Do young homeowners have a sense of entitlement?

[CanadianDaniel]

This rant is about an ongoing argument that I’m having with my friend Frank, a human resources professional (we’re both in our late fifties). The heated debate started when we were discussing a CIBC poll finding that Canadians now expect to be mortgage free at age 57.

According to the poll, non-mortgage debt is a major reason why younger people expect to take longer in paying for their homes these days. My dad repaid his mortgage at age 48, despite having to support 6 sons and our stay-at-home mother.

When I commented that many of my nephews and nieces are new homeowners who seem to have a sense of consumer entitlement, acting like they have the right to overspend on new vehicles, the latest gadgets, fancy restaurant meals and luxury clothes, Frank went into attack mode lecturing me on my sanctimonious close-mindedness about today’s youth. Frank’s argument is that young people today are no worse off than my dad was during the early 1980s when he made his last mortgage payment. My worry is what’s going to happen to free-spending young homeowners when interest rates go up.

Am I being unfair in my assessment that youngsters today “want it all, and want it now” compared to older generations? My dad grew up during the Depression, when many Canadians didn’t have a choice about living within their means and delaying gratification until they had money.

Your thoughts about today’s young homeowners as consumers, and do you have any suggestions for them?

[matrix82]

It depends on who you are are referring to as young homeowners.

I'm past the stage of young, being 30, and I've come to realize I may never own my own house. We don't spend money on luxury items, or meals out, we spend the majority of our money on paying back our student loans. My spouse never found employment in his field, so he's stuck making minimum wage working in a kitchen trying to pay back his loans. I'm employed in my field but could only find part-time work. I am currently trying to find another part-time job but unfortunately most employers want to hire someone part-time who is available full time, so they will not work with my current part-time position. We struggle a lot to keep up with the payments, but we never missed a payment. Our car is 6 years old and we plan to keep it for another 8 years.

I'd love to own a home, but I don't think it will ever happen. When my parents were my age, they were both employed in their field, working in a job with good pay and benefits, had three kids, and were in their second home. Here I am, the same age and the only thing I've accomplished is getting employed in my field part-time. I owe so much in student loans, and I worked while going to school, never received the max loan amount, and still owe a lot. My dreams are to work full time in my field, have children and own a house, and maybe take a vacation, just once.

[bargain_hunter_lola]

I think this is one subject that everyone seems to have strong feelings about.

My thoughts are simple - I dont plan to kill myself to pay off our mortgage quickly. It will be paid for when it's paid for. Do we live above our means? No, but we also do ENJOY our life. If in 4 years when we have to refinace, the mortgage rates have gone up, can we still afford our mortgage? Yes, absolutely.

We dont live off credit. We pay our basic mortgage and other misc. bills (including student loans) and then enjoy the rest of it.

I think the age has risen for MANY reasons -older when buying a house, many years in school, not living simply for a house.

I do agree that there are a large percentage of people who think it's necessary to have new vehicles and fancy gadgets but I really dont think that is representative of the whole generation.

[matrix82]

My dream of having a house are so strong right now. Loud neighbour. Ended up calling the super who got them to disconnect their bass speaker. Dreaming about owning a detached home on acres of land. Someday.

[lilo0003]

I agree people often buy more house than they need. I for one could not imagine still having a mortgage in my late 50's. We bought a three bedroom bungalow in a great location 18 years ago and thought we would buy bigger when we had children. Even though our home is the same size as what we both grew up in. But then we had kids and our city had become very expensive to buy and the children were connected to the neighbourhood as were we. So we stayed and paid of the mortgage last year at 45. Since the boys are still young we can travel and save for retirement (or take less stressful jobs) and their educations and in a few years as they leave for school the house will feel huge to us. I will admit to house envy when I see my friends with the huge new home with all the fixtures, but the envy me for not having a mortgage so all is fair.

[luckbealady]

I think it would be unfair to categorize all young people as free spenders.

I'm in my 20s, and I wouldn't dream of buying a house right now. I personally would require a sizable down payment (over $75,000 - and in my area I'd never go for a house more than $150,000 no matter what size mortgage I qualify for) before I would take on that event. I don't own a car, because it makes more sense to pay cash then take on payments - and I can't afford to pay cash.
I own nice clothes, but none of them were full price (I cringe at paying more than $15 for a top).
I have an old laptop and old TV that were given to me.
The only furniture I've bought in the past few years are a couple of bookshelves - everything else is from when I was a teenager, found at the side of road (my dresser which looks great painted with new handles), or passed down to me (a great metal train trunk from my mother that I painted leather brown).

I grew up in a household where I was never want for anything. All my needs were met, and I was never necessarily spoiled, but at Christmas and birthdays we'd get more expensive things (video games or clothes). But that doesn't mean that I believe I'm entitled to everything I want.

I'm working on paying off my student debt, and that is most important to me. I'd rather wait until I can afford something than go into debt.

[luckbealady]

To comment on your concern about interest rates though (which I think is very real and valid) - I too worry about that.

My concern though, is more that mortgage lenders should be educating their applicants more. Just because a person qualifies for a $400,000 mortgage doesn't mean they should buy a house that costs that much. I think there should be more talk about how payments change if interest rates go up or what happens if a person loses their income.
Unfortunately most customers see the dollar signs and figure they might as well spend what they can in order to get the best they can (whether it actually is the best or not) - young, middle age, and older.

[Minou]

I think your opinion (if often loudly stated in the way you have stated it here) IS probably going to make you look like a sanctimonious old fogey. Shhhhhhh!

I agree that some overspend, but rising housing prices in many areas are making it harder for people to pay off homes quickly. People are also having a hard time getting jobs in their fields, and they're often delaying marriage and likely home ownership,meaning that they're starting mortgages later in life. In my school division, graduating student teachers aren't even able to get on the substitute list, as they've capped it at a maximum number of subs. No longer is there the expectation that you'll get a term that turns into a full-time job -- people generally expect to be filling in on terms for mat/sick leaves -- and that's often about the best that a new teacher can get. Many of these people are dealing with student loan payments as well. I'm sure that there are plenty of examples of people who have paid off their mortgages early these days, just as there were examples of people paying their mortgages off after 60 or spending irresponsibly in the past.

I suspect lower mortgage rates (and thank goodness they got rid of 30-year mortgages as an option) make it seem less essential to pay off a mortgage quickly. In the eighties, mortgage interest was a huge consideration! Now, I guess many people feel they have more discretionary money to spend.

Yes, some people have huge debt and are overspending, but a lot of others don't.

I do feel that Generation Y does have, in general, confidence and a sense of optimism that amazes me (and maybe you're seeing it as entitlement). As someone born at the tail end of Generation X, I really felt a sense of doom about the job market when I graduated... expected terrible things after all the downsizing and cuts of the early to mid-nineties... and things turned out far better than I expected them to. Still, I lack that positive Generation Y outlook on life, and I wish I had it!

[ancarett]

It's worrisome, I understand, when you see young people making reckless choices with their money. Some of them know they have a family safety net in place, so they're willing to flirt with disaster. Others might be saving in places you don't see - many relatives are surprised to see my coupon collection when I dig into my purse on visits. I was told that women who make as much money as I do "don't coupon"! Hah!

That said, not many people learn gracefully from lectures. It's better to show through action or demonstrate the positives. If you share how you had your mortgage paid off early or got a real great deal by buying a certified used car, etc., that can be an eye-opener and something people will remember a lot better than "Stop spending so much money!"

I was explaining to a teenager about the eighties and interest rates. She couldn't believe that people used to get and give double-digit interest, especially when the best the bank would give her on $1000 in a GIC was 1.8% - 14% mortgage interest and 10% investment interest sounds alien to kids these days.

[thriftygranny]

This may not be the popular answer but I am with the OP.Most people are not afraid of debt, and have no problem getting into more debt. We live in an entitled society but I don't believe it is just the younger generation.When I drop my son off at high school I am amazed at what most of the kids are driving...really really nice cars (thanks mom and dad).Perhaps it is different here in the west as a lot of people work in the oil industry and make bucket loads of money....and they spend buckets of money.(not all )WE seem to want bigger and better all the time.I have two friends that have a tough time making ends meet but they still think that getting their hair and nails done regularly is a neccesity. I don't understand this at all.We haven't had a mortgage in a very long time and own 2 properties.When we bought our priority was to pay it down as quickly as possible ..we hate debt and we hate paying interest.I need a new car this fall, I could buy whatever I wanted and I have been researching the most economical and reliable car I can find, I guess it is just they way we are.

[redhdlois]

I am in my early(ish) 50's so I remember when interest rates were very high. I remember looking at condos and not being able to afford to buy one because of the high interest rates.
I also remember when I was first applying for credit cards and I could not get one very easily. My first credit card was Eaton's and I think they gave me a line of credit of $300. From there I established my credit and eventually got a major credit card. Nowadays they force credit on you....encouraging young people to get into (a lot) of debt. The media doesn't help either; shoving the new and latest gadgets, cars, electronics down your throat and encouraging people to replace their perfectly good items for the newest version. And everything is bought on credit nowadays. A cashless society doesn't help one appreciate working and saving for the things they need.
It's not only young people though....many people I know squeaked into a mortgage and heaven forbid if rates go up, there will be a lot of people unable to make their mortgage payments and thus, a lot of foreclosures. I've been thinking this for a long time. A lot of people already have very high debt loads and if rates go up just a bit, it's going to get worse.
Recently there was a perfectly nice house on my block that sold (for over $2mil) The previous owners had renovated it and it was very nice. No, that wasn't good enough for the new owners, it was torn down a week ago so they can build a bigger and better house. It made me sick. It is such a wasteful society IMO.
Enough rambling.....I am worried what it's going to be like in 5 -10 years if this keeps up.

[Qtpi]

My husband and I are in our 30's....we happen to be unlucky, or lucky, depending on how you look at it, to have paid for our house in cash. My husband was in a terrible accident 7 years ago and we used part of the settlement he received to buy a modestly priced home. The area in which we live has decently priced homes, around $160,000 for a four bedroom home, so my of our friends will be able to pay their homes in full by their 50's. Another couple we know lives in Calgary, and said that they know they will never pay off their home, it's just not possible.
Maybe this generations opinion on whether or not it is important to pay off a mortgage differs from previous generations. Could be more important to enjoy the present, and worry about the future when it arrives, to a certain extent, I agree, but again, we are in a different position than most.

[marmaduke]

I don't think this is a "generation" thing. There have been saver and wastrels in every generation.
There are different expectations and that is as it should be. In the 50s families more often had a single income and more children. Then in the 70s 2 income and having smaller families later in life was more common. Why would they make the same financial decisions?
And is being able to afford something the same as a sense of entitlement? And if they can afford it why are they not entitled to it?
When things change (interest rates, job security) there will be hard times for some but most will come out just fine.

[sarajk]

I really think it depends more on the person, not how old they are.

We are in our early 30's and our morgage will be paid off in less then 4yrs.
We travel, eat out, have 2 cars, reno'd the house and buy new things.
But we don't go completely over board.

[Midnightly]

i think the younger generation is carrying more debt then the previous generation.. plus the jobs just arn`t out there (baby boomers not retiring as early) people are no longer getting apprenticeships or career style jobs right out of highschool.. they now have to go to college where my parents generation didn`t have to do that.. and after college hope that there is a job out there for you allowing you to make enough to live and pay off your bills.. so often they are getting into houses later in life.. and in most places you can no longer afford a house and mortgage with only 1 person working.. there is a real imbalance

http://www.cbc.ca/doczone/episode/ge...n-jobless.html is a really interesting to watch

i do worry if the interest rates jump up dramatically like it did in the 80`s (even then there were many people who couldn`t keep up.. i remember my parents saying that the banks were so overwhelmed with foreclosures that they basically told people if you can just pay the interest they wouldn`t foreclose) we have been blessed with relatively low rates for the last 10+ years but it does flip around we`re not too worried. we will make due and still be able to function.. though we don`t live beyond our means (no vacation in nearly 10 yrs and my car is over 15yrs old)