What Is The Next Driver of The Economy?

[Chef Boyardee]

Somebody said somewhere that home prices should be around 3 times wages. I know that The BLS says average wages are around 40k, but that seems like a load of statistical bull crap to me. Suze Orman put it around 20k per year. As in, that's what most people make!

Fine, I'm good with the 10 bucks an hour figure. So then, homes should cost about 60k. With 20% down (12 grand), payments on a 30 year mortgage should be around $333.00 per month (plus taxes and insurance). Wow, that's cheaper than renting a one bedroom apartment!!!

[Philip T]

Originally Posted by Chef Boyardee

Somebody said somewhere that home prices should be around 3 times wages. I know that The BLS says average wages are around 40k, but that seems like a load of statistical bull crap to me. Suze Orman put it around 20k per year. As in, that's what most people make!

Fine, I'm good with the 10 bucks an hour figure. So then, homes should cost about 60k. With 20% down (12 grand), payments on a 30 year mortgage should be around $333.00 per month (plus taxes and insurance). Wow, that's cheaper than renting a one bedroom apartment!!!

The number part of your math may be correct, but I think you are missing the model.

The BLS numbers are usually HOUSEHOLD income -- anymore that is typically a two-earner family, or someone with a job and a half. That is probably the difference between the salary cited and the net results.

Taking that a step further -- back at household income levels -- at $40K X 3 = $120K, or payments double what you were figuring. Add in insurance, property taxes, maintenance costs, and you are up to around $1000 / mo. for that same household.

But those income numbers vary widely by location -- as do the houses. City Data (this site) covers those number very well on the main front page (City-Data.com). Just type in any city/state of interest and it will give you all these stats.

[Philip T]

Originally Posted by Woof Woof Woof!

Do you think I'll have time for one last shopping spree? I'd like to get my wardrobe in order before all goes to hell.

Or maybe I should focus on functional clothes, like rubber boots and warm jacket to get me through....

*Sigh*

Import shipments of clothes heading to US are supposed to be dropping something like 70% this last quarter.

First Rule of Business is: The Customer MUST have money. We aint got the money, and folks around the world seem to be smart enough to slow or stop the shipping to US.

I'll be doing my Doomer shopping and stock up at my favorite haberdashery -- The Salvation Army Outlet Store.

See you there?

[Chef Boyardee]

Originally Posted by Philip T

The number part of your math may be correct, but I think you are missing the model.

The BLS numbers are usually HOUSEHOLD income -- anymore that is typically a two-earner family, or someone with a job and a half. That is probably the difference between the salary cited and the net results.

Taking that a step further -- back at household income levels -- at $40K X 3 = $120K, or payments double what you were figuring. Add in insurance, property taxes, maintenance costs, and you are up to around $1000 / mo. for that same household.

But those income numbers vary widely by location -- as do the houses. City Data (this site) covers those number very well on the main front page (City-Data.com). Just type in any city/state of interest and it will give you all these stats.

Actually, I'm pretty sure Orman was talking household income as well. In any case, one job should be enough!

In regards to home prices, average home prices are 191k.

[Woof]

I think cheap energy will bring back the economy some day, that's all you need for it to boom once the credit thing works itself out in a decade or so. Maybe those new micro nuclear plants by Hyperion will do it.

Originally Posted by Woof Woof Woof!

Do you think I'll have time for one last shopping spree? I'd like to get my wardrobe in order before all goes to hell.

Or maybe I should focus on functional clothes, like rubber boots and warm jacket to get me through....

*Sigh*

Goretex boots are much more comfortable and safe than rubber. Rei.com and LL Bean are reasonably fashionable names (at least among men, dunno about women) and have some practical AND pretty women's apparel.

[rubber_factory]

Originally Posted by Chef Boyardee

RubberFactory, Patriotism implies a willingness to make sacrifices for the good of The Nation.

Like paying higher taxes, or taking a bullet from an AK-47 somewhere in the eastern hemisphere?

My patriotism has limits.

[Chef Boyardee]

Originally Posted by rubber_factory

Like paying higher taxes, or taking a bullet from an AK-47 somewhere in the eastern hemisphere?

My patriotism has limits.

Like paying 10% more for a pair of shoes.