NOBODY deserves a house.
Nobody deserves anything in life.
Maybe it’s my kind of odd upbringing that gives me such a hard outlook on life, but it’s just who I am.
I’ve been thinking about this for a while, and it’s not because I’m trying to jump on the recession bandwagon (I’ve tried to steer all my posts off that topic because it’s been flogged to death)
But….
SingleMa a while back (like in February) wrote in a comment that “Well based on your logic of not buying 2X more than your income, no one in America should own a home“.
Wow.
It’s hard to agree that it’s a hard and fast rule with no exceptions, but generally, yes that’s my feeling for 99% of the cases.
You rent for the rest of your life.
I like to think that the market for houses has a free market kind of philosophy.
If people couldn’t afford a home, they wouldn’t buy, and the prices would drop.
But if people are being given outrageous mortgages, then of COURSE people who are reasonable about their debt (even for a house), couldn’t afford a home unless they played a dangerous game of “Who Can Get More In Debt”.
And if everyone stuck to the 2X or even the 3X your income rule, there would not have been $60,000 household incomes being allowed to buy $500,000 homes.
The price of home would (maybe) not have skyrocketed to those ridiculous amounts, and people would have purchased homes later in life, in a more reasonable range, then maybe we would not be in the middle of this mess right now.
But everyone seems to want everything NOW even if it isn’t realistic. Gimme gimme GIMME.
Not everyone can own property in NY, Boston, or SF. It just isn’t in the cards if you plan on staying in that city.
You want to own a home but don’t own enough? Here are some options:
Make more money.
Move to a cheaper area or completely out of state.
Compromise on the home and buy something cheaper, or maybe a condo instead.
Realize that a home isn’t the be-all and end-all, and people who rent can actually be richer, or even happier because they aren’t as physically or financially tied down by a property and a hefty mortgage as others.
Or just deal with the fact that you earn $60,000 and if homes around you are $500,000 then you either need to make more money or pair up with someone else who makes that kind of cash and make it happen.
With this crisis, I (even as a Canadian) feel like the rest of the responsible American citizens and companies left in the States have to clean up after errant adults and companies who have seemed to have run around irresponsibly creating financial problems that have compounded into one big explosion that has affected the rest of the country, and the world as well.
Now these citizens and companies have to take on more debt load, work harder for less money and figure out a way to help the country survive instead of fail.
I cannot pinpoint any one area or attitude as the problem – was it the banks for allowing them to borrow the cash?
Or the homeowners for getting blinded by the cheap rates & big houses?
Or investors and investment banking companies getting greedier and greedier to make quick cash?
I don’t have any answer on how it should be sorted out with the least amount of problems, and I can only speak from a hindsight at a distance (I am in Canada after all), so don’t get all up in my stuff demanding my solution to this problem.
I don’t have one.
I’m just saying what I think and feel (as per the definition of a blog), and the frustration that I am sure many of you are feeling.
I also have a general feeling like these people should pay for their mistakes (companies and people alike). If they couldn’t afford the mortgage to begin with, then they can’t afford a house in that area and need to move or live with what they’ve got instead of pouting and saying:
Well, we all do. If we can afford it, or if it’s free.
But some of us held back on buying a home because we wanted to be financially secure before rushing into what could be a potentially disastrous decision, and now we’re being punished because others couldn’t delay gratification.
Everyone just feels too entitled to the American Dream and they shouldn’t.
AN ALTERNATIVE TO LOOK AT
The interesting thing is that a lot of FOB (fresh off the boat) Asian friends that come over from Cambodia, Vietnam and the Philippines have a unique way of affording a home.
I was amazed as a kid to see this, and found it insanely practical considering the circumstances.
The entire family — I am talking the mothers, fathers, aunts, uncles, cousins… any able-bodied adult who is able to work, went to work cutting chickens up for a living.
And then these families would pool their money with other families who did the same thing, earning $5 an hour cutting chickens in a factory and live in the same home together.
Unlike the recent story of these Mexican workers pooling their cash together to buy a $500,000 mansion*, these families chose very small, affordable homes and had them paid off in no time, because they were realistic about what they could afford, even after pooling their cash.
*(I can’t remember where I read it, but it was something like $60,000 a year combined in income from these families, and they bought some ridiculous mansion to live in, and take pictures of to send back to Mexico to show how far they’ve come since going to America).
I had friends who lived in 1500 square feet homes with 2 other families (with kids) who had done the same thing. One family lived in the upper floor, the second family on the main floor, and the third family in the basement.
No kidding.
They didn’t feel entitled to buying a home the minute they came off the boat, and they admirably hacked their way through hundreds and thousands of chickens just to pay for a floor in the house.
To me, that’s just as good as renting and I’d rather rent and live alone than buy a home, but they, like other Americans, wanted to own a home and built equity.
So they did what it took to achieve that dream without digging themselves into a grave of financial desperation.
My parents are also another case in point.
Before they won all that money, they saved up for years before buying their first home at the age of 35. In the mean time, they lived in a small, cramped 500 square foot apartment with my grandmother and 3 small kids.
They did what it took at that time to make it happen without crippling themselves financially.
I don’t know what happened to that mentality but they did have that spark in the beginning.
Then you look at families who thought that they should buy a home and build equity because renting is just throwing their money away, and you wonder if they actually did the calculations without their emotions and deciding whether renting in an expensive city was a better deal than buying.
So buying a home? It isn’t in the cards for everyone, especially if they’re unrealistic and think that they deserve it all. And people just have to accept that.
Lastly, for extra reading, this is truly an exceptional article that must be read: MSN Money’s interesting article on why renting may make you richer
RELATED ARTICLES
- Why I rent instead of buying a home
- Parents & Finances: What have you received from your parents?
- My Odd Middle-Class Existence
- The Story of the Idiot and his Wife, Part 1 and Part 2
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