Income a family of four need to live comfortably by state in the U.S.

[Dave Hess]

Its all sort of relative.

1992 was pretty crappy for sure - just coming out of recession. However housing @ 3x annual income was about historical mean. Currently its 5X, with mortgage rates around 7%. So just simple math says a typical payment now is about 30% more than in 1992, relative to median income. Of course finding a good job then vs now was much harder.

I was fortunate to graduate college in the late 90's boom - so I was able to get a good job. However I purchased my first house in 2006.

You win some you loose some.

I like reading your posts.

I always thought you were 20 years older. LOL.

 

[supton]

A 5% CD of $20K would be $1000/year, plus compounding would add some small amount. I actually have a 1 year one that is 6%.

What about a money market fund? Downside to a CD is lack of liquidity, I thought. Ok if you don't need that money for the time period.

 

[SC Maintenance]

I like reading your posts.

I always thought you were 20 years older. LOL.

Its not the age, its the mileage.

 

[bullwinkle]

I don't know very many people that were getting 3% raises during the GFC - most were locked down to zero if they were lucky enough to have a job. Also, most lost half their savings during that period.

The Great Recession (along with the dot-com collapse of the late ‘90s) & the pandemic made me realize that the stock market was not the best place to keep ALL my retirement savings! T.here’s WAY TOO MUCH insider influence & games being played in stocks, too much pump-and-dump going on.

 

[bullwinkle]

What about a money market fund? Downside to a CD is lack of liquidity, I thought. Ok if you don't need that money for the time period.

SoFi has a 4.60% MM savings rate, if you use direct deposit. Probably others that are a little higher(?) FDIC insured for up to $2M! (Disclaimer-I have some there too…)

 

[Astro14]

This is not quite true. Mortgage payments are slightly higher now than they were in the past.

Also, consider the fact that the current situation with higher house prices and lower rates requires 41% larger down payments to avoid mortgage insurance, despite inflation-adjusted wages only going up 19%.

Because of this, buyers are forced to either save for longer or accept even higher mortgage payments.

Finally, a buyer in 1994 could take advantage of falling rates for over the next decade, and could continually refi. This is not the case for buyers in 2024. Rates are going to stay put for at least the next 5+ years.

So, no, it’s not the same. It may not be as radically different as some claim, but it is indeed worse now than in the past.

1994, adj. for inflation:
Median income: $63,000/yr, $5,250/mo
Median home price: $280,000
Average rate: 8%
20% down payment: $56,000
Monthly payment with 20% down: $1,644
Down payment/yearly income: 89%
Payment/income: 31%

2024:
Median income: $75,000/yr, $6,230/mo
Median home price: $395,000
Average rate: 7.1%
20% down payment: $79,000
Monthly payment with 20% down: $2,050
Down payment/yearly income: 105%
Payment/income: 33%


Not median homes. In many cases they are the same buildings. In cases where it is a newer house, any advancements in technology are offset by degradations in build and materials quality.


Not out of proportion to the technology advances since. The boomers expected to have central heating. Their grandparents… not so much.


Yes, but this is not relevant.

Actually, it is relevant. All of it.

The technology advances are just that - advances in the standard of living. We didn’t have air conditioning in my house growing up, in Connecticut. Now, it is standard. That is an increase in the standard of living, and my central point is that the expectation for a house is much higher.

The median house is bigger and is better equipped. So is the median car, but let’s focus on the house, for now.

Median home has increased in size by about 30% since I bought my first one in 1992. So, yep, bit higher percentage of income, but only a bit because interest rates are lower than they were in 1992, for a much larger house.

Further, since families are smaller, the number of square feet per person has increased by an even greater percentage.

https://money.cnn.com/2014/06/04/real_estate/american-home-size/index.html

 

[SC Maintenance]

What about a money market fund? Downside to a CD is lack of liquidity, I thought. Ok if you don't need that money for the time period.

Yes I like MM, and like T-bills even better. But a lot of people simply prefer to deal with their bank, so a CD works for them.

 

[99Saturn]

Got back to my computer. Lottery indeed.
View attachment 219085

That's not really realistic, so I set it to making $244k at age 50, this year, then went back in time. I still think the typical person was not making $100k back in 1999 so this doesn't seem right either.
View attachment 219086

IMO someone would have large jumps in pay every 5 or so years, when they jumped ship, that's more likely.
View attachment 219087
something like that, maybe.

That seems more realistic... and now I'm sad that I didn't job hop...

Also worth considering what options are realistic with dual income households, even if the household isn't dual income forever. The second example starting at $114K doesn't seem that farfetched, especially if the starting year was today rather than 1999.

 

[John105]

Trillions and trillions of cash pumped into economy after Covid and it affected housing to the point many renters feel they will never own a house.

Lots of house poor Americans are broke just paying house related monthly expenses.

No politician wants to see families thrown out of foreclosed homes before the election.
Wait till election is over and we’ll see what happens.

Imho Covid changed work habits all around. It became “ok” for non measureable workers to go into an office every 2-3 years. Running personal errands on co time is normal. Before one asked for permission or let others know. I’m on a team of 7 and 5 permanently work from home. This costs corp America tons of money. Some don’t put up with it (GS, JPM, Google, etc). The best was when Broadcom took over VMware on a Thursday. Memo went out that starting Monday, wfh is no longer an option

Ps my buddy makes a lot of money in insurance but has no savings and at 42 may never own a home. 4 kids. I guess many contributing factors. He even told me Sat his co does a 9% match on the 401 and he can’t afford to contribute at all. It’s a rough situation

 

[LDB]

I use Marcus through Goldman Sachs. They have good rates. They have a referral program where both parties get a bonus rate for a time. I've had a few people ask me for the code and it has worked well.

 

[Quattro Pete]

Young/single?

A family of four.

 

[andrew_j]

It’s tough out there. I am at year 11 of 15 year 2.75% mortgage paying $1440/month on a home worth $750k. Obviously home prices and rates spiked…..

 

[Pew]

Its not the age, its the mileage.

The engine run time for some of us!

 

[Pablo]

I could blow that in a week on ranch. I put that sh.. on everything

 

[goingplacesanddoingstuff]

Actually, it is relevant. All of it.

The technology advances are just that - advances in the standard of living. We didn’t have air conditioning in my house growing up, in Connecticut. Now, it is standard. That is an increase in the standard of living, and my central point is that the expectation for a house is much higher.

The median house is bigger and is better equipped. So is the median car, but let’s focus on the house, for now.

Median home has increased in size by about 30% since I bought my first one in 1992. So, yep, bit higher percentage of income, but only a bit because interest rates are lower than they were in 1992, for a much larger house.

Further, since families are smaller, the number of square feet per person has increased by an even greater percentage.

https://money.cnn.com/2014/06/04/real_estate/american-home-size/index.html

It is not relevant because the march of technology makes new conveniences fit into equivalent budgets. It’s only relevant if expectations outstrip the increase of natural technological development and price decline curve, which is a dubious and yet-unsupported claim.

A $200 phone now has more compute power than a multimillion dollar supercomputer from 40 years ago. Air conditioning was incredibly expensive but is now mass produced and has a nominal cost.

By this logic everyone should be building their own log cabins because it’s cheaper.

 

[JHZR2]

This is not quite true. Mortgage payments are slightly higher now than they were in the past.

Also, consider the fact that the current situation with higher house prices and lower rates requires 41% larger down payments to avoid mortgage insurance, despite inflation-adjusted wages only going up 19%.

Because of this, buyers are forced to either save for longer or accept even higher mortgage payments.

Finally, a buyer in 1994 could take advantage of falling rates for over the next decade, and could continually refi. This is not the case for buyers in 2024. Rates are going to stay put for at least the next 5+ years.

So, no, it’s not the same. It may not be as radically different as some claim, but it is indeed worse now than in the past.

1994, adj. for inflation:
Median income: $63,000/yr, $5,250/mo
Median home price: $280,000
Average rate: 8%
20% down payment: $56,000
Monthly payment with 20% down: $1,644
Down payment/yearly income: 89%
Payment/income: 31%

2024:
Median income: $75,000/yr, $6,230/mo
Median home price: $395,000
Average rate: 7.1%
20% down payment: $79,000
Monthly payment with 20% down: $2,050
Down payment/yearly income: 105%
Payment/income: 33%


Not median homes. In many cases they are the same buildings. In cases where it is a newer house, any advancements in technology are offset by degradations in build and materials quality.


Not out of proportion to the technology advances since. The boomers expected to have central heating. Their grandparents… not so much.


Yes, but this is not relevant.

Thing is, you’re looking at a 30yr span, with an irregular near zero interest rate in between. And an “inflation rate” that doesn’t account for the real increases in cost of a lot of stuff. So I suspect the reality is somewhat worse…

 

[JHZR2]

It’s tough out there. I am at year 11 of 15 year 2.75% mortgage paying $1440/month on a home worth $750k. Obviously home prices and rates spiked…..

Case in point really… if you sold tomorrow, what would the next buyer be paying? Assuming you’re both of about the same means/income, what’s the ramification?!?

 

[JHZR2]

It is not relevant because the march of technology makes new conveniences fit into equivalent budgets. It’s only relevant if expectations outstrip the increase of natural technological development and price decline curve, which is a dubious and yet-unsupported claim.

A $200 phone now has more compute power than a multimillion dollar supercomputer from 40 years ago. Air conditioning was incredibly expensive but is now mass produced and has a nominal cost.

By this logic everyone should be building their own log cabins because it’s cheaper.

I believe that march of technology also is accounted for relative to inflation.

 

[SC Maintenance]

By this logic everyone should be building their own log cabins because it’s cheaper.

Except your not allowed to build a cabin. Most jurisdictions have a size requirement on single family. 1200 square feet / 2 bath minimum is common requirement - fallout from the tiny home movement.

Around here there tearing down the 1950's 3/1 and putting up 3 stories, that look basically like a row house - small footprint to fit the small lot, 2000 square feet.

 

[John105]

It’s tough out there. I am at year 11 of 15 year 2.75% mortgage paying $1440/month on a home worth $750k. Obviously home prices and rates spiked…..

i was 10 years into a 30 yr mortgage in 2012, and if memory serves me 5.75% (had refi’d once **** it’s over $4k closing costs but I was at 7.5% from 2002).

Citizens Bank told me about a first lien position home equity. It pays off the mortgage, is a home equity product, and if you have any other home equity loans (I had a line) they must subrogate.

The rate was comparable to a 15, but the amortization was 120 mos. The key was no closing costs no title insurance. I can’t believe that in that case, the bank helped me. Not only did they lower my rate with truly no costs (well $68 when closing to record it at the county but that’s any loan), they got me from 22 years left to 10. I actually did it again the next year as the rate dropped another 1/2% (3 3/8% and I never attempted to do anymore). Again I like to give credit where due. Bank didn’t “ask” me about my situation I’d still be making house payments today. Yes my payments went up due to 120 mos. But that’s a good thing. Imho our society is taught small payments are good, more disposable income more goodies, rather than big payments are not great.