They've slowly re-started construction in the subdivision across the street from where I live - huge 3000-5000+ sq ft houses, each with three-car garages, each going for around $400k-600k. There are also more apartment complexes going in, with one-bedroom units going for about $900/month. There's nothing in-between being built and nothing for the especially frugal; if you want a modest-sized single-family home in this area you'll have to wait for someone to put their 30 year-old modular home on the market. I was reading this article about how today's 30-somethings have 21% lower net worth than previous generations did, adjusted for inflation, and how it's the first time in the US that a younger generation has been that much worse off than their parents since the Great Depression. I'm not quite to 30 yet, but it would be difficult to financially compare myself with my parents when they were my age: unlike me they were married, had a house and a mortgage, 3 kids, credit card debt, no college education or loans, and one was self-employed. But on the whole I'm financially in much better shape than my parents were, and probably still am today: that whole build-up-equity-by-being-a-homeowner thing hasn't really been working out for my parents, and is one of the reasons I'm very skeptical about just how financially wise it would be for me to buy a home. According to the article, there's been a sharp drop in home ownership rates for people under 39 so it sounds like other younger people have the same idea. So who's buying those giant houses across the street? They seem to be geared toward younger families: there are nice community playgrounds and some have kids' toys in the yards. Maybe some people, owing so many tens or even hundreds of thousands of dollars for their educations, figure what's a few hundred thousand more? Even with the housing bubble collapse, it's still fairly easy for someone with decent credit to get a huge mortgage. And after all, it's not like debtors go to prison anymore. Being in debt is not the worst thing that can happen to a person. Look at the woman in the video: she has a nice home, a car, food in her kitchen, her own business, a baby on the way - she says so herself, she has everything she wanted to have, just with this 'debt' thing hanging over her head. So it seems like these days worrying about debt is like worrying about your gut bacteria; everybody has it and it's probably not going to do you any physical harm and it'll probably even enhance your quality of life. I read blogs about personal finances, all shunning debt as if it caused Ebola and all singing the praises of living a debt-free life (and all written by older people who escaped college before the tuition bubble). And I live frugally and financially-aware, and I know I could pay off the last bit of my student loan and then I could join the ranks of the debt-free right now. But it would wipe out my savings and all those benefits of living debt-free don't matter so much to me: if I were debt-free I wouldn't just quit my job and move to a more desirable part of the country. I'd still need to pay for rent and groceries and flight instruction, and my dream career will take at least a few more years and a whole lot more money to realize. There's always something that needs paid for; unless you've got so much money you can live comfortably off the interest it's a neverending cycle whether you're in debt or not.
Personally, I think the government instead of encouraging people to buy homes at every opportunity should reverse course and DISCOURAGE home ownership. Our modern economy is not like 50 years ago where a person could be expected to settle in one area and work for the same company 40 years and then retire. Back then it made sense to encourage people to "put down roots" in the community that they were going to be a part of. Now we live in a dynamic jobs environment where people frequently move and need to stay mobile and agile. I'm a government employee for crying out loud and I've lived in basically four separate towns far enough apart to require relocation. I used to have a stepbrother who is a mechanical engineer and he moved five different times over three states within a 7 year period. He kept being offered much higher paying jobs as he gained experience. Which made repeatedly buying a house foolish.
Yeah, I don't think my generation is ever going to have as high a percentage of home ownership as our parents, even if we ever get there financially. Homes can't be trusted to build up equity anymore, so you might as well rent and put your savings somewhere else that likely will see a return.
A few thoughts: 1. Home ownership has never been particularly high in the US if you count homes that do not have a mortgage on them. The homeownership fantasy has largely been a part of the debt slavery our system supports. 2. Our quality of life has dramatically increased even as our reserves have decreased. This is unsustainable as you noted above. 3. Newer homes are typically built like crap. That is one of the reasons they are not holding their value. I know this for fact, yet I have never seen people talk about it. It is for this reason that my wife and I bought a house built before 1950. Sure, it needs new electric and other updates, but it is built like a tank compared to the POS's today. 4. People always want to live above their means, which means they have to have the house their parents had at 60 when they're 30. This is foolish and unrealistic.
The whole "house is an asset" thing is only if intend to sell it at some point. People are under the impression that houses don't depreciate in value because most people have never seen it in their lifetime. However, if you like an area well enough and plan to stay there longer than ten years, the house value going down wouldn't matter all that much, I would think.
I've been under the impressive that "housing values" in this day and age were more a function of the community and area you were in than the actual qualities of the house itself. For example if you are in a growing area with people moving in to take jobs, the market demand pushes the value of your home up. Likewise if you are in a dying community with 30 houses up for sale for every buyer, then you are very much screwed even if you live in a well maintained mcmansion.
I have wondered that too lately. I've been looking at condos here lately since I have some money burning a hole in my pocket but the prices are out there. I love my apartment to death, but something a little closer to work would be good. So I looked around. Holy fuckweasel. Who the hell can pay those prices?! Now there's a bubble ready to burst - and I'm more than willing to wait for it. This looks like there'll be two for the price of one kinda deals on the market in five years. The gnashing of teeth from all those who haven't learned and think it will go up, up, up ad infinitum is already audible from the future.
I was thinking about posting this as it's own thread but this seems like a perfectly good place: Yes, summer job paid tuition back in ’81, but then we got cheap Kids, it’s true! You used to be able to work odd jobs to pay your way through college. How? Well, that’s the part we don’t want to talk about anymore. By Danny Westneat Seattle Times staff columnist People tell me you used to be able to work one job, the entire summer, and cover your entire education. I’m not sure how long ago that was — I have a hard time believing it. — Stephan Yhann, 21, current UW student Put down your smartphones, kids, and gather around Uncle Danny. I’m here to tell you a little something about these yarns from the days of yore, these tales so tall and preposterous. What’s most amazing about them is: They’re true! You really could work a summer job and pay for your education. I saw it myself. And I’m only 48 years old! OK, I say “only,” as if 48 isn’t all that old. Which, let’s be blunt, it is. But it’s not like I’m reaching back to the 1930s here. Just the ’80s. Depressing, maybe, but hardly the Depression. Yet in the early 1980s, when I was about to head off to college, I worked jobs at Kentucky Fried Chicken and later at a rubber-parts factory, where I got paid $3 and $6 an hour. With no skills whatever, I made $120 to $240 a week. Sounds like beer money only. But here’s the part that will really freak out you kids today: a year of tuition and fees at the University of Washington in, say, 1981, was $687. It was similar for other public colleges around the nation. That’s not a misprint. There’s no missing digit. Even a crappy job like slinging chicken at KFC could pay for that year’s UW tuition, and most of next year’s, too. Today? At $10 an hour you’d have to work 1,250 hours to cover the UW’s $12,500 tuition (more, once you take out taxes). In a 12-week summer, that’s more than 100 hours a week. What really made me feel ancient is that the 1981 UW student guide shows the Med school charged only $1,029 a year back then. Today: $28,040! Now, I didn’t go to the UW. But I’m going down Husky memory lane because last week The Seattle Times featured a crop of harried UW students looking rueful and broke. The story said skeptical state legislators often say how “they worked their way through college. And then they ask: Why don’t students do that today?” Of all our delusions, we old farts cling to this bootstrap one the most. We worked our way up on sweat and chicken grease, we say. Can’t this generation? What’s wrong with them? What’s wrong is that after we got ours, we cut it off for them. The reason a summer at KFC could pay for a year of UW med school in 1981 isn’t that we were so hardworking and industrious. It’s that taxpayers back then picked up 90 percent of the tab. We weren’t Horatio Algers. We were socialists. Today, the public picks up only 30 percent of UW tuition, and dropping. How we milked the public university system in this state and then starved it will go down as the great badge of shame of my generation and the one before mine, the baby boomers. Affordable college made us. Once made, we wouldn’t pay even a two-cent per can soda-pop tax to give that same gift to anybody else. So, kids, the unbelievable tales of yore are true. Except the part about rugged individualism — that is baloney. Due to the allure of this myth, however, you’ll get no help from us. You’re on your own. You can have a lecture on the virtues of hard work, though. No charge. Danny Westneat’s column appears Wednesday and Sunday. Reach him at 206-464-2086 or dwestneat@seattletimes.com http://seattletimes.com/html/localnews/2021250505_westneat23xml.html
I disagree with the notion that debt is necessarily a bad thing. If managed properly, it's an important financial tool, allowing you to leverage future earnings potential to achieve goals sooner. I don't particularly advise debt for the sake of blind consumerism, but it's just fine for education, housing, and sometimes medical costs.
I disagree by and large. A house is the one area where I think debt is okay, but you have to be careful not to over consume. Speaking of over consumption, student loans are a prime example. Adjusted for inflation, the average degree costs 2.5x as much as it did in 1970, but is certainly not 2.5x as valuable. Government guaranteed student loans allow people to do the same thing in education that they do in housing: over buy. While I believe in economic freedom, it is incredulous to think that the amount borrowed for education is topping the amount of mortgages and credit cards, considering that only about 10% of graduates use their degree directly.
Just as they did with housing, government has created a bubble in education that has now burst. RealClearPolitics linkage: College Bubble Bursts after Decades of Extravagence Considering that today many college graduates are finding out their degree isn't worth nearly what they paid for it, we probably need fewer graduates. We CERTAINLY don't need the taxpayers further subsidizing a system that is already producing phenomenal waste so it can produce even more. It's time for politicians and administrators to learn that a college degree's value isn't in itself, it's in what it allows you to achieve in the real world. A four year education that leaves you tens of thousands of dollars in debt with no job prospects is worse than useless: it was a BAD idea.
HA! Maybe being too dumb for college turned out to be....the smart play in my case! I make over 50G a year in my actual job and another 30K or so from my "no show" job and I only have 62 college credit hours, most of those thru the military.
Wow, Anc's article is a real eye opener. And the saddest part is, most of that huge tuition bill has fuck all to do with rising expenses, but paying those at the top, like the Dean of Students and the President of the college and whatnot. That is what that Occupy US Davis (the one where all the kids got OC sprayed by that one cop last year) was campaigning against. As for the topic, like Gul said debt can be good. A house IS an asset, for example, if it's a rental property that pays for itself and builds itself in value enough for a down payment on another property that brings in money. A house as something to be "consumed" for the purpose of personal use, like a car...not so much. The whole "Own a house at all cost" Cake is a lie, as is the "Go to college at all cost" bit. I know I certainly wouldn't pay for my child to major in English or most things that weren't in the science and engineering field for that reason.
It also doesn't help that kids are jumping straight into post secondary after high school and often waste a ton of money on courses that they're really not interested in at all. I'm 24 and I have only recently REALLY figured out what I want to do. Luckily enough the classes that I took up till now have been a small step in that direction, but had I gone to post secondary straight after high school I would have $70,000 in debt and a law degree that I never would have wanted to begin with. Now I have money saved to pay for most of post secondary, I know what I want to do, I have my housing arrangements figured out, and I'm actually serious about the whole damn thing. Win, win, win.
I'm 28 and finally going to college, I have enough money saved up to pay my own way and enough part-time work to keep me fed.
The generational warfare being carried out by the Boomers (The Most Selfish Generation) only begins with college. Take a look at Unions, where older workers will resist any potential cut in their lavish benefits in order to stave off layoffs. Layoffs that according to the rules they wrote require the newest (youngest) workers be laid off first. Housing is another place. Think about all the billions they got to help prop up their over-inflated houses, at the expense of us. I liked the falling prices. It meant I was able to buy the kind of place earlier generations (historically prices were around 3x median income) were at that time in their life. Now that they are going back up, I'm being priced out.
I dunno how the Canadian college system is set up, but here in America, kids have to complete sixty units of coursework that, like you said, they have no interest in and if they paid attention in high school , would be fairly easy to pass. In most college systems around the world, like England, "general education" refers to the core classes of a particular major, not a bunch of women's lib or basket weaving classes. Those courses make college longer and more tedious than it needs to be, and I"m glad I jumped into those when I was still stupid and naive. I don't know if I would have the patience to sit through most of that stuff now, GI Bill be damned. But even if ours was modeled more like the British universities, I do agree that kids don't often know what they want out of life at eighteen. I thought I wanted to be a playwright, for fuck's sake. And many students change majors two or three years in, and one friend of mine left a pre-law degree program after completing all the credits to graduate! I don't think I'd have a problem at all with a kid of mine holding off on college until he knew what he wanted to do in life...either than, or take an apprenticeship or tech program to make money and THEN go to college after having some real world experience.
Honestly I think your generation needs to roll back to your grandparents expectations for a residence, at least as far as square footage. Trust me, if we weren't trapped into this house my ass would find a nice CHEAP 1,200 to 1,500 SF place. It would serve one purpose: A place to sleep and store my crap. Other than that, it need do nothing more. IOW, live below your means if you can. The universities themselves have jacked up the cost of tuition to an insane degree, a large part of which was driven by the idea that everyone simply MUST get a degree. The student financial aid scam fed into that. So the question is: Did state subsidies really dry up (25%* of state revenues going to higher ed in 1990, 5% today), or did they remain constant as a part of the state budget (i.e. 10% of state revenues in 1990, 10% of state revenues today), and was it skyrocketing tuition that created the "imbalance"? At 42, I did pay my way through college in the early 90s through a combination of the GI Bill and near full time work. It killed me but I did it. A bunch of my buddies did it with out having the GI Bill. Yeah it took us about 6 years on average instead of 4, but we did it. Having said that I don't see a kid (like my 21 year old) being able to do that. Tuition has just gone through the roof. As a further note, my 13 year old already figured this out. He told me yesterday that unless he gets a full scholarship he really doesn't see the point behind going to college. He said think about it; Today's BA/BS is the AA/AS from 20 years ago. The BA/BS is now the MA. This is all thanks to education inflation. He said he thinks that if he goes into a skilled trade while everyone else is getting a degree, he'll make a killing as a plumber, electrician, etc.. Hard to argue with that logic. It's also sad because he is a certified genius. I told him to go into construction and be THE contractor, not one of the subs. * I'm just whipping those percentages out of my ass. They are only meant to illustrate a point.
I don't think a lot of people in my generation have exaggerated expectations for a residence; that's why our home ownership rates are so much lower than our parents' when they were our age. It's zoning laws that say that houses have to be gigantic that has made a dearth of 1,200-1,5000 sf homes. It's not just subsidies that have driven this; a lot of it is employers now having the expectation that even their cashiers have degrees. If a high school education meant something, and if employers didn't automatically chuck any resume that didn't have a college degree listed, maybe fewer people would waste time and money with it.
One reason is that because of fear of lawsuits about bias, virtually no employer uses a simple aptitude test to screen job applicants. So the "do you have a bachelor's degree" has become a de facto tier one screening test for job applicants.
So zoning laws determine minimum housing square footage? I always wondered why you rarely see small new homes being built. You would think there would be a market for them, especially since family size isn't getting any bigger. Yes, there are townhomes but some counties don't allow them. oops - I guess family size isn't an issue. Now take the SUV - please! When it comes to vehicles how the heck did we tote three kids around a few decades ago in a small/medium car? Or tote our two bags of mulch back from Home Depot in a small pickup truck? We have childless couples that NEVER LEAVE THE PAVEMENT driving around in what I call "tanks." Anyway, here's my philosophy on a house: the more extra room you have, the more bullshit worthless crap you buy to fill it up. Us older WF members probably grew up in 1,000 square foot (or smaller) homes. That's all we needed, because we didn't have twenty tons of crap to put in it. We lived within our means for the most part. And riddle me this, Batman: if electronics and appliances are getting smaller and more efficient, wouldn't we need smaller homes, not larger?
It's simple, really. Developers make the most money on either vast tracts of townhouses jammed onto a given property at maximum density, or on McMansions of 3, 4, even 5 thousand square feet on small lots. So that's what gets (poorly) built. The 1950s style development of 1500-2000 square foot SFH's on at least a quarter-acre each is simply not done any more.
I heard that some families actually build large houses so they will not encounter fellow family members during the day.
I love my little 800sf 1950 house. I wouldn't mind 8' ceilings as I always bump my hands on the light fixture in the bathroom while changing clothes, but I was able to paint the entire exterior with a 6' stepladder and I can clean out the gutter on the back of the garage by just reaching up into it.
I live in a 1300-1400 sq. foot townhouse and, while I don't consider it big--my living room and dining area are quite small--it's big enough for a single guy with a lot of stuff who wants a room for guests.
My house is fairly large for an older urban area, but I have a large family. And when I say large, I mean relative to typical area units. It's nothing lime a McMansion, but at 1,900 SF it fits five bedrooms, which is just perfect for our needs.
For now our 1100 sqf place works. Long term I'd like to get back to 1700 (what we had in Fayetteville).
