But seriously. Those housing prices! How do you do it?

[Rhea]

much. But living in the 909 is not for the faint of heart. But it really is a bit of a mystery as to how people manage in the typical LA County home. Houses in my neighborhood are at least $900k for about 1,100sf, 3 bed home, the lot size varies. A house across the street from me is on the market at $1.2m, I'd be surprised if they get that much but it will be close. Rentals in my area for a two bedroom apartment is at least $2,800.

Yeah, those are the kinds of numbers they talk about. They blow my mind.

Both my kids are resigned to leaving California even though they quite like it here. I will try to help them stay if I can.

Yeah, me, too. I hear them talk sometimes about how “they’ll never own a house,” and I remember thinking that myself when I was first looking and interest rates were 16%. It seemed impossible, but it was possible. Starting small. But they have parents who can and will help, so I imagine they’ll have their house at some point. Their age-mates won’t all be able to without help, perhaps.

And it’s true that I could not afford to buy my own parent’s house, and moved out of state. But the point of that is that they can move out of state.

I hope for them that remote work really takes off. Then they can live anywhere, even here. <3

Imagine paying $800k for a modest home plus the property tax every year, you must be sitting on boxes and eating spam six days a week. But somehow people are doing it but I really don't know how, they must have saved for a significant down payment or something.

Yeah, I just don’t know.

I bought my house 21 years ago for about $345k. It's almost paid off. I just need the property market to stay hot a couple more years then I will sell up and move, probably out of California.

We bought ours 30 years ago, and we’d like to sell to our kids, but we don’t know if they’ll end up here. They’d like to, I think, but may not be able to work in the field they want from here unless remote becomes normal.

 

[Old Woman in Purple]

Daughter is in the process of buying a 3-bed/2.5-bath condo in Niles (another suburb NW of Chicago, ~25min drive from where I live), after discovering monthly mortgage costs are comparable to monthly apartment rents of similar size places here in Chicagoland. The down payment was the tough part for her, but Husband & I helped with that.

 

[Ford]

I chat with my friends who live in high price housing markets and I am stumped on how this works.
Do y’all mind sharing your stories?

I can't afford to live in my own neighborhood.

Moved into this house a little over 23 years ago when I was still married. Got divorced a couple years later and I got the house. Refinanced it two years after to get the ex completely off the note, and did another refi 10 years ago under the HARP. Thanks Obama!

Of course the price cratered during the housing crisis. Looked into a HELOC in 2008 or so and the bank was like "actually, the value of your home is less than what you paid for it, and the answer is no." Ouch.

Things have changed a bit since then, to put it mildly. My modest house in a suburb of Phoenix is - on paper - a mountain of money. I have turned off the ringer on my phone because I get calls from 8am to 8pm from investors/flippers/assholes wanting to make a "cash offer" on my house. For guano's and grins, I checked the rental market in the neighborhood, and have decided that if the people living next door and across the street ask how much I'm paying per month, I will change the subject immediately.

 

[rousseau]

I chat with my friends who live in high price housing markets and I am stumped on how this works.
Do y’all mind sharing your stories?

I have turned off the ringer on my phone because I get calls from 8am to 8pm from investors/flippers/assholes wanting to make a "cash offer" on my house.

That reminds me, I need to get our 'leave us the hell alone' sign back up on our mailbox. Damn windy days..

We get a few of these offers per week.

 

[TV and credit cards]

How do they do it? They’re in debt up to their eyeballs.
I think you have to dispel yourself of the notion that everyone buying a home lives within a responsible budget that does not put their family’s wellbeing at risk.
Many people are irresponsible. Keeping up appearances is paramount, by any means necessary. Yes you can lie on a mortgage application despite the dire warnings that you can go to prison for doing so. An individual homeowner can plead a high degree of ignorance in filling these applications up.
I don’t know if we are going back to the days of wacky mortgages. I thought after the last housing collapse in which condos in San Diego lost 40% of their value, we went back to the 20% down payment rule and stayed there.
If there are “interest only” loans, people utilizing them are just banking on the increase in their home value. But this is a delusion. They may go into homeownership with this good intention but after a few years they’ll look at their equity, breakdown, and pull that money out. So they are back at zero.

I like to compare San Diego to Cleveland. Neighborhoods don’t age in San Diego. In Cleveland enough people stay in their homes that neighborhoods generally grow old. In San Diego people take the money and retire elseware, easily paying with cash for a home with the equity from their CA sale. It’s a good way to go if you can manage it.
I can say what many say, it’s a matter of luck. I got out in ‘05 at a peak. My ex rode the crash out and still lives in San Diego. Still has her two rental condos and a house now. If she has maintained discipline and not refinanced, she’s sitting pretty. She worked for one employer her entire life. Started by handing out flyers at a department store and retired as the manager of that same store. Now she makes even more money running a daycare out of her house and selling Filipino food to her Facebook group on the weekend. She made three grand on Super Bowl weekend mostly rolling lumpia. First gen immigrants. They’re so damn ambitious.

 

[TSwizzle]

How do they do it? They’re in debt up to their eyeballs.
I think you have to dispel yourself of the notion that everyone buying a home lives within a responsible budget that does not put their family’s wellbeing at risk. Many people are irresponsible. Keeping up appearances is paramount, by any means necessary. Yes you can lie on a mortgage application despite the dire warnings that you can go to prison for doing so. An individual homeowner can plead a high degree of ignorance in filling these applications up.

True that. About six years ago my lovely neighbor died and the family sold the house. Built in 1952 my neighbor was the original owner and had done nothing significant to the house other than perhaps a new roof about ten years ago. No plumbing or electric upgrades or new windows, the house was pretty much as it was from the day they moved in in 1952. It needed a lot of work and was sold for $750k to a complete jackass. The house sat empty for about a year, then he had a slew of contractors working for him as time after time he couldn't pay for the work and they walked off the job. He couldn't live in the house, power and water had been cut off because he couldn't pay and the bank tried to evict him. The bank changed the locks. Somehow he got back in the house and would sleep there to give the impression the house was occupied as it is more difficult to evict and take over the house if it is occupied. And there was no power or water at the time. Somehow he managed to get the house in good enough shape to move in. He "owned" that house for about four years before him, his wife and young child moved in. How did he do it? Hard to say but I suspect the house value went up enough he could refi and get some cash to finish the work. He will never own that house but I guess this is the model we are all headed towards. You will own nothing and be happy.

 

[Hermit]

I chat with my friends who live in high price housing markets and I am stumped on how this works.
Do y’all mind sharing your stories?

This boomer basically sleepwalked his way into it with some hard yakka and a truckload of luck. I never intended to become a home owner. When I came to Australia I was still a schoolboy, a couple of months short of 16. Our first abode was a migrant hostel about 2.5 kilometres from Maroubra Beach. The ocean had fascinated me since we went on a holiday to the north Sea in Germany, so I took a walk down to it the day after our arrival. The weather was shit. Cold, and a stormy southeasterly blew rain into my face on my way. What I saw when I got to the north point of the beach was a revelation. A couple of boys were paddling through mushy whitewater on sticks. Then they turned around, stood up and travelled back towards the shore. This I gotta do!

And that is all I was interested in doing for the next 17 years. Jobs were easy to get, but I only ever kept any one of them for long enough to go on surf trips up and down the coast from Sydney, or to build another kneeboard whenever I broke one. I also got fired from a fair few jobs for taking too many sickies when the surf was too good to waste my time at work. I did not want to get chained to years of mortgage payments or paying off fancy cars. Life was too short for that shit.

The downside was that I was regularly short of money. Things came to a head when I was about to return to Sydney from the Gold Coast where my father lived with my stepmother at the time. My stepmother took me aside and handed me a 50 dollar note, saying "I think you could do with one of these." At the time that would have been the equivalent of a day's wages. I thanked her and thought "Yes, I'm broke again, aren't I?" It was at that point that I was sick of my hand to mouth existence to the point of putting an end to it.

Back in Sydney I found another job easily enough. I enjoyed driving and people were not all that fussed about checking your qualifications or work history at the time. All I had to do is to check the classifieds and turn up at the site of an advertiser seeking a driver 15 minutes before starting time. Once there, I told them how i drove a ute for Brearley's. a 12-tonner for Bowen's, a semi for Cook's or whatever suited the occasion. I obviously didn't tell them that half of the dozen or more of the employers fired me for taking too many unscheduled days off, or that one of them sacked me for squashing a car parked at the entrance of a wharf with the triaxle of a 41 foot trailer. Easy peasy. Nobody even asked me to show them my license.

Two years after my return to Sydney I was still driving for the same company, breaking my record by 18 months or more, and my savings account had grown to a massive eleven grand. I became ambitious. Surely, subcontracting to someone with one's own truck would pay more than driving someone else's for a wage? I checked the "truck with work" ads and wangled some finance after finding a suitable deal. It was a $12,000 loan, and to this day the most stressful financial commitment of my life.

Anyway, after a mishap (the engine blew up three months into the venture, leaving me with the princely sum of 64 dollars cash in the bank at Christmas) things went swimmingly. Two and a half years later my bank balance was burgeoning once more. 30 thousand bucks. What on earth was I going to do with all that? Just leaving it there was just stupid. Mhhhh. My landlady was OK, but her husband was a pain, and the rent kept going up. What if...?

I lived in Glebe at the time. Lovely, bohemian inner Sydney suburb with lots of second-hand bookshops, sleazy pubs, a cinema showing offbeat movies, a couple of halfway houses with recently released heroin addicts and stuff like that. It suited me down to the ground, but unfortunately it was also in the early stages of becoming yuppiefied. The housing market was out of my price range.
But there was nearby Newtown. More affordable, and what's more, more bohemian. Dozens of tiny restaurants with menus from all four corners of the world, opportunity shops, an actual family owned and run greengrocer, and a bunch of daggy pubs with regular pub bands, one which was particularly favoured by gays sat cheek by jowl on the narrow main drag, King Street. Best of all, two fast food franchises, McDonald's and KFC tried to establish themselves there but didn't last long. Wrong demography.

Without going into much detail, I finished up buying a tiny single story two-bedroom plus study terrace on a 5 x 30 metre block of land. Built in 1890, it was in dire need of renovation (which never happened while I owned it). Getting the mortgage involved some bending of the rules, but the manager of the building society branch I dealt with was most accommodating. In the end I finished up with a $106,000 mortgage on a house 6 kilometres from Sydney's harbour bridge I bought for $154,000 in 1992. Heaven on a stick.

All things must change, though. Yuppies bought run-down terraces and spent fortunes upgrading them. One by one second-hand shops closed down, as did the greengrocer. A special day of mourning was the day Cornstalks closed for good. Then came the return of franchised businesses, KFC and McDonald's. And new ones as well, like Gloria Jeans and some fashion shops, the names of which I can't remember. Time to move out. I looked at moving to Newcastle, a once horrid coal mining city two hours north of Sydney, that scrubbed up quite nicely in recent years, but could not find an area I would feel at home in. Then I got seriously attached to someone which necessitated me moving to South Australia.

In 2005 I sold my tiny Newtown terrace for $499k and bought a rather larger, freestanding home on a 900 square metre block of land in a small city 380 kilometres (by road) from Adelaide's CBD for $280. The person who bought my terrace spent somewhere between 2 to 300k on doing it up and sold it in 2010 for just under a million bucks. It is now valued at around 2 million. I will never be able to afford to buy anything in inner Sydney ever again. Luckily, I can't think of a reason why I would want to. The ambience I so liked has been destroyed for good.

 

[Toni]

I tend to assume that the point of societies and economies is the benefit to be had from the arrangement, individually and collectively, that with progress life becomes easier for all its members.....yet considering developments in recent times, that doesn't seem to be the case.

Things can't be perfect for everyone, all the time.

There is usually the generational whining. I tried to explain to Boomers that the stock market has exploded during their life time. College was affordable. Housing wasn't too expensive. Health care not too nutty. So yeah, you better have done well you lucky fucks!

The latest generation has a stock market that just yo-yos like madness, college is through the roof expensive, health care costs continue to increase, and housing gets expensive. I feel like my generation, Late Z'er were the last ones to get out into the old world where you went to college (worked hard... well some did), graduated and got a job, and things work themselves out. I graduated, got a house in '03, and since then the Great Recession and a global pandemic. It isn't WWII, but there were blue collar jobs back then too.

Boomer here. We lived through the Viet Nam war, the Cold War, nuclear bomb drills, inflation, stagflation, high unemployment and a host of other economic horrors. We also got to experience measles, mumps abs chicken pox and all have these nice scars from smallpox vaccinations. We were thrilled our kids could get vaccinated against so many childhood diseases abs get antibiotics for ear infections and strep throat which is possibly why I have a small heart murmur. The first of our friends who purchased a home got a mortgage rate of 17-18% ( I forget the exact interest) or what my kids call usury but was a decent rate for the time. We couldn’t afford a house for several years and purchased our first home when we had 3 kids, paying an interest rate that was quite good fir the time but 2-3 times what our kids currently pay on their mortgages. Yes, our houses’ purchase prices were much lower as were our earnings—and our lifestyle. I was almost 50 when I bought my first car. Last fall, my husband bought a brand new vehicle for the first time—because it is so difficult to find decent used cars abs the new one was a little cheaper than the only used one he could find.

All of our children purchased homes for significantly more than our first home cost and one is worth probably twice what our current home is worth now, even though their home is less than half the size of our home which is much more updated. But they live in a major city and have easy access to loads of restaurants, bars, clubs, concert venues, shopping, etc. They ‘can’t afford kids’ but mostly that’s because they don’t want to give up their 3-4 nights a week out, etc. 3 have been to Europe, something I’m giving up on thanks to the pandemic and WW3. The only one who had student debt beyond a couple ( unde 3) thousand dollars total has debt because of law school which we could not afford to pay for.

I agree that the cost of college and grad school or professional school is prohibitive —and I know because hubby and I paid for our own plus the kids’ undergrad. The cost of daycare is also extremely high and yet day care workers are not well paid.

We faced different challenges than our parents did or than our children do now. But we did have the good sense to recognize and appreciate the hardships our parents faced and the sacrifices they made for us.

 

[Toni]

Daughter is in the process of buying a 3-bed/2.5-bath condo in Niles (another suburb NW of Chicago, ~25min drive from where I live), after discovering monthly mortgage costs are comparable to monthly apartment rents of similar size places here in Chicagoland. The down payment was the tough part for her, but Husband & I helped with that.

Youngest son just bought his first home—a townhouse after making a similar discovery. Heck, years ago, that’s why we bought our first home—rent went up to equal a mortgage payment. I will never forget telling the landlord when she announced our rent was going up that it was equal to a mortgage payment—and her saying smugly: ‘If you can get a mortgage.’ Damn straight we could and did.

 

[Toni]

https://www.census.gov/quickfacts/fact/table/CA/PST045221

Here's what I'm using for a bit of context:
Median household income: $78,672
Median value of homes: $538,500
Median monthly owner costs with mortgage: $2,422

$4K a month alone is $48,000 a year, which to me is a staggering amount of money to pay on a mortgage. You could maybe manage that on a median CA household income, but I bet it's unusual. I'm guessing that your friends have a household income much higher than the median, and I'm guessing that there aren't many people who can afford these million dollar homes.

(I've heard that some people do interest-only repayment plans, but I can't see how that is anything other than financial suicide unless you are aggressively building a real estate portfolio.)

I've watched a fair bit of HGTV and the variation in house prices from one TV show to another is incredible. It looks like you can get some absolute bargains if you are willing to live outside of a big city, although it isn't at clear whether those are good places to live (and get a job) overall.

My understanding is living outside of LA is called "living in Phoenix".

HGTV pisses me off. Talk about ungreen. Yeah... we're taking this otherwise decent looking house apart, spending $200,000 to improve it, and then flipping it for a $100,000 gain. The amount of trash we are producing and resources we are wasting for vanity will be intense! Granite countertop, GONE! 15 year old cabinets, GONE! Hey, let's needlessly replace this door with a $12,000 door! SMASH!

I feel the same. And yet, we’ve probably spent the equivalent of twice what we paid for our house more than 30 years ago in improvements—more if you count normal maintenance such as new roof, new furnace. But our house had a 40 year old bad kitchen and bathroom of similar or older vintage, in rough shape when we bought it.

So, no, we did not toss out perfectly nice granite or original—-anything! We’ve been trying to restore and appropriately update. Sexy stuff like new plumbing abs eke trucks. Some stuff we had to do. For instance, the kitchen wasn’t just old but the layout was terrible. The counters were worn out frim the ‘60’s but not in a good way. Flooring from the 70’s —again, not a great period of home decor. Cabinets—40’s-50’s??? Metal. In fact, I gave the old kitchen cabinets to a neighbor who loved them and we had the old tub re-glazed and have had floors refinished, woodwork restored. Damn HGTV has inspired me to do a lot of expensive projects! Preserving is sometimes more expensive than new. We’ve tried to stick with local, period appropriate and as green as possible. Not cheap or easy. But we’ll probably stay here until we can’t anymore. No way we’ll get our money out of the house but that’s not our goal.

 

[Toni]

Yikes: I was tired from a road trip when I typed that so my typing is way worse than usual. Should read: Sexy stuff like new plumbing and electrical work (we actually re-wired the entire house).

To clarify: there were no granite countertops in our house and there still are not. VERY old laminate from the early 60's which was in very poor condition.

We live in a house that is over 100 years old. We've done our best to honor the house and to keep anything original that we could and in some cases, changed a swinging door to a pocket door, created a new bathroom and added tile in bathrooms that had no tile and no floor other than subfloor when we purchased the home.

We still need to refinish upstairs floors and re-do the windows and do some painting. But that will be for another year. I'm reno-exhausted and so is my budget.

 

[Rhea]

I have turned off the ringer on my phone because I get calls from 8am to 8pm from investors/flippers/assholes wanting to make a "cash offer" on my house.

That reminds me, I need to get our 'leave us the hell alone' sign back up on our mailbox. Damn windy days..

We get a few of these offers per week.

Funny, the offers we get are:
Can I hunt on your land?
Can we log your woods?
Do you have any scrap metal?

Every couple of years we do get “Ca$h for land” offers, but not recently.

 

[Toni]

Hunting I understand. Farmers and other wooded land owners often allow others to hunt, with permission. Perhaps not so easily as when I was a girl. Even then, only someone you knew and trusted. Logging? That’s a huge Wow. Asking if you want to sell scap metal? I get that. Asking if they can just have scrap metal? Wow.

 

[Rhea]

Around here the scrap metal is lying around in yards and fields, so the scrappers are doing you a favor by cleaning up your yard. Actually, I’ve been trying to find one for a while - we have a couple of hundred pounds in a pile waiting for a pickup to drive up and ask, and I haven’t seen one since the pandemic!

One year I had stone pickers show up and ashk if they could have our pile of rocks in the field. They stack it up on pallets, wrap it in chicken wire and drive it off to the city for stone walks or something. 100 years ago, the farmer who owned this place made two piles, each 200 feet long. So it’s just sitting there waiting for this guy in his tractor trailer with his skid-steer. Someone got some nice flat slate.

 

[spikepipsqueak]

My daughter and her fiance have brought (Nov. 2022) a house/land package in Lara (Melbourne, Australia) for ~$600k. Small block, the house will be nothing flash. When I was growing up (60s-70s) nobody wanted to live in Lara. A similar block now costs > $700k. Stupid.
At that price both will need to work for decades to pay it off. If one loses their job or is injured etc. then after about 6 months they will be in strife. My daughter is an ambo so the pay is quite reasonable provided she gets the overtime. But if she gets the overtime then she will not spend much time with fiance/hubby or any kids they might have.
I paid $14k for my land in 1991. Installed a kit home for $80k in 1993.
Housing prices in Aust. have lost any links to reality.

Quoting Tigers for context. Our market differs from the US.

Bought my first house (3BR, weatherboard, tiled, land 50' x 124', in Melbourne ) in 1983 for $48k. The mortgage was $33k. I was single, living with my boyfriend, (who did not contribute, another story) and had no trouble meeting the mortgage and getting the house restumped, rewired, replastered where necessary, on a mid level salary. Sold that for $142k in 1991 to a young couple starting out. An amount that reflected inflation and the increased value of the place but placed no undue burden on them.

By comparison, in 1999 I bought a tiny 3BR weather board, tin roof, land irregular but 10% smaller, in a rural, coastal area for $57K.

Sold that around 2002/3 for $165k with very minor renovations (new water tank, floors sanded and polished, slate surround to heater). Just heard that same house is again for sale. It has had a very substantial renovation and small extension, but even 20 years of inflation cannot justify the $895k they are asking for it. They will get it, however.

In 1999, small empty blocks were going for $11k in the area. In 2002 that skyrocketed suddenly to $80-100k. Covid, and the exodus out of cities, has seen the remaining land fetch in the region of $250k.

I just Googled the median house price for Melbourne. $1,101,612

I don't know how young people are ever going to do it.

 

[TSwizzle]

I don't know how young people are ever going to do it.

I bought my first property, a one bedroom flat/apartment when I was 20 with a little help from my parents who basically paid the legal fees. I don’t know how young people are going to get on the property ladder. Maybe young professionals will move into the more “diverse” neighborhoods and make something of it.

 

[Hermit]

I just Googled the median house price for Melbourne. $1,101,612

List of median house prices in Australian capitals:

City​ Median price​ Growth​ Sydney​ 1,601,467​ 33.1%​ Melbourne​ 1,101,612​ 18.6%​ Brisbane​ 792,065​ 25.7%​ Adelaide​ 731,547​ 27.5%​ Canberra​ 1,178,364​ 36.6%​ Perth​ 752,110​ 7.5%​ Hobart​ 752,110​ 34.6%​ Darwin​ 645,487​ 25.2%​

Timeline of growth 1970 - 2021

Another timeline

People keep talking about greed. I think it's just how capitalism works.

 

[DBT]

Insane.

 

[bigfield]

We bought our first house mid-2020 at about 60% of the median house price and below 3% interest, and yet the mortgage repayments are still huge. However, we're actually paying less per week than most people are paying to rent, so we'd be in an even worse financial position if we hadn't bought at all.

We currently live in the outer suburbia, where the train lines end, and we've considered moving to a country town as some family has done. However, doing so would take us a long way from our jobs (meaning higher petrol and vehicle maintenance costs), and the country towns around here are tiny with scant employment opportunities.

(I'm trying to think of a comparable place in the US but I don't know the geography that well.)

My parents went through a short spell in the 1990-91 recession where they paid 17% interest rates on a three-bedroom house they'd built about five years beforehand. Despite that, the principal on the loan was so small that they were able to make the repayments on a single tradesman's income.

 

[southernhybrid]

I'm going to "gift" an article from the NYTimes that I read this morning. It's a little bit off topic, but I think it's still pertinent to the discussion of unaffordable housing. It's about how investors are buying up mobile home properties, increasing the rents and/or selling the properties again in a short time. It's heartbreaking to think of all the low income people who are being forced out of their modest homes. In a few cases, the renters of the properties have been able to buy the land themselves but that is rare. I hope some of you will read the article and express your opinion. My opinion is that greed is totally out of control and we are either going to have a lot more homeless people in the US, or a lot of large groups of people living in small homes, or apartments, if something isn't done to change this issue.

While it's not discussed in the link, anyone who follows the news closely probably knows that investors are also buying up a high percentage of single family homes as well. They either flip them or. use them as rental property. I know of one woman in my community who has been hurt by this. She was renting a home for a little over 600 per month, but the owner raised her rent to 900 as of next month. She is on SS and is retired. Luckily for her, she has a son in the area who has invited her to move in with him. But, what if she had no friends or relatives to take her in?

nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html?unlocked_article_code=AAAAAAAAAAAAAAAACEIPuomT1JKd6J17Vw1cRCfTTMQmqxCdw_PIxftm3iWka3DODmwdiPkORI2H8UbJaO9jYN4-miySXtwEN6ApSeZpzu5HekdqUBWz5JuYnZBPawMElbWOZEJklZTcQeJ_tjbwcmiy