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Arkansas and other places where land is effectively free work differently than California. You buy a starter home straight out of college, maybe you improve it,

by mrkurt 10y ago

Arkansas and other places where land is effectively free work differently than California. You buy a starter home straight out of college, maybe you improve it, it'll probably increase in value marginally over the next 5 to 7 years. Then you sell it and put what you've "earned" into your next house. My friends back in Oklahoma are on their third or fourth houses (we're all around 35) at this point. In the Bay Area, you probably don't buy a house until you're 35. In fact, you have to get a bit lucky to be able to do it then. Houses aren't retirement plans in most places. And I think that's good.

logfromblammo 10y ago
If you have ever seen hermit crabs do a multiple shell swap, that's about how it works. In areas where housing is cheap enough to have younger homeowners, the sale of a big home can often depend on a chain of other sale contingencies that depend on whether a first-time homebuyer can scrape up a $15k down payment. So you have the 1/1 homes for young singles, 2/1 homes for young couples, 3/2 and larger homes for families, and then maybe a step-down option for empty-nesters. My chain broke in 2007, when I got canned in a buyout, had to move to find work, and couldn't sell either the 3/2 or the previous 2/1 (rented out) at a decent price, and all my accumulated equity vanished. I would probably also be on my 3rd or 4th house by now if I hadn't been busted back down to tenant. I definitely can't afford SV home prices, even with a higher salary. I need at least a 3/2, and don't have enough millions in the bank to get one anywhere near SF Bay. Homes aren't the retirement plan around here, but the retirement plans definitely factor in not paying rents or mortgages after about age 55.
TulliusCicero 10y ago
Yeah, but in the bay area you can live in a small apartment, save a ton of money that you put into stocks, and then eventually use those investments to buy a house outright in a cheaper part of the country when you move. > Houses aren't retirement plans in most places. And I think that's good. Absolutely; the fact that they've worked that way in some places is completely poisonous. For one thing, it's obviously not sustainable; you can only have the inflation-adjusted average value of a home double so many times before it's literally impossible for anyone but the actually wealthy to afford. Secondly, it creates a strong incentive to oppose building more housing, which causes all kinds of problems.

by mrkurt 10y ago

logfromblammo 10y ago

If you have ever seen hermit crabs do a multiple shell swap, that's about how it works. In areas where housing is cheap enough to have younger homeowners, the sale of a big home can often depend on a chain of other sale contingencies that depend on whether a first-time homebuyer can scrape up a $15k down payment. So you have the 1/1 homes for young singles, 2/1 homes for young couples, 3/2 and larger homes for families, and then maybe a step-down option for empty-nesters. My chain broke in 2007, when I got canned in a buyout, had to move to find work, and couldn't sell either the 3/2 or the previous 2/1 (rented out) at a decent price, and all my accumulated equity vanished. I would probably also be on my 3rd or 4th house by now if I hadn't been busted back down to tenant. I definitely can't afford SV home prices, even with a higher salary. I need at least a 3/2, and don't have enough millions in the bank to get one anywhere near SF Bay. Homes aren't the retirement plan around here, but the retirement plans definitely factor in not paying rents or mortgages after about age 55.

TulliusCicero 10y ago

Yeah, but in the bay area you can live in a small apartment, save a ton of money that you put into stocks, and then eventually use those investments to buy a house outright in a cheaper part of the country when you move. > Houses aren't retirement plans in most places. And I think that's good. Absolutely; the fact that they've worked that way in some places is completely poisonous. For one thing, it's obviously not sustainable; you can only have the inflation-adjusted average value of a home double so many times before it's literally impossible for anyone but the actually wealthy to afford. Secondly, it creates a strong incentive to oppose building more housing, which causes all kinds of problems.