Where Are the Young Home Buyers?

*This is a cross post of something I wrote for the day job.

It’s no secret that there’s a dearth of younger home buyers these days, but why are young adults still slow to move from renting to buying even though the economy is finally growing? Shane Squires of MPF Research wrote about some of the challenges faced by millennials:

For starters, income levels for those between 25 and 34 are down. Median household income for that demographic has declined between roughly 5% and 15% in real terms from 2000 to 2012 for every education level of the head of household, according to the National Center for Education Statistics. And in 2013, the real median net worth of households under 35 years old was just $10,400. That was approximately 32% below the level estimated in 2001, according to the Federal Reserve Survey of Consumer Finances…

He then cites some data showing that the combination of an increasing population and anemic job growth coming out of the past two recessions led to a highly competitive job market that prompted many students to continue on to grad school. That demand allowed universities to jack up tuition which led to more debt:

That brings us to the most commonly cited economic constraint for Gen Y – student debt. Over the decade from 2002-2003 to 2012-2013, the number of full-time undergraduate students rose from 9.1 million to 11.6 million people, according to College Board. That increased demand enabled higher education institutions to raise tuition prices 51% past the rate of inflation in the past 10 years,…

Add to that the increase in health care costs, which he cites as being 31% greater than the reported rate of inflation, and the increase in cost of staples and you can see that young adults face some serious obstacles to home ownership. Even the accelerated job growth of 2014 is recognized with a caveat:

Given that job growth has accelerated notably in 2014, with a much higher share being created in higher-paying sectors, these trends in income and net worth are bound to start improving to some degree. Though, considering that the appreciation of median home prices has vastly outpaced wage growth over the past decade, many in the Millennial generation will likely continue to find it more difficult to qualify for a mortgage than Generation X did 10 years ago.

It would be easy to point to the Great Recession as the primary cause for the struggle young adults will have in moving from renting to buying, but some of the contributing factors are the result of societal shifts that began a generation ago. For instance, the decoupling of income from worker productivity:

The “decoupling” is the divergence between labor productivity and employment/wages that happened in the US in the 1980s and has become quite pronounced over the past thirty years. During the great postwar boom, productivity and wages grew in lockstep in the US. Of course, we don’t see any data from the 19th century and the first half of the 20th century so it’s not clear that labor and wages have always grown in lockstep. But something certainly changed in the 1980s and the result has not been good for median family income which has been stagnant in the US for almost thirty years now.

This is the kind of shift that does not happen overnight, and if that trend is to reverse it will not happen in a matter of years but in decades. What that means for rental housing providers in particular is that the falling rate of home ownership could be the new normal for a generation to come, which is good news for their businesses. On the other hand, if real median household income continues to decline then the demand for market rate units could stall and the demand for affordable housing units could skyrocket.

Obviously some policy changes could change this outlook. For instance if lending standards are relaxed again and if more affordable single family homes are constructed, then rental demand would obviously be impacted. Considering the lessons we learned when the housing bubble popped that first if is pretty big, and given the persistent problem of slow income growth any growth in home construction we do see probably won’t come close to what we saw in the late 90s through mid 00s.

Long story short – rental housing should continue to grow for the foreseeable future.

This is the American Way¡

I recently heard that the inverted exclamation point is used to denote irony which is why I used it in the title of this post – This is the American Way¡ – and after reading the following you’ll hopefully agree that it’s appropriate. Dateline New York:

PS 120 in Flushing held a carnival for its students Thursday, but kids whose parents did not pay $10 were forced to sit in the auditorium while their classmates had a blast.

Close to 900 kids went to the Queens schoolyard affair, with pre-K to fifth-grade classes taking turns, each spending 45 minutes outside. The kids enjoyed inflatable slides, a bouncing room and a twirly teacup ride. They devoured popcorn and flavored ices. DJs blasted party tunes.

But more than 100 disappointed kids were herded into the darkened auditorium to just sit or watch an old Disney movie while aides supervised — the music, shouts and laughter outside still audible…

Principal Joan Monroe tacked up a list of the number of students per class: “How many attending, Paid,” and “How many not attending, Not paid.”

On Thursday morning, Monroe used the school loudspeaker to remind teachers to send in a list of kids who did not pay.

While teachers were handed a bag of little stuffed animals to give kids who paid for the carnival, one withheld them until she could add her own gifts for the half-dozen or so kids in her class who didn’t go.

She may not have meant it, but I’d say the principal gave her students a real life lesson in how things work in the world beyond the walls of PS 120. Of course if the kids whose parents didn’t pay had been allowed to attend then I know a few people who would say, “Well, they’re getting a good lesson in how our entitlement society works.” Still, I can’t imagine anyone thinking this is the right approach to take with these kids. If it’s an event taking place after school hours at which admission is tied to the money paid then at least the kids whose parents didn’t/couldn’t pay aren’t confronted with the sight of their classmates participating while they can’t, but doing this during the school day when they can’t help but wonder why they’re being “punished”? That’s just stupid.

Lies, Damned Lies and …

Mark Twain popularized the phrase, “There are three kinds of lies: lies, damned lies, and statistics” and it stuck because 125% of humans who have ever lived have been misled using statistics. (See what I did there?) If you think this is a problem unique to politics or baseball, think again:

Reinhart is a physicist turned statistician who has set out to write a book whose aim is to improve the quality of statistical education and understanding that researchers need to have. Statistics Done Wrong is not a textbook. It is a highly informed discussion of the frequent inadequacy of published statistical results and confronts the sacred cow: the p value. Here is what he has to say on page 2.

“Since the 1980s, researchers have described numerous statistical fallacies and misconceptions in the popular peer-reviewed scientific literature and have found that many scientific papers — perhaps more than half — fall prey to these errors. Inadequate statistical power renders many studies incapable of finding what they’re looking for, multiple comparisons and misinterpreted p values cause numerous false positives, flexible data analysis makes it easy to find a correlation where none exists, and inappropriate model choices bias important results. Most errors go undetected by peer reviewers and editors, who often have no specific statistical training, because few journals employ statisticians to review submissions and few papers give sufficient statistical detail to be accurately evaluated.”

Astonishing to my eyes was his conclusion that

“The methodological complexity of modern research means that scientists without extensive statistical training may not be able to understand most published research in their fields.”

The excerpt above is from a post on Boing Boing about a book that Alex Reinhart has written (Statistics Done Wrong) to try and address the issue of statistical malpractice and I’m thinking it could be a useful reference for all of us who need to parse statistics as part of our daily lives, which based on my extensive research would be all 125% of us.

Long-term Recovery

Friend Kim Williams has written an important opinion piece for the Winston-Salem Journal and I highly recommend you check it out. Here’s just a snippet:

Being an addict means so much that is negative in our lives. Lies, stealing, distrust – we wrap addicts in all of these things. However, I would like to believe that that is only part of the truth.

One of the major obstacles to recovery is public stigma. The stigma comes, in part, from the way we talk and think about recovery. Addict. Junkie. Druggie. These terms carry with them the Hollywood scenes and dramatic memories of the underbelly of alcoholism and addiction. These words cause us to ignore the people like myself who are living in recovery. These words and prejudices cause us to objectify the addict and the alcoholic. We can then easily place them in the box with the “town drunk” as too often incurable. As a result, when I sought help, the help that was available to me existed only in church basements, amid bad coffee, smoke-veiled doorways and broken stories of destruction and carnage…

According to the 2012 National Survey on Drug Use and Health, 23.1 million people ages 12 and older needed treatment for an illicit drug or alcohol use problem last year, but only 2.5 million received treatment at a specialty facility. About one-quarter of those who need treatment but do not receive it lacked insurance, according to the article…

There are an estimated 23 million people in the United States who are living in long-term recovery. I am an addict, but I’d prefer to say something different. I am a person in long-term recovery. What that means to me is that I haven’t had alcohol or other drugs since July 10, 1999. This has allowed me to become a better person, a loving father, grandfather and husband. I have established myself as a productive member of my community and a successful business leader.

Kim’s focus here is on the price that individuals pay for their addiction and the lack of resources many of them find when they look for help, but we should also keep in mind the impact that the lack of resources have on the rest of us. Our prisons are full of people put there for drug crimes, we have foster homes filled with children who are a product of homes broken by addiction and we have friends and families who suffer the agony of watching their loved ones kill themselves slowly and abuse those around them in the process. In one way or another addiction takes a tremendous toll on everyone, not just the addicted, and we long ago passed the point where we need to change how we address the issue.

You should also check out Kim’s blog and his ebook Wishful Preaching.

The Helpful Dad Bod Flowchart

The Wonkblog has posted a very helpful dad bod flowchart, and as a well-worn dad it should surprise no one that I fall squarely in the dad bod strike zone:

Wondering what this whole dad bod thing is? Well, apparently it’s just another tool of the patriarchy.

Personally I think it’s the first positive pop-culture related thing to come along for middle aged men since, well, anything.

Code of Conduct

Until reading Anil Dash’s blog post about it I’d never heard of ConfCodeofConduct.com. What is it? In a nutshell it’s a “rules of the road” for conferences, trade shows, etc. Here’s their short version:

Our conference is dedicated to providing a harassment-free conference experience for everyone, regardless of gender, gender identity and expression, age, sexual orientation, disability, physical appearance, body size, race, or religion (or lack thereof). We do not tolerate harassment of conference participants in any form. Sexual language and imagery is not appropriate for any conference venue, including talks, workshops, parties, Twitter and other online media. Conference participants violating these rules may be sanctioned or expelled from the conference without a refund at the discretion of the conference organisers.

Thankfully I’ve never had to work an event that would have had to invoke this code, with perhaps the exception of some costumes worn by folks at one or two trade shows. (There are some things I really wish I could un-see). Still, I’ve heard tales of conferences where this code would have been necessary and I’m glad I wasn’t there to see it.

I’d say this is a pretty good code for any gathering of 2+ humans, not just conferences.

Very Big Development for Downtown Winston-Salem

Wrote this for the blog at the day job today. Exciting news for Camel City:

A few years ago the mayor of Winston-Salem took a bit of a political hit for leading a public bailout of the development that would eventually become the BB&T Ballpark just off of Business 40 in downtown Winston-Salem. Really the mayor and the rest of the city’s leaders didn’t have a choice – if they didn’t come up with the financing to finish the construction the private developer had started, then the city would have a giant red clay mud pit on a site that was envisioned as a vital part for the redevelopment of downtown – and because of the recession that was in full swing at the time there really weren’t any private sector options. Since they took the political hit and came up with the dough the city now has one of the nicest minor league ballparks in the country, the baseball team regularly sets tremendous attendance numbers and thousands of people are regularly drawn downtown from spring through the early fall. Oh, and they were able to restructure the debt so that it would be payable over 25 years and could eventually net the city some money.

So why the brief history lesson? Because today we’ve learned that a private developer is planning a very large multi-use project that will help the city realize the vision it had for that part of downtown those many years ago. From the Triad Business Journal:

An Atlanta-based real estate investment group has announced plans for more than 1 million square feet of retail, office, hotel and residential property adjacent to Winston-Salem’s downtown ballpark.

The proposed development by Brand Properties, called the Brookstown District at BB&T Ballpark, would include 300,000 square feet of retail, 300,000 square feet of office space, 250 hotel rooms and 580 luxury residential flats.

If this comes to fruition then the overall downtown plan that’s been promoted by the city’s leaders for years, with the Innovation Quarter to the east as one bookend and the ballpark/Brookstown area to the west as the other, will take a HUGE step towards being realized.