In my city a 400 sq.ft "starter" apartment will cost you around $300k, and there's 15% down payment too - so young adults straight out of college need to have $45k in cash, just to get a mortgage.
Rent for a similar apartment is around $1200-$1500 month. If you start at zero, and have a regular paying professional job, you'll spend around 3-5 years saving up for the down payment - depending on how frugal you live.
But if you have resourceful parents, it's no problem to get your own place. Banks will gladly re-mortgage their (paid down) house, or use it as collateral.
In fact, there's quite a divide here, first-time house owners are getting younger, because their parents will bankroll the mortgage / down payment, just to get their kids in on the housing market. They know that if they have to wait 5-10 years, the market will be much more expensive.
The big problem (IMO) with our housing market is that it takes too much time to get projects started, especially big affordable apartment complexes, because the established owners will engage in full-force NIMBY-ism warfare on any developers that dare to steal their precious sunlight or "visual pollution".
I don't live in the US, but I feel we share a lot of the similar problems when it comes to the housing market.
How many people straight out of school even want to buy a place?
Young people in general tend to be more mobile even if it's often within a general metro area. Buying a house (or even a condo) really limits your ability to easily move and, depending upon the type of housing, often is a significant time commitment as well.
People are very much entrenched in the "Renting is money out the window" ideology, which gets repeated ad nauseam from you're old enough to move out.
Home ownership is also one of the big adulthood milestones here, because there's so much responsibility involved.
But I think the main (current) driver is ever growing cities, along with the ever growing housing prices. We've experienced a ton of centralization for the past decades, but it is especially now that people are starting to feel the heat of exploding rents and housing prices. FOMO is very real.
We also don't move that much around. Most people move away for college / university, then to a city or two for work - usually settling down fairly quick.
I assume the US is relatively more mobile. Also, the bigger US metros are quite large. Even if you limit yourself to individual metro areas like the Bay Area, DC, etc. a change in job could easily add 90 minutes to a commute even if you don't move to a new city.
To be clear, home ownership is often an adult milestone in the US as well. But, anecdotally, it's not something a lot of people really pursue for the first decade or so out of school--especially if they haven't gotten married.
In most housing markets, the cost of housing is at least somewhat similar to the dividend-discounted future net cost of rent. High rents and high home listing prices are usually connected. So if you don't want to buy a house, you probably want to rent and that's going to be seriously over-priced too.
I wanted to, and did, buy as soon as I was able after graduating college. I admit to being an oddball, though. I hate moving and value the ability modify my living space without restriction (building codes notwithstanding) over location flexibility.
> They know that if they have to wait 5-10 years, the market will be much more expensive.
The "fear of missing out" seems reminiscent of a market nearing its peak, or minimally, plateauing. Home prices have more or less always gone up long-term, though it's been very gradual over long periods. 10% year-over-year gains don't continue unabated forever.
It's interesting, about 2 years ago Bay Area I was looking to hop in to the Bay Area housing market before it grew out of reach, but the housing prices were going up every month (so kept getting outbid because I was bidding based on recent sales), with double digit year over year increases.
I finally gave up and concluded that I had already missed out, and accepted not being able to afford housing. Not long after, prices plataeued, and have even cooled off somewhat over the past year, despite tight inventory and falling interest rates. I'm guessing there was a mini bubble due to a FOMO frenzy and now that the frenzy is over, prices are taking a respite from ballooning.
For the sake of the region, I hope prices have hit an equilibrium point and will stop outpacing inflation, although I'm going to hedge by buying in now.
I'd say the fear is rational if its nearing only a plateau, wouldn't you? Housing prices are already many multiples higher of the median wage than they were 15-20 years ago I believe (due to wage stagnation).
Rent for a similar apartment is around $1200-$1500 month. If you start at zero, and have a regular paying professional job, you'll spend around 3-5 years saving up for the down payment - depending on how frugal you live.
But if you have resourceful parents, it's no problem to get your own place. Banks will gladly re-mortgage their (paid down) house, or use it as collateral.
In fact, there's quite a divide here, first-time house owners are getting younger, because their parents will bankroll the mortgage / down payment, just to get their kids in on the housing market. They know that if they have to wait 5-10 years, the market will be much more expensive.
The big problem (IMO) with our housing market is that it takes too much time to get projects started, especially big affordable apartment complexes, because the established owners will engage in full-force NIMBY-ism warfare on any developers that dare to steal their precious sunlight or "visual pollution".
I don't live in the US, but I feel we share a lot of the similar problems when it comes to the housing market.