Alternative Take on the Subprime Crisis

[DanS]

Originally posted by Patroklos
As DanS has said, the American Dream has morphed from just owning a house to owning a house twice as big as the one you grew up it with a yard, granite countertops, stainless appliances, whirlpool tubs, a pool, etc. etc.

As with so many things people were/are living beyond their means. Every time I tell my married freinds looking for houses to buy the three bedroom instead of the four and use tack the money saved doing so onto the down payment they look at me with horror. "And make our daughters SHARE a room!"

More bathrooms than bedrooms, don't forget!

[Kidlicious]

Originally posted by Patroklos
I edited some examples into my last post.



Because if the land really is that expensive and you are set on buying it, saving 10-20K on the actual house will make the land more afordable to you.

We are talking about houses that cost a half mil, so no.

[DinoDoc]

Originally posted by DanS
More bathrooms than bedrooms, don't forget!

That's just Kuci's house.

[Arrian]

You have to figure that there will now be a trend of new construction that goes smaller, with less frills.

-Arrian

[Kidlicious]

This isn't even a crisis. The "prime" crisis is coming this century. These houses aren't worth this much.

[Patroklos]

We are talking about houses that cost a half mil, so no.

Why would we be talking about half mil lots when the median home price is 220K with lot and house?

In any case, another problem with home buyers as illustrated by Kid is that one they go into the 200-250 range they treat 10-20K as chump change.

[OzzyKP]

Originally posted by Patroklos


WTF.

As DanS has said, the American Dream has morphed from just owning a house to owning a house twice as big as the one you grew up it with a yard, granite countertops, stainless appliances, whirlpool tubs, a pool, etc. etc.

As with so many things people were/are living beyond their means. Every time I tell my married freinds looking for houses to buy the three bedroom instead of the four and use tack the money saved doing so onto the down payment they look at me with horror. "And make our daughters SHARE a room!"

Another example, the formal dining room. What buisness does a lower middle class family have paying for a 400 extra square feet that they will use twice a year (maybe) and have to spend still more money to funish with expensive but inevitably still tacky furniture? Its that faux luxury mindset. Of course how many houses are they building these days without a formal dining room?

Or yet another example, the study. Sure, a great place to put your computer but how many of us even in the upper classes do enough actual work at home to warrant a dedicated space? Is there something wrong with the stool at the kitchen counter or using the kitchen table to do your taxes (which I bet most use for such purposes anyway even if they do have a dedicated study)? Honestly, unless you spend all your freetime writing essays on the life or Plutarch or run a real buisness from home this is another useless luxury.

And what is worse is that we all know these are useless luxuries, but you just have to have them to be a successful member of the middle class. If everyone else has useless luxuries and you don't, well we can't have that now can we? The fact is most people should have those two rooms turned into bedrooms and not have built that second story in the first place and thus spent 25% less on their mortgage.

Eh, I personaly like small cozy places (though I will pay for a neighborhood I like). It all comes down to expectations.

[Whoha]

Households are typically two income homes now, as opposed to 40 years ago, so I'm not sure how true this is. Falling wages certainly don't help, but haven't been responsible for what has happened.

[rah]

I don't see much difference as the old days.
In the past, you were always told to start with more than you could afford because in 5 years you'd be able to and in 10 years you'd be laughing about it and in 20 years your car payments would be higher than your mortage.

The difference is that these days, most people can't rely on a continuous increase in their income. More are staying steady or going backwards, despite duel incomes.

And just a handful of years left on mine, and I can still laugh at it.

[Kontiki]

I think there's also a general trend towards constantly upgrading your house - I know we're guilty of it too. I think people were much more likely to buy their house and stay there for 20+ years in the past.

And for the love of god, people: DUAL is two, DUEL is a fight.

[DirtyMartini]

I don't know how many married people you know, but a lot of times "duel incomes" is more accurate than dual incomes.

[Krill]

Originally posted by Patroklos


QFT.

As DanS has said, the American Dream has morphed from just owning a house to owning a house twice as big as the one you grew up it with a yard, granite countertops, stainless appliances, whirlpool tubs, a pool, etc. etc.

As with so many things people were/are living beyond their means. Every time I tell my married freinds looking for houses to buy the three bedroom instead of the four and use tack the money saved doing so onto the down payment they look at me with horror. "And make our daughters SHARE a room!"

Another example, the formal dining room. What buisness does a lower middle class family have paying for a 400 extra square feet that they will use twice a year (maybe) and have to spend still more money to funish with expensive but inevitably still tacky furniture? Its that faux luxury mindset. Of course how many houses are they building these days without a formal dining room?

Or yet another example, the study. Sure, a great place to put your computer but how many of us even in the upper classes do enough actual work at home to warrant a dedicated space? Is there something wrong with the stool at the kitchen counter or using the kitchen table to do your taxes (which I bet most use for such purposes anyway even if they do have a dedicated study)? Honestly, unless you spend all your freetime writing essays on the life or Plutarch or run a real buisness from home this is another useless luxury.

And what is worse is that we all know these are useless luxuries, but you just have to have them to be a successful member of the middle class. If everyone else has useless luxuries and you don't, well we can't have that now can we? The fact is most people should have those two rooms turned into bedrooms and not have built that second story in the first place and thus spent 25% less on their mortgage.

Eh, I personaly like small cozy places (though I will pay for a neighborhood I like). It all comes down to expectations.

[Krill]

Originally posted by Rufus T. Firefly


True. But that does mean that, for an ordinary middle-class family, the choice is between buying a house at teh outer edge of their means (if not beyond) or being in the vanguard of gentrification, neither of which used to be what was meant by "American Dream." I think that's really what intrigues me about teh article; that it may be that we, as a nation, should be scaling back our expectations regarding home ownership -- it may be, for example, that my daughter's generation should imagine that owning a home will eb for them the exception, not the rule -- but nobody has the cajones to say that.

I think you're right, but renting will have to become significantly cheaper on this side of the pond to justify not buying a house.

[Rufus T. Firefly]

Originally posted by rah
I don't see much difference as the old days.
In the past, you were always told to start with more than you could afford because in 5 years you'd be able to and in 10 years you'd be laughing about it and in 20 years your car payments would be higher than your mortage.

The difference is that these days, most people can't rely on a continuous increase in their income. More are staying steady or going backwards, despite duel incomes.

The other difference is that your model is predicated on a fixed-interest mortgage, which the author (who, yes, is a credit pimp -- love that term!) claims fewer and fewer people can qualify for. I've no idea if he' s right.

Otherwise, very interesting stuff, everbody! I'm trying to follow this sall more closely, since I'm likely to be buying something in a couple of years, whhen I get back from Afghanistan. So thanks!

[pchang]

In olden times

a 20 year mortgage was standard.