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Who's going to Buy My House/Consumer Goods/Service/Stock/Gold?



November 26, 2010 – Comments (8)

Updates in bold/italics 

January 16, 2007


Not that I'm selling it yet, though. (not that I have sold yet, though) My kids ( one boy, one girl, beautiful ,smart, both in advanced placement classes,) have six (two) more years of school before they are both off to college (I Hope). So I am expecting to be staying put for that long. The question is then what happens? My house is 5 bedrooms, 1/2 acre, 2700 square feet on Long Island in a good school district and right now it is worth $550,000 (Hooray!) The identical house across the street just sold in July 2006 for $640,000 (I would never have paid that much!). O.K. so lets say my house is worth only $500,000 ('Only' I cannot believe I am saying 'only' about $500,000 dollars) If a potential buyer wants my house and puts 10% down their mortgage will be 2600/ month, plus taxes will make a monthly payment of $3000 ( My taxes are relatively low for Long Island). When I was 20 years old it was suggested that your monthly home expense should not exceed 1/4th of your monthly income (ha ha that was then) now lets use 1/3rd as a guideline. $3000 x 3 x12 = $108000 dollars annual income (gasp!). According to Wikepedia 75% of US households earn less than $80,000/year (households, not individuals). And that top group is mostly boomers of which I am almost the youngest, born in 1960.

Many times during my life my older boomer brothers and sisters have gotten there first. Leaving me crumbs to pick up. At 30yrs old my new wife and I went shopping for our first house only to find that housing had skyrocketed the previous 7 years, and it took our entire incomes to purchase a starter home. Then the housing market flattened for the next 5 years. So we put $30,000 of improvements into our first house and after 5 years were able to sell it for what we had paid for it. (Not even getting the $30,000 back). But we had gotten ahead of some of the Boomers and that $500,000 dollars our current home is worth is twice what we paid for it. But the housing market has begun to flatten again. And now 30 million of them (us) are going to retire, sell their houses, and not trade up. 6-10 years from now it will be my turn to retire.

On L.I we have lots of new jobs in service now. Wal Mart, Target, and the like. Lots of people who do not make enough to buy my house, or any of my retiring friends houses either. Nope, those 30yr old professionals are earning $60k ($48k) combined. And there are less of them now. Lots more of them are earning even less. (And paying 10% of their income toward their education loans. and 25% more for health insurance)

I have(want) to make my kids dinner(breakfast) now, but I am still wondering...

Who's going to buy my house/consumer goods/service/stock/gold?

6 Comments – Post Your Own#1) On January 17, 2007 at 10:49 AM, TMFBent (99.80) wrote:

Interesting question!

Is the answer still, "anyone who can sign up for ARM mortgage payments of 40% of income at the teaser rate?"


Report this comment #2) On January 17, 2007 at 12:13 PM, PLynchJr (99.93) wrote:

Nice post. I often wonder the same things. I make a good living. My wife also works. We are considering starting a family and moving to a larger house with a little more of a yard. Here in Columbus, OH it seems that you can't find a nice house that doesn't need some major renovating for less than 300K. That may not sound like a lot to those in California or the NY area but it still seems like a lot to me. I don't want to live under the weight of a heavy mortgage. I'd like to be able know...actually afford things...invest...someday retire.

Report this comment #3) On January 17, 2007 at 7:51 PM, devoish (99.50) wrote:


Nice to meet you.

I have a hunch that type of loan will not be as popular in six years.

Just a hunch.



Report this comment #4) On February 18, 2007 at 11:44 AM, djrue (47.89) wrote:

Great post!

Here in Miami, you can see a lot of the same going on. Cost of living rising, salaries not up to par, and tons of living spaces (condos and subdivisions) going up and selling at outrageously high prices.

As a prospective buyer, I can't help but wonder who these developers are looking to sell these properties to (there are only so many foreign investors they can bank on). Demand is already leveling off, but pricing remains a bit more reluctant IMO.

Couple that with poor urban development planning and the wave of foreclosures that is bound to hit us... I feel it's a win/win for me to wait for prices to get back to reality before I buy your house.

Report this comment #5) On February 19, 2007 at 10:57 AM, iLikePie (61.61) wrote:

Wow, that hit the nail right on the head! My concern is from the other side of your fence, "how in the world could I EVER afford your house?"

Salaries are growing slower than inflation and cost of living. Where I work, we all got a whopping 2% salary increase for the 2007 calendar year...but I was told to increase budgets by 3.7% for inflation.

I am certainly left wondering and worried about how I'm going to raise the necessary cash to purchase a home. For now, a friend and I are sharing a house so we can afford it...but values in our town are on the decline and we probably won't get as much out of the house as we've put in. Ouch, indeed.


Report this comment #6) On February 10, 2009 at 4:54 PM, TMFAwesome (98.15) wrote:

What a great post even though it's two years old.  I am a potential first time home buyer that luckily avoided the carnage of purchasing at the height of the market. My college friends, now out of school for 10 years have postponed buying due to the ridiculously high prices in DC.  They all make a good living and do not wish to be house poor for a less than starter home.  I'm not sure who will buy your house in 4 years. It is doubtful that you will be able to get 500k for it unless the government manages to keep housing prices inflated.   But then folks like me with cash but no home will still have to dedicate a much larger portion of our income on housing and less for everything else...

8 Comments – Post Your Own

#1) On November 26, 2010 at 2:32 PM, rofgile (99.39) wrote:


 This is post is kinda a downer.  Are we just barely treading water as a culture for the last 3 years?


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#2) On November 26, 2010 at 5:46 PM, devoish (75.27) wrote:


I reposted it for perspective. And I agree it is depressing.

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#3) On November 26, 2010 at 5:52 PM, TMFBabo (100.00) wrote:

I'm glad to see some people (the selected commenters) had the sense to think clearly.  

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#4) On November 27, 2010 at 9:54 AM, devoish (75.27) wrote:


The "commenters" but not me? Now my feelings are hurt. Also I object to your phrase "selected commenters". They were not "selected" by me or anyone else. Those are all the comments to the original post. No editing for political gain.

As far as thinking clearly, I didn't know why my house's loan value had skyrocketed, Seth obviously knew what was going on, djrue was counting on a housing price collapse, but I suspect he had his money "safely" growing in stocks and got burned anyway, Pie got burned, and TMFAwesome seems to think he got lucky based mostly upon age or the stage of life he was in.

And just for the record, a quick look at MLSLI shows the most similar house for sale in my neighborhood is currently asking $475k, and if it is the house I think it is, it was purchased in 2007 and the homedebtors are probably getting slaughtered.

Anecdotally right now there seems to be a lot more of the "higher end" houses for sale in my school district than I remember seeing in 2007, and I would suggeest that the lower cost houses $295K - 350K have held their prices and might be a little higher. I remember thinking that you could still see a few houses for $250k in my school district in 2007.

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#5) On November 28, 2010 at 9:55 PM, ChrisGraley (28.69) wrote:

I'm sorry for your financial loss Steven.

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#6) On November 28, 2010 at 11:52 PM, TMFBabo (100.00) wrote:


In my head, I included you when I said "commenters." What I meant by my original comment was that people realized something was foul in the housing market. I didn't learn anything useful about housing and the stock market until it had already started to crash down, so I can't say I knew anything was up.

I'm currently waiting to sell a small 1 bedroom condo I bought in 2008 so I can move closer to work. I think I'll be waiting more than I originally thought (2012 was the original hope).

I also learned in the past 2 years that young people shouldn't buy anything until they're ready to settle. I had a plan to go to grad school while working and take advantage of tuition reimbursement at my former job. That would've taken 6 or 7 years to play out completely (apply and hear back for 1 year, finish school in 3 years, stay 2 additional years as that is the arrangement for receiving free schooling). That changed quickly as it often does for people not long out of school, of course.  


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#7) On November 29, 2010 at 12:05 AM, goalie37 (89.79) wrote:

It brings up a relevant question for our current markets.  Many, though not all, argue that we are experiencing bubbles in the bond market and in gold.  If they are bubbles, then at some point they will pop.  Are we in for another severe downturn?  Bonds especially can have repercussions for everyone.

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#8) On November 29, 2010 at 4:46 PM, devoish (75.27) wrote:

Thanks Chris. 

I also learned in the past 2 years that young people shouldn't buy anything until they're ready to settle.

I think you most of the people burned by the financial industry were just trying to "settle down", and that is not neccessarily a good guide on deciding when to buy.

A better idea might to have a look at Dwot's posts. She has pointed out that buying when interest rates are high, gives you the opportunity to reduce a lot of debt simply by refinancing when rates go down. Read your mortgage contract first though, the banks may never offer that opportunity again.


Yes, I believe another, bigger leg downward is coming. Look at Abitare's post about households earning less than $60k have zero discretionary income. That represents well over half of all American households.

Those folks are not investing in a 401k - which is smart because the 401k manager will taking the vast majority of the profit with fees of 2.5% - or investing in gold, or houses or anything else. 

The spending policys of Roosevelt in the depression worked because the spending was done in the form of jobs. Employees bought products made in America. Employees saved in banks and restored the banks. Handouts to banks is just cutting employees out of the loop.


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