September 28, 2007 at 10:24 PM #10444kev374Participant
I know before the boom, pre 2000, a single income person who was an educated professional could very well afford something decent (say a 3bd house, 1500sqft, $200k). Do you think that reality is going to come back? Or do you think it will be essential to have a dual income to afford any kind of home.September 28, 2007 at 11:33 PM #86317gnParticipant
In 1989 & 1990, at the peak of the previous real estate boom, many folks thought that California real estate had moved permanently to a higher plateau. Then, the correction came & by the mid-1990 homes are affordable again.
The boom of the last few years is not the first time nor is it the last time. People kept saying: this time it’s different. Well, it’s the same PATTERN, only the details are different.September 29, 2007 at 8:59 AM #86330
Kev, the mere fact that dual incomes are needed to buy is exactly why the prices will fall, affordability. Half the population is single and removing them from the market takes a huge chunk out of the demand. I have a theory that if housing plummets 50% the divorce rate will skyrocket. I base this on a straw poll of buddies who stay in marriages primarily because they can’t afford housing as a single person and it scares them into staying.
I think you will see that house 3/2 1500 sq return to 300k, maybe not 200k. A single person making 100k can easily afford a 2k/mo payment and borrowing 240k gets them in the ballpark with 20% down on 300k. I see that as when the affordability returns to the market, unless of course none of them have saved a downpayment.September 29, 2007 at 9:15 AM #86335patientlywaitingParticipant
Staying in a marriage because of housing costs? That’s a novel theory which I didn’t think of. It must suck to look at that nagging broad every day knowing that you would have left her a long time ago if it weren’t for housing, child support and alimony. Can a divorced man still afford a condo and a car after paying all that? (before anyone jumps on me for being sexist, the same would apply if the woman had to make the payments).
On the plus side, more divorces will create more households which will fill up the empty houses. More transactions would make the realtors happy. So the cycle begins anew.September 29, 2007 at 10:13 AM #86343
TG: That is an interesting theory! How big is your straw poll?
After 9/11, I heard this phrase “… she decided against pressing for divorce after these events …” many times. See http://www.nocourtdivorce.com/news_text.phtml?pressID=27September 29, 2007 at 11:17 AM #86349greensdParticipant
I’m in the middle of a divorce now… it’s definitely put a dent in my material standard of living, but that wasn’t really a factor in deciding whether to leave or not. The situation was intolerable, and if being out of it means I have to rent an apartment and drive a used car, well, that’s a small price to pay. Compared to everything that goes along with a family breaking up, the money part is not that big a deal. It reminds me of a character in a novel I read years ago who was an insurance adjuster. He rationalized denying claims from policyholders who had suffered some disaster by saying that if money could fix it then it wasn’t really a disaster. My bet is that your buddies who say they’d leave their wives if it weren’t for housing costs just aren’t ready to leave. If it wasn’t housing, it would be something else.September 29, 2007 at 11:33 AM #86350
greensd – since the perspectives are sometimes asymmetrical, are you the husband or wife in the divorce?September 29, 2007 at 12:04 PM #86354greensdParticipant
greensd – since the perspectives are sometimes asymmetrical, are you the husband or wife in the divorce?
Husband and sole breadwinner. My ex is talking about going back to school, but hasn’t and hasn’t gotten a job either. So, yeah, I write a huge check every month. I’m just saying, by any objective measure my divorce was a financial catastrophe for me, and it still beats having to spend the next forty or fifty years with that woman. Just like people don’t usually decide to get married just for the money, I don’t think the choice to split up is very often made on purely economic grounds. Sure, plenty of divorces turn into fights over money in court, but that’s not what it’s really about.September 29, 2007 at 12:50 PM #86356kev374Participant
another reason to marry your own financial equal. This also lessens the chance of disagreements about money which is the #1 cause of divorce statistically. If both earned roughly the same there would be less friction. If a guy earning $100,000/yr married someone making $15/hr and they had different spending habits that would be a disaster.
problem is too many are blinded by the “love” that hardly lasts a couple yrs and after that reality sets in and all the differences that didn’t seem to matter at first are beginning to cause problems. Especially for women, the “Prince charming” syndrome wears off rather quick since the guy can’t keep up with her expectations anymore and then they want to move on and find “Prince charming #2”. The guy is left with no woman, no children and a fat bill!
When they say men are commitment phobic these days I don’t blame them at all! Marriage is a raw deal for men these days!
Society has changed tremendously for women, women work these days and have an equal standing in professional circles, however they still expect the privileges from the old days, privileges that were designed to protect women because they did not work. Those concepts don’t apply anymore!!!
I will add that there are women who are exceptions to the above but very hard to find them!September 29, 2007 at 1:11 PM #86357salo_tParticipant
Wasn’t there an article posted on here somewhere about a woman that was leaving her husband (a once successful realtor in FL) because he lost his ass when his investments collapsed?
I know of a few women I work with that openly talk about staying with their husband only for financial reasons.
I guess thats just the reality of it.
Anyway, I see a major correction in the market coming and I don’t think 250K for a nice home will be out of the question.
You can already find descent 3 bed homes in places like Escondido for around 250k. The “Pain Train” is steaming southbound and aint nothin gonna stop it!September 29, 2007 at 1:55 PM #86360
openly talk about staying with their husband only for financial reasons.
Hmm, doesn't that "profession" have a name? I thought so.September 29, 2007 at 2:11 PM #86363
Someone else used the phrase “pain train,” that is sweet, I thought I made that up, maybe it is a more widely used term than I thought. Sorry this wen’t sideways into a divorce thread, there is just some merit to the reality that prices cannot stay at a level where even a single person earning twice the median is priced out. There are also many couples where one person does not work or earns very little. The amount of high income dual earner couples is not enough to keep the whole market propped up. We got in this mess because 60%+ of the population wants a house but half of those people needed wacky financing to do it. Remove the wacky financing and you have removed those buyers, Less buyers (less demand) and you have falling prices. It is a fixed asset that cannot be reduced, reducing inventory by builders only shifts the inventory to the existing stock. No matter what any realtor or economist tells you, supply and demand is a law, not a guideline, and that law is never violated for very longSeptember 29, 2007 at 2:35 PM #86366salo_tParticipant
Temeculaguy, I took “pain train” from one of your previous posts. Its a great analogy for this market.September 29, 2007 at 11:50 PM #86402
That’s fine, if it is going to be the next catch phrase to sweep the nation (old school letterman reference) then it has taken it’s first step. We will get there, one blogger at a time. Truth be told I probably liberated it from someone else, I just can’t remember because I regularly drink and type.October 1, 2007 at 10:56 AM #86572zzzParticipant
On the original post – as people have simply pointed out, there are cycles and we’re currently in a housing slump and there are no fundamental reasons or emotional reasons it will correct anytime soon. With inflation – income and prices increasing year after year, will it go back to what it was 10 /15 years ago? Probably not. But they will go back to realistic levels because as others also pointed out, the days of inprudent financing is over. Many of the economic drivers for the home prices didn’t exist during the boom – such as job and income growth in SD (stayed relatively flat to modest growth), population growth driving housing demand(negative growth amongst professionals), etc. Why did prices triple in some instances – speculation, overexuberance, firms creating ridiculous financing aka wacky financing as someone else called it and lending money clearly to individuals who didn’t qualify. if you want a realistic idea of what the pricing levels should be- look at the neighborhood you’re evaluating, the home values pre-boom, and then appreciate that home by 5-10% per year (take the average appreciation over the last 30-50 years), arriving at the year you’d like to buy.
The divorce discussion – I’m sorry to hear about the men who didn’t choose wisely. Don’t you men know that a third of woman nationally out-earn their husbands? Perhaps you should have chosen more wisely than blaming it on the woman. Didn’t you test drive the car before you bought it?I firmly believe you get what you chose – you chose someone who couldn’t contribute financially or didn’t want to, but met your wants in other ways – whether she is hot, fun, nurturing, loving, subservient, intelligent, undemanding, has child bearing hips, cooks & cleans – I hope she contributed something positive to your life or you would have really been insane to have married her. Its not anyones place to judge why you married her, but the point it, either know what you’re getting into and lie in the bed you made, but don’t get married and then bitch about the choice you made. You could have chosen someone who is more of an equal across the board.
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