Where have all the 20 something’s gone?

SingleSue

LydiaJ wrote: »

I don't know about "most people". This is not the way anyone in my peer group saw life. I left school in 1986. We all expected to leave home when we left school and go away to uni, poly etc, and then at the end of the course look for a job anywhere in the country and move there. Moving to a new job (either mine or my then husband's) generally meant moving across the country too.

I also left school in 1986, our expectation was that when we had finished our 'O' levels, we would leave school, get a job and move out of our parent's home at some point in the next couple of years but generally stay in the local area.

Very very few went on to do A levels and even fewer did a degree...amazing the different expectations by area.

It actually worked for me initially financially and employment wise but as time has passed, not having a degree and only one A level (obtained via night school) put me at a disadvantage returning to work after having to take a career break.

For comparison, my parents purchased their home in late 1969 for £3000 (£2400 mortgage), it was their one and only house purchase, a 3 bed semi and was purchased on one income as mum was a SAHM. Dad was 28 and mum 26 with one child and one (me!) on the way.

Unfortunately, I have no idea how much dad was earning at the time as he comes from the generation where you never tell anyone but I do know that compared to most, he was on a good wage as a construction worker. Their house is currently worth around £300k but they do kick themselves as at the time they had the choice of buying here, or buying in Epping (nearer to their home town and the same price as the one here) and renting whilst he had the construction contract here...the one in Epping they almost bought is closer to a million now!

As a further comparison, I was earning more back in 1991 than is offered now for my old job. Unfortunately minimum wage pretty much held salaries back for new ones coming in, so much so that in my last office job, we were banned from discussing our pay scale with any new employees as our pay scale was based on the old scheme (a hell of a lot higher) whilst new ones were on minimum wage plus a bit extra despite us all being equal in seniority and responsibilities. Any old pay scale employee leaving was replaced with a new pay scale employee so that over time, there were very few of us on the old (and much better), pay scale.

moneyistooshorttomention

LydiaJ wrote: »

I don't know about "most people". This is not the way anyone in my peer group saw life. I left school in 1986. We all expected to leave home when we left school and go away to uni, poly etc, and then at the end of the course look for a job anywhere in the country and move there. Moving to a new job (either mine or my then husband's) generally meant moving across the country too.

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I think a lot of us speak from our own personal viewpoint.

I'm a Baby Boomer (ie now in my 60s) and most people in my agegroup certainly didnt expect to move far (unless we ourselves personally wanted to and made a voluntary decision to do so). As it was only the minority that went to University back in our day - not 50%.

The vast majority of people (particularly woman in that era) had jobs, rather than careers. As someone that had a job (rather than a career) and lived in a city anyway - there was no reason per se to move - as everything I required was there. Hence I think (know) that it's reasonable to decide to stay/expect to stay in one's home area if that's the situation and not be forced to move elsewhere by house prices.

buglawton

Cakeguts wrote: »

You would think that there would be a price correction.

Where are the investors getting their money from?

It takes two to make a successful gazump. The person making the offer and the person accepting it. A house is worth what someone will pay for it. So if an investor offers more that is the correct value of the property. Houses are not worth the imaginary number put on them by estate agents they are only worth what someone will pay. Looked at from the other side the first time buyer was trying to buy a house too cheaply from the seller?

Houses aren’t worth what someone will pay, they’re worth what someone will lend. How much they’ll lend is based on speculation about future house price movement and an assessment of the housebuyers creditworthiness and general UK economic stability. That’s why governments get so involved in propping up house prices - consumer confidence seems strongly linked with house price optimism.

AdrianC

buglawton wrote: »

Houses aren!!!8217;t worth what someone will pay, they!!!8217;re worth what someone will lend.

For some people, yes, those buyers who are heavily reliant on as high an LtV as they can get. A £237,500 95%@£250k mortgage turns into a 119%@£200k mortgage. Impossible.

For others, those who have lower LtV finance or are cash buyers, there is no such issue. A down-valued lender's valuation simply means a higher LtV than nominally apparent, but the property can still be easily acquired. A £100,000 40%@£250k mortgage turns into a 50%@£200k mortgage. The rate may well remain the same.

Then there are those properties which are unmortgageable, because lenders do not view them as suitable security. The lenders say value of £0, but they are clearly not of £0 value.

GreatApe

Jaywood89 wrote: »

So I’ve got a topic I’d like to discuss.

I begin by saying I hope we can discuss it civilly and agreeing to disagree where needed.

Saying that we are all adults here so if you feel strongly then wade in!.

Here goes...

I am a millennial, I find myself in a rare position of inheriting a very large amount of money, meaning I can buy a good sized family home in a good area that my young family can grow into...... not much of a consolation prize for loosing my mom to cancer but she’s ensured her family are provided for and I consider myself very lucky!

12 months ago I was like most millennials, wondering what the future would hold for us housing wise, paying rent that took more than half our income and struggling with the increasing cost of living with small mouths to feed.

Now I know not all of us have children and some have been able to get into the property market, but I don’t know a single person who could afford to live in the area they would like or buy a family sized home. Definitely not both!. For the vast majority home ownership is a distant dream, unattainable and unlikely at best!.

20 years ago was it possible for a young couple with two children and full times jobs to buy a 3 bed house near a good school? Let’s face it, it was. Is it now? Nope! Infact anything less than 2 jobs on more than 30k each with no childcare costs is getting you diddly squat!

And this is before we take into consideration the amount of people stuck in the rental trap. Saving 20k plus? On top of rent? No chance!

To my point, I as a millennial can’t see the upside to these ever increasing house prices as I worry where my entire generation is heading, but as I imagine there are a lot of ‘non-millenials’ on here and I’m sure plenty of property owners, who finacially benefit from this current system. And by that I mean the house you bought 20 years ago is worth 4 times what you paid, I wouldn’t be too disappointed either! But Do you ever wonder what is in store for the people who come after you?

Does it concern you? Or is it a ‘not my issue’ kind of feeling?

Do you think I’ve got it all wrong? Is there even a problem?

Do you see an issue at all? And if you do, do you see a solution??

Really hope I haven’t bored anyone to death with this lengthy post and would really love some feedback

TIA

Most UK born Brits will inherit housing for free like you have.

Thus is because the average British woman has fewer than two kids and close to 80% of the older generation own their own homes.

With regards to house prices in about half the country house prices are cheaper than they were a hundred years ago. Even in Birmingham our #2 city you can buy a home for close to or even under build cost.

There really isn't a housing problem nor are house prices unaffordable.
The only exception is London but even that can be explained by London being prices on capital not income.

Part of the reason fewer people in their 20s own is because they started life much later. Fifty years ago kids left school at 15 continued living with their parents and worked. By early 20s they were married with a combined 15-20 years of work under their belts. Today a couple of 22 year olds have just 1-2 years under their belts and lots of debt and high cost living. Blame the unnessary excessive education kids go through today for later life stages

westernpromise

One the endearing things about millennials is that they think everything they don't like has never happened to any previous generation.

My dad was born in St John's Wood in the 1920s and he sure as hell couldn't afford to buy there when he was 30 or any other age.

I consequently grew up in one of the smarter bits of Hertfordshire and I couldn't afford to buy there when I was 30 either.

Back in the 1950s you could buy a Maida Vale white stucco mansion house for £2,000. They were costly to run and nobody wanted them. Today if you want one, you better have £10,000,000.

The idea that prices were correct at some point in the past but are unfairly wrong now ("20 years ago was it possible for a young couple with two children and full times jobs to buy a 3 bed house near a good school? Let's face it, it was") is another millennial gem. The only way the above was possible was if you were an FTB - if you'd had the misfortune to buy within the previous 10 years, you had a load of negative equity you had to get out from under first. 30 years ago you couldn't and 10 years ago you couldn't, so why pick on 20 years ago?

LydiaJ

GreatApe wrote: »

Most UK born Brits will inherit housing for free like you have.

But not until they're 50ish, which is a bit late for most people's purposes. Average maternal age is about 30, and life expectancy is about 80.

Malthusian

LydiaJ wrote: »

But not until they're 50ish, which is a bit late for most people's purposes.

Not at all. There are plenty of houses available for working-age families to rent. The point they "need" a mortgage free house is after they have retired, and on average they will get their free house 10 or 20 years before that point.

Of course what we really want is for people to buy a house at 25 with subsidy from the taxpayer. Then in their late 30s or 40s when they have increased their earnings and paid their mortgage off, they can get another mortgage and buy a buy-to-let property, using more subsidy from the taxpayer. Then in their 50s they get their free house from their parents. Hey presto, thanks to the magic of Government subsidy, everyone will have a nice little property portfolio of three houses each and we'll all be rich.

GreatApe wrote:

Part of the reason fewer people in their 20s own is because they started life much later. Fifty years ago kids left school at 15 continued living with their parents and worked. By early 20s they were married with a combined 15-20 years of work under their belts. Today a couple of 22 year olds have just 1-2 years under their belts and lots of debt and high cost living. Blame the unnessary excessive education kids go through today for later life stages

Childhood and by extension education lasts longer because life lasts longer. 50 years ago average life expectancy was 70. A person leaving school at 15 had 55 years of working life + retirement to look forward to on average. Today someone leaving university at 22 has spent 7 extra years dossing around and partying, and still has 3 more years of working life + retirement to look forward to than the person born in the 1960s.

When a healthy human has potentially 80-100 years of life to look forward to, why on earth should there be any rush to leave school at 15 and go sweep floors in an abattoir or do data entry?

The people who left school at 15 would have been viewed as stunted by Victorian children who went up chimneys from the age of 8. But when life expectancy was only 60 you couldn't afford for someone to spend a quarter of their life being economically unproductive. When life expectancy rose to 70 we could afford for children to take a bit longer developing. And now that life expectancy is north of 80 we can afford for them to take longer still.

Now ideally 22 years of development should not come with a £60,000 debt and a worthless degree at the end of it, but that's a separate issue. Even if we razed all the useless universities to the ground, you would not see UK children going back to work at 15 en masse.

LydiaJ

Malthusian wrote: »

Not at all. There are plenty of houses available for working-age families to rent. The point they "need" a mortgage free house is after they have retired, and on average they will get their free house 10 or 20 years before that point.

This position would make more sense if working-age families in rented houses could reliably expect to keep pets, put up pictures and not worry about being turfed out with two months' notice.

However, it's not dissimilar to my life. I spent my 20s in rented places, my early 30s in a house tied to my then husband's job, and late 30s renting again as a single parent, while wondering how I was ever going to meet my mental deadline of buying a house a maximum of 25 years before retirement. I own my current house (outright) not because of my parents' deaths but my late-nearly-ex-husband's. I bought it with a combination of the life insurance, pension scheme lump sum, and compensation for the accident that killed him. It seems probable that I will inherit from my surviving parent some time in my 50s, but I've got 3 siblings, so I wouldn't ever have expected to inherit a whole house. In any case, we will be using the proceeds of the sale of my parents' house to make sure that my dad has a really high quality of whatever care he needs as he progresses further into his 90s - and since his family tree has a lot of 90-somethings needing care for at least a few years, it's anyone's guess as to how much of that house money will be left by the time he leaves it to the four of us.

Malthusian wrote: »

Of course what we really want is for people to buy a house at 25 with subsidy from the taxpayer. Then in their late 30s or 40s when they have increased their earnings and paid their mortgage off, they can get another mortgage and buy a buy-to-let property, using more subsidy from the taxpayer. Then in their 50s they get their free house from their parents. Hey presto, thanks to the magic of Government subsidy, everyone will have a nice little property portfolio of three houses each and we'll all be rich.

This is a joke, right? Everybody over 25 is an owner occupier, but there are enough tenants wanting houses to live in for everyone over 40 to have a BTL????

westernpromise

itchyfeet123 wrote: »

Oh wait, I remember now: Cakeguts is the poster who has started at least two threads on how housing is now more affordable than in the past using statistics in a way I could give my undergrads as an example of torturing statistics.

Let's assume that Cakeguts is right that today's average income is £27, 600. Let's even use a source that gives a much lower average wage in 1970 than (s)he does, £1,204. The same source says £1,204 is worth £17,224 today, so Cakeguts should be feeling confident here: the average salary today is worth more than 50% more than the average 1970 salary!

So now let's look at house prices, using the same (I'm assuming) Nationwide data. As Cakeguts said, it's about £4,500 in 1970. 4,500/1,204=3.73. And today? £210,000ish for a house, from the same data source. So, 210,000/27,600=7.64.

So taking averages, the income to house price ratio is now twice what it was in the 70s. It would be interesting, and potentially more informative, to look at medians, because I suspect the distributions of both housing and income will have changed. If someone has that data, please do share.

You've overlooked several key facts. First is the fact that in 1970 - in fact until 1988 - wives' earnings were taxed at their husband's marginal rate, and they had no personal allowance. Mortgage lending in 1970 was thus based typically on 3x one salary with the wife's salary discounted completely for the purposes of making mortgage repayments. If her husband was on the 83% top rate, or if her earnings added to his took him into that rate, then 83% of her income would be lost to tax, which is £5 of every £6. Subtract the cost of commuting and she was paying to be at work.

In 1988 a Conservative chancellor corrected this farce.

Hence, now the relevant multiplier is 3x joint salary and indeed with today's low rates 4x or 5x are permissible. On that basis, the average house's price hasn't increased. Note also that the "boomer" generation of which millennials are so envious was the one that faced basee rates over 10%. They've only been over 10% for 20 of the last 300 years and all 20 were between 1970 and 1995 - i.e. exactly when that generation was paying off its mortgage.

Finally, you're incorrect to take median or average incomes anyway, because these include the incomes of those who can't buy and never could. The more relevant study is of whether there are people who could have bought but now can't. To look at that you should be looking at the middle of the top 70% or so, not the middle point of everyone.