Turns out that 2013 is the first year since 2005 that the percentage of 18-34 year olds living at home has declined. This actually is GREAT news when you think about it. When you look at the chart, you see that the percentage of that age group starts growing in 2005, several years before the recession actually began. 2005 is the year that homes started getting too expensive for people in that age group, creating the logical conclusion for those folks to move back home in order to save up for a downpayment.
So what does this mean? Well, we can look at two factors that most likely matter:
1. The unemployment rate for this age group is dropping, allowing people to afford to move out
2. More people in this age group are getting married! And married people can’t live at home with their parents. I mean, they can but that’s just weird.
With people beginning to move out of their parents’ basements or the apartments above the garage (I’m looking at you Kirk Cameron), we’re brought to the age old discussion of renting vs buying. Right now this is an interesting discussion for me in particular, as I may or may not be moving to a Northern California city at some point in the next three or four months.
We’ve spoken about renting vs buying before but I’ve started to get slightly annoyed with some people lately. I won’t name names, mostly because they’re not online people, but in general, they don’t get the concept. Here’s what I typically hear from them:
“Houses aren’t great investments because your money would be better off in the stock market. The housing market went up like crazy before but you missed out on the recovery. Besides, in the long run houses only appreciate at 1% a year, adjusted for inflation. So why bother buying a house?”
Nope, nuh uh, no. See, my problem here isn’t the whole housing appreciation thing. I get that. That number, however, is based off of housing appreciation from 1890 to 2011, adjusted for inflation. That’s a pretty serious long term timeline there. Longer than I will likely be alive but that’s beside the point. The point here is that the alternative to buying is not investing that money in the stock market. It’s renting. And renting is the WORST. There is 0% return on renting. In fact, you’re just a consumer there, paying for someone else’s lunch. I’m tired of people comparing buying to investing. When you buy a house and your mortgage is comparable to what your rent would have been, you’re always going to come out ahead.
And with that, I think I’m officially in the market for a house, depending on where it is. Preferably one with a gold leafed Eucalyptus tree in the backyard.