Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
That's my question. Do you think people buying more house than they can afford?
Like my mom used to say back in the 80s "Half of people in any given neighborhood can't really afford to live there". That was by her definition (i.e. had some or all of the above: car loans, minimal savings, stretched to make the mortgage, etc.). During the housing bubble she said "Now, I think it's more like 2/3 of the people in any given neighborhood can't really afford to live there". That meshes roughty with Jean Chatzky's survey data (as of 2008) that showed 69% of Americans were either living payday to payday or were going further in debt.
Since mortgage requirements are a bit more stringent now, and the personal savings rate is a bit higher, I'd say the number is around 50%.
According to new research by Harvard University, almost 40 million Americans “live in housing they cannot afford.” That's an increase of 146% in the past 16 years.
It's funny how we use the term "own". It seems that so many Americans own a house and people often compare the US to other countries. But own means paid off. Most houses are own by the banks. If the house isn't paid off, people just live there, they don't own it. (same with cars and other goods they don't own, till its paid off)
Only about 37% of mortgages are paid off and people actually own their houses.
My wife did mortgages for over 30 years before retiring last year. Qualifying for a mortgage doesn't mean you can afford it. And you can never tell from the outside looking in. She's seen people with all the trappings of success drowning in debt and blue collar people who look to be struggling killing it in their financial life.
My wife had a very loyal following because she always was honest with people and really did care they didn't get in over their heads. That's not always the case as most real estate and mortgage people are commission. They don't care what happens to you after the sale.
That being said, from her experience, most can afford the mortgage. It's the stuff they do after buying the house that gets them in trouble. Cars, boats, travel trailers, and other stuff usually does people in. And if they don't qualify? Mostly car payments and sadly, student loans followed by excessive credit card debt.
Lots of people buy things they can’t really afford. Houses cars clothes etc. Some people need to have that outwardly sign of success and will put themselves in tremendous financial jeopardy to do so. As far as percentages....hell who really knows. Lots of people lost houses that were purchased back in the bubble that they really couldn’t afford.
Most people correlate having the ability to make the payment with afford. It's simply how most people have been trained to buy things. Just look at the simple argument over buying cash or financing a car or buying vs leasing. People are being trained to not only buy on payment but rent it don’t own it.
To each his own. I don’t care how they do it I care how I do it.
Quote:
Originally Posted by elnina
According to new research by Harvard University, almost 40 million Americans “live in housing they cannot afford.” That's an increase of 146% in the past 16 years.
It's funny how we use the term "own". It seems that so many Americans own a house and people often compare the US to other countries. But own means paid off. Most houses are own by the banks. If the house isn't paid off, people just live there, they don't own it. (same with cars and other goods they don't own, till its paid off)
Only about 37% of mortgages are paid off and people actually own their houses.
Sorry that’s a big copout. If you have complete control of who comes into your house, if you can put it up for sale, if you’re payment is paying the mortgage, you pay repairs, can modify the house as you please by painting adding rooms walls etc, are paying the property taxes, benefit from the rise in value when you sell, deduct the interest paid, can give the house yo your kids.......
Then.....
You in fact do own it. The house and land itself it’s only for the collateral for the loan. That’s it.
lol, this is a question that really doesn't mean anything.
If you want to get technical, All people live in a house they can't afford, that's why they have mortgages. most folks are carrying around hundred of thousands of dollars especially in their early working lives.
now basically imo it's all about choices. some people chose to get a more modest house so they have dough to do other things. I have a friend who hates to travel, simply hates it. her house is truly her castle so she and her husband have a 5500 square foot mcmansion for 2 people. they just dropped 70K on installing a backyard living area. that's their choice but they also don't drop thousands of dollars on trips.
I also think "paycheck" to "paycheck" is a deceiving term. I pretty much would be classified as "paycheck" to "paycheck" but I also save ~17% of my salary (10% pretax and about another 7-8%) but once I spend that weeks pay, that's it, no more spending until I get paid again
According to new research by Harvard University, almost 40 million Americans “live in housing they cannot afford.” That's an increase of 146% in the past 16 years.
It's funny how we use the term "own". It seems that so many Americans own a house and people often compare the US to other countries. But own means paid off. Most houses are own by the banks. If the house isn't paid off, people just live there, they don't own it. (same with cars and other goods they don't own, till its paid off)
Only about 37% of mortgages are paid off and people actually own their houses.
All people live in a house they can't afford, that's why they have mortgages.
Way to miss the point!
Affordable= low ratio of monthly housing expenses amount VS monthly net income (rent or buy).
Everyone gets to pick what that X% will be for them (assuming the lender or LL goes along).
Nearly everyone commits to paying too much. Some are compelled to. Most choose it.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
