I'd have to agree, my sisters & I are all of that age group. My one sister & I see real estate as an investment if done properly & my other two sisters see it as a ball & chain to the area. Our Generation does see the limits owning a property brings cause we have been raised on a be quick to move onto the new thing idea. At least I know if I ever need to move to a new location asap, my parents would be willing to rent my place out. Its the idea of how permanent the property is that scares our generation, even though buying a property might be cheaper than living in an apartment, its the ability to break the lease w/in 30days that makes owning a house so unappealing.

Thanks for the guest post!

I don't buy Timothy's argument about losing your job and having to pay the mortgage as a liability- you would have the same problem if you rent. Also, if you break the lease, more often than not, you have to buy your way out of it which is ultimately more expensive then remaining in the apartment in the first place. It takes a while for the bank to foreclose upon a property and you can get by for a while w/o paying the mortgage; not paying the rent, is a quicker process of removing one from a property. I feel that having only $1500 in net worth or savings is the bigger liability here- that's not enough to buy your way out of most leases, and it's only enough to cover one month's worth of expenses if you live in an apartment or own a modest house. As for having a higher degree equaling more job opportunities, those opportunities still have to actually be there and available, and that seems to me to be more of a limiting factor nowadays as opposed to what degree you possess. Timothy also fails to point out that more education usually means more personal debt due to student loans one must pay off over the course of one's lifetime.

In part, I think people are just "growing up" later. Most people I know are getting married, having kids, buying houses up to a decade later than their own parents did.

Most 20-somethings are simply not ready to buy property... as to whether it will ever happen, seems like we still need some time.

Andrea, you bring up an excellent point. I've been told by some sociologists that Echo Boomers are about 7-10 years where they should be when they compare them to former generations.

Tim,

You are so right about this and I've been saying something along these lines for 3 or 4 years now. The housing bubble was created by other generations, but people in our generation are greatly affected by it. Because of government policies attempting to artificially "prop up" the housing sector, we're not going to see where the "bottom" truly is for a very long time. All these realtors and RE cheerleaders are deluded if they think we're at the bottom now.

If this is the bottom, then it's going to be a very unhealthy, stagnant next decade or so, much like Japan experienced over the past 20 years. As you say, not enough people our age believe that buying a house is a very high priority. Once you factor in how much work some of these houses need or take into consideration HOA fees and routine repairs, it's simply a smarter move to rent. Especially if you might want to relocate to a different part of town or a different state.

I studied finance in undergrad and went on to law school--like you say, I thought about getting an education before I thought about starting a family or investing in a house. Of course, our generation has many people who didn't invest in education... but can they afford to buy the baby boomer's huge McMansions? Even more to the point--for those of us that have good career prospects, would we even want to live in some outer-ring suburb and take on a long commute, higher fuel costs, energy costs to heat/cool a McMansion, and longer drives to shopping/recreation? Not many people I know aspire to live out in no-man's land so they can live in a large house (often mass produced anyway). I truly can't see a bright outlook for baby boomers who have those huge houses when the look to downsize in the future. People will buy them, but not at a great price. Smart people are getting savvy about the hidden costs of having a large house that's not close to job opportunities and recreation.

Overall, great guest blog--I'm going to start reading your regular blog as well.

Oh, the other thing I forgot to mention was that you're so right about the likelihood of many Millenials planning on renting for life. At the same time, with inflation likely in this country's future, this is a great time to buy rental properties. If you can hang on for 5-10 yrs in a flat-rate 30 yr mortgage, by 2020 or so, inflation will enable you to collect significantly more rent than your PITI (principal+interest+taxes+insurance). For example if your PITI now is 1500/month, it should still be about 1500/month in 2020. However, inflation will eventually make that $1500 seem very low compared to the rent you'll be able to get, as prices and wages get driven up while the dollar weakens.

The question is whether someone is a skilled landlord and has fiscal discipline or not. Because in the meantime you might need to do repairs, upgrades, and handle some rough tenants. But if your mortgage is at 5% (locked) and inflation picks up like many think, plus a large market of Millenials who just want to rent... you'll win big in the long run.

I am of the age group as well. I bought a house in Baltimore City and chose one that I would still enjoy even if I get "stuck" and can't move. I think that it is how we have to think now. Starter homes can become future homes. The idea of getting "stuck" in a home does not worry me as much because I'd be happy living in Baltimore for a long time. I like it here.

chappy10,

You have a fascinating background, I'd love to hear more. Thank you for bringing up the other financial material; I sometimes forget about the insurance, taxes, et cetera of owning a home. But you're right, that can really drain a wallet fast.

Excellent insight.

For what it's worth, I do agree with Bayview, that if you find a house you love and can afford, buy it. I'm a skeptic by nature and the RE industry's cheerleading grates on me to no end. However, I do have to admit my spouse and I own our house and actually rent out our old house. However, if one looks at demographics and digs into all the costs of really owning a house, it doesn't take long to realize that many people were priced out during the bubble and have dropped the idea of owning a house altogether. Most of our tenants who do claim they want to own someday have no realistic way of qualifying for a mortgage or saving up the down payment or even the 10k in inspections and closing costs, to say nothing of repairs.

My last point--the only thing that bothers me about this new reality TIm speaks of is that we're approaching the point of becoming a country of "haves" and "have nots". Millenials may not dream of owning a house in the same way Boomers did, but at least part of this is because of heavy student loan burdens, economic insecurity, outsourcing of jobs, and the government's continued efforts to keep housing prices high--which is actually BAD for first time buyers and low-end buyers in general. The effects of the government's tax credits are actually somewhat perverse. Sure, those tax credits kept the market from "collapsing", but by keeping prices high, you only help the sellers (usually an older generation). And once the incentives are over, prices resume their fall.

Buying a home to live in is not an investment. If you add up what you paid for it, plus interest, the expenses for repairs etc, what kind of return on investment did you earn? Now if you buy a home to rent, than yes, it’s an investment. I agree with chappy10 if you found a house you love and can afford it, buy it, but don’t look at it as a high yield investment.

I'm a gen Y.

It's great to value higher education but the cost of education is most likely a large reason why buying is being delayed. They are broke!

I can't help but see this as a rebellious action against their parents, "sticking it to the man".

I'll go against the grain of my own generation if I can profit from them. They can rent their entire lives as long as they pay me on the first of the month.

I'm an echo boomer, and have spent most of my post college life thinking about grad school, but have always wanted to own a house sometime in the near future. i would like to pay off student loans and my car still has 3 years left on it, then id seriously be in the market for buying but until then im left to dreaming and looking at whats out there. Fortunately, i have time to wait since we obviously havent hit the bottom of this yet. i'm also extremely fortunate to have a job that will pay for me to go back and get my MBA!

27 year old E-Boomer here. I graduated with honors from a decent private university in 06 with a BA in History and Art History. Neither of my parents went to college. I am the oldest in my family, so no one helped me or gave me advice when my time came. All my life it was just go to the best school you can get into no matter what from my teachers and parents. I paid for school myself with loans that the bankers were very eager and happy to give me. When I was 18, I signed for a $15K loan on my own, all together my BA cost me about 70k for four years of schooling and I know people in far worse shape than that. I pay double every month on my loans and have been since 06. I have been very lucky to have found a job that I have been able to advance in over the last four years, but I didn't really need a B.A. to do what I do now. I will be out of student debt in about five years paying double, I live on my own but after paying rent and my loans I am constantly broke even though I work 40+ hours a week. I have no interest in buying a home using debt, nor do I have any interest in starting a family before I am totally out of student debt, that really bugs the women I date these days but I am honest with them upfront. If I learned one thing from student loans it's that debt is your enemy and will tie you down and make you unhappy and restricted in life. No bank will ever get another dollar in interest payments from me ever again. Once my student loans are gone I am going to start saving the cash I was putting towards those payments for rainy days that are coming quickly. The way the boomers have lived they are going to screw us so bad with all this debt, what a horrible generation of Americans who lived way beyond their means and now want their children to take care of them, they really fumbled away all the greatness their parents achieved. Anyways, student loans are not just keeping young people from buying homes right now, they are scaring today's young people away from taking on debt at all, ever again.

General distrust of banks, bad experiences with student loans and falling home values all around. Easy to see why young people are not rushing out to buy homes today, I doubt that changes anytime soon.

That was very informative.
I belong to a different generation but I do understand the echo boomers view on this. They reached the point where they are now through hardship and tons of loans to pay, which shaped them into thinking this way.