Everyone has to be rich now??

[friskinator]

I guess what we're collectively saying here is that we're screwed. Glad I'm old-ish and don't have children to worry about.

 

[djmay]

I guess what we're collectively saying here is that we're screwed. Glad I'm old-ish and don't have children to worry about.

My children are grown and I worry all the time

 

[FRoss6788]

I guess what we're collectively saying here is that we're screwed. Glad I'm old-ish and don't have children to worry about.

I've two daughters in their early 20's and I'm worried, and really pissed off, at the current situation.

 

[JazznFunk]

I started my "professional" life with a masters in structural engineering directly into the 08/09 downturn, and spent the first two years driving school buses to survive. And while I agree with a lot of the hardships we face now, I'd also point out that houses are larger and nicer (as our cars) than the standard was in the 1980's. It's not only that prices have increased, it's that the "standard" has drastically increased also.

This is all while household sizes have decreased in that timeframe by almost one person. So people are expecting much larger homes while complaining that housing is so expensive.

The median home size was around 1,500 sf in 1960.
The median home size today is around 2,300 sf.

That's a massive increase.

Interestingly, the cost per square foot hasn't changed much. People just want WAY more house than they used to. Affordability isn't the root problem. It's home sizes. I believe this changed drastically when so many households became dual income. It instantly opened up new revenue, and people immediately started buying bigger, nicer, and more stuff (including homes). The solution to "affordability" is to simply buy a smaller home. It's really not difficult to understand.


Now, I DO agree that we should ban or severely curb corporate ownership of homes for a variety of reasons, because that is a major problem that is bad for our society and economy.

Again, nuance is being missed. Not everyone is buying a brand new home, because most can't afford them, based on the metrics you supplied. I agree with your data there. But you ignore how much older, existing constructions ALSO cost, and how much work they usually need. I don't subscribe to the notion that people are starting out wanting MORE HOME right off the bat for some superficial reason. I'm arguing that's all they can get, and it might be better to buy a new construction than an existing home, because not everyone wants to renovate on every off-hour of their day.

My parents bought their home from a family member in the late 1970s. They lived in that same house, the house I grew up in, until 8 years ago when they finally moved into a new construction they wanted their entire lives. I applauded them. They worked hard and saved and deserved it. The old house was paid off for years. They definitely taught me the value of managing expectations.

To reiterate where I'm coming from again: my wife and I rented an apartment from a private owner for $600-700/mo for almost 13 years, starting in 2003. We finally bought in 2015. Contracted to build a new construction for $225k in a very small new home community in our area. 1,500SF. 3.5% interest rate. Bare bones, builder-grade house with no upgrades. Similar small homes in our area were already selling for at least that same price and well above, and needed a LOT of work. For us, for our situation as first time home buyers, we got lucky, and a new construction was the only way to control costs and not get into a bidding war we couldn't win with far more affluent buyers with cash to burn. We were strategic because we had to be. We got in right before the current run-up started again. The cost per square foot for materials has increased exponentially since 2015. The company that built our homes now sells our same floorplan for almost $400k in other communities where they build.... and they don't build that many in our size anymore. It's more cost-effective for them to build bigger homes because of the comps in our area.

So - I would argue that your 'solution' (just buy a smaller home) is a solution which doesn't exist in the new construction OR existing home market, because the median home PRICE in the country right now is about $450k, and builders AREN'T BUILDING SMALLER HOMES, nor are there that many on the market that are existing constructions. Median home price in the Asheville area where we are is over $500k. It's not so simple.

ALSO - and maybe this is just a thing here in NC - but we have as serious problem of not enough homes being built in general. So there's low inventory and not enough houses of any size being built, except for maybe multimillion dollar homes for super high earners.

Housing Gap Crisis IN NC

NC's Housing Crisis Can't Wait

 

[fishdude101101]

I'll disagree based on the data. The debt is an issue, no doubt about that. But rising debt hasn't led to higher inflation. Take a look at annual inflation in the US over the past century. Other than the 2022-23 global inflation spike resulting from the bounce back from the pandemic, inflation hasn't been anywhere near the 1970s (post-1950) peak.

View attachment 7240145

Keep in mind that the chart you posted isn't normalized and there have been. Major changes to how inflation in the US is calculated. Obviously their has to be changes to the basket of goods used to calculate inflation, but after the mid 1970's they stopped including food and energy costs in the calculation, which is nonsense. Those most affected by inflation, poorer people are more affected by rising food and energy costs than the price of an iphone.

Are saying is that currency debasement doesn't cause a decrease in purchasing power? It absolutely does. Otherwise we could just ad zeros to 100 dollar bills.

Other than the currency issue, higher levels of debt lead bond buyers to ask for higher interest rates as the bonds become relatively riskier. Lots of negatives from this but one of them is higher borrowing costs throughout the economy. Prices go up. Bad cycle.


Part of the drop as well was the Greenspan methodology and the fed fomc, but those tools are becoming more limited. Right now we have rising borrowing costs, currency debasement, and a fed keeping rates higher than recent averages.

 

[klyph]

just want WAY more house

Nope. Sorry. Already been covered (and debunked) in this thread. Maybe you would like to catch up.

I can name a DOZEN people local to me who would JUMP at the chance to buy a recent 800 sq ft. 2bd 1ba ranch for a HALF MILLION DOLLARS. These are successful business people and tradesmen who could actually afford it. THEY DON'T EXIST (There are plenty of those houses around here built before 1980 that fit that description, but they are mostly not for sale or are falling down.)If everyone in this thread could stop creating straw men from poorly interpreted and suspect "data", that would be like, REALLY GREAT. TIA

 

[Peteyboy]

I remember a TBer who used to preach the bootstraps homilies. (Inactive for a few years now.) I later realized he married a doctor. I guess that's one way to do it.

"Now I believe in this, and it's been tested by research"...

GregC I KNOW you could finish that quote!

 

[Paul New]

I didn't want to say this to come off badly but this is well said.

It is area dependent and just my experience I'm 24 and in a class I took we the teacher in our HS talked about the fairy tale problem. This class was about financial responsibility and investing. It was basic but generally fun. But this one lesson stood out, the fairy tale problem is when young adults especially gen-z around within the 20s are more often to be in a serious relationship those ages roughly. The point of the topic is fresh grads or first time full job after college can't save money or blow their early savings... Most people are very serious in my generation I argue about long term goals and such at least in my neck of the woods. My point is many get marry right after college or grad school, and have to do the whole fairy tale life, big wedding, honeymoon, buy a house or attempt to get one, at least rent a very nice one, buy a big car because "we're a couple!" and all that junk. My friend who is a new history teacher burst out laughing because it is all too real he share. He sees it all the time in his field of work of those who secure a job, get marry and go crazy and tried very hard to live the whole suburban consumer life. I honestly can't say much on it, I just want a nice working Japanese sedan, a job that pays, money for basses and all that junk. I don't have a GF so maybe I'm just salty

On a serious note - I think these Fairy Tale social media lifestyles are to blame, I saw one influencer in Texas, she live the most stereotypical picture perfect lifestyle, got a new giant Cadillac and people in the comments were saying all this stuff of wishing they could make money like them. News flash, they gifted/given it on a discount it since they have 400k followers, yeah that isn't a large number in the grand scheme but for sure its still a giant advertisement to people similar to those influencers lifestyle... half of it is fake just aiding the whole fake lifestyle.

I can add thousand more things to my point but I'll just be a young man screaming at the clouds lol...

Are you willing to get dirty, sweat, and go home every day physically exhausted?

 

[backin82]

Take that same house that was built in 1960 and the selling price today. It will cost much more in terms of annual income. This is the point of several posts by owners of homes here. My daughter and her husband just bought an old rancher in the Chicago suburbs for 362k.

I'd love to see a breakdown of this example, but it would vary wildly depending on the location. I know that housing costs have increased more than wages, but so have home sizes on average. Anecdotally, I know several younger prospective first-time buyers who are frustrated by prices, but are looking for 2,000 sf houses in nice neighborhoods. It simply doesn't work that way.

Across the board, I think our houses are too large in the U.S. One way to curb prices to offer smaller homes and for people to lower their standard, especially for first-time buyers.

 

[FRoss6788]

I'd love to see a breakdown of this example, but it would vary wildly depending on the location. I know that housing costs have increased more than wages, but so have home sizes on average. Anecdotally, I know several younger prospective first-time buyers who are frustrated by prices, but are looking for 2,000 sf houses in nice neighborhoods. It simply doesn't work that way.

Across the board, I think our houses are too large in the U.S. One way to curb prices to offer smaller homes and for people to lower their standard, especially for first-time buyers.

Our first house was a 900 sq ft cinder block house on a slab floor two block from the interstate in San Carlos, CA. It was 284,000 in 1998. We sold it for 420,000 in 2002, that house is over 1.5 million dollars now.

Size has NOTHING TO DO WITH IT.

 

[GretschWretch]

I still wish I could live in Mayberry. Or Bedford Falls.

I've visited Mt. Airie NC, the town upon which Mayberry is based. Nice little town. On the other hand, driving from there to Galax, VA through the Fancy Gap in a fog can be absolutely terrifying.

 

[Jeff Scott]

It’s always someone else fault isn’t it. One of the largest problems in this country is lack of self responsibility.

Always someone else fault. Always.

I know a couple of people who seriously live by that philosophy.

 

[GretschWretch]

Referencing Post #156 above, decades ago there was some sort of mill -- textile, as I recall -- that burned completely to the ground up in one of the northern New England states. The mill owner was in his seventies and could have lived large and laughed easy on the compensation from the insurance company. He instead chose to rebuild. The reason he gave was that that mill was one of the few industries in the area and too many people depended on their jobs there for their livelihood. He put his employees ahead of himself. My kind of guy.

So a tip of the hat and a deep bow to that mill owner and to the poster of #156. You guys are doing it right.

 

[HelpImaRock]

Exploitation is the cornerstone of Western civilization. Same as it ever was.

 

[GretschWretch]

It probably depends on the degree of poverty and the challenges faced. Like in our case, we always existed below the poverty line, but we never went without food, shelter, clothing, and only rarely struggled with transportation (only because my dad was a mechanic). And frankly, the only way that was true is because my dad worked extra contractor jobs on the weekends to subsidize his military pay.

I got made fun of and marginalized because I only had one pair of jeans or shoes, didn't have a backpack for a while, couldn't afford braces, we drove beater cars, etc... But those are still first world problems.

To bring this full circle, it's very likely that my early life experiences living in relative poverty allow me to reject some of the more alluring aspects of capitalism (marketing, propaganda). A good example I can remember vividly is all the toy commercials that came on while watching Ninja Turtles. I wanted all those toys so bad, but knew I could never let myself even consider getting them, because we couldn't afford them. It wasn't even an option. I had to learn how to navigate that feeling of seeing something so tempting and yet completely out of reach at a very early age. I think it made marketing really transparent for us, and made all the kids in my family very aware of reality most of the time.

On the flip side, I have definitely had to navigate a "poverty mindset", which has led me to hoard things at times or be very fearful of throwing things away. Our garage and other rooms used to have a lot of "stuff" piled in them "just in case" or "because that's a perfectly good item"... I'm still working though that, and have made a lot of progress, but it's a real thing.

"it's a real thing." Tell me about it.

 

[KenSmithFan]

Even if you’re making $1000 a week gigging, that’s only 44K yearly before taxes. If that’s on top of a decently paying day job, great. But by itself, you’re going to have a tough time surviving unless you have a partner with a good job.

My calendar has 52 weeks which would make that $52K a year.

 

[KenSmithFan]

It’s always someone else fault isn’t it. One of the largest problems in this country is lack of self responsibility.

Always someone else fault. Always.

 

[MYLOWFREQ]

I don't know about everyone, but I have to be rich for sure.

 

[backin82]

Our first house was a 900 sq ft cinder block house on a slab floor two block from the interstate in San Carlos, CA. It was 284,000 in 1998. We sold it for 420,000 in 2002, that house is over 1.5 million dollars now.

Size has NOTHING TO DO WITH IT.

It definitely has something to do with it depending on where you live. Not every place has skyrocketed to the same extent you're describing.

 

[dbsfgyd1]

With respect, as someone who started my 'professional life' in 2002/2003 after the 9/11 recession, and then got smacked squarely in the face by the 2008 crash before I ever really got my footing after graduation, there is no way one can prepare - especially when just starting out - for the amount of financial crises and upheaval that we've experienced in less than a quarter century. 2008 was one of the biggest generational shifts in housing ownership in the aftermath, with properties getting snatched off the market and into the hands of investors (public and private), reducing the available housing stock for purchase, because many of the properties were single family homes which got turned into rentals. I live in an area where that happened, so I can speak from personal experience on this one. You mentioned the sizes of homes being built. As touched on in an earlier reply, the amount of starter homes being built (1,500 SF or less?) is next to nothing now because the cost to build vs size vs selling price makes it unaffordable for builders to commit to them in many cases. Houses are being built way smaller to keep the price low (which often means they are TOO small to be practical), or they're being built bigger because they know people will pay the price for them.... because that's the only available inventory. People either choose to go into debt for a home that's too big just to own it, or they pay rent that's higher than a mortgage payment, which doesn't help their credit score at all. That's another criminal thing.... paying rent doesn't help build credit STILL to this day, unless you're one of a handful of landlords who chooses to report it.

Working people in general don't have a sense of 'entitlement', unless you consider wanting to own a house at reasonable price as being 'entitled'. It IS the conditions to a large degree, when you look at wage stagnation vs inventory vs price vs interest rates. Yes, you had high interest rates in the 80s, but you also had far lower home prices and better wages/compensation packages for jobs vs now.... and healthcare was not as expensive.

Every generation experiences challenges, but nearly all of the things you mentioned are red herrings which completely ignore the things that are completely out of peoples' control, that they can't reasonably plan for, which nearly wrecked the economy and cost many of us our jobs and livelihoods for at least a few years' time. You can be well educated with a good sense of financial responsibility and discipline and live below your means and still never be 100% prepared the way people preach about it. 2008 changed me into a skeptical bear, and made me even more reticent to go into debt of any kind, which has been very beneficial given the amount of volatility which seems to persist around us.

My friend, I guess you had to be there. What started with OPEC tripling the cost oil overnight, resulting in gasolene.going from $.31 a gallon to $.74 a gallon in a matter of days in 1974. Gas was in in short supply, so it was rationed, the national speed limit was reduced to 55mph, and strictly enforced.

This resulted in the rate of inflation at times over 20% and it took 20 years to revert to normal, when Congress finally produced a balanced budget. And yes we had plants shut down, jobs lost, like almost the entire Steel industry in Pittsburgh, Not to mention all their sevice companies suppling what the Steel industry. To this day some of the surrounding towns around still look worse than what they looked like during the Great Depression. .

Don’t get me wrong, I’m not discounting your experience, but you are not going to convince me that what you went through was more than your individual experience, no better or worse than what has happened to others through out history.

And we can disagree on the sense of entitlement as I don’t expect it to be a popular sentiment..But 20+ years of working out financial reclamation projects for people, mainly college graduates that didn’t learn anything useful with an outsized amount of debt says otherwise.

it’s unfortunate what you went through, but I went through a lot as well, just 20 year earlier. I wouldn’t discount mine until your go through a great deal of research of US ecomonics during the last 25 years of the prior century. It was not good.

There are some similarities between the 2 eras we could discuss on a PM.if interested, as we may have gone over the line here..LOL!! have a good one.