It's good to be old!

Lies, damn lies, statistics

Always question statistics that are not adjusted for time period . Most people over 65 have houses. A house in my neighborhood sold for about $150,000 in 1984 while the same house is worth about $260,000 today. This alone could count for the increase in net worth.

Under 35 mainly are new home owners and their homes are upside down in the last 6 years.
 
That's what the article says...

more or less. And the numbers were all in 2010 dollars. Don't understand your objection.:hmm:

Besides, there is more to statistics than one overused bromide. All of science is driven by statistical analysis in one way or another. We don't have any better tools for looking at the world-prone as those numbers may be to misuse (maybe the phrase should be reconstructed as: " Liars, damn liars and liars using statistics"(which is closer to the truth I think):(
 
can not just adjust for dollars for any year.

I made a mistake. I read 1994 instead of 1984. The price of housing is gone up more than 58% in the last 25 years. I bought a house in Germantown, MD in 1984 for $94,000 and sold it for $185,000 in 1989. In 2008 the house sold for $465,000. The house went up almost 500%. I know this is not normal for the US, but the percentage of housing value increase has to be multiple times the inflation rate.

Adjusting dollars for inflation only works if the product (wealth) is inflation driven.

I am not saying the statistics are wrong, I am saying that statistics can be analyzed to say almost anything you want.

I am also not saying that the net worth statements are not correct, I am saying looking at them in a vacuum is just pushing a point.
 
Last edited:
Don't see where they...

looked at them in a vacuum. Not every possible factor under the sun can be included in some essentially 'press ready' sort of article. I think they did a good job of overviewing the basic wealth/income issue vis-a-vis the age divide. Adjusting dollars is certainly not a drop dead science, but it is done all the time in some attempt to allow for the inflation of currency-otherwise the numbers are utterly useless.
Maybe I am basically sympathetic to the argument because I am seeing it at work in the immediate circle of my family and aquaintance. We know a number of folks in their 30s who are just plain not getting traction on wealth building because of job insecurity and the collapse of their equity position in the house they bought and this with both partners working, which, I dare say, was probably not the case so commonly for older Americans.
 
Housing prices (on average) stayed pretty flat adjusted for inflation until the very late 90's. Since 2008 the massive average price increase in the housing market has fallen very close to the pre 2000 tend which is just slightly ahead of inflation. And of course that's if you believe official inflation numbers :pigsfly:. In reality housing prices have probably tracked inflation much closer than even the official numbers suggest.

Old people are going to naturally be wealthier than young people (on average) because they have had longer to accumulate wealth and pay down debt. With college tuition through the roof and a weak economy it's not at all surprising that the gap has widened so much.
 
No not surprising at all....

but very worrying. Irrespective of how any retirement system is devised (even if there was no system per se) it is the productivity of the younger generation that supports the older. The US has dodged the basic dempgraphic bullet that plagues Western Europe and Japan of an aging population and falling birthrate, but sheer population is not necessarily going to mean sufficient excess wealth production up to the support of the 80M strong Boomers. This is the worry for the next 20-25 years. These stats on the wealth/income of the 30 somethings is (or should be) highlighting that issue, I think. Where will the money come from? The retirees themselves don't have it either, despite the wealth gap relative to the young. I confess to not seeing how this circle gets squared:hmm::(
 
Bingo!

Matthew said:
Old people are going to naturally be wealthier than young people (on average) because they have had longer to accumulate wealth and pay down debt. With college tuition through the roof and a weak economy it's not at all surprising that the gap has widened so much.
Click to expand...

All true... in addition... just some anecdotal evidence on what may be a different mindset now, vs. two to three decades ago:

Both my father (now retired) and brother are real estate brokers and they've both mentioned something that is different about how young people now approach the purchase of their first home as opposed to 20 to 30 years ago. Back in the 80's and early 90's, young folks were usually just grateful to be able to qualify for their first home purchase. They looked at the home that they were purchasing as something with potential... they envisioned improvements that they wanted to gradually make as time went on and as they might be able to afford the expense associated with improvements... a new kitchen... new landscaping, carpeting, painting, etc..

From about 2000/2001 on, young buyers looked at a home and if it didn't have granite counters and new stainless steel sinks in the kitchen, new paint, carpet and the sort of improvements that the previous generations of first-time buyers made over time, they aren't interested. Mind you, these aren't wealthy first home buyers, they are about equal in income qualification. The difference is they want it all and they want it now. A sense of entitlement? I don't know, but one could probably extrapolate it out to how they conduct other aspects of their financial lives.
 
There is going to have to be a significant reduction in government interference in the economy and a significant increase in immigration. I have no doubt both will happen out of necessity.
 
It could be they...

are also just making sure they get a lot considering how expensive housing was. I mean I can see this as being a wholly rational expectation of a buyer, especially when during that period there was so much shifting of property after a very short ownership period you would want marketable features. Also when the money to borrow was so cheap and available for a time, why wouldn't a buyer's attention turn away from that aspect to something else. They were being told by the financial industry that they could get a loan regardless of much of anything except wanting it! There is a vicious circle element to this.

That being said, the 'everything and right now' mentality is pretty well entrenched in the national mindset, or so I think anyway.
 
Yes, I tend to strongly agree with you...

The current fly-in-the-ointment on that being if the OWS movement proves to be the opening shots in a 'generational conflict'. My entirely intuitive impression is that this is the case and that some politician will make hay of it in the next 12 months-particularly with the total student loan burden approaching $1T and delinquency rates at 10% and default at 8%-those figures being ten times that of other non-mortgage debt.
 
I'm pretty sure I know who that politician will be. The trillion dollars in government backed student loans is probably too big an opportunity to buy votes for any politician to pass up. The only reason there isn't more unrest is because the government has kept the peace through unprecedented unemployment extensions. When that ends it could get ugly.
 
ColonelHaiku said:
All true... in addition... just some anecdotal evidence on what may be a different mindset now, vs. two to three decades ago:

Both my father (now retired) and brother are real estate brokers and they've both mentioned something that is different about how young people now approach the purchase of their first home as opposed to 20 to 30 years ago. Back in the 80's and early 90's, young folks were usually just grateful to be able to qualify for their first home purchase. They looked at the home that they were purchasing as something with potential... they envisioned improvements that they wanted to gradually make as time went on and as they might be able to afford the expense associated with improvements... a new kitchen... new landscaping, carpeting, painting, etc..

From about 2000/2001 on, young buyers looked at a home and if it didn't have granite counters and new stainless steel sinks in the kitchen, new paint, carpet and the sort of improvements that the previous generations of first-time buyers made over time, they aren't interested. Mind you, these aren't wealthy first home buyers, they are about equal in income qualification. The difference is they want it all and they want it now. A sense of entitlement? I don't know, but one could probably extrapolate it out to how they conduct other aspects of their financial lives.
Click to expand...

I see this as well... When I got my commission in the military... my 'Ensign Ride' was a base model Miata... $14k... When I landed a job with the railroad, the wife and I ended up with a base Toyota truck that has no carpet, 4banger with a stick... it doesn't even have a cigarette lighter! New kids to the Railroad I work with now... are likely to roll up in a brand new G37!!! We had 5 Infiniti G35's in the parking lot 3 years ago, all owned by kids who had just started. Loaded Silverado's are popular too.

Crazy.
 
I believe it is ending...

The last number I saw indicated that the percentage of unemployed receiving benefits fell from 75% a year ago to 48% today! The implications are, um, 'interesting' to say the least.:shock: Of course the whole unemployment benefit issue is sort of moot for graduates who have never worked and have no job prospects and owe several tens of thousands which cannot be walked away from even through bankruptcy. Cheap money seems to have a very high price, doesn't it?:hmm::hmm: And it is debatable what exactly was purchased through that debt.
 
Last edited:
Do they actually own anything?

The cars or a house or whatever? Or is it all just on credit?
What struck me in the article that kicked off this thread was the paltry household wealth at age 35-a few thousand dollars as I recall.

An article I read today was talking about how the student loan programs are starting to look a lot like the sub-prime mortgage bubble dynamic-debt with an implied government guarantee puts a lot of money up for grabs in the education industry, the schools respond by raising fees and tuition, the students borrow more, the debt is securitized and sold to investors who create a market for even more debt securities so the banks lend more and the students borrow more and even more money heads towards the schools..... and away we go as Gleason used to say!
 
Government guaranteed home loans and student loans are the unfortunate product of a government filled with people who don't understand basic economics but are certain that they do. It's no wonder that they can't even begin to understand why college, health care and (until recently) houses got so expensive. If somebody doesn't put an end to all this nonsense soon it's going to be a generation before we can even start to recover let alone actually recover.
 
You can see in Greece...

just how hard it is to put an end to debt driven crisis. I think you are right that a generation is going to be eaten up getting the plane even level, let alone flying somewhere useful. And, all the elements are there for a remake of the Japan scenario, with the exception of our underlying population characteristics. It could turn around, I suppose, but it's awfully hard to see the process that will do it, even in concept, and even ignoring all the political hurdles. The austerity programs, such as they are, have proved out in the short term, so far, to make matters anywhere from slightly worse (Britain) to horrible (Greece and Ireland and Spain) so the political incentive to pursue that is kind of low. Hmmm, just seems like a two steps forward and 2(or more) steps back problem.:hmm:
 
You must log in or register to reply here.
Back
Top