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You are totally wrong. When I was in my early 20s I lived in a large city and could afford to do it without roommates. I did have a roommate, but I certainly would have been able to afford to do it without a roommate. My income was slightly above average, but with an average income it still would have been doable.
It really irks me that you keep maintaining in the face of all evidence that wages have not collapsed.
Figure 1 shows it has been $13.50 - $15.00 per hour for decades. Yes, it has fluctuated, by this is a range of only a few percent. Not a collapse.
And no, housing has not been as affordable as you suggest. Many that were living with no roommates couldn't really afford it (they were not saving for retirement or had no emergency fund).
Rents are rising because people are still responding to the mortgage crisis. They got the idea into their heads that home ownership is a bad deal, and there it sticks. In fact, home ownership has always been cheaper than renting, because it locks in your housing costs and gets you out of the inflation rat race.
It does not "lock in" housing costs. Repairs, taxes, and insurance can go up, and opportunity cost of capital also goes up.
I don't exactly buy the "opportunity" cost because only the down payment is "locked" up. The mortgage part is still "fresh" money like rent is that is paid into, and hopefully people are smart and buy a mortgage at the same rate of a rent that they can afford, IE $X for either rent or mortgage and not $X times 2 for mortgage. A real "opportunity cost" system is the key money in korea https://en.wikipedia.org/wiki/Jeonse where you pay upfront for a set length of time where you live for free. Or at least in my mind, my emergency fund is larger than my down payment but I don't consider it an "opportunity cost" because it isn't being invested otherwise. It's doing it's job of keeping me "secure" in an event of an emergency. A down payment secures my "housing" so I don't have to worry about a short housing contract term.
though none of this is really applied beyond how I manage my own money, just didn't like how buying a house is seen as an opportunity cost when it's mostly just the buying fees and down payment, and a heloc can open up the down payment if you need it
I don't exactly buy the "opportunity" cost because only the down payment is "locked" up. The mortgage part is still "fresh" money like rent is that is paid into, and hopefully people are smart and buy a mortgage at the same rate of a rent that they can afford, IE $X for either rent or mortgage and not $X times 2 for mortgage. A real "opportunity cost" system is the key money in korea https://en.wikipedia.org/wiki/Jeonse where you pay upfront for a set length of time where you live for free. Or at least in my mind, my emergency fund is larger than my down payment but I don't consider it an "opportunity cost" because it isn't being invested otherwise. It's doing it's job of keeping me "secure" in an event of an emergency. A down payment secures my "housing" so I don't have to worry about a short housing contract term.
though none of this is really applied beyond how I manage my own money, just didn't like how buying a house is seen as an opportunity cost when it's mostly just the buying fees and down payment, and a heloc can open up the down payment if you need it
Very simple - that equity could have been invested elsewhere. The ROI that you forfeit to own the house is an opportunity cost.
What equity do you have to invest else where, if you have a $1000 mortgage or a $1000 rent, you spend $1000 for a roof. And a heloc opens equity up to be invested elsewhere if you are able to pay the fees on it.
It's only a cost if you let equity sit in the house and not do anything with it. But this isn't the only option for it.
I submit that you have no idea what "choice" means. If you are determined to own a $750,000 house, you have no choice but to buy it. If you are realistic about what you can afford, many choices will become available. In the 1950s, $25,000 was over twice the price of the average home, and very few people could afford that. They bought what they could afford instead. It looks cheap to you now because you didn't live back then.
Except that in 1950, $25,000 was still much more affordable for the average person than $750,000 is today in 2015, by many orders of magnitude. Since the 1970's at least, the U.S. dollar has dropped over 90% in inflation-adjusted value, vs. what it used to be worth.
Also, another analogy about inflation and deflation of the dollar: as far back as the mid-1980's, an average-income person could still buy a new car for approximately $7,000. Today, the average price of a new car is estimated at approximately $34,000, according to recent news headlines.
If the live within one's means philosophy was truly and 100% universally applicable, there would be two additional possibilities, that are not currently possible in today's economic environment. (1) The price of a new car would still be closer to $7k vs. $34k. Or alternatively, (2) wages would have appreciated over the the past several decades so that an average-income person would be able to relatively easily purchase or finance a new $34k car; say for example if the minimum wage in 2015 were hypothetically $30 - $35 dollars an hour. Because neither or these 2 avenues are realistic or viable in today's economic climate, that's another reason why I believe that "live within your means" is yet another smokescreen phrase that really means "stay in poverty".
Figure 1 shows it has been $13.50 - $15.00 per hour for decades. Yes, it has fluctuated, by this is a range of only a few percent. Not a collapse.
And no, housing has not been as affordable as you suggest. Many that were living with no roommates couldn't really afford it (they were not saving for retirement or had no emergency fund).
In MHO, Keynes was 100% right, and Thatcher was wrong. One hypothetical that might be worth mentioning: if the Vietnam conflict had never happened and had never occurred, would neoliberalism (as described in the cited article above) have been a runaway success, instead of being considered as unsuccessful? And without a Vietnam event happening, could the Stagflation of the 1970's have been entirely averted?
ETA: according to at least some economists, if the U.S. dollar had actually been truly and fairly-adjusted for inflation since the 1970's, the minimum wage would have been as high as $30 - $35 an hour today...just some food for thought...
You're suggesting salaries keep pace with technology and not just inflation. A new car without the new tech is "fairly" cheap if you just want motor, tires, selt belt.
A house has more too once you through in everything that a modern house have, tv, dishwasher, bathrooms, etc
What equity do you have to invest else where, if you have a $1000 mortgage or a $1000 rent, you spend $1000 for a roof. And a heloc opens equity up to be invested elsewhere if you are able to pay the fees on it.
It's only a cost if you let equity sit in the house and not do anything with it. But this isn't the only option for it.
Does the $1000 mortgage you refer to include both the first mortgage and the HELOC?
Does the $1000 mortgage you refer to include both the first mortgage and the HELOC?
Just mortgage, i said somewhere about paying fees on heloc if you could. So someone with $500 extra could invest it plus rent or mortgage plus heloc fees.
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And without a Vietnam event happening, could the Stagflation of the 1970's have been entirely averted?
