Worse?? Maybe different.
I’m not really any generation. Kind of an age between a lot of stuff. But I vividly remember my parents buying a house and talking about points and double digit interest rates. Makes 9%, or today’s 8-ish% seem low.
But the double digits of the early 80s were preceded by “high” percentages (relative to, say, the last decade) for many years before. That’s a vast difference from historic lows for a decade or more that we’ve seen recently. Yes, it makes for different pricing structure. That is also explained in the Ted talk I mentioned above. Not saying I agree with everything the guy says, but it hits on a lot of areas.
BTW, here’s the case in point from the St. Louis Fed.
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So you suffered to make ends meet. Great. I hear ya. My parents bought cars with no AC. They pinched pennies too. As did my in laws. As do I. As should most.
But to make a hypothetical and evaluate costs that would make up a graphic like the OP’s, which has a non-objective basis of “comfortable” living, all I did was make a beyond simple math basis of what would drive a $200k (or higher) cost. It makes total sense when I see the situation of people all around living in.
And sure, the payment as a fraction of somebody’s income may have been lousy back when with different interest and housing rates, and niceties. But for the last what, 20 years, pricing has been affected by the low rates allowing more “buying power”, which allows pricing to rise higher…. And now, today, when rates go back up, against housing prices that factor in 3% type mortgages, yet buyers have to buy in at 7%, it’s a vast difference in monthly outlay. And when you look across the life of the loan, the difference is hundreds of thousands of dollars.
But as my notional roll-up showed, that’s what? $50k of it? Sure people can make that work on far less means than OP’s graphic. Absolutely. Someone today could drive an 1995 Ford Aerostar instead of a new Sienna. They could have no cellphone, or an Uber-cheap, no frills existence. And that may result in less of this non-objective “comfortable” metric, but what “comfortable” might be… THAT was the point of the discussion and my post. If you look at what is kind of considered a normal life to many these days, we get an income need of $x. Nothing more, nothing less.
Now, if you want to overlook the gross mismanagement of people in the past (which would include, the “greatest generation” I suspect since they were really in charge when much of the defecit spending and pension raiding started), go for it. And I’m not saying that anyone else will do it better. Im not saying that the idiots out getting stupid degrees and protesting in the cities have any semblance of better ideas. But every dollar incurred today is going to have to be paid by my two year old when I’m long dead. Not to mention the reckoning for debts incurred and spent by folks who are long dead even today. That’s scary. That should concern you regardless if your kids are 2 or 22 or 42.
