People talk about eating out less and eating at home more.....but groceries aren't cheap either
Thank you for the insight. The part about devaluing the dollar related to asset values, I think, is the part many dime store real estate people miss.Heineken-Ashi said:Depends on demand. My guess is not well. But it's just a guess. I could see anywhere from a 10%-50% drop. If we enter a full on deleveraging event, it doesn't matter what supply and demand is at. A delveraging is when the value of the dollar increases (which we haven't seen in any of our lifetimes and not since the Great Depression). If the dollar is rising (and please keep in mind, I don't mean in relation to other currencies), it means liquidity is being sucked out of the system which means falling asset prices in relation to the dollar.Tex117 said:
Your posts are always insightful. How do you think prices will do with their being limited supply?
If we keep with the trend of devaluing the dollar, it might be a significantly lesser correction as asset values continue to rise in relation to the value of the dollar along with higher inflation. In this case, a drop in demand would still drop prices moderately no matter the supply, but would likely eventually stabilize until a couple years down the road when we enter the next, worse inflection point for the economy.
I really don't see a scenario like 2020 where values rocket for a multi-year period. Rates would have to be at zero and people would have to be flush with cash directly from the government, which I guess is possible. But that would come with such a massive inflation shocks that I simply couldn't advise buying a house in that environment, as, again, we would be right where we are today in a couple years with literally no backstop available and all the room below to fall into depression.
agracer said:You're doing something wrong here.AlphaBean said:crowman2010 said:You make ~$12,500/mo after taxes and you can't stay cash flow positive? Your issue is not your $3750/mo house payment.Aston04 said:
All I can say is don't move up in house unless 100 percent sure.
The wife pushed hard for us to it just over a year ago- so finally went along.
Even though we could put a ton down, rates our killing us. After mortgage pmt, taxes and insurance, we are at about 3750 a month. We make combined just over 200k - and it's a struggle to stay cash flow positive.
You sure about that? Throw in a couple kids and responsibly contributing to retirement and there is not much left.
50k feds gonna take their cut
45k retirement
25.5k childcare (our costs)
45k housing (3750/month all in for this hypothetical)
4.5k Auto insurance (I admittedly don't know if this typical, we have more than just a basic two vehicles on ours so I shaved a chunk off to get to this)
10k Healthcare max OOP because with kids you're gonna need it *looks at 70k bill from 4 days in hospital with 2 in pediatric ICU
That's 180k all in BEFORE incidentals and anything fun or even a reasonable car payment. If you've got cc or SL debt? My goodness. $1,666 for groceries, home and auto maintenance, electricity, fuel…
I know this because we live it. Not our exact numbers but close enough for the point. It is mind boggling to me how a household at our income can feel like we are barely getting by. 4 years ago we did not have to even think about savings. It was just there every month. But I refuse to cut back on retirement. We have cut many, many other things. I do not know how average households are making it.
with just retirement you're income is $155k (didn't subtract Soc Sec) and your Fed Inc Taxes would be closer to $30k. Take all those deductions for child care, etc. and it would be less.
Check your inputs into TurboTax. My wife and I made more than that last year and didn't pay $50k in income taxes + state income taxes
I mean...you realize that the 1970's prices were reflected in that high interest rate, correct? It was a completely different economic environment.Ag97 said:
In 1971 the interest rates were in the 7's. If you would have waited for them fall into the 6's you would have waited till 1993 (22 years) to purchase a home. Home values continued to climb those 22 years (probably not as quickly as lately, but still significantly over that period).
We aren't living in unprecedented times, we just have short memories. My family started out in rent houses and trailer houses till I was in Kindergarten. My parents purchased their home (1,900 sq/ft) in 1980 and still live in it today. Their interest rates at time of purchase was 15%+.
I'm about to turn 50 and am on my 3rd home. My first was a 1,700 sq/foot starter home built in the early 70's. I saved for about 5 years living with roomates in cheaper, older houses and apartments to save for my downpayment. We've upgraded twice now, rolling our equity into our newer, larger and nicer homes.
This is still doable. You'll just have to live in a smaller, older home in a less desirable neighborhood. I've got 2 nieces in their mid 20's that ***** and moan about not being able to afford a house. Both take 2 or 3 vacations a year, go out to eat constantly and don't miss many weekends at the bar partying with their friends. They don't want to sacrifice what their parents and grandparents did to get where their parents and grandparents ended up.
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up. You don't get to start at the top unless you have parents rich enough to put you there right out of the box. A quick search of Brazos County shows multiple older, smaller homes for sale less than $200K.
agracer said:I'm not saying he's wrong...I get the one big family trip to Disney...but not multiple. That's insane to me.tysker said:Funny I think that would be totally worth it.agracer said:There is a poster on the entertainment board (the Disney thread) who claims to have spent at least $40K in the last 12 years going to freaking Disney!A Net Full of Jello said:That is a frustrating thing to hear, for sure, because circumstances are not equal now to how they were when Boomers were in their twenties and thirties. I think that we can all agree, though, that younger millennials and older Gen Zs who are entering the workforce have different priorities than Boomers and even GenXers. They do not remember the years their parents struggle financially and used only one car or two beat up cars, didn't go on nice vacations and would settle for a trip to Six Flags every couple of years, and didn't eat out often at all. They remember the prosperous years and expect to have a similar lifestyle right out of college. And even if they don't consciously realize it, many do prioritize the latest gadgets and toys, evenings out with friends, and fun vacations. They aren't saving for an investing in the future.barbacoa taco said:
and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"
But I say that as guy that has spent multiples of that to watch Fran, Sherman, Sumlin, and Jimbo achieve mediocrity at Kyle
I second that. Manufactured housing is not remotely the same these days as they were 20 years ago. Much more customizable and better constructed and insulated.Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
I wonder how many people are eating out less but instead are simply ordering in more often (Door Dash, UberEats, etc)DonHenley said:
People talk about eating out less and eating at home more.....but groceries aren't cheap either
Yes, and it's really not as straight forward as even people with a cursory knowledge can grasp.Tex117 said:Thank you for the insight. The part about devaluing the dollar related to asset values, I think, is the part many dime store real estate people miss.Heineken-Ashi said:Depends on demand. My guess is not well. But it's just a guess. I could see anywhere from a 10%-50% drop. If we enter a full on deleveraging event, it doesn't matter what supply and demand is at. A delveraging is when the value of the dollar increases (which we haven't seen in any of our lifetimes and not since the Great Depression). If the dollar is rising (and please keep in mind, I don't mean in relation to other currencies), it means liquidity is being sucked out of the system which means falling asset prices in relation to the dollar.Tex117 said:
Your posts are always insightful. How do you think prices will do with their being limited supply?
If we keep with the trend of devaluing the dollar, it might be a significantly lesser correction as asset values continue to rise in relation to the value of the dollar along with higher inflation. In this case, a drop in demand would still drop prices moderately no matter the supply, but would likely eventually stabilize until a couple years down the road when we enter the next, worse inflection point for the economy.
I really don't see a scenario like 2020 where values rocket for a multi-year period. Rates would have to be at zero and people would have to be flush with cash directly from the government, which I guess is possible. But that would come with such a massive inflation shocks that I simply couldn't advise buying a house in that environment, as, again, we would be right where we are today in a couple years with literally no backstop available and all the room below to fall into depression.
DonHenley said:
People talk about eating out less and eating at home more.....but groceries aren't cheap either
Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
My first house was effectively $142k just fifteen years ago and now Zillow shows it at $473k. That was a starter home back then. Even at over twice the income, I would struggle to buy that same house today if I didn't already have equity in another home.A Net Full of Jello said:
We bought our first house in October of 2011. It was just over 2200 square feet in an Austin suburb and we paid right around $120,000 for it. Today, that home is appraised at $334,425. It went up 277% in 13 years. That's obscene.
Predmid said:Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
LOL.
"Spend $200k so you can save and buy a house for 400k later"
All I can say in response, is...yup.Heineken-Ashi said:Yes, and it's really not as straight forward as even people with a cursory knowledge can grasp.Tex117 said:Thank you for the insight. The part about devaluing the dollar related to asset values, I think, is the part many dime store real estate people miss.Heineken-Ashi said:Depends on demand. My guess is not well. But it's just a guess. I could see anywhere from a 10%-50% drop. If we enter a full on deleveraging event, it doesn't matter what supply and demand is at. A delveraging is when the value of the dollar increases (which we haven't seen in any of our lifetimes and not since the Great Depression). If the dollar is rising (and please keep in mind, I don't mean in relation to other currencies), it means liquidity is being sucked out of the system which means falling asset prices in relation to the dollar.Tex117 said:
Your posts are always insightful. How do you think prices will do with their being limited supply?
If we keep with the trend of devaluing the dollar, it might be a significantly lesser correction as asset values continue to rise in relation to the value of the dollar along with higher inflation. In this case, a drop in demand would still drop prices moderately no matter the supply, but would likely eventually stabilize until a couple years down the road when we enter the next, worse inflection point for the economy.
I really don't see a scenario like 2020 where values rocket for a multi-year period. Rates would have to be at zero and people would have to be flush with cash directly from the government, which I guess is possible. But that would come with such a massive inflation shocks that I simply couldn't advise buying a house in that environment, as, again, we would be right where we are today in a couple years with literally no backstop available and all the room below to fall into depression.
Since 2008, the dollars created were not "printed" in the way people think they are. The money was actually borrowed from the banks and then loaned back to the banks using the 10% reserve requirement. That money was then loaned out to the economy with the banks keeping 10% reserve.
So $1,000 borrowed by the FED
FED loaned $10,000 to the banks.
Banks then loaned $100,000 to the economy.
And that doesn't include any additional leverage which absolutely happened. So while the money supply expanded, no "new" money was actually printed. We just leveraged existing money. They promised us they would pay it back. They didn't. Not a dime. Then in 2020, they did the same thing again at a 4x multiple of what they did in 2008.
So the value of the dollar shrank immensely, but the amount of new dollars in the system along with cheap rates created a massive productivity increase over the relative short term (10-15 years). Because we had explosions in technology to go along with globalization, even though we lost manufacuring completely, we were importing insanely cheaper goods from the world to sell into our economy. This was deflationary despite what should have been rising inflation. The two forces were offsetting each other. That is until the shock to the system in 2020. When we lost the productivity and mass consumption during COVID, that suppressed inflation finally reared its ugly head. And since we devalued exponentially further putting the entire burden on the balance sheet of the FED, we are just now seeing the effects on what the future will hold. And there's no way out, because the money loaned to the banks isn't in the banks. It was loaned into the economy and the economy spent it. Because we really don't produce anything. We consume goods and services. That money is gone forever. And the only way to kick the can is to do it again. Take what little is left in the banks, and loan it back again in hopes that we can productive enough to keep inflation relatively in check. The best case is literally today's economy. The worst case is we finally pay the piper in the form of banks and the FED defaulting on the debt.
Oh no, I get it. We always emphasize to our kids how lucky we are, but also how hard their parents have worked and continue to work to be able to attend the games, even when it's a hassle.agracer said:I'm not saying he's wrong...I get the one big family trip to Disney...but not multiple. That's insane to me.tysker said:Funny I think that would be totally worth it.agracer said:There is a poster on the entertainment board (the Disney thread) who claims to have spent at least $40K in the last 12 years going to freaking Disney!A Net Full of Jello said:That is a frustrating thing to hear, for sure, because circumstances are not equal now to how they were when Boomers were in their twenties and thirties. I think that we can all agree, though, that younger millennials and older Gen Zs who are entering the workforce have different priorities than Boomers and even GenXers. They do not remember the years their parents struggle financially and used only one car or two beat up cars, didn't go on nice vacations and would settle for a trip to Six Flags every couple of years, and didn't eat out often at all. They remember the prosperous years and expect to have a similar lifestyle right out of college. And even if they don't consciously realize it, many do prioritize the latest gadgets and toys, evenings out with friends, and fun vacations. They aren't saving for an investing in the future.barbacoa taco said:
and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"
But I say that as guy that has spent multiples of that to watch Fran, Sherman, Sumlin, and Jimbo achieve mediocrity at Kyle
JobSecurity said:ThunderCougarFalconBird said:
How are most people able to carry a 400k note at current rates?
ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.
For reference, 400k with 20% down @ 6.75% with 2.2% property tax and average insurance is around ~3000/mo
Definitely tight for an "average" household of 80k but I wouldn't say impossible
Dinner last night at local, reasonably priced, restaurant was $125 with tip for my family of four any my nephew. No alcohol, one person had tea, everyone else water, one appetizer.DonHenley said:
People talk about eating out less and eating at home more.....but groceries aren't cheap either
crowman2010 said:You make ~$12,500/mo after taxes and you can't stay cash flow positive? Your issue is not your $3750/mo house payment.Aston04 said:
All I can say is don't move up in house unless 100 percent sure.
The wife pushed hard for us to it just over a year ago- so finally went along.
Even though we could put a ton down, rates our killing us. After mortgage pmt, taxes and insurance, we are at about 3750 a month. We make combined just over 200k - and it's a struggle to stay cash flow positive.
We can't. And it's extremely discouraging.ThunderCougarFalconBird said:
How are most people able to carry a 400k note at current rates?
ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.
Yes, you can do it. But it's still going to cost you more working hours for the average income than it would have to go that same route 10 and 20 years ago. That will never change. The whole point of housing costs is focusing on percent of income. We all know there are some ways around it, but as American's, that shouldn't have been the answer. To sacrifice more time and effort to get the same thing you could have got for less 10 years ago. Never a good argument.Bob Lee said:Predmid said:Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
LOL.
"Spend $200k so you can save and buy a house for 400k later"
Why is this funny? You can buy a home for less than the median home price. Then upgrade to a nicer home when you have enough equity. My parents lived in a trailer to save enough to buy their first home.
100%. Groceries are more expensive now than in the past, but man, it's still so much cheaper than eating out.Urban Ag said:Dinner last night at local, reasonably priced, restaurant was $125 with tip for my family of four any my nephew. No alcohol, one person had tea, everyone else water, one appetizer.DonHenley said:
People talk about eating out less and eating at home more.....but groceries aren't cheap either
Grocery prices are ridiculous but it's not remotely comparable to eating out.
beerad12man said:Yes, you can do it. But it's still going to cost you more working hours for the average income than it would have to go that same route 10 and 20 years ago. That will never change. The whole point of housing costs is focusing on percent of income. We all know there are some ways around it, but as American's, that shouldn't have been the answer. To sacrifice more time and effort to get the same thing you could have got for less 10 years ago. Never a good argument.Bob Lee said:Predmid said:Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
LOL.
"Spend $200k so you can save and buy a house for 400k later"
Why is this funny? You can buy a home for less than the median home price. Then upgrade to a nicer home when you have enough equity. My parents lived in a trailer to save enough to buy their first home.
We're at 1960 interest rates coming off a major low. The 70's and 80's haven't even happened yet, and our economy is teetering on the edge. Cheap access to capital is GONE. Profitable companies will succeed by staying profitable, whatever it takes. Valuations based on growth will be a thing of the past. The days of government fueled liquidity are in the rear-view.Bob Lee said:beerad12man said:Yes, you can do it. But it's still going to cost you more working hours for the average income than it would have to go that same route 10 and 20 years ago. That will never change. The whole point of housing costs is focusing on percent of income. We all know there are some ways around it, but as American's, that shouldn't have been the answer. To sacrifice more time and effort to get the same thing you could have got for less 10 years ago. Never a good argument.Bob Lee said:Predmid said:Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
LOL.
"Spend $200k so you can save and buy a house for 400k later"
Why is this funny? You can buy a home for less than the median home price. Then upgrade to a nicer home when you have enough equity. My parents lived in a trailer to save enough to buy their first home.
The idea is 10 years ago was the anomaly in terms of cheap access to capital. I guess it's easy for me to say because we bought our first and second homes during that time when money was very cheap, and before home prices spiked. But if you compare the state of things now to between 30 and 50 years ago, it's not very much different. The main differences I see are the median priced home is a much, much different offering than a median priced home was back then. And people have ravenous appetites for the finer things.
I haven't lived in a trailer since 1985 so I wouldn't know how the new ones are.aggiehawg said:I second that. Manufactured housing is not remotely the same these days as they were 20 years ago. Much more customizable and better constructed and insulated.Quote:
Here in Brazos County, you can still purchase a 1/2 acre lot in the country for $20K to $40K. Put a trailer house on it for $100K to $150K, get electricity and water hooked up for a few thousand more and live that life for a few years till you can afford better and then sell that and roll the equity into your next step up.
The biggest downside I see going that route is that they still don't always qualify for conventional mortgages. But one gets more house with nicer finishes than the cost of a comparable traditional stickbuilt house.
Funny thing about weed holding people back.Stat Monitor Repairman said:
You make. good point about the drug testing for weed. That has to be a solid percentage of whats holding some people back. Alcohol use is way down for GenZ and weed is more popular than ever.
There's a price that comes with having a job where you can use weed. You either got to be at the top or all the way at the bottom. Very little middle ground there and no tolerance when it comes to .gov, contractors or transportation industry.
Can see where thats for sure holding people back.
So thats another problem long term with the labor market. Weed gotta be treated like alcohol in some workable regime. We might be past the tipping point on that. Some crazy number of employable people either aren't looking or gave up looking.
And thats also the appeal of the failing gig economy.
The biggest winners in all of covid were weed dealers and liquor stores. A lot of daily users spawned from that.
Sims said:The note is probably doable (by itself).ThunderCougarFalconBird said:
How are most people able to carry a 400k note at current rates?
ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.
Add insurance, property tax, maintenance etc and you are cruisin for a bruisin compared to 5 years ago.
Home ownership is leaving the grasp of many.
MemphisAg1 said:
I feel for young folks trying to get into their first home, I really do. It's not their fault. My oldest son bought one in Dec 2020 just before prices took a moonshot and he got a good interest rate. I'll do whatever it takes to help my other two sons get into a house when they're ready, but a lot of people don't have that parental backup.
One thing that would help is if builders would build simpler starter homes. Today's median size house is 50% to 80% bigger than the median house 50 years ago, depending on where you get your statistics. Plus, ten to twelve foot vaulted ceilings, fancy trim, tile floors, granite counter tops, integrated electronics, wooden deck, etc. are now considered standard. All those things and all that extra size doesn't explain everything behind the moonshot in prices, but it's a big piece of it.
Cost = Square Feet X Dollars per Square Foot
Take a big bite out of both of those and it would help. I'm talking 1,200 to 1,500 square feet and Plain Jane. There's a market demand for smaller, simpler starter homes where first time buyers could build equity over several years and then gradually trade up to bigger homes when they're financially ready. I wonder if we'll see builders begin to target that segment, or are they making so much money on current home designs that they're just not interested?
Yep.Ramdiesel said:MemphisAg1 said:
I feel for young folks trying to get into their first home, I really do. It's not their fault. My oldest son bought one in Dec 2020 just before prices took a moonshot and he got a good interest rate. I'll do whatever it takes to help my other two sons get into a house when they're ready, but a lot of people don't have that parental backup.
One thing that would help is if builders would build simpler starter homes. Today's median size house is 50% to 80% bigger than the median house 50 years ago, depending on where you get your statistics. Plus, ten to twelve foot vaulted ceilings, fancy trim, tile floors, granite counter tops, integrated electronics, wooden deck, etc. are now considered standard. All those things and all that extra size doesn't explain everything behind the moonshot in prices, but it's a big piece of it.
Cost = Square Feet X Dollars per Square Foot
Take a big bite out of both of those and it would help. I'm talking 1,200 to 1,500 square feet and Plain Jane. There's a market demand for smaller, simpler starter homes where first time buyers could build equity over several years and then gradually trade up to bigger homes when they're financially ready. I wonder if we'll see builders begin to target that segment, or are they making so much money on current home designs that they're just not interested?
It's like vehicles. Go try to buy a plane jane truck nowadays that looks nice, and doesn't have all the luxuries that Soccer moms want? What if I just want a truck that's very basic on the inside ( just radio, bluetooth, A/C, and Heat), and no carpet, just vinyl or something durable..I don't need a huge computer screen or power windows, or a truck with sensors all over it to tell me im going to cross the line or hit something. And, I want it to be 4x4 and look good on the outside. You can't get it really, they want you to pay for all the extras...
barbacoa taco said:
and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"