In principle, ownership vs renting should be more about stability than income level per se. Those of moderate means ARE consuming housing. If they have stable jobs, it would be advantageous for them to be able to get a mortgage and to fix and inflation protect the greater portion of their housing expenses. In a normal, non-bubble housing market, owning one’s home usually doesn’t start to pay off until several years of inflation have raised the cost of an equivalent rental. But of course stable low and moderate income jobs are increasingly rare in today’s economy.
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Is there a similar chart showing the same data as a proportion of income?
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Disco can mean merely music played at a disco. It doesn’t have to mean a specific type of music. My best friend and I ran a mobile discotheque in the early '70s as teenagers in the UK.
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howmuch.net has interesting articles but unreadable charts. They use a ridiculously tiny font, gray text, pale pastels. There is no zoom option for more detail, just for bigger pixels.
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Truly? It’s really easy to buy into the idea that housing always goes up, but that’s (as we saw temporarily) not a given. The idea that moderate income owners should take on massive debt to become speculators seems somewhat dubious advice. (Admittedly, it has been good past advice, but past return is no guarantee…)
Sure, a lot of speculators do get rich, but they also can lose their investment. And when your investment is a loan? Ask the people who spent a lifetime paying off the mortgage on a Detroit property.
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I don’t see him arguing that they should take on massive debt to become speculators. He’s talking about people who can afford to do so (the shrinking group of Americans with steady jobs with middle-class compensation) buying rather than renting the homes that they actually live in. Depending on circumstances that decision might make sense in the way he describes, but fewer middle-class people have the option to make that decision.
For 30+ years, Americans have been conned into believing that their homes are first and foremost “investments” rather than places to live. In the same time period, real and diversifiable retirement investments like pensions have given way to 401ks, if you’re lucky.
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One of the biggest issues is that people don’t get a career path in the same company anymore. If you know that you have a 95% likelihood of staying where you are or moving up the ranks at ABC Company, you can consider buying your home. That’s what Baby Boomers think is normal. If, however, you’re a Millennial and you know that you have a 95% likelihood of not being with the same company 5 years from now, and your new job might very well be in another state, then having cash sunk into a down payment on a home you might not be able to sell quickly when it’s time to move becomes a huge liability.
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The precariat class in the U.S. is now a wide-ranging one, and for most Millenials (including those with well-paying jobs) being a member of that class is now a fact of life, despite what their Boomer parents told them. As a Gen Xer at least it was made clear to me when I graduated college that I would go through many employers and at least a couple of careers in my life and that most of us were screwed when it came to attaining “The American Dream.”
Still, the desire to put down roots is a strong human one. I’m afraid the corporations will ultimately respond to that desire by creating a form of one-sided indenture, similar to how they used (and will use again) fear of losing health insurance to keep employees in exploitative and abusive workplaces.
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My view on this is that the precariat class is pretty much an unavoidable outcome of technological progress. We all crave security, but technology has changed the cost of staying static from some small penalty to staggering differences in price and/or profit.
Sure, we want stability, but every time we’re made to pay the price for it, we’re screaming from the rooftops because, in the end, most people value lifestyle over everything else (at least their actions seem to indicate this).
And sure, there may be a small subset of people who do value something more than lifestyle, but there’s not enough to support the continued existence of companies who could cater to those values.
It’s all well and easy to blame some evil others, but in my experience, we have met the enemy and he is us.
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The only solution to the outcome of automation and race-to-the-bottom globalisation will be something that was taboo to discuss for the American establishment to discuss in public forums as late as 2014: a universal basic income. Now it’s just a matter of designing it to be nasty and miserly enough to get buy-in from conservatives and restrictive enough that it will primarily benefit large corporations and incumbent rentiers. But hey, there won’t be food riots and it’ll look like we still have a consumer economy.
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The housing cost graph actually looks remarkably flat compared to my reality. In my lifetime most of the properties I have lived in have gotten more expensive by a factor of 5-10x. Rents have gone up at least several times. Yet the housing graph only shows housing prices going up just about 25%.
I’ve lived in or near big cities, and this makes me wonder whether I should be living somewhere less desirable.
Is there anyone whose housing costs have grown the same or less than the howmuch graph implies?
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Rents go up more precipitously than home prices. The answer to “how much does this house cost?” is more or less “what the market will bear.” The answer to “how much is rent?” is more like “how much ya got?”
Homeowners, by and large, are interested in having a place to live. Landlords, by and large, are parasitic leeches extracting as much wealth as they can from the less fortunate.
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Not here in the Bay Area. Here home costs are driven exclusively by people who are somehow wealthy independent of their salary. But everyone needs to find a place to live so rents are market-based, and much more affordable than mortgages.
From our own experience, the only way someone with a modest middle class income will be able to afford buying a home is if you get in shortly after the bust part of one of our recent boom-bust cycles. We timed it out fairly well; our first house was a condo bought around 1995, when a brief decline in the economy made a lot of real estate more affordable. In 2003, shortly before the market heated up again for the next cycle, we sold the condo and used it to finance our current house. The problem now will be resisting the temptation to sell when the next bubble doubles what we bought the house for, since there is no guarantee the next bust will bring prices down to what we can afford on another house.
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The market is being purged of all the renters who can’t afford whatever the landlord thinks he can get from someone else. I can afford an average studio in the city, except I’ve been trying to save up the first + last + two months deposit while living in hotels and paying for storage since April. (My shift ends right when BART shuts down, so commuting would require a car, with all the costs that entails.)
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Those are broad national median amounts with changes marked by decade. For every NYC or SF or L.A. that’s gone up crazily over the last 40 years there’s a Detroit or a dying small town in Appalachia that’s fallen just as crazily during the same time period.
So yes, you could be living somewhere less desirable, but your income would probably be much lower and housing costs might eat up a slightly larger amount of it. Depending on your personal priorities, your better bet might be a second- or third-tier city that’s starting to gain real traction (not just early-stage booster hype) on a STEM or “meds and eds” push. Rents will be high but not yet insane, and income will be better than in a non-urban area. If it’s one of the few remaining places with a form of rent control even better.
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There are also aspects of “College A costs more than College B, so it must be better!” (The idea is possibly some kind of signaling thing where parents spend a lot of money to show that they have a lot of money.)
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COCAINE!!! Woo hoo!
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Homeownership rate. How is that defined?
Percent of what?
I’m pretty sure that at no time in all of history even fifty percent of all Americans owned a house. Are those the people that live in a house owned by a relative so they don’t pay rent?
Mum’s basement dwellers?
Maybe I should have looked that up instead of showing off my ignorance. Oh well.
I’d completely agree. However, feeling pessimistic today, I can see two problems.
One, during the transition to more or less full automation (say robots replacing 90% of the workforce), you’ll end up a lot of people doing much better, and a lot of people doing much, much worse.
I can see most of the citizenry of the developed world having fits at say a 80% tax rate at $40K just to pay for a half decent world basic income of $5K. The 1%-ers just don’t feel that wealthy.
(Even if the citizenry of the developed world decide that we are the Lords of Creation and to hell with the poor, I think we’d be pushing for an 80% tax rate at $100K to pay a UBI of maybe $20K, and again, all those people earning $80K and paying 60% would feel they aren’t rich enough to justify paying everyone for simply existing.)
The trouble is that once the transition is finished and scarcity is almost artificial, it’s even harder to change the status quo and it’s really easy to be locked in to a world were 90% have almost nothing (and 10% are working their tail off to avoid being part of the 90%).
It’s a nasty treadmill, but we’re all running on it.
My other worry about UBI is that if we do achieve it, I’m afraid what it will do to people. I’ve known a fair number of people who’ve suffered from depression at one time or another, and for almost all of them, “earning their daily oxygen” was almost always a vital part of preventing from falling of the depression cliff.
Now maybe it’s just my handful sample size, but if if my observation is true more widely, I really worry about the mental health of a population that could easily feel they’re utterly superfluous.
The healthy can take up a hobby, become a care-giver, etc. but if your energy is already being sapped by depression, it becomes incredibly easy to just curl up in bed, which just makes things worse.
Anyway, those are my fears about getting UBI implemented and then working. I’m desperately hoping I’m wrong. (And given my election predictions, I’ve proved I can be extremely wrong :-)).
[Edit: grammar-o’s)
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