A couple weeks ago my boyfriend and I decided to walk through some of the residential neighborhoods around us. We'd walked through the pricer one at night but it was our first time walking through there in the afternoon.
The more expensive neighborhood we walked through is the one behind the golf course in Costa Mesa - with prices generally in the 750-1m range and largeish homes of varying character - some look like the track homes of our childhoods (well, not MY childhood, but my boyfriend's whos parents bought a brand new home in Rancho Cucamonga in 1989ish). Some are all redone - and most fall somewhere in between. There's a really nice little park back in there and the homes all have 2-3 car garages and drive ways, so unlike some of the newer areas the curbsides are not parked all to hell.
Then we walked across Adams to the mesa verde neighborhood which is more mixed, but generally smaller, older, and less expensive homes (costa mesa is not as cheap as some people would like you to think when they call it Little Santa Ana) that are probably much more in our range in the future -- whereas we both find it a bit hard to imagine buying an 850k house.
All this got us to talking. Who is going to buy these 800k+ houses in 5-10 years? Or 20? Most of the people we know (mid-late 20s, early 30s) either are just starting their careers, single, maybe pulling down 45k-60k/year or have a few career years under their belt, making salaries that won't go up too much more (but a little!) unless they get promoted to higher level positions and making....lets say no more (or not much more) than double that, at 90k-120k. Salaries are speculative but grounded in some knowledge from personal and close friend testimony.
On the lower end, within my very small group of friends and acquaintences, 4 are in grad school so they won't even start seeing any meaningful income until they are 28-29. 2 are civil engineers and are in great shape financially (can't really outsource civil engineers to any major degree, they frequently hve to go physically look at a site) and could easily end up with those 800k homes, 4 or 5 of them are making starting salaries around 40k and frankly don't have a lot of immediate and large salary increase in their future, and so on.
On the upper end (generally the early 30 crowd making decent salaries) most of htem have babies, or are planning ot have babies shortly, and already went out and bought less expensive homes to keep the babies in (Detached condos or larger attached homes in aliso viejo or mission viejo for example, in that 500-600 range that is going to keep a lot of their income tied up in payments for years), In the past decade I imagine this group would have moved up, but I don't think that is going to happen in the next decade. Most of them stretched a little to get those homes in the first place, some of them now have wives that are no longer working, etc.
So we ran over this list of people and felt like --- will the upper middle end homes need to drop in price in order for younger generations to eventually afford them? Are we just overestimating how many homes in that range there are verses homes in the 400's? Do we just know a sort of limited set of people so that our view of the world is skewed (the last two are very likely)?
If you are heading towards 40 or beyond, what is your experience with people you knew as a young adult? Do they all grow into fortune eventually? How many of these people I described are really going to be able to buy a home for 800+? We are dual income and making...i dunno actually, somewhere in the realm of 120ish - and we can't really imagine paying for an 800k home.
Additional food for thought: this generation (born in the 80s, grew up in the 90s) is possibly much more experience oriented than wealth oriented - as compared to our 10-years-older cousins who grew up during hte 80s. And some of them are not all that good with money. And I suspect hte generations growing up after us are even worse with money (I seem to know a lot of people who's teenagers trash the brand new cars their parents bought them) because they came up in the 00's when their parents could buy a fancier house, car, etc.
The more expensive neighborhood we walked through is the one behind the golf course in Costa Mesa - with prices generally in the 750-1m range and largeish homes of varying character - some look like the track homes of our childhoods (well, not MY childhood, but my boyfriend's whos parents bought a brand new home in Rancho Cucamonga in 1989ish). Some are all redone - and most fall somewhere in between. There's a really nice little park back in there and the homes all have 2-3 car garages and drive ways, so unlike some of the newer areas the curbsides are not parked all to hell.
Then we walked across Adams to the mesa verde neighborhood which is more mixed, but generally smaller, older, and less expensive homes (costa mesa is not as cheap as some people would like you to think when they call it Little Santa Ana) that are probably much more in our range in the future -- whereas we both find it a bit hard to imagine buying an 850k house.
All this got us to talking. Who is going to buy these 800k+ houses in 5-10 years? Or 20? Most of the people we know (mid-late 20s, early 30s) either are just starting their careers, single, maybe pulling down 45k-60k/year or have a few career years under their belt, making salaries that won't go up too much more (but a little!) unless they get promoted to higher level positions and making....lets say no more (or not much more) than double that, at 90k-120k. Salaries are speculative but grounded in some knowledge from personal and close friend testimony.
On the lower end, within my very small group of friends and acquaintences, 4 are in grad school so they won't even start seeing any meaningful income until they are 28-29. 2 are civil engineers and are in great shape financially (can't really outsource civil engineers to any major degree, they frequently hve to go physically look at a site) and could easily end up with those 800k homes, 4 or 5 of them are making starting salaries around 40k and frankly don't have a lot of immediate and large salary increase in their future, and so on.
On the upper end (generally the early 30 crowd making decent salaries) most of htem have babies, or are planning ot have babies shortly, and already went out and bought less expensive homes to keep the babies in (Detached condos or larger attached homes in aliso viejo or mission viejo for example, in that 500-600 range that is going to keep a lot of their income tied up in payments for years), In the past decade I imagine this group would have moved up, but I don't think that is going to happen in the next decade. Most of them stretched a little to get those homes in the first place, some of them now have wives that are no longer working, etc.
So we ran over this list of people and felt like --- will the upper middle end homes need to drop in price in order for younger generations to eventually afford them? Are we just overestimating how many homes in that range there are verses homes in the 400's? Do we just know a sort of limited set of people so that our view of the world is skewed (the last two are very likely)?
If you are heading towards 40 or beyond, what is your experience with people you knew as a young adult? Do they all grow into fortune eventually? How many of these people I described are really going to be able to buy a home for 800+? We are dual income and making...i dunno actually, somewhere in the realm of 120ish - and we can't really imagine paying for an 800k home.
Additional food for thought: this generation (born in the 80s, grew up in the 90s) is possibly much more experience oriented than wealth oriented - as compared to our 10-years-older cousins who grew up during hte 80s. And some of them are not all that good with money. And I suspect hte generations growing up after us are even worse with money (I seem to know a lot of people who's teenagers trash the brand new cars their parents bought them) because they came up in the 00's when their parents could buy a fancier house, car, etc.
