Interesting comments from one of my former students on housing

[JeffKeryk]

True and the buyer should know that the salesman is not his friend going in.

Exactly. I'm pretty sure no one ever gave me a good deal because they thought I was cute...
I will say, however, the Lexus dealer I ended up with has been all about repeat sales. Pretty rare in the car business.

 

[IndyIan]

I used to work in tech at a Fortune 100, and occasionally the HR team would have us tech leads do some recruiting at a fairly prestigious local STEM school.

I grew up relatively poor with two working parents struggling to make ends meet. I got my first job at 14 and worked continuously multiple jobs through high school and college in order to pay my own tuition 100% myself. I got good grades and went to a good state university which was still within top 40 in the country. I could never have any internships because I had to earn money in the summers. I graduated and moved on to get a postgraduate degree at another state school (payed for by being a TA) before getting hired into this Fortune 100 and getting promoted into management within 3 years.

Fast forward to recruiting. You’d be amazed by how many of these entitled, bratty, egotistical little college seniors have literally never had a real job before. No paper routes, no fast food job, nothing. A few had unpaid internships that seemed more like school than actual work.

I was so struck by their arrogance and their pushiness. The interviewees were selected by HR beforehand and the lists were handled by staff at the college. These kids would lie and try to get on the list or try to tell me to interview them off the record. They’d accost me and treat me like as if I clearly didn’t know what I was doing if they weren’t on my list. News flash, I’m the tech manager and I didn’t make the list, and by treating me like this you just got black listed. It was something else.

None of them, bar maybe one or two exceptions (whom I recommended for hire), had had to “scrap.” It was so eye-opening how entitled and privileged some of these kids are. I now look for evidence for being hard working, being able to deal with adversity, treating people equally, and being self-sufficient whenever I’m involved in the hiring process.

My inexpert opinion is that many in the US who have done well financially, don't believe in a meritocracy for education or employment or sports, and don't really like democracy either. The rich folks votes and political influence has to count more than everyone else.

So far it hasn't really hurt the US much financially, maybe more in tech or science it sounds like?, but you can see it international sports now with Norway dominating the winter olympics in sports where the US or Canada has far more amatuer athletes. Or in the MLB where even Cuba out performs the US with 120% more players per million people, and the Dominican with %500 more mlb player per capita.
Canadian hockey is following this trend as in making kids hockey at a high competitive level from early ages, so expensive and time consuming that only a small fraction of players parents can afford it, and while coaching and training can do a lot, we are missing lots of natural talent by taking them out early based on their parents income or commitment...

 

[JeffKeryk]

Another reason that I have neither the funds or the want to live in Cali.

You might be surprised. The wages are higher here and the long term rewards can be beyond your wildest dreams.
That's my experience.

 

[goingplacesanddoingstuff]

I can save any young couple hundreds of dollars a month that older people didnt have when they bought a home.

Trash the expensive cell phones and plan, Walmart or Redpocket service on a cheap phone.
No PAY TV, no Sports Package. Subscription to maybe Netflex
NO music Subscription
No cars over $10,000, No Jet Skis, Boats, Motorcycles
No eating out, cook at home, one night a week date night followed by a movie at home
Clothes from Old Navy, TJ Max, Marshalls
No Furniture except for the very basic stuff.
No Credit card loans
Buy a very small house that needs work

Life has never been more easy in the USA, never, ever. The only reason home prices are what they are is other people know how to save and capable of buying one or else they wouldnt be able too.

I’m all for financial responsibility but if you’re implying those things are going to make the difference between most people truly affording a house and not, I’m not sure I agree.

In as recently as 2019 you needed to make $60k to afford the median $260k home and your payment was $1700.

In 2023 you need to make $115k to afford the median $460k home and your payment is $3700.

That delta of $2000 in a payment is not typically something most couples can make up by simply cutting expenses. Moreover, it’s committing to a huge monthly expense that can never be trimmed if needed.

 

[brianl703]

If you bought a home in 2006 like we did

If you bought a home in Manassas, VA in 2006, you still wouldn't be able to sell it for what you paid for it.

 

[JeffKeryk]

I’m all for financial responsibility but if you’re implying those things are going to make the difference between most people truly affording a house and not, I’m not sure I agree.

In as recently as 2019 you needed to make $60k to afford the median $260k home and your payment was $1700.

In 2023 you need to make $115k to afford the median $460k home and your payment is $3700.

That delta of $2000 in a payment is not typically something most couples can make up by simply cutting expenses. Moreover, it’s committing to a huge monthly expense that can never be trimmed if needed.

Yep. To qualify around here, you need a huge down payment. For the $590 bid we threw, it included $240K down and the source of funds was documented.

 

[Hillbilly Deluxe]

I can save any young couple hundreds of dollars a month that older people didnt have when they bought a home.

Trash the expensive cell phones and plan, Walmart or Redpocket service on a cheap phone. Buy a reputable phone, pay cash for it, keep it until it is about to DIE.
No PAY TV, no Sports Package. Subscription to maybe Netflex. I'd support another streaming entity. But I agree with the first sentence.
NO music Subscription
No cars over $10,000, No Jet Skis, Boats, Motorcycles. I'm coaching my daughter to run the current vehicle she is driving (that I own) for a year, save like there's no tomorrow and buy a $17-20k Toyota/Lexus that is sure to get another 250k miles; maintain it and save during that 250k miles.
No eating out, cook at home, one night a week date night followed by a movie at home. Agree, but even today groceries for eating at home are much more expensive, still do it.
Clothes from Old Navy, TJ Max, Marshalls. Some of that I can agree with, maybe not Old Navy, but also buy pieces from Duluth Trading, especially if you are male, buy them on sale. Their stuff is almost multi-generational when it comes to durability.
No Furniture except for the very basic stuff. Buy it at the local charity second hand stores or FB marketplace.
No Credit card loans
Buy a very small house that needs work. Disagree, buy a reasonable house that has been carefully inspected and has no issues. A young person in these financial times/conditions doesn't need to be "fixing up" a beater house. A HVAC replacement/upgrade today is $15-20k for a 2-3 ton system. A roof can be $15k. Plumbing issues can be $10k.

Life has never been more easy in the USA, never, ever. The only reason home prices are what they are is other people know how to save and capable of buying one or else they wouldnt be able too. That's debatable. The cost of living has never risen so much so sharply as it has the last 2-1/2 years. You gotta be smart, educated and willing to work to make ends meet today.

I like your advice, but I made some changes.

 

[alarmguy]

If you bought a home in Manassas, VA in 2006, you still wouldn't be able to sell it for what you paid for it.

So goes life, I am sure that goes for a significant amount of areas that turn bad or overhauled, we can only talk averages and median.
Buyer beware/if looking for a house as an investment.

 

[alarmguy]

It’s basically wants over needs when it should be the other way around. Young people are woefully unprepared for adult life.

I agree 100% but disagree with one segment of young people. My kids. If I can brag about anything in my life is the fact that they pulled their own weight, survived on their own, yes when really young with my guidance that they listened too. ! *LOL*
Im really proud of all three, proud doesnt mean they are filthy rich, it means they need no financial support from me, never have, sure while I may have helped through college I still didnt pay their way, I helped and created incentives.

I know no matter what happens they are survivors, sometimes when their friends were getting brand new cars to drive to high school with my kids were driving their clean but old cars that they paid insurance on. At times I might have looked like the bad guy or bad dad but the rewards to me TODAY are immeasurable. I swear, they thank me for the way they were raised, even the one who was a challenge in her teen years OMG. The most incredible young lady who sends me Fathers Day cards with notes that even make my wife go wow.

The key here is, it's not about me though, they are truly happy that they achieved what they have without someone giving it to them. Its really amazing feeling.

Boy if I did anything right in this life, well... I suspect you know

 

[PimTac]

I agree 100% but disagree with one segment of young people. My kids.

Sounds like you did well. I did paint a broad brush there.

 

[brianl703]

So goes life, I am sure that goes for a significant amount of areas that turn bad or overhauled, we can only talk averages and median.
Buyer beware/if looking for a house as an investment.

The crash was amazing. Houses that sold for $500K were selling for $150K just 2 years later.

There was a significant amount of mortgage fraud taking place, most of which was never investigated or prosecuted.

But this did happen:

Ringleader Sentenced in $7.4 Million Mortgage Fraud Conspiracy that Targeted Northern Virginia Hispanic Community

www.justice.gov

 

[alarmguy]

Sounds like you did well. I did paint a broad brush there.

Yeah, but I get it 100%. I know exactly what you meant.

 

[Dave Hess]

So goes life, I am sure that goes for a significant amount of areas that turn bad or overhauled, we can only talk averages and median.
Buyer beware/if looking for a house as an investment.

A house is a place for shelter, not an investment.

 

[John105]

Your situation reminds me of my wife’s bffs older brother. He taught at Johns Hopkins until the pandemic began and was challenged by super bright kids. His undergrad was nothing like Hopkins. He said pay was horrendous but he truly enjoyed it and heck it was prestigious being there.

 

[John105]

A house is a place for shelter, not an investment.

Imho sticking to this simplicity, a person will not be wealthy, nor will they be broke. They just might be ok or more than ok.

 

[JeffKeryk]

A house is a place for shelter, not an investment.

You got me here, Dave. It can be and should be both.
Can you explain your reasoning? I'm feeling a little dumbfounded...

 

[goingplacesanddoingstuff]

You got me here, Dave. It can be and should be both.
Can you explain your reasoning? I'm feeling a little dumbfounded...

By some definitions, investments bring in income. Since house you live in does not typically bring in income, it is not an investment.

It gets down to semantics to some degree but it can be a beneficial way of thinking.

 

[SC Maintenance]

You got me here, Dave. It can be and should be both.
Can you explain your reasoning? I'm feeling a little dumbfounded...

I agree with him. Once it became an asset class was when prices skyrocketed. If you plot the average US home price vs Avg. wages it was linear for like 100 years, until sometime in the 90's. Now we are here.

 

[John105]

I agree with him. Once it became an asset class was when prices skyrocketed. If you plot the average US home price vs Avg. wages it was linear for like 100 years, until sometime in the 90's. Now we are here.

The stock market has been a no brainer my entire working career. Just index to the S&P. Problem is, it wasn’t always that way. I’m part of the generation who does not truly believe stocks can go down. What year am I talking about, approx 1994.

But we all know the adage. Past performance is not indicative of future performance.

I do think that many people who assumed unrealistic risks will keep their rewards. my buddy’s last landlord is a waitress. She kicked them out of the townhome they were renting at I’d say 1/2 of the market value.

 

[SC Maintenance]

The stock market has been a no brainer my entire working career. Just index to the S&P. Problem is, it wasn’t always that way. I’m part of the generation who does not truly believe stocks can go down. What year am I talking about, approx 1994.

But we all know the adage. Past performance is not indicative of future performance.

I do think that many people who assumed unrealistic risks will keep their rewards. my buddy’s last landlord is a waitress. She kicked them out of the townhome they were renting at I’d say 1/2 of the market value.

I tend to agree. I don't think housing being an asset class is all the beneficial to society, however I also don't think its going to change. I am looking to buy more. A tangible asset in long term inflation is a good thing.