TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
Where we failed is that $120k was supposed to be a middle-class income when living costs this much. The fact the median is 63k is a sign that all the excess value has been sucked out of the masses and funneled into the coffers of the billionaire class.
100% this. It’s not that costs rose as much as it’s that salaries didn’t increase.
In the late 70s around 23% of US corporate revenues went to pay salaries. By 2012 that had fallen to 7% - in other words, just before neoliberalism really took off almost 1/4 of the money workers spent buying goods from US companies was almost directly back in workers’ pockets, whilst by 2012 less that 1/14 of what workers spent buying goods from US companies ended back in workers’ pockets.
All that excess money that doesn’t get recycled back to workers anymore has got to be pooling somewhere.
Wow, now that’s a hell of a statistic! Got a nice reference for it so I can read more?
I read it ages ago when I was still frequenting a certain finance discussion forum (whose name totally evades me now, and I did just try looking up such forums but failed to find it) back in the post 2008 Crash years, hence why the end date in that statistic is 2012.
This is the best I found on the subject. Note that the numbers are quite different from the statistic I quoted since they’re not the same thing (it’s about labour share of income in the whole Economy, rather than the corporate labour to revenue ratio) but you can see the very same trend I mentioned in that report and what’s used there is almost certainly a better statistic to use to get an overall view of what’s going on.
a certain finance discussion forum (whose name totally evades me now…)
I used to frequent a few finance forums too; maybe I can help. Was it a personal finance/FIRE forum (e.g. bogleheads.org, forum.mrmoneymustache.com, etc.), or some other kind?
Nah, it started as a forum made by an ex-edge fund guy which in the beginning had quite a lot of people over there with a background in Investment Banking like me, but it kept getting more and more american goldbugs and preppers and was eventually swamped by simpleton Libertarian politics.
It’s both. If the price of homes aren’t reflecting an affordable price, you have to ask, who’s buying them? It’s not the average family - it’s corps sucking up homes as investment assets, driving up prices to sell to each other and the “lucky” family or two that get to empty out their retirement fund just to have a place to live. That’s not reflective of a natural, reasonable increase. That’s the result of hedge funds destroying the housing market for the rest of us, just to pad their bank accounts.
That may be true in some of the lower priced Midwestern markets, but I sell real estate in Boston and I don’t see big corporate interests in the single family or owner occupied 2-3 family market. as much as big corporations have ruined a lot of things in this country, I don’t think we Dan just wave our hands and say “corporate buyers” and explain away our housing market problems.
We have a confluence of decades of exclusionary zoning and restrictions on building that make meaningfully adding to the supply of housing almost impossible. We have a huge deficit of qualified workers in the building trades, in part because all the work dried up after the great recession and people left the field and in part because we’ve pushed more and more kids to go to college. We have a mortgage system that’s nearly unique worldwide that allows homeowners tremendous advantages in keeping their housing costs low, but inversely provides tremendous disadvantages to having them move around more often and free up housing stock (so lots of aging singles and couples in big houses better suited for young people with kids). We have a society that’s bizarrely fixated on single family living even though we desperately need more density in most markets. And we have the problem of wage stagnation. None of those things are directly attributable to corporate ownership of large numbers of houses.
I’d love for there to be some silver bullet where we could just say “disincentivize corporations from owning small housing stock” and solve the problem, but it’s nowhere near that simple.
You’re right, it’s more complicated than just blaming corps, and I don’t want to imply an issue this complicated could be completely solved with one change. They’re definitely exacerbating the issues we already have, though, and dealing with them could only help.
The link gives great context to the article. Thank you.
The problem is you need to be a couple to have a house.
In the 80s and even 90s the mother of the house probably didn’t work. I know mine didn’t. Now they have to. The prices have gone up to match this “new normal” because there simply aren’t enough houses. Or at least not enough houses in the places people want to live.
The free markets have settled on the idea that a house should cost two incomes. The government needs to step in to build affordable homes and get them into the right hands. No landlords scoffing them all up.
I honestly don’t even know why this upsets me so much. I am 50 and all set. I don’t have children and barely any debt. I never considered myself particularly patriotic but somehow this whole thing gets under my skin. I guess it sours my achievements and fruits of decades of struggle (it took three generations of planning and hustle to get us out of poverty). It’s like being a kid having a birthday party at Chuck E Cheese by yourself while all your friends are locked outside and you can see them through the glass windows.
Because you have empathy for others, it’s a good thing.
I agree. Something I wish we saw more of.
Something foreign to MAGAts
It gets under my skin because the west was on the right trajectory; improving wealth equality, quality of life, work life balance, etc — Then Capitalists killed all those gains using Conservatism, Neoliberalism, and a bastardised version of Libertarianism — just to enrich a tiny percentage the human population and return the rest of humanity to feudalism.
Why should they own all the gains from humanities collective efforts, when all of us have a rightful claim to a share of those gains?
In the early 1900s we had huge fights for labor. Strikes yes, but also some literal armed fights.
We won a lot. They conceded a lot.
But they’ve eroded those wins, little by little, for a century or so.
This is what will ALWAYS happen when you live in a system explicitly designed to extract profit from workers and reward greed. It cannot be reformed. It cannot be controlled. It will always slide backwards into this. We need a different system altogether.
Yup, we could be creating an amazing life for more people - and damaging the environment less while we are at it; but instead “we” keep doubling down in the other direction
the west was on the right trajectory
A lot of the west is still on the right trajectory. It’s the US that is not.
There are a lot of developed countries, especially in Europe, where the “American Dream” is much easier to attain than in America. But, more often than not, they don’t even want that dream. For good reason.
Wanting other people to have what you have, without your struggle, is an opinion we need more of.
Especially when we have a society with a huge number of people who think that if you’re poor, you deserve it.
What gets me is, a lot of the POOR people say that about POOR people.
We live in the most effectively propagandized society ever created. It hasn’t been until more recently that it’s started to slip. A lot of folks still believe in the old lies and believe that everything would work if we just got rid of the immigrants, Jews, and corrupt politicians. Still I think more people are waking up to the reality that this system is broken not the people in it.
And that’s because they are stupid. They are not educated becasause the education they received was garbage. All by design from your “trickle down” bringing republikkkans. Working as planned.
By “your,” you mean United States’s of course? Because they aren’t mine.
What in the fuck are you talking about?
You talking to me?
Because you’re not an awful person trying to pull the ladder up while saying “fuck you I got mine”
I’m in a similar boat, except in my early 40’s.
My parents are in their 80’s and working for DoorDash. They are lucky they at least paid off their home, because they didn’t save enough and this country is sucking every penny it can get from them.
I bought a condo that I love, have almost all my debt paid off, and am saving for what I hope will be an early retirement. It breaks my heart to see people struggling everywhere, and if I had Elon Musk money, I wouldn’t be blowing it on a vanity space program.
I’m so glad my Dad, also in his 80s, programs COBOL. My parents have owned their home since 86, but I’m sure that without the random COBOL job they’d have to do door dash or something as well.
Here’s what happened in a nutshell.
Lyndon Johnson had great plans for the US, but wanted to win the Vietnam War with one huge push. That quickly turned into a giant quagmire. LBJ and later Nixon, ordered bombing of the North. That meant the US factories were working 24/7. Nice for factory owners and union workers, but LBJ was paying for it with paper money because he didn’t want to raise taxes. Ironically, Nixon ran for President as an anti inflation and pro peace candidate.
Nixon and Kissinger doubled down on the bombing and inflation started to spiral. Also, those factories were getting a bit worn down. Unable to met the deamnd for the bombing and supply foreign markets the US ceded local steel making to Germany and Japan. This is going to bite the US in the ass when the Arab Oil boycott hits. US steel is much more oil dependant than the newer factories, so suddenly Toyotas and VWs are the hot cars, and US manufacturing takes a huge hit.
Carter tried to control inflation and cut oil use, but got kicked out over the Iran hostage mess. Reagan came in and cut taxes for the rich. This increased the debt, but gave the economy an unrealistic jolt.
tl dr. In 1960, minimum wage was $1.00/hour. The average house was $11,000.00 and $1 million was considered a vast fortune.* Middle class meant a High School graduate with a Union job supporting a family of four.
By the time Nixon, Reagan and Bush Sr were done, ‘middle class’ was two college degrees supporting the house and $1 million was what a rich guy paid for a party.
- In case anyone tells you that $1 million is 1960 would be $10 million today, tell them that in 1960, $100,000 would buy a mansion in Beverly Hills.
The massive difference in the purchasing power of what the Official Inflation Figures tell us - when we used them to adjust an amount of money for inflation over the years and get a supposedly equivalent present day amount - is the same salary now as in 1960, shows just how fake Official Inflation Figures are.
The reason for Official Inflation Figures being so much bullshit and always on the understating inflation side, is because the lower the Inflation used in calculating the Official GDP figures, the higher that figure gets.
All that talk of GDP Growth in the last few decades is the product of some very consistent (and hence likely purposeful) understating of the Inflation so that the Maths used to produce the Real (i.e. Official) GDP output a higher number hence politician can proudly declare GDP is growing strongly.
As Mark Twain once said,
There are lies and there are big damned lies, and then there are statistics!
Lyndon Johnson had great plans for the US
I recently learned that Johnson’s “Great Society” plan was partially a continuation of Kennedy’s “New Frontiers” plan (which he wasn’t very successful in pushing through Congress before he was assassinated).
LBJ is probably the most WTF President of the 20th Century. He pushed the Civil Rights Act, and created the Vietnam fiasco.
I like this story. Someone who worked for Kennedy and Johnson put it this way; if JFK came into your office and saw you reading he’d assume you were working. If LBJ saw you reading a book he’d think you were goofing off.
If we hadn’t had Wilson we wouldn’t have had Hitler, or Stalin. We may not have had Nixon and Reagan…
https://www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_SFH502Direct.pdf
the federal government will loan you the money for the house at below market rates, and if their rate is still too expensive, they can give you a deferment.
my effective interest rate today is 1%.
please take money from the federal government.
fuck the banks.
Lots of sellers will prefer cash or regular loans so your application is very likely to be last in line. Plus the applications are much, much more complicated and mortgage applications are already a bitch. But then it’s usually a once in a lifetime experience and may be the only option for a lot of people do this is more of a heads up than an attempt to discourage anyone from applying.
we lost 4 bids and saw almost 2 dozen houses before finding a winner
Cash I understand, but what’s the reasoning behind sellers preferring regular loans instead?
USDA isn’t gonna buy a fixer upper. they want people to have safe housing. this might mean the seller is going to need to fix the problems
for us, we liked that, but it did mean we lost our on a couple bids. which was good: we found a real jewel.
In a hot market/location this will never happen. Even with a regular loan there’s a bidding war on houses with obvious issues.
i live in a hot market. i got one. it was a slog, but it happened.
edit: we were approved in november. we put in multiple offers and had to periodically get re-approved by the usda, but we had an offer accepted mid march and closed in april.
for a brief period, we kept the “apartment in the city” for a month and moved one sub-compact car worth of belongings across town every night. not really relevant, but i’m going to remember fondly the brief time that we kept an apartment in the city, because that shit is never gonna happen again for poor schlubs like us.
Oh ok makes sense.
This. The inspection and repair criteria are higher than for private lending. We sold our house to someone using this program and had to fix stuff that we didn’t need fixed when we bought the house. It wasn’t a huge deal but it did add a week to the process to get it fixed and reinspected.
“applicants must be without decent, safe, and sanitary housing” is that a hard stop or is there some flexibility on that condition? im not trying to pry into your previous situation, but that makes it sound a bit more dire than the average renter.
i had a lease on an apartment when the process started.
edit: honestly if the requirement were that you were homeless or next to it,i don’t think anyone would ever apply for this program. the first application is daunting, and then there is the matter of actually shopping for a house.
ah, good to know. thanks for the tip!
Saved bro i need to marry a real welfare qween
Humans can’t marry corporations.
fair warning: my application packet was around 100 pages
Why tho, republicans are fucking horrible people.
Smith explained how, just a few years ago, $60-$70K a year would have been sufficient to qualify for a home.
Yeah, no. It was more than a few years ago.
I think that this has been trouble since 2007. Financial institutions went from giving lots of home loans to only giving corporations and the elite loans.
2007 was 4 years ago.
checks math
Everything checks out here
I don’t have a full Orlando market research report but pre-pandemic (2018) you could get a house in my neighborhood (Davenport) for $265k-325k. In 2024 the starting price is ~$650k. In 2018 I bought a house (Orlando) for my aunt to live in for $150k. After buying the little bungalow, I saw the rest of that neighbohood get gobbled up by investment funds and now it is almost completely rentals. The current comps have it at $325k.
Homes were dirt cheap from 2009 until about 2013, but everyone was broke. Prices were reasonable from 2014 to maybe 2018 (maybe). The post lockdown boom and investment fund buying spree has been insane.
But then you would have to live in Davenport. I’ve never seen a more literal suburban hell. 30 minutes of side streets to go anywhere without traffic.
You are not wrong.
This happened because people were lulled into voting for the very people who gave their fair share of corporate profits to the rich. Looking at you, Republicans, especially Ronald Reagan.
You can argue that Democrats inability to support the working class and unions helped to kill the American dream. “Both sides” are capitalists.
Hell, Clinton essentially adapted Reaganism for the Democratic Party.
I didn’t expect upvotes. It’s an election year for christ sakes.
At least on lemmy, more people understand dems v repubs isn’t left v right, it’s mid right v far right.
Don’t blame me I voted for Kodos
Lemmy is a leftist haven
And they’ll do it again.
dude ronald regan gave my family papers my cousins are named ronald and ronny
i am a communist too. sometimes bad people do good things
Poor tax laws on the richest 1% killed the American Dream.
Sufficient application of guillotines will restore it.
wow thats archaic we use the Puyi method now dude
Puyi
death by kidney disease?
Capitalism did that too. Capitalism is in a constant state of decline with short upward bursts of innovation that too will decline. Enshittification infects all.
My wife and I manage it because we both work.
I didn’t intend on marriage as a way to own a home but I couldn’t do it without my partner.
TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
Maybe in the middle of nowhere America. Meanwhile my wife and I make well above that in Los Angeles and we can’t afford the monthly on a two bedroom house in a sketchy neighborhood.
SF Bay Area, $125k a year, I gave up on buying a house. I’ll just inherit my parents’ when they die, thanks.
Most people’s parents will end up selling their home to pay for cruise ships, and or palliative care.
Shhh, don’t take this away from me
Which will be bought in cash above asking by capital funds exclusively for rental purposes.
So why do people live there?
All I ever heard is how absurd the cost of living is in Cali, is the weather really that good?
Being born there, living your entire life there, your whole family and all your friends are there, you went to high school and college there so it’s easier to transfer to a CSU for grad school, and cheaper because you won’t have to pay non-resident fees, etc etc. The same reason people don’t move from other places. Besides, it takes a lot of savings to move, especially out of state, especially when you have to keep going back and forth to look at places. There’s also just not wanting to move. I am really not ok with being forced out of my home and away from my family because of bullshit like this.
And yes the weather really is that good - in Southern California.
Makes sense. I certainly wouldn’t want to move because of greedy BS either.
I guess the trade off is higher costs for everything.
I’m sorry, you think people that can’t afford a basic living situation in California are able to up and move their entire lives that easily? Do you have any idea how much that costs?
People making 120k a year can… I also live in socal area and make less than that
Well, it sounds like basic living there is way higher than anywhere else, so maybe?
If you already live in a place that is difficult for you to afford, how are you supposed to be able to afford moving to a different state? You’re having trouble paying rent/mortgage, but you’re still able to save a few grand to move your whole life across state lines? What about changes in your income due to the change of state?
There are so many more factors than “you make x, this place costs y, so move dipshit.”
Yeah, I get it…I know it doesn’t come through a simple text question, but I wasn’t born yesterday 😉
I wasn’t really asking from the standpoint of every single person’s circumstances from the well off to the impoverished. It was more of what would you do if there was choice.
I know people who were behind on rent, scraped enough gas money to just drive ina direction and found themselves somewhere they could make under the table money to get started in another place.
That’s a hard and scary thing to do. If you have a family, almost impossible unless you’re on the edge.
Good thing investment “firms” are buying up all the rental properties, right, guys? Neofeudalism for the win!
But you can buy a microshare of the fund through Robinhood, so it all works out. Right?
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Mr Realtor can blame his own industry for a good portion of the problem.
Blame SFR
What is SFR?
SFR
Single Family Real Estate. It is buying single family homes as an investment.
This is what happens when most people think the disparity in wealth should grow.
It does.
If you want the results of the American dream the only way to do so is crime. Probably always been true, but boy is it truer than ever now.
I achieved the American dream by leaving America.
dont glamorize it man criminals get gulag /supermax
That or they get elected/promoted.
I can technically afford my house and acre on my wife and mys income
Doesn’t mean I’m not currently planning and setting up my network of legit customers of shitake and no other mushrooms to help make sure I can survive, no sir
inflation has hit ALL industries
Yeah, back in my day. A simple theft only got you a few days in jail. With inflation, we’re looking months now for the same crime.
Shakes head
transportation costs, suppliers, loss prevention is not 100%, insurances, food, lower customer base due to inflation/ cheaper lower quality alternatives (goes hand in hand), office supplies/ services, etcetera
inflation has hit everyone even in the shady areas
Probably always been true
No, it really was true for a long time (as long as you weren’t a minority). Wealth disparity has skyrocketed in the last few decades. It’s why boomers can’t grasp that people just can’t afford to live–in their day, anyone who couldn’t afford to live was just plain lazy*.
*Wasn’t true, but that’s a whole other thing.
It wasn’t perfect but there was dignity to being an American 24 years ago. Inequality is not helping anything at all
Note that the source of this opinion piece is TikTok. The salary needed for a middle class existence varies wildly from city to city.
The source is an Orlando area Realtor who happens to have a TikTok.
A local realtor doesn’t have the qualifications to make broad claims about income or affordability for the entire nation.
I’m in Salt Lake City, for example, and a recent article has the necessary salary to afford a home around $140,000/year. I moved here in part because it was a much cheaper alternative to D.C. and the minimum salary to own a home is still $140,000.
There are some pockets of affordability out there.
The map in this article is nice (though you have to scroll through some annoying stuff to get there):
https://www.cnn.com/interactive/2023/06/homes/housing-market-prices-affordability-dg/
I would guess those would be the areas of next major population influx as people continue to flee high cost of living in other areas. Climate change making much of the west and southeast more unattractive in the long run too. While the more affordable areas are still relatively cheap compared to the rest of the country, most of them have already been seeing large spikes in housing prices too. We need some major policy changes to encourage cheap and higher density housing, better use of land in general, can’t just keep building only single family homes in low density areas sprawling out forever.
Smith explained how, just a few years ago, $60-$70K a year would have been sufficient to qualify for a home.
“Most people are carrying student loan debt, which is at an all-time high, and the average payment in the country is $500 a month for your college degree. [There are] some people I’m seeing in my comment section saying ‘$500, I wish, it was $1,200 a month for me’,” said Smith.
“If you are someone who bought a house before 2020 and you have it paid off or you have a 3% interest rate, you are not burdened by the housing costs like the 2024 adults are now,” the relator said, explaining how debt, especially college debt, housing costs and childcare are burdening millennials and Gen Zers starting their lives.
It’s scary how everything seemed to change so fast, yet the ingredients for this very situation have been simmering for some time. It’s no coincidence that since student loans ballooned it didn’t take much for the dominoes to really begin to fall and have drastic effects on everything else downstream.
At least part of the equation is that Trump pressuring the Fed to lower rates (that were already historically low in the first place) to add even more fuel to what already was an overheated market prior to COVID completely wrecked the housing market for the foreseeable future.
I bought in 2020 and I’m glad I did because if I hadn’t I would’ve likely been permanently priced out.
Yeah, I bought a couple years before and I’m glad I did, but it’s really sad to think of everyone who couldn’t or didn’t for whatever reason.
Everything is so messed up now and the uncertainty will probably continue for awhile.
Yet disability pays $11k a YEAR that’sthe same as $5.42/hour.
The US government would rather disabled people just not exist. From their perspective, nobody on disability creates shareholder value, therefore you are subhuman. And non-disabled humans to them are cattle.
If we have more than $2k in assets, a number that hasn’t changed since 1974, we lose our food and Medical on SSI, too… it’s ridiculous
