patrick.net

Middle class is not going away, merely normalizing. In China, only 10% are middle income, what should be the % in USA? Definitely not 99.99%. Was an anomaly.

Why not 100% ?

SFace says

Late 2008/2011 was an opportunity of a lifetime

Opportunity of a decade. If a lifetime, then I'm jumping off a cliff. There was not much special about those years, and only the fed's printing allowed the 'recovery' that hrh is tired of hearing about. It's bullshit and you all know it.

hrhjuliet says

Ummm, okay? So, back to topic, generation x should wait until prices go down to buy and let the boomers sell, buy, trade-up amongst themselves.

We are stuck waiting until the boomers trade with themselves and then die.

Ceffer says

Just kill the extra 3 biliion people that have swarmed the earth over the last several decades, and things will go back to what they were like in the 60's.

Killing all or most of the people is the only solution. That, or just suck it up that things change.

Do we have to kill MillXY? Why not the boomers? That would decrease occupancy, demand, and thus prices.

Call it Crazy says

JH says

We are stuck waiting until the boomers trade with themselves and then die.

Trading between ourselves is the only thing possible now because the Gen X's and Gen Y's can't get approved for mortgages to purchase anything...

Aw c'mon, we were having a nice discussion on the other thread. haha

But please feel my pain. You know my credit score is very high. I have never had problems qualifying for anything. One late payment to Discover in college is all that ever marred by credit as is long gone. But I can't qualify for a mortgage because of the price. (Of course I could move, but I live in a traditionally middle to upper middle class area of north OC, so I'm not out of place.) If everyone and their brother with no credit, no income, etc, didn't get loans in 2005, prices would not have skyrocketed and partially crashed, the fed wouldn't have started to print (so much) money, and I would be able to afford a home in my area as my wife's middle class parents and aunts did in their time. To make twice median income and have a credit score over 800 and still NOT qualify for middle (to upper middle) class housing in an area full of middle (to upper middle) class. Ouch! That hurts.

Call it Crazy says

JH says

Do we have to kill MillXY?

Not all of them, just the useless ones...

You have a FICO limit on that one? I'm thinking 740 but that might exclude most anyone I know......

Call it Crazy says

I've also made the move further away from my "target" area to buy "affordability" (which I did this go around) versus "neighborhood" (which I did in the past).

Comparing the two, it took me a bunch of houses to finally "smarten" up, but stressing out trying to make that maximum mortgage payment in the past really SUCKED!!!

Now, I am a little further away from the target area we wanted to live in, and her commute is a little bit longer, but having an easily affordable mortgage payment (because we bough a less costly house) makes us sleep A LOT more peacefully at night!!

A few extra minutes of driving is WELL worth it in the big financial picture!! You should SERIOUSLY consider looking a little bit further out in an affordable area... Trying to "Keep up with the Jones" ain't worth it in the big picture..... It's YOUR life to enjoy!!!

In other words, scale down to what you can afford.
All I hear is "Homes are not affordable, homes are not affordable" Well your fellow bear, Call Crazy just showed you how to make it affordable.
Moral of the story....down grade to what you can afford, or remain without a home.
Sounds mean? sure, but it's the truth.

The truth is the economy has been getting worse since the 1970's. It just didn't seem that bad because the women went to work, creating the double income household. And, borrowing increased (creating another form of "income") due to generally declining interest rates over that 45 year period, which led to increasing housing prices, which people could take loans out against.

Everyone who can think objectively is slightly annoyed that house prices being high or a bubble helps no one.

The capital to buy these inflated houses came not from USA alone, it was worldwide money seeking interest that bought the MBS=bonds made up of American mortgages. Only American mortgages are made into MBS, no other country.

Once a guy has owned a house and liked the bubble value because he feels rich, his thinking is clouded.

The entire system enriched many (builders, loan originators, MBS bundlers, house flippers, etc.) but also put huge burdens on people to buy houses. No one has been able to slow down house price inflation.

Bullshit says

due to generally declining interest rates over that 45 year period, which led to increasing housing prices, which people could take loans out against

This is the most frustrating part. What happens when interest rates drop? Home prices go up. What happens when more members of the family work? Home prices go up. Making a monthly payment easier to achieve only makes the asset more expensive. I feel like a fucking hamster.

JH says

Bullshit says

due to generally declining interest rates over that 45 year period, which led to increasing housing prices, which people could take loans out against

This is the most frustrating part. What happens when interest rates drop? Home prices go up. What happens when more members of the family work? Home prices go up. Making a monthly payment easier to achieve only makes the asset more expensive. I feel like a fucking hamster.

Prices don't have to go up if they build more homes to match the increase in demand.

Call it Crazy says

Sometimes that's what it takes, and you should seriously consider that... I've been on both sides of the argument, trying to squeeze every out every last dollar to qualify at the maximum amount we could afford and getting the largest mortgage possible..

Call it Crazy says

Now, I am a little further away from the target area we wanted to live in, and her commute is a little bit longer, but having an easily affordable mortgage payment (because we bough a less costly house) makes us sleep A LOT more peacefully at night!!

Thank you for the ideas and experience. I do wonder why people would commute (in my case to Riverside or Ontario) to afford a better place. Then they are stuck commuting an hour each way, and I can't imagine a better life. (In fact I have commuted in the past, and I will never do it again (45 min)) Your change must have been smaller. Unfortunately, where I am, there is only about a 10-20% premium in my city compared to nearby (20 min radius). So I would save a little by moving, but I would lose in the school district. While I did grow up in a shitty school myself, that meant I had to do a lot more work to catch up by the time I went to college. I want to spare my kids that. We have a sweet deal now: I work FT 10 min drive (or 20 min bike) from work, and wife (PT) is same. And she can walk the kids to school. It's a good gig, and we would lose by moving away. Once the "illnesses" grow up, we will have more flexibility.

I'm sure it's tiresome listening to people in CA complain when all we have to do is move. But we are discussing affordability. My neighborhood has a white trash vibe. There is nothing up and coming about it. No doctors and lawyers itching to get in. Yet, you need $400 to $600k for 900-1200 sf. I could move to shittier schools outside my city, double my drive, and then 1) pay $50-100k less and 2) have my kids observe daily fights in school. There is nothing better than lower middle class around, and yet even there the price is over $300k.

At least for now the plan is to keep renting, keep reading patnet, and hope the bubble pops. Saving 10-20% by moving further away vs saving 30-40% when Janet Yellen's saggy teet runs dry... I am hoping for the latter. And if somehow the latter never happens, and the current pricing level is here to stay, then I'll get the fuck out of this state!

In the long run, we might just stay in a 900sf so I can sleep at night with a "low" payment. However, $400-600k for that is NOT happening! But I like the idea of not paying what I could even qualify for. Affordable means something different to me and my kids than it does to the banks.

Strategist says

Moral of the story....down grade to what you can afford, or remain without a home.

Sounds mean? sure, but it's the truth.

Fuck off. Homes are a manipulated market. There is nothing real except a couple thousand dollars worth of wood and stucco. If you don't see a fundamental problem with $400 for 900sf...

clambo says

Once a guy has owned a house and liked the bubble value because he feels rich, his thinking is clouded.

Strategist says

Prices don't have to go up if they build more homes to match the increase in demand.

Outstanding strategy in 2003-2007. Worked like a charm.

JH says

Strategist says

Prices don't have to go up if they build more homes to match the increase in demand.

Outstanding strategy in 2003-2007. Worked like a charm.

How would you bring down home prices?

Strategist says

How would you bring down home prices?

Build a time machine, not bailout banks, stop printing money, raise interest rates to historically normal levels, and don't write stupid ass loans.

If you want to be socialist, create disincentives for non owner-occupied housing.

If housing were simply supply-demand and there was no fed intervention, it would be wildly different and these solutions wouldn't do much.

hrhjuliet says

Housing "Recovery"

Sure. Been there before few years back. Overbidding frenzy got far only to certain extent and most people here know what happened next.

bubblesitter says

. Overbidding frenzy got far only to certain extent and most people here know what happened next.

SFBA: House prices decline drastically, many foreclosures, recover spectacularly and then back to overbidding frenzy.

Lesson learnt: Be ready to buy

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

hanera says

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

Many immigrants tell me coming to America is the best thing that ever happened to them. Some Middle Eastern students from my college days did not like America, but even they did not want to leave.

jazz music says

I disagree with you. I get your point and even agree with it, but all that adds up to not a free market. It is a market with the regulation set to benefit the elite. The elite may regard it as freedom, but 99% of us regard it as license to kill. E.g. some will die when they could live if red states, who already take more than they give states would allow medicaid expansion instead of trying to close the emergency clinic loophole by which the poor sometimes do gain access to medical treatment if their case is sufficiently dire.

Nice post. As I posted earlier, I would think that a democratic free market might behave differently, but as you outlined, we do not have a government that represents the majority of the people.

Strategist says

Remember.......there is a reason no one wants to leave America.

Uh. Ok. Sure there are more people from 3rd world that want to come here, but there are plenty who leave and want to leave.

hanera says

Despite some flaws, America has the most fair and equitable system.

Surely you've seen this article by now:

http://www.nytimes.com/2014/04/23/upshot/the-american-middle-class-is-no-longer-the-worlds-richest.html?_r=0

After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

Catch that "after tax" statement?

Reason 1: Education Problems in USA
Reason 2: Cash hoarding by corporations in USA
Reason 3: Aggressive redistribution of income in Canada

America's stance:

Solution 1: Cut funding and make sure all teachers drive Pintos
Solution 2: Inject more money into the system, because, you know, corporations are people, my friend
Solution 3: SOCIALISM!!!!!!!!!

Result:

After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

hanera says

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

You need to get out more.

bob2356 says

hanera says

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

You need to get out more.

Btw, I was not born in USA and has been in USA for less than 20% of my life.

hanera says

Btw, I was not born in USA and has been in USA for less than 20% of my life.

Immigrants don't want to leave. They came here for a reason. But some of us who have been here for multiple generations are sick of the bullshit. Happy you found something better. Truly. But we are not satisfied, because we see it deteriorating.

hanera says

Lesson learnt: Be ready to buy

Abslolutely. Buy at a foreclosure auction. That's the plan.

JH says

hanera says

Btw, I was not born in USA and has been in USA for less than 20% of my life.

Immigrants don't want to leave. They came here for a reason. But some of us who have been here for multiple generations are sick of the bullshit. Happy you found something better. Truly. But we are not satisfied, because we see it deteriorating.

But maybe this is what America is and always has been all about. The wealthy class allows in enough immigrants to take low- to mid-paying jobs, providing the opportunity of many lifetimes to families (like mine in the 1800s), while siphoning the wealth of the immigrants, their kids, their kids kids, their kids kids kids....... The exceptions are the few who escape that cycle of siphoning and break into the upper class.

Many middle class people like myself are fortunate to not still be from poor European (or insert your continent here) families, but we realize we aren't going anywhere now, the 1% are holding all the wealth they can get their hands on, and the rest of the first world middle class is catching up as it redistributes its wealth.

America, the land of opportunity....just not too much opportunity....

bubblesitter says

hanera says

Lesson learnt: Be ready to buy

Abslolutely. Buy at a foreclosure auction. That's the plan.

If you know how. Be sure don't walk away with a useless piece of paper and no house.

hanera says

bob2356 says

hanera says

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

You need to get out more.

Btw, I was not born in USA and has been in USA for less than 20% of my life.

How exactly does that make the US the most fair and equitable system? Are you saying you've experienced all the other systems.

E-man says

If you know how. Be sure don't walk away with a useless piece of paper and no house.

Again, you seem like you only know what you are doing. But, thanks for the tip. I'll be careful like how you are. :)

jazz music says

Good luck with that.

What's the problem with that? You see all the money behind that penguin?

hanera says

bob2356 says

hanera says

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

You need to get out more.

Btw, I was not born in USA and has been in USA for less than 20% of my life.

Welcome to America!

jazz music says

Strategist says

...there is a reason no one wants to leave America.

Outdated or limited applicability to your statement. America is 17th on the list of preference by citizens. Google it. (was it NY Times?)

Number 16 is Mexico!

Almost all retirees are investigating and following through with life in other countries. This is similarly verifiable, and also through my personal experience talking to other old guys. both on the west coast and on the gulf coast.

Regular people do leave California and they do leave the USA for quality of life.

Illegal immigration to USA from Mexico is a much smaller problem any more because times have changed in USA for the worse.

If Mexico is a happier place then USA, why are we the ones having a problem with illegal immigration and not them?
Would you want to emigrate to Mexico?

bob2356 says

hanera says

bob2356 says

hanera says

Strategist says

Wow Jazz, how can you say that. Remember.......there is a reason no one wants to leave America.

Exactly. In fact, many want to come. Despite some flaws, America has the most fair and equitable system.

You need to get out more.

Btw, I was not born in USA and has been in USA for less than 20% of my life.

How exactly does that make the US the most fair and equitable system? Are you saying you've experienced all the other systems.

It's the opportunities. Starting from day one when they loaded up the Mayflower with people looking for an opportunity to practice their own religion.
They haven't stopped since.

SFace says

Late 2008/2011 was an opportunity of a lifetime.

I would think opportunity of a lifetime was before the scam-laden peak. That gave the opportunity of selling very high if you were willing to live in a house for well less than a decade. So much for settling-down.
2008-2011 is just the most recent better looking opportunity and in the Bay Area it still meant buying a place for 8-10 times an unusually high take-home income.

Now if I was trying to retire and hadn't sold my house during 2004-2006, I'd be really pissed at myself.

Strategist says

It's the opportunities. Starting from day one when they loaded up the Mayflower with people looking for an opportunity to practice their own religion.

They haven't stopped since.

There is a lot more opportunity other places. The problem is that other places require you to have education and/or skills before letting you in. US residency is a lottery for the poor in the third world. Something like 30% of immigrants to the US don't even have a high school diploma and 60% don't have a college degree. You can't get a residency at all in other first world countries without a hs diploma. Most places you can't get residency without a college degree or a specific recognized skill. So the US is the only option if you're poor and uneducated. They come here because they can.

Jazz, check this out. I don't know how the East India Company comes into the picture.

http://stufffromthelab.wordpress.com/2007/11/12/why-did-the-pilgrims-come-to-the-new-world/

Who writes stufffromthelab? I didn't see an "about" section or any other way to determine whether the writer had studied the subject with any rigor.