Rent, Rage, and the Dollar’s Vanishing Act: A Final Gonzo Report on Inflation, Affordability, and th

[Luis Gonzalez]

Rent, Rage, and the Dollar’s Vanishing Act: A Final Gonzo Report on Inflation, Affordability, and the Vanishing American Dream
The Last Wire

I’ve been thinking a hell of a lot about money lately — not just how much I’ve got, but how little it seems to buy. You hear people talk about inflation like it's some abstract monster eating the economy alive, but when you put it next to real-world affordability — especially housing — the math gets nasty, and the truth stings.

Let’s start with what really matters: affordability, not just sticker shock. Everyone’s shouting about inflation, but what do you do when your wages don’t keep pace, and rent or mortgage climbs like a rampaging beast? That’s the heart of the crisis: purchasing power is draining, and for millions, housing is the bleeding wound.

The Bloody Math of Housing: Income-to-Cost Ratios, Then and Now

Here’s where the gonzo part comes in — you can’t sugarcoat this: households are being squeezed. The standard yardstick is this: spend more than 30% of your income on housing, and you’re “cost-burdened.” Over 50%? That’s “severely cost-burdened.” According to expert policy analysts, that benchmark is deeply flawed, but it's still wildly used.

Continue reading at The Last Wire.

[Luis Gonzalez]

This ends my work on our economy.

I hope I offered some valuable insights for everyone.

[Cyber Liberty]

This ends my work on our economy.

I hope I offered some valuable insights for everyone.

You have, for me at least!

[Luis Gonzalez]

You have, for me at least!

 

[DefiantMassRINO]

These are the substantive discussions we need to be having on a regular basis.  Consensus is not required.  It is the differences of opinions, educations, and life experiences that creates a competitive marketplace for ideas.

Our current mass, public markets of ideas are dominated by thought oligarchs.

This ends my work on our economy.

I hope I offered some valuable insights for everyone.

[Bigun]

These are the substantive discussions we need to be having on a regular basis.  Consensus is not required.  It is the differences of opinions, educations, and life experiences that creates a competitive marketplace for ideas.

Our current mass, public markets of ideas are dominated by thought oligarchs.

 

[Smokin Joe]

It isn't that I, personally (thank God), am in dire straits. Thankfully, I bought my home in the '80s, it's paid for, and the only increases I watch for are utilities and insurance and the cost of maintaining it. I do most of that work myself.

But I'm looking at three generations following me who are struggling, partly because of individual decisions, but also because that dollar just does not stretch as far as it once did. I've learned to shop loss leaders, stock up, how to avoid retail prices, but this is a skill that just isn't being picked up by a generation (or three, actually) who will buy at convenience store prices when they could have, with a little planning, had much more for less.

Being willing to say "not at that price" and walk away from something I'd like to have helps, and that's a level of discretion I have had trouble communicating to generations used to having it now, whatever it is.

Buyers can affect the market by doing the one thing buyers can do--withholding purchases until absolutely needed, deciding on a price point above which they will not go. Unless you are planning on moving on, paying rent is what will keep you poor, but with rents where they are, it's tough to put together a down payment and build equity.

I'm not sure that has really changed, though, it was tough to put together the down payment for this place when we did. It involves a sense of planning for the future, of some austerity today for the promise of tomorrow, and that's hard to do when the Government keeps flooding the economy with dollars, diluting the value of any savings.

Note, too, most of the people advising on investments are starting with $100K, while the people who really need the advice are hard put to squeeze $100 out of their budget. Living hand to mouth is stressful and difficult, but with some adaptation, with the concept that having 'enough' is truly enough, instead of living as large as you can and impulse buying, those on the bottom could possibly do better.

And we haven't talked about the effect of flooding the housing market with an extra 20,000,000 people who aren't even supposed to bee here.

[Luis Gonzalez]

It isn't that I, personally (thank God), am in dire straits. Thankfully, I bought my home in the '80s, it's paid for, and the only increases I watch for are utilities and insurance and the cost of maintaining it. I do most of that work myself.

But I'm looking at three generations following me who are struggling, partly because of individual decisions, but also because that dollar just does not stretch as far as it once did. I've learned to shop loss leaders, stock up, how to avoid retail prices, but this is a skill that just isn't being picked up by a generation (or three, actually) who will buy at convenience store prices when they could have, with a little planning, had much more for less.

Being willing to say "not at that price" and walk away from something I'd like to have helps, and that's a level of discretion I have had trouble communicating to generations used to having it now, whatever it is.

Buyers can affect the market by doing the one thing buyers can do--withholding purchases until absolutely needed, deciding on a price point above which they will not go. Unless you are planning on moving on, paying rent is what will keep you poor, but with rents where they are, it's tough to put together a down payment and build equity.

I'm not sure that has really changed, though, it was tough to put together the down payment for this place when we did. It involves a sense of planning for the future, of some austerity today for the promise of tomorrow, and that's hard to do when the Government keeps flooding the economy with dollars, diluting the value of any savings.

Note, too, most of the people advising on investments are starting with $100K, while the people who really need the advice are hard put to squeeze $100 out of their budget. Living hand to mouth is stressful and difficult, but with some adaptation, with the concept that having 'enough' is truly enough, instead of living as large as you can and impulse buying, those on the bottom could possibly do better.

And we haven't talked about the effect of flooding the housing market with an extra 20,000,000 people who aren't even supposed to bee here.

Most people who are struggling to get by do it with $1000 phones in their pockets.

Richest poor people in the world.

I was taking a look at the idea of a 50-year mortgage earlier today. My son is in the initial stages of house hunting.

 

[Smokin Joe]

Most people who are struggling to get by do it with $1000 phones in their pockets.

Richest poor people in the world.

I was taking a look at the idea of a 50-year mortgage earlier today. My son is in the initial stages of house hunting.

 

We have the fattest poor people in the world, with phones many models newer than my old S10. But it still works, and until it doesn't, I'll keep using it.
New cars are another way to lose 20% or more of your investment in less than a year, too. Good, used cars are the way to go. Off lease or rental car auctions can be a good source of clean vehicles that have been well maintained.

On the house, if I could do it over, I'd have done a 15 yr. Instead I did a 30 yr. with no penalty for early payout, and paid a bit extra every month. That took two years off the back end. But even with a 30 at 9.1% (fixed, which was good then), you end up paying close to triple the amount of the loan back in payments if it goes to full term.

(Granted, some of that is escrow for taxes and insurance, and over 30 years, then, about a third was insurance.)

So I'd advise if they aren't planning to just flip the home in the not so distant future for a profit, and are actually shooting to own it, to get as much together for a down payment as possible, and go with the plan that will be sustainable on one income that will pay it off soonest. One income (assuming they have two) because things change. To me a 50 yr. is just nuts unless the intent is to flip the property in the not too distant future. Equity would build very slowly to start. You might never pay it off before you die of old age.