Because rampant consumerism isn't the issue. Most families are responsible with their money. Their greatest expense? Rent/mortgage which is pushed up by:
1. bankers issuing insane amounts of debt that out-pace wages
2. speculators borrowing from said banks to "invest" in pushing up living costs for families (ie people like MMM)
The media loves to portray people as feckless idiots but the real problem is economic rent extraction by people who are adding zero value to society. That is the rentier - they generate no wealth merely appropriate it.
Do you and people you know own assets? Not accusatory - it's just there's a lot of working class people who can't afford to feed their kids.
It's about the cost of housing / basic necessities sucking up money from the middle classes. The money accumulates towards assets so people who own them don't notice anything is wrong (quite the contrary)
This is such a dismissive comment and misses the main point.
The main point is that these are presumably upper-middle class families. You would expect that with their higher-than-average incomes they would have greater amounts of discretionary income that they would be spending and that their expenses would be spread out across more of the economy, supporting many other businesses and services. Instead the high salaries are being captured by housing costs. Sure they're not hurting, but it is surprising that dual-income, high-earning families are basically breaking even.
I disagree that the idea of a family residence is from a time long gone
Agree, but Nobody is arguing/describing this. My point was if you are overconsuming (buying too much house), you are delaying ownership and extending payment, such that you never really get clear of the debt. A 30 year mortgage taken on at 35 needs you working at the same job until 65. But careers are no longer so stable, in this regards at all, or so it seems lookinga around the West. It also leaves precious minimum left to pay for college. In the example of 22-52, you had 13 years free to pay/save/recover from your housing expenditure to pay for schooling of your kids. This would require taking out a 15 year mortgage at 35, and that would be smarter. But many people could not then afford the payments....
This is part of the reason people have overbid for housing. The other reasons are social/signalling, etc. But that is as old as forever...think of all the nobles in europe living with massive debts, etc...
The amount of money a household can spend on a mortgage increases drastically as income increases. Because, for the most part, the costs of raising a family doesn't have to increase in proportion to income.
What this means is that a family making $100k/yr can spend dramatically more than one making $50k/yr, and making $200k can spend more on housing their the other two families make in a year.
In most cities, this plays out by having islands of expensive neighborhoods in desirable areas. And housing decreases proportional to desirability as you get out. The problem in some cities in California is that there are so many extremely wealthy families, that the island of desirability has become so large that there are no affordable housing anywhere close to where the good jobs are, so lower income people are forced to commute for longer and longer.
Most other cities do not have the same numbers of extremely wealthy people. But in every city where a large number of disproportionately wealthy people move in, a housing crisis seems to follow.
It used to be, living closer to the city meant a compromise in some other area. Maybe you lived in an apartment and took the bus everywhere because you couldn't afford to have a house and a car in the neighborhood you want to be in. But now, people can afford to have a single family home with a garage in areas that really should be limited to large apartments.
Because young people cannot afford a home to raise their families in. Because enormous amounts of wealth from the productive sectors of the economy are being siphoned to the class of the landed gentry in exchange for no benefits to society at large.
People love hating modern tech billionaires or old time industrialists, but this class at least create something and hire people.
Because a household must have two incomes now to afford a home. This comes at the expense of what is best for the family, especially the children. I think you're agreeing. Home prices are out of control.
The issue is wealth inequality - DINK households with 2 six figure incomes massively dwarf what’s possible for a regular American family (one breadwinner, 2.4 kids) - they’re the top 5% which isn’t Elon Musk territory, but as a group it’s distorting housing way more than a tiny amount of billionaires would
Fwiw I don’t think there’s anything inherently “wrong” with it, the market is a brutal mistress
I do think people tend to overblow things because of generational miscommunication.
But... I'm 25, and won't be owning a home anytime soon. And not for lack of trying! In Canada, there's a first time homebuyers saving account, which I load up when I can. But food is quite expensive. And so is rent. I had to move (Toronto => Montréal) because I couldn't afford 2500$/m there.
I think people hear that, and attribute that the costs are directly related to me being "too picky" or overspending, unlike people in the past. But I was living in an area of Toronto a parent grew up in. In the city. Food has definitely gotten more expensive in my own lifetime. I tend to be pretty boring with meals I make, so seeing the normal grocery bill tick up from 40$ to 55~60$ has been a bit of a shock, despite buying the same things. I look at my home buyer savings account, and compare to the housing market around here in Montréal which is "good" compared to most of canada, and I see lots of 100k$ down, 750k$ units. Most of which will eat up my savings account with the down payment.
This is while working on a tech worker salary. That puts me in a lucky category, for which I'm infinitely grateful for, it's a lot more stressful for others.
I don't really want to pay a premium to not be homeless, just to fund the last generation's retirement, when I'm already paying their pension and healthcare. Why should I live here anymore? For the chance that maybe I can sell that home for more... to my children's generation?
Because even if it's their parents that pay for the mortgage, they are still affected by the consequences of high housing prices (longer travel times, less disposable income, lack of space, bad neighborhood, lack of social mobility, etc...)
There are no grandmas that can save money anymore. The wealthy can afford to pay so much for housing that real working people can even afford it. The wealthy consume so much simply because they can. And there are a LOT more of them thanks to financial engineering.
The problem is that many in the US have been brainwashed into believing their house IS an investment and this justifies purchasing above their means, because "at least I'm not throwing the money away in rent."
That's a weird comparison. Not every household makes enough money to afford a home. I don't think home ownership is a universal human right so I don't really see the problem with this. The median household shouldn't be buying a median priced new car either
that article had me face-palming so many times. Maybe people should stop worrying about how much they need to spend to appear to be in a certain "class" and instead just stop spending money to keep up with the Joneses. If you can't responsibly support a (non-west-coast/NYC) family on $130k then you just suck with money. Christ if you can't even come up with an extra $400/month as someone with a middle class income wtf are you even doing? Your bank probably followed the 34% rule if you bought a house, meaning you just took on a ton more debt after securing the biggest mortgage you could...
If one has a problem replacing an AC and they own a home, they're just bad with money. I live in Arizona. I understand, it's called an emergency fund.
Most people do not want to move frequently.
I think you'll also find most people do not want to be childfree.
Homeowners are not at the mercy of the market. People paying down a mortgage are not true homeowners. They are paying off a mortgage.
"Modern world" or not, "serfs" still exist, and they certainly exist in the perception of others looking outward onto other people's lifestyles.
You can absolutely say the same thing about people who own luxury condos. They're being luxury charged for something they don't own.
You don't own land? You don't own a house? What about a car? You lease that, too? Lifestyle choices stop being lifestyle choices when you can't afford the alternatives.
My parents just sold their fairly nice large house for something like $170k. Of course it's not in a cool city. Living in a high cost of living area with expensive houses is voluntary consumption. If that's what you voluntarily want to spend your money on then fine, but you get just as much sympathy as the people complaining about how expensive brand new BMWs are.
How is the biggest purchase of someone’s life not consumption? It’s can be both, although, I would argue the investment aspect of a house is minor and irrelevant since you always need somewhere to live.
The mortgage debt has to be serviced, and your kids have to go to the schools in the richest areas (aka best schools). Hence once you have kids, most are innately pushed to stretch themselves so their children have access to the best possible future.
Oh, I completely agree that it's reasonable to be angry we have to pay more for the same or less. And our family is single income so it's been really hard for us.
It doesn't take houses to be considered investment vehicles by anyone though for this to happen (even if some people do). Just more and cheaper money available to throw at the same things.
1. bankers issuing insane amounts of debt that out-pace wages
2. speculators borrowing from said banks to "invest" in pushing up living costs for families (ie people like MMM)
The media loves to portray people as feckless idiots but the real problem is economic rent extraction by people who are adding zero value to society. That is the rentier - they generate no wealth merely appropriate it.
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