There are places like that and lifestyle choices that can be made to do so. You have to go to those places and make those choices.
And not have kids until you can afford them.
The thing is that this lifestyle was basically attainable anywhere. Why is it becoming more and more exclusive?
So my grandfather could afford a home and many children on his income alone in his 20's. People my age can't afford a 1 bedroom apartment or any kids even with both spouses working.
Why do you refuse to admit that there's a problem?
Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.
Given that people are now regularly spending 30-50%+ of their incomes on housing, what are we going to do about it? Clearly this isn't good for quality of life. How do we expect people who are spending this much just to live to pay down debts and save for retirement? What are your ideas on how to solve this problem?
Personally I'd like to see mortgage rates rise to temper demand for mortgage debt. While not perfect, there does seem to be a correlation between the ratio of mortgage debt/GDP and home prices/income.
I'd also like to see unearned income at least taxed at the same amount as wages, as this would decrease speculation in housing and drive down rents. Some may counter that this will decrease investment in new housing units. That may be, but this would also decrease the cost of land itself which would counteract that and also incite more people to buy land and build their own homes on it.
What are your thoughts? Criticisms of my ideas and ideas of your own are welcome!
So your solution to increased home prices is to increase leverage? This doesn't really seem to explain what's caused the problem in the first place: why have home prices risen faster than incomes over the past few decades?
The thing is that this lifestyle was basically attainable anywhere. Why is it becoming more and more exclusive?
So my grandfather could afford a home and many children on his income alone in his 20's. People my age can't afford a 1 bedroom apartment or any kids even with both spouses working.
Why do you refuse to admit that there's a problem?
Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.
That's a function of our aging population. Look at the breakdown by age:Given US homeownership rates have hovered pretty consistently in the 63-65% for decades and decades (outside of bubbles) I question that they really are more unaffordable now than in the past. Sure some local markets are crazy but for the most part, no.
Which would naturally lead to the conclusion that we ought to be limiting immigration when the cost of living is this high.There are multiple variables that contribute to rising prices and some of which are particular to certain areas. For instance, in LA you could point to regulations limiting the amount of housing created coupled with increases in population which is naturally going to dramatically increase the value of housing since the supply is artificially limited while demand is rising.
When the prime lending rate goes up - and mortgage interest rates go up - it makes buying a house even less affordable, although it may discourage a few from buying, which could result in more houses on the market. The big winners, however, are those who are heavily invested -- because their rate of return also goes up.
I'm not sure what you mean by taxing unearned income would decrease speculation in houses. We're contractors and there is no unearned income in specs. It's all considered profit and taxed.
The problem is not that we need fewer spec houses -- just the opposite -- we need more. Nationwide, we're still short of houses on the market, which drives up competition for a house, and the result is higher prices. When contractors are building specs, they don't make money until the house sells. But contractors are skittish -- the housing burst made them that way and they're not putting up houses as quickly as they once were. I know we're not.
The other driver is material costs and regulation costs. Those have skyrocketed in the past five years. Contractors aren't making up the difference in profits -- their profits are staying relatively stable -- but they have to charge more for the high costs of building materials. And regulations are out of this world. If you buy a new home, easily 5% of the cost could be in permits and all the new precautions that must be taken while building. When we were building in Lake Tahoe, it was common to spend upwards of 10K just on earthquake ties (and it had to be the brand "Simpson"). When you add up all the costs, it gets quite high.
It's a game. But if you want to win -- you should probably buy a house. Owning a house is a great investment, especially when you can sell it for double the price in 15 years.
Some people are getting weeded out -- that's true -- and they ought to do as some here have suggested and move. There's nothing at all wrong with that.
THings change, economics change. They have all thru history. ALWAYS. Why do you think people migrated? Immigrated? Moved to new places, settled new lands?
For a better life, for more opportunities, to survive.
Why do you refuse to admit that adapting is the way to survive and prosper? Because IMO, you feel entitled to something and dont want to have to make the tough choices, sacrifices.
This isn't about entitlement. This is about structural issues in our economy where banks have assets equivalent to nearly 90% of our GDP where that used to be 50%, and now the cost of living is extraordinarily high. Does me moving to a cheaper city (where there aren't as many jobs) fix this problem?
Don't you think that there is something very wrong with this picture and the fact that real US household wages have stagnated over the past 20 years?
They are separate issues IMO.
But if enough people relocate, housing prices change. If they change their lifestyles, economics change. If they borrow less money, banks profits change. Etc etc etc.
Which would naturally lead to the conclusion that we ought to be limiting immigration when the cost of living is this high.
Sent from my HTC phone. Instaurare omnia in Christo.
Or better yet get rid of prohibitive regulations and ordinances that stymie the creation of new housing.
- address capitalism-driven wealth inequality. Remember, the wealthy can afford more and more every year...of lavish lifestyles that as you point out, don't really change quality of life. And 99% of that earning is on the back of the employee. Labor rights is how you solve that
- population growth...land is scarce. Not much to do about that, if you hold population in check, that has other bad consequences too...don't know about that one
But in generaly, people will probably just purchase less house/space to mitigate that cost, and as you note, spend more.
That's a function of our aging population. Look at the breakdown by age:
Sent from my HTC phone. Instaurare omnia in Christo.
Weird how the Chamber of Commerce pushes hard for amnesty and immigration reform, but not against regulations that stifle new housing construction. Why do you think that is?
Reading this post, I come back to think of decades ago when families could buy a home with one income. Today we're in a situation where one income isn't even enough to rent a one bedroom apartment without creating financial stress. What's changed in those decades? I argue it's a massive increase in debt which, as you allude to, exacerbates inequality as the rich get richer and the poor get poorer. How do you see it?
IDK, I got 2 kids in their 20s who both bought homes on one income. They way underbought what they could afford too.
And it shows the same thing. We're better off than anyone prior to the 1950s, but we're worse off than anyone after that. And way more of our women are working! Something has gone wrong.Get me a similar graph that doesn't start at 2006. The older folks weren't as affected by the bubble because more of them owned homes pre-bubble already, the younger folks were the ones that got hit hardest by it. I'd be willing to bet the ownership rates have trended down closer to the historical averages for all age groups.
Edit: There you go, found one for you.
You think the Chamber of Commerce doesn't know exactly what it's doing?They don't follow their ideas to the logical conclusion and believe ultimately that any problem can be solved simply by passing legislation and the force of government. It is the same people that think sticking a "no guns allowed" sticker on a window is going to prevent a criminal from entering an area without a weapon.
Did they buy them right after the collapse? Because if so, they had great timing.IDK, I got 2 kids in their 20s who both bought homes on one income. They way underbought what they could afford too.
Do you really think that me moving from Los Angeles is going to change the profits of property owners there? Because let me tell you, millions have moved away from the city in the past decades, yet it's still the most expensive city in the country (relative to incomes).
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