how much opportunity is dependent on owning property
June 3, 2019 11:34 AM Subscribe
"To get there, you need a down payment. And if you’re putting your extra money toward child care, or loans, or medical bills — how do you come up with that down payment? And how do you find a home you can actually afford? Homeownership, like other forms of participation in the American dream, increasingly resembles an exclusive country club, with membership predicated on who your parents are and your race." Anne Helen Petersen: 14 Millennials Got Honest About How They Afforded Homeownership
I feel like this link provides some accompanying context.
posted by Selena777 at 11:43 AM on June 3, 2019 [3 favorites]
posted by Selena777 at 11:43 AM on June 3, 2019 [3 favorites]
How I, A Millennial, Afforded Home Ownership (Abridged):
1. Am white and college-educated.
1a. Married Gen Xer with STEM degree and high-paying job.
2. Mother died. Grandfather stole bulk of life insurance payout from me. Step-grandma returned it in fit of guilt after he died; used for down payment.
3. Relocated from Expensive East Coast City to Slightly-Less Expensive Midwestern City.
4. Bought first home at age 32.
5. Fin.
If any of the first 3 items hadn’t happened, I’d still be sinking 70% of my shitty paychecks into renting some hole in DC. I’m under no illusion that home ownership is due to any bootstrapping on my part, either.
posted by timetoevolve at 11:53 AM on June 3, 2019 [23 favorites]
1. Am white and college-educated.
1a. Married Gen Xer with STEM degree and high-paying job.
2. Mother died. Grandfather stole bulk of life insurance payout from me. Step-grandma returned it in fit of guilt after he died; used for down payment.
3. Relocated from Expensive East Coast City to Slightly-Less Expensive Midwestern City.
4. Bought first home at age 32.
5. Fin.
If any of the first 3 items hadn’t happened, I’d still be sinking 70% of my shitty paychecks into renting some hole in DC. I’m under no illusion that home ownership is due to any bootstrapping on my part, either.
posted by timetoevolve at 11:53 AM on June 3, 2019 [23 favorites]
I know there are other, larger issues to discuss, but I'm hung up on needing to know what sort of house Becca from Kalamazoo bought on craigslist for $9,200 dollars.
posted by He Is Only The Imposter at 11:56 AM on June 3, 2019 [34 favorites]
posted by He Is Only The Imposter at 11:56 AM on June 3, 2019 [34 favorites]
As homeownership vanishes from most people’s grip the time has never been better to remove homeownership as the sole source of investment for Americans.
posted by The Whelk at 11:58 AM on June 3, 2019 [39 favorites]
posted by The Whelk at 11:58 AM on June 3, 2019 [39 favorites]
I feel like you could write this same article just about renting without roommates. I feel like I've won the lottery to be able to share a multi-bedroom townhouse with only my husband even though we'll never save enough for a down payment or pay off our debts.
posted by bleep at 12:05 PM on June 3, 2019 [16 favorites]
posted by bleep at 12:05 PM on June 3, 2019 [16 favorites]
As homeownership vanishes from most people’s grip the time has never been better to remove homeownership as the sole source of investment for Americans.
Or investment as the sole source of financial stability for that matter.
posted by entropone at 12:07 PM on June 3, 2019 [45 favorites]
Or investment as the sole source of financial stability for that matter.
posted by entropone at 12:07 PM on June 3, 2019 [45 favorites]
I feel like you could write this same article just about renting without roommates.
COSIGNED
posted by EmpressCallipygos at 12:10 PM on June 3, 2019 [6 favorites]
COSIGNED
posted by EmpressCallipygos at 12:10 PM on June 3, 2019 [6 favorites]
This is... frustrating to read, for a whole constellation of reasons. Not least of which is that the stories that are the most relatable (people buying in insanely-overpriced urban environments where every open house is meant to spark a bidding war) are still miles away from the experiences of anyone I know. Good on you for finding a $465K single family in the suburbs, Dave From Boston, but I'm betting you're either (a) a 70-minute drive from the city where all the jobs are (b) living somewhere closer, but where you can't raise kids there because the schools are under state conservatorship or (c) living in 500 square feet in a place far from public transit of any sort.
Housing prices are insane, guys. The condo next door to me sold last week, after 3 days on the market. It's a 2BR 1BA 900 sq. ft. first-floor unit that's in nice-but-not-luxury shape. It was listed at $615K, and sparked a bidding war whose winner is not yet public knowledge. Prices like that aren't tenable even by the stereotypical yuppy lawyer; you'd need two earners pulling down doctor-or-lawyer-money to even begin to think about affording that. I don't know anyone buying in the city proper, except for one friend whose parents have enough dough that they have an endowed faculty position at a state university named after them. Tack on the fact that home equity is the country's #1 savings vessel, and something's gotta give.
posted by Mayor West at 12:11 PM on June 3, 2019 [14 favorites]
Housing prices are insane, guys. The condo next door to me sold last week, after 3 days on the market. It's a 2BR 1BA 900 sq. ft. first-floor unit that's in nice-but-not-luxury shape. It was listed at $615K, and sparked a bidding war whose winner is not yet public knowledge. Prices like that aren't tenable even by the stereotypical yuppy lawyer; you'd need two earners pulling down doctor-or-lawyer-money to even begin to think about affording that. I don't know anyone buying in the city proper, except for one friend whose parents have enough dough that they have an endowed faculty position at a state university named after them. Tack on the fact that home equity is the country's #1 savings vessel, and something's gotta give.
posted by Mayor West at 12:11 PM on June 3, 2019 [14 favorites]
As homeownership vanishes from most people’s grip the time has never been better to remove homeownership as the sole source of investment for Americans.
That just might have the paradoxical effect of increasing home ownership in some areas. "My home is my retirement safety net" is one of the drivers of NIMBY-ism and artificial scarcity of housing. Ensure that people who retire (or become disabled) aren't up a creek if their home loses value, and more housing might get built.
Obviously NIMBYism is much more complicated than this but if people weren't dependent on their homes as their safety net/cash cow our society would look a lot different.
posted by Rosie M. Banks at 12:11 PM on June 3, 2019 [8 favorites]
That just might have the paradoxical effect of increasing home ownership in some areas. "My home is my retirement safety net" is one of the drivers of NIMBY-ism and artificial scarcity of housing. Ensure that people who retire (or become disabled) aren't up a creek if their home loses value, and more housing might get built.
Obviously NIMBYism is much more complicated than this but if people weren't dependent on their homes as their safety net/cash cow our society would look a lot different.
posted by Rosie M. Banks at 12:11 PM on June 3, 2019 [8 favorites]
As a single woman, I never really expected to own a home, but surprisingly, I do. At least for the next few months until I sell it because it is inconveniently located 400km from my job.
For me it was two things that allowed it to happen:
One, my parents gave me some money they inherited from my grandmother. I could have swung a down payment without that, but it sure brought the mortgage payments down.
Two, Options for Homes, a Toronto-based non-profit that builds housing and sells it to people at cost, recovering their investment only if the unit later sells for a higher value on the open market. I bought a unit pre-construction from them, and then waited four years to live in it, but it was a hell of a deal in the Toronto market.
posted by jacquilynne at 12:19 PM on June 3, 2019 [9 favorites]
For me it was two things that allowed it to happen:
One, my parents gave me some money they inherited from my grandmother. I could have swung a down payment without that, but it sure brought the mortgage payments down.
Two, Options for Homes, a Toronto-based non-profit that builds housing and sells it to people at cost, recovering their investment only if the unit later sells for a higher value on the open market. I bought a unit pre-construction from them, and then waited four years to live in it, but it was a hell of a deal in the Toronto market.
posted by jacquilynne at 12:19 PM on June 3, 2019 [9 favorites]
Seriously, without the nebulous future dream of “property value” (which is just putting the exploitation of capital into the future rather then the past, what is debt if not mining money from someone’s future?) controlling people’s minds we could get so much Meroe done.
Homes are for living in, not for investments, not as commodities.
posted by The Whelk at 12:21 PM on June 3, 2019 [21 favorites]
Homes are for living in, not for investments, not as commodities.
posted by The Whelk at 12:21 PM on June 3, 2019 [21 favorites]
Yeah, my dad is all over me about how I need to buy property... but then I'd be stuck in that property? I like renting. Something breaks, and all I'm out is a phone call to the landlord/super, not potentially thousands of dollars. And I'm not stuck here. I'd rather keep my money liquid in case I do decide to stop living in a ridiculously expensive city and retire at some point before I die. (My retirement plan is not having kids)
posted by Grither at 12:27 PM on June 3, 2019 [9 favorites]
posted by Grither at 12:27 PM on June 3, 2019 [9 favorites]
One person in the article says "even though we had the cash and our credit scores are mid-700s, they frown on applicants whose down payments come from gifts." Ain't that the truth! We got help from my in-laws when we bought our first place with an FHA loan so the down payment was only like 3%, and the bank still wanted all of their account information in addition to our own. I assume they want to make sure there's no funny business/money laundering going on, but whatever it was an incredible pain in the ass. In fact, I will say that if you're not able to quickly locate and send to your broker electronic versions of the gazillion financial records needed just to get pre-approved, the process is a nightmare. And then you get to own a house that is always breaking somewhere, yay.
posted by schoolgirl report at 12:27 PM on June 3, 2019 [2 favorites]
posted by schoolgirl report at 12:27 PM on June 3, 2019 [2 favorites]
I once dreamed of owning a home. I grew up in apartments. I have never lived in anything but rental - except for the few years I lived with my in-laws (and paid them rent, but that was more about our pride). But when I was a kid, if you'd asked me what I would have done if I had won the lottery, I knew exactly what the first thing I would do: buy a house for my family.
I recognize the advantages of renting: when our rented house needed $10k worth of work recently, it was our landlord's issue.
But I wanted (still want) the house - the backyard and/or garden, being able to paint the walls any colour you wanted, being able to do that thing where you mark off kid's heights on a bit of wall (and it doesn't matter that it's not movable because you are never moving). I want to be able to buy furniture without worrying about how portable it is. Relatives my age (who have had help to purchase) complain about having to renovate - and I think, wow, it's nice you can renovate. I have to ask someone else to help us not have a shower that grows mushrooms. (Seriously: an adorable, but completely ill-placed mushroom popped up beside our bathroom sink.)
And thanks to the relative costs of rents in my city, we're still paying just about as much in rent as many do in a mortgage, but we can't afford a down-payment. So instead we pay and make no equity - and in 30 years, we'll have a fraction of the assets that our relatives of the same age do, and that freaks me out. They will have several million dollars that they can also live in, will be able to help their own children - and we will have very little to show for all the rent we've paid, and any kids we have will be in the same position we are.
When I was a kid, I thought that if I studied and went to university, I could get a good job and buy a house, like my friend's parents. I studied very hard and came out near the top of my class. I now have a good job - well above the average for the area. But I might as well play the lottery for the likelihood that I will ever have that security or privilege.
(Of course, the other irony is that, because I have never lived in a non-rented house, I have absolutely no idea how to keep one up. So there's that.)
posted by jb at 12:31 PM on June 3, 2019 [24 favorites]
I recognize the advantages of renting: when our rented house needed $10k worth of work recently, it was our landlord's issue.
But I wanted (still want) the house - the backyard and/or garden, being able to paint the walls any colour you wanted, being able to do that thing where you mark off kid's heights on a bit of wall (and it doesn't matter that it's not movable because you are never moving). I want to be able to buy furniture without worrying about how portable it is. Relatives my age (who have had help to purchase) complain about having to renovate - and I think, wow, it's nice you can renovate. I have to ask someone else to help us not have a shower that grows mushrooms. (Seriously: an adorable, but completely ill-placed mushroom popped up beside our bathroom sink.)
And thanks to the relative costs of rents in my city, we're still paying just about as much in rent as many do in a mortgage, but we can't afford a down-payment. So instead we pay and make no equity - and in 30 years, we'll have a fraction of the assets that our relatives of the same age do, and that freaks me out. They will have several million dollars that they can also live in, will be able to help their own children - and we will have very little to show for all the rent we've paid, and any kids we have will be in the same position we are.
When I was a kid, I thought that if I studied and went to university, I could get a good job and buy a house, like my friend's parents. I studied very hard and came out near the top of my class. I now have a good job - well above the average for the area. But I might as well play the lottery for the likelihood that I will ever have that security or privilege.
(Of course, the other irony is that, because I have never lived in a non-rented house, I have absolutely no idea how to keep one up. So there's that.)
posted by jb at 12:31 PM on June 3, 2019 [24 favorites]
I've noticed how many of these specifically mentioned inheritances. This is a good reminder of how the effects of systemic race and class warfare can last hundreds of years. When you have whole classes of people (especially along racial lines, but along class or ethnic lines a well) who were intentionally denied home ownership and other forms of material wealth, you have generation after generation of people who can't say "well, we got pretty lucky to have an inheritance that covered the down payment."
posted by shapes that haunt the dusk at 12:32 PM on June 3, 2019 [87 favorites]
posted by shapes that haunt the dusk at 12:32 PM on June 3, 2019 [87 favorites]
And I don't mean to downplay the horrible effects of the economic crash and rapidly-rising housing costs. I mean, after all, my grandfather was able to buy a house and support a wife and three kids on a teacher's salary -- which is simply not possible today. And I studied former slaves who wound up owning houses in places like Galveston. But still! Historic economic oppression has lasting effects, especially across generations.
posted by shapes that haunt the dusk at 12:35 PM on June 3, 2019 [7 favorites]
posted by shapes that haunt the dusk at 12:35 PM on June 3, 2019 [7 favorites]
I watch one of my best friends, who has owned a house for almost a year, struggle to make it the way he wants, and deal with yard troubles and weather related troubles and plumbing troubles and so on, and I kind of don't ever want to own. But my apartment situation is somewhat precarious and I'm also scared of having to move, because there are no apartments in Toronto, because an apartment that's $2500 a month is no apartment at all.
I'd own for stability, not financial security, but that would mean finding a minuscule condo in a neighbourhood I don't want to live in. (Unless I am in fact not forever alone, but we'll have to wait and see about that.)
posted by wellred at 12:36 PM on June 3, 2019 [2 favorites]
I'd own for stability, not financial security, but that would mean finding a minuscule condo in a neighbourhood I don't want to live in. (Unless I am in fact not forever alone, but we'll have to wait and see about that.)
posted by wellred at 12:36 PM on June 3, 2019 [2 favorites]
Actually, I'm out of date. Apparently condo-prices are even more insane than rents in my city. My rent for a 3-floor, 1800 square foot house (3 bedrooms, large living room, separate large kitchen, full basement den/storage) is still $1000 less per month than the mortgage and fees on a 1000 square foot condo - where there is only 1 room other than the bedrooms and all the living takes place in one chaotic space. And that's from the "affordable" construction.
The crash can't come soon enough, but it's going be very painful when it happens.
posted by jb at 12:41 PM on June 3, 2019 [2 favorites]
The crash can't come soon enough, but it's going be very painful when it happens.
posted by jb at 12:41 PM on June 3, 2019 [2 favorites]
Owning has definitely been sold as the stable way to build your family's wealth, but I'm not entirely sure that's going to hold up over the lifetimes of millennials and the generations after us. My dad's years of investment in his house got totally wiped out by catastrophic flooding that he couldn't even have bought insurance for. He eventually sold his plot for less than he'd originally paid to someone who he knew would take the shell of what was left and build a new house on it. Considering the rate at which we're seeing unprecedented weather, I worry that his fate will be the fate of a lot more people.
Even if it's not the natural disasters that do it, Boomers looking to retire are already seeing that the market for huge houses in exurban areas isn't exactly what it used to be, and realizing the on-paper value of that house can be pretty difficult. No one needs to shed a tear for people who are going to take a big loss on their McMansion or anything, but it does kind of make the point that the assumption inherent to the American middle-and-upper-class economy that property values will only ever go up isn't necessarily a safe one.
posted by Copronymus at 12:56 PM on June 3, 2019 [17 favorites]
Even if it's not the natural disasters that do it, Boomers looking to retire are already seeing that the market for huge houses in exurban areas isn't exactly what it used to be, and realizing the on-paper value of that house can be pretty difficult. No one needs to shed a tear for people who are going to take a big loss on their McMansion or anything, but it does kind of make the point that the assumption inherent to the American middle-and-upper-class economy that property values will only ever go up isn't necessarily a safe one.
posted by Copronymus at 12:56 PM on June 3, 2019 [17 favorites]
The growing community land trust movement
On inheritance, report relevant black homeowners in Chicago lost millions to predatory lending
I was thinking about inheritance in a thought experiment recently, “ban inheritance” and all that - it just creates and perpetuates aristocracy - but then I thought about people like this, or those start up stories which almost always include from 300k interest free loan from a family member or something ...what if we democratized access to that capital? Basically interest free loans for everyone in exchange for some minor share of the If successful venture’s stocks?
We’re all living off the fumes of the postwar abundance and it’s being rapidly concentrated into fewer and fewer hands leaving the rest of us with nothing or perpetually in debt. Some radical redistribution will be needed.
posted by The Whelk at 1:00 PM on June 3, 2019 [20 favorites]
On inheritance, report relevant black homeowners in Chicago lost millions to predatory lending
I was thinking about inheritance in a thought experiment recently, “ban inheritance” and all that - it just creates and perpetuates aristocracy - but then I thought about people like this, or those start up stories which almost always include from 300k interest free loan from a family member or something ...what if we democratized access to that capital? Basically interest free loans for everyone in exchange for some minor share of the If successful venture’s stocks?
We’re all living off the fumes of the postwar abundance and it’s being rapidly concentrated into fewer and fewer hands leaving the rest of us with nothing or perpetually in debt. Some radical redistribution will be needed.
posted by The Whelk at 1:00 PM on June 3, 2019 [20 favorites]
Boston housing is absolutely insane. We bought our place in mid 2016 for $325K, requiring only 3% down (thank you, affordable housing program!), only 1.5% of which needed to be our savings rather than a gift (thank you, parents-in-law!). I have no idea how we'd ever have saved 20%.
Zillow and Redfin suggest it's now worth over $400K, which is an insane return over only 3 years. Not that we can do anything with that value; we need to live somewhere.
posted by explosion at 1:01 PM on June 3, 2019 [2 favorites]
Zillow and Redfin suggest it's now worth over $400K, which is an insane return over only 3 years. Not that we can do anything with that value; we need to live somewhere.
posted by explosion at 1:01 PM on June 3, 2019 [2 favorites]
it is difficult to cope with the fact that a single year's rent in nyc is enough to buy a home outright in some parts of the country and that the purchase price of a 600 sq ft studio here is enough to buy a fucking private island.
posted by poffin boffin at 1:01 PM on June 3, 2019 [13 favorites]
posted by poffin boffin at 1:01 PM on June 3, 2019 [13 favorites]
I recommend CAPITAL CITY about how real estate fought with industry for control of capital and at least right now, Real Estate won (Cause industry moved overseas, capital first moves location and then moves away in time)
It really sums up how we got into this hell and how this kind of extreme control over homeownership hasn’t been seen since like, France in the 1900s. There is an excellent episode of the Antifada with the author witch actually ends on a high note: Capital is so over invested in real estate and in NYC invested to the point of exclusion of all other assets, that it represents a chokepoint, a leverage we could use to force change.
A few mass rent strikes, for example, could work wonders.
posted by The Whelk at 1:07 PM on June 3, 2019 [17 favorites]
It really sums up how we got into this hell and how this kind of extreme control over homeownership hasn’t been seen since like, France in the 1900s. There is an excellent episode of the Antifada with the author witch actually ends on a high note: Capital is so over invested in real estate and in NYC invested to the point of exclusion of all other assets, that it represents a chokepoint, a leverage we could use to force change.
A few mass rent strikes, for example, could work wonders.
posted by The Whelk at 1:07 PM on June 3, 2019 [17 favorites]
Owning has definitely been sold as the stable way to build your family's wealth, but I'm not entirely sure that's going to hold up over the lifetimes of millennials and the generations after us.
I agree with this; we are fortunate enough to own a house (because of family money, it's extremely much just luck, my grandparents were rich and died and so we had money, I cannot emphasize enough how much it was NOT hard work and frugality), and it's basically because we could afford it and we didn't want to keep renting because that was kind of uncertain and we have a kid, but we aren't viewing it as an investment, we're viewing it as a place to live.
I think there's a lot of "conventional wisdom" that Boomers and so on have averred really confidently for a long time and they are going to be surprised at how angry younger people are when it turns out not to have been the case, and are going to be surprised at how hard things are for them when it turns out their confidence that they were right was incorrect.
posted by an octopus IRL at 1:07 PM on June 3, 2019 [10 favorites]
I agree with this; we are fortunate enough to own a house (because of family money, it's extremely much just luck, my grandparents were rich and died and so we had money, I cannot emphasize enough how much it was NOT hard work and frugality), and it's basically because we could afford it and we didn't want to keep renting because that was kind of uncertain and we have a kid, but we aren't viewing it as an investment, we're viewing it as a place to live.
I think there's a lot of "conventional wisdom" that Boomers and so on have averred really confidently for a long time and they are going to be surprised at how angry younger people are when it turns out not to have been the case, and are going to be surprised at how hard things are for them when it turns out their confidence that they were right was incorrect.
posted by an octopus IRL at 1:07 PM on June 3, 2019 [10 favorites]
This is a good reminder of how the effects of systemic race and class warfare can last hundreds of years.
I was pondering a FPP on the topic (and it's a semi-derail here) but yes, the effects of class warfare lasts a long time:
I was pondering a FPP on the topic (and it's a semi-derail here) but yes, the effects of class warfare lasts a long time:
- What’s your (sur)name? Intergenerational mobility over six centuries (Italy)
- Surnames and Social Mobility: England 1230-2012 (England)
- Brave Old World: Immigration, inequality and intergenerational mobility in the US (USA)
This is the first point in my life where I conceivably could buy, but between climate change, maintenance, rising property taxes in my state, and the fact that my home might not get paid off before I'm dead, I shrug at it.
Also, I think the way we build homes is inefficient and results in buildings that are far too fragile and costly to maintain, as well as energy-inefficient, so any home I could buy would be one I was permanently grumpy about fixing all the damn time. Whereas as a renter, it's just how it is and so long as the landlord fixes it, I deal.
I could see just buying land, maybe, and passing it along to my son so he could either build something he liked or sell it.
posted by emjaybee at 1:18 PM on June 3, 2019 [3 favorites]
Also, I think the way we build homes is inefficient and results in buildings that are far too fragile and costly to maintain, as well as energy-inefficient, so any home I could buy would be one I was permanently grumpy about fixing all the damn time. Whereas as a renter, it's just how it is and so long as the landlord fixes it, I deal.
I could see just buying land, maybe, and passing it along to my son so he could either build something he liked or sell it.
posted by emjaybee at 1:18 PM on June 3, 2019 [3 favorites]
hmmm.
When I got my raise this year (2%), it made me wonder about cost of living changes in my area. But I couldn't find any good data telling a story of how that had changed in terms that I could understand.
Every cent that comes in, goes out. Every cent except for those that are auto withdrawled for retirement. So it's hard for me to compare how my personal cost of living has changed. Yes, things are getting more expensive, but how much more expensive? And what about the trade wars?
posted by rebent at 1:31 PM on June 3, 2019
When I got my raise this year (2%), it made me wonder about cost of living changes in my area. But I couldn't find any good data telling a story of how that had changed in terms that I could understand.
Every cent that comes in, goes out. Every cent except for those that are auto withdrawled for retirement. So it's hard for me to compare how my personal cost of living has changed. Yes, things are getting more expensive, but how much more expensive? And what about the trade wars?
posted by rebent at 1:31 PM on June 3, 2019
I really fucked this up....I could have been a contender
posted by thelonius at 1:39 PM on June 3, 2019
posted by thelonius at 1:39 PM on June 3, 2019
My wife and I (at the upper end of the millenial age range) are looking completely outside of the US for buying property for investment purposes, FWIW. and maybe to move to eventually as shit increasingly gets fucked around here. Diversify your portfolio and all. We could probably buy a home in the midwest on a decent timeline if we could get good jobs in our industries there (or remote jobs), but Bay Area property still feels so far out of reach for us that we have trouble conceptualizing what the process would even look like. And we've seen too many people around here who are trying to sell with no buyers, so we're not convinced it's even a sound investment.
I don't get the sense there are too many "still ridiculously affordable and about to blow up" situations around the cities we're familiar with here in the States. The situation is rather different in some of the parts of Eastern Europe she's lived in.
posted by naju at 1:42 PM on June 3, 2019 [1 favorite]
I don't get the sense there are too many "still ridiculously affordable and about to blow up" situations around the cities we're familiar with here in the States. The situation is rather different in some of the parts of Eastern Europe she's lived in.
posted by naju at 1:42 PM on June 3, 2019 [1 favorite]
I'm hung up on needing to know what sort of house Becca from Kalamazoo bought on craigslist for $9,200 dollars.
Becca bought in 2013, when the population of Kalamazoo was 10-15 percent down from its 1970 peak. And check out that table: the population went up 42 percent in the 1950s. A lot of houses got built in that time, and lot of owners were dying off 50-60 years later.
I'm gonna bet that she bought a house that had been empty for years, from a child (or even a grandchild) of the original owner who didn't live anywhere near Michigan and had been trying to unload it since before the housing bubble burst and was willing to part with it for any amount of money and a promise that they wouldn't get sued if it all fell down within a year. And then she and her partner have sunk at least $30K plus their own effort into bringing it up to the level where they could rent it out.
If you tell me that Becca didn't need to replace 3/4 of the windows in that house and pry plywood off the rest, I will raise an eyebrow so as to indicate that I am thinking Oh really... at you.
posted by Etrigan at 1:45 PM on June 3, 2019 [24 favorites]
Becca bought in 2013, when the population of Kalamazoo was 10-15 percent down from its 1970 peak. And check out that table: the population went up 42 percent in the 1950s. A lot of houses got built in that time, and lot of owners were dying off 50-60 years later.
I'm gonna bet that she bought a house that had been empty for years, from a child (or even a grandchild) of the original owner who didn't live anywhere near Michigan and had been trying to unload it since before the housing bubble burst and was willing to part with it for any amount of money and a promise that they wouldn't get sued if it all fell down within a year. And then she and her partner have sunk at least $30K plus their own effort into bringing it up to the level where they could rent it out.
If you tell me that Becca didn't need to replace 3/4 of the windows in that house and pry plywood off the rest, I will raise an eyebrow so as to indicate that I am thinking Oh really... at you.
posted by Etrigan at 1:45 PM on June 3, 2019 [24 favorites]
How much opportunity is dependent on owning property?
I'm out of work right now, and the first thing I do when I see a job posting I might want to apply to is calculate what kind of apartment I could rent on the offered salary. Sometimes it's kind of depressing. And - sometimes I just can't apply for the job because there is no rental housing within a reasonable commute.
Often these are very small towns, and I don't know whether there's no demand for rental housing or if the town zoning is just super hostile to rental properties, but - those are opportunities that are available to people who can buy houses, but not to me.
posted by Jeanne at 1:48 PM on June 3, 2019 [3 favorites]
I'm out of work right now, and the first thing I do when I see a job posting I might want to apply to is calculate what kind of apartment I could rent on the offered salary. Sometimes it's kind of depressing. And - sometimes I just can't apply for the job because there is no rental housing within a reasonable commute.
Often these are very small towns, and I don't know whether there's no demand for rental housing or if the town zoning is just super hostile to rental properties, but - those are opportunities that are available to people who can buy houses, but not to me.
posted by Jeanne at 1:48 PM on June 3, 2019 [3 favorites]
I feel like we should somehow merge this FPP with the one about how people are moving much less frequently than they used to.
posted by EmpressCallipygos at 1:50 PM on June 3, 2019 [4 favorites]
posted by EmpressCallipygos at 1:50 PM on June 3, 2019 [4 favorites]
"I can't believe how easy it was to accumulate this wealth." -- Jennifer, South Orange County.
I feel confident in saying that Jennifer from South County is not a good person.
posted by DarlingBri at 1:54 PM on June 3, 2019 [22 favorites]
I feel confident in saying that Jennifer from South County is not a good person.
posted by DarlingBri at 1:54 PM on June 3, 2019 [22 favorites]
so we're not convinced it's even a sound investment
California is a non-recourse state, so your worst-case scenario would be walking away from the house (and thereby keeping the rest of your money). Which is bad, but not as bad (I think?) as having your funds raided and then being forced to declare bankruptcy in order to get out from a mortgage. I kinda feel like people are nuts to buy something as expensive as a house in a recourse state, but maybe bankruptcy isn't really so bad?
posted by aramaic at 1:55 PM on June 3, 2019 [2 favorites]
California is a non-recourse state, so your worst-case scenario would be walking away from the house (and thereby keeping the rest of your money). Which is bad, but not as bad (I think?) as having your funds raided and then being forced to declare bankruptcy in order to get out from a mortgage. I kinda feel like people are nuts to buy something as expensive as a house in a recourse state, but maybe bankruptcy isn't really so bad?
posted by aramaic at 1:55 PM on June 3, 2019 [2 favorites]
I thought about people like this, or those start up stories which almost always include from 300k interest free loan from a family member or something ...what if we democratized access to that capital? Basically interest free loans for everyone in exchange for some minor share of the If successful venture’s stocks?
It seems to me the most straightforward way to accomplish this would be for the government to offer subsidized loans to start-ups and then rely on general taxes---corporate, income, wealth, or some combination---to capture its (our) share of the successes, regardless of where the money from those successes happens to pool.
posted by This time is different. at 2:02 PM on June 3, 2019
It seems to me the most straightforward way to accomplish this would be for the government to offer subsidized loans to start-ups and then rely on general taxes---corporate, income, wealth, or some combination---to capture its (our) share of the successes, regardless of where the money from those successes happens to pool.
posted by This time is different. at 2:02 PM on June 3, 2019
The crash can't come soon enough, but it's going be very painful when it happens.
The thing is, I'm not convinced that this is actually going to happen. 2008 happened (and I'll just abridge this horribly for the sake of this very narrow argument) after enough people started defaulting on their completely-insane mortgages that they had only been approved for because of the speculative hope by the banks that property values would keep rising forever. More to the point, the crash and subsequent value-deflation happened because the people who were buying these absurdly expensive houses weren't actually capable of keeping up the monthly payments on the mortgages they were given. Having myself purchased property in the last few years, I can tell you with some degree of confidence that if the bank doesn't think you can make $X/month in payments for the next 30 years, they're not issuing you that mortgage. The people buying this crazily-expensive real estate are in fact people who can afford it. There's no subprime crisis looming, and if you're willing to be an amoral sociopath, housing is actually a really good investment: folks are always gonna need somewhere to live, no matter how badly everything else is going to hell.
I don't know WHO the people buying these million-dollar condos are, but the banks believe they can make the payments on them. A large number of them are wealthy speculators who just want to own assets that appreciate, who would need to worry about the guillotine problem if this trend continues, but I don't see anything on the horizon that would have the effect of deflating prices in the same way that the 2008 crash dd.
posted by Mayor West at 2:08 PM on June 3, 2019 [4 favorites]
The thing is, I'm not convinced that this is actually going to happen. 2008 happened (and I'll just abridge this horribly for the sake of this very narrow argument) after enough people started defaulting on their completely-insane mortgages that they had only been approved for because of the speculative hope by the banks that property values would keep rising forever. More to the point, the crash and subsequent value-deflation happened because the people who were buying these absurdly expensive houses weren't actually capable of keeping up the monthly payments on the mortgages they were given. Having myself purchased property in the last few years, I can tell you with some degree of confidence that if the bank doesn't think you can make $X/month in payments for the next 30 years, they're not issuing you that mortgage. The people buying this crazily-expensive real estate are in fact people who can afford it. There's no subprime crisis looming, and if you're willing to be an amoral sociopath, housing is actually a really good investment: folks are always gonna need somewhere to live, no matter how badly everything else is going to hell.
I don't know WHO the people buying these million-dollar condos are, but the banks believe they can make the payments on them. A large number of them are wealthy speculators who just want to own assets that appreciate, who would need to worry about the guillotine problem if this trend continues, but I don't see anything on the horizon that would have the effect of deflating prices in the same way that the 2008 crash dd.
posted by Mayor West at 2:08 PM on June 3, 2019 [4 favorites]
I have been a pretty well compensated programmer for almost twenty years. I did manage to buy a house in LA a few years ago, but there's no way I would've had a down payment without a big payout from working for a startup that sold.
Even with that, I couldn't afford to buy my house now. I would be totally fine if its value dropped quite a bit if that meant more people could buy houses as homes.
posted by flaterik at 2:08 PM on June 3, 2019 [2 favorites]
Even with that, I couldn't afford to buy my house now. I would be totally fine if its value dropped quite a bit if that meant more people could buy houses as homes.
posted by flaterik at 2:08 PM on June 3, 2019 [2 favorites]
How I got into a Los Angeles area home in 2003: we had no savings, so asked a wealthy grandparent for a $20,000 loan, and instead received a $10,000 gift. It was before the housing bust so they were writing loans to anyone with 3% down. And even then, prices were going up like crazy...the home we purchased went up in value $40,000 between acceptance of the offer and the closing, and the house next door had been purchased just five years before for half the price.
Looking at today's housing prices now in the same area for a similar house, that gift would have to be 20% down, or $140,000. In the classic game of "once you're in it, you win it", I can afford that down payment by selling the house I already occupy and using the equity. I cannot imagine how an average person gets into a house in SoCal today without already having a house, and that sucks.
posted by davejay at 2:09 PM on June 3, 2019 [5 favorites]
Looking at today's housing prices now in the same area for a similar house, that gift would have to be 20% down, or $140,000. In the classic game of "once you're in it, you win it", I can afford that down payment by selling the house I already occupy and using the equity. I cannot imagine how an average person gets into a house in SoCal today without already having a house, and that sucks.
posted by davejay at 2:09 PM on June 3, 2019 [5 favorites]
Yeah I’m worried there’s some kind of iron bubble going on where the risks of a crash are so big that no one wants to call bullshit on the whole thing so the entire world’s economy is betting on keeping house prices going up forever.
Like I don’t know what breaks that fever but every day it doesn’t is making it worse.
posted by The Whelk at 2:10 PM on June 3, 2019 [3 favorites]
Like I don’t know what breaks that fever but every day it doesn’t is making it worse.
posted by The Whelk at 2:10 PM on June 3, 2019 [3 favorites]
I would be totally fine if its value dropped quite a bit if that meant more people could buy houses as homes.
Yeah, totally on that team. Some of my neighbors are very upset about new housing being built in the area because our collective property values will go down (so they say) but I love the idea of an influx of new and lower-priced housing, to bring in an influx of new people and new businesses, and maybe I'll finally live in a thriving walkable neighborhood instead of a suburban island. If my property values have to go down for that to happen, bring it on. We already have the transit infrastructure to support it in this area.
posted by davejay at 2:11 PM on June 3, 2019 [9 favorites]
Yeah, totally on that team. Some of my neighbors are very upset about new housing being built in the area because our collective property values will go down (so they say) but I love the idea of an influx of new and lower-priced housing, to bring in an influx of new people and new businesses, and maybe I'll finally live in a thriving walkable neighborhood instead of a suburban island. If my property values have to go down for that to happen, bring it on. We already have the transit infrastructure to support it in this area.
posted by davejay at 2:11 PM on June 3, 2019 [9 favorites]
Oh yeah, I answered the survey that Petersen tweeted out a few months ago.
My first non-temp office job was at a title insurance company right after the housing collapse, trying to figure out all of the paperwork that was left over from smaller title insurance companies that went over. The sheer amount of money flying around with little oversight (and also, the sheer amount of embezzlement) kept me from wanting to purchase for years. I still don't really view the house as an investment, but that job did mean that I had a better idea of what to look out for and could actually read the paperwork involved. We also sent copies of our inspections to family members that worked in construction, which was useful.
A few things happened that made me want to purchase:
1. Two really bad landlords in a row - one who came into our place when we were gone without any sort of notice and that we had to sue to get our deposit back afterwards, another who refused to major structural issues - which left us with a frozen water pipe to the kitchen - so no water in the kitchen for two weeks and no hot water in the kitchen for two-three months followed by bats in the attic, which then translated to bat mites in our apartment when the bats migrated (they're like bedbugs, only spraying for bedbugs when you don't have bedbugs does nothing). The bad part of owning a house is that you're responsible for fixing whatever goes wrong, but the upside is that if something goes wrong, you're allowed to fix it.
2. Mr. Dinty's father is a building super, so he hates condo boards with a firey passion. Our last apartment had thin enough walls that I could hear everything that was going on in my neighbor's bedroom (including his snoring) whenever I used our bathroom, so that also helped with our wish for a detached home (yes, we're aware that we got the better part of that deal).
3. I worked a job that had 50-60 hour work weeks on average for a year, but was also non-salaried, so I got overtime. That was the bulk of our down payment, so we got to put down 20%. We bought a house and then two weeks later I quit that job.
If we had better tenant protections, better multi-family housing stock, and a job market that compelled an employer to just hire another employee instead of paying an employee twice their wage until the burnt out, I'd be happily renting.
I also live in one of the more affordable cities in the US - one with a plan to remain somewhat sustainable and affordable, even! And the only thing that seems to be going up are luxury condos. Luxury condos for as far as the eye can see. Target corporate can only employ so many people, so I guess the rest are investment properties.
posted by dinty_moore at 2:14 PM on June 3, 2019 [5 favorites]
My first non-temp office job was at a title insurance company right after the housing collapse, trying to figure out all of the paperwork that was left over from smaller title insurance companies that went over. The sheer amount of money flying around with little oversight (and also, the sheer amount of embezzlement) kept me from wanting to purchase for years. I still don't really view the house as an investment, but that job did mean that I had a better idea of what to look out for and could actually read the paperwork involved. We also sent copies of our inspections to family members that worked in construction, which was useful.
A few things happened that made me want to purchase:
1. Two really bad landlords in a row - one who came into our place when we were gone without any sort of notice and that we had to sue to get our deposit back afterwards, another who refused to major structural issues - which left us with a frozen water pipe to the kitchen - so no water in the kitchen for two weeks and no hot water in the kitchen for two-three months followed by bats in the attic, which then translated to bat mites in our apartment when the bats migrated (they're like bedbugs, only spraying for bedbugs when you don't have bedbugs does nothing). The bad part of owning a house is that you're responsible for fixing whatever goes wrong, but the upside is that if something goes wrong, you're allowed to fix it.
2. Mr. Dinty's father is a building super, so he hates condo boards with a firey passion. Our last apartment had thin enough walls that I could hear everything that was going on in my neighbor's bedroom (including his snoring) whenever I used our bathroom, so that also helped with our wish for a detached home (yes, we're aware that we got the better part of that deal).
3. I worked a job that had 50-60 hour work weeks on average for a year, but was also non-salaried, so I got overtime. That was the bulk of our down payment, so we got to put down 20%. We bought a house and then two weeks later I quit that job.
If we had better tenant protections, better multi-family housing stock, and a job market that compelled an employer to just hire another employee instead of paying an employee twice their wage until the burnt out, I'd be happily renting.
I also live in one of the more affordable cities in the US - one with a plan to remain somewhat sustainable and affordable, even! And the only thing that seems to be going up are luxury condos. Luxury condos for as far as the eye can see. Target corporate can only employ so many people, so I guess the rest are investment properties.
posted by dinty_moore at 2:14 PM on June 3, 2019 [5 favorites]
In retrospect, my current status as a millennial homeowner stems from taking the full-ride scholarship to the tiny, unglamorous rural state college; falling into an IT-adjacent career and staying in IT despite finding it quite boring; eloping and staying married to a guy with a similar income; and buying a possibly haunted house next to a high school at the bottom of the market in 2012.
I wonder sometimes what it would have been like to go to a fancy college, have a career I am passionate about, and live in a house untouched by death or undisclosed flooding. All I know is that it would be very difficult to afford this same house now, given rising prices in our area, and we will only move when we break our elderly hips on the sidewalk trying to shovel snow.
posted by Maarika at 2:15 PM on June 3, 2019 [8 favorites]
I wonder sometimes what it would have been like to go to a fancy college, have a career I am passionate about, and live in a house untouched by death or undisclosed flooding. All I know is that it would be very difficult to afford this same house now, given rising prices in our area, and we will only move when we break our elderly hips on the sidewalk trying to shovel snow.
posted by Maarika at 2:15 PM on June 3, 2019 [8 favorites]
Two really bad landlords in a row
I would love to be an attentive long-term landlord to everyone I know who prefers to rent, and charge them break-even rent so that they can have a nicer place and lower stress while my kids get an equity and/or income windfall someday...but it is a challenge to bid against everyone else who is striving to crank every last dime out of the units they buy, and willing to pay more for the units to have that opportunity.
Then again, I know someone who bought some local houses in the 80s and has been renting them out ever since, refuses to sell, and got them so cheap (by today's dollars) that more than a few units have had people living without paying any rent for years at a time and he's been too lazy to deal with it. I also know someone who lives in another state, in the same rental unit since the 70s, and the owner has never raised the rent or given them a hard time because she's happy to have someone they trust and like living in a unit that is already paid off. I'm happy there are stories like that out there.
posted by davejay at 2:20 PM on June 3, 2019 [4 favorites]
I would love to be an attentive long-term landlord to everyone I know who prefers to rent, and charge them break-even rent so that they can have a nicer place and lower stress while my kids get an equity and/or income windfall someday...but it is a challenge to bid against everyone else who is striving to crank every last dime out of the units they buy, and willing to pay more for the units to have that opportunity.
Then again, I know someone who bought some local houses in the 80s and has been renting them out ever since, refuses to sell, and got them so cheap (by today's dollars) that more than a few units have had people living without paying any rent for years at a time and he's been too lazy to deal with it. I also know someone who lives in another state, in the same rental unit since the 70s, and the owner has never raised the rent or given them a hard time because she's happy to have someone they trust and like living in a unit that is already paid off. I'm happy there are stories like that out there.
posted by davejay at 2:20 PM on June 3, 2019 [4 favorites]
When we moved to San Francisco we went to sit down with a couple different realtors to talk about our path to homebuying. After explaining to them exactly how large our then-six-figure CASH nestegg was (not counting our retirement savings, various stock positions we could liquidate, etc.), both realtors asked this exact question, whitewashed and completely emotionally flat:
Do you have any family members that might die soon from which you could stand to benefit?
Our answer of course was no and it was clear we were all wasting each others' time and the meetings ended soon thereafter. They put us on their email lists and don't even bother following up to see if that position has changed.
It won't. We'll never own here, but maybe we can somewhere else some day. Maybe. We're in our 40's already though so now it becomes a question of whether someone would write us a 30-year loan.
And I consider us firmly middle class, meaning a whole lot of people have it way worse than us. The system is broken. As far as I'm concerned, anyone who does own a home isn't paying enough taxes into the system to help those who can't. People who own two or more should pay on a sliding scale. Fuck your free market capitalism if it comes at the cost of lives it has to ruin so you can play golf instead of working / never retiring / physically and emotionally ruining your family / borrowing to get by / presidenting.
posted by allkindsoftime at 2:25 PM on June 3, 2019 [10 favorites]
Do you have any family members that might die soon from which you could stand to benefit?
Our answer of course was no and it was clear we were all wasting each others' time and the meetings ended soon thereafter. They put us on their email lists and don't even bother following up to see if that position has changed.
It won't. We'll never own here, but maybe we can somewhere else some day. Maybe. We're in our 40's already though so now it becomes a question of whether someone would write us a 30-year loan.
And I consider us firmly middle class, meaning a whole lot of people have it way worse than us. The system is broken. As far as I'm concerned, anyone who does own a home isn't paying enough taxes into the system to help those who can't. People who own two or more should pay on a sliding scale. Fuck your free market capitalism if it comes at the cost of lives it has to ruin so you can play golf instead of working / never retiring / physically and emotionally ruining your family / borrowing to get by / presidenting.
posted by allkindsoftime at 2:25 PM on June 3, 2019 [10 favorites]
dinty_moore's story, and others, are the downside of Why Don't You Just Rent? I'll add in "no-pet policies." A lot of people buy not because of a burning desire to put down roots and own property but because they have, or want, pets, or they've had one too many shitty landlords or terrible neighbors. The latter can happen in home ownership, too, but at least in a detached house you can get away from noisy neighbors.
Ban no-pet policies, institute better soundproofing, have better protections and recourses for tenants in general, and renting would be more attractive. There's nothing about renting, or multi-family housing, that has to be uncomfortable or restrictive.
posted by Rosie M. Banks at 2:34 PM on June 3, 2019 [17 favorites]
Ban no-pet policies, institute better soundproofing, have better protections and recourses for tenants in general, and renting would be more attractive. There's nothing about renting, or multi-family housing, that has to be uncomfortable or restrictive.
posted by Rosie M. Banks at 2:34 PM on June 3, 2019 [17 favorites]
I "cheated" by buying a house in Minneapolis last year (where I am from) and working 50/50 between there and the office in the Bay Area (where I lived full time from 2006-2016). I eat the cost of flights and rent when I am in San Jose, but it's probably a wash with Bay Area salaries vs. Minneapolis salaries. The house I bought for $300k in Minneapolis would be between $1.5M and 4M in the Bay Area depending on the city.
I am pretty happy to be owning a house - love having my own space, love working on it, house itself is in great shape, just needed some cosmetic updates.
As noted by others the real estate market no longer operates the way it did prior to 2008. I'm also in a spot where I don't care about valuation, only my ability to pay the mortgage monthly and ultimately pay it off.
posted by MillMan at 2:37 PM on June 3, 2019 [1 favorite]
I am pretty happy to be owning a house - love having my own space, love working on it, house itself is in great shape, just needed some cosmetic updates.
As noted by others the real estate market no longer operates the way it did prior to 2008. I'm also in a spot where I don't care about valuation, only my ability to pay the mortgage monthly and ultimately pay it off.
posted by MillMan at 2:37 PM on June 3, 2019 [1 favorite]
Some of my neighbors are very upset about new housing being built in the area because our collective property values will go down (so they say)
People are so crazy about things like that. Habitat for Humanity is building some duplexes across the street from me, and some of my neighbors were just LIVID about it. Making scenes at the planning commission meetings about it. Dancing around outright talking about property values MOST of the time but sometimes saying it right out.
My house is up almost 40% in appraised value in -three years-. The appraisers asked what the development is and -maybe- it slowed down the increase but for fuck's sake, people. Values in my neighborhood aren't going down any time soon, and even if they do everyone will still be ahead of where they bought.
The loudest voices were from people who have been there for ages and whose homes have appreciated hundreds of percent, of course.
posted by flaterik at 2:54 PM on June 3, 2019 [8 favorites]
People are so crazy about things like that. Habitat for Humanity is building some duplexes across the street from me, and some of my neighbors were just LIVID about it. Making scenes at the planning commission meetings about it. Dancing around outright talking about property values MOST of the time but sometimes saying it right out.
My house is up almost 40% in appraised value in -three years-. The appraisers asked what the development is and -maybe- it slowed down the increase but for fuck's sake, people. Values in my neighborhood aren't going down any time soon, and even if they do everyone will still be ahead of where they bought.
The loudest voices were from people who have been there for ages and whose homes have appreciated hundreds of percent, of course.
posted by flaterik at 2:54 PM on June 3, 2019 [8 favorites]
If we had better tenant protections, better multi-family housing stock, and a job market that compelled an employer to just hire another employee instead of paying an employee twice their wage until the burnt out, I'd be happily renting.
Same! Every 13, 14 hour workday I am just like, one hour closer to a condo. But I have been pulling these days now, 5 days a week (it's just a "regular" 8 hours on weekends wheeee), for almost 4 months and I feel like I am actually physically dying.
We're in our 40's already though so now it becomes a question of whether someone would write us a 30-year loan.
Oh, fucking great. NEVER FUCKING MIND. BRB quitting nightmare job.
Fuck this fucking nation.
posted by We put our faith in Blast Hardcheese at 3:00 PM on June 3, 2019 [7 favorites]
Same! Every 13, 14 hour workday I am just like, one hour closer to a condo. But I have been pulling these days now, 5 days a week (it's just a "regular" 8 hours on weekends wheeee), for almost 4 months and I feel like I am actually physically dying.
We're in our 40's already though so now it becomes a question of whether someone would write us a 30-year loan.
Oh, fucking great. NEVER FUCKING MIND. BRB quitting nightmare job.
Fuck this fucking nation.
posted by We put our faith in Blast Hardcheese at 3:00 PM on June 3, 2019 [7 favorites]
I am going to be like the Canadians and others who come into health care threads and mention that in my life I have purchased three houses and never once had to come up with a down payment. The first was a sub-prime 100%-financed mortgage on E-4 pay that I paid PMI on for 7 years until I paid off the entire loan with deployment money. The other two were VA loans. In each case my mortgage payments have been comparable to rents in the same area. Opportunities exist for those willing to take them. I understand that they are not opportunities that everyone wants...
posted by Hal Mumkin at 3:15 PM on June 3, 2019
posted by Hal Mumkin at 3:15 PM on June 3, 2019
Hal Mumkin, I am 39. I can’t join the military. Does that mean I don’t deserve help, too?
What about others that didn’t qualify for the military because they have health issues? Or didn’t want to sign up for all the consequences like death, dismemberment, or PTSD?
I’m glad it worked out for you.
posted by Monday at 3:39 PM on June 3, 2019 [20 favorites]
What about others that didn’t qualify for the military because they have health issues? Or didn’t want to sign up for all the consequences like death, dismemberment, or PTSD?
I’m glad it worked out for you.
posted by Monday at 3:39 PM on June 3, 2019 [20 favorites]
I'm a home owner in what is now the most expensive market in the country but only because:
1) My parents are obsessive savers and started me a college fund when I was born
2) That college fund was well invested and ultimately sewed a windfall in Apple stock at the right moment
3) I bought just before the market blasted off
4) Interest rates have been below 3% since then
I didn't earn my way to this. I was just lucky and privileged.
posted by WaylandSmith at 3:48 PM on June 3, 2019 [1 favorite]
1) My parents are obsessive savers and started me a college fund when I was born
2) That college fund was well invested and ultimately sewed a windfall in Apple stock at the right moment
3) I bought just before the market blasted off
4) Interest rates have been below 3% since then
I didn't earn my way to this. I was just lucky and privileged.
posted by WaylandSmith at 3:48 PM on June 3, 2019 [1 favorite]
I bought a house with “no” money down (but still plenty of closing costs) in 2007, and then after 6 years of making mortgage payments got to write a check for over $20K for the privilege of not owning the house anymore. It was underwater on the mortgage about 5 minutes after I walked in the door.
Sometimes the opportunities that come along are the opportunity to light a bunch of money on fire.
posted by Huffy Puffy at 3:58 PM on June 3, 2019 [7 favorites]
Sometimes the opportunities that come along are the opportunity to light a bunch of money on fire.
posted by Huffy Puffy at 3:58 PM on June 3, 2019 [7 favorites]
Late Boomer here. While attending grad school in the Bay Area the late '80s, my father suggested buying a house for my time there. I told him prices were too high, and I would not be there long enough. Sure enough, housing prices dropped about 25% in the 1991-92 recession. I looked like a genius! Of course, even five years later, not so much . . .
While they say real estate is about three things--location, location, and location, part of at least one of those locations is really timing. I bought my first house in Pittsburgh, PA in 1995 for about $130K in a very good neighborhood. At that time graduate students could buy decent houses on their graduate student stipends thanks to Pittsburgh's shrinking population.
While I no longer live in Pittsburgh, I still own that house as a rental property, and observe the effect of supply and demand. Pittsburgh is an up and coming city again, thanks to tech (Uber, Amazon, Google, Microsoft, and the like). After leaving Pittsburgh in 2012, the three bedroom house commanded $2000/mo (profit of about $1300/mo after taxes and maintenance but before management fees). But demand for housing led to the construction of many rental properties. Now the supply of rental units in has caught up with demand, and my property rents for $1795 per month.
The assessed value of the place is $200K, but I could probably sell it for close to $300K. An appreciation of only about 3.4% per year since 1995. A clear indication that Pittsburgh is not a speculative market.
While real estate may drop in the Bay Area or NYC or Boston, the demand is just too high for prices to fall to what most people find affordable. Want a high quality of life with affordable real estate prices? Move to a city like Pittsburgh or Cleveland or Rochester, NY. They don't have the pizzazz of the major urban areas like NYC, Boston, Bay Area, or Chicago, but one can have great life, and be a part of the rejuvenation of these former industrial power houses.
posted by haiku warrior at 4:00 PM on June 3, 2019 [1 favorite]
While they say real estate is about three things--location, location, and location, part of at least one of those locations is really timing. I bought my first house in Pittsburgh, PA in 1995 for about $130K in a very good neighborhood. At that time graduate students could buy decent houses on their graduate student stipends thanks to Pittsburgh's shrinking population.
While I no longer live in Pittsburgh, I still own that house as a rental property, and observe the effect of supply and demand. Pittsburgh is an up and coming city again, thanks to tech (Uber, Amazon, Google, Microsoft, and the like). After leaving Pittsburgh in 2012, the three bedroom house commanded $2000/mo (profit of about $1300/mo after taxes and maintenance but before management fees). But demand for housing led to the construction of many rental properties. Now the supply of rental units in has caught up with demand, and my property rents for $1795 per month.
The assessed value of the place is $200K, but I could probably sell it for close to $300K. An appreciation of only about 3.4% per year since 1995. A clear indication that Pittsburgh is not a speculative market.
While real estate may drop in the Bay Area or NYC or Boston, the demand is just too high for prices to fall to what most people find affordable. Want a high quality of life with affordable real estate prices? Move to a city like Pittsburgh or Cleveland or Rochester, NY. They don't have the pizzazz of the major urban areas like NYC, Boston, Bay Area, or Chicago, but one can have great life, and be a part of the rejuvenation of these former industrial power houses.
posted by haiku warrior at 4:00 PM on June 3, 2019 [1 favorite]
Basically, by living in a semi-rural area in which housing value is non-existent. An expensive house in this area is in the $200K range (House the Sequel, my current abode, cost way less than that). This is great if you happen to have a good reason to be in the area--as I do, given that I live walking distance from the college where I teach. The obvious flip side of this is that you cannot move anywhere else, as most selling prices will not provide you with even the beginnings of a down payment for a property in a snazzy location unless you've been here for thirty years and have tons of equity.
By contrast, I recently found that the house right next door to my family's first home is up for sale. The house is just barely over 1000 sq ft and in a not-great (not terrible, just not great) part of a not-great Los Angeles suburb. To my knowledge, it has no central heat or a/c, and there's no garage. And it's listed as a bargain at just under one million. I...can't move back to my home state. Ever.
posted by thomas j wise at 4:00 PM on June 3, 2019 [3 favorites]
By contrast, I recently found that the house right next door to my family's first home is up for sale. The house is just barely over 1000 sq ft and in a not-great (not terrible, just not great) part of a not-great Los Angeles suburb. To my knowledge, it has no central heat or a/c, and there's no garage. And it's listed as a bargain at just under one million. I...can't move back to my home state. Ever.
posted by thomas j wise at 4:00 PM on June 3, 2019 [3 favorites]
Owning a home is a crap shoot for investment. We had a house in San Antonio for several years but, because of vagaries in the market and the timing of a job change, basically “gave” it away to a friend and allowed them to assume our mortgage with almost zero down. (Well, not totally altruistic as our equity was essentially zero at market prices of the time.) Other homes we have owned have done better but none have been a great windfall; nevertheless, they were all better than renting where there is a guaranteed zero recapture of housing expense.
I’m only familiar with the local market but it seems a lot of the froth in prices is related to the lack of rental properties. Investors buy homes, knowing they can rent them and make a decent return, as a diversification from equities or bonds.
posted by sudogeek at 4:03 PM on June 3, 2019
I’m only familiar with the local market but it seems a lot of the froth in prices is related to the lack of rental properties. Investors buy homes, knowing they can rent them and make a decent return, as a diversification from equities or bonds.
posted by sudogeek at 4:03 PM on June 3, 2019
Opportunities exist for those who are young enough, able-bodied enough, and until very recently, straight, cisgender, and (slightly less recently) male enough to take them. I understand that they are not opportunities that everyone wants...
I mean.
posted by We put our faith in Blast Hardcheese at 4:21 PM on June 3, 2019 [29 favorites]
I mean.
posted by We put our faith in Blast Hardcheese at 4:21 PM on June 3, 2019 [29 favorites]
they were all better than renting where there is a guaranteed zero recapture of housing expense
People say this and I get confused - what do people think the interest payments on the mortgage is? A person $500,000 in debt at 4% is paying $20,000 per year purely in interest, not counting capital repayments (which is the part where you are building real wealth). Interest payments are effectively equal to your rent, it's money you'll never get back.
Money has an opportunity cost. It's like the stock market, some investments do better than others, not every house you buy is "guaranteed" to be be profitable relative to what else you could have invested your money into. For long periods of history house price appreciation always lagged stock prices. Even worse is trying to pick ONE specific house to sink all your savings into - it's like, oh, I have a million dollars to invest in the stock market, instead of buying a diversified, balanced portfolio across several industries to minimize risk, perhaps even diversifying internationally and across different currencies... I sink everything into one particular stock (say Tesla) and hope I picked a winner. I mean if people were really thinking that housing is a good investment, there are real estate investment trusts to diversify your risks across a large selection of markets...
I hate what the housing market has become, all available options today are bad. I rather like Singapore's solution, where over 80% of the housing is government controlled, and the distribution of housing is weighted more towards need rather than simply whoever is wealthy enough to buy them. But such strong government intervention is distasteful to some...
posted by xdvesper at 4:22 PM on June 3, 2019 [13 favorites]
People say this and I get confused - what do people think the interest payments on the mortgage is? A person $500,000 in debt at 4% is paying $20,000 per year purely in interest, not counting capital repayments (which is the part where you are building real wealth). Interest payments are effectively equal to your rent, it's money you'll never get back.
Money has an opportunity cost. It's like the stock market, some investments do better than others, not every house you buy is "guaranteed" to be be profitable relative to what else you could have invested your money into. For long periods of history house price appreciation always lagged stock prices. Even worse is trying to pick ONE specific house to sink all your savings into - it's like, oh, I have a million dollars to invest in the stock market, instead of buying a diversified, balanced portfolio across several industries to minimize risk, perhaps even diversifying internationally and across different currencies... I sink everything into one particular stock (say Tesla) and hope I picked a winner. I mean if people were really thinking that housing is a good investment, there are real estate investment trusts to diversify your risks across a large selection of markets...
I hate what the housing market has become, all available options today are bad. I rather like Singapore's solution, where over 80% of the housing is government controlled, and the distribution of housing is weighted more towards need rather than simply whoever is wealthy enough to buy them. But such strong government intervention is distasteful to some...
posted by xdvesper at 4:22 PM on June 3, 2019 [13 favorites]
I've made nominal profits selling two house over the years but nothing worth the effort. First house was $40K and I sold it for $66K and the second condo went from $100 to $130. I got out from under that place a month before the crash in 2008 so I was lucky as hell. Current house was $200K in 2007 and Zillow values it around $400K but we've put at least $150 of renovations into it so we still wouldn't make much.
posted by octothorpe at 4:23 PM on June 3, 2019
posted by octothorpe at 4:23 PM on June 3, 2019
No no no, as a woman it's super cool I'm definitely down with a 32% chance of being sexually assaulted and an 80% chance of being sexually harassed in order to buy a house, that is AN EXTREMELY GOOD SYSTEM. It is exactly like universal healthcare.
posted by We put our faith in Blast Hardcheese at 4:24 PM on June 3, 2019 [32 favorites]
posted by We put our faith in Blast Hardcheese at 4:24 PM on June 3, 2019 [32 favorites]
I don't believe in owning any house I live in as "an investment" in a financial sense* but it's one in a perhaps-irrational emotional sense. I've seen too many little old widow septuagenarians who were renting and then had their worlds turned upside down when the landlord raised the rent beyond what they could afford on whatever meager monthly income they had. (Hell, one is too many.)
I'm 7.5 years out from owning the house free and clear, 23 years out from likely retirement age. That gives me runway for saving up to afford taxes and home maintenance costs post-retirement. Now I only need fear the vicissitudes of age, climate change, global fascism, etc. But at least "spending my declining years in fear of the landlord" is off the list.
* A financial investment for me, no. Assuming my child/the island I live on/civilization survives me, the house may likely be a financial asset for her. And thus the generational privilege perpetuates ...
posted by sobell at 4:29 PM on June 3, 2019 [6 favorites]
I'm 7.5 years out from owning the house free and clear, 23 years out from likely retirement age. That gives me runway for saving up to afford taxes and home maintenance costs post-retirement. Now I only need fear the vicissitudes of age, climate change, global fascism, etc. But at least "spending my declining years in fear of the landlord" is off the list.
* A financial investment for me, no. Assuming my child/the island I live on/civilization survives me, the house may likely be a financial asset for her. And thus the generational privilege perpetuates ...
posted by sobell at 4:29 PM on June 3, 2019 [6 favorites]
I'm pretty convinced that the next bubble bursts are going to be limited to specific regions, rather than affecting the entire US/world markets.
Yeah, for example, it seems to me that the Portland housing market maintaining price increases is dependent on people continuing to sell their house in California and bid up the prices in Portland, which seems... unstable, to me. Salaries in Portland certainly don’t justify $400K for a house.
posted by Automocar at 4:37 PM on June 3, 2019
Yeah, for example, it seems to me that the Portland housing market maintaining price increases is dependent on people continuing to sell their house in California and bid up the prices in Portland, which seems... unstable, to me. Salaries in Portland certainly don’t justify $400K for a house.
posted by Automocar at 4:37 PM on June 3, 2019
The way I usually explain my home-ownership in heavily gentrifying Portland is "You remember when they were handing out NINJA loans to any idiot? I WAS THAT IDIOT." 100% financing worked for me, but I really, really don't recommend it.
Fortunately, 3 years later I married someone with professional ambition, a good union, and the good sense to refi a few years back or else I would be totally hosed by now.
Meanwhile, since I moved in there's a new low-income housing project across the street from me, and a brand-new $1.6-million monstrosity across the back fence. I really, really don't understand how the real estate market works, and my growing suspicion is that it doesn't.
posted by ivan ivanych samovar at 4:45 PM on June 3, 2019 [1 favorite]
Fortunately, 3 years later I married someone with professional ambition, a good union, and the good sense to refi a few years back or else I would be totally hosed by now.
Meanwhile, since I moved in there's a new low-income housing project across the street from me, and a brand-new $1.6-million monstrosity across the back fence. I really, really don't understand how the real estate market works, and my growing suspicion is that it doesn't.
posted by ivan ivanych samovar at 4:45 PM on June 3, 2019 [1 favorite]
You're probably screwed no matter what you do. Any choice you make now will be wrong in the future.
posted by jenfullmoon at 4:50 PM on June 3, 2019 [6 favorites]
posted by jenfullmoon at 4:50 PM on June 3, 2019 [6 favorites]
I'm hung up on needing to know what sort of house Becca from Kalamazoo bought on craigslist for $9,200 dollars.
north side or possibly edison neighborhood or possibly around e michigan to gull rd
certainly run down, needing work and probably abandoned
i would be shocked if it was anywhere else - and even in those neighborhoods, you would pay more for a house in decent shape, especially edison
posted by pyramid termite at 5:00 PM on June 3, 2019
north side or possibly edison neighborhood or possibly around e michigan to gull rd
certainly run down, needing work and probably abandoned
i would be shocked if it was anywhere else - and even in those neighborhoods, you would pay more for a house in decent shape, especially edison
posted by pyramid termite at 5:00 PM on June 3, 2019
Currently selling/buying place just outside NYC. Buyer is putting 10% down; realtor has seen mortgages where buyers are putting 3% down.
posted by armacy at 5:17 PM on June 3, 2019
posted by armacy at 5:17 PM on June 3, 2019
Virtually every change in the American family/home dynamic has been used to mask the systematic reduction of wages for the working and middle classes. Women entered the workforce in record numbers and we tried hard not to notice that having twice the earners in one family somehow didn't provide twice the earnings. People who grew up in families of three to five kids grew up to have only children, or no kids at all, and still had less left over at the end of the month. Our older relatives lived longer and longer, but not so that they could relax in their own homes and enjoy their twilight on their own terms. They get turned into cash cows for a broken health care system, spending their twilight years funneling their savings into the system instead of passing them on.
Millennials are just the generation left holding the bag when there were no more dollars to shift around.
posted by DirtyOldTown at 5:24 PM on June 3, 2019 [32 favorites]
Millennials are just the generation left holding the bag when there were no more dollars to shift around.
posted by DirtyOldTown at 5:24 PM on June 3, 2019 [32 favorites]
I'm hung up on needing to know what sort of house Becca from Kalamazoo bought on craigslist for $9,200 dollars.
I'll also note that she purchased in 2013 - according to redfin's data blog (a totally normal place to check out for fun), housing prices in the Kalamazoo area have gone up around 70% since then. Mind you, that still means that she purchased the house for about 10% of the median price in the area, so yeah, probably either an assumed tear-down (I'd also assume if there were a ton of liens on it she'd have mentioned that in the interview).
posted by dinty_moore at 5:27 PM on June 3, 2019 [2 favorites]
I'll also note that she purchased in 2013 - according to redfin's data blog (a totally normal place to check out for fun), housing prices in the Kalamazoo area have gone up around 70% since then. Mind you, that still means that she purchased the house for about 10% of the median price in the area, so yeah, probably either an assumed tear-down (I'd also assume if there were a ton of liens on it she'd have mentioned that in the interview).
posted by dinty_moore at 5:27 PM on June 3, 2019 [2 favorites]
The obvious flip side of this is that you cannot move anywhere else, as most selling prices will not provide you with even the beginnings of a down payment for a property in a snazzy location unless you've been here for thirty years and have tons of equity
This is basically my parent's dilemma.
They live in a lovely semi-suburban neighborhood in rural NY.
Paid off for years, relatively low taxes (for NY).
They'd like to move to be closer to grandkids, but what they can sell their house for won't even approach a similar place out here in the PNW.
So their choice is either a mortgage, which they certainly don't want or need at their age, or a much different style of housing.
There are, of course, intangible perks to living near us but from an economic point of view, it's a bad deal.
posted by madajb at 5:35 PM on June 3, 2019
This is basically my parent's dilemma.
They live in a lovely semi-suburban neighborhood in rural NY.
Paid off for years, relatively low taxes (for NY).
They'd like to move to be closer to grandkids, but what they can sell their house for won't even approach a similar place out here in the PNW.
So their choice is either a mortgage, which they certainly don't want or need at their age, or a much different style of housing.
There are, of course, intangible perks to living near us but from an economic point of view, it's a bad deal.
posted by madajb at 5:35 PM on June 3, 2019
I bought my house in 2005 as a 25th birthday gift to myself; previously, I'd bought myself a new pair of sneakers each year as my personal birthday gift. It cost $67,000 and was and belonged to a steel worker who likely died somewhere on the premises. My nieghborhood was not a fashionable one, but it was a safe one in my mid-sized city. It was crazy mortgage time, so there was no down payment or mortgage insurance. I was a graduate research assistant making less than $30K a year.
My story is closest to the Kalamazoo homeowner's story. My house was in less than ideal shape when I bought it. I took the lump sum I'd saved for the down payment I didn't need and put it toward replacing the kitchen, fixing the gutters, and updating the wiring. Later we replaced the roof, 80 year old windows, and the crumbling front steps (they extend two stories down from my front porch to the sidewalk, so they're pretty important and expensive to replace).
My parents weren't able to help me with money, but they were worth much more than that in knowing how to make my house livable. They spent a month helping me refinish the floors, paint the walls and replace the substandard plumbing. They assembled my IKEA kitchen and helped me dispose of *seven* layers of linoleum. They also wrangled and supervised my tradespeople family members into offering their services at a reasonable price. So I guess I inherited skilled help instead of money, but it worked out the same.
Luckily, my handy now-husband moved in within a year of me signing the papers as I'm still pretty incompetent at maintaining my own house. I still live in the same spot and my daughter is getting a good education at the public schools. My friends all eventually bought similar houses and live near me, so I am looking forward to another summer of sitting on each other's porches and drinking homemade cocktails.
posted by Alison at 5:39 PM on June 3, 2019 [4 favorites]
My story is closest to the Kalamazoo homeowner's story. My house was in less than ideal shape when I bought it. I took the lump sum I'd saved for the down payment I didn't need and put it toward replacing the kitchen, fixing the gutters, and updating the wiring. Later we replaced the roof, 80 year old windows, and the crumbling front steps (they extend two stories down from my front porch to the sidewalk, so they're pretty important and expensive to replace).
My parents weren't able to help me with money, but they were worth much more than that in knowing how to make my house livable. They spent a month helping me refinish the floors, paint the walls and replace the substandard plumbing. They assembled my IKEA kitchen and helped me dispose of *seven* layers of linoleum. They also wrangled and supervised my tradespeople family members into offering their services at a reasonable price. So I guess I inherited skilled help instead of money, but it worked out the same.
Luckily, my handy now-husband moved in within a year of me signing the papers as I'm still pretty incompetent at maintaining my own house. I still live in the same spot and my daughter is getting a good education at the public schools. My friends all eventually bought similar houses and live near me, so I am looking forward to another summer of sitting on each other's porches and drinking homemade cocktails.
posted by Alison at 5:39 PM on June 3, 2019 [4 favorites]
Anecdotally, everyone I personally know who owns a home, and is my age (mid-thirties) relied on family help. Whether the parents were co-signatories on the loans, or helped with the down-payment, or bought the home (and are/aren't being paid back), or passed along a family inheritance, etc.
I don't know anyone who was able to purchase their home "on their own."
Let's not forget that the after the 2008 financial crisis, the government bailed out the financial institutions, and threw the home-owners (mostly low-income, many also POC) fucked over by predatory loans, into the void. I believe that cemented a shift in which the government fully aligned itself with home-ownership as an investment vehicle, rather than as a path to stability and community for its citizens aka the government (once-again) fully backed the Capitalist class.
BTW Community Land Trusts FTW.
posted by nikoniko at 5:41 PM on June 3, 2019 [2 favorites]
I don't know anyone who was able to purchase their home "on their own."
Let's not forget that the after the 2008 financial crisis, the government bailed out the financial institutions, and threw the home-owners (mostly low-income, many also POC) fucked over by predatory loans, into the void. I believe that cemented a shift in which the government fully aligned itself with home-ownership as an investment vehicle, rather than as a path to stability and community for its citizens aka the government (once-again) fully backed the Capitalist class.
BTW Community Land Trusts FTW.
posted by nikoniko at 5:41 PM on June 3, 2019 [2 favorites]
We bought for the first time in 2007. It was a $92k 2BR/1BA bungalow in a stable working class neighborhood with no retail or "walkability". (It's smack on the middle of the city, but this is Pittsburgh and topography cuts us off from the surrounding more walkable areas.)
Anyway, major factors that enabled this at a time when I was a research assistant and my husband was a junk mail proof-reader:
1. It's Pittsburgh. (We still are nowhere near our high water population numbers from the 50s.)
2. FHA first time home buyer loan
3. 3% down
4. A small gift from our parents (a couple thou).
We had no mind whatsoever towards this tiny 800 sq ft characterless post-war bungalow being any kind of investment. It was just a home for us to be able to have our dogs and a garden and maybe eventually a baby.
Fast forward 9 years (and one baby) and the two neighborhoods on either side of ours both gentrified to a truly bananas degree. Suddenly this little weird slice of suburbia stuck on top of a hill in Pittsburgh was somewhat desirable as a place you could afford to live and still be near those other places. So when we decided we needed a little more room, we got a cash offer on our house without us even putting it on the market. (It was a retired couple who wanted a second home close to their kids and grandkids.) We made enough that we were able to put 20% down on a new place (literally around the corner) and keep our mortgage payment the same as it's been for the past decade.
I mean, homeownership is a pain. I'm currently aggressively paying down a $15k HELOC that we used to completely renovate the kitchen. Shit breaks. It gives me anxiety. But I also remember the anxiety and what ifs of renting. What if the rent goes up so much of can't afford it? What if the landlord decides they want to sell out and the buyer wants to evict us? What if I can't have my pets anymore? It felt too much like relying on the kindness of capitalist strangers.
posted by soren_lorensen at 6:16 PM on June 3, 2019 [12 favorites]
Anyway, major factors that enabled this at a time when I was a research assistant and my husband was a junk mail proof-reader:
1. It's Pittsburgh. (We still are nowhere near our high water population numbers from the 50s.)
2. FHA first time home buyer loan
3. 3% down
4. A small gift from our parents (a couple thou).
We had no mind whatsoever towards this tiny 800 sq ft characterless post-war bungalow being any kind of investment. It was just a home for us to be able to have our dogs and a garden and maybe eventually a baby.
Fast forward 9 years (and one baby) and the two neighborhoods on either side of ours both gentrified to a truly bananas degree. Suddenly this little weird slice of suburbia stuck on top of a hill in Pittsburgh was somewhat desirable as a place you could afford to live and still be near those other places. So when we decided we needed a little more room, we got a cash offer on our house without us even putting it on the market. (It was a retired couple who wanted a second home close to their kids and grandkids.) We made enough that we were able to put 20% down on a new place (literally around the corner) and keep our mortgage payment the same as it's been for the past decade.
I mean, homeownership is a pain. I'm currently aggressively paying down a $15k HELOC that we used to completely renovate the kitchen. Shit breaks. It gives me anxiety. But I also remember the anxiety and what ifs of renting. What if the rent goes up so much of can't afford it? What if the landlord decides they want to sell out and the buyer wants to evict us? What if I can't have my pets anymore? It felt too much like relying on the kindness of capitalist strangers.
posted by soren_lorensen at 6:16 PM on June 3, 2019 [12 favorites]
Virtually every change in the American family/home dynamic has been used to mask the systematic reduction of wages for the working and middle classes.
1982, that’s when wages stopped tracking productivity and inflation, that’s when the rot really set in. That’s when cheap credit and overseas production for everyone replaced actual growth and wages.
If minimum wages tracked the same growth as CEO pay raises it would be 33$ now.
posted by The Whelk at 6:17 PM on June 3, 2019 [10 favorites]
1982, that’s when wages stopped tracking productivity and inflation, that’s when the rot really set in. That’s when cheap credit and overseas production for everyone replaced actual growth and wages.
If minimum wages tracked the same growth as CEO pay raises it would be 33$ now.
posted by The Whelk at 6:17 PM on June 3, 2019 [10 favorites]
But I also remember the anxiety and what ifs of renting.
I'm glad somebody does! I feel like there's always a chorus of "oh, trust me, owning a house is not as great as it sounds."
Whenever someone is like "renting is so much easier!" I have to assume they aren't picturing a bug-infested hellhole next to the train tracks. For $1200/month ("that's a good price around here!").
posted by shapes that haunt the dusk at 6:26 PM on June 3, 2019 [11 favorites]
I'm glad somebody does! I feel like there's always a chorus of "oh, trust me, owning a house is not as great as it sounds."
Whenever someone is like "renting is so much easier!" I have to assume they aren't picturing a bug-infested hellhole next to the train tracks. For $1200/month ("that's a good price around here!").
posted by shapes that haunt the dusk at 6:26 PM on June 3, 2019 [11 favorites]
If there's ever a time in my life where I've got enough money in my bank account to buy a home that I like, outright, and have change left over, then I'll buy a home, but I'll be god-damned if I'm getting caught up in any of this horseshit before then.
posted by turbid dahlia at 7:57 PM on June 3, 2019 [2 favorites]
posted by turbid dahlia at 7:57 PM on June 3, 2019 [2 favorites]
My son and his wife are in the process of buying a home. They live in gawdforsaken nowhere. Neither have great jobs. Kind of just scraping by. They are currently renting a new-ish single-wide mobile home. Their monthly payments on the house are going to be lower than the rent on the trailer (which has gone up twice in the past year. Apparently, Indiana allows landlords to increase rents in the middle of a contract.)
I’m not thrilled about them hopping on the home ownership treadmill, but they kind of have to move in that direction because of the economics.
posted by Thorzdad at 7:59 PM on June 3, 2019
I’m not thrilled about them hopping on the home ownership treadmill, but they kind of have to move in that direction because of the economics.
posted by Thorzdad at 7:59 PM on June 3, 2019
Having sort-of owned a house and currently renting from a shitty landlord, I prefer the shitty landlord, but that's because I'm an even shittier landlord to myself.
posted by wierdo at 8:23 PM on June 3, 2019 [4 favorites]
posted by wierdo at 8:23 PM on June 3, 2019 [4 favorites]
As far as I'm concerned, anyone who does own a home isn't paying enough taxes into the system to help those who can't.
I own (aka have a mortgage on) a house in a somewhat cheaper second tier city, and I completely agree. I can see arguments for why that should come from property vs income vs inheritance taxes and so on, but regardless those who have received opportunities should be returning the favor.
We did it without any family money or inheritances, so yay us I guess, but really that just means we have a smaller and cheaper house than those who did get that kind of help.
posted by Dip Flash at 10:20 PM on June 3, 2019
I own (aka have a mortgage on) a house in a somewhat cheaper second tier city, and I completely agree. I can see arguments for why that should come from property vs income vs inheritance taxes and so on, but regardless those who have received opportunities should be returning the favor.
We did it without any family money or inheritances, so yay us I guess, but really that just means we have a smaller and cheaper house than those who did get that kind of help.
posted by Dip Flash at 10:20 PM on June 3, 2019
We're in our 40's already though so now it becomes a question of whether someone would write us a 30-year loan.
It's illegal to deny or adjust a mortgage based on age, so they probably will. Most banks will just sell the loan to someone else immediately anyway.
posted by the agents of KAOS at 11:05 PM on June 3, 2019
It's illegal to deny or adjust a mortgage based on age, so they probably will. Most banks will just sell the loan to someone else immediately anyway.
posted by the agents of KAOS at 11:05 PM on June 3, 2019
The reason I'm a homeowner is that a) my parents were well taken care of with disability pensions when first one, then the other had to quit working due to bad health and b) I took advantage of the free college education for everyone that my country has. I was the first in my family to go to college, but that was more a matter of inclination than economic status.
Hanging around on MetaFilter has taught me that I am extremely lucky.
posted by Harald74 at 12:05 AM on June 4, 2019 [2 favorites]
Hanging around on MetaFilter has taught me that I am extremely lucky.
posted by Harald74 at 12:05 AM on June 4, 2019 [2 favorites]
Today's observation:
Before you claim to have pulled yourself up by your bootstraps, recognize that you already owned a nice pair of custom fitted boots.
Did anyone else find the poster's name amusing?
Some people were lucky in affording a house. Posted by everybody had matching towels.
posted by BlueHorse at 1:12 AM on June 4, 2019
Before you claim to have pulled yourself up by your bootstraps, recognize that you already owned a nice pair of custom fitted boots.
Did anyone else find the poster's name amusing?
Some people were lucky in affording a house. Posted by everybody had matching towels.
posted by BlueHorse at 1:12 AM on June 4, 2019
I'm an old millennial, born in the first year of that cohort. I own in the Raleigh-Durham tech triangle. I used to own in exurban New York. I was lucky enough to have my first job be tech-adjacent (not really a tech salary, but enough to comfortably live on) and my next one be not-quite-six-figures tech (and, for that matter, to have switched jobs only once in a decade, and that voluntarily). Even so, my owning a house would never have had the slightest chance of happening, because loldownpayments, had my parents not:
1) Been inveterate savers who owned their own home outright and had positive cash flow, and
2) Made investments in things like mutual funds for me practically since birth, and
4) Paid for my college, so I have no student loans, and
5) Flat-out gifted me about half of the down payment for house #1, making up the difference my investments didn't cover, and
4) Lent me the down payment for house #2 as a bridge loan so I didn't have to sell #1 at exactly the same time as buying #2
We've been in house #2 for almost 3 years now and it's appreciated about $40k in estimated value (which is like...30%? or something mathy like that). We have only a 12-year mortgage on this house because housing stock here is so much cheaper than it was in NY that we could get a 12-year mortgage in RDU and make slightly smaller payments than we had made in NY. Which is great, but was only a feasible switch because I'm lucky enough to work for a tech company that is cool with remote workers and I thus could have moved pretty much wherever I wanted, and I was able to choose "that place, where it's much cheaper".
In short, I had pretty much nothing to do with the fact that I comfortably own a home. A combination of privilege and luck did it all.
I have family members who are not so lucky/privileged, and sometimes I daydream about what they could do with their lives were I to die and leave a paid-off house to them. It feels so powerfully unfair - it is so powerfully unfair - that I landed here and they didn't.
posted by Hold your seahorses at 2:21 AM on June 4, 2019 [1 favorite]
1) Been inveterate savers who owned their own home outright and had positive cash flow, and
2) Made investments in things like mutual funds for me practically since birth, and
4) Paid for my college, so I have no student loans, and
5) Flat-out gifted me about half of the down payment for house #1, making up the difference my investments didn't cover, and
4) Lent me the down payment for house #2 as a bridge loan so I didn't have to sell #1 at exactly the same time as buying #2
We've been in house #2 for almost 3 years now and it's appreciated about $40k in estimated value (which is like...30%? or something mathy like that). We have only a 12-year mortgage on this house because housing stock here is so much cheaper than it was in NY that we could get a 12-year mortgage in RDU and make slightly smaller payments than we had made in NY. Which is great, but was only a feasible switch because I'm lucky enough to work for a tech company that is cool with remote workers and I thus could have moved pretty much wherever I wanted, and I was able to choose "that place, where it's much cheaper".
In short, I had pretty much nothing to do with the fact that I comfortably own a home. A combination of privilege and luck did it all.
I have family members who are not so lucky/privileged, and sometimes I daydream about what they could do with their lives were I to die and leave a paid-off house to them. It feels so powerfully unfair - it is so powerfully unfair - that I landed here and they didn't.
posted by Hold your seahorses at 2:21 AM on June 4, 2019 [1 favorite]
I bought my first house in 1996 for $160K. In a nice Seattle neighborhood. I sold an old car I had to come up with the 10% down payment on a stated income mortgage.* That house last sold a couple of years ago for almost $700K. I mean...
I sold it for $330K in 1999. More than doubled it's value in three years. I bought it from a guy who paid...$160K for it, in 1990. He didn't double his money. (In our society, that just means I'm a better, more deserving, person than he was.) To be clear: normal housing markets don't see houses double in value in a few years. And yet, the house is "worth" around five times the price I originally paid, and probably more, since it has been a couple years since the last sale.
I could not have afforded to buy that home from myself when I sold it, whereas I was able to comfortably buy it when I did. It was a 900 square foot "cottage" which was cute but not particularly amazing. To be clear, I got lucky: there were no bootstraps or knowledge or timing the market or whatever libertarian, neoliberal, free-market, republican or other capitalist bullshit you want to try and paste onto that.
Housing shouldn't be a matter of luck.
* God how I miss stated income mortgages, a goddess-send for self-employed people.
posted by maxwelton at 2:23 AM on June 4, 2019 [7 favorites]
I sold it for $330K in 1999. More than doubled it's value in three years. I bought it from a guy who paid...$160K for it, in 1990. He didn't double his money. (In our society, that just means I'm a better, more deserving, person than he was.) To be clear: normal housing markets don't see houses double in value in a few years. And yet, the house is "worth" around five times the price I originally paid, and probably more, since it has been a couple years since the last sale.
I could not have afforded to buy that home from myself when I sold it, whereas I was able to comfortably buy it when I did. It was a 900 square foot "cottage" which was cute but not particularly amazing. To be clear, I got lucky: there were no bootstraps or knowledge or timing the market or whatever libertarian, neoliberal, free-market, republican or other capitalist bullshit you want to try and paste onto that.
Housing shouldn't be a matter of luck.
* God how I miss stated income mortgages, a goddess-send for self-employed people.
posted by maxwelton at 2:23 AM on June 4, 2019 [7 favorites]
I'm nearly 30 in a relatively high COL area for the country I live in and I was only able to buy a place because a) my dad, also my most abusive relative, died in late 2014; he was an only child, and then b) my grandma, easily my third-most-abusive relative, died in mid-2015, meaning my sister and I inherited everything from her.
My half of the money from the sale of her house in a much lower COL area was enough for a downpayment on a house that cost literally twice as much in my high COL area. My sister has stayed in the low COL area and should also be in a position to buy something in the next couple of years. I'm also white and highly educated, which meant that I was making a salary at the time that, with the downpayment in the mix, meant someone would give me a mortgage.
If my dad had lived, there's no way I'd have seen any of that money; he was planning to spend it on new fencing (not sure how you buy low six figures of fencing but whatever). If he'd lived and it had ever crossed his mind to offer me some of the cash for the downpayment, it would have come with such gross emotional control strings attached that it likely wouldn't have been worth taking. I know I'm lucky, but people whose parents are both able and willing to give them cash to help out their lives like this feels like some whole other level of lucky.
So I feel gross and weird about the fact that I was able to do something that for a lot of people my age is either a distant dream or an even more distant fantasy, but I basically bought it with blood money. Nothing will really make the way my abusive relatives treated me as a kid right, but I do sometimes get a huge burst of satisfaction from the idea that they're dead, they can't hurt me any more, and my living setup is nice and low stress (which was never true of my childhood home) because they died at an extremely convenient time, in an extremely convenient order.
The thing that is truly messed up, though, is that my mortgage payments, even after a slight rate increase this year, are cheaper than the rent was on either of the two much smaller, crappier places I rented before I bought this place. I realise the older and wealthier I get how much the world is designed to give rich people breaks - because I could "afford" a mortgage in the first place in the eyes of the bank, I now pay less for housing. That's absurd, like morally wrong on multiple levels, and yet that is the world we live in. The private rental market needs some serious reform.
posted by terretu at 3:39 AM on June 4, 2019 [8 favorites]
My half of the money from the sale of her house in a much lower COL area was enough for a downpayment on a house that cost literally twice as much in my high COL area. My sister has stayed in the low COL area and should also be in a position to buy something in the next couple of years. I'm also white and highly educated, which meant that I was making a salary at the time that, with the downpayment in the mix, meant someone would give me a mortgage.
If my dad had lived, there's no way I'd have seen any of that money; he was planning to spend it on new fencing (not sure how you buy low six figures of fencing but whatever). If he'd lived and it had ever crossed his mind to offer me some of the cash for the downpayment, it would have come with such gross emotional control strings attached that it likely wouldn't have been worth taking. I know I'm lucky, but people whose parents are both able and willing to give them cash to help out their lives like this feels like some whole other level of lucky.
So I feel gross and weird about the fact that I was able to do something that for a lot of people my age is either a distant dream or an even more distant fantasy, but I basically bought it with blood money. Nothing will really make the way my abusive relatives treated me as a kid right, but I do sometimes get a huge burst of satisfaction from the idea that they're dead, they can't hurt me any more, and my living setup is nice and low stress (which was never true of my childhood home) because they died at an extremely convenient time, in an extremely convenient order.
The thing that is truly messed up, though, is that my mortgage payments, even after a slight rate increase this year, are cheaper than the rent was on either of the two much smaller, crappier places I rented before I bought this place. I realise the older and wealthier I get how much the world is designed to give rich people breaks - because I could "afford" a mortgage in the first place in the eyes of the bank, I now pay less for housing. That's absurd, like morally wrong on multiple levels, and yet that is the world we live in. The private rental market needs some serious reform.
posted by terretu at 3:39 AM on June 4, 2019 [8 favorites]
"Money has an opportunity cost. It's like the stock market, some investments do better than others, not every house you buy is "guaranteed" to be be profitable relative to what else you could have invested your money into. For long periods of history house price appreciation always lagged stock prices. Even worse is trying to pick ONE specific house to sink all your savings into - it's like, oh, I have a million dollars to invest in the stock market, instead of buying a diversified, balanced portfolio across several industries to minimize risk, perhaps even diversifying internationally and across different currencies... I sink everything into one particular stock (say Tesla) and hope I picked a winner. I mean if people were really thinking that housing is a good investment, there are real estate investment trusts to diversify your risks across a large selection of markets..."
Quoted for truth. That house someone mentioned above in Boston with the "insane" return in 3yrs from $325k to $400k? That's almost exactly equal to the lifetime average return of the stock market...7% per year. And during those specific years(2016-2019), if they'd invested in a run-of-the-mill stock-tracking ETF, they'd have over $450k instead.
posted by Grither at 5:14 AM on June 4, 2019 [2 favorites]
Quoted for truth. That house someone mentioned above in Boston with the "insane" return in 3yrs from $325k to $400k? That's almost exactly equal to the lifetime average return of the stock market...7% per year. And during those specific years(2016-2019), if they'd invested in a run-of-the-mill stock-tracking ETF, they'd have over $450k instead.
posted by Grither at 5:14 AM on June 4, 2019 [2 favorites]
That house someone mentioned above in Boston with the "insane" return in 3yrs from $325k to $400k? That's almost exactly equal to the lifetime average return of the stock market...7% per year.
Sure, but no bank's going to lend you $325k to invest in the stock market when you have $10k in cash. The reason ordinary people make money in the housing market is leverage. (This is of course also how they lose their shirts. And their pants.)
posted by madcaptenor at 6:33 AM on June 4, 2019 [2 favorites]
Sure, but no bank's going to lend you $325k to invest in the stock market when you have $10k in cash. The reason ordinary people make money in the housing market is leverage. (This is of course also how they lose their shirts. And their pants.)
posted by madcaptenor at 6:33 AM on June 4, 2019 [2 favorites]
A hyper-local news twitter account has been tweeting a lot about city and neighborhood planning meetings in Minneapolis, especially about housing and rezoning. And it's frustrating because a lot of the arguments seem to be about 'too many people/housing prices are going to be lowered' vs. 'we need more housing' and not paying attention to whether or not anyone can afford the units that are already there, or if developers are keeping their promises when they claim to offer a certain number of affordable apartments.
I just checked the rental prices on the new development around the corner from my house, and my mortgage is the equivalent of a 1 bedroom/1 bath with about a third of the total square footage of my house - not including pet rent. I mean, I also don't get access to a fitness center with my mortgage, but there have to be rental opportunities made available for someone who isn't a young single professional.
posted by dinty_moore at 7:41 AM on June 4, 2019 [2 favorites]
I just checked the rental prices on the new development around the corner from my house, and my mortgage is the equivalent of a 1 bedroom/1 bath with about a third of the total square footage of my house - not including pet rent. I mean, I also don't get access to a fitness center with my mortgage, but there have to be rental opportunities made available for someone who isn't a young single professional.
posted by dinty_moore at 7:41 AM on June 4, 2019 [2 favorites]
A side note on unaffordable housing:
There are a lot of poor and working class neighborhoods of houses -- like rowhouse neighborhoods in a lot of cities -- where the prices have gotten so high that anybody who actually wants to live in the neighborhood can't afford to buy there, and anyone who can afford to buy there doesn't want to live in such a "rough" neighborhood. So you have lots of streets that go from mostly occupied by owners (and their families/friends) to mostly occupied by people renting from small-time landlords who bought the "cheap" housing as investment property (or possibly as "starter homes" that they've long since moved on from and are using as investment property). And meanwhile, as prices soar and land becomes more and more valuable, public housing projects start looking like a waste of very valuable land. So cities decide that instead of projects, they're going to lean harder and harder on Section 8 rent vouchers, with the eventual goal of shuffling everyone out of public housing and into private landlords' property, and then selling/"developing" the land where the projects were. And if you're a small-time landlord who owns just one or two houses in a not-especially-desirable city neighborhood, you will often reason that renting to people using Section 8 is the reliable, easiest, and most lucrative way to go. Government money has a low default risk, waiting lists for tenants trying to use it are always long, and Section 8 rents are higher than private market rents as a way of enticing landlords to accept tenants on public assistance. But then the elevated Section 8 rents become the going rate in the neighborhood and people not able to get public assistance get priced out. So a neighborhood of houses mostly owned and rented by small-time landlords soon ends up becoming vast majority Section 8, and essentially the new projects. That isn't necessarily a problem, except that when the poor and working class neighborhoods in a city get transformed into privately owned projects, while meanwhile all these small-time landlords live off in their "nice" neighborhoods enriching themselves on those (publicly funded) rents...well, that's how you get an awful unequal city that's basically just slums and mansions. That is almost by definition a city of "haves" and "have nots."
I don't really have an answer for what should be done about that, just have seen the phenomenon in action. I guess it's whatever you call the opposite of gentrification. Ghettoization? But you only have the ghetto if you have the gentrification somewhere else and vice versa. They feed off each other because that's what inequality is (in other words, exploitation). So fucked.
posted by rue72 at 8:49 AM on June 4, 2019 [17 favorites]
There are a lot of poor and working class neighborhoods of houses -- like rowhouse neighborhoods in a lot of cities -- where the prices have gotten so high that anybody who actually wants to live in the neighborhood can't afford to buy there, and anyone who can afford to buy there doesn't want to live in such a "rough" neighborhood. So you have lots of streets that go from mostly occupied by owners (and their families/friends) to mostly occupied by people renting from small-time landlords who bought the "cheap" housing as investment property (or possibly as "starter homes" that they've long since moved on from and are using as investment property). And meanwhile, as prices soar and land becomes more and more valuable, public housing projects start looking like a waste of very valuable land. So cities decide that instead of projects, they're going to lean harder and harder on Section 8 rent vouchers, with the eventual goal of shuffling everyone out of public housing and into private landlords' property, and then selling/"developing" the land where the projects were. And if you're a small-time landlord who owns just one or two houses in a not-especially-desirable city neighborhood, you will often reason that renting to people using Section 8 is the reliable, easiest, and most lucrative way to go. Government money has a low default risk, waiting lists for tenants trying to use it are always long, and Section 8 rents are higher than private market rents as a way of enticing landlords to accept tenants on public assistance. But then the elevated Section 8 rents become the going rate in the neighborhood and people not able to get public assistance get priced out. So a neighborhood of houses mostly owned and rented by small-time landlords soon ends up becoming vast majority Section 8, and essentially the new projects. That isn't necessarily a problem, except that when the poor and working class neighborhoods in a city get transformed into privately owned projects, while meanwhile all these small-time landlords live off in their "nice" neighborhoods enriching themselves on those (publicly funded) rents...well, that's how you get an awful unequal city that's basically just slums and mansions. That is almost by definition a city of "haves" and "have nots."
I don't really have an answer for what should be done about that, just have seen the phenomenon in action. I guess it's whatever you call the opposite of gentrification. Ghettoization? But you only have the ghetto if you have the gentrification somewhere else and vice versa. They feed off each other because that's what inequality is (in other words, exploitation). So fucked.
posted by rue72 at 8:49 AM on June 4, 2019 [17 favorites]
I know I'm not a millennial because I snuck in under the wire ('06) to buy a place zero down and startlingly few questions asked. I got lucky (and was both cheap and paranoid and drinking buddies with a mortgage loan officer, who kept me out of the worst of the bad loan options) and did pretty well on the place when I sold it last year, but man, two years later and I couldn't have gotten a loan for love or money, and fifteen years later, nothing in Austin is anything like as affordable as that crapsack 450 sq ft condo. Including that crapsack condo.
But I did get in under the wire, and was able to use the profits to buy a perfectly nice house in what a friend calls "a reasonable facsimile of the middle of nowhere" and I am very, very aware that I rolled the dice and got lucky, and that two or three setbacks in a row and that luck will go the way of all luck. And that the guy who bought that condo from me paid in cash as a bit of speculation because the market is so tight in Austin now and he'll probably rent it out for double what I was charging my tenant.
So, yeah. I have complicated feelings about all of this.
posted by restless_nomad at 8:50 AM on June 4, 2019 [2 favorites]
But I did get in under the wire, and was able to use the profits to buy a perfectly nice house in what a friend calls "a reasonable facsimile of the middle of nowhere" and I am very, very aware that I rolled the dice and got lucky, and that two or three setbacks in a row and that luck will go the way of all luck. And that the guy who bought that condo from me paid in cash as a bit of speculation because the market is so tight in Austin now and he'll probably rent it out for double what I was charging my tenant.
So, yeah. I have complicated feelings about all of this.
posted by restless_nomad at 8:50 AM on June 4, 2019 [2 favorites]
Madcaptenor's comment brings up the issue that underlies the "lottery ticket" aspect of the whole system. Even in the unbelievably expensive San Francisco Bay Area market, the Case-Schiller index shows that the return over the last 20 years is under 5% annually, in real (inflation-adjusted) dollars. If you had a choice between putting $500K in the stock market and buying a $500K house for cash, obviously you'd have been better off with the market. But that's not the situation. Even a large 20% down payment is 4:1 leverage. If the value of the house goes down 20%, you're skunked. But if it goes up 20%, you've made a 100% return on your down payment. That kind of return is not going to be found in any other legitimate investment, anywhere. At least not one that regular people can access. But your ability to access it is entirely dependent on access to other early wealth.
posted by wnissen at 11:02 AM on June 4, 2019 [2 favorites]
posted by wnissen at 11:02 AM on June 4, 2019 [2 favorites]
. Even a large 20% down payment is 4:1 leverage. If the value of the house goes down 20%, you're skunked. But if it goes up 20%, you've made a 100% return on your down payment.
It's better than that - you are not skunked if your house falls in value by 20%, as you still have a place to live, and unless your entire commutable region gets skunked (vs just perhaps your neighborhood or your city) then you are still good as long as you don't have to move. Even if you ultimately lose your property money (both real and inflation adjusted), if you are able to remain, you have a relatively set value which is not being directly inflation adjusted every year.
For example my parents, whose house in 1980 was worth more inflation adjusted than it is today, but their mortgage is paid off because they were able to take advantage of the time factor and that comparable rents are adjusted to reflect current market conditions.
That's a pretty good deal.
posted by The_Vegetables at 11:32 AM on June 4, 2019
It's better than that - you are not skunked if your house falls in value by 20%, as you still have a place to live, and unless your entire commutable region gets skunked (vs just perhaps your neighborhood or your city) then you are still good as long as you don't have to move. Even if you ultimately lose your property money (both real and inflation adjusted), if you are able to remain, you have a relatively set value which is not being directly inflation adjusted every year.
For example my parents, whose house in 1980 was worth more inflation adjusted than it is today, but their mortgage is paid off because they were able to take advantage of the time factor and that comparable rents are adjusted to reflect current market conditions.
That's a pretty good deal.
posted by The_Vegetables at 11:32 AM on June 4, 2019
Section 8 rents are higher than private market rents as a way of enticing landlords to accept tenants on public assistance
? It's complicated, but they are literally pegged to average market rents. There is definitely not a policy of exceeding market rent, and they're going to go even lower in lower-income areas now that the calculations are being done by zip code in most large cities.
prices soar and land becomes more and more valuable, public housing projects start looking like a waste of very valuable land. So cities decide that instead of projects, they're going to lean harder and harder on Section 8 rent vouchers, with the eventual goal of shuffling everyone out of public housing
Cities don't determine Section 8 funding. It is a federal program, one which hasn't seen meaningful expansion in years.
posted by praemunire at 1:43 PM on June 4, 2019 [2 favorites]
? It's complicated, but they are literally pegged to average market rents. There is definitely not a policy of exceeding market rent, and they're going to go even lower in lower-income areas now that the calculations are being done by zip code in most large cities.
prices soar and land becomes more and more valuable, public housing projects start looking like a waste of very valuable land. So cities decide that instead of projects, they're going to lean harder and harder on Section 8 rent vouchers, with the eventual goal of shuffling everyone out of public housing
Cities don't determine Section 8 funding. It is a federal program, one which hasn't seen meaningful expansion in years.
posted by praemunire at 1:43 PM on June 4, 2019 [2 favorites]
Mr. Objects and I currently own a new-build house, purchased 3 years ago, in one of the most desirable areas of our city. We put 10% down, which was basically all of the equity we got out of the sale of our first home, which we had also owned for about 3 years, and purchased with 3% down at the bottom of the market. (Thank you FHA HomePath!). Hopefully we'll be here at least until Baby Objects goes off to college.
While that is bragging a little, every day still, I kinda have a moment where I just sit and go "huh..." and wonder how we made it here. I grew up teetering between being in poverty and just being poor. Mr. Objects grew up on a farm in rural Virginia. If you had told either of our 18-year-old selves where we'd be now, we wouldn't have believed it was possible.
His dad was able to save enough to pay for 4 of his 5 years in college, while I took out $50K in loans. No help from family on either home purchase. But we just had Baby Objects a year ago, when I turned 37. People keep saying she's so great, we should have more. But I'm like, "Yeah I'm almost 40, not happening." We never would have been able to move around to better jobs and taken some of the chances we've taken with a tiny human in tow.
So our houses were paid for in some pretty steep opportunity costs, as well as cash. No vacations, DIY labor for everything possible, and fewer children than we might have otherwise had. And even with all that I still consider us both incredibly lucky. Lucky to have found each other, lucky to have gotten better jobs (not worse) over time, lucky to have been in decent health...and so on and so on. So our situation is different but no better really than others who are homeowners because of good luck in having relatives with money. (Or having relatives die and leave them money...which isn't really good luck, I guess?)
And I still don't feel secure. Because of my childhood, I'm not sure I even can. As grossly unfair as generational wealth can be, I never ever want Baby Objects to have to go through some of the things her dad and I did. I want to be able to make her life, not easy, but easier. I don't want her to feel guilty if we can pay for her college, or her first beater car, or help her purchase her first home. I just want her to feel like she has the breathing room, the security, to be able to pay-it-forward to others who need it, and to happily pay her taxes.
posted by sharp pointy objects at 2:33 PM on June 4, 2019 [5 favorites]
While that is bragging a little, every day still, I kinda have a moment where I just sit and go "huh..." and wonder how we made it here. I grew up teetering between being in poverty and just being poor. Mr. Objects grew up on a farm in rural Virginia. If you had told either of our 18-year-old selves where we'd be now, we wouldn't have believed it was possible.
His dad was able to save enough to pay for 4 of his 5 years in college, while I took out $50K in loans. No help from family on either home purchase. But we just had Baby Objects a year ago, when I turned 37. People keep saying she's so great, we should have more. But I'm like, "Yeah I'm almost 40, not happening." We never would have been able to move around to better jobs and taken some of the chances we've taken with a tiny human in tow.
So our houses were paid for in some pretty steep opportunity costs, as well as cash. No vacations, DIY labor for everything possible, and fewer children than we might have otherwise had. And even with all that I still consider us both incredibly lucky. Lucky to have found each other, lucky to have gotten better jobs (not worse) over time, lucky to have been in decent health...and so on and so on. So our situation is different but no better really than others who are homeowners because of good luck in having relatives with money. (Or having relatives die and leave them money...which isn't really good luck, I guess?)
And I still don't feel secure. Because of my childhood, I'm not sure I even can. As grossly unfair as generational wealth can be, I never ever want Baby Objects to have to go through some of the things her dad and I did. I want to be able to make her life, not easy, but easier. I don't want her to feel guilty if we can pay for her college, or her first beater car, or help her purchase her first home. I just want her to feel like she has the breathing room, the security, to be able to pay-it-forward to others who need it, and to happily pay her taxes.
posted by sharp pointy objects at 2:33 PM on June 4, 2019 [5 favorites]
I'm a single millennial homeowner, single I purchased my home with zero help from my family (if you don't count listening to me complain about the househunting process). My parent is also a lifelong renter who isn't all that learned in the financial literacy department, so let's get any assumptions about privilege out of the way. But this isn't a bootstraps or #sistasdoinitforthemselves narrative.
How the hell did I do this?
(1) I'm Canadian, which doesn't really help with the big city housing market, but means that my student debt was lower (but not that much lower) than the average debt load that my American contemporaries would have graduated with
(2) By moving to a comfortable but boring AF city where real estate prices really haven't held up (guess where!)
(3) Working in an industry that pays reasonably but not amazingly well, yet at least is mostly insulated from local economic volatility
(4) The big one is settling into not having much of a life in my late 20s. It turns out that you save a lot of money when you don't immediately resume dating at the end of an LTR. When your friends who are already married and also have access to intergenerational wealth transfer that allows them to buy homes and settle into adulting, you see less of them and spend a lot less money on spending time with them. When a couple years of an insular, work-focused life become the "new normal", it makes it a lot easier to move to a comparatively boring city with a less-ridiculous housing market. Not only that, but when much of your time is spent either working full-time or doing graduate studies, you're a lot less inclined to financially invest in developing a social or romantic life because of a nagging fear that those two things make you inherently boring. The financial savings just keep adding up!
(5) Giving increasingly fewer effs about (4) as time went on
Even given these other advantages, I'm not sure I would have been able to do this as a single woman if weren't on the Deep Boring-Ass Spinster Workaholic path. I mean, I don't think I'd be able to afford home ownership if I were dropping $15k on international travel every year or going Dutch on multiple Tinder dates every week. I'm also not entirely sure I'd be happier if I were doing those things, so there's that. Would most people be happier making my sorts of choices? Absolutely not! Could I afford to own a home in the city where I grew up? Not even remotely; I'm not even sure I could buy a ground floor bachelor condo there with what I paid for my house here.
This is just to say that those of us with narratives close to the bootstraps myth really don't have it all. If someone had told 18-year-old me that these are the kinds of tradeoffs that 30-something-year-old me might find acceptable, I'd be horrified TBH.
posted by blerghamot at 2:42 PM on June 4, 2019 [6 favorites]
How the hell did I do this?
(1) I'm Canadian, which doesn't really help with the big city housing market, but means that my student debt was lower (but not that much lower) than the average debt load that my American contemporaries would have graduated with
(2) By moving to a comfortable but boring AF city where real estate prices really haven't held up (guess where!)
(3) Working in an industry that pays reasonably but not amazingly well, yet at least is mostly insulated from local economic volatility
(4) The big one is settling into not having much of a life in my late 20s. It turns out that you save a lot of money when you don't immediately resume dating at the end of an LTR. When your friends who are already married and also have access to intergenerational wealth transfer that allows them to buy homes and settle into adulting, you see less of them and spend a lot less money on spending time with them. When a couple years of an insular, work-focused life become the "new normal", it makes it a lot easier to move to a comparatively boring city with a less-ridiculous housing market. Not only that, but when much of your time is spent either working full-time or doing graduate studies, you're a lot less inclined to financially invest in developing a social or romantic life because of a nagging fear that those two things make you inherently boring. The financial savings just keep adding up!
(5) Giving increasingly fewer effs about (4) as time went on
Even given these other advantages, I'm not sure I would have been able to do this as a single woman if weren't on the Deep Boring-Ass Spinster Workaholic path. I mean, I don't think I'd be able to afford home ownership if I were dropping $15k on international travel every year or going Dutch on multiple Tinder dates every week. I'm also not entirely sure I'd be happier if I were doing those things, so there's that. Would most people be happier making my sorts of choices? Absolutely not! Could I afford to own a home in the city where I grew up? Not even remotely; I'm not even sure I could buy a ground floor bachelor condo there with what I paid for my house here.
This is just to say that those of us with narratives close to the bootstraps myth really don't have it all. If someone had told 18-year-old me that these are the kinds of tradeoffs that 30-something-year-old me might find acceptable, I'd be horrified TBH.
posted by blerghamot at 2:42 PM on June 4, 2019 [6 favorites]
We got lucky and my husband (then boyfriend) received a $10,000 inheritance right at the bottom of the housing market. It sucks that someone has to die for most people to be able to afford a house. This is not sustainable.
posted by domo at 2:58 PM on June 4, 2019 [1 favorite]
posted by domo at 2:58 PM on June 4, 2019 [1 favorite]
25 years ago we bought a small old house in a neighborhood of large newer houses. It met our needs very well: Nearby good schools, safe neighborhood, near work, nice trees. The fact that it is on the railroad tracks is a bonus, not a negative. Because the house was old and small, the banks assumed that we were going to tear it down and build new. In the end, we were only able to finance the land value. This meant getting a gift from the parents, which we truly appreciated. I knew a bit about home finance, so I was sure to get a Gift Letter from them, indicating that this was not a loan. Our own down payment savings was a result of living very cheaply during the prior 10 years.
We still live in that house. The land value has increased by 4 times. Fewer and fewer homes in the neighborhood resemble ours. Still, we intend to retire in this house.
Over the years we have spent approximately the purchase price to repair, maintain, and improve the house. We have paid approximately the purchase price in property taxes during these 25 years. The cost of insurance over the years has been about half of the original price.
We could not afford to buy in our own neighborhood now. I cannot picture how a young couple with a small child will do so, assuming that they are not doctors or the equivalent. We have not had a discussion with our own kids about their own future home ownership.
posted by Midnight Skulker at 2:58 PM on June 4, 2019
We still live in that house. The land value has increased by 4 times. Fewer and fewer homes in the neighborhood resemble ours. Still, we intend to retire in this house.
Over the years we have spent approximately the purchase price to repair, maintain, and improve the house. We have paid approximately the purchase price in property taxes during these 25 years. The cost of insurance over the years has been about half of the original price.
We could not afford to buy in our own neighborhood now. I cannot picture how a young couple with a small child will do so, assuming that they are not doctors or the equivalent. We have not had a discussion with our own kids about their own future home ownership.
posted by Midnight Skulker at 2:58 PM on June 4, 2019
The story of Electchester, one of the largest surviving social housing projects in NYC
posted by The Whelk at 4:54 PM on June 4, 2019
posted by The Whelk at 4:54 PM on June 4, 2019
? It's complicated, but they are literally pegged to average market rents. There is definitely not a policy of exceeding market rent, and they're going to go even lower in lower-income areas now that the calculations are being done by zip code in most large cities.
They're pegged, but they increase the tenant pool, and the increased/changed demand changes the market. There's also an issue of what average market rent is in an area with huge inequalities. If you've got a crummy building near a bunch of fancy buildings, then the crummy building is probably going to charge below market rent in order to get people living there. Same thing for housing in a crummy neighborhood near a bunch of fancy neighborhoods. And obviously it sucks that then you've got people living in a crummy building or neighborhood or whatever, but at least people who can only afford below market rent can still live in that zip code. Only, if the landlord of that crummy building or a house in that crummy neighborhood can get people coming in paying market or nearly market rents because their payments are augmented with a housing assistance subsidy, then the landlord is going to charge market or nearly market rents and fill their units with tenants receiving subsidies. The tenants who could only afford below market are going to get pushed out to god knows where unless they can get subsidies themselves. And other landlords or wanna-be landlords are going to see the money-making opportunity and snap up any housing for sale there as an investment, driving the real estate prices up, too, right along with the rents. So you can get a neighborhood or building that's essentially an expensive as hell, privatized project. And some other neighborhood somewhere filled with "real estate investors" making bank on it. Which, I think, is how you get a city of slums and slumlords.
Cities don't determine Section 8 funding. It is a federal program, one which hasn't seen meaningful expansion in years.
What I mean about a city leaning on Section 8 is that they're funneling as much housing assistance as possible through vouchers rather than relying more on public housing. Which I mean, it's not like projects are so great, there are pros and cons to each strategy. But in my city there was this long, long effort to shift from projects to housing assistance via vouchers (different types of vouchers, not just federal), but eventually that shift got halted when there was a ton of hue and cry about this one super beloved housing project possibly being demolished. Basically, people felt like when that part of town was shitty and inconvenient, it was alright for poor black people to live there, and so the city built those projects, but now that that part of town is nice and by all this public transportation and shopping and stuff, the city wanted to kick all the poor black people out and sell the houses/land off to rich white people. Which is fair enough, that legitimately was the city's plan. What's kind of annoying in my mind is that those were already the crown jewel projects, though. There's a way shittier project for elderly and disabled people like five blocks away and nobody cared about that building or the people living there. But I guess when you're getting all jealous about who gets to live in "the nice projects" clearly the housing market is fucked up. So anyway, that hue and cry was basically the straw that broke the camel's back and the city started really de-emphasized getting people out of the projects and started buying more and more apartment units (and eventually whole complexes) to offer as subsidized housing. I don't really understand what the funding situation is there so who knows if they're "public projects in all but name" or something else -- they've mostly been developed using city/nonprofit partnerships and then the city eventually buys out the nonprofit. But larger households usually can't live in those apartment complexes because of space-per-person regulations, which means that those households still need vouchers to rent houses from private (and usually small time) landlords. And with how expensive land is now, there is a 0% chance that the city could or would buy land to build low-rise houses on to enact the same kind of "projects in all but name" strategy that they have with apartments. I guess it's just different archeological layers of housing policy: the projects still exist, Section 8 and voucher programs are still going strong, the affordable housing complexes are trucking along. Who knows what policy will come next.
Anyway, I just brought it up because of the owning v. renting discussion, and how unaffordable it is to really do either.
posted by rue72 at 5:53 PM on June 4, 2019 [3 favorites]
They're pegged, but they increase the tenant pool, and the increased/changed demand changes the market. There's also an issue of what average market rent is in an area with huge inequalities. If you've got a crummy building near a bunch of fancy buildings, then the crummy building is probably going to charge below market rent in order to get people living there. Same thing for housing in a crummy neighborhood near a bunch of fancy neighborhoods. And obviously it sucks that then you've got people living in a crummy building or neighborhood or whatever, but at least people who can only afford below market rent can still live in that zip code. Only, if the landlord of that crummy building or a house in that crummy neighborhood can get people coming in paying market or nearly market rents because their payments are augmented with a housing assistance subsidy, then the landlord is going to charge market or nearly market rents and fill their units with tenants receiving subsidies. The tenants who could only afford below market are going to get pushed out to god knows where unless they can get subsidies themselves. And other landlords or wanna-be landlords are going to see the money-making opportunity and snap up any housing for sale there as an investment, driving the real estate prices up, too, right along with the rents. So you can get a neighborhood or building that's essentially an expensive as hell, privatized project. And some other neighborhood somewhere filled with "real estate investors" making bank on it. Which, I think, is how you get a city of slums and slumlords.
Cities don't determine Section 8 funding. It is a federal program, one which hasn't seen meaningful expansion in years.
What I mean about a city leaning on Section 8 is that they're funneling as much housing assistance as possible through vouchers rather than relying more on public housing. Which I mean, it's not like projects are so great, there are pros and cons to each strategy. But in my city there was this long, long effort to shift from projects to housing assistance via vouchers (different types of vouchers, not just federal), but eventually that shift got halted when there was a ton of hue and cry about this one super beloved housing project possibly being demolished. Basically, people felt like when that part of town was shitty and inconvenient, it was alright for poor black people to live there, and so the city built those projects, but now that that part of town is nice and by all this public transportation and shopping and stuff, the city wanted to kick all the poor black people out and sell the houses/land off to rich white people. Which is fair enough, that legitimately was the city's plan. What's kind of annoying in my mind is that those were already the crown jewel projects, though. There's a way shittier project for elderly and disabled people like five blocks away and nobody cared about that building or the people living there. But I guess when you're getting all jealous about who gets to live in "the nice projects" clearly the housing market is fucked up. So anyway, that hue and cry was basically the straw that broke the camel's back and the city started really de-emphasized getting people out of the projects and started buying more and more apartment units (and eventually whole complexes) to offer as subsidized housing. I don't really understand what the funding situation is there so who knows if they're "public projects in all but name" or something else -- they've mostly been developed using city/nonprofit partnerships and then the city eventually buys out the nonprofit. But larger households usually can't live in those apartment complexes because of space-per-person regulations, which means that those households still need vouchers to rent houses from private (and usually small time) landlords. And with how expensive land is now, there is a 0% chance that the city could or would buy land to build low-rise houses on to enact the same kind of "projects in all but name" strategy that they have with apartments. I guess it's just different archeological layers of housing policy: the projects still exist, Section 8 and voucher programs are still going strong, the affordable housing complexes are trucking along. Who knows what policy will come next.
Anyway, I just brought it up because of the owning v. renting discussion, and how unaffordable it is to really do either.
posted by rue72 at 5:53 PM on June 4, 2019 [3 favorites]
Having myself purchased property in the last few years, I can tell you with some degree of confidence that if the bank doesn't think you can make $X/month in payments for the next 30 years, they're not issuing you that mortgage.
I bought in 2012 and they offered to give me a mortgage that would have been 60% of my net income at the time. I knew my limits and stayed away from houses that expensive, but they don't really care if you can make the payment now either.
(I'm an older millenial, bought my house using the first-time home buyer's 3% down payment and a loan from my 401k. I sold 4 years later after moving across the country for work for $25k more than I bought for a return of about 5% per year. My parents didn't help directly with buying a house, instead it was more indirect like when the hot water heater broke or a pipe burst and I didn't have enough to fix it. So a good chunk of that $25k was split between closing costs and paying them back)
posted by LizBoBiz at 5:34 AM on June 5, 2019
I bought in 2012 and they offered to give me a mortgage that would have been 60% of my net income at the time. I knew my limits and stayed away from houses that expensive, but they don't really care if you can make the payment now either.
(I'm an older millenial, bought my house using the first-time home buyer's 3% down payment and a loan from my 401k. I sold 4 years later after moving across the country for work for $25k more than I bought for a return of about 5% per year. My parents didn't help directly with buying a house, instead it was more indirect like when the hot water heater broke or a pipe burst and I didn't have enough to fix it. So a good chunk of that $25k was split between closing costs and paying them back)
posted by LizBoBiz at 5:34 AM on June 5, 2019
I’m surprised at how much acknowledgement of privilege/luck the people in this article are discussing, is that normal for millennials?
I'm a young GenX too - slid right in under the wire buying a house in 2006 just before everything went to hell, paid off the mortgage last year. I had parental help with the down payment, and a few years later when my partner became disabled and could no longer work, my parents also helped make up for the loss in income so we could keep making the mortgage payments. I'm well aware that this is a shit-ton of luck and privilege.
I see very little awareness of similar privileges in my acquaintances and colleagues who are my age, and a lot of awareness of it in my just-a-bit-younger friends. Might be because my social groups tend toward the queer and disabled, so we're sort of primed to think a lot about privilege and power. But some of those people my own age and older are also disabled and none of them seem to talk about this stuff at all, so I suspect some of it's a genuine generational difference in experience and culture. (Using "generational" pretty loosely here because I don't really buy into generational theory in some ways, but I can't think of a better shorthand for "the differences in cultural milieu experienced by people growing up even just 5-10 years apart."
posted by Stacey at 6:20 AM on June 5, 2019
I'm a young GenX too - slid right in under the wire buying a house in 2006 just before everything went to hell, paid off the mortgage last year. I had parental help with the down payment, and a few years later when my partner became disabled and could no longer work, my parents also helped make up for the loss in income so we could keep making the mortgage payments. I'm well aware that this is a shit-ton of luck and privilege.
I see very little awareness of similar privileges in my acquaintances and colleagues who are my age, and a lot of awareness of it in my just-a-bit-younger friends. Might be because my social groups tend toward the queer and disabled, so we're sort of primed to think a lot about privilege and power. But some of those people my own age and older are also disabled and none of them seem to talk about this stuff at all, so I suspect some of it's a genuine generational difference in experience and culture. (Using "generational" pretty loosely here because I don't really buy into generational theory in some ways, but I can't think of a better shorthand for "the differences in cultural milieu experienced by people growing up even just 5-10 years apart."
posted by Stacey at 6:20 AM on June 5, 2019
Early-to-mid GenX here; I think that GenX is in this weird midway point of "aware of privilege but also conditioned that it wasn't something you talked about." I have friends who bought a home as a rental property in 2006, and then did so well with that that they went on to buy a couple more and the income from that is basically how they make their living. But it was kind of an open-secret that we just didn't really talk about that a lot of how they were able to do that was because of assistance from parents.
As for me, I just wrote off the possibility of home ownership outright back in my 30s because I worked in the arts for several years and knew that as a result I was never, ever going to have had a chance to start building up enough savings for a downpayment, and I knew my parents were also never going to be able to afford to give me that kind of help either. I knew that my only chance to get that kind of windfall would be through an inheritance, if that; I made my peace with that a long time ago.
But - that's just also the kind of thing that I believed that you just don't talk about. We knew it, but you don't, like talk about it. I still feel kind of weird bringing it up now, even.
posted by EmpressCallipygos at 7:27 AM on June 5, 2019 [2 favorites]
As for me, I just wrote off the possibility of home ownership outright back in my 30s because I worked in the arts for several years and knew that as a result I was never, ever going to have had a chance to start building up enough savings for a downpayment, and I knew my parents were also never going to be able to afford to give me that kind of help either. I knew that my only chance to get that kind of windfall would be through an inheritance, if that; I made my peace with that a long time ago.
But - that's just also the kind of thing that I believed that you just don't talk about. We knew it, but you don't, like talk about it. I still feel kind of weird bringing it up now, even.
posted by EmpressCallipygos at 7:27 AM on June 5, 2019 [2 favorites]
It's almost as if Peak Capitalism isn't working for people.
posted by theora55 at 7:57 AM on June 5, 2019 [1 favorite]
posted by theora55 at 7:57 AM on June 5, 2019 [1 favorite]
So, to engage more directly with the article: I'm a millennial and really never thought that owning a home was something that I could or wanted to do. It just didn't really occur to me growing up because my dreams as a child were bizarrely small, and as an adult, it's literal, fungible cash money that makes me feel most secure, not a house that could theoretically be made into money. Like if an emergency comes up, you can't sell a little bit of your house to get through it, and the mortgage is an endless burden. Well, I guess you can get a HELOC or something but that's not exactly fast. Also, this isn't rational, either, but big financial commitments freak me out to the point of literal nightmares, and I don't know if I'd have it in me to pull the trigger on something like buying a house without a lot of external pressure more or less forcing me to.
Anyhow, I'm in a weird situation, though. My grandma is in assisted living and she has a condo that she bought in 1996 that is now paid off and safe from any spend down in a way that her money isn't. So my mom and I decided to keep the condo in her name unless/until selling it is absolutely necessary -- and that's where I live now. The condo fee alone is around $1200/mo (rising every year), but without a mortgage, it's doable and roughly what I would pay for a 1br apartment around here anyway, if not less. The problem would be if I have to officially buy it from my grandma in order to give my parents or grandma a cash infusion with the mortgage money -- which is pretty likely, depending on what elder care bills come down the pike. Elder care is no joke, guys. I also figure that my mom will inherit it when my grandma passes, and she will probably want me to buy her out afterward so that she'll have a better nest egg for retirement. So, I have told my parents that I would buy it if needed, and I'm pretty sure I would qualify for a large enough loan based on income, but a mortgage would more than double the monthly payment and at the very least I would have to get a second job to swing that. So I am really benefiting from privilege, I get to live in this nice condo that I wouldn't have been able or even willing to buy on my own -- but I might end up shackled to it for the family's well-being, and I have mixed feelings about that.
Something that I noticed about the people profiled in this article is that even the ones buying less expensive property went in on it with a spouse, and some of them had four adults (parents and two sisters) going in on a house together, and virtually all of them had other family money (inheritances) involved, too. I wonder if something that we're seeing more of is the need for the family unit to be a lot bigger than just the nuclear family (again) in order for everyone to survive. I know that's how my family works, and how I basically have always expected family/community to work, and I think it's just the financial reality in general now. But it is a kind of tribal, collective mindset and not the atomized "American Dream" that got sold back in the day. And obviously there are a lot of social/cultural differences when multiple generations of family have to be up in each others' faces and living in each others' homes and financially entangled for their whole lives, rather than each individual marching off into isolation.
posted by rue72 at 8:36 AM on June 5, 2019 [3 favorites]
Anyhow, I'm in a weird situation, though. My grandma is in assisted living and she has a condo that she bought in 1996 that is now paid off and safe from any spend down in a way that her money isn't. So my mom and I decided to keep the condo in her name unless/until selling it is absolutely necessary -- and that's where I live now. The condo fee alone is around $1200/mo (rising every year), but without a mortgage, it's doable and roughly what I would pay for a 1br apartment around here anyway, if not less. The problem would be if I have to officially buy it from my grandma in order to give my parents or grandma a cash infusion with the mortgage money -- which is pretty likely, depending on what elder care bills come down the pike. Elder care is no joke, guys. I also figure that my mom will inherit it when my grandma passes, and she will probably want me to buy her out afterward so that she'll have a better nest egg for retirement. So, I have told my parents that I would buy it if needed, and I'm pretty sure I would qualify for a large enough loan based on income, but a mortgage would more than double the monthly payment and at the very least I would have to get a second job to swing that. So I am really benefiting from privilege, I get to live in this nice condo that I wouldn't have been able or even willing to buy on my own -- but I might end up shackled to it for the family's well-being, and I have mixed feelings about that.
Something that I noticed about the people profiled in this article is that even the ones buying less expensive property went in on it with a spouse, and some of them had four adults (parents and two sisters) going in on a house together, and virtually all of them had other family money (inheritances) involved, too. I wonder if something that we're seeing more of is the need for the family unit to be a lot bigger than just the nuclear family (again) in order for everyone to survive. I know that's how my family works, and how I basically have always expected family/community to work, and I think it's just the financial reality in general now. But it is a kind of tribal, collective mindset and not the atomized "American Dream" that got sold back in the day. And obviously there are a lot of social/cultural differences when multiple generations of family have to be up in each others' faces and living in each others' homes and financially entangled for their whole lives, rather than each individual marching off into isolation.
posted by rue72 at 8:36 AM on June 5, 2019 [3 favorites]
I'm a millennial who bought a home with no financial help from my parents, but I full recognize the privilege that I have and I do have an enduring sense of guilt that I was lucky enough to make it. First in graduating from a STEM school debt free, then lucking into a high paying white collar job right out of college, and being terrified enough though out the recession that hit literally months after I started working that I saved a ton of cash very early on. I am EXTREMELY lucky, and have had really good timing, which paired with my white, college educated upbringing means I was positioned well to recognize and take advantage of different opportunities.
The awareness and guilt associated with homeownership (well apartment ownership) in an expensive city is something myself and the other home owning friends have talked about a lot. One of them had parental help with the down payment, while the other got lucky in the startup space. All of us talk about feeling really guilty about having a safe space and escaping from rising rents (we're all white, college educated, and in broadly stable health), and we also feel guilty talking about "homeowner problems" with our friends who haven't gotten as lucky. Talking to Gen-x colleagues none of them feel the same level of shame associated with having made it, although they do have some awareness that they are privileged, so there is a definite generational shift in privilege awareness. For older millenials I think it is in some way linked to living through a recession right as we came into the workforce, and realizing how easily it is to take all that wealth away (and seeing family, or friends see all their wealth destroyed, unable to find jobs, living off of credit). It takes a remarkable amount of privilege and luck to navigate a downturn successfully and still have assets left over.
posted by larthegreat at 8:36 AM on June 5, 2019 [5 favorites]
The awareness and guilt associated with homeownership (well apartment ownership) in an expensive city is something myself and the other home owning friends have talked about a lot. One of them had parental help with the down payment, while the other got lucky in the startup space. All of us talk about feeling really guilty about having a safe space and escaping from rising rents (we're all white, college educated, and in broadly stable health), and we also feel guilty talking about "homeowner problems" with our friends who haven't gotten as lucky. Talking to Gen-x colleagues none of them feel the same level of shame associated with having made it, although they do have some awareness that they are privileged, so there is a definite generational shift in privilege awareness. For older millenials I think it is in some way linked to living through a recession right as we came into the workforce, and realizing how easily it is to take all that wealth away (and seeing family, or friends see all their wealth destroyed, unable to find jobs, living off of credit). It takes a remarkable amount of privilege and luck to navigate a downturn successfully and still have assets left over.
posted by larthegreat at 8:36 AM on June 5, 2019 [5 favorites]
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