Buying That First Home: A Faded American Dream
The odds are unfairly stacked against the next generation of our kids
I keep running the numbers, and looking at the markets, and taking into consideration the reality of being 60 with a 24-year-old daughter who makes minimum wage and is likely to never earn much more on top of that, and it only further confirms that nothing adds up, and nor will it ever.
I don’t think I’m alone. Hardly.
All around us, we see 20-something and even 30-something offspring whose jobs options, pay scales and housing needs keep them living at home, or bouncing back home when a roommate flames out or rental costs balloon beyond affordability.
It’s not news, yet it continues to be startling. The Federal Reserve is trying to cool home prices with its fourth consecutive jumbo rate hike. More listings are taking price reductions, fewer homeowners are opting to sell now that mortgage rates are over 7 percent.
A $300,000 home — which is now below the national median price! — is out of reach for first-time buyers, or any buyers with fixed incomes. That in turn pushes rents higher as more people compete for fewer options, which then pushes a lot of young people back home.
That makes what’s taking place a societal buzz kill as much as a financial wack job. Young people are stuck! Parents are stuck, or worried, or frustrated, or racking their brains trying to understand why kids these days talk about van life. If they haven’t exactly given up, they can see they’re being squeezed and left to hold the bag.
While there’s been great talk about the flexibility the pandemic caused since workers could go remote and relocate from affluent coastal cities for bigger homes in less pricey environs, I get the feeling that what we read about generally only scratches the surface of the repercussions we’re experiencing from so many cataclysmic events so close together.
Today, a real estate article in The New York Times makes plain what we already see.
“Historically, first-time buyers made up about 40 percent of the market. But the share of first-time buyers fell to 26 percent during the 12-month survey period, from July 2021 through June 2022, plummeting to the lowest level since the trade association began tracking such data in 1981,’’ reports Ronda Kaysen.
The headline was a little bracing, especially since it underscored the way the wealth of white Americans, particularly those around my age, is accelerating the inequity:
“Older, White and Wealthy Home Buyers Are Pushing Others Out of the Market”
I think I’ve been part of that equation, which is another startling thing to consider. In using our knowledge of real estate, and capitalizing on some ability to invest, and our willingness to move or act on good opportunities, Diane and I have been in markets where housing prices have risen 20 to 50 percent in a matter of three to five years.
Seattle. Baltimore. Long Island. Saratoga Springs. The past 20 years has been an explosion of housing wealth, the results of which are finally and dramatically squeezing the American Dream.
We considered it our good fortune to be able to use these “tools for wealth” if only to make sure we don’t have to eat cat food G-d willing we live to our actuarial table destination. But it’s all coming home to roost, so to speak.
We look out and see the devastating impact high housing costs has had on the lives of a lot of people, including the kids of our friends and families, including the increasing number of homeless people begging for food money on the corners of downtown Saratoga Springs.
Meanwhile, this small city continues to attract second and third home buyers who recognize it as a pocket of affluence. That reality only further compels people who can afford good things to aggregate here. Housing has always been a way to self-select your neighborhood, but the impact now is far more exclusionary.
That’s sad. That has an impact down to the way the next generations can be part of a community. Having your own home, regardless of how modest or grand it is, really is such an important part of separating from your parents; establishing yourself as an individual; setting up a nest for your own new tribe.
It’s the place where you embrace your own life, where you run it and pay for it and agonize over it and fix it and mow the lawn or change a lightbulb or learn how to cook better or …. everything! I can’t imagine my life being the same without the experience I had buying my first home.
In 1988 or so, five years after graduating from college, I had moved to Albany and worked at the Times Union newspaper. After two years of renting up here, my partner and I decided to start looking at what we could afford, and where we wanted to be. Not the suburbs. Not in Albany. Not in Troy. We wanted urban but safe and walkable to stuff. Within weeks, we found a Dutch colonial house in the Upper Union section of Schenectady.
The house was two blocks to restaurants and shops, and right across the street from Central Park — a huge and lovely public park with a swimming pool, hiking trails, cookout grills, hills and paths and a rose garden. There were hardwoods and a formal dining room, a sunroom and a bright rear den behind French doors.
Three bedrooms, 1.5 bathrooms, a level lot and detached garage. It was $75,000, and we paid $73,500, having borrowed $5,000 or $7,000 from my parents and using whatever cash I had to put down.
Over the few years we owned the place and lived there, I had such an incredible sense of security, of peace, not because things were smooth-sailing 100 percent of the time but I could always sit on my porch and read a book. I could go in the yard and rake the leaves. I could walk to the park or the library or the deli for lunch.
Mortgage rates were over 10 percent back then, so it’s not like the payment was “cheap.” But getting to own something as substantial as a handsome single-family home, and to have such a place to run my life … it was the demarcation point in my life that let me know: I was on my way.
To where? That is another question!
There have been many houses along the way. We were the kind of high-flying Americans riding the gravy train of the Web 2.0 wave and tech surge to this place we’re all at now — a place where there’s scant little middle ground left between wealth, or at least financial stability, and the cliff people are either falling off or can never climb.
It all seems to have pitted us into another division. People who can have their own home, or homes. And people who never will. Unaffordable. Unfair.