bostonbubble.com

[Brian C]

Is it possible that the housing bubble was driven by a certain generation? And of course im talking about Generation X. What if the next generation learned from their mistakes and drives the market back down?

If the average FTHB age is 32 (in MA), then Generation X fueled the bubble since about 30-40% of total sales are from First Time Homebuyers.

"My generation", aged 25-32 are completely different than Generation X and have different feelings about the market. At least all of my peers don't want to keep with the Joneses and have no one to impress. They like renting a apartment or living at home on the cheap.

The other issue we have is career advancement. Because Baby Boomers are staying on the job longer, it prevents these young professionals to move up and make more money. I personally am dealing with this issue at work, with a few workers in their 70's still on the job because they need the money for retirement. The cycle is slowed down so we either make less money or move somewhere to make more (like North Carolina)

Do you have hope that myself (and other peers) will correct this crazyness Generation X fueled over the last few years?

[Guest]

I think it was fueled by Greenspan, low interest rates, and the fiscally criminally irresponsible Bush administration myself..

[john p]

I am a bit older than you and it wasn't my generation, it was the prior one which I call the St. Elmo's Fire Generation. This was a movie about kids graduating college in the early to mid 80's (the era where the term "yuppie" was invented. This generation went to college when they were still relatively cheap and graduated into a boom and rents in Boston still were obscenely cheap due to rent control. This generation wasn't financially bonded, got great cash flow and their expenses were low due to the rent. Above and beyond that, houses were dirt cheap. The prior generation was more traditional and the economy was based on one worker These guys were able to save a larger portion of their take home pay etc.

When I graduated college in the early 90's, we were hit with two recessions in the face of skyrocketting rents due to the end of rent control and the huge growth of student enrollment with the echo boom and generation Y which increased demand for apartments in Boston. Our "mentors" were the "Me Generation" which pretty much treated our generation like commodities. Of my generation, those that had college paid for by Mom and Dad, got a few years living at home for free after college, and were in a field in the financial industry made out fine; the rest had to rent for a lot longer. As soon as it seemed possible to hold a steady job and have a decent enough down payment, house prices started to skyrocket and your savings couldn't keep up with the price increases. Our generation were the young lambs sent to slaughter. Right now, the younger generation have so much press and support and all the misdeeds are being exposed. When I was in the midst of it, loved ones were pushing you to buy, people were pushing adjustable rate mortgages (even Greenspan) and there wasn't any leaders out there warning about anything.

Don't blame the Gen X'ers, they got hit smack in the face with all of this; at least the younger generation has a clue as to what is going on.

[john p]

That other comment you made about older workers remaining in the field longer. I do think that is a concern as well. Either we create an abundance of work to do, or we'll naturally end up with a higher unemployment rate. I think they might consider allowing people to draw out a certain amount of their 401k's without as much tax taken out. I think if they ought to consider this as it would put "earned" money in the market and not artificial money.

[Guest]

John P is right on. I'm a member of Gen X myself, and my situation isn't that different from the OP's. My partner and I are still renting. We're certainly not wealthy, but we both have decent jobs.

When I first moved to this area, I was single and not all that interested in buying a home. By the time I *was* interested, prices were out of reach for me. I'm sure someone would have loaned me the money, but I tend to be cautious about finances and was reluctant to take on a monthly payment for a SFH that would, once taxes and insurance were added to the mix, cost much much more than renting for the first several years.

Many of my friends did buy during the last 5 years or so. However, most of them were first-time home buyers, just looking for a place to live. Many of them moved to outlying suburbs with less than stellar school districts to find something they could afford. They did not, in their early to mid-thirties, have enough income to get involved in the sort of speculation/flipping activity that got us into trouble.

[CJ]

John P was right. When I graduated from college around 1997 (though I went to graduate school later), the rent started going up like crazy, probably 20-30% for about 3 years. It was a really tough time for renters, especially for students. The rest story is even worst. After we all finished graduate school, we were in the face of skyrocketting housing price. Most of my friends left MA because either they found jobs else where or the living standard became unreasonable here.

[Ranunculus]

Bump. Another Gen X-er here. We were a day late and a dollar short as far jobs and real estate go. Most of my friends got out of Boston after graduating from college; of those who stayed, none of us own yet. When my older sister (a Boomer) was my age, 31, she and her husband were just selling their condo and moving into an honest-to-god house with an actual backyard. I can't even imagine it. My husband and I both make above-average salaries and are good savers, but don't have a house yet. Yeah, definitely not our generation driving those prices up...Our generation is the one staring stony-eyed at those Boomers who made a bundle on their "starter" houses and made tons of money (and got raises, remember raises?) in the heyday of the eighties and nineties. Not bitter. Nope, not bitter.

[Guest]

I don't believe in blaming or crediting generations. If the generation that went to WW II is the "greatest", does that make the preceding generation which led the world into depression and then war the "worst"? Generations play the hand they are dealt. IMO every generation follows the money, outlooks, trends, etc of its day. Blaming preceding generations for your economic predicament is like looking at old fashions and thinking "I would never have worn anything that stupid looking". Discloser: I am 47, part of the mineminemine generation.

[Ranunculus]

Guest, I agree with you...we all do the best we can with the economic and social factors of our day. Have you read "Generations" or "The Fourth Turning"? Fantastic books about how our place in time shapes us. The Fourth Turning (a sociological look at American history, published about 15 yrs ago) lends an interesting perspective to the current real estate situation. I would encourage anyone interested to give it a read.

[Boston ITer]

For me, RE in Boston is puzzling... the so-called most brilliant sector of the country and yet, minimal job growth since the Genuity implosion (ala IT/telcom collapse) side-by-side with an even greater run up in RE than during Dukakis's Massachusetts miracle of the 80s (which was really Kennedy & the defense contracts, and the DEC legacy).

How is it that Gen X, yes my generation, couldn't see it? You see, this whole hindsight is 20/20 is a cop out. The truth of matter is that the truthsayers (or muckrakers in this case) were brow beaten until Jim Kramer started saying the same thing a year ago.

A region w/o job growth should never see an accrual in real estate. Buffalo NY is a prime example of that phenomena, thirty years of zero employment growth alongside flat real estate prices.

[Guest]

[balor123]

I believe that the Boston bubble is not due so much to people but politics of the state. There are so many different governing bodies in the Boston area that goals, such as affordable housing, are difficult achieve. Combine that with high amounts of conservation, poor city planning, low density living in key areas, and an addiction by local residents to consistent high real estate growth and you've got a recipe for high costs and low standards of living. I think the problem is one of supply and demand - we just need to build more everything: housing, roads, sewers, etc. Won't happen though. Concord and Lincoln love being large empty forests within stone throw of Boston. Newton, Wellesley, Weston, and Lexington don't want poor people. And those towns that do support them, such as Waltham and Watertown, have adopted a policy of low income housing, which helps poor people but makes less housing available for regular housing, further propelling housing prices.