“I am a boomer, I see the problems that high housing prices are causing for the younger generation. I have two children; one challenged with a large mortgage, another priced out of the Vancouver market.”

“Yesterday while visiting friends and family, I started to talk about the price of Real Estate and how I see it affecting the younger generation.
Let me first say, I am of the boomer generation, I see the problems that high prices for housing is causing the younger generation. After all, I have two children of my own and see the problems that they are dealing with. One family challenged with a large mortgage, another one of my children priced out of the Vancouver market.
Now back to the conversation, I stated that the prices were out of reach for the normal working family and a family member made the argument that it was all relevant. He claims that prices of houses for his parents were cheaper than he bought and when he bought his first home he was making $300 a month.
True, he was making that money back in 1966, but in that same time period my father was making $70 a week and bought five acres and a two bedroom home for $9800. If we round that up to $300 it would have taken my father less than three years of work to purchase that home.
Two years ago, I looked at the same property, it now was selling for over $800,000. My son is in the $40,000 dollar range, like most people that is an average wage, it would take him 20 years of work to purchase the same property.
Wages have not kept up to inflation, let alone the cost of housing. This is going to cause the housing market to stagnate and if the young generation are lucky, prices will fall. There is some sign of that happening now in Vancouver.”

– from ‘House Prices and Young Folk’, by ‘RA’ (a ‘Retired British Columbian’) at their blog ‘Voice of the Wet Coast, 28 Aug 2012

28 responses to ““I am a boomer, I see the problems that high housing prices are causing for the younger generation. I have two children; one challenged with a large mortgage, another priced out of the Vancouver market.”

  1. I would say: don’t worry. It’s not like any of this money is real. Only the debts are real, until they are defaulted on. Canada has asked and enabled its young people to pay (effectively, with interest) a million dollars or more for shelter. The price is so high that there is nothing left for them or their families. There will not be the money to fund the health care and social safety net for the baby boomers. There will not be Canada as we knew it, because all of this wealth has been borrowed from the future and pissed away on a fraud.

    • you’re just a bitter basement dweller

      • Bitter:sure, basement:no, dweller:no. I’m dismayed by the complete lack of scrutiny by my fellow citizens and their eagerness to sell the whole damn country to China. And I’m not talking about media reports. There is willful blindness towards corruption and negligence of all sorts. First comes moral bankruptcy, then financial. I would be delighted to be wrong. That’s why I think it’s serious.

        I’m on the other side of the world right now and I’m telling you the Canadian dollar is grossly overvalued. In terms of world purchasing power Canadian prices are just obscene. This can not last, just like the Canadian dollar at 63 cents couldn’t last. But with ultra easy monetary policy everywhere, there is only one mechanism now that allows a currency to fall, and that is structural economic damage. I say we’re doing it! With growing consequences for our future, I fear.

  2. “Wages have not kept up to inflation, let alone the cost of housing.”

    The world has become less fair to the average Western wage earner since the boomer era.

    We are not going back to an era where the principal wage earner can carry his family and pay off their home in 3-4 years. That era, with it’s lifetime jobs, full pensions, unlimited growth and resources is over.

    Not to say there aren’t fundamental reasons for lower prices in our future, but the boomer situation and ours are not analogous.

    • UBCghettodweller

      My parents are Boomers, but they bought a house during the early 1980s when the interest rates were very high. They both worked an extra job on top of being high school teachers with pay scaled for having masters degrees for nearly seven years to pay off to mortgage before the interest killed them. They drove shit vehicles, didn’t do more than camping for vacations and grew their own vegetables before it became cool with the Yuppie class… Oh, and they held off on having kids until they knew the house was actually theirs.

      Not ever boomer had it easy. But I still equally envy that generation and despise them for leave my generation with a world more broken than they received it. Their failure is that they thought they were improving things by being different (read: more cool) than their parents rather than actually working to make the world a better place. Instead, they generated a culture that rewards and exalts the folly of youth, confusing it for the beauty of youth.

      • UBCghettodweller

        Also, upon reading that post, it’s evident that my editing skills proportionately decrease with every hour over twelve that I work in the lab on weekends. Time for sleep. Sorry for the poor grammar and thanks for the fish.

  3. Terminalcitygirl

    Wow, it’s nice to read a boomer actually thinks about/ cares about this stuff. Most seem oblivious in the entitlement mind frame. I am sooooo tired of hearing boomers talk about how hard they worked for what they have. Honestly they just don’t have a clue what the generations after them have faced in the job/ housing markets.

    • By doesn’t the boomer consider renting to be an option? There are no “problems associated with high housing costs” if you simply don’t pay the high prices.

      What was boomer’s advice when their kid took on the high mortgage? Was it perhaps the old “renting us throwing your money away, why pay somebody elses mortgage”?

  4. I am a boomer, hear me pop.

  5. granite countertop

    I am of the younger generation, I see the problems housing is going to cause for the boomers. A lot of them are expecting a comfortable retirement funded by their real estate gains. Just as they’re ready to retire their net worth will plummet.
    I’m flexible. I can move. I have decades of earning potential ahead of me. Even if I was stupid and bought a condo, I could recuperate. Bankruptcy isn’t the end of the world if you’re in your 30’s.
    A few insightful boomers realize how badly they’ve screwed us over, but very few see the disaster awaiting them.

  6. I’m a young guy with boomer parents who can afford the high real estate prices–for now, until rates go up.

    But as someone pointed out before, why are Vancouverites obsessed with buying? There’s nothing wrong with renting. You still have shelter, and rent is still relatively affordable and you don’t have to worry about upgrades, maintenance, finding GOOD tenants, etc. You’re not throwing your money away, because you are saving up downpayment to invest in something OTHER than real estate (no real estate does not always go up and when you have to sell you have to sell, and if you’re in a down market, good luck).

    I bought a house in late 2010 in westside Vancouver, when I was in my late 20s. Got married last year, wife is still a student and although mortgage only takes up about 10% of our pre-tax income, we could’ve diversified our downpayment. Instead, we’re dumping all of our money into the mortgage, with no chance to invest in other business opportunities. We live very simply. I bike, wife takes transit. We have no need for fancy cars. We don’t eat out often. Don’t even have cable or satellite. All this because we feel like we need to live simply due to the large mortgage. My boomer parents certainly didn’t have this cheap skate lifestyle when I was growing up.

    • “I bought a house in late 2010 in westside Vancouver, when I was in my late 20s. Got married last year, wife is still a student and although mortgage only takes up about 10% of our pre-tax income, we could’ve diversified our downpayment. Instead, we’re dumping all of our money into the mortgage, with no chance to invest in other business opportunities”

      Of course you have a chance to invest in other business opportunities – if your westside home is taking up only 10% of your income, that leaves a ton of money to invest in other things. You’ve just chosen to put it into your mortgage.

      If you think there are other (better) things worth investing in, just divert some of your money to them.

    • You either had a massive down payment or a massive salary, so while you’re young you definitely aren’t representative of the “younger generation”.

    • Yes I had a huge down payment and yes I pull a very good income as a doctor (who makes more than the average doc as i work very hard). But my point is, even for someone who is in the 1%, I don’t feel like I can afford a lot of luxuries because of this albatross around my neck called the mortgage. Yes, I will likely pay it off in due time but life is full of the unforeseen and so I am foregoing other luxuries to pay this off in case something happens and I can’t pay the mortgage.

      Thus, whenever I see all these luxury cars bought on credit in this city, I just think people are so dumb, and that that is what’s going to be their downfall. Ive seen teachers, nurses, CUSTODIANS, driving luxury cars. As a doctor I peer into people’s lives and it’s amazing how other people live it up and when things crash, things really crash. Having very little savings or none at all. I’ve seen it in the US and it will happen here too. It is not different here.

      • UBCghettodweller

        OK, as an MD in the right field working nausea inducing hours, I believe that you could earn that much. Seriously man, that’s pretty damn impressive.

        Just promise me that you won’t be one of those many MDs who gets married in their early-30s only to have the marriage dissolve a few years later because in reality they’re married first to their work and then to their wife second… I’ve seen that play out in a few of my friend’s lives.

  7. Extremely relevant paper by William White, “Ultra Easy Monetary Policy and the Law of Unintended Consequences”.

    http://dallasfed.org/assets/documents/institute/wpapers/2012/0126.pdf

    • Nice post. I liked this part:

      “Another channel through which monetary policy is said to work is through higher prices for assets, in particular houses and equities. In effect, higher prices are said to add to wealth and this in turn spurs consumption. Before turning (below) to the latter link in this chain of causation, consider the former one. In those countries in which the crisis raised concern about the health of the banking system (eg; US, UK, Ireland, Greece, Spain) house prices began to decline sharply early in the crisis. Lower policy rates were not sufficient to reverse this trend. In contrast, in countries where the health of the banking system was never a serious concern, house prices did continue to rise as policy rates were lowered. This has raised concerns of an eventual and aggravated collapse.”

  8. I watched Vertigo last night and it struck me how in older movies, the characters tended to live in apartments. Both the main guy and Midge lived in apartments in that film, and while Midge’s place had a ridiculous view of the city, otherwise their places looked like normal, affordable (presumably rented!) places to live. Contrast that to today where characters in mainstream movies seem to always live in gigantic luxurious condos.

  9. Ralph – you observation is spot on.

    Having travelled recently through China, India, Malaysia: one can observer the raising tide syndrome today in Asian and some African countries.

    On the other hand travel through the US will give impression of country with best years behind and not ahead.

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