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A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor'
(www.businessinsider.com)
this post was submitted on 14 Aug 2024
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Yeah. I hate the negativity of the Internet, but this is what "life" (at least in the first world) has become: the negative stories are amplified and the positive ones are short.
In a time of great planetary wealth creation, there is still disparity. One of the richest nations on the Earth has packed all of its citizenry onto the "liveable coasts", into cities.
The couple mentioned in the article tried to move away to a more affordable area with more land (Portland is Urban, and Spokane is rural), and were met with boredom and dissatisfaction.
They both earn collectively $250,000/year, which seems like a lot, and to many people in the U.S who earn the median salary of $52-65,000/year, it is.
They mention not wanting to pay more than 30% of their budget to mortgage costs, which they stated with "$5,000 being 50%", which means their real adjusted income is closer to $120,000, not $250,000.
That's still a lot, but more reasonable to the point of Median Salary Γ 2.
What this average couple demonstrates however, is that the erosion of the "middle class" in the United States is complete: The middle class is dead. They are both educated professionals who are working honestly, and don't make enough money to own a home.
That makes them poor. That makes all of us poor -- and it is a gross failure of the economic system with misplaced incentives and lack of regulations that has led us to this point.
The important thing to remember that this socioeconomic and political atmosphere is wholly contrived.
A better world is possible -- it however requires sacrifices that many people are unable or unwilling to endure. Whatever you are imagining going through your head right now, that's exactly what is necessary to change the first world for the better.
It's not any one individual's fault this happened. The honest working man and woman haven't done anything wrong here, and aren't to blame -- it's precisely because the honest (the just) have enabled the dishonest (the unjust) to continue to run amok, completely unchecked and unchained.
Here is to a better future, and for all the hardship we must all endure, to get there. πΊ
Fuck Private Equity.
For the middle class to be dead, it would have had to be real in the first place, but it has always been an illusion.
There is the owning class and the working class.
If you don't own the means of production (and or a load of property to leech rent off of), you are part of the working class, however uncomfortable that might make someone with the "temporarily embarrassed millionaire" mentality feel. The lie exists in the first place to create and feed that mentality, to ensure at least some working class people consistently vote against their own interests.
The middle class historically was the loyal servants of the upper class, whose expertise was needed to maintain the system. While they worked for wages they were allowed income sufficient to accumulate surpluses, property, and a facsimile of financial security.
In the 20th century it seemed possible for labor organizing to grant the privileges of the middle class to everyone in society. People who were definitely working-class were able to live like the middle class.
In the 21st century the rich seem to be starting to operate on the idea that, not only can labor be broken and the working class cast back down into hand-to-mouth poverty, but that vast numbers of people in the professions have been misclassified as essential loyal servants and they, too, can be cast down into poverty. I think the end state is that the middle class is squeezed down to the size it was during the gilded age and return to being an afterthought rather than the central focus of our politics.
You are literally just describing how the "middle class" is artificial and manufactured, not an actual thing. High earning working class people are still working class people. Making you think otherwise serves the owning class by dividing the working class and pitting us against each other, and providing a fictional carrot (becoming part of the owning class) and the motivation to step over others to try and get it (but you never will, unless you win a lottery, which is a similar carrot) (E: and no, owning one rental, while still problematic because the essence of landlordism is, doesn't quite make someone part of the owning class, but it will make them much more likely to vote for owning class interests because they've been made to believe they're one of them, or will be soon).
The middle class is real and was originally identified by Engels.
The important distinction for Engels is that the middle class's interest are aligned with the upper class. Importantly: they don't think their interest s are aligned. Their interests really are aligned with the upper class. If you're a solicitor or, say, hat-maker to the king in 18th century England, you owe your social position to upper class largess.
In the 20th century the idea developed that with organizing, the middle class lifestyle is attainable for everyone. This began the era of the "broad middle class" or what Piketty called the "patrimonial middle class." Engel's original middle class in this society was the PMC.
In the late 20th and early 21st century the upper class started a class war, first targeting organized labor. But with that deed done they are now focusing on the ranks of the PMC, which they see as bloated, and they're going through and evicting as many people as they can from it.
If you really think some doctor who owns a nice house 2 cars and maybe a rental property has more interests in common with an oil baron (E: or even just their local property mogul) than with the person who bags their groceries, I honestly don't know what to tell you except that you've bought in to one of the many lies (or structures, or systems) manufactured to divide the working class and keep the owning and ruling class in power and assets.
Yes he does and what's more, he knows it! He's not loyal to the baron because he's an idiot. He's doing so because he knows how his bread is buttered.
Yelling at him that he has "nothing to lose but his chains" won't work because he has a lot to lose besides his chains. In fact he probably suspects (rightly) that his rental property, his medical practice and his fancy car will all be torched in the revolution long before anything happens to the baron.
Yes because that doctor is allowed in the door of the ownership class.
They will have accumulated enough capital over their lives that their children will have a huge head start. If their children repeat their parents success, the grandchildren will be ownership class.
Being more privileged members of the working class still doesn't make them part of the owning class.
As long as they aren't stupid, the grandchildren will not need to work. They will be ownership class.
I know a doctor couple with one child and they are nearing retirement. They have about $5m in savings. In 50 years, including inflation losses, that will be $200 million.
I can tell you the doctors I know think that. They think taxes on the high end are to high and I can't convince them the issue is the tax brackets don't go any higher once it gets to around their compensation level (well and its not collected on investment income and such)
Thinking a thing doesn't make it reality, especially when someone (or society at large) is made to think a certain way by and in service of a construct and the people who implement and enforce it for their own benefit.
This so much. Middle class is just working poor.
It's too bad the majority of people are too thick to understand this.
Yeah, that's the problem, not the state and capitalism serving propaganda machine and education system..
Packed is a reaaaaal stretch here. Portland's population density is about 1/10th that of notably the lovely and liveable city Paris.
The USA has "cities" that have so much land dedicated to preventing anyone else from owning a home - all that matters is the landowners and their precious fucking "real estate value". And where it's not houses it's car parks.
Everyone in the US who wants to live in a city could live in a city if we just built the requisite housing. We have too many self preserving leeches who refuse to live next to an apartment complex.
Yeah people in the US don't know what housing density actually looks like.
We got a country with a massive amount of land and just decided that the rich should be able to own all of it and if you don't feel like making money rentinf it out to people you rent it out to cars and demolish the house that was there.
We keep pushing further and further into the suburbs though for massive costs of infrastructure for 3 hour commutes to jobs that pay minimum wage though. It feels so unsustainable when I see our farm land being sold to real estate developers to put a massive parking lot and 12 houses on it.
what gets me is the cost. you would think it would be the cheapest given the efficiency but I know plenty of people like myself who would dearly like to live in a high rise towards the city center but they are insanely expensive.
No one is in a rush to build more housing and lower the cost of all the other buildings they own and rent out.
It should be packed - economics of housing aside. Spread out everywhere is incredibly inefficient in terms of transportation and infrastructure. Look at the San Joaquin valley in California. 1/6th of the land since 1990 after the initial gold rush has been urbanized and they lose 40k acres a year more to urbanization. CA has some of the best farmland in the country and itβs being paved over with housing and the associated businesses.
The American stereotype of the βburbs with a standalone house on a piece of land is destructive and inefficient, especially with the shitty way we build homes for max profit and minimum energy efficiency. The unfortunate downside of everyone living in one area is that housing developers and landlords drive rent and sale prices to the extreme.
It should be packed but it isn't was my point - not sure if it came through there.
You also get such a degradation of the fabric of society when every family lives in their little isolated burb, away from all the consequences of their callous indifference, socially isolated and slowly losing all empathy for their fellow man.
Not to mention the torturous effect on kids and parents - being forced to be an Uber for your child or let them rot in boredom in your basement away from all in person socialization.
And I say that as one who grew up rotting. Suburban Atlanta is hell on earth and you can't convince me otherwise.
As someone who prefers living in actual rural areas, the suburbs are the worst of both worlds. You've got a tiny plot of land you can't do anything with except grow grass, you're as surrounded by people as you are in a city, you have no public amenities and no space for good private ones, and you still have to drive everywhere.
Absolutely - I have farmers in my family. They also hate suburbs. It's neither rural nor urban.
I make just north of 50k a year and my wife just over half that and we bought a house. Yes it was built in 1962, it's not large, it's not in the middle of a large city. But 250k a year? I'd be able to clear my mortgage in under 10 years.
So either the housing market in the US is much more messed up than the one in Europe, or we aren't taking into account that buying a house with compromise is better than no house at all.
It's both, the housing market is a disaster here, but they also could easily buy a house in a less popular, less desirable area. Now maybe that $250K combined salary is also only possible because of the very high cost of living area they live in. I have a friend that was making $150K in CA that had to live in small an apartment with a roommate, and that was nearly a decade ago. It still blows my mind, but that salary simply wasn't a lot in that area.
It amazes me that some folks will just say 'everything is more expensive, raise the minimum wage'. Salaries are going through the roof everywhere and cost is following suit.
If companies would stop counting 150-200% overhead on goods and services for employees' salaries we wouldn't need to all be millionaires in order to get by. If we were to source more stuff locally transport costs would be much lower. If we used our goods longer, tried to get by with less, we could do longer with our cash.
But we all see these hyper rich folks and we want to be like them, live like them, have what they have. It's not a sustainable situation.
Salaries are not "going through the roof", that's ridiculous. Salaries haven't come close to staying in line with the cost of living, and especially house prices, for decades. It's been thoroughly shown companies have been lying about employee compensation being the main cause for inflation and high prices. The real reason is corporate greed.
Is that not what I said? My point was that 50 years ago 75k was more than enough money to buy a house. Salaries have increased, but prices have increased much more because companies charge 150-200% for every unit of currency off labour put into goods and services. Increasing the minimum wage would only fortify this effect unless companies are held accountable for this.
I can't afford a house where i live in a ghetto essentially because they went from $65,000 pre covid to $360,000 post covid.
The houses are old and will need a lot of work which would be fine but I can't scrounge the $30,000 for a down payment without it being higher than that in a few years when (if cause I keep getting laid off every few years) I have the money and even then the monthly mortgage payments are close to $3,000 a month, and god forbid I live in an HOA area which tacks on an extra $1,000 for them.
I make just over $80,000 but when I lose about 27% to tax that's only about 58,000 and then I have to pay for healthcare on top of that and a retirement plan that doesn't matter cause it will never let me retire anyways.
You could pump up your 401k contributions in order to lower your taxes and then take a loan out against your 401k for the down-payment. It's a little risky in that if you lose your job they might request you to pay off the loan but I've had a few coworker do this in order to get a house.
My 401K was completely emptied during covid cause I couldn't survive otherwise especially on $600 a month in unemployment. And I just now have started back into it as of last month after getting a new contract.
So I could make myself extra poor now and lose any liquidity so I can maybe eventually save up to take a loan I will certainly be fucked by on top of my mortgage I still can't afford per month?
Look its an honest idea and thank you but hell no.
This is almost exactly my situation (except I'm stuck at 60k and am perpetually single so no dual income for me) houses were 60k+ for real shit holes and now those same shit holes are 250-300k in flood zones and the worst neighborhoods. It's absolute insanity.
One asshole even had the gall to make a joke, there was a hole in the roof of this glorified shed and they put "airy feel" in the description while asking 295k... It is not in a desirable location whatsoever so it's nothing but pure greed.
Yeah I can't wait to figure out dual income cause it really is the only way to scrounge for even the basic of life in the western world.
But the issue seems to be that the "floor" has become a real cemented thing. Where it was once a sorta vague idea of lowest costs for an area the connection of everything has made it real and now there is no "house" that would dare sell lower than the floor because it should sell for that as agreed upon by an algorithm averaging all costs.
But houses are assets and there shouldn't be such a thing as an asset that goes down in value rich should only get richer cause that's only natural! /s
In terms of healthcare and retirement I feel for you. The 30k down payment is also rough.
My government (Netherlands) gave starters the option to not pay tax on their first house purchase (2% of the sum). Also we have collective health insurance at around 150 a month. We have to pay 375 of all costs if we incur any. Part of our salary is put aside for a retirement premium. At my current employer, we get to decide how aggressively this premium is invested.
So all in all I needed about 6k for the pure costs of buying a house. I live half an hour (bike)/20mins (car) from a city with 200k citizens. The town I live in has about 10k people, three supermarkets, some pet stores, a vet, and some general purpose stores.
I am aware that my situation is actually pretty good, but in my country people my age are also complaining they cannot buy large luxury apartments in downtown Amsterdam or Utrecht with a salary of about 100k a year.
My health insurance is "good" which means I pay $260 a month for the privilege of them getting to do a genetic and full body test on me each year to make sure I won't cost them any money or the price goes up to $380 and then I still get to pay a couple thousand for actual health care when I need it in copays and premiums.
I currently live near a discount grocery store that sells expired food from other grocery stores. That's one of 2 grocery stores near me in a suburb that's also about 30 minutes from the city but also does have way more people in it.
Yeah your situation is great.
my wife has health issues and we pay max out of pocket each year and we pay about 500 a month for it so medical budgeting is 1k a month for us and im worried its going to crack that to higher levels. Oh and as much as we resist it we end up having to do some out of out of pocket spending. I should be giving lectures in europe to all people buying into any kind of privatization of their healthcare.
what year did you buy. I can't imagine even affording a house in the middle of iowa on 75k a year from what I have seen. You have a few kids yeah?
Well first off I'm in the Netherlands, which we have established is a different situation. I bought last year, been on the job market since 2020. I have no kids, no need for any but I couldn't afford kids either. I would suggest folks that would like to buy a house to hold off on having kids until it makes sense financially. I know sometimes it sneaks up on people or whatever but kids are a huge responsibility and they cost a shitload of money and time.
They are nowhere near poor they're just not willing to pay what the market demands.
They are not poor.
I repeat they are not poor.
Not being able to afford things you want doesn't make you poor. They can afford a house. They do not want to pay a high price.
Square the two cuz u look like a fool defending these whiners.
That's why they said 'house poor'. They're not poor, read the article they even talk about it. Being unwilling to pay "what the market demand" is a fun way of saying "were priced out of all reasonable choices".
Cost of living is different everywhere. If they made 250k in Indiana or Ohio, they'd have money to spare and a McMansion to boot. But Indiana and Ohio don't pay 250,000 for a lot of things, the salaries don't reach that here for a VAST majority of upper level earners in the state. Take into account cost of living and average wages in a location before you get shitty
In the 70s this couple could have easily owned two houses.
Sure, they're not poor compared to someone in an undeveloped region of Africa, but they are absolutely poor compared to their parents and compared to what is right/just/fair.
And 30% is a sound limit for what you ought to be spending on your mortgage. This isn't them whining about price, it's them recognizing that it's not financially responsible to wage-slave themselves for the sake of buying a home.
Thank you.
It's entirely possible that after about 30% effective tax, they're left with $175K net and set aside $55K for savings (retirement, college, etc).
Maybe not one individual, but the relatively small number of individuals who are hoarding all the wealth, and buying political influence to keep it this way. Bumping up the funding of the IRS is a start, capping CEO salaries as a percentage of lowest -worker wages, and adding taxes on non-salary income over a million dollars would be a good start, but only if accompanied by a requirement that all military budget increases be balanced by matching amounts for social services.
There is more disparity, increasing at an accelerating rate.
The middle class was always a fiction designed by the ruling elite to divide and conquer: in reality, there has only ever been the working class and the oppressor class.