Author Topic: From the NYTIMES: 100K income, "can't afford" a $200K house  (Read 9095 times)

monstermonster

  • Magnum Stache
  • ******
  • Posts: 4307
  • Age: 32
  • Location: The People's Republic of Portland (Oregon)
From the NYTIMES: 100K income, "can't afford" a $200K house
« on: October 04, 2015, 11:15:57 AM »
1) This article is full of all sorts of propaganda about why owning a house it the "best investment" you can make and indications that clearly renting is sub-par
2) $800 for preschool (!!)
3) $750 in payments for two cars

http://www.nytimes.com/2015/06/24/business/economy/more-americans-are-renting-and-paying-more-as-homeownership-falls.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3519
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #1 on: October 04, 2015, 11:34:00 AM »
Additionally, I see other things he could change:

- Apparently he has one child in school, one in preschool -- but they have their own rooms in a rental.
- He's still paying back student loans.
- They have a Shih Tzu, not a cheap dog. 
- He has "sketchy" credit.

I think he could afford that house, if he were willing to rearrange some financial priorities. 

The article says half of all renters in New Jersey are paying more than 50% of their income to rent and utilities -- why would anyone enter into that deal? 

Sofa King

  • Bristles
  • ***
  • Posts: 381
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #2 on: October 04, 2015, 11:54:38 AM »

The article says half of all renters in New Jersey are paying more than 50% of their income to rent and utilities -- why would anyone enter into that deal?

Because alot of them have no choice and are living pay check to pay check. It's either that or be homeless. 

monstermonster

  • Magnum Stache
  • ******
  • Posts: 4307
  • Age: 32
  • Location: The People's Republic of Portland (Oregon)
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #3 on: October 04, 2015, 12:01:00 PM »

The article says half of all renters in New Jersey are paying more than 50% of their income to rent and utilities -- why would anyone enter into that deal?

Because alot of them have no choice and are living pay check to pay check. It's either that or be homeless.

To be fair, I'm not living paycheck to paycheck by any means, but the rental market in my city is so crazy that even at a middle class wage, most of the shitty studios here are 50% of my post-tax income. I share a shitty 2 bedroom and still pay nearly 40% of my income.

justajane

  • Handlebar Stache
  • *****
  • Posts: 2147
  • Location: Midwest
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #4 on: October 04, 2015, 12:24:00 PM »
1) This article is full of all sorts of propaganda about why owning a house it the "best investment" you can make and indications that clearly renting is sub-par
2) $800 for preschool (!!)
3) $750 in payments for two cars

http://www.nytimes.com/2015/06/24/business/economy/more-americans-are-renting-and-paying-more-as-homeownership-falls.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news

We were paying $400 for three days of preschool in a LCOL area and in a disadvantaged school district. $800 in the Northeast doesn't sound insane. Search MMM threads and you will find people paying a similar rate or even much more. I guess you could argue preschool is optional, but it has become the norm. But yeah, the car payments are a face punch.

soupcxan

  • Stubble
  • **
  • Posts: 181
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #5 on: October 04, 2015, 03:39:11 PM »
2) $800 for preschool (!!)

Is there free preschool where you live? Because it's $1,000/mo here. And with two working parents, what is the alternative?

nereo

  • Senior Mustachian
  • ********
  • Posts: 11318
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #6 on: October 04, 2015, 04:00:45 PM »
what bugs me most about this article is the author's (DIONNE SEARCEY) insinuation that home ownership is somehow declining horribly.  To back up that claim, she includes a graph of homeownership rate that goes all the way back to 1990 (gasp!).  We are at where we were from about 1990 to 1995, where ~64% of families own their home.  The peak?  the ludicrous period from 2004-2007, aka "the mortgage bubble".  Even then home ownership was only ~5% higher than it is now, and that was during a period when we had a huge number of people with mortgages that had absolutely no means to pay for their mortgage (e.g. "NINA" mortgage loans)

Look back to the 1960s and... guess what?   The home  ownership rate today is about what it was for most of the 60s, 70s, 80s and half of the 90s.
https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States#/media/File:Historic_U.S._Homeownership_Rate,_as_of_2014.svg

The entire premise of this article is horrible. 

mm1970

  • Walrus Stache
  • *******
  • Posts: 7139
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #7 on: October 04, 2015, 05:59:25 PM »
$800 for preschool is cheap.

I know it depends on where you live, but I assume that NJ is going to be like Coastal So Cal in that situation.  I paid $800 a month 6 years ago.  When  my 3 year old hits preschool next year, I shudder to think of the price tag.

FYI, my in home daycare is $320 a WEEK and I'd be hard pressed to find cheaper in this area.  So even if I  managed to find preschool at $1100 a month, I'd be saving money.

Generally the only preschool less than a grand are associated with a Christian church.

monstermonster

  • Magnum Stache
  • ******
  • Posts: 4307
  • Age: 32
  • Location: The People's Republic of Portland (Oregon)
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #8 on: October 04, 2015, 06:11:07 PM »
2) $800 for preschool (!!)

Is there free preschool where you live? Because it's $1,000/mo here. And with two working parents, what is the alternative?

I (clearly) do not have kids but actually there is free pre-school where I am provided as pre-kindergarten as part of the public schools.

hdatontodo

  • Bristles
  • ***
  • Posts: 287
  • Location: Balto Co, MD
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #9 on: October 04, 2015, 07:40:13 PM »
Balto suburbs. My kid went from a $750/mo daycare to an over $750/mo preschool. Also, he had to be in preschool an extra year since he was born in December. Some of his friends born earlier in the year started kindergarten a year before he did.

Once he started public kindergarten, not having to pay was wonderful.

Making Cookies

  • Handlebar Stache
  • *****
  • Posts: 1648
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #10 on: October 04, 2015, 07:45:11 PM »
~$500 a month for quality daycare and that is potentially ~6AM to ~6PM if you needed it. We used it from ~7:45AM to ~5PM back in the day.

if you want to hire someone's grandmother who keeps 4-5 kids at her house all day and feeds them lunch on her dime - it gets even cheaper. The problem is when she's sick, you have no daycare to rely on for a day. I know someone who used a lady like that. They loved her care.

Flyover states...
« Last Edit: October 05, 2015, 12:22:11 PM by Joe Average »

MrMoneyMaxwell

  • 5 O'Clock Shadow
  • *
  • Posts: 65
  • Age: 37
  • Location: Colorado
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #11 on: October 05, 2015, 10:45:32 AM »
Even with Denver's insane housing market, we're renting a 2br/2ba for what amounts to $100 more than a mortgage for a house. We just moved to the area, but I get the sense from some of my neighbors that they are bouncing around different apartments or getting evicted.

Also, a shitzu does not need a "yard to run in", my cattle dogs need a yard to run in.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2299
  • Location: EastCoast
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #12 on: October 05, 2015, 11:02:46 AM »
2) $800 for preschool (!!)

Is there free preschool where you live? Because it's $1,000/mo here. And with two working parents, what is the alternative?

I (clearly) do not have kids but actually there is free pre-school where I am provided as pre-kindergarten as part of the public schools.

I was curious so look around now at my local elementary school. They say they have an extremely limited number of spots for pre-k program. I think somewhat low-income focused too, but not sure. So yeah, our son probably wont get in there. At his current daycare the charge for pre-k (3-4 y.o.) is $1,300/month, and that's quite a bit less than we pay now.. Only $800 sounds fantastic!

I also learned that the "full day" kindergarten ends at 3:30. I guess me or my wife will have to go to work at 6 am then.. Well at least we'll have an extra $1000..
« Last Edit: October 05, 2015, 11:05:49 AM by Scandium »

MgoSam

  • Magnum Stache
  • ******
  • Posts: 3643
  • Location: Minnesota
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #13 on: October 05, 2015, 11:10:18 AM »
It does sound like they should get their house in order. Pun intended.

mm1970

  • Walrus Stache
  • *******
  • Posts: 7139
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #14 on: October 05, 2015, 01:13:27 PM »
2) $800 for preschool (!!)

Is there free preschool where you live? Because it's $1,000/mo here. And with two working parents, what is the alternative?

I (clearly) do not have kids but actually there is free pre-school where I am provided as pre-kindergarten as part of the public schools.

I was curious so look around now at my local elementary school. They say they have an extremely limited number of spots for pre-k program. I think somewhat low-income focused too, but not sure. So yeah, our son probably wont get in there. At his current daycare the charge for pre-k (3-4 y.o.) is $1,300/month, and that's quite a bit less than we pay now.. Only $800 sounds fantastic!

I also learned that the "full day" kindergarten ends at 3:30. I guess me or my wife will have to go to work at 6 am then.. Well at least we'll have an extra $1000..
Many schools have after school programs that go later.  For kinder, at our school, that's $375 a month (kinders get out at 2 pm, except for one day a week it's 1:30 pm)

Some local childcares and churches provide care too, where they pick up the students and take them to their facility

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4793
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #15 on: October 05, 2015, 01:29:47 PM »
2) $800 for preschool (!!)

Is there free preschool where you live? Because it's $1,000/mo here. And with two working parents, what is the alternative?

I (clearly) do not have kids but actually there is free pre-school where I am provided as pre-kindergarten as part of the public schools.

I was curious so look around now at my local elementary school. They say they have an extremely limited number of spots for pre-k program. I think somewhat low-income focused too, but not sure. So yeah, our son probably wont get in there. At his current daycare the charge for pre-k (3-4 y.o.) is $1,300/month, and that's quite a bit less than we pay now.. Only $800 sounds fantastic!

I also learned that the "full day" kindergarten ends at 3:30. I guess me or my wife will have to go to work at 6 am then.. Well at least we'll have an extra $1000..
Many schools have after school programs that go later.  For kinder, at our school, that's $375 a month (kinders get out at 2 pm, except for one day a week it's 1:30 pm)

Some local childcares and churches provide care too, where they pick up the students and take them to their facility
I looked around here.  Even if I get my daughter into the free pre-K, with afterschool care costs and summer care I save about $1000 over the year from daycare to pre-school (about $11000 to $10000). 

JR

  • Stubble
  • **
  • Posts: 129
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #16 on: October 05, 2015, 08:40:17 PM »
My son's preschool teacher is his mother with a graduate degree and she "costs" a lot more than the figures stated here. :p She can still work part time so it's only costing us about $45,000 per year.
« Last Edit: October 06, 2015, 08:16:10 PM by JR »

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2299
  • Location: EastCoast
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #17 on: October 06, 2015, 06:56:52 AM »
Many schools have after school programs that go later.  For kinder, at our school, that's $375 a month (kinders get out at 2 pm, except for one day a week it's 1:30 pm)

Some local childcares and churches provide care too, where they pick up the students and take them to their facility
I looked around here.  Even if I get my daughter into the free pre-K, with afterschool care costs and summer care I save about $1000 over the year from daycare to pre-school (about $11000 to $10000).

We're still a ways away from that, but yes I have seen there are pre-/after school programs around here too. The school system here is pretty good so I think  they should be ok. My work is flexible and if at that point I can arrange so I leave at 3pm that'd be fine with me..

The summer care is a whole other issue. Got a catalog from the county, and they all seem to be $200-400 per week for most of them. So probably still $1000/month then too. But at least the rest of the year is free public school! And many of the programs seem pretty cool; Lego robotics, science class, music. I didn't do any of this stuff when i was a kid! Just a lame soccer camp which I hated.. Boy scout camps were ok.

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3519
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #18 on: October 06, 2015, 08:08:56 AM »

The article says half of all renters in New Jersey are paying more than 50% of their income to rent and utilities -- why would anyone enter into that deal?

Because alot of them have no choice and are living pay check to pay check. It's either that or be homeless.
They have no choice but to remain in an unaffordable area?  No option to combine housing with family members?  No choice to live in a more reasonably priced area and commute to work?  Half the renters in the state are unable to make such a thing happen? 

Any reasonable person would see that you'll never "get ahead" if you're spending that much on housing.

Off-topic:  Alot is not a word.  Allot is a verb meaning to divide goods.  Sorry, it's a pet peeve of mine. 

soupcxan

  • Stubble
  • **
  • Posts: 181
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #19 on: October 06, 2015, 02:23:16 PM »
Half the renters in the state are unable to make such a thing happen?

62% of Americans have <$1k in their savings account, so...yes, they are unable to make it happen.

http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06

nereo

  • Senior Mustachian
  • ********
  • Posts: 11318
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #20 on: October 06, 2015, 03:14:47 PM »
Half the renters in the state are unable to make such a thing happen?

62% of Americans have <$1k in their savings account, so...yes, they are unable to make it happen.

http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06
This is one of those metrics that's designed to shock people and generate clicks but really isn't all that meaningful.  It looks only at savings accounts - and excludes available credit, cash flow, retirement accounts and taxable investment accounts.  The reality is that a lot more than 62% of Americans are able to make it happen.  Do you really believe that ~68% of senior citizens have less than $1,000k of total net worth? No - it's how much is in their checking account at the moment they were surveyed.

Heck - I've got less than $1k in my savings account.  I also have a suite of investments, available credit and a cash surplus each month.

MgoSam

  • Magnum Stache
  • ******
  • Posts: 3643
  • Location: Minnesota
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #21 on: October 06, 2015, 03:28:31 PM »
Half the renters in the state are unable to make such a thing happen?

62% of Americans have <$1k in their savings account, so...yes, they are unable to make it happen.

http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06
This is one of those metrics that's designed to shock people and generate clicks but really isn't all that meaningful.  It looks only at savings accounts - and excludes available credit, cash flow, retirement accounts and taxable investment accounts.  The reality is that a lot more than 62% of Americans are able to make it happen.  Do you really believe that ~68% of senior citizens have less than $1,000k of total net worth? No - it's how much is in their checking account at the moment they were surveyed.

Heck - I've got less than $1k in my savings account.  I also have a suite of investments, available credit and a cash surplus each month.

Yup, I generally don't keep much in my savings account, but I have a load of methods of generating cash should I need it in a pinch. Should this situation change, I'll make sure to keep a greater cash reserve.

honeybbq

  • Handlebar Stache
  • *****
  • Posts: 1316
  • Location: Seattle
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #22 on: October 06, 2015, 05:28:54 PM »
1) This article is full of all sorts of propaganda about why owning a house it the "best investment" you can make and indications that clearly renting is sub-par
2) $800 for preschool (!!)
3) $750 in payments for two cars

http://www.nytimes.com/2015/06/24/business/economy/more-americans-are-renting-and-paying-more-as-homeownership-falls.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news

My kid's preschool/daycare was $1650/month. But that was full time daycare with a preschool curriculum.
« Last Edit: October 06, 2015, 05:30:38 PM by honeybbq »

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3519
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #23 on: October 06, 2015, 08:48:14 PM »
Half the renters in the state are unable to make such a thing happen?

62% of Americans have <$1k in their savings account, so...yes, they are unable to make it happen.

http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06
I don't believe it.  Oh, I believe the thing about savings, but I don't believe that's what keeps people from making better decisions.  I moved multiple times when I was young and dirt poor.  I found new jobs and "moved up in the world".  I think it's a matter of just being unwilling to be resourceful and seek out a better option, and it's a matter of not being willing to make the long-term decisions and sacrafices that lead to success.

Jack

  • Magnum Stache
  • ******
  • Posts: 4734
  • Location: Atlanta, GA
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #24 on: October 06, 2015, 09:36:03 PM »
Half the renters in the state are unable to make such a thing happen?

62% of Americans have <$1k in their savings account, so...yes, they are unable to make it happen.

http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06
This is one of those metrics that's designed to shock people and generate clicks but really isn't all that meaningful.  It looks only at savings accounts - and excludes available credit, cash flow, retirement accounts and taxable investment accounts.  The reality is that a lot more than 62% of Americans are able to make it happen.  Do you really believe that ~68% of senior citizens have less than $1,000k of total net worth? No - it's how much is in their checking account at the moment they were surveyed.

Heck - I've got less than $1k in my savings account.  I also have a suite of investments, available credit and a cash surplus each month.

I have $11.92 in my savings account.

But that's because all my money goes into my checking account, and then into either my IRA or brokerage account. Considering that even the brokerage sweep account pays comparable (money market) interest to the "high interest" savings, I'm not sure if there's even any point in keeping the latter open.

DragonSlayer

  • Stubble
  • **
  • Posts: 183
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #25 on: October 07, 2015, 09:30:26 AM »

Off-topic:  Alot is not a word.  Allot is a verb meaning to divide goods.  Sorry, it's a pet peeve of mine.



http://hyperboleandahalf.blogspot.com/2010/04/alot-is-better-than-you-at-everything.html

If you've never read Hyperbole and a Half, it's a scream.)

JLee

  • Walrus Stache
  • *******
  • Posts: 5786
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #26 on: October 08, 2015, 01:19:35 PM »
Half the renters in the state are unable to make such a thing happen?

62% of Americans have <$1k in their savings account, so...yes, they are unable to make it happen.

http://www.marketwatch.com/story/most-americans-have-less-than-1000-in-savings-2015-10-06
This is one of those metrics that's designed to shock people and generate clicks but really isn't all that meaningful.  It looks only at savings accounts - and excludes available credit, cash flow, retirement accounts and taxable investment accounts.  The reality is that a lot more than 62% of Americans are able to make it happen.  Do you really believe that ~68% of senior citizens have less than $1,000k of total net worth? No - it's how much is in their checking account at the moment they were surveyed.

Heck - I've got less than $1k in my savings account.  I also have a suite of investments, available credit and a cash surplus each month.

Yep...savings accounts are a really bad place to store money, IMO.

Mine lives in Vanguard. :)

Abe

  • Handlebar Stache
  • *****
  • Posts: 1265
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #27 on: October 08, 2015, 07:46:26 PM »
I don't have a savings account either. Just keep money in the checking account! I think most people are held hostage by the circumstances of their jobs rather than actual lack of money to move somewhere. The other possibility is people are really attached to their stuff and think it's necessary to haul it with them. In reality that's probably not true behind clothes, some food and a few cooking implements. I know it's possible because I've done it but most people haven't tried.

Helvegen

  • Pencil Stache
  • ****
  • Posts: 542
  • Location: PNW
Re: From the NYTIMES: 100K income, "can't afford" a $200K house
« Reply #28 on: October 15, 2015, 10:57:24 AM »
I don't have a savings account either. Just keep money in the checking account! I think most people are held hostage by the circumstances of their jobs rather than actual lack of money to move somewhere. The other possibility is people are really attached to their stuff and think it's necessary to haul it with them. In reality that's probably not true behind clothes, some food and a few cooking implements. I know it's possible because I've done it but most people haven't tried.

Could also be all of their family/support network is in that area and it can be hard to leave that all behind. It is a lot of people's hill to die on.

Some people work in such niche positions that there are only a handful of places they could find another job in their field, most in VHCOLAs.

I am doing great now because my husband and I make decent money and pay way undermarket rent. But if we lost this rental, we would have to move because we have been priced out. We like it here, but we are not going to two income trap ourselves to be able to live here. We have no family here and our jobs can be found basically anywhere with a decent sized MSA. Moving for economic reasons isn't that terrible of a proposition. But I can see how some people feel trapped where they are.