How are people affording these crazy home prices?

dutch_henry

Lil-Rokslider
Joined
Mar 5, 2018
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262
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Vermont
Since Covid, we've seen astronomical increases in home prices in my area. (I work in Vermont.) Most of it is driven by wealthy urban dwellers who can now work remotely, thanks to changes in their workplace culture + the arrival of better internet here in town).

They bring a different value system that's tough on small town New England. Example: My friend's house is in the middle of a major remodel. This summer his contractor quit because one of these new arrivals offered to pay double his rate and in cash if he could start that week. Contractor jumped ship the next day. My friend is pretty screwed.

In other words, it's not just home prices that have skyrocketed--it's also contractors, HVAC, electricians, building materials, landscaping, you name it.

Personally, I can't wait for this class of people to lose interest and just. Go. Away.
 
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@Yoder I disagree.......the enslavement, as you call it, only comes when you want a house as a showpiece for others to see that you cant truly afford. Having a modest house that can be paid off (and it can be) because you dont have 9 cell phone bills, 4 car payments for vehicles you dont need (another showpiece) and throwing money at frivolous things. There are other options for health care such as cost sharing that many take advantage of. Think outside the box and you dont have to be an 'ant'..........
In I way, I agree with you both. Watching my kids rent vs. buy is very eye opening. No, they don't have any equity built up in a house, but they also don't have any debt and routine payments to repair a house or taxes related to that house.

My wife and I have both worked for over 30 years, both have college degrees (two in the case of my wife) and have always had good, but not necessarily high paying jobs. In the small towns we live in, we would probably be solid in the middle of the middle income bracket.

That said, we have always bought reasonably sized homes (never over 2k square feet despite having 3 kids) in reasonably priced locations. And yet, 20 years after buying our first home, we still owe half of what it cost. We are not extravagant spenders. We don't buy expensive toys or go on expensive trips or decorate our home or property in expensive ways. So it does feel like we've been tricked after doing everything right and still not owning more than half our home after 20 years. Meanwhile our young professional kids are debt free. It's been eye opening for sure.

I'm not sure I'd give my kids the advice to go buy a home. I don't see the up side for them so long as they don't have kids. Financially I think they just might be better off renting and investing in their retirement.

This topic really makes me wonder what percentage of Western Europeans own their home vs. rent, and how that affects their cash flow and retirement age. Some days I put on the tinfoil hat and think we've all been sold a story about the "American dream" of owning a home and land by people who are laughing all the way to the bank.
 
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Yup. I’ve been telling the wife all the toys will go on sale very soon.
I've thought for a while now that when the boomers all start dying off and going into retirement homes, all that wealth will have to go somewhere. They have more wealth tied up in their homes and properties probably than all the generations that follow them. It has to go somewhere. Pretty soon, they won't be able to take care of their homes/properties and that's when something's gotta give.
 

jraugie1

FNG
Joined
Aug 1, 2023
Messages
4
I just retired and am returning back to my childhood home in the Catskills of NY. We sold my parents house back in 2010 for $60k. Now I am searching for a similar home in the same area and the starting point is now over $200k. WTF? Things have changed drastically since C19 and city folk figured out they could move to the sticks and work remote. It has negatively impacted my retirement plans.
 

ODB

WKR
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Mar 24, 2016
Messages
4,008
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N.F.D.
In I way, I agree with you both. Watching my kids rent vs. buy is very eye opening. No, they don't have any equity built up in a house, but they also don't have any debt and routine payments to repair a house or taxes related to that house.

My wife and I have both worked for over 30 years, both have college degrees (two in the case of my wife) and have always had good, but not necessarily high paying jobs. In the small towns we live in, we would probably be solid in the middle of the middle income bracket.

That said, we have always bought reasonably sized homes (never over 2k square feet despite having 3 kids) in reasonably priced locations. And yet, 20 years after buying our first home, we still owe half of what it cost. We are not extravagant spenders. We don't buy expensive toys or go on expensive trips or decorate our home or property in expensive ways. So it does feel like we've been tricked after doing everything right and still not owning more than half our home after 20 years. Meanwhile our young professional kids are debt free. It's been eye opening for sure.

I'm not sure I'd give my kids the advice to go buy a home. I don't see the up side for them so long as they don't have kids. Financially I think they just might be better off renting and investing in their retirement.

This topic really makes me wonder what percentage of Western Europeans own their home vs. rent, and how that affects their cash flow and retirement age. Some days I put on the tinfoil hat and think we've all been sold a story about the "American dream" of owning a home and land by people who are laughing all the way to the bank.

70% of EU folks own versus rent. In the US it’s slightly less.
 

dlee56

WKR
Joined
Feb 8, 2021
Messages
780
Location
Colorado
I’m 27 and just bought my first house for a little over $300k. It’s scary given that it was worth $180k not 5 years ago but me and my lady value being homeowners and having the freedoms that come with it. Saved up for 6 years after college and finally had enough for the down, fees and the up-front renovations we wanted.

I don’t like being risky but we already waited years and years for a crack in the market that never came. Just had to jump in and ride what the market gives us (or doesn’t).
 
Joined
Dec 30, 2014
Messages
9,588
In I way, I agree with you both. Watching my kids rent vs. buy is very eye opening. No, they don't have any equity built up in a house, but they also don't have any debt and routine payments to repair a house or taxes related to that house.

My wife and I have both worked for over 30 years, both have college degrees (two in the case of my wife) and have always had good, but not necessarily high paying jobs. In the small towns we live in, we would probably be solid in the middle of the middle income bracket.

That said, we have always bought reasonably sized homes (never over 2k square feet despite having 3 kids) in reasonably priced locations. And yet, 20 years after buying our first home, we still owe half of what it cost. We are not extravagant spenders. We don't buy expensive toys or go on expensive trips or decorate our home or property in expensive ways. So it does feel like we've been tricked after doing everything right and still not owning more than half our home after 20 years. Meanwhile our young professional kids are debt free. It's been eye opening for sure.

I'm not sure I'd give my kids the advice to go buy a home. I don't see the up side for them so long as they don't have kids. Financially I think they just might be better off renting and investing in their retirement.

This topic really makes me wonder what percentage of Western Europeans own their home vs. rent, and how that affects their cash flow and retirement age. Some days I put on the tinfoil hat and think we've all been sold a story about the "American dream" of owning a home and land by people who are laughing all the way to the bank.

What % of a 2003 purchase price that is still owed when you seemingly have bought other houses since, is a pretty worthless metric because the context could vary so much.

Buying isn't a one size fits all, there is risk and commitments that must be understood for sure.
 

Hnthrdr

WKR
Joined
Jan 29, 2022
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3,482
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The West
The biggest mistake I think people made over the last 2-3 years is completely ignoring location. Location is always the determining factor in appreciation for real estate. Location was absolutely lost when people got FOMO bad. There are houses in shit areas that people paid more than our house, which is in a really nice area. We waited till rates popped high, got ours for under asking and paid our rate down. Yes, it was unfortunate timing for when we were buying, but just saying "I need a house somewhere, anywhere in town!" would have made it worse if/when the bubble pops.
Yes! Location is king! Right now my parents house which was the same price as homes in a better location when built 20 years ago is nearly 500k less than if 6 miles west. 800 vs 1.3 is a pretty big deal.
 

bigeyedfish

Lil-Rokslider
Joined
Sep 22, 2021
Messages
130
Just from a numbers perspective, I think you can make a really solid case for renting vs. buying. We bought our house about five years ago and refinanced when rates were near the bottom. Ultimately, we bought our house and land so that we and our kids could grow up raising animals, gardening, and hunting and fishing right out the back door. It was a dream that we were extremely lucky to realize, but I seriously doubt it will gain *useable value at the pace of a decent stock portfolio. We knew going into the deal that we would have to sacrifice vacations and luxuries for several years in order to make it all work, but we were happy to make that trade.

*Keep in mind that in order to capitalize on market growth you have to sell. Most people will buy another home in the same market. That means you need to buy a cheaper/less desirable house when you sell the one that gained value. That isn't appealing to most people.
 
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What % of a 2003 purchase price that is still owed when you seemingly have bought other houses since, is a pretty worthless metric because the context could vary so much.

Buying isn't a one size fits all, there is risk and commitments that must be understood for sure.
I meant 50% of my current home, 20 years later.
 

tdoublev

Lil-Rokslider
Joined
Sep 25, 2022
Messages
104
Not surprising things are barely any better today. I was recently told ‘you can always count on stupid people to continue being stupid’ and that’s now how I view the future economy. Same with cars - those prices won’t come down anytime soon. People will continue to spend money they don’t have and not save a dime until the system breaks
 
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