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> In the 40s and 50s a middle class household could get by just fine (and the house be bought) by a single income earner. Has that really changed? A manufactu

> In the 40s and 50s a middle class household could get by just fine (and the house be bought) by a single income earner. Has that really changed? A manufacturing business in my area is currently hiring everyone who shows up to an interview. They pay they are offering isn't wonderful (at least if you concept of money has been warped by the IT industry), but you should expect to make around $40,000 per year to start. Perusing the real estate listings, I see a three bed, two bath detached home near to that business listed at $139,000. Rule of thumb says you shouldn't spend more than three times your income on housing, but many suggest you can go as high as five times income. We're at 3.4 times income. It's not ideal, but it seems doable, especially if you want to live like it is the 1940s. The cost of cell phone each month can easily apply $50-100 more to your mortgage payment each month instead. I will point out that our example job is one that you can walk into and start today. If you take a little more care and look around and risk a few rejections before finding work, there are plenty of jobs that pay considerably more. In those cases, one person buying a home should not be an issue whatsoever. A $45,000 income would provide the necessary amount for the three times income rule of thumb to buy this home in question.

Retra 8y ago
Then you decide have your first child and every reasonable thing you said suddenly looks impossible.
- randomdata 8y ago
  I don't see why? The three times income rule already carries the assumption that you have children. When you get out to the five times income rule you are probably right that children are out of the question, but we're only sitting at 3.4 times income. With the potential to earn more with a little effort, bringing us closer to the ideal three times income. Not even in the 1940s or 1950s could you buy a house with a week's pay. Housing has always been a substantial cost.
- ryandrake 8y ago
  Or you get a major illness, or you ever want to retire...
torpfactory 8y ago
I think folks are spending quite a bit more on things they need which used to be much cheaper. Healthcare and higher education come to mind as expenses which have started to eat the average family's budget much more than in the past. The medicine is much better today than in the 50's of course. We ought to include a full picture of required spending in relation to housing costs.
- randomdata 8y ago
  On the other hand, essential costs like food and clothing have dropped substantially over time. In the 40s and 50s food and clothing accounted for approximately 50% of one's disposable income. Now it is closer to 30%. But your comment does raise an interesting question: If I were to hypothetically spend $100,000 for an optional status symbol like a Ferrari or higher education and can no longer afford to own a home due to that purchase, does that indicate a problem with the housing market?
  - michaelmrose 8y ago
    People that can't afford housing don't buy Ferraris and they spend money on higher education because that is sold to the entire populace at large as the way to get ahead. Further good jobs use it to distinguish between those who are worth looking at and those that aren't even where the education isn't truly required to do the job. Also we really don't want to admit to ourselves that the biggest step up would be to go back in time and drop out of the right uterus.
  - InclinedPlane 8y ago
    Spending on food, clothing, and housing does not factor into "disposable income".
    - randomdata 8y ago
      Where would you factor it in then? "Disposable income is total personal income minus personal current taxes"[1] Where else would the money come from? [1] https://en.wikipedia.org/wiki/Disposable_and_discretionary_income https://en.wikipedia.org/wiki/Disposable_and_discretionary_i...
slv77 8y ago
Households today spend more on cell phones and communication but also spend less on fine china, dress clothes and food. When you net out all the pluses and minuses households today spend much more on housing, healthcare, daycare, transportation (two cars, for two jobs) and education. When you look closely the two bed, two bath detached home it’s likely in a school district that is underperforming and while the home may be slightly larger than those in the past it’s 30+ years old. This is detailed elegantly in the Two Income Trap by Elizabeth Warren. The thing that is crazy is that there is any debate in the subject. Real productivity growth has averaged 2% for the last 100 years in the US. Early in the last century they they were speculating that if productivity growth kept up at that rate their grandchildren would only need to work a couple of hours a week and what would they do with all their free time? How did we get here?
- roenxi 8y ago
  gp actually answered that with "especially if you want to live like it is the 1940s". There is a quiet denial about how luxurious modern living is. People just flat-out underestimate how much work it takes to keep the infrastructure of the modern world in place and humming - traditional infrastructure, IT grids, distribution of goods and services (particularly maintaining an enormous fleet of wheeled vehicles). I know a lot of people who are poorer than I am but spend more, because they just don't clamp down on things like car usage, sending money to their children, pets and ordering a daily coffee. The only thing that will force them to live a simple lifestyle is literally having no money. Sometimes people maneuver into a position where they have no choice, because they make bad long-term lifestyle choices early on, but so far the evidence is that human demand for stuff and services is infinite. People use their spare hours to gather and consume more.
  - deleted 8y ago
    [deleted]
  - FranzFerdiNaN 8y ago
    Ah yes. The poor are poor because of poor morals, instead of you, who is of good moral standing. The poor are poor due to lack of money. This is caused by increasing costs of healthcare, education and houses, you know those basic things needed to live. And by a capitalistic class taking about 95% of all gains from productivity increases. Saying millions of people are poor because because of bad morals is disgusting and completely false.
michaelmrose 8y ago
If we are to compare eras and discover what's different I would suggest we ought to compare broad numbers not anecdotes. Even your example is suspect. The real median income at present in the US is 31k meaning half make less. 45k puts you at the 59th percentile better than almost 2/3 of people. Clearly not everyone who wants to is earning 45k. A median earner with a spouse and 2 kids is liable to take home less than 1100 every 2 weeks after taxes but your 45k earner will have more like 1400. They will get 3 paychecks in 2 billing cycles but will have to live on 2 most cycles. Median rent is almost 900 a month. Health insurance for a family is going to run 500 usd says that their food will be 150 a week 2 crappy cars maybe 400 a month. Utilities at least 200. Communications at least another 100. We are already at 2700/2800 without including clothing or detergent to wash them. The real question is where is the person supposed to save the money to move from the apartment to the house in the first place. At 45k you are too well off to qualify for a lot of benefits except in areas that are very expensive to live in, but still too poor to support a household. Incidentally areas where you can buy a three bedroom house outside of the crime ridden hood tend not to have a huge number of jobs so everyone go and move to Ohio isn't a tenable solution for the present economic situation.
- randomdata 8y ago
  > The real median income at present in the US is 31k meaning half make less. You will find that the full-time median income is much closer to $50,000 though. > Clearly not everyone who wants to is earning 45k. But, in fact, as this is a full-time job, you are actually below the median. When you add in high school students working part time, then you're right, but that's not particularly meaningful. > Median rent is almost 900 a month. Seems high for the area in question, but regardless, since you are buying a home, I'm not sure why you would also pay rent to someone else? > 2 crappy cars maybe 400 a month. Maybe the person paying for the house needs one car to get to work. Why do you need two cars? > Communications at least another 100. A landline phone where the house is located is $23.50/month. Another $35/month if you want internet service. That's a long way from $100 and already way more than someone in 1940 would have. If you really want the 1940s house-buying experience, you don't need internet service. > Incidentally areas where you can buy a three bedroom house outside of the crime ridden hood tend not to have a huge number of jobs so everyone go and move to Ohio isn't a tenable solution for the present economic situation. I don't know about the economic situation in Ohio, but the place in question has exceptionally low unemployment and substantial job growth. That's why businesses like the one I mentioned have to hire everyone who shows up. If they didn't, they wouldn't have any employees. I don't think anyone expects that you should be able to throw at dart at a map and be able to afford a home anywhere it lands. Not even people in the 40s and 50s could do that. They had to be quite discerning about where they settled in order to do so. That much remains true today.
thunder_clap 8y ago
Living in Sydney Australia spending three times my income or less would be impossible. Didn't think it would be possible within decent travel of any city hub.
- randomdata 8y ago
  I'm sure there are places where housing is unaffordable, but that was also true in the 40s and 50s. The people in that time couldn't just live anywhere they felt like. They did have to move to specific places to find that housing that was affordable, just as is true today. It's interesting how we are so quick to ignore the uncomfortable details about what home ownership in the 40s and 50s entailed, only focusing on the fact that it was possible, then thinking we can apply that to our ideal living situation in 2018.
cc439 8y ago
>A manufacturing business That alone cuts out nearly half the country. The skilled labor economy has been hollowed out and is nearly extinct in most places. You and I live in similar places and the dream remains alive here, but it is long dead in the corner of the country in which I was raised.
- randomdata 8y ago
  It is true that you may have to move to find places where a single income can buy a house, but that has always been true. The necessity of having to move to find better economic conditions has been true since the dawn of humankind. It's why we left Africa, and eventually covered the globe. It is not like in the 40s and 50s you could live anywhere you wanted either. In fact, the 40s and 50s is right in the heart of the urbanization movement that happened precisely because capital concentrated, exactly like what is happening in many major cities today, and regular people could no longer afford to live where they grew up and had friends and family, and were left with little choice but to leave their existing life and head for the city to start a new one. It wasn't particularly pleasant. Most people don't crave that kind of adventure. Most people would rather stay near to friends and family and the life they know, but sometimes you don't get that option. That remains true today.
  - pixl97 8y ago
    The difference between then and now, is now the planet is full. At some point there must be a paradigm shift in this line of thinking or very bad things will happen.
tremon 8y ago
In the 40s and 50s a middle class household could get by just fine (and the house be bought) by a single income earner. > Has that really changed? Yes. From http://www.mybudget360.com/the-magical-2-housing-ratio-between-median-nationwide-home-prices-and-household-income/ http://www.mybudget360.com/the-magical-2-housing-ratio-betwe...: > Back in 1950 the median home price cost a little above 2 times the annual median household income [2.2] > in 1970 the ratio became more favorable to US households [1.7] > After this point[..] prices remained fairly stable only because of the two income household, until 2000 [2.3] > After this point, things went haywire. Even today after the [subprime mortgage crisis] the ratio is still out of sync with 50 years of data [3.3] Keep in mind that this data is comparing housing prices to household income, not per-capita income.
bumholio 8y ago
> Rule of thumb says you shouldn't spend more than three times your income on housing Is this a rural rule of thumb? Looking around me, I see people routinely paying 5-10 times their annual income to get a crappy city apartment and spending the majority of their income making mortgage payments. The alternatives, spending the majority of their income on rent or moving to an area where the majority of the income would vanish, do not seem better.
- scarface74 8y ago
  A conforming loan usually requires you to have a debt to income ratio of 43%. I'm definitely not in a rural area and you can buy a decent house in a slightly above average school system for $200K - if you live in the burbs.

Retra 8y ago

Then you decide have your first child and every reasonable thing you said suddenly looks impossible.

randomdata 8y ago
I don't see why? The three times income rule already carries the assumption that you have children. When you get out to the five times income rule you are probably right that children are out of the question, but we're only sitting at 3.4 times income. With the potential to earn more with a little effort, bringing us closer to the ideal three times income. Not even in the 1940s or 1950s could you buy a house with a week's pay. Housing has always been a substantial cost.
ryandrake 8y ago
Or you get a major illness, or you ever want to retire...

torpfactory 8y ago

I think folks are spending quite a bit more on things they need which used to be much cheaper. Healthcare and higher education come to mind as expenses which have started to eat the average family's budget much more than in the past. The medicine is much better today than in the 50's of course. We ought to include a full picture of required spending in relation to housing costs.

randomdata 8y ago
On the other hand, essential costs like food and clothing have dropped substantially over time. In the 40s and 50s food and clothing accounted for approximately 50% of one's disposable income. Now it is closer to 30%. But your comment does raise an interesting question: If I were to hypothetically spend $100,000 for an optional status symbol like a Ferrari or higher education and can no longer afford to own a home due to that purchase, does that indicate a problem with the housing market?
- michaelmrose 8y ago
  People that can't afford housing don't buy Ferraris and they spend money on higher education because that is sold to the entire populace at large as the way to get ahead. Further good jobs use it to distinguish between those who are worth looking at and those that aren't even where the education isn't truly required to do the job. Also we really don't want to admit to ourselves that the biggest step up would be to go back in time and drop out of the right uterus.
- InclinedPlane 8y ago
  Spending on food, clothing, and housing does not factor into "disposable income".
  - randomdata 8y ago
    Where would you factor it in then? "Disposable income is total personal income minus personal current taxes"[1] Where else would the money come from? [1] https://en.wikipedia.org/wiki/Disposable_and_discretionary_income https://en.wikipedia.org/wiki/Disposable_and_discretionary_i...

slv77 8y ago

Households today spend more on cell phones and communication but also spend less on fine china, dress clothes and food. When you net out all the pluses and minuses households today spend much more on housing, healthcare, daycare, transportation (two cars, for two jobs) and education. When you look closely the two bed, two bath detached home it’s likely in a school district that is underperforming and while the home may be slightly larger than those in the past it’s 30+ years old. This is detailed elegantly in the Two Income Trap by Elizabeth Warren. The thing that is crazy is that there is any debate in the subject. Real productivity growth has averaged 2% for the last 100 years in the US. Early in the last century they they were speculating that if productivity growth kept up at that rate their grandchildren would only need to work a couple of hours a week and what would they do with all their free time? How did we get here?

roenxi 8y ago
gp actually answered that with "especially if you want to live like it is the 1940s". There is a quiet denial about how luxurious modern living is. People just flat-out underestimate how much work it takes to keep the infrastructure of the modern world in place and humming - traditional infrastructure, IT grids, distribution of goods and services (particularly maintaining an enormous fleet of wheeled vehicles). I know a lot of people who are poorer than I am but spend more, because they just don't clamp down on things like car usage, sending money to their children, pets and ordering a daily coffee. The only thing that will force them to live a simple lifestyle is literally having no money. Sometimes people maneuver into a position where they have no choice, because they make bad long-term lifestyle choices early on, but so far the evidence is that human demand for stuff and services is infinite. People use their spare hours to gather and consume more.
- deleted 8y ago
  [deleted]
- FranzFerdiNaN 8y ago
  Ah yes. The poor are poor because of poor morals, instead of you, who is of good moral standing. The poor are poor due to lack of money. This is caused by increasing costs of healthcare, education and houses, you know those basic things needed to live. And by a capitalistic class taking about 95% of all gains from productivity increases. Saying millions of people are poor because because of bad morals is disgusting and completely false.

michaelmrose 8y ago

If we are to compare eras and discover what's different I would suggest we ought to compare broad numbers not anecdotes. Even your example is suspect. The real median income at present in the US is 31k meaning half make less. 45k puts you at the 59th percentile better than almost 2/3 of people. Clearly not everyone who wants to is earning 45k. A median earner with a spouse and 2 kids is liable to take home less than 1100 every 2 weeks after taxes but your 45k earner will have more like 1400. They will get 3 paychecks in 2 billing cycles but will have to live on 2 most cycles. Median rent is almost 900 a month. Health insurance for a family is going to run 500 usd says that their food will be 150 a week 2 crappy cars maybe 400 a month. Utilities at least 200. Communications at least another 100. We are already at 2700/2800 without including clothing or detergent to wash them. The real question is where is the person supposed to save the money to move from the apartment to the house in the first place. At 45k you are too well off to qualify for a lot of benefits except in areas that are very expensive to live in, but still too poor to support a household. Incidentally areas where you can buy a three bedroom house outside of the crime ridden hood tend not to have a huge number of jobs so everyone go and move to Ohio isn't a tenable solution for the present economic situation.

randomdata 8y ago
> The real median income at present in the US is 31k meaning half make less. You will find that the full-time median income is much closer to $50,000 though. > Clearly not everyone who wants to is earning 45k. But, in fact, as this is a full-time job, you are actually below the median. When you add in high school students working part time, then you're right, but that's not particularly meaningful. > Median rent is almost 900 a month. Seems high for the area in question, but regardless, since you are buying a home, I'm not sure why you would also pay rent to someone else? > 2 crappy cars maybe 400 a month. Maybe the person paying for the house needs one car to get to work. Why do you need two cars? > Communications at least another 100. A landline phone where the house is located is $23.50/month. Another $35/month if you want internet service. That's a long way from $100 and already way more than someone in 1940 would have. If you really want the 1940s house-buying experience, you don't need internet service. > Incidentally areas where you can buy a three bedroom house outside of the crime ridden hood tend not to have a huge number of jobs so everyone go and move to Ohio isn't a tenable solution for the present economic situation. I don't know about the economic situation in Ohio, but the place in question has exceptionally low unemployment and substantial job growth. That's why businesses like the one I mentioned have to hire everyone who shows up. If they didn't, they wouldn't have any employees. I don't think anyone expects that you should be able to throw at dart at a map and be able to afford a home anywhere it lands. Not even people in the 40s and 50s could do that. They had to be quite discerning about where they settled in order to do so. That much remains true today.

thunder_clap 8y ago

Living in Sydney Australia spending three times my income or less would be impossible. Didn't think it would be possible within decent travel of any city hub.

randomdata 8y ago
I'm sure there are places where housing is unaffordable, but that was also true in the 40s and 50s. The people in that time couldn't just live anywhere they felt like. They did have to move to specific places to find that housing that was affordable, just as is true today. It's interesting how we are so quick to ignore the uncomfortable details about what home ownership in the 40s and 50s entailed, only focusing on the fact that it was possible, then thinking we can apply that to our ideal living situation in 2018.

cc439 8y ago

>A manufacturing business That alone cuts out nearly half the country. The skilled labor economy has been hollowed out and is nearly extinct in most places. You and I live in similar places and the dream remains alive here, but it is long dead in the corner of the country in which I was raised.

randomdata 8y ago
It is true that you may have to move to find places where a single income can buy a house, but that has always been true. The necessity of having to move to find better economic conditions has been true since the dawn of humankind. It's why we left Africa, and eventually covered the globe. It is not like in the 40s and 50s you could live anywhere you wanted either. In fact, the 40s and 50s is right in the heart of the urbanization movement that happened precisely because capital concentrated, exactly like what is happening in many major cities today, and regular people could no longer afford to live where they grew up and had friends and family, and were left with little choice but to leave their existing life and head for the city to start a new one. It wasn't particularly pleasant. Most people don't crave that kind of adventure. Most people would rather stay near to friends and family and the life they know, but sometimes you don't get that option. That remains true today.
- pixl97 8y ago
  The difference between then and now, is now the planet is full. At some point there must be a paradigm shift in this line of thinking or very bad things will happen.

tremon 8y ago

In the 40s and 50s a middle class household could get by just fine (and the house be bought) by a single income earner. > Has that really changed? Yes. From http://www.mybudget360.com/the-magical-2-housing-ratio-between-median-nationwide-home-prices-and-household-income/ http://www.mybudget360.com/the-magical-2-housing-ratio-betwe...: > Back in 1950 the median home price cost a little above 2 times the annual median household income [2.2] > in 1970 the ratio became more favorable to US households [1.7] > After this point[..] prices remained fairly stable only because of the two income household, until 2000 [2.3] > After this point, things went haywire. Even today after the [subprime mortgage crisis] the ratio is still out of sync with 50 years of data [3.3] Keep in mind that this data is comparing housing prices to household income, not per-capita income.

bumholio 8y ago

> Rule of thumb says you shouldn't spend more than three times your income on housing Is this a rural rule of thumb? Looking around me, I see people routinely paying 5-10 times their annual income to get a crappy city apartment and spending the majority of their income making mortgage payments. The alternatives, spending the majority of their income on rent or moving to an area where the majority of the income would vanish, do not seem better.

scarface74 8y ago
A conforming loan usually requires you to have a debt to income ratio of 43%. I'm definitely not in a rural area and you can buy a decent house in a slightly above average school system for $200K - if you live in the burbs.