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??? How so? For several years I rented a guest house. The owners and I agreed on a price of $40,000. The mortgage payment including taxes and insurance at the time would have been less than what I was paying for rent. Today the rent would be 2x the mortgage payment. Renting that house is what I can no longer afford.
That "living space per person" is very unevenly distributed. Millions of singles and couples in houses @ > 1000 sq ft per person, and millions in crowded houses e.g. 8 people in 1,200 sq ft house where I live = 150 sq ft per person.
One component of Two Americas (TM).
Surely those 1200 square foot homes come on the market sometimes. I thought you said there weren't any smaller homes available for you to buy.
Typical response. People ask for links. Then when proven wrong, they diss the source with a couple of words and nothing to back it up.
Numbers back it up.
Your right, I do diss the source. It's pretty common sense that wages collapsed when you see the lifestyle that you grew up in to be totally unattainable for all but the rich.
Lifestyle not including iPhones and flatscreen, btw.
Your right, I do diss the source. It's pretty common sense that wages collapsed when you see the lifestyle that you grew up in to be totally unattainable for all but the rich.
Lifestyle not including iPhones and flatscreen, btw.
Since your complaint is based on your disbelief that the CPI tracks inflation (as made clear from previous posts of yours), I will go from that angle.
You keep asserting this but propose no unbiased methodology to demonstrate it. I have already pointed you to the MIT Billion Prices Project as an independent assessment of inflation and it comes pretty close to the CPI. Now it is your turn to describe how you would conduct your price data and methods. I expect a lot of detail; it should be done with the rigor of a scientific paper. If you don't do this, your position isn't backed up well. Then you need to gather the data and analyse it.
Since your complaint is based on your disbelief that the CPI tracks inflation (as made clear from previous posts of yours), I will go from that angle.
You keep asserting this but propose no unbiased methodology to demonstrate it. I have already pointed you to the MIT Billion Prices Project as an independent assessment of inflation and it comes pretty close to the CPI. Now it is your turn to describe how you would conduct your price data and methods. I expect a lot of detail; it should be done with the rigor of a scientific paper. If you don't do this, your position isn't backed up well. Then you need to gather the data and analyse it.
I eagerly await your research.
"It's obvious" is not a method, sorry.
I've already described my position. It just doesn't fit your narrative.
Again:
1. Twenty years ago my monthly health insurance costs were at or near 0.
Now they are at or above 1k/mo.
2. Twenty years ago my transportation costs were around $250/mo for a late model car (new driver so insurance price was on the higher end).
Now they are at or above $1000/mo for a late model car (except now I have a good driving record so the costs would probably be much higher for a new driver).
3. Twenty years ago the cost of tuition at my college was around 3k/yr.
Now it's over to 15k/yr.
4. I don't have a precise number, but food costs have exploded relative to what the government says is inflation.
5. Twenty years ago it costs me $133/mo to rent a nice apartment in an average area (with roommates). That same apartment today would cost around $500/mo (with roommates).
6. The same house that I grew up in (probably worth around 100k 20 years ago) is now worth at least 1 million today.
7. When I was young the majority of families could afford to have 1 working adult and live a middle class lifestyle. Today it's the vast minority.
8. Families had money for leisure when I was growing up. It was common for families to have summer homes, vacation homes, boats, take vacations, do adult leisure activities (for example, bowling was huge back then, so was men's adult softball, the bars were packed back then almost every single night, now they are dead almost every night). Today, the vast majority of families cannot afford these things.
9. Young families could afford to have multiple children back then.
The vast majority can't do this today even if they bought small houses.
10. Companies were aggressively expanding back then. As an example, there were several large employers near where I grew up that were always hiring. These companies provided a middle class wage to even high school graduates.
None of those companies continue to expand, and what's worse, no other companies have taken their place!
11. Even the military is now being judicious with who they'll take. When I was growing up, they would take anyone!
Ok, interesting. But keep in mind that buying vs. renting depends on area and expected appreciation, and is also not the same decision as buying outright vs. buying with a mortgage.
At the time we really didn't care where prices were going to be. We still don't care where prices are heading. The only issue we had was could we afford to buy a home and how would that compare to our cost of living. With rents what they were we could afford to buy a home. With where rents went it was a great decision. With ownership and a fixed mortgage the cost to own stays about the same during the life of the loan. Our property taxes can go up but here in California the increase is minimal.
True, we could have waited to save up the $310,000 to buy our home. Lets see how that would have worked out. Not even 5 years later and our home is valued at more than $100,000 than we paid for it. Our rent was about the same when we bought our home so we could not have saved very much there. Who knows, maybe prices could have went further down. The problem was we bought near the bottom of the market. It was the perfect time to buy a home as no one was buying. I just don't see any benefit to renting a place when our home was within the housing budget, was a place that we liked, had plenty of room for our family.
Our goal is to pay our home off in 10 more years. lets say that we had decided that we want to pay cash for a home back in 2010. Lets say that we were able to save $1,500 a month by staying in our cramped 2 bedroom apartment. We would have to pay rent during the entire time. Lets say that we were able to save $1,500 a month from Auguest 2010 untill March 2025. That is a 15 year period. Lets just say that we saved $1,500 during 180 months. Without any interest we would have saved $270,000. Lets say that we did very well during the 15 year time frame and now had the total to buy our home. Realize that although we could have saved the money during the time frame, now homes cost much more. This would be 10 years from now. With a slow growth rate I am thinking our home would be in the $500,000 range. So now, we have the money to buy the $310,000 home but still need maybe $200,000 more.
Here is what we can do right now. Paying an additional $1,500 a month onto our mortgage we will have the home paid off within the next 10 year period. We would have had use of the space during the entire time frame. We could deduct the interest on the loan.
Last edited by SOON2BNSURPRISE; 03-09-2015 at 01:04 PM..
The idea that most people who are struggling these days are just not "living within their means" is so simplistic, isn't it? Dave Ramsey followers who think if people would just stop going to "Starbucks" every day and buying all of those "large screen TV's," they would be just fine.
Wages are not keeping up with the continued upwardly spiraling cost of living and NECESSITIES like utilities, health care, property taxes, auto repairs, food, etc.
It worked out pretty well for some of us who were struggling 40 years ago. Those of us who lived within our means ended up much better off than those of us who didn't. No matter how broke you are, you will have more money if you don't go into debt.
True, we could have waited to save up the $310,000 to buy our home. Lets see how that would have worked out. Not even 5 years later and our home is valued at more than $100,000 than we paid for it.
Quote:
Originally Posted by SOON2BNSURPRISE
At the time we really didn't care where prices were going to be. We still don't care where prices are heading. The only issue we had was could we afford to buy a home and how would that compare to our cost of living.
Huh? First you say renting during the interim period of 5 years would not have made sense, because prices went up by $100k during that time. But you also said price increases didn't matter. Which is it- did the price increase justify owning during that 5 year period, or did it not? Take your pick!
Quote:
Originally Posted by SOON2BNSURPRISE
With rents what they were we could afford to buy a home. With where rents went it was a great decision. With ownership and a fixed mortgage the cost to own stays about the same during the life of the loan. Our property taxes can go up but here in California the increase is minimal.
Insurance and maintenance and opportunity cost and repairs and time cost (if you DIY) go up just as rent does.
Quote:
Originally Posted by SOON2BNSURPRISE
Our rent was about the same when we bought our home so we could not have saved very much there. Who knows, maybe prices could have went further down. The problem was we bought near the bottom of the market. It was the perfect time to buy a home as no one was buying. I just don't see any benefit to renting a place when our home was within the housing budget, was a place that we liked, had plenty of room for our family.
Our goal is to pay our home off in 10 more years. lets say that we had decided that we want to pay cash for a home back in 2010. Lets say that we were able to save $1,500 a month by staying in our cramped 2 bedroom apartment. We would have to pay rent during the entire time. Lets say that we were able to save $1,500 a month from Auguest 2010 untill March 2025. That is a 15 year period. Lets just say that we saved $1,500 during 180 months. Without any interest we would have saved $270,000. Lets say that we did very well during the 15 year time frame and now had the total to buy our home. Realize that although we could have saved the money during the time frame, now homes cost much more. This would be 10 years from now. With a slow growth rate I am thinking our home would be in the $500,000 range. So now, we have the money to buy the $310,000 home but still need maybe $200,000 more.
This is not a problem of not buying - it is a problem of failing to invest your savings to earn a decent return. Even the poorly performing S&P 500 would not have done so poorly if you invested some every month instead of all at the peak of the market.
Quote:
Originally Posted by SOON2BNSURPRISE
Here is what we can do right now. Paying an additional $1,500 a month onto our mortgage we will have the home paid off within the next 10 year period. We would have had use of the space during the entire time frame. We could deduct the interest on the loan.
I've already described my position. It just doesn't fit your narrative.
Again:
1. Twenty years ago my monthly health insurance costs were at or near 0.
Now they are at or above 1k/mo.
2. Twenty years ago my transportation costs were around $250/mo for a late model car (new driver so insurance price was on the higher end).
Now they are at or above $1000/mo for a late model car (except now I have a good driving record so the costs would probably be much higher for a new driver).
3. Twenty years ago the cost of tuition at my college was around 3k/yr.
Now it's over to 15k/yr.
4. I don't have a precise number, but food costs have exploded relative to what the government says is inflation.
5. Twenty years ago it costs me $133/mo to rent a nice apartment in an average area (with roommates). That same apartment today would cost around $500/mo (with roommates).
6. The same house that I grew up in (probably worth around 100k 20 years ago) is now worth at least 1 million today.
7. When I was young the majority of families could afford to have 1 working adult and live a middle class lifestyle. Today it's the vast minority.
8. Families had money for leisure when I was growing up. It was common for families to have summer homes, vacation homes, boats, take vacations, do adult leisure activities (for example, bowling was huge back then, so was men's adult softball, the bars were packed back then almost every single night, now they are dead almost every night). Today, the vast majority of families cannot afford these things.
9. Young families could afford to have multiple children back then.
The vast majority can't do this today even if they bought small houses.
10. Companies were aggressively expanding back then. As an example, there were several large employers near where I grew up that were always hiring. These companies provided a middle class wage to even high school graduates.
None of those companies continue to expand, and what's worse, no other companies have taken their place!
11. Even the military is now being judicious with who they'll take. When I was growing up, they would take anyone!
So I should take numbers from YOUR example over a study with a much larger amount of data? The problem with your method is the small sample size. You cannot simply assume that it is representative.
Your right, I do diss the source. It's pretty common sense that wages collapsed when you see the lifestyle that you grew up in to be totally unattainable for all but the rich.
Lifestyle not including iPhones and flatscreen, btw.
Ok, so show me YOUR sources to back it up then.
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