Blogging Bayport Alameda

August 27, 2019

Looting the bootstrap store

Filed under: Alameda — Lauren Do @ 6:07 am

There was a scary headline from the Atlantic yesterday: The Next Recession Will Destroy Millennials.  And even if you are comfortable Boomber or even Gen Xer you still should be concerned about the fate of the generation who, ostensibly, will be the generation in charge of our welfare when we’re ready to pull our Social Security checks.

From the Atlantic:

Millennials got bodied in the downturn, have struggled in the recovery, and are now left more vulnerable than other, older age cohorts. As they pitch toward middle age, they are failing to make it to the middle class, and are likely to be the first generation in modern economic history to end up worse off than their parents. The next downturn might make sure of it, stalling their careers and sucking away their wages right as the Millennials enter their prime earning years.

The toxic combination of lower earnings and higher student-loan balances—combined with tight credit in the recovery years—has led to Millennials getting shut out of the housing market, and thus losing a seminal way to build wealth. The generation’s homeownership rate is a full 8 percentage points lower than that of the Gen Xers or the Baby Boomers when they were the same age; the median age of home-buyers has risen all the way to 46, the oldest it has been since the National Association of Realtors started keeping records four decades ago.

As a result, Millennials have not benefited from the dramatic rebound in housing prices that has occurred since the financial collapse and the foreclosure crisis. Millennials have also been forced to shell out hundreds of billions of dollars in rent as housing costs have skyrocketed in many urban areas. This represents a large generational transfer of wealth from the young to the old. Boomers own the houses and bar municipalities from building more of them, thus benefiting from rising prices and soaking up endless rent checks forked over by younger and poorer families. [emphasis added]

And it will continue to be grim as easily won trade wars push us closer and closer to recession.


“With the baby boomers occupying most of the top jobs and much of the housing, Millennials are doing less well than their parents,” concluded Credit Suisse. “We expect only a minority of high achievers and those in high-demand sectors such as technology or finance to effectively overcome the ‘millennial disadvantage.’”

I guess that dispels the belief that Millennials would be doing better if they just worked harder or bought less avocado toast.


  1. Avocado toast is delicious.

    Comment by dave — August 27, 2019 @ 6:48 am

    • wow, I just finished my avocado toast with fontina cheese.

      Comment by trumpisnotmypresident — August 27, 2019 @ 8:31 am

  2. And you can also thank Baby Boomers for failing to pass along their wealth. Geez and all this time I thought I was doing my part as a Baby Boomer raising a family, providing them with a good education and work ethic.

    Comment by Mike McMahon — August 27, 2019 @ 7:38 am

  3. In regards to home ownership, the key is getting that first home, which is the most challenging. Here’s a link to California’s 2019 First Time Home Buyer’s Programs – there are quite a few programs:

    Boomers faced a similar challenge to buying their first home. While some first home buyers received help from their parents, many turned to first time home buyer programs, or used creative methods to buying their first home.

    Creative methods change and expand over time, but here are a few methods that boomers used: two or three families getting together to buy a duplex or a triplex; or buying a fixer upper and overtime using the increase of equity to renovate the home. Another one is starting with a smaller home (1 or 2 bedrooms) with an attic or a basement that could be developed into more space as their family and income expanded.

    Years ago when I was a real estate agent, one of my clients purchased a large single family home with two other family members – sharing the cost of home ownership. Years later, when the home was sold each family received a share of the increase in equity to purchase their own individual home.

    Finally, there are other creative ideas out there — consider creating or joining a facebook group of like minded people working to purchase their first home to support each other, share ideas, and share success stories.

    Comment by Karen Bey — August 27, 2019 @ 8:21 am

  4. from one of the links:

    “In response to concerns about the price of tuition, some political leaders and foundations have proposed initiatives for free tuition. One report stated that 80 percent of Americans think the government should make college tuition-free. Numerous governors have cited “free tuition” as a goal for their states. While this idea seems radical now, it wasn’t always so. The California university system was tuition-free until the 1960s. In fact, most state colleges and universities were tuition-free until the 1960s, when the demand for higher education by the public outpaced the political will to fund such subsidies.

    “Free tuition” is a worthy ideal, but any program providing it must ensure that it fully benefits those who need it most — talented students from low-income families. Most state tuition subsidies, since they are based on admissions criteria that are influenced by family socio-economic status, seem to benefit those who need it least.”

    Comment by MP — August 27, 2019 @ 8:49 am

  5. Let’s pit the generations against each other instead of remembering about all those professional house flippers and corporate landlords who bought up all of those cheap houses that aren’t available now that the economy is better. Boomers did not have to deal with them either when trying to buy their 1st houses.

    Comment by michonnekatana — August 27, 2019 @ 8:56 am

    • Flippers sold houses to buyers, who live in them. Corporate landlords rent out to people who live in those houses. These two groups didn’t decrease supply of housing, they helped maintain and increase it. Your derision is misplaced.

      Comment by dave — August 27, 2019 @ 9:03 am

    • Banning flippers (or longer term owners who fix the property themselves or pay their agent or contractor to do it before closing) would work, if people who are willing and able to pay flipper prices were unwilling to (1) buy the property and then undertake (by doing or paying for) the improvements/repairs themselves and (2) unwilling to live in the unimproved property. Or, if the buyer side of the market doesn’t cooperate, you could always come back and close that loophole by updating the building code to say, e.g., if you touch anything in the kitchen or bathroom after buying the property, not only do you re-wire, but you also must add at least one ADU [and consider whether to pass something that specifically overrides any barrier imposed by CC&Rs/HOA rules to the addition of an ADU so that there are no exceptions].

      Other solutions are probably more feasible, though.

      Comment by MP — August 27, 2019 @ 11:25 am

  6. I have spent the last 20 years as a housing advocate in this town trying to get people to understand that not building housing would lead to this. I never understood why people who were raising children here, as I was, could not see that finding the finest schools and colleges for their children was not going to be enough for them to have stable lives. I later realized that one’s children’s achievements were all part of one’s ego. A true sense of community, that includes a realistic vision of the future, seems to be hard for many to grasp. It’s too bad. I see millennials struggling mightily and maybe not making it, being broken by the stress. I hope it’s not too late for them. The rest of us must look at our part and see what attitudes we can change and what fears we can overcome to help out.

    Comment by Laura Thomas — August 27, 2019 @ 9:41 am

  7. Gee my parents thought my generation (boomers) was a bunch of lazy, unmotivated bums…it’s “nice” to hear we turned into industrious and rapacious landlords and home flippers bent on sucking the blood out of other generations (sarc).

    This boomer knows we are in the 4th industrial revolution. A.I. will displace at least 25% of the workforce. Guess what? Millennials will suffer even more. Exactly the same thing happened in the previous three industrial revolutions. Somehow we continue to grow our economy, and enjoy the highest wages in the world.

    The worst thing that happened to millennials was “college for all”policies and exorbitant student loans pushed by the previous administration. They can never be discharged. Now millenials have so much debt they are delaying getting married and buying property, and the government is holding all the debt and profiting enormously.

    Most “solutions” to housing proposed by progressive politicians sound like a combination of the French Revolution, the Occupy Movement, and Chairman Mao’s Red Book. We’ll take over your property and tell you everything you can’t do with it. Boomers remember that as characteristic of a country behind the Iron Curtain. You know, the one where people were willing to die trying to escape…Many Chinese-Americans remember how horrible it was during the communist upheavals in mainland China where land was confiscated from the “criminal” landlords. This is why they came to the United States, Taiwan, or Hong Kong.

    Prediction: one day the “entitled” millenials will shake their head in disgust about Generation Z-too educated, too stressed and too depressed…

    Comment by Nowyouknow — August 27, 2019 @ 1:36 pm

    • The student loan burden is indeed out of hand, and it has certainly been handled badly by the federal government, but you should have stopped there while you were still coherent.

      -The federal government is not profiting enormously off student loans, indeed it is losing money for 3 reasons: A) default rates between 20 and 40% (wide range due to definition, such as default vs forbearance, as well as projections of future defaults) B) these loans are funded by the federal deficit which in fiscal ’18 had an average coupon rate of 2.49% C) long collection periods of loans in forbearance and those making token payments to remain ostensibly current are de facto very high loss severity rates for the lender (mostly the taxpayer)

      -While the Obama administration did make serious mistakes with federal loans, the rate of increase of such loans during his administration FELL vs previous. That can hardly be labeled as “pushed” on borrowers.

      -Equating reform enacted by democratic means (however misguided that reform may be) with genocidal “Iron Curtain” regimes is such an extreme false equivalence, it really makes you look like a putz who has nothing but Fox News talking points.

      With a name like “Nowyouknow” you seem to have a desire to inform. Why don’t you get informed first, and then come back and we can have a more serious and realistic discussion about how to fix this problem.

      Comment by dave — August 27, 2019 @ 2:54 pm

  8. Here is data showing the relationship between home prices and rent.

    Comment by Mike McMahon — August 28, 2019 @ 7:42 am

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