Is it harder now than it was before?

I was watching Nigel Latta’s first instalment in his series called XXXXX. He spoke with Baby Boomer retirees. One of them in particular mentioned that he didn’t think it was any harder for first home buyers now than it was in his day. He said, all this generation needed to do, was well, ‘harden up’ and stop buying brunches. They just aren’t making the right sort of sacrifices and expect everything to be handed to ‘them’ on a plate. Queue Nigel interviewing a young man who happens to be an Economist, and he clearly disagreed with said retired baby boomer.

It also reminded me of a North Island Mortgage Adviser (who shall remain nameless, lest it creates any publicity for him: plus I suspect he’s on the NZ Herald’s payroll.) who said ‘first home buyers need to stop paying the lease on their BMWs’) Yeah. I have never ever, in my professional capacity, had to tell a first home buyer to quit the lease on the beamer. About the best that remark did, was irritate a group of well-educated young people, and we know what happens then, don’t we? I think my internet nearly blew up from reading all the comments and impromtu blogs.

Those throw away, if somewhat authoritarian remarks, do not help us to understand what’s really going on in our Economy. Nor does it help our understanding of what is a complex set of problems that comes from one simple issue: we have more people than houses available.

I don’t think our first home buyers generation need to harden up. I don’t think baby boomers had it any easier than our current first home buyers either. It’s just different. For those that purchased in the 1980s – they slugged it out, or perhaps crumbled under the weighty interest rates at the time, no thanks to the Stock Market Crashes. 26.95% pa on a home loan anyone? Nope, I didn’t think so. An abundance of houses, but not an abundance of income (job losses) to pay for those houses.

The one thing that our First Home Buyers will have, that our baby boomers are less likely to have: a whopping Student Loan. So before they start their working lives, they are already $20k to $50k in the hole. No hardening up required; the bitter vet’s pill has already been swallowed. So, about those brunches – I suspect non-existent for our newly graduated, $50K in debt first home buyers.

In short, no particular generation had it easy. Ever. My generation was grappling with high unemployment when leaving school. And we were the first generation to know about Student Loans and the impact that would have on our financial lives. We were also the generation that embraced debt, probably to our detriment. I know my father’s generation understood what the Depression was about. To this day, it’s still engrained in him to buy second-hand clothes. He’d have to be under arrest to buy brand new!

What ever the economic issue was for each generation, regardless of who created it, the way to survive the issue has always come from the same place – you and I. And more commonly, you and I and a whole lot of yous and Is. It’s not uncommon for families to pull their resources together, so the first home buyer gets their foot in the door. Others have looked at the big picture and have decided this whole home ownership malarchy, in the traditional sense, isn’t the way to go. They may have looked at the small house movement and taken that road as a legitimate way of owning a bit of our paradise.