The Boomer Supremacy Summary

The Guardian ran a series of articles last week comparing Generation Y and the Boomers.

One compared the lives of a 29 year old and a 73 year old. The article is about London, but Sydney and possibly Melbourne have the same dynamic.

What struck me was that the millennial was hit by a combination of heavy student debt and expensive property costs. Throw in a lack of opportunities due to outsourcing, and a slow economy still hungover from the GFC, and it seems a raw deal.

Housing is the problem. I've got a friends who were able to buy an apartment on a single salary in London in their twenties prior to about 2000, and the percentage of income spent servicing the mortgage would have been less than someone is spending on renting a room in shared property.

The other fun piece is a comparison of earnings for different age groups over time. Those in Generation X will be pleased to know that things generally suck for them!

 

Interesting. Relieved to see that it only goes to 2010 though. I think the Sydney and Melbourne booms would've made a difference.

That's a lovely article. Artists really know how to put things together in their homes.

 

‘I’d rather spend $80k travelling’

 

Boomers were not hit by heavy student debts because some of them didn't have opportunities to go to university.

 

University costs have increased significantly over the past 15 years. I remembered my brother-in-law, graduated from the same course as me 2 years later, paid more than double in HECS.

 

Was it at the same university?

 

Yes. Same university, same course. 2 years later.

 

@mrdobalina - & they probably get paid half as much as your starting salary too.

More like, most of them didn't go to uni as courses were rigid, intake was limited and you only had 2 or 3 unis in each city ie Sydney/UNSW/Macquarie (UNSWIT/UTS, WSU didn't exist). 'Free university' didn't exist until early 1970's (Gough Whitlam era), prior to that University was expensive - it was the mid/late boomers who got university fee free education - not all boomers. You didn't have HECs/never-never plan to pay for education - you went if you paid your fees, no pay/no attendance. You didn't go into debt, you simply did without. They still survived.

 

Crikey, that's a big difference.
Hope you sold him all of your textbooks.

 

My two sisters in law both qualified to get into Uni in the late 1970s, same time as me. But there was no way on God's earth that they could physically travel from where they lived to attend a university, even if it was their mother's greatest wish that they do so. It just didn't happen. Both ladies are in comfortable financial situations 40 years later, but going to Uni is not the reason. All three of us got entrance scores in the top 10 percent of the state, but none of us actually made it to getting a degree. The university to be built at Petrie is just a little too late for us. We each could have walked there!

 

Gee this thread is exceptionally torn on the topic. At time of this post, voting results are essentially 50-50.

Disclosure, I'm a gen Y.

So the big factors compared to when my parents were my age are:

• Exploding house prices. BB's are living longer than their parents and accumulating a tonne of wealth in the process. Houses may not come on to the market for a whole generation and may instead just be passed down / stay in the family. Heaps of data to suggest housing affordability is tighter than 30 or 40 years ago thanks to wages and housing prices. These points combined with less land available today spell a much tougher picture.
• Education costs. Let's face it - the mining and oil and gas booms are in hibernation and one of Australia's top industries is now education. Education costs are higher and we are competing against a rapidly growing and knowledge hungry Asian market. Employers 'demand' people have formal qualifications now. Something BB didn't need to worry about to the same extent.
• Sustainability. The industrial revolution saw little to no regard for sustainability issues. That is economic factors played a bigger role in decision making during the BB younger days. We are now in the third wave of sustainability thinking, as such more regulation, procedures, standards, etc, equates to higher cost of doing business compared to last generation.
• Gen Y are trained to be savers. BB will be relying more heavily on the government, which is why investment is heavy in aged care, waiting for th day when the older population out numbers the younger population. Again I think social and economic sustainability is going to be an important debate as the BB and gen Y age. This needs to be balanced against quality of life.

There's more to discuss, but time to move on.

 

BUT back in the day it was the poor man of the house working long hours to support the family.
Now in the age of equality most households have 2 incomes.

 

I agree with you. Gen Y and future generations won't be forever disadvantaged, because they will benefit from wealth created by previous generations.

My parents and in-laws are now in their 80s and my children will benefit from inheritance from their grandparents, and eventually from their parents.

My parents and in-laws, just as I did, worked for everything we own. Given their health, I imagine my parents and in-laws will leave into their 90s. By that time, I'll be approaching 60s. Unlike me, my children will have wealth handed to them while they are still young.

 

The great Australian housing myth: Gen Y vs. Baby Boomers

 

Bit of a thread bump, but this piece from The Independent, a UK paper, makes a few good points.

No, technology won't solve the problems of the millennials – and the way politicians treat them is unjust

The article is UK centric, and I think that the problems that the millennials face there are threefold:

• Rising numbers of university students has meant that they've become self-funding. This has left them with very high debt.
• The UK economy hasn't really recovered from the recession following the GFC. This has led to a lack of decent, permanent jobs. Brexit won't help this.
• House prices have risen ahead of inflation for a prolonged period. In fact, I've got a feeling that the last time they were in line with earnings was in 2000. The zero percent interest rate policy from the Bank of England has inflated this, along with money coming in from overseas in London.

That said, Brexit is putting a dampener on house prices in the UK. There might be bargains over there in a few years.

 

I agree with this and although I haven't read the article I was thinking anyway that boomers have really liked street themselves.
Dont get me started on how young people aren't disciplined that's true. But I don't think they are starting from a level playing field at all.
However it is a lot harder and does serve the interests of the landlord boomers to have high property prices and renters.
I think the way things are going with house prices it is entrenching an unfair system.
I'm not complaining though just acknowledging. As a gen x I'm trying to become a landlord (of multiple properties) myself.

 

I'm Gen X too. (We might be the forgotten generation, but we still have the coolest name. )

I reckon that the housing boom has been of a net benefit to those over 45 or so, and hurt those younger than that. The statistics would seem to bear that out.

From The Guardian today.

• Fewer than half of all Australians could be homeowners by 2017, report finds
• Australia's economic wellbeing is at a standstill as rift between young and old widens

I don't know if the young now are any more feckless than they were in my day, or even further back. Spaced was practically a documentary of a certain period in my life.

 

There is still very affordable houses in Australia, might not be in ideal locations but it is down to supply & demand.

Do you think it is affordable to be within 10km of NYC? Definitely not a house to give you an idea this house

270 Ocean Ter, Staten Island, NY 10301 - Home For Sale and Real Estate Listing - realtor.com®

Asking price is 1.9M USD (2.5M AUD) for 4bed 3 bath 2 car.

The Census Bureau estimated real median household income at $53,657 for 2014 and $54,462 in 2015 - lets call that 55k but remember this is household!

Of the total population in 2010, 300.8 million lived in 116.7 million households for an average of 2.58 people per household.

So lets say the average family is M&D + 1 child - 2 incomes just like AUD. So approx. 25-30k US is the average wage.

Just a lazy 63.33x the average wage US (using 30k) to own this home.

It all comes down to supply vs demand, if something was to happen to NYC and it was uninhabitable... Property prices would plummet.

 

It seems to vary massively by state. For what I pay/can afford in Brisbane I'd be depressingly far out in Sydney (as in I think the 2+ hours a day commuting would actually give me depression.)

You're right though, markets don't give a **** about concepts like "affordability" or "fareness", its supply and demand. Sydney is a world city with fairly mediocre transportation systems. If you want to live inner, you're going to pay a big premium over less popular areas for that.

That said, I think you're being incredibly disingenuous with your staten island house example. That's not a typical 4/3/2, it sits on a 29,000ft block. 3/4 of an acre of land within 45 minutes drive of Midtown is going to be $$$$$. This is more accurate:

67 Orange Ave, Staten Island, NY 10302 - Home For Sale and Real Estate Listing - realtor.com®

• 4/3/2
• Exact same street as the house you posted
• Recently Renovated
• $1,469,991 cheaper
  
• If we use $30k, its 14.3x the average wage. Very different to 63x. Also unlike Australia where wages are broadly comparable across major cities, wages are very different in the US by state & area. The average salary in Manhattan (why would you care about distance to it if you didn't work there) is the highest in the country at an average of $2,847 per week (Employment and Wages in New York City - First Quarter 2015 : New York–New Jersey Information Office : U.S. Bureau of Labor Statistics)
• Keep in mind its a city where a double income household income of 90,600 or less qualifies you for public housing programs. your family of four with the kids would qualify with an income of under $90,600. (Specifically they would qualify for: New Housing Opportunities Program (New HOP), Mixed-income Program, Taxable 80/20, and Coop Housing Program). So its absolute BS to suggest that they would be trying to buy a $1.9m house when that's grossly overpriced for the neighbourhood (due to massive block) & they would even qualify for a tonne of government assistance. With your $30k number they would also qualify for the LAMP program.. I can only imagine the absolute screeching of voters if we proposed offering housing affordability programs to households making $90kpa...

 

I spent 2 seconds finding a property, just went house on 1/2 acre+ (this was the min it allowed) and made sure it was renovated in the pictures.

It is still 14x more than the average wage which is similar to Sydney.

The average Australian (couldn't find Sydney except being 77k in 2014) is pretty much 80k but using 2 incomes that makes it 160k (keeping up with two income family). Which at 14x would make it 2.24M. Which might be something like this;

12 Beattie Street Balmain NSW 2041 - House for Sale #123077266 - realestate.com.au

I see better value in the Sydney property than your NYC property as the finish on Sydney is top notch.

Remember I used the average Australian wage which the average salary in Sydney (why would you care about distance to it if you didn't work there) should be higher than the majority of Australia if not the highest in the country.