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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.
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!
Your a real treat to work with. When we bought our home prices were low. We could afford those prices. we needed a place that was larger to live in. We could have rented a place or as we found out we were also in a position to buy a place. At the time I didn't think prices had declined far enough. I had figured that another year or so and they would have went down further. It turns out that they dipped down but not by much.
At the time that we bought our home, prices could have gone up, or they could have continued to go down. Back then it would not have mattered. All we knew was that we were able to buy our home. Price changes would not have made a change in our ability to pay the mortgage or change our lifestyle much. we bought our home knowing that we would pay it off and spend our life in that home.
We knew that prices would go back up again. That is just how things work. Waiting the 5 years would not have made sence. As it is the prices for our neighborhood have increased quite a bit. Lucky us.
So you see, when we bought our home, we did not care if prices would go up or go down. We just knew that we were in a position to buy right then.
Insurance and maintenance and opportunity cost and repairs and time cost (if you DIY) go up just as rent does.
Not by much. Normally the rate of inflation. I also make more money each year. So it is a wash.
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.
True, we could have invested the money in other areas. That would not have fixed our problem of needing a larger place though now would it. We would still need to either rent or buy a place. This comment is also a wash. Lets say that we keep up with the full 30 year time frame on our mortgage and invest the remainder that we would have used to pay off the loan. We would still have our home and an even larger investment portfolio. We still have to pay rent somewhere. Realize that just over 4 years later and our housepayment, insurance, property tax is less than what the apartment we used to rent now rents for. I see us as having the best of both worlds.
Assuming you itemize during the entire time...
You really are a joy to work with. How sharp is that ax that you have to grind?
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.
Very true, rents go up as well. with us paying a mortgage the cost is fixed for a 30 year period. Insurance will also go up with both renters and home owners. sure the cost would be more with a home than with renters insurance of an apartment. Property tax can go up as well. For the first 4 years that we lived in our home the property tax was flat with the 2013 year declining. For 2015 the property tax increased to what is known as our base rate plus 2%. What that means is that the home was valued at $310,000 or the price that we paid for the home. They added 2% to that amount, or an additional $6,200 bringing our tax rate to 1% of $316,200 or $3,162 a year. In addition we pay some school funding bonds that add an addional .25% for a true property tax of $3,952.50 a year. Each year if prices rise the County can add an additional 2% to the value of our home. I have heard that they don't always do that but it can happen. Lets say that they do it again next year. The new assessed value is $316,200 * 2% = $6,324 for a new assessed value of $322,524 with the property tax (and bond payments) bringing our bill to $4,031.55 a year.
I know that I run on and on, but did that answer the question?
Very true, rents go up as well. with us paying a mortgage the cost is fixed for a 30 year period. Insurance will also go up with both renters and home owners. sure the cost would be more with a home than with renters insurance of an apartment. Property tax can go up as well. For the first 4 years that we lived in our home the property tax was flat with the 2013 year declining. For 2015 the property tax increased to what is known as our base rate plus 2%. What that means is that the home was valued at $310,000 or the price that we paid for the home. They added 2% to that amount, or an additional $6,200 bringing our tax rate to 1% of $316,200 or $3,162 a year. In addition we pay some school funding bonds that add an addional .25% for a true property tax of $3,952.50 a year. Each year if prices rise the County can add an additional 2% to the value of our home. I have heard that they don't always do that but it can happen. Lets say that they do it again next year. The new assessed value is $316,200 * 2% = $6,324 for a new assessed value of $322,524 with the property tax (and bond payments) bringing our bill to $4,031.55 a year.
I know that I run on and on, but did that answer the question?
My point was merely that rising rent shouldn't be a concern as long as your income goes up to cover it, just as you were pointing out with HOA dues and property taxes. And of course lets you invest enough to later either buy a house in cash, or have enough in your portfolio to cover rent/mortgage in retirement.
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!
It appears to me that you are just whining about not being able to live an upper class lifestyle on a middle class income, and have run yourself so far into debt that you can't even see daylight. $1000/mo for a car? Really? If your family had a summer home and a boat bigger than a rowboat, your parents were way into the upper class. You may think you are entitled to that lifestyle, but you aren't. Go earn it. Meanwhile, learn to live within your means. If you are making a $1000/mo car payment, you have no idea how to do that.
If you want to go bowling, cancel your cable service and spend the money bowling. That would buy a lot of lines. The bars are not packed because people have more money to spend and are filling the upscale venues.
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