That’s at the root of all these stories about, ”I can’t afford to live where I grew up”. Buddy, I can’t either, but when my parents bought it was a fruit orchard. Today it’s the hottest real estate market in the world. It’s apples and oranges.
People are very opposed to the idea that they can’t buy a house where they grew up, or in an area they feel is comparable. Which I suppose I can understand.
But to your point — things change, you aren’t rich enough, it sucks, get over it.
You can still have that large hand crafted home if you don't expect to live in the middle of San Francisco or Boston. There are gorgeous houses within two hour's drive of me that cost five figures.
I can't afford my parent's house. But when they bought it, it was surrounded by peach fields, not bustling metro America with top schools.
To me, it is like bemoaning how your Grandma was able to afford a house in Beverly Hills in 1920, but you can't today. How unfair the economy, how cruel the world! Except Beverly Hills wasn't Movie Star City in 1920.
My take is that our nation's appetite for coveted, increasingly scarce real estate has silently grown without our realizing it. Not one of my friends today would consider moving to a house surrounded by orchards.
That's exactly my point though, then & now are almost certainly not apples to apples, and "Well I couldn't afford their house today" is exactly the thing that I am saying is a mistake to think.
The value of my paycheck can not buy an average home in my city. I'm not talking about a large McMansion, but a house built in 1940. It's great that I can buy an IPhone, but basic necessities in life like shelter, children, etc. are being priced above the middle class in many area. Sure I could move to a cheaper area, but then I wouldn't have a job.
I grew up in Manchester NH where housing prices are high in the suburbs where I grew up (that's how I traded a 1200 sq ft house for a 75 acre farm with two houses and a barn the size of an aircraft hangar.)
In a really nice neighborhood in downtown (w/ good access to the freeway as well as a local grocery store 2 blocks away, as well as a dunkin donuts and a great ice cream stand not to mention a municipal pool and a beautiful park with a big pond and hiking trails) my uncle bought a huge 3 story house that was "luxury housing" in 1910, lived on the first floor, put up his mother and sister on the second floor, rented out the third floor to one family since at least 1976, finished 1/3 of the basement and built an addition on the first floor, raised 2 kids.
His property values are "depressed" compared to an array of 2 story colonials that were built in 1998 next to the intersection of Rt 93 and 101 (we measured 80 db noise levels outside.) These houses are made of chipboard (we hit "peak wood" 15 years ago and nobody noticed) and they suffered 90% mortality for the yews planted on the foundations because the idiot contractors didn't know that you're supposed to take the burlap bag off yew plants when you plant them.
But I guess they are expensive because of the liquidity premium that you can sell go get an equally bad house in Texas or Las Vegas or anywhere.
Right, this throwaway account is misnamed. My point is not that I can't buy a house, because I could easily move further away or move somewhere with lousy schools or get a small condo. It's that the majority of houses in the city we live in are out of our reach, despite how well off we are (median price in MV is > $1M). And so it boggles my mind how there are enough people in perpetuity to maintain these prices.
Regardless, the demand for the land under his dad's house has greatly increased since it was purchased (unless the house is in Detroit). If you consider housing in areas with zero or negative population growth over the past generation, people can probably afford their parents' houses.
That he can't afford the house he grew up in has to do mainly with two factors:
1. House prices are still ridiculously high, since cities and college towns haven't hit the back side of the bubble yet.
2. The academia job market has shit all over its knees.
The economic tone of the past 35 years isn't growth or decline but stagnation. Some people are better off than their parents; some are worse off. This has always been the case, but it used to be that being better off was far more common. Now it's 50/50.
Economic growth has been decent in the past 35 years, and world economic growth has is at record highs, but the upper class (which is better described as a malevolent and extremely powerful interest group than any kind of formal conspiracy; of the latter, there is none) has done an excellent job of siphoning off all of the gains for themselves, leaving the lower 99.5% of the American population in essential stagnation. They don't want the American lower- and middle-classes to get poorer (they'll revolt) or richer (they'll challenge their position) but to stay right where they are.
As a side effect of historically cheap money, house prices have risen so high that entire younger generations are locked out of home ownership in quite a few areas.
There are a few outliers but in general it's good jobs, affordable housing, pick one.
>But, as you mention, homes are priced insanely high
Homes in some areas are higher. Others they have increased with inflation and are more affordable due to lower interest rates.
The "life is so hard these days" crowd is living in a bubble. They live in a coastal city and have debt from their expensive school that they may be struggling to pay back. [Not coincidentally this describes lots of the media].
Reality is that the majority of people don't go to college. And the majority of those that do graduate with reasonable debt into jobs that pay well enough to pay it off. Simply put, it's easier to live today than virtually any other time in American history.
Even in rural areas you can no longer get the same house that your parents had for the equivalent money.
My parents have an extremely nice house on a beautiful 60 acre piece of land. My dad did water & sewer work and my mom worked part time when we were young and later worked as a postmaster.
My wife and I both have degrees and jobs that pay way better after accounting for inflation, and our house is absolute shit by comparison. My parent’s house and land is worth millions. My wife’s parents did what is pretty standard around here and built on a lake, also with low paying jobs. Their home is probably worth close to a million or so as well.
For many it is also tied to expectations of what they should be able to afford that are born out of what they saw their parents afford and what they grew up in.
If you grew up in a modest but well-kept house in a decent neighborhood, that is your baseline. If you then go on to reach some level of success in your career such that you are roughly on par or exceeding your parents income, your expectation naturally is that you should be able to afford something similar or better. Unfortunately the market dynamics have completely shifted since parents bought, and so people are having to take a really harsh look at the reality of their past expectations and how they align with their current reality. It often means paying way more than they ever wanted or thought was necessary to buy something way crappier.
My mom used to push my dad to buy a 2nd house in Florida. They wanted to retire there and the prices were rising so fast she believed they never would be able to afford it if they didn't get one in 2005 or 2006. (They are retiring in the next 2013-2014 range).
My dad always refused. He ran a medium sized manufacturing business (about 100 employees) and is certainly in the top 5%, but not the 1% of people in the country in terms of income.
His rational at the time for not buying the house was very simple: "There aren't that many people in this country that can afford a house this expensive. It just doesn't add up to me. I know that most people don't make what I make, and if it's a struggle for me to do it rationally, something is wrong here".
They didn't buy the house, but we all thought he was being too pride bound at the time.
Now they're looking at what used to be 1.5 million dollar places that are going for $550-$600k. Meanwhile our house in New Jersey dropped in price roughly $100k because the bubble economics didn't take hold here as much.
The bubble was absolutely crazy. At the end of the day there were a lot of people buying houses that they could only afford assuming the value of the house increased signifcantly before they sold them. Essentially they could only pay the carrying costs - and that was before the jobs market tanked.
In theory, if your goals and chosen locale are not identical to your parents, you can sell their house for cash and use the cash to buy a house in your chosen locale.
In practice, a large percentage of the population are getting screwed because a.) their parents lost their home in the foreclosure crisis, the bank repossessed it, and it got sold to a private investor b.) their parents had inadequate savings and needed to take out a reverse mortgage, and most of the home equity goes to the bank by the time they die c.) their parents got divorced and their evil stepmother got the house or d.) their parents live in one of the many regions where housing prices are stagnant or declining but the kids need to live in an expensive region to have a job.
Indeed, we bought a home due to the fact that the mortgage was less than rent for a low end apartment. We see it as a way to build net worth and reduce costs, we buy used cars, buy bulk household goods though Amazon. A lot of people have this impression that its impossible to live the life that our parents had today. I'm sure its impossible in the bay area or Manhattan but as a high school drop out who lives in one of the top 100 highest income counties in the US I assure you that a very good standard of living is possible here. The only debt we have is our mortgage.
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