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New Re: housing.
Interesting point. When we refinanced our home I was "self-employed". The loan officer said that was always a big problem (even after I reminded her that I had been self-employed through my own corporation when we built the house and had not ever been late with a payment in more than two years - we pay extra principal every month. She said, "It has nothing to do with you, but we don't need your income anyway." So, the financing went through based exclusively on my wife's salary. The kicker is that the loan amount was better than 4 years gross income for her. The rule-of-thumb for my father's generation was you could only get financing for 2.5 years of your household income. That's a big change that I've seen plenty of anecdotal evidence for. We've some very young newly wed friends whose income (combined) is $40,000. They just closed on a $210,000 home. My guess is that a generation ago they'd have never gotten that amount from any lending institution.

bcnu,
Mikem

The soul and substance of what customarily ranks as patriotism is moral cowardice and always has been...We have thrown away the most valuable asset we had-- the individual's right to oppose both flag and country when he (just he, by himself) believed them to be in the wrong. We have thrown it away; and with it all that was really respectable about that grotesque and laughable word, Patriotism.

- Mark Twain, "Monarchical and Republican Patriotism"
New That's insane
We've some very young newly wed friends whose income (combined) is $40,000. They just closed on a $210,000 home.
Their payments have to be well over $1,500/month. Who told them they can afford that?
===

Implicitly condoning stupidity since 2001.
New Same as rent.
Average rent on a one bedroom apartment here is $800.00 / mo.

If each were living by themselves, the two rents together would be $1600/mo.

Housing is out of control.

Imric's Tips for Living
  • Paranoia Is a Survival Trait
  • Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
  • Even though everyone is out to get you, it doesn't matter unless you let them win.


Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.
 
 
New People overbuy houses
Young couples often buy houses that are really more then they can afford now, on the theory that in the decades they will spend paying it off their income will go up.

That idea has been really dangerous though in the past decade or so as jobs have become less stable and pay raises smaller. Back in the 60s and 70s people expected to get a pay raise every year that was larger then inflation.

What I find amazing is how often people with no savings and large debts can get that kind of financing. I know people that have used financing to get money to pay the downpayment on their house, something that banks used to never accept.

Jay
New The term "house poor" comes to mind. :)
A big expensive house with no furniture in the living room.
Alex

"Don't let it end like this. Tell them I said something." -- last words of Pancho Villa (1877-1923)
New Loans for downpayments? I've one better.
Consider a good friend of mine. Household income: $80,000/year.
First house mortgage: $94,000.
Second mortgage on first house: $22,000.
Line of credit balance on first house: $13,000.

He goes to the bank and they give him $40,000 to buy a lot, then give him another $200,000 to build a new house. He finally sold the first house after making payments on all five of those loans for over a year. He's not out from under yet because his first house sold for $103,000 (yep, he'd borrowed $129,000 on a $103,000 house). Now he's just got a "reasonable" 3 year gross debt.
bcnu,
Mikem

The soul and substance of what customarily ranks as patriotism is moral cowardice and always has been...We have thrown away the most valuable asset we had-- the individual's right to oppose both flag and country when he (just he, by himself) believed them to be in the wrong. We have thrown it away; and with it all that was really respectable about that grotesque and laughable word, Patriotism.

- Mark Twain, "Monarchical and Republican Patriotism"
New Depends on where they live
property values may be more on the west coast. A house and land that cost $120,000 in the Missouri, may cost $210,000 in California. Maybe that was the cheapest house in their neighborhood.

Here in Missouri the place I live in has higher property values than the place my mother and father live in, which is no more than 10-15 miles away. There are a lot of farms and businesses near my property, and mostly residential near my parent's place. Down a few streets and a mile or so away is a lot of mansions worth a lot. The Behlmann Mansion got tore down to create Behlmann Farms, where they are building new homes. It is not that far away from my house and may send property values up again.

Also they are paying more in property tax and interest, which means they will get a bigger tax refund.



"Lady I only speak two languages, English and Bad English!" - Corbin Dallas "The Fifth Element"

New No it doesn't.
It's not the price of the house, it's the ratio of the money they borrowed to their income.
--\n-------------------------------------------------------------------\n* Jack Troughton                            jake at consultron.ca *\n* [link|http://consultron.ca|http://consultron.ca]                   [link|irc://irc.ecomstation.ca|irc://irc.ecomstation.ca] *\n* Kingston Ontario Canada               [link|news://news.consultron.ca|news://news.consultron.ca] *\n-------------------------------------------------------------------
     Article on credit card debt and two income families - (JayMehaffey) - (9)
         Re: housing. - (mmoffitt) - (7)
             That's insane - (drewk) - (6)
                 Same as rent. - (imric)
                 People overbuy houses - (JayMehaffey) - (2)
                     The term "house poor" comes to mind. :) - (a6l6e6x)
                     Loans for downpayments? I've one better. - (mmoffitt)
                 Depends on where they live - (orion) - (1)
                     No it doesn't. - (jake123)
         So what they're saying is.... - (gdaustin)

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