Shadow inventory finally being released ?

[Scarlett]

Totally agreed with that.

[bearishgurl]

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:

A write up about it:

The Two-Income Trap

[/quote]

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.”

[end of OT rant]

[bearishgurl]

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:

A write up about it:

The Two-Income Trap

[/quote]

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.”

[end of OT rant]

[bearishgurl]

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:

A write up about it:

The Two-Income Trap

[/quote]

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.”

[end of OT rant]

[bearishgurl]

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:

A write up about it:

The Two-Income Trap

[/quote]

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.”

[end of OT rant]

[bearishgurl]

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:

A write up about it:

The Two-Income Trap

[/quote]

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.”

[end of OT rant]

[Scarlett]

Wow, that was a long rant. I kind of skimmed thru it and I’ll reply more to it tomorrow. I strongly believe that the home prices have been set so that you need two income household. There is no doubt in my mind about that. I have looked at many areas within 20 miles of our work place and there is NO freaking way I could afford a 3-4 bdr home on ONE salary, even if it’s 100K. Hell, I almost don’t think I can afford it on TWO incomes!

Yes there are ways to live cheaper, but it takes a lot of effort, time and planning, and most people won’t do it. Let’s face it, we as a generation ARE poorer than our parents. Who owned pretty LARGE houses in their early 30s on ONE income AND pay their child college tuition from their salary (not thru 15 years of savings like we will be doing, without even coming close to covering the tuition at good out of state school).

I tell you how the expenses differ from the yesteryear – median housing expenses, daycare, college, healthcare. It’s not nearly as much as you think about over-consumerism, though that plays a role too. I am sure you were NOT paying half your take-home salary for daycare for example. You also were not paying rents that were even more than that. Very hard to save money even with 2 non-executive salaries when you pay over $2000 rent, $1300 daycare, etc. etc.

FWIW, we are “behind” most of our peers/friends/coworkers in buying a house, and only recently bought a 2nd car because the 12 yr old one was just becoming unreliable . We don’t even have a flat plasma tv or HBO. Definitely not a SUV. I don’t know how they managed to buy, many had help from family which we didn’t and somehow I don’t think they are all going to end up in foreclosure – again I am sure the family will help.

[quote=bearishgurl]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 [/quote]

Well, then I’ll be waiting for all those guys to be forced to short sell their houses, or get foreclosed, which I am sure will drive the prices down. Maybe I’ll even end up buying one of THIER houses, LOL.

The only thing I’d change in the quote above is single=income with double-income. But yeah, we drive around or visit them and see them and think, well, if they can afford it we should be able to also. Though we don’t feel comfortable with that. Doesn’t make sense.That’s what so frustrating.

[Scarlett]

Wow, that was a long rant. I kind of skimmed thru it and I’ll reply more to it tomorrow. I strongly believe that the home prices have been set so that you need two income household. There is no doubt in my mind about that. I have looked at many areas within 20 miles of our work place and there is NO freaking way I could afford a 3-4 bdr home on ONE salary, even if it’s 100K. Hell, I almost don’t think I can afford it on TWO incomes!

Yes there are ways to live cheaper, but it takes a lot of effort, time and planning, and most people won’t do it. Let’s face it, we as a generation ARE poorer than our parents. Who owned pretty LARGE houses in their early 30s on ONE income AND pay their child college tuition from their salary (not thru 15 years of savings like we will be doing, without even coming close to covering the tuition at good out of state school).

I tell you how the expenses differ from the yesteryear – median housing expenses, daycare, college, healthcare. It’s not nearly as much as you think about over-consumerism, though that plays a role too. I am sure you were NOT paying half your take-home salary for daycare for example. You also were not paying rents that were even more than that. Very hard to save money even with 2 non-executive salaries when you pay over $2000 rent, $1300 daycare, etc. etc.

FWIW, we are “behind” most of our peers/friends/coworkers in buying a house, and only recently bought a 2nd car because the 12 yr old one was just becoming unreliable . We don’t even have a flat plasma tv or HBO. Definitely not a SUV. I don’t know how they managed to buy, many had help from family which we didn’t and somehow I don’t think they are all going to end up in foreclosure – again I am sure the family will help.

[quote=bearishgurl]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 [/quote]

Well, then I’ll be waiting for all those guys to be forced to short sell their houses, or get foreclosed, which I am sure will drive the prices down. Maybe I’ll even end up buying one of THIER houses, LOL.

The only thing I’d change in the quote above is single=income with double-income. But yeah, we drive around or visit them and see them and think, well, if they can afford it we should be able to also. Though we don’t feel comfortable with that. Doesn’t make sense.That’s what so frustrating.

[Scarlett]

Wow, that was a long rant. I kind of skimmed thru it and I’ll reply more to it tomorrow. I strongly believe that the home prices have been set so that you need two income household. There is no doubt in my mind about that. I have looked at many areas within 20 miles of our work place and there is NO freaking way I could afford a 3-4 bdr home on ONE salary, even if it’s 100K. Hell, I almost don’t think I can afford it on TWO incomes!

Yes there are ways to live cheaper, but it takes a lot of effort, time and planning, and most people won’t do it. Let’s face it, we as a generation ARE poorer than our parents. Who owned pretty LARGE houses in their early 30s on ONE income AND pay their child college tuition from their salary (not thru 15 years of savings like we will be doing, without even coming close to covering the tuition at good out of state school).

I tell you how the expenses differ from the yesteryear – median housing expenses, daycare, college, healthcare. It’s not nearly as much as you think about over-consumerism, though that plays a role too. I am sure you were NOT paying half your take-home salary for daycare for example. You also were not paying rents that were even more than that. Very hard to save money even with 2 non-executive salaries when you pay over $2000 rent, $1300 daycare, etc. etc.

FWIW, we are “behind” most of our peers/friends/coworkers in buying a house, and only recently bought a 2nd car because the 12 yr old one was just becoming unreliable . We don’t even have a flat plasma tv or HBO. Definitely not a SUV. I don’t know how they managed to buy, many had help from family which we didn’t and somehow I don’t think they are all going to end up in foreclosure – again I am sure the family will help.

[quote=bearishgurl]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 [/quote]

Well, then I’ll be waiting for all those guys to be forced to short sell their houses, or get foreclosed, which I am sure will drive the prices down. Maybe I’ll even end up buying one of THIER houses, LOL.

The only thing I’d change in the quote above is single=income with double-income. But yeah, we drive around or visit them and see them and think, well, if they can afford it we should be able to also. Though we don’t feel comfortable with that. Doesn’t make sense.That’s what so frustrating.

[Scarlett]

Wow, that was a long rant. I kind of skimmed thru it and I’ll reply more to it tomorrow. I strongly believe that the home prices have been set so that you need two income household. There is no doubt in my mind about that. I have looked at many areas within 20 miles of our work place and there is NO freaking way I could afford a 3-4 bdr home on ONE salary, even if it’s 100K. Hell, I almost don’t think I can afford it on TWO incomes!

Yes there are ways to live cheaper, but it takes a lot of effort, time and planning, and most people won’t do it. Let’s face it, we as a generation ARE poorer than our parents. Who owned pretty LARGE houses in their early 30s on ONE income AND pay their child college tuition from their salary (not thru 15 years of savings like we will be doing, without even coming close to covering the tuition at good out of state school).

I tell you how the expenses differ from the yesteryear – median housing expenses, daycare, college, healthcare. It’s not nearly as much as you think about over-consumerism, though that plays a role too. I am sure you were NOT paying half your take-home salary for daycare for example. You also were not paying rents that were even more than that. Very hard to save money even with 2 non-executive salaries when you pay over $2000 rent, $1300 daycare, etc. etc.

FWIW, we are “behind” most of our peers/friends/coworkers in buying a house, and only recently bought a 2nd car because the 12 yr old one was just becoming unreliable . We don’t even have a flat plasma tv or HBO. Definitely not a SUV. I don’t know how they managed to buy, many had help from family which we didn’t and somehow I don’t think they are all going to end up in foreclosure – again I am sure the family will help.

[quote=bearishgurl]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 [/quote]

Well, then I’ll be waiting for all those guys to be forced to short sell their houses, or get foreclosed, which I am sure will drive the prices down. Maybe I’ll even end up buying one of THIER houses, LOL.

The only thing I’d change in the quote above is single=income with double-income. But yeah, we drive around or visit them and see them and think, well, if they can afford it we should be able to also. Though we don’t feel comfortable with that. Doesn’t make sense.That’s what so frustrating.

[Scarlett]

Wow, that was a long rant. I kind of skimmed thru it and I’ll reply more to it tomorrow. I strongly believe that the home prices have been set so that you need two income household. There is no doubt in my mind about that. I have looked at many areas within 20 miles of our work place and there is NO freaking way I could afford a 3-4 bdr home on ONE salary, even if it’s 100K. Hell, I almost don’t think I can afford it on TWO incomes!

Yes there are ways to live cheaper, but it takes a lot of effort, time and planning, and most people won’t do it. Let’s face it, we as a generation ARE poorer than our parents. Who owned pretty LARGE houses in their early 30s on ONE income AND pay their child college tuition from their salary (not thru 15 years of savings like we will be doing, without even coming close to covering the tuition at good out of state school).

I tell you how the expenses differ from the yesteryear – median housing expenses, daycare, college, healthcare. It’s not nearly as much as you think about over-consumerism, though that plays a role too. I am sure you were NOT paying half your take-home salary for daycare for example. You also were not paying rents that were even more than that. Very hard to save money even with 2 non-executive salaries when you pay over $2000 rent, $1300 daycare, etc. etc.

FWIW, we are “behind” most of our peers/friends/coworkers in buying a house, and only recently bought a 2nd car because the 12 yr old one was just becoming unreliable . We don’t even have a flat plasma tv or HBO. Definitely not a SUV. I don’t know how they managed to buy, many had help from family which we didn’t and somehow I don’t think they are all going to end up in foreclosure – again I am sure the family will help.

[quote=bearishgurl]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 [/quote]

Well, then I’ll be waiting for all those guys to be forced to short sell their houses, or get foreclosed, which I am sure will drive the prices down. Maybe I’ll even end up buying one of THIER houses, LOL.

The only thing I’d change in the quote above is single=income with double-income. But yeah, we drive around or visit them and see them and think, well, if they can afford it we should be able to also. Though we don’t feel comfortable with that. Doesn’t make sense.That’s what so frustrating.

[CA renter]

Good post, Scarlett.

…………………..

BG,

You’re mistaking technological improvements for “increased wealth.” Though we are taught to think this way (by the elite, who control our schools and economic theories — this makes it easier for them to “justify” the further concentration of wealth), that is not how wealth is measured. Wealth is not measured longitudinally through time, but rather synchronically, by taking a cross-sectional look at the percentage of the world’s resources/wealth one controls at a given point in time.

Most people didn’t have color in the 1950s because color TVs didn’t really exist in any numbers. Advances can be made in technology that can make it **cheaper** to produce a superior product than its predecessor. The fact that we’ve made this progess is remarkable and beneficial, but it does not mean that people are “wealthier” than they otherwise would be.

Wealth is measured relative to one’s peers. Therefore, if a family has less wealth than his/her peers vs. what their parents had compared to their peers in the past, one can say that today’s family less wealthy than their parents, even though technological improvements might have made things more convenient or nicer for them.

[CA renter]

Good post, Scarlett.

…………………..

BG,

You’re mistaking technological improvements for “increased wealth.” Though we are taught to think this way (by the elite, who control our schools and economic theories — this makes it easier for them to “justify” the further concentration of wealth), that is not how wealth is measured. Wealth is not measured longitudinally through time, but rather synchronically, by taking a cross-sectional look at the percentage of the world’s resources/wealth one controls at a given point in time.

Most people didn’t have color in the 1950s because color TVs didn’t really exist in any numbers. Advances can be made in technology that can make it **cheaper** to produce a superior product than its predecessor. The fact that we’ve made this progess is remarkable and beneficial, but it does not mean that people are “wealthier” than they otherwise would be.

Wealth is measured relative to one’s peers. Therefore, if a family has less wealth than his/her peers vs. what their parents had compared to their peers in the past, one can say that today’s family less wealthy than their parents, even though technological improvements might have made things more convenient or nicer for them.

[CA renter]

Good post, Scarlett.

…………………..

BG,

You’re mistaking technological improvements for “increased wealth.” Though we are taught to think this way (by the elite, who control our schools and economic theories — this makes it easier for them to “justify” the further concentration of wealth), that is not how wealth is measured. Wealth is not measured longitudinally through time, but rather synchronically, by taking a cross-sectional look at the percentage of the world’s resources/wealth one controls at a given point in time.

Most people didn’t have color in the 1950s because color TVs didn’t really exist in any numbers. Advances can be made in technology that can make it **cheaper** to produce a superior product than its predecessor. The fact that we’ve made this progess is remarkable and beneficial, but it does not mean that people are “wealthier” than they otherwise would be.

Wealth is measured relative to one’s peers. Therefore, if a family has less wealth than his/her peers vs. what their parents had compared to their peers in the past, one can say that today’s family less wealthy than their parents, even though technological improvements might have made things more convenient or nicer for them.

[CA renter]

Good post, Scarlett.

…………………..

BG,

You’re mistaking technological improvements for “increased wealth.” Though we are taught to think this way (by the elite, who control our schools and economic theories — this makes it easier for them to “justify” the further concentration of wealth), that is not how wealth is measured. Wealth is not measured longitudinally through time, but rather synchronically, by taking a cross-sectional look at the percentage of the world’s resources/wealth one controls at a given point in time.

Most people didn’t have color in the 1950s because color TVs didn’t really exist in any numbers. Advances can be made in technology that can make it **cheaper** to produce a superior product than its predecessor. The fact that we’ve made this progess is remarkable and beneficial, but it does not mean that people are “wealthier” than they otherwise would be.

Wealth is measured relative to one’s peers. Therefore, if a family has less wealth than his/her peers vs. what their parents had compared to their peers in the past, one can say that today’s family less wealthy than their parents, even though technological improvements might have made things more convenient or nicer for them.

[Author]

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