Arcadia Posted February 9, 2022 Share Posted February 9, 2022 18 minutes ago, Carrie12345 said: https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median;range:1989,2019 Now I went down a rabbit hole. Median net worth is DRAMATICALLY higher for homeowners than renters. I’m confident there are a whole lot of factors playing into that, but still. Home equity would probably explain the difference. Also maybe the age of homeowners would play a part in terms of amount in retirement and emergency savings. The flow chart list the factors used to calculate net worth. https://www.federalreserve.gov/econres/files/Networth Flowchart.pdf Quote Link to comment Share on other sites More sharing options...
Sk8ermaiden Posted February 9, 2022 Share Posted February 9, 2022 14 minutes ago, Carrie12345 said: https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median;range:1989,2019 Now I went down a rabbit hole. Median net worth is DRAMATICALLY higher for homeowners than renters. I’m confident there are a whole lot of factors playing into that, but still. Yes. It's not as cut and dry as what you buy your home vs. what you sell it for and that's the gain in your family value. That was really the very smallest peice of the puzzle. It wasn't "I bought a house and now we have a higher net worth." It was "I bought a house and now my family has stability and a safe place to land, and eventually I won't have a large monthly payment which will help me when I'm old on a fixed income. And when I die and my kids sell it, they will inherit mine and have no mortgage, or have the money to help THEM buy a house and provide stability for their kids, and maybe be done paying for it even sooner which will help THEM help their kids...." Because landlords sell from under you, because rent is constatly increasing, the families I am friends with who rent move CONSTANTLY. That has effects on everything from community involvement to education... And they are always moving into less and less desireable accomodations, because their wages are not increasing at the same rate as housing is. My very first thought was as Carrie says - what person who can not afford to buy can afford to invest???? The money not spent on a mortgage goes to their rent. Also, I bought in 2007. My monthly payment has been locked in. Even with tax and insurance increases, I now pay *HALF* of what the current rent on similar houses is in our area. Rent keeps going up forever. By the time my daughter goes to college, I will own my home and what was my mortgage payment can go to college expenses. I can help her if she falls on a hard time. My money in retirement will go farther so my children will not bear the financial burden of feeding/housing/caring for me. Those are just a few of the ways owning a home can help pull families out of generational poverty. 7 Quote Link to comment Share on other sites More sharing options...
fairfarmhand Posted February 9, 2022 Share Posted February 9, 2022 1 hour ago, Carrie12345 said: Well, with one extra significant factor… You can’t invest your rent money. Unless you’re already wealthy enough to be that far ahead. Yep. You have to pay for your housing. A mortgage helps you keep at least some of that money for the future. Even if the return isn’t as good as an investment, it’s still there in the house. 2 Quote Link to comment Share on other sites More sharing options...
Bootsie Posted February 9, 2022 Share Posted February 9, 2022 2 hours ago, Carrie12345 said: Well, with one extra significant factor… You can’t invest your rent money. Unless you’re already wealthy enough to be that far ahead. No, you can't invest your rent money, but the money that you pay for mortgage interest is not being invested either. Quote Link to comment Share on other sites More sharing options...
Bootsie Posted February 9, 2022 Share Posted February 9, 2022 2 hours ago, Carrie12345 said: https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median;range:1989,2019 Now I went down a rabbit hole. Median net worth is DRAMATICALLY higher for homeowners than renters. I’m confident there are a whole lot of factors playing into that, but still. That does not indicate that the net worth of the homeowners is due to those people being homeowners. I would bet that the median net worth of those who drive a Lexus is higher than the median net worth of those who drive a Chevrolet--that is not because the Lexus is the cause of the net worth. All that statistic is telling you is the characteristics of homeowners versus the characteristic of renters. Quote Link to comment Share on other sites More sharing options...
Arcadia Posted February 9, 2022 Share Posted February 9, 2022 (edited) 4 hours ago, Laurel-in-CA said: A lot of people in our area have moved to Idaho, where it is now a LOT more expensive than it used to be. Supply and demand, baby. I watch our neighborhood prices and compare them to prices in areas where we'd like to retire....as we go up, they go up too, and especially in the last couple of years. So much for our hope of buying a retirement home with our equity...well, unless we compromise somehow. The discussion is ongoing. @Roadrunner https://www.nbcbayarea.com/news/local/making-it-in-the-bay/new-real-estate-report-provides-insight-into-competitive-bay-area-market/2805177/?amp ”The latest National Association of Realtors report provides a look into how hard the path to home ownership has gotten in the Bay Area. The report shows that anyone earning between $100,000 to $125,000 has a shot at owning one home in the South Bay for every 1,200 buyers with the same annual income.” https://cdn.nar.realtor/sites/default/files/documents/2022-the-double-trouble-of-the-housing-market-02-07-2022.pdf Edited February 9, 2022 by Arcadia 1 Quote Link to comment Share on other sites More sharing options...
Bootsie Posted February 9, 2022 Share Posted February 9, 2022 1 hour ago, Sk8ermaiden said: Yes. It's not as cut and dry as what you buy your home vs. what you sell it for and that's the gain in your family value. That was really the very smallest peice of the puzzle. It wasn't "I bought a house and now we have a higher net worth." It was "I bought a house and now my family has stability and a safe place to land, and eventually I won't have a large monthly payment which will help me when I'm old on a fixed income. And when I die and my kids sell it, they will inherit mine and have no mortgage, or have the money to help THEM buy a house and provide stability for their kids, and maybe be done paying for it even sooner which will help THEM help their kids...." Because landlords sell from under you, because rent is constatly increasing, the families I am friends with who rent move CONSTANTLY. That has effects on everything from community involvement to education... And they are always moving into less and less desireable accomodations, because their wages are not increasing at the same rate as housing is. My very first thought was as Carrie says - what person who can not afford to buy can afford to invest???? The money not spent on a mortgage goes to their rent. Also, I bought in 2007. My monthly payment has been locked in. Even with tax and insurance increases, I now pay *HALF* of what the current rent on similar houses is in our area. Rent keeps going up forever. By the time my daughter goes to college, I will own my home and what was my mortgage payment can go to college expenses. I can help her if she falls on a hard time. My money in retirement will go farther so my children will not bear the financial burden of feeding/housing/caring for me. Those are just a few of the ways owning a home can help pull families out of generational poverty. Real estate markets are highly localized. So, what is true in one are/neighborhood is not necessarily true for other areas. In my area, a house that sells for approximately $400,000 would have principal and interest payments of about $2000 per month for a 30-year mortgage. The same houses are renting for about $2000 per month. If someone purchases the home, they will also have about $6000 per year in property tax, property insurance payments, expenses to replace a roof, and other repairs that the homeowner does not have. If the renter places $6000 per year in an investment earning 10% (which is less than the average annual return in a broad- based stock, diversified stock portfolio), that $6000 that is not going to property insurance would be $986,964 in 30 years. If the renter also placed the savings on all of the expenses of owning a home into an investment like that-the balance would be well over $1 million. Quote Link to comment Share on other sites More sharing options...
Sneezyone Posted February 9, 2022 Share Posted February 9, 2022 26 minutes ago, Bootsie said: Real estate markets are highly localized. So, what is true in one are/neighborhood is not necessarily true for other areas. In my area, a house that sells for approximately $400,000 would have principal and interest payments of about $2000 per month for a 30-year mortgage. The same houses are renting for about $2000 per month. If someone purchases the home, they will also have about $6000 per year in property tax, property insurance payments, expenses to replace a roof, and other repairs that the homeowner does not have. If the renter places $6000 per year in an investment earning 10% (which is less than the average annual return in a broad- based stock, diversified stock portfolio), that $6000 that is not going to property insurance would be $986,964 in 30 years. If the renter also placed the savings on all of the expenses of owning a home into an investment like that-the balance would be well over $1 million. In my sister's area, the median household income is $32-33K and the average rent for a 2BR apartment is over $900. That's average. In a safe area, it's $1200+. Full-time daycare is $800. Make it make sense. 2 Quote Link to comment Share on other sites More sharing options...
Roadrunner Posted February 9, 2022 Share Posted February 9, 2022 My former boss bought her home for $235k in mid 1990s here. It’s now worth $1.8 million. Quote Link to comment Share on other sites More sharing options...
BakersDozen Posted February 9, 2022 Share Posted February 9, 2022 15 hours ago, prairiewindmomma said: Same here. To be fair, the Californians who have moved into our school district say stupid things like, “I can’t believe how cheap houses are here compared to California.” Or, they complain about the weather and how we are not California-like in some way. You can write off the oddball family or two but it’s been eye-opening to see it be a prevalent enough attitude to make it into a stereotype. I resisted the mindset which viewed Californians in a stereotypical way...until I had a few encounters which I just couldn't ignore. Our small town parks are not good enough. Roads are not wide enough. Speed limits aren't high enough (this is on busy/congested small town roads w/speed limits of 45-50). Thrift stores are not good enough. There's "nothing for kids to do" and "nowhere to go out to eat." Or the CA folks who buy two homes here (with money left to spare) and go into thrift stores to purchase stuff for their AirBnB and sit on the couches with their phones on speaker while they LOUDLY discuss their finances and what they are buying with all their money. Ugh. We moved out of a huge city with a sigh of relief. Living without billboards and intense lighting (dark sky ordinances/observatories), slower traffic and slower pace of life is fantastic. But it's changed and will continue to do so, and the resentment is growing in those who escaped city life only to watch it be recreated here. And yes, the attitude that things are so "cheap/affordable" with housing does not endear previous residents to newcomers unless one is selling or raking in some big bucks as a landlord. The question that newcomers ask which makes me really cringe: "What does "this city" need??" Nothing. It needs nothing. There is a reason it ranked so high year after year, decade after decade, as an ideal place to live/retire. It is a place to get away from the hustle and bustle...but the hustle and bustle is now here. 😞 2 Quote Link to comment Share on other sites More sharing options...
Sneezyone Posted February 9, 2022 Share Posted February 9, 2022 (edited) These sound like the complaints of native Washintonians circa 1985. People move. Things change. Edited February 9, 2022 by Sneezyone 3 Quote Link to comment Share on other sites More sharing options...
Carrie12345 Posted February 9, 2022 Share Posted February 9, 2022 7 hours ago, Bootsie said: No, you can't invest your rent money, but the money that you pay for mortgage interest is not being invested either. To a certain degree, it is. I’ve been paying to live in my house for almost 17 years (at an amount that’s now lower than average rent.) If I sell the house I purchased for <200k FOR <200k, I will walk away with around 1/3 of my original purchase price. Is that a significant sum in the big picture? Not really. Is it significant compared to what I would walk away with if I had rented these past 17 years? Absolutely. I got nothing but moving expenses out of my first two rentals. Am I just going to dump it into a more expensive home that I don’t ever intend to directly financially benefit from? Yup. But it will provide my kids with either shelter or a fairly decent financial cushion/investment at some point. It also could have failed, like any other investment, and technically did. For years after the pop, my house’s value plummeted to <100k. Not all investments beat inflation or the stock market. Not all investments are intended to. Some serve a larger purpose (such as securing a roof over our heads that cannot be taken away) with a bit of potential to give us a little boost in the end. Just look at people who invest in restaurants! 😉 7 hours ago, Bootsie said: That does not indicate that the net worth of the homeowners is due to those people being homeowners. I would bet that the median net worth of those who drive a Lexus is higher than the median net worth of those who drive a Chevrolet--that is not because the Lexus is the cause of the net worth. All that statistic is telling you is the characteristics of homeowners versus the characteristic of renters. Yes, that’s why I said I’m sure there are many other factors that go into it. 1 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted February 9, 2022 Share Posted February 9, 2022 Owning a home is more than a financial decision. It has emotional value that can’t be easily measured. 1 Quote Link to comment Share on other sites More sharing options...
Janeway Posted February 9, 2022 Share Posted February 9, 2022 On 2/7/2022 at 6:38 AM, Faith-manor said: I agree. We need rentals, not vacation rentals, and not wealthy, gated community rentals, but reasonably priced rentals. GenZ probably won't be homeowners. Between student loans debt and the fact that the job market is no longer "get a job, stay in one place" because the only way to move up or get pay raises most of the time is to change employers, they can't stay in homes long enough to make back the cost of buying it plus the costs of selling it. This market will cool and settle down soon, and then if everything has been bought up for vacation rentals, it is going to be VERY problematic. We need well thought out, lol my term solution regulations, not knee jerk reactionary responses. However, long-term is not something the powers that be do well in this country to state it mildly. Some countries have laws against non-citizens (foreign investors) buying up property for this purpose. We would also do well to have regulation to prevent so much property from being allowed to be used as rentals. Some areas simply do not allow renting, so if HOAs can set enforcable rules like that, so can state and federal laws. 2 Quote Link to comment Share on other sites More sharing options...
Arcadia Posted February 9, 2022 Share Posted February 9, 2022 7 hours ago, Carrie12345 said: It also could have failed, like any other investment, and technically did. For years after the pop, my house’s value plummeted to <100k. During the Great Recession, rents went up locally. So even those with underwater mortgages were benefiting from not paying much higher rents. @Roadrunner regarding property tax The tax for my home is $4,967.28. The bill with bonds, measures and special assessments added comes to a total of $6.046.52. So the add-ons amount to $1,079.24 1 Quote Link to comment Share on other sites More sharing options...
Bootsie Posted February 9, 2022 Share Posted February 9, 2022 14 hours ago, Sneezyone said: In my sister's area, the median household income is $32-33K and the average rent for a 2BR apartment is over $900. That's average. In a safe area, it's $1200+. Full-time daycare is $800. Make it make sense. Housing prices (whether rental or owning) are high in some parts of the country. That is a separate issue from whether owning a home is a way of creating generational wealth, and a better way than renting. Quote Link to comment Share on other sites More sharing options...
Roadrunner Posted February 20, 2022 Share Posted February 20, 2022 This NY Times article just popped up today and touches on things we discussed here, so I thought some of you might enjoy it. The Next Affordable City Is Already Too Expensive https://www.yahoo.com/news/next-affordable-city-already-too-160234622.html 3 1 Quote Link to comment Share on other sites More sharing options...
DawnM Posted February 21, 2022 Author Share Posted February 21, 2022 On 2/8/2022 at 10:02 AM, prairiewindmomma said: Same here. To be fair, the Californians who have moved into our school district say stupid things like, “I can’t believe how cheap houses are here compared to California.” Or, they complain about the weather and how we are not California-like in some way. You can write off the oddball family or two but it’s been eye-opening to see it be a prevalent enough attitude to make it into a stereotype. Don’t be tone deaf, iykwim. THANKFULLY, here in NC, it is the NJ/NY crowd who get the backlash for being obnoxious. We Californians are still just an oddity. 🤣 5 Quote Link to comment Share on other sites More sharing options...
TravelingChris Posted February 21, 2022 Share Posted February 21, 2022 On 2/7/2022 at 12:39 PM, Clarita said: Please stop with the tech worker blame. Tech workers make a decent living like doctors, surgeons, lawyers, CPA's, etc. Seriously a majority of tech workers have trouble affording a house in CA near their work, many are dual income families. Granted the plight of teacher, maids, fast food workers are harder please stop making it seem like all tech workers are Elon Musk and Mark Zuckerburg. On 2/7/2022 at 11:52 PM, rebcoola said: Yes, my brother is in tech and does well he refuses to move to Cali because of costs. tWO STORIES. IN 2011, were living in the DC area and dh was getting offers for work in both that area and an offer,for work in the East Bay-lower Bay area. He was active duty then and we were thinking about whether he should retire. We immediately took all offers of the DC area out since that was where we were living and we didn't want to start our second lives in such a crowded area with such awful traffic. And when quickly looking at East Bay, it was very easy to see we couldn't afford it with either the VA loan we would need or with rent. He continued in active duty service and we moved here and are still here. Oh and dh is tech. Fast forward to our youngest having graduated from college with a cs major and looking for first full time work. One company that pursued her, was a company that sent basically fairly well paid interns to various companies. Well, well paid if she stayed in my area or went to ID or Oh or scores of places. But very poorly paid if she ended up in DC area, NYC area, Seattle area, Bay area, etc. She wisely didn;t take it and got an almost as well paid job locally. Quote Link to comment Share on other sites More sharing options...
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