After stocks rose to a new record on Monday, Tuesday will bring markets a bunch of key data on the U.S. housing markets.
In the morning we’ll get earnings from Home Depot (HD) as well as the latest reading on housing starts in the U.S. during April. Expectations are for housing starts to rise 3.7% after a 6.8% drop in February.
Home Depot shares, which have risen over 500,000% since inception, have been one of the great stock investments of all-time. Also on the earnings calendar will be results from Dick’s Sporting Goods (DKS) and TJ Maxx parent company TJX (TJX).
On Monday, another blockbuster stock, Amazon (AMZN), celebrated its 20th anniversary as a public company. And with Amazon returning about 50,000% since inception, the performance of stocks like these ought to reinforce the notion that it is low-cost index fund investing that will best serve the average investor over time.
Research shows that just a handful of stocks account for all of the gains enjoyed by the market over time, and while investing in an index fund might seem like the best way to avoid the losers, it is more aptly described as the best way to capture the winners. Picking the next Home Depot or Amazon is only easy in hindsight, and only in hindsight are we exposed to what harms investing decisions the most: regret.
On Monday afternoon, Twitter was outraged by comments from Australian millionaire Tim Gurner, who said that millennials should stop buying things like avocado toast if they want to buy a home.
Gurner said on 60 Minutes that, “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” ostensibly a dig at the brunch-crazed millennial generation which values taking Instagram pictures of meals over things like homeownership. Or so the story goes.
But the problems here are many.
First, though Gurner is Australian, let’s just use American dollars for our example and assume the aspiration is U.S. homeownership (Yahoo Finance is, after all, based in New York). Our millennial will buy coffee five times a week at $4 a pop and avocado toast once at $19, but building in taxes and tip on the avocado toast let’s make it a round $25.
So $45 per week is being wasted by our consumer-crazed millennial that is damaging something — themselves? America? society? — by consuming toast and drinking coffee instead of saving for a home. Assume two weeks for vacation and our millennial is spending about $2,300 per year on coffee and brunch alone.
The median home sale price in the U.S. was $306,000 in the first quarter of 2017, meaning that if the difference between buying a home or not came down to coffee and avocado toast, it would take Gurner’s wasteful millennials about 27 years to save enough money for the 20% down payment on a home.
Assuming home prices rise over time, it will take even longer.
But this math is crude, obviously, and also a misrepresentation of what the gap between millennial habits and homeownership really is. Right now, the U.S. housing market is defined by one thing: a lack of supply. Saving money on avocado and coffee is not going to make up this gap.
Additionally, low housing supply pushes prices up. Couple this with a labor market that was slow to recovery from the financial crisis and first-time home buyers comprised just 35% of buyers in 2016, below the 40% average seen over the last 35 years.
And while millennials are everyone’s favorite generation to blame for everything — literally — the decisions young professionals do and don’t make today are more often than not the result not of them being unique and unlike any generation we’ve seen, but playing the economic hand they were dealt.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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