An illustration of labor force growth in the Pittsburgh MSA (a.k.a. what a "dying" MSA does not look like) (apartments, renter)

[SteelCityRising]

Originally Posted by ML North

Birth rates in the US -- and in nearly every other developed country in the world -- have been falling for hundreds of years, with the brief exception of the baby boom. It's a sign of prosperity; people no longer need fifteen children to help with the farm.

People also don't have children if they don't feel as if they can adequately provide for them.

Originally Posted by ML North

Boo.

You disagree that it's irresponsible for someone to have a child they can't provide for?

Originally Posted by ML North

I don't see that as necessarily a bad thing. Homeownership is generally a mediocre financial investment, but it's one of the only asset classes in which our parents' generation has any significant wealth. Baby Boomers have very little amounts of cash and securities. Perhaps primary residences will comprise a slightly smaller portion of our generation's wealth, and I think that may be a good thing.

Strongly disagree. I currently pay $700/month in rent. If I don't buy a home, then this is a monthly expense that I will always have and that will only consistently increase over the years, including when earnings decrease in retirement. On the other hand I can also buy a home now, pay it off in 5-10 years, and then that $700/month+ burden for rent can instead be invested for retirement. An extra $8,400 per year to invest is far from trivial.

[Moby Hick]

Originally Posted by SteelCityRising

On the other hand I can also buy a home now, pay it off in 5-10 years, and then that $700/month+ burden for rent can instead be invested for retirement. An extra $8,400 per year to invest is far from trivial.

Because it costs nothing to own a house after you've paid off the note. Completely free. Especially houses where you can pay off the loan in 10 years at $700/month. Those are the houses with the lowest maintenance costs.

[SteelCityRising]

Originally Posted by Moby Hick

Because it costs nothing to own a house after you've paid off the note. Completely free. Especially houses where you can pay off the loan in 10 years at $700/month. Those are the houses with the lowest maintenance costs.

Sarcasm aside most improvements made to a home will improve the value of the home and elevate its eventual resale value. Any improvements we make to our rental now will just help my landlady justify charging us progressively higher rent.

[Moby Hick]

Originally Posted by SteelCityRising

Sarcasm aside most improvements made to a home will improve the value of the home and elevate its eventual resale value. Any improvements we make to our rental now will just help my landlady justify charging us progressively higher rent.

That's one way to put it. Another way to put it is that if you don't make improvements, the value of your house will drop. If you make stupid improvements, the value will also drop.

Don't improve a rental.

[ML North]

Originally Posted by SteelCityRising

You disagree that it's irresponsible for someone to have a child they can't provide for?

is clearly not that same thing as

Originally Posted by SteelCityRising

Only irresponsible people would have babies that they couldn't comfortably afford.

Originally Posted by SteelCityRising

Strongly disagree. I currently pay $700/month in rent. If I don't buy a home, then this is a monthly expense that I will always have and that will only consistently increase over the years, including when earnings decrease in retirement. On the other hand I can also buy a home now, pay it off in 5-10 years, and then that $700/month+ burden for rent can instead be invested for retirement. An extra $8,400 per year to invest is far from trivial.

Your personal financial/housing situation in not necessarily indicative of a broader trend. Appreciation rates in housing in this area are generally right around the rate of inflation. The RoR is partly improved by leverage, but at the same time it's partly hindered by nonrecoverable costs (i.e. interest, maintenance, taxes, etc.). It's not a secret that baby boomers are way under-funded for retirement, hold significant amounts of consumer debt, are generally very far away from being financially independent, though at the same time they are heavily invested in their primary residences. To me that indicates that perhaps a more balanced allocation of wealth could have lead to a better outcome, as opposed to being 95% invested in one residential property. And maybe a our generation's delay in home buying (and witness of a major housing bust) will foster that sort of diversification.

[SteelCityRising]

Originally Posted by Moby Hick

That's one way to put it. Another way to put it is that if you don't make improvements, the value of your house will drop. If you make stupid improvements, the value will also drop.

Don't improve a rental.

It's still better to buy in areas where it is generally cheaper to buy than to rent (including here) was the main gist of what I was trying to say because most of what you invest back into your own home will improve its resale value while you use the money saved from rent over the years to make wise investments. Not every sub-$50,000 home here that I've toured has looked to be a money pit. Most are just in undesirable neighborhoods where the "gamble" would be hoping the neighborhood would improve so the improvements you make into your home wouldn't be for naught.

Also, I don't agree with you at all when you say your home's value will drop over time if you don't improve it. Look at Bloomfield. Most homes there now are listed for six-figures---insulbrick, lack of central air, aging roofs, and "remuddling" be damned. Ditto for Polish Hill.

[Moby Hick]

Originally Posted by SteelCityRising

Most homes there now are listed for six-figures---insulbrick, lack of central air, aging roofs, and "remuddling" be damned. Ditto for Polish Hill.

Bloomfield and Polish Hill have benefited from location. You really can't count on that. Also, a fix figure house doesn't necessarily mean it increased in value. Adjusting only for inflation, a $20,000 house in 1970 would be worth $120,000 today. (Obviously, there are many ways to calculate inflation. I used the site below.)

Inflation Calculator: Bureau of Labor Statistics

I certainly agree about the cost of ownership being lower than renting. That's the reason to buy here.

[SteelCityRising]

Originally Posted by ML North

is clearly not that same thing as

I'm still not understanding our semantics-related feud here. No responsible person would have a child they knew they could not adequately provide for. Only an irresponsible person, therefore, would have a child they knew they could not adequately provide for. What am I missing?

Originally Posted by ML North

Your personal financial/housing situation in not necessarily indicative of a broader trend. Appreciation rates in housing in this area are generally right around the rate of inflation. The RoR is partly improved by leverage, but at the same time it's partly hindered by nonrecoverable costs (i.e. interest, maintenance, taxes, etc.). It's not a secret that baby boomers are way under-funded for retirement, hold significant amounts of consumer debt, are generally very far away from being financially independent, though at the same time they are heavily invested in their primary residences. To me that indicates that perhaps a more balanced allocation of wealth could have lead to a better outcome, as opposed to being 95% invested in one residential property. And maybe a our generation's delay in home buying (and witness of a major housing bust) will foster that sort of diversification.

Perhaps if my personal financial/housing situation DID become indicative of a broader trend we'd have more neighborhoods improved as more younger people spent well within their means to buy cheaper homes in less desirable neighborhoods and used the cash spared from not being "house poor" to invest more for retirement at younger ages? In my parents' area most who own McMansions are Baby Boomers. Most of them DO have too much of their net worth tied into their homes as a result and would need to sell those behemoths and strongly downsize their living situations to have enough liquidity to buoy them through retirement OR just not retire at all, which I feel is becoming more commonplace.

[pman]

while it's true that the simple majority of money invested (within reason) will be made back, a $60k kitchen/deck doesn't necessarily add $60k to the price of your house. each project has its own return (all negative but some moreso than others). improvements to rentals are problematic but OTOH maintenance costs are someone else's problem as is insurance and property taxes.

[ML North]

Originally Posted by SteelCityRising

I'm still not understanding our semantics-related feud here. No responsible person would have a child they knew they could not adequately provide for. Only an irresponsible person, therefore, would have a child they knew they could not adequately provide for. What am I missing?

You're missing a whole realm of possible scenarios and painting every poor parent as irresponsible. I think that's a factually false, oversimplified, and reprehensible misunderstanding of the way the world works. Beyond that, I really don't care to have this conversation with you in this thread.

Originally Posted by SteelCityRising

Perhaps if my personal financial/housing situation DID become indicative of a broader trend we'd have more neighborhoods improved as more younger people spent well within their means to buy cheaper homes in less desirable neighborhoods and used the cash spared from not being "house poor" to invest more for retirement at younger ages?

That may very well be true and would be a great outcome. I would like if that happened. That's not what happened with Baby Boomers, though, and we don't yet know if it will happen for Gen Yers. (Some moderation is necessary, as something roughly analogous resulted in the housing bubble.)

Originally Posted by SteelCityRising

In my parents' area most who own McMansions are Baby Boomers. Most of them DO have too much of their net worth tied into their homes as a result and would need to sell those behemoths and strongly downsize their living situations to have enough liquidity to buoy them through retirement OR just not retire at all, which I feel is becoming more commonplace.

Right, and when they do liquidate and downsize for retirement, they'll be worse off than if they owned less house and more investments to begin with, because real returns on stocks crushed real returns on housing. I don't fault them for taking they approach they did because there was just no way they could have known how things would have evolved, but I do think there's something to be learned from it all, and I also think we can draw some conclusions about what has and has not succeeded at making people wealthy.