14-10-2003 06:17									#1
	Interesting study on American bankruptcy Support Apolyton, pre-order Civilization IV

Go here. You'll have to sit through an ad, but the article is worth it.

Interesting findings.
Despite modern homes having 75% more income than their parents generation (because of two income earners), the average family has less left over after paying their bills than their parents generation.

The cost of a mortgage payment has increased 70 times faster than an average man's wages.

"In 75 percent of the metropolitan areas across America, a police officer cannot buy a house on one income. The same is true for a teacher or a firefighter."

Families today are more at risk of bankruptcy than divorce. This is because today's family's are dependent on two incomes, which means there are twice as vulnerable to losing a job, having their income diminished, and not being able to meet their bills.

Yikes!

	14-10-2003 06:21									#2
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I've said many times personal bankruptcy is at an all-time high.
Startling.

	14-10-2003 06:28									#3
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quote: Originally posted by SlowwHand I've said many times personal bankruptcy is at an all-time high. Startling.

Well, Sloww, that's not the new part. I think I put up a thread two years ago about how the credit industry was trying to gut bankruptcy. Most people think, including me, that people who go bankrupt by and large had a problem controling their spending, bought too many lattes and toys, etc.

What this study is saying is that is largely not the case. What is happening is that home costs have increased massively. In the early 70s, the average home had 5.7 rooms. Today it's 6.1, so it's not like people are buying huge homes. The average home being purchased is 25 years old.

The problem is the cost of housing in general, and the cost of housing in districts with good school's specifically.

	14-10-2003 06:30									#4
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According to the teaser, much of the problem comes from buying homes in areas with good schools.

It's sad. When I was growing up, all [white] schools were good. Then for the last 30 years, the California public school system slipped from being No. 1 in the nation to being No. 47. Grey Davis took office took us back up to No. 33 or 27 (depending on who you believe). But he was thrown out of office for increasing spending.

	14-10-2003 08:16									#5
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Home prices have gone up much faster than wages, partly because of extra mandates, regulation, and other costs being heeped on land developement and building, but for part of that you get better homes. Lenders and byiers cost increased esponetially after the S & L and banking disaters of the eighties. After all thoses new regulation and underwriting requirment came in, it cost me 12 times as much in fees and cost ro rollover a project loan, with the same lender, for less risk with more equity and value in the collateral, than it did to get the initial loan. One example: the initial apraissal was 25 pages, the apprasial to roll it over was 200 something pages.

	14-10-2003 08:24									#6
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that is misleading Che

One reason Mortgage payments are so high is because banks no longer require 20% of the total cost of the home.

This is why you see more foreclosures

But a benefit to that is some poor (including minorities) families who would never be able to afford to put up 20% of the house cost 50 years ago, now can afford to live in a home. Some of them don't make it, but many do.

Look at the positive sides of things

	14-10-2003 08:25									#7
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again you are wrong Che

Americans are buying much, much, much larger homes than 50 years ago. Though outdoor space has decreased. But much of the cost is in the home.

	14-10-2003 08:44									#8
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Since US population is increasing land prices are also going up. Still US ppos got it good, in many other countries owning a house is unrealistic for most of the population.

	14-10-2003 08:45									#9
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taxes have also increased...

question...

quote: Today it's 6.1

define room... because the typical two story rowhome in philly got 6-8 rooms depending on how old the house is (older ones in north philly have more rooms than the post-WW2 ones in Frankford)

so 6.1 seems tiny compared to these ghetto rowhomes that cost less than 50K to buy.

	14-10-2003 09:19									#10
	supply and demand Support Apolyton

the supply of land has not increased. the number of people seeking housing has increased. it is only natural that housing prices have risen faster than inflation. it is logical that this will continue until the number of people seeking housing stabilizes or decreases.

	14-10-2003 09:21									#11
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we have hundreds of abandoned houses in philly... some real big Victorian ones too. delapidated but massive. Could easily fit 8 families in these former mansions if you got rid of the dealers, homeless squators, and fixed the houses up.

	14-10-2003 09:52									#12
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quote: Originally posted by Smiley Since US population is increasing land prices are also going up. Still US ppos got it good, in many other countries owning a house is unrealistic for most of the population.

Last I read, the population increase was almost exclusively from immigration, since our birth and death rate are nearly equalling each other out at this time.

	14-10-2003 09:59									#13
	Why doesn't matter Support Apolyton, buy Galactic Civilizations

It doesn't matter why the population is growing. What matters is that the population is growing. Unless of course, you are advocating shutting off all immigration?

	14-10-2003 10:01									#14
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I know -- I just wanted to make sure everyone was not assuming the wrong factor in our country's population growth.

call it nit-picking, I guess

	14-10-2003 14:37									#15
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The thing is, how fast has population been increasing as compared to the price of real estate?


che,

I think a better comparison is total indoor areas, not number of rooms, since rooms can vary a lot in size.

	14-10-2003 14:42									#16
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Ha! You think you have a problem. Come to congested old England my friends! The Government is in the pocket of the morgaged classes. For 50 years we've had morgage tax relief and prices have continued to sky-rocket.

Many first-time buyers cannot get onto the property ladder, since they can't afford the morgage.

Example, my parents house was bought for 40,000 in 1983. It's now worth 120,000. Even in the relatively deprived wildes of Scotland!

	14-10-2003 20:11									#17
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quote: Originally posted by Dissident again you are wrong Che

Did you even read the article?

	14-10-2003 20:11									#18
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Evil, our house prices are as out-of-whack as they were in 1989 - there is likely to be another fall in the real price of housing by around 20% to 30% over the next few years (like there was in 1973-77 and 1989-93)

	14-10-2003 20:17									#19
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So, have you/are you selling your property now?

You could make quite a bit by selling now, renting for a bit, and then buying again in a few years.

	14-10-2003 20:18									#20
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quote: I've said many times personal bankruptcy is at an all-time high.

It might be. But as a percentage of the population (the thing you should be looking at), it is not.

	14-10-2003 20:27									#21
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I think you all have given good reasons why home/land prices have gone up so fast.

1) More families less space
2) Larger homes
3) Less down for note
4) additional regulations and rollover fees

I would also like to add that there are more people owning multiple homes. This is great as far as those who want to rent a house go, but for those who want to buy it only pushes those costs up.

The neighborhood I rent in is very pricey, I could not afford a home there. The only reason I am in the area is because when I moved here I had no idea of the area. All around me I see real estate going on sale for about 600-800k, gobbled up by developers who replace the house there with a new one and then charge 1.6-2 million! Who the heck is buying these places?! Most of them stay on the market for over 6 months, and recently I saw one of the houses that was recently bought put back on the market. What? Obviously people are buying more house then they can afford.

As long as people continue try and push their wallet and buy homes that are too big, cars that are too expensive, take vacations that are too big there will continue to b bankruptcy. I am not to sure if it is the "competitive" nature of the real estate market that is driving up land costs, but more so people idea of what that property is worth. Not the same thing, as people are not being as competitive when it comes to a home as the use to be, instead they will pay out the arse to get something they can't afford. Both my sisters have done it, and half of my friends... I wouldn't be suprized if they ended up in bankruptcy soon too.

	14-10-2003 20:30									#22
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quote: Still US ppos got it good, in many other countries owning a house is unrealistic for most of the population.

Hah! Let them eat cake!

	14-10-2003 20:35									#23
	Stop, Wait Support Apolyton

Cake and Ice Cream! I said, "Let them eat Cake and Ice Cream!"

	14-10-2003 20:39									#24
	Re: Timing Help yourself to an AD-FREE life

quote: Originally posted by pchang So, have you/are you selling your property now? You could make quite a bit by selling now, renting for a bit, and then buying again in a few years.

Nope, I really like where I live - and I don't really need the money.

	14-10-2003 21:34									#25
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I thought that people were pouring cash into their homes because it's now considered a better investment that stocks right now. People pour money in leading to higher prices and the expectation of selling that home for profit or leveraging the value of the home for better loans in the future. Am I crazy or right?

	14-10-2003 21:39									#26
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Timex, I think that's just another reason...

1) More families less space
2) Larger homes
3) Less down for note
4) additional regulations and rollover fees
5) multiple home owners
6) down market economy

Though I am with Buffet and invest when people are scared of the market and am scared when people are happy with the market... I am waiting for the market to go up before buying a house as I think prices will come down, though cost to buyer will remain the same as the banks will raise interests to compensate.

Yet, those who are buying the homes as an investment right now will be disappointed when the market goes up, and the housing market corrects. Yet, those who want a "home" and not an investment will be happy they got in now with the low interest rates.

	14-10-2003 21:46									#27
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quote: Originally posted by chegitz guevara The problem is the cost of housing in general, and the cost of housing in districts with good school's specifically.

Amen! The cost of a new four bedroom detached home here in San Diego is between $500,000-$800,000 depending upon how fashionable the area is. If you want to buy a 25 year old home the average price is still $425,000. Even a townhouse (an attached home) will set you back $350,000.

A California Highway Patrolman with three years experience makes $65,000 per year which isn't bad but it would be next to impossible to buy a house unless his wife is also working. If she works then who takes care of the kids?

	14-10-2003 21:50									#28
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quote: Originally posted by Japher As long as people continue try and push their wallet and buy homes that are too big, cars that are too expensive, take vacations that are too big there will continue to be bankruptcy.

Well, if you'd read the article, you'd have learned that this is not the case. It's not out of control spending that is causing bankruptcy. It is dependency on two-wage earners that is causing it. Most American families are one layoff or one extended illness from bankruptcy.

	14-10-2003 22:07									#29
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quote: Well, if you'd read the article, you'd have learned that this is not the case. It's not out of control spending that is causing bankruptcy. It is dependency on two-wage earners that is causing it. Most American families are one layoff or one extended illness from bankruptcy.

Yes, I realize that. Yet, I think you, or at least the study, is too narrowminded.

Overspending is the cause of bankruptcy, hands down, no question about it. Since bankruptcy means that you have spent more than you have earned for far too long. Dependency on two wage earners has to do with the requirements of the family; a home, good education, etc... which in turn leads to bankruptcy because they spent too much to get this.

Reasons they are spending too much? Homes in "good" school districts are too expensive... Why? Demand.

The real question, though, is why are the good school districts in places with high demand for homes?

or

Why are the school districts that are better have more expensive homes in that area?

IMO, schools are a reflection of the students that attend. Bad students lead to a bad school while good students lead to a good school. What makes a good student? Family values. The type of family that will spend too much to ensure their kid has a good education.

If more people spent within their means, paid attention to their kids (instead of requiring the government to do it why mom and dad work), taught their kids responsibilty by doing so, and lived in the areas where they could afford the quality of education in that area would increase.

How to fix this? I think HUD/FHA are already trying by offering lower interest loans, grants, improvement loans, etc. for homes in transition areas to encourage families to live there. Yet people are to willing to pay the higher price to give their kids what they want them to have without spending any time with them.

Thus, over spending coupled with lack of family values are the cause for bankruptcy not a dependency on a two family income and high home prices. But then I am not a [snide]Harvard[/snide] law professor, a consultant of any type of firm, nor have I ran any type of study...

	14-10-2003 22:10									#30
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quote: Originally posted by pchang So, have you/are you selling your property now? You could make quite a bit by selling now, renting for a bit, and then buying again in a few years.

Hell ****ing NO! I don't own any property but my parents own five houses in San Diego and rent four of them out to other families. Over all the total appriciation has averaged 12%-15% per year every year for the last decade. That means something like a $120,000 average yearly capital gain. Only a fool would sell.

Heck, even if home values half (a virtual impossibilty without a total depression and even in 1990 the values only went down like 15%) we'd still have a positive cash flow since the housing vacancy rate is around 0.5%. That means we can rent out the houses for much more then what the morgage costs are.