There's a rise, however, in the number of seniors who reverse-mortgage their house and sign away the title to it in exchange for a monthly income until they die. If that continues, I imagine the banks and private companies will own all houses in about 50 years, because the previous generation decided to further screw their offspring in the name of having a slightly cushier final days.
This statement can only be made with a straight face by someone who has never been off the coasts. There are 65 million people in the midwest and another 119 million in the South. A majority of those are in areas where cheap housing is the norm.
The difference in housing is so huge that it sometimes feels like it swallows everything else. But, make no mistake, everything is cheaper here.
Use a tool like this for some comparisons:
http://www.bankrate.com/calculators/savings/moving-cost-of-l...
Walmart or any other nationwide retailer isn't going to give you lower prices on TVs or clothes or groceries because you're in a low cost-of-living area. It all costs the same, nationwide. Same goes for anything online. ISP/telecom costs are not any lower in the midwest. Gasoline is not significantly cheaper. Cars cost the same no matter where you buy them. What else is left? I suppose you can get away with paying someone less to mow your lawn there, but that's about it.
You're right about online, obviously, but the evidence for the other stuff is abundant.
Edit to add: Of course big retailers set their prices based on the local economy.
https://www.quora.com/Does-Wal-Mart-charge-different-prices-...
I don't think people on the coasts really understand this. My girlfriend moved here from Boston by way of NYC. She still can't believe the apartment we rent Downtown. In her mind this is an apartment for people much wealthier than we are.
And, no, it won't be in a place that's as nice as Palo Alto, but it will be in a perfectly reasonable working-class neighborhood. It's up to you to decide if that tradeoff is worth it.
One way to clarify your own thoughts on this is to imagine the reverse. If you were from St. Louis and somebody gave you a million dollars, would you spend every penny of it to buy a house in Palo Alto?
A better comparison would be someplace like northern New Jersey, or any such suburb, where you can be an hour away from a big city and you can get a house for ~$350k or so. Then you can enjoy having decent access to the big city, and also having lots of nice amenities very close by, enjoying a much prettier environment (there's a reason it's called "the garden state"), and there's better-paying jobs than anything you'll find in the midwest.
If I were stuck in STL for some odd reason and someone gave me $1M, I would not stay in STL, I'd move to someplace where houses cost $300-500k most likely.
But, to further the point, the same would obviously apply to houses in higher price ranges. $500k can buy a house in the Midwest that could fairly be described as luxurious.
It wasn't meant to be "clever". Maybe you think it's a great place, but if you're offended that not everyone thinks STL is some great place to live, that's your problem. STL does not have a reputation as a nice place to live. Proof: Ferguson. And Midwest weather is generally very bad (temperature extremes, tornados, etc.). And the crime rate there is known to be very high. If I was forced to live in some Midwest city, STL is probably the last place I'd choose. There's plenty of other Midwest cities that have boring but safe reputations.
Yes, $500k can buy a luxurious house in the Midwest, but the salaries there are much lower so you're not going to be able to afford that house there anyway.
The fact that you think "Proof: Ferguson" is a complete thought demonstrates this beyond doubt.
But you're definitely right about the weather. It sucks.
Edit: Just one thing I wanted to point out, not so much for you, but for anyone else reading this. Saying that, "And the crime rate there is known to be very high" about St. Louis is equivalent to suggesting that the South Bay isn't safe because the crime rate is very high in Oakland.
The only difference is that nobody measures the safety of the South Bay against Oakland. But in St. Louis, the whole region is referred to as "St. Louis" even though only the inner core -- St. Louis City -- is included in those crime stats.
You're right about one thing: that's a huge perception problem. The crime rate is "known" to be high here due to ignorance about how the region draws its political borders (which affects how crime stats are collected) and wildly mistaken impressions about Ferguson.
But, I guess as long as you "know" it to be true, it's not worth trying to better understand it.
So you can easily afford to buy a house, but when you have to move for a new job 3 years later, your equity may just be eaten up by closing costs and market fluctuations, and you might as well have been renting the whole time.
There's just nowhere in the US where I feel like I might still be in the same spot 10 years from now. And even if I did inherit a house from my parents, I'd just have to sell it, because their city--my hometown--is absolute crap for tech jobs.
SF, NYC, and Boston aren't the only places you can get a job.
It might be cheaper than NYC, SF, & Boston - but we're not pulling down 200k+ Salaries for Sr. Engineers here either, its all relative.
It used to be the case that all of those jobs were at MEGACORP, but that's no longer true. You can find just about whatever you're looking for.
Yet, funnily enough, the justification one hears frequently for enduring the housing premium of the Bay Area is the number of nearby jobs that make it easy to switch employers every 18 months or so.
Step 1 is to get a job. There are jobs all over the country. The concentration may be highest in the tech hot spots, but most of the jobs are elsewhere. Pick some place like Melbourne, FL. Pick a job that has long-term potential.
Step 2 is to fly out there and look at rentals. Pick one. Move.
Step 3 is to start looking for a home, casually at first. You want to learn about neighborhoods and traffic jams. Meanwhile, see how you like your new job. If the job doesn't work out, go back to step 1. If you need more time to figure out the local housing situation, rent for another year. Also, if you own a house in a different part of the country, get it sold.
Step 4 is you buy the house. Move.
Hopefully you can work there for decades. I've done a decade already. When things start to go sour, go back to step 1.
Sometimes you may lose on the "closing costs and market fluctuations", but remember that it's no big deal when the houses are cheap.
There are several statements that elide over critical details. You could literally write entire books on these topics:
- Pick a job that has long-term potential.
- If you own a house ... get it sold.
- When things go sour, go back to step 1.
- It's no big deal when the houses are cheap.
Remember 2008? I do. There's nothing quite like dropping $50k as a down payment and then being unable to sell when you really need to, because your note-holder won't even consider taking a little haircut with a short sale--which you would have to do, because all your equity is gone.
Step 1 is BS. How many articles pop up on HN about how broken tech hiring is? I would literally rather help my current boss bury a dead hooker in the woods (for the paying customer, of course) than deal with more whiteboard interviews and homework assignments and sudden ceasing of all communication.
When houses are cheap, usually rent is, too. But even where houses are "cheap", they are often still an over-unity multiple of the local median income, and require a lot of long-term debt to purchase. For most people in the US, a house is the most expensive thing they will ever even aspire to owning.
On top of all that, in the current era of women having their own professional jobs, that makes it even harder to settle down and have a family, since one of you losing a job means you have to move someplace, and that screws up the other's career. That means there's really a big disincentive to even date seriously and get married, because everyone's constantly moving around from city to city. I'm somewhat newly divorced and most of the professional women I see on Tinder/OKC in the metro area I live near (DC) have a string of characters in their profile indicating all the places they've lived: Boston, Philly, NYC, Seattle, etc. It's gotten to be a cliché. One woman I briefly dated complained that every time she made a new friend in the city, she (the female friend) moved away.
Could you get a security clearance? There are many government agencies near you.
Can you do low-level stuff like assembly? If so, my employer might want you. It's been 11 years, with growth, and we've never laid off a technical person.
Sadly, the Beltway Barons can easily afford the differential. The least you can do is demand that they pay it.
Government contractors are generally also private companies; those aren't really separate groups.
However, working there isn't like working at a company in the commercial sector either. You have to get a clearance, you might work with classified information, you'll frequently work with government workers, you might work at government facilities even. And you'll be exposed to a lot of nonsense, as you said, because it is government work, even though you're paid differently.
Basically, being a contractor has two big differences from being a government worker: you generally get paid more, but you don't have the job security and can be furloughed at any time (without pay) if there's a government shutdown or if the contract you're working under ends. (Government workers get furloughed too when Congress doesn't pass a budget, but they usually get back pay after it's over.) The big advantage with government work (government or contractor) seems to be that you can be a worse-than-mediocre worker and still have a job with decent security.
It's been 11 years. During furlough stuff, most of our contracts were exempted due to high national importance. For the few people on contracts that had to stop, we found other work for them to do. It would be nuts to lose a good employee to a competitor because of a work stoppage.
The crummy people do get fired.
2008 would've been bad if you had to sell. I still think you ought to have been able to cover the loss in most places. There were places around here that dropped by 70%, which is horrid. You ought to be able to cover a large portion of that, and certainly anything outside 2008. That year was special.
I guess I don't see the complaint about tech hiring. Except for the time sink and the fact that you might really really need a job, it's kind of fun. You get flown out somewhere, see the place, and talk about nerdy stuff. What is not to like?
Being in tech, you're probably 2x the local median income. If you can tolerate a normal house, the situation isn't bad. You could be looking at 2x your income. You can get that paid off in less than 5 years.
I just found out this week that my current employer is being sold. Again. That's 6 times in 16 years, and 4 of those times resulted in layoffs for me and my least-connected co-workers. 2 of those layoffs resulted in changing cities, mostly due to the need to keep paying the mortgage or risk losing all the equity. That's a grand total of 12 different corporate overlords over 16 years, for 7 different jobs. Not one of them lasted more than 3 years, even for the few I wanted to stick with until retirement.
So I'll be dusting off the resume again, just in case. I just can't wait to immerse myself in the sheer idiocy that is the tech hiring ordeal once again.~ And this time, I'm even older and less "culturally fitting" than all the previous rounds.
The two times I bought houses during that time burned me badly. I lost all the equity anyway, even after keeping up the payments while trying to sell, and paying rent in a different city. Tyler Durden might have a better opinion of the credit/banking industry than I do.
I'm only bitter and pessimistic because the real world is an awful place that doesn't care whether I live or die, so long as the checks continue to clear. There are few people on this planet that can take a $100k kick in the teeth and laugh it off. We're not ruined, no, but I don't exactly appreciate the setback to the college and retirement funds, either.
I made $50K per year when I graduated and bought a house about a year later. $170K for a new house in a nice neighborhood. The total house payment was sub $1000. That's typical when you get out of the big cities on the coast.
The vast majority of my peers actually do NOT make $50k - and we are all on the East coast, where a house would cost you ~$300k minimum for something that wouldn't require extensive repairs.
Sometimes people need a good kick up their arse to be able to see outside of their bubble.
If parents decided to reverse-mortgage, sell, or otherwise not bequeath their hard earned property to their children they are acting completely within their moral rights. It doesn't matter if the parents hold on so they can continue to buy food or so they can cruise the world: it's their stuff. The child is not "screwed" out of anything because their parent's property was never rightfully the child's in the first place. If the parents decide to be generous and give their kids the house, car, bank accounts, etc.... lucky kid.
The only case when this above is not true is when the child is not yet an adult or was born with defects which impair proper functioning as an adult.
I agree that inheritance shouldn't be a natural right. I don't really expect to receive anything from my parents.
However, things like rampant anti-development attitudes are an untenable example of screwing their offspring. The older generation already owns houses, so they love opposing any new development without regard for the fact that it's making home ownership impossible for all but the wealthiest or luckiest of my generation.
I doubt very much that the effect it has on price of existing real estate and how it limits the market is something that the decision to oppose growth is made "withour regard for".
The cognitive dissonance is when they then turn around and wonder why kids these days (including their own) can't afford to live on their own.
But then he pointed out that these same parents kick their kids out of the house at 18 without much compassion.
I guess parents do have the right to do what they like with their wealth and to force their kids out to fend for themselves, but they need to accept the consequences.
One of her last statements to my spouse was, "They're in cahoots against you."
Some people should have died alone.
I think the most appropriate way to approach an inheritance is that your job as the inheritor is to be a custodian.
Sure, you can absolutely blow the money on scratch-tickets or throw it into the wind but I don't consider that to necessarily be very moral or ethical.
Moreover, if you refuse to help your descendants and expect them to "pull themselves up by their bootstraps" like you did because (ultimately) "it builds character," you shouldn't be surprised when they get their asses handed to them in life by the multigenerationally wealthy that were playing the game from the start.
My parents have inherited a little bit of money - it'd be a fortune where I grew up, although you couldn't buy a house in SF with it - but that money isn't really theirs, just like it won't be mine when they are gone. It's the slowly, painfully built fortune of the entire lineage, going back to before 1900, and it's something to be carefully grown and protected. If any generation blows it, there goes the cushion that we've worked for decades to climb out of subsistence farming to the middle class.
That sounds like a perspective limited to a handful of major coastal cities. Go buy a house in Des Moines for $150K or something.
You can get a house for that same price almost everywhere on the east coast.