Goodbye Middle Class; Hello House Poor

[ckramer]

For the investment property market, I really wonder how many people will stick around to pay the insurance, property taxes and mortgage when the price is going down. Calling them homeowners is a joke. If you really own something it means it is paid for and it can¡¯t be taken away!

Only the upper class can really afford what was once a middle class house unless, of course, you are willing to ¡°take cash out of your house¡± just to pay for living in it. When housing prices cool down but the cost of living keeps going up, the ¡°phony equity¡± in the house will quickly vanish. When that occurs, today¡¯s buyers will be literally eaten alive by housing costs. So, when it comes to class, the Middle will lose it and truly become the House Poor.

link

[Nay]

1. A friend of mine and her husband are buying a new house and when

I heard their mortgage payment I almost dropped dead. $3,200 a month. Holy shit. Just holy shit.

[CrispyQ]

2. Gasp!!

I have a freind who pays $2400 & I think that is a lot!

Do they make lots of money or did they go for creative financing -- or both?

[ProudDad]

5. That would be cheap where I live.

We're looking at $3500+/month for a house in the war zone in Oakland, CA.

The cheapest house here is over $500,000.

[adarling]

3. this is happening alot in texas

people are buying these huge houses and are going bankrupt doing it. These people are dumb for spending too much, but every american should have the right to a good home. Its just sad that peopleare doing this now and just making it easier for them to be poor.

[The Velveteen Ocelot]

4. A friend in the real estate biz

told me that people really want these huge suburban McMansions, and will buy the biggest house the lender will qualify them for. Then, because they have to spend every spare nickel on the mortgage, they can't afford to furnish the place, so they're living in this huge, nearly empty house furnished with their crappy old college furniture. But it looks great from the outside. Unfortunately, if somebody gets sick or loses their job, they can't possibly keep up the payments.

[tamtam]

6. I often wonder

why people do this to themselves. I used to work with a woman who worked two jobs just to buy furniture for her home. She drove an hour to work everyday and she just got married. She never saw her husband he also worked. Their mortgage payments were $2100 a month. She used to brag to us all the time about her wonderful house. A wonderful house that she will never enjoy because she works two jobs.

In a way I can understand her. Everyone wants the best and it seems that we live in a society where everyone is trying to keep up with everyone else. I don't think it really matters in the long run though. If you cannot afford it then evidently you will have to give it up.

[CrispyQ]

7. We have been conditioned to believe that "the best"

equals material wealth. I've worked with many people like the woman you know, who work mega hours to support their over-the-top life style. I wonder why it is so important to have such a big house when all they do is sleep in it. Some of them hardly ever use the kitchen as they go out to eat almost every meal.

As my husband & I have enjoyed increasing income, we chose to pay off our small house instead of ramping up our life style. He was laid off last November (a week after Shrubbish was 'elected') & we are able to maintain our life style on my part time wages. Free time is a wonderful thing! I value it so much more than a big house or nice furniture.

The essence of our lives is time. We could go a long way to curing many of the ills of our society if we would realize & value that. When we are all breathing our last breath I doubt we will be thinking, "I wish I had lived in a bigger house." Instead, we will be thinking, "I wish I had more time!"

[Jeff In Milwaukee]

8. Don't know how old you are...

but you're wise beyond your years. While moderation has it's own rewards, you're clearly reaping the personal and financial benefits of the right lifestyle choices.

[CrispyQ]

12. *blush*

Thank you. But what you call wise I call practical. I've done the paycheck to paycheck thing & it isn't fun. Also, when I was very young I worked part time for many years. I remember how much I enjoyed the free time. It has been a joy to finally go back to that!

BTW, the saying "time is the essence of our lives" was in "Gone With the Wind." In one of the first scenes there is a sundial that has that saying on it & the truth of it always stuck with me.

:hi:

[earth mom]

15. You've got the right attitude...

and it's pretty much how I've tried to live my life for the last 15 years. Some people refer to it as Voluntary Simplicity. I don't need to have the latest or greatest or expensive clothes/shoes/purses/jewelry to be happy. I'd much rather find something cool at a thrift store or flea market or a garage sale for a fraction of the price.

In addition, I keep telling Dh that we could make a decent living working for ourselves (hand made items) and have much more free time together as a family, but stubbornly he's worked 10 years at one low paying (working poor) job after another before landing a secure and very good paying job a year ago. He likes the stability and security of the work world...and I have to agree that the benefits aren't to be sneezed at. Yet, I don't doubt that we could make it without that job and our lives would probably be richer (though not monetarily) for it.

The bottom line is that it just seems so silly to wait so long to retire to be able to enjoy life. Life is way too short!

[cestpaspossible]

16. That's why I took my twenties off.

You are better off being broke and retired in your twenties than rich and retired in your seventies.

[Name removed]

9. Deleted message

Message removed by moderator. Click here to review the message board rules.

[GreenPartyVoter]

10. Welcome to DU

[MsTryska]

11. thanks for the Prudentbear link......

I am int he midst of reading this book by John A Rubino:

http://www.amazon.com/exec/obidos/ASIN/1579548709/ref=pd_sxp_elt_l1/002-2665659-2286414



i highly recommend it for anyone trying to wrap their head around the housing bubble - very easy to read and lots of good info.

he mentions the prudentbear website in his reading and i had made a mental note to check it out. Now i have the link. :)

[WinkyDink]

13. market value

I found it amusing recently to read of people upset at missing the "bargains" of the 90's. HAHA! Excuse me?! The bargain years were the 70's maybe stretching to about 1984, at least here in eastern PA (aka, suburban Jersey-from-I78 and NYC-from-I80). From 1985 to 1987 the model of the house I'm in went from $164,000 to $184,000 (when we bought, dang it!), and now the house across from me is going for $320,000.
The local paper reported the AVERAGE price of a new 4-BR home in my greater local area is $416,000.
I don't get it. What do all these people do for a living?

[MsTryska]

14. thank you......I've been wondering the very same thing for a while....

I didn't know there were so many 6 figure earners out there.....


but that book i mentioned above explains what's going on - it's not the old-fashioned mortgage lending you and i maybe thinking of.

and i think i'm stuck on the 1980s when i valuate houses just by looking at them. I'm always several 100K shy of what they are going for, it seems.