It must be easier to get credit. I remember when I was 23 (it was 1984). I was making 31k a year and had no debt. I’d never been late on rent, utilities, or anything else. But I also had no credit history. I wanted to buy a stereo, and I wanted to borrow, if I remember correctly, $350. The store (one of the major audio/visual chains) wouldn’t give me the credit because I had no history.
Anyway, to add one more “what today’s middle-aged people did in their 20’s” story:
I’ve had the same job for 23 years. A white-collar salary. I got married at 35, and didn’t have a nickel saved at that time, despite the decade-plus of having a good job. On the other hand, the only debts I’d had were for a VCR (they were expensive in the ’80s – and yes, someone eventually gave me credit), a used car, and a couple houses. The second house I bought was in 1989, which (when I sold it because I was moving) wiped out the profit I’d made on my first house. So the saving was minimal (ok, non-existent), but the borrowing was minimal also (I put down 20% on the first house and 30% on the second house, both fixed-rate 30-year loans), which seems to be a contrast to “kids these days.”
To tie this in further with the RE situation, I’ve got more in the bank now (from selling a house) than I possily could have saved over the past 23 years unless I’d been a complete fanatic about it, sacrificed many things over the years, and made good returns on all investments. And I wonder how many people over the past few years in San Diego have said to themselves, “I can sacrifice and save and hope my investments do well, or I can buy the biggest house I can afford (or can’t afford but can get a loan for) and make even more money and live in a nice house to boot. Prices will keep going up, so there’s no risk. There’s no downside!” How much of the demand and the willingness to pay any price came from that type of attitude? And how much will the reversal of that attitude affect the market? I think there’s a good chance that that attitude change will add up to more price declines than any fundamental economic situation.
