[Uehreka]

> More of gen z are home owners than previous generations at that age[0]

If you’re going to make a claim this bold and this counter to the prevailing narrative, you’re gonna need to cite a better source than an outbrain-riddled webpage that tells me to “watch our video to find the lede we buried”. I’m not saying this isn’t true, but extraordinary claims require good sourcing and explanation.

[kasey_junk]

Here is the underlying dataset https://www.ipums.org/projects/ipums-cps/d030.V11.0

Redfin did the analysis quoted https://www.redfin.com/news/homeownership-rate-by-generation...

[cj]

> The homeownership rate for 26-year-old Gen Zers is 30%, below 31% for millennials at 26, 32.5% of Gen Xers at 26, and 35.6% of boomers at 26.

Unless you're specifically 26 years old, I suppose? This analysis seems far from scientific and cherry picks data in strange ways.

[lazyasciiart]

The fall in genz ownership rates is also quite interesting: I guess they weren’t buying during the pandemic?

[9rx]

> If you’re going to make a claim this bold and this counter to the prevailing narrative

What do you see as the prevailing narrative? The one I see is homeownership itself, which suggests that homeownership has been seen as being hotly desirable. I strongly suspect we wouldn't have a homeownership narrative to speak of if ownership was unwanted. When something becomes unusually desirable like homeownership has, it is not unexpected to see an uptick in participation around it; in this case owning a home. Much of the urban age has been marked with the majority of the population being renters. Everyone wanting to own a home with such furor is historically unusual.

I expect homeownership has become so desirable as it has become seen as a way to build wealth. While, historically, housing only kept pace with inflation at best, real home values have risen by unfathomable amounts in the last decade or two. Which, again, attracts people willing to risk it all for a chance at some of that wealth opportunity. It would be unusual if said generational group had comparatively lower ownership rates given the "FOMO" aspect. People run away when prices are falling, not when they are rising.

Given the market we've watched, the extraordinary claim would be that Gen-Z has lower ownership rates compared to previous generations at the same age.

[jasonkester]

Well said. I remember making a spreadsheet in maybe 1995 laying out the math to compare the real costs and expected gains from buying vs. renting.

It mathed out about even. I decided to go with renting instead of buying, with the logic that the S&P didn’t need me to buy it a new roof every 15 years or to work in its garden every weekend.

It worked nicely too, growing the money that would otherwise have gone into mortgages and property tax, letting me take some of it out recently and buy a house with cash.

I don’t see much of this attitude in my younger friends now. But living cheap and saving does actually work.

[FooBarBizBazz]

A 20% down mortgage is a 5x levered bet. Plus you can roll capital gains into new real estate. The S&P 500 cannot offer these advantages.

[abduhl]

With the proper mix of retirement accounts, options, and futures contracts it can. It can offer even more leverage if you want.

[FooBarBizBazz]

A retirement account is a ship in a bottle. You can't put much into it. The only way to make it huge is to take huge risks inside and have them work out. Which isn't a plan.

And -- options? The most leverage I can think of reasonably getting would be LEAPS (calls) and rolling them. But, even with LEAPS, you have limited timing flexibility, and are forced to realize more gains/losses.

There's nothing on par with a house. They're almost $1M everywhere now. You can't get that much into a retirement account when you're young.

[abduhl]

You can back door around $70k per year into a Roth currently I believe. I don’t know where you’re from, but few people would say that isn’t much.

And I’m not sure why you’re talking about LEAPS. Options are naturally leveraged: you have synthetic positions on [complicated Greeks math]*100 shares with every option. Theta is only one of the Greeks. Same with futures contracts re: natural leverage.

With respect to “bets” and having them go your way: dude you’re talking about a $200k investment on a property worth $1MM. It seems like your whole view on property ownership is premised on the idea that property values always go up no matter what. That’s no more a fundamental law of nature than the stock market going up, and a bet on the property value for a specific home in a specific location is probably riskier than a broad market fund options play.

I’m also not sure why you’re talking about the full price of a house? A $1MM house with 20% down means the comparator is 200k - you can't get that kind of cash together when you're young any more than you can get it into a retirement account. But to the extent you can, you can back door that into a Roth in 3 years, and you have plenty of stock/options/futures setups that will give you leverage to $1MM notional of exposure. And capital gains on that position are actually tax free by the way, no shenanigans required with 1031s and residential conversion or having to wait until you’re dead to get the tax benefits.

The bottom line is that buying property is rarely the best investment decision quantitatively because you can get equivalent (and often better) returns in the market while maintaining liquidity, meaning that you can almost always pivot into a house at a future date for cheaper (on an adjusted basis). But people FEEL good doing it, so the mainstream view is that owning a house should be a goal. Common sense oftentimes isn’t; owning vs renting is one of those times.

[kasey_junk]

The bigger win is the government subsidies and tax breaks.

You need very little on hand cash to get a very low interest rate. Much lower than asset loans at equivalent levels of wealth.

[pitpatagain]

There is little tax break for home ownership currently with the SALT cap + high standard deduction. You get some break if you have a large enough mortgage or high enough interest rate but it has been very nerfed.

[lotsofpulp]

A 5x levered bet with no prepayment penalty subsidized by future Americans, and it cannot be called and is non recourse in many states. And it provides shelter.

[george_w_kush]

The claim isn’t that homeownership is undesirable to Gen Z, but that a lower percentage of Gen Z owns homes compared to previous generations regardless of the specific reason. I think in this case the most likely cause is the increase in prices is causing houses to be unaffordable to Gen Z, despite their desire to own houses.

[9rx]

There may be some temporal confusion here. Gen-Z rates of homeownership has stalled out over the past year or so. Prices are no longer rising like they once were, with fears over impending decline, so the desire is not what it once was. It may be fair to say that the narrative has shifted to "too expensive", but as they loaded up early when prices were rising at unprecedented rates there is a big head start at play. They don't have to buy any more homes for a while to maintain the lead.