Definitely Not A Cop said:
hph6203 said:
techno-ag said:
What did we ever do back when the interest rates were near 18%?
Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.
You have to save 2.5x as long to purchase a home that costs 3x as much monthly. Interest rates are a portion of the equation, but they matter WAY less than price relative to income. Even at 0% interest rates it's more expensive/difficult to buy a home than it was in the early 80's.
1980
Median House Price: 47,200
Median Household Income: 21,000
20% Down: 9,440
Interest Rate: 17%
Tax: 864/yr (72.00/mo)
HOI: 250/yr (20.80/mo)
P&I: 539.00
Total Payment: 631.80
Down payment percent gross income: 45%
Total payment percent of gross income: 16%
2023
Median House Price: 416,000
Median Household Income: 81,500
20% Down: 83,200
Interest Rate: 7.5%
Tax: 7615 (634.59/mo)
Insurance: 2204 (183.67/mo)
P&I: 2327.00
Total Payment: 3145.26
Down payment percent gross income: 102%
Total payment percent of gross income: 46.3%
Thanks. Some people's inability to admit that economics were more favorable to them in the past is strange. And that's not to absolve the idiocy towards our current economic policies that this generation is perpetuating. I'm sure the millenials will be gaslighting the 30 year olds the same way in 30 years.
The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.
Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.
So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.
Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.
I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.
The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.
The primary life lesson I attempted to gift to my son: "Don't be a victim".
