Since we seem to be in full fledged hijack mode now (sorry FSD), I’ll reply to CAR’s post here ;=)
[quote=CA renter]FWIW, single-income families are often more stable than dual-income families if both are living at the max budget. The SAH spouse represents potential income-earning capacity, whereas the dual-income family has no additional income-earning capacity, barring someone getting a second/third job.[/quote]
I don’t agree. I feel that a dual-income family can live on 1 to 1-1/4 of their income and save for college/retirement or a rainy day, if they so choose. They don’t have to live on ALL their income (max budget). If a SAH spouse was forced to attempt to enter the workforce after say, a ten-year hiatus, it is not likely they would be able to make much beyond minimum wage, no matter what their educational background was. An exception would be a medical professional who has kept up all their licenses and continuing education in the interim. A family who lost the main breadwinner’s income could not live on that. UI is approximately 62% of gross income. State Disability insurance is the same. Both are temporary fixes. Employers in SD have thousands of freshly minted 20 and young 30-somethings to choose from who are fresh out of occupational school or college and eager to work for meager starting salaries while often still living with parents and beginning payments on student loans. Salaries are not based upon need or education and experience. They are based upon what employers can get away with in the local market. SD County has many workers who will work for less money and live in TJ or with six or more other persons.
[quote=CA renter]If you look in the “rich” neighborhoods, you’ll often find at least one person at home during “business hours.” That’s also the same for very stable communities filled with retired folk who have their houses paid off. It’s the middle class neighborhoods where both people work outside the home that are least stable during an economic downturn, IMHO.[/quote]
I agree with these 3 statements with a few caveats. You and I might have “rich” at different income levels. My discussion was about tracts because that is what Scarlett was interested in purchasing in. Any family who purchases a tract home does so because it is in a price range they can afford, or, if it is new construction, they were enticed by builder incentives. A truly wealthy family has many choices in life. They don’t have to live in a tract where every fifth house is the same floor plan and typically don’t. They can buy a custom home, a historical home or have a home commissioned by an architect and designed/built to their needs. They’re not bothered by school boundaries and the like because they can afford to send their children to any school they wish. They can live in SD’s finest, most coveted and convenient areas and often do. Some of these families have their own business where both spouses DO “work” in it – however one spouse may do the work at home (bookkeeping) or be on the Board of Directors. In the truly “rich” areas, it makes no difference how many people are “hanging around” the area during the business day. These owners are not indebted enough to have problems paying their bills and if they are, they are indebted by choice (for a mortgage interest deduction, for example).
The stable areas of primarily “retired folk” are where I think a buyer who is short on downpayment funds should consider for a seller-assisted purchase.
And yes, I agree that a preponderance of dual income families AND single-income families who spend every dime they make every month (and then some), when lumped together in one tract, do not bode well for the stability of an area.
Bear in mind that Scarlett’s price ceiling was $500K and she was interested in =<30 yr old tract areas in fairly close proximity to employment. This puts her as a buyer in the category of your third statement (those “least stable” areas where the majority of single and dual income families live).
[quote=CA renter]Elizabeth Warren explains here why the dual-income household has not benefitted us nearly as much as people would like to think. As a matter of fact, the prevalence of two-income households constrains people’s options because now prices are set by those with multiple incomes per household — forcing EVERYONE to take on multiple (paying) jobs per household if they just want to keep up.
Here’s her book, The Two-Income Trap, which goes into more detail:
CAR, I haven’t had a chance to look at the video but saw the Mother Jones writeup and have some personal observations. I disagree that the prevalence of two-income families constrains people’s options. There are several one-income families around me with 2-4 minor children apiece. Their houses range in size from just under 1500 sf to 2600 sf. Some have only “vintage” 1-1/2-car garages. Lot sizes are 6000 – 14,000 sf. Ages of the homes are 49-65 years old. The prices they paid for their properties range from about $270K to about $500K. Two families have large backyard gardens. They purchased their homes 3-10 years ago. 2 families homeschool, one goes to private school and the rest go to public school. Often, the SAH parent does not have access to a vehicle at all times of the day. They do not hire out any domestic or gardening services or child care. I think a family CAN make it on one non-executive income but their expectations have to be such that they don’t feel deprived not driving a $100-per-tank SUV or not even owning a late-model vehicle. They bought these properties to be close to extended family members instead of standing in line with dozens of “competitors” in a captive open-house audience trying to chase down public school API scores. The author of the book, “The Two-Income Trap,” Amelia Tyagi, stated in it that house prices in certain school attendance areas were being forcibly driven up in price by “dual-income families” due to their “perceptions” when they are not better-built or better-appointed houses, do not have bigger lots (actually, the opposite is true) or are situated in better or more convenient locations than those residential properties in older, more established areas. No one is forced to take on “multiple jobs” just to keep up unless they have chosen a lifestyle above their means.
Tyagi also states public school vouchers and public college tuition freezes would keep middle-class families from “paying too much” for houses and college. In theory, I agree with this but in reality, I don’t see either of these things happening. No one is “forcing” a family to purchase in any particular area or to automatically send every one of their children to a public university.
The homeowners in your “middle-class” group (stmt 3) bought into what Tyagi called the “overconsumption myth.” She further states that families of yesteryear used to live on one income easily so we should be able to today. We’ve discussed this phenomenon ad nauseaum here on the forum and I have not read her book. The article fails to mention that these families of yesteryear differ from the typical family of today in that: they did not have anywhere near the square footage in their homes, frequently got by on one vehicle, did not aspire send all their children to college, medical costs were much cheaper, they hung their wash on the clothesline, had four (B/W) channels on the TV, etc. It’s comparing apples to oranges.
So therein lies the rub. If a potential buyer of today is a working-class family (whether “white-collar” or “blue collar” – doesn’t matter) but their homebuying expectations are not in line with living on only one income so one can be a SAH parent, then they will either refuse to buy, will be unable to buy or may eventually be priced out of mortgage money while wrestling with the decision. If a potential buyer of today is same but is a dual income family and has the same expectations which are not in line with their resources, then they will have the same outcome.
Either way, these potential buyers don’t become homeowners unless this “expectation disconnect” is resolved and maybe that is okay.
Part of the problem is that potential buyers drive around and observe these presumably single-income families already living in these newer “middle class” tracts. If these families purchased within the last 7 years, it is likely that not only are they “underwater,” but they may very well still be living off home equity they removed (while the getting was good). When those funds are exhausted, they will likely no longer be able to keep up their “over-consumption” facade or even pay for basic necessities such as mortgage, taxes and utilities. Even if they purchased their residence in the last 20 years, if the single-income family has repeatedly “cashed out” to supplement their one income, they were never really living on one income. They were using their house for their “second income” to put on their own “overconsumption facade.”
