interesting lecture on income/consumption over the last 30 years

[gryffindor]

The brilliant part of Warren's analysis is to show interrelated dynamics why education and real estate costs are going up so rapidly.

Parents are willing to pay higher real estate costs to get a better education for their children and mortgage interest is tax deductible. The combination of these two have resulted in intense competition for good school districts and much higher real estate costs for the areas that have good schools. You could see this in Philadelphia in the nineties when the University sponsored an elementary school in area surrounding the university, vastly improved the quality of education and real estate prices tripled in 6 years.

We can argue with her policy solutions, but she makes a point that higher real estate costs is not the most efficient way to fund K-12 education.

[W2R]

Quote:

Originally Posted by ladelfina 2.) I think you and others here (even me) have a mental picture of the McMansion and the 2 SUVs, etc. that might be more prevalent in our imagination than it is in the US at large. People here on the board are relatively prosperous and so those spendy folks are our neighbors.. maybe we don't "see" the people living in the same old small houses and tenements in Mississippi or the Bronx or Detroit or Ohio.

Or California. Housing costs in some parts of the country are so high that even moderate sized homes can be out of reach to many.

I plan to ER in southern Missouri, due to low housing costs. I will be able to afford as large a house as I want, there. I do not happen to want a McMansion, though.

I see plenty of McMansions but believe me, they aren't in my middle class neighborhood!

[ladelfina]

W2R.. gotcha!! But that kinda proves my point. The McMansions are highly visible, but don't define the actual consumption of the vast majority of the middle class.. They're a convenient "handle" for the media, though. Note the MSN sleight-of-hand in claiming the avg. of ALL US houses is 2,300 s.f. .. when that's just new construction. It distorts our capacity for accurate discussion and consideration of where the pressures really are coming from.

I put a new thread up (in "Other Topics") on an article that talks about new AZ developments, their density and services.

[UncleHoney]

After watching the lecture video I did a little digging and came up with my first paycheck after DW and I got married in 1972. I was interested in how I fit into the median income at the time compared to how I fit in the last month before I retired last fall.

I found I was above the median income for US males in 1972 and just below the household median income. DW was working at the time so we had two incomes. In the video Warren mentioned that the median income for males was just about level from 1970 to 2006. My ending income (for me alone) was 1.8 times the national household income.

Healthcare is interesting, $18.35 back then for all families. In September 2007 it was $120 for two and I know people with kids were paying a maximum of $180.

Exhibit A, notice the savings at 13.3%. My last month's savings was 50%.

[W2R]

Quote:

Originally Posted by ladelfina W2R.. gotcha!! But that kinda proves my point. The McMansions are highly visible, but don't define the actual consumption of the vast majority of the middle class.. They're a convenient "handle" for the media, though. Note the MSN sleight-of-hand in claiming the avg. of ALL US houses is 2,300 s.f. .. when that's just new construction. It distorts our capacity for accurate discussion and consideration of where the pressures really are coming from. I put a new thread up (in "Other Topics") on an article that talks about new AZ developments, their density and services.

You are so right about new homes being larger. It would really be interesting to find a median size of all occupied single family homes in the U.S. I have looked for that information briefly, but I haven't found it yet. I admit that I only listened to portions of the video, which was fascinating but lengthy, so if she presented that info I missed it.

In looking for "used" homes in Missouri, I have noticed that older homes are more likely than newer homes to be quite small by modern day standards, and often have only one bathroom. I don't think many homes are being built today with just one bathroom. When I was a child, a common experience for a middle class family was lining up to use the bathroom, pounding on the door while the teenaged daughter showers, and so on. It doesn't seem like middle class families have to do that any more.

[Zoocat]

Here's an intersesting article about the kinds of people who aspired to the middle class, probably hoping to give their kids a better shot, moving their kids from urban areas to a new development in Arizona called Maricopa but ended up worse off, IMHO.
Calculated Risk

The upshot is that the developers of Maricopa didn't build a high school and there's absolutely nothing for teenagers to do except get a after school job at the supermarket which has become their hangout.

Looks like Ladelfina beat me to it. She posted this article link in "Other Topics" with a good summary. Great minds think alike!

[ladelfina]

Oldbabe, that's exactly the link I posted on Other Topics! v. sad.

RightWingSis is telling me that AZ's RE troubles are due to illegals defaulting!!!
There's no end to the media distortion and distraction regarding a far more complex issue. (I didn't read the whole NYT piece yet, but a commenter pointed out that Maricopa is 96% white, for those who are interested.)

[UncleHoney]

Quote:

Originally Posted by gryffindor The brilliant part of Warren's analysis is to show interrelated dynamics why education and real estate costs are going up so rapidly. Parents are willing to pay higher real estate costs to get a better education for their children and mortgage interest is tax deductible. The combination of these two have resulted in intense competition for good school districts and much higher real estate costs for the areas that have good schools. You could see this in Philadelphia in the nineties when the University sponsored an elementary school in area surrounding the university, vastly improved the quality of education and real estate prices tripled in 6 years. We can argue with her policy solutions, but she makes a point that higher real estate costs is not the most efficient way to fund K-12 education.

Living in a city with the typical dysfunctional public school system I've had a ringside seat to what has happened. The money left town and the system fell apart. Homes in my area have kept their value because of one drawing card, parochial schools and families are willing to pay extra even if they aren't affiliated with the catholic religion.

Maybe we will see a slow reversal of the money flight as gas prices and taxes eat into incomes more and more.

[twaddle]

Quote:

Originally Posted by gryffindor The brilliant part of Warren's analysis is to show interrelated dynamics why education and real estate costs are going up so rapidly. ... You could see this in Philadelphia in the nineties when the University sponsored an elementary school in area surrounding the university, vastly improved the quality of education and real estate prices tripled in 6 years.

Brilliant, but wrong. I took a look at prices in Riverside, San Bernadino, and Ontario -- the armpits of SoCal. Prices trippled from 1997-2006. I somehow doubt it was due to their great school districts.

Now there absolutley is a correlation between higher home prices and quality of education. But that was certainly true in the 1970's as well.

Our SoCal family had members in schools in both Riverside and Beverly Hills. Believe me, the differences were striking in the 1970's.

[haha]

Quote:

Originally Posted by twaddle Our SoCal family had members in schools in both Riverside and Beverly Hills. Believe me, the differences were striking in the 1970's.

For example English was spoken in Beverly Hills.

BTW, great older movie about (among other things) one family's solution to the school problem

Slums of Beverly Hills, starring Alan Arkin, Marisa Tomei and Natasha Lyonne.

Try it, you’ll like it.

ha

[TromboneAl]

Anyone else notice that UncleHoney still has paycheck stubs from 36 years ago? We may need to do an intervention.

[UncleHoney]

Quote:

Originally Posted by TromboneAl Anyone else notice that UncleHoney still has paycheck stubs from 36 years ago? We may need to do an intervention.

Just following instructions T Al...

Notice it says "Retain This Record"

DW has already intervened in most of my collection of valuable data.

[Hamlet]

Seems to me that this housing crisis is a partial solution to the lack of affordable housing facing the middle class.

A few more years of this and that 76% increase in housing will be wiped away.

New families will find the median home much more affordable.

[growing_older]

Quote:

Has anyone here ever sent their kids to an urban school? I'm telling you, it's not a pretty picture. A smart kid will become brain dead within a few years of that kind of education environment.

I'm in a true urban school system, and it quickly becomes too large to generalize. Yes a city with hundreds of public school has a few horrible pits, lots of duds and a few good schools. On average that's pretty dismal, but kids only go to one school at a time so getting a good one (and especially getting good teachers) can still be a good educational experience. Getting a bad one leads to parents withdrawing support from the schools, sending kids to private schools and eroding social network in neighborhoods. Assuming parents can tell the difference between a good and bad school experience and either lobby for improvements or react if needed. Not always possible I suppose if both parents are working and have limited time to deal with it.

[deserat]

OK - now for a libertarian streak - expectations seem to be driving a lot of this - what about home schooling? what about mom (or dad) staying home for the kids and then picking up their career afterward? I work with many people who do that and do well - a woman can still become educated - just don't have children until afterwards - or as T-Al says don't have them. What about public transportation - yes, yes, I know in the Western US it's not as good as it could be - however, there are ways if one want to find them. As for a house, it does look as though the average square footage has gone up and in general the concomitant costs of acquisition and maintenance go up as well.

To me it comes down to expectations and choices - additionally, after doing some statistical research for a few years, I also found out you can present anything the way you want to prove your point. Bias is always present, therefore let the reader beware.

[clifp]

On home size from the Census 616 page report on housing. Rough number of house at particular size as of 2005 (the latest available)

Sq ft million of units
< 1000 8.8
1000-1500 20.3
1500-1999 19.5
2000-2499 13.5
2500-2999 7.0
3,000-3999 6.4
4000+ 4.2

Now the actually data of average/median size is probably buried in the 600 pages I didn't look at. Eyeballing the numbers the median size looks like it some where around 1800 square feet, and the mean is clearly well over 2000. Note this includes vacation homes and mobile homes so understates the size of primary residence.

I think the existence of 10+ million homes greater than 3000' shows that McMansion aren't just limited on the rich coastal cities.

As for the average age of the houses, I invite anyone to pore through the data. I simply note that the well reported nesting trending, the explosive growth of DIY home builders store like Home Depot, and Lowes, genetriciation, the numerous stories of flippers buying homes renovating them and then selling them, and the dramatic increases in Real home prices all point to pretty much one conclusion. Americans over the last 10+ years have invested dramatically in housing, the result is we live in bigger, and better and more expensive houses.

Now I am not sure we came first the bigger houses, and then filling them with stuff or the more stuff caused us to buy bigger house. (I suspect the later since there is also an large increase in storage rental usage in the US).

You couple the increase in home quality with record levels of home ownerships I think that wife going to work has resulted in some real benefits to the middle class.

Ladelfina, while you are right that suburbanization of America has moved many costs to the consumers. I think you are forgetting people still have choices there 140,000 convenience stories in the US pretty much all of which sell milk and bread and many of which are within walking distance. I think people are pretty rational and if the need just milk or bread that go to a 7-11 and more than that than the go to a Costco/Walmart. I know a fair number of people without cars and they figure out someway of getting to Costco in Hawaii a couple of times a month.

Quote:

1.) "material prosperity" is not real if it is simply a function of debt

I disagree. If I had 6 months to live and had no money or heirs, I'd get me a pile of credit cards and live like a king. My prosperity, first class travel, renting Porsche's, and 5* restaurants would be quite real to me. Of course it wouldn't be sustainable, and wouldn't finding out the doctors made a mistake be a mixed blessing!


One thing I did find thought provoking on her speech, was the wholesales adoption that you need to go to college to have a middle class live style. My initial reaction was I wish everybody didn't buy into the college trap, cause I think a lot of kids should do something else like a learn a trade, rather than study liberal arts they don't care about. After some reflection, I think parents are right, in increasingly global economy, American will need to be better/smarter workers to continue to live in house 3x as large as the British!.

So while my pessimistic sides find the leverage of the typical middle class family pretty terrifying, the optimist in me, notes that at least a large chunk of the leverage is invested in improved houses which acts as saving for most America (a bit naively IMO), and education of future generations.

I think much of the board probably shares my belief
Two ways be rich; earn more or desire less... (from my favorite T shirt)

[HFWR]

Quote:

Originally Posted by UncleHoney Just following instructions T Al... Notice it says "Retain This Record" DW has already intervened in most of my collection of valuable data.

I recently shredded 20 years worth of **** important documents...

I believe humans will have to adjust and adapt to a future with more competition for resources. One way or another...

[old woman]

I remember the 70s, I don't have kids so I will use my little brother as an example. He was married 1968 had babies 1969 and 1972. He was in the Navy until 1974 when he moved his family home. His house was a nice older 3 bedroom one bath with a basement and cost 227 a month. His kids played little league or soccer or took swimming lessons or cub scouts or something but not all at once. The kids got new clothes for back to school and a few for spring/summer and had little toys in a room in the basement. They heated with the wood stove insert, cut and split the wood themselves he had an old truck he paid 200 for from his FIL and a car that barely ran. His wife canned and froze food and if they could afford it they would get a side of beef. Vacations were camping trips in tents. They had a tv and stereo but nothing fancy.
Now they have grandchildren 12 and 9. The kids have electronic toys like the Wii and they take trips to places like Disneyland or Hawaii for vacations. Their house is old and only 2 real bedrooms and 2 baths so the boy sleeps in the basement in an area that isn't a real room. But the house is waterfront so they have a nice beach. They own two other houses and 3 business locations so are much better off than either set of parents.

[W2R]

Quote:

Originally Posted by clifp On home size from the Census 616 page report on housing. Rough number of house at particular size as of 2005 (the latest available) Sq ft million of units < 1000 8.8 1000-1500 20.3 1500-1999 19.5 2000-2499 13.5 2500-2999 7.0 3,000-3999 6.4 4000+ 4.2 Now the actually data of average/median size is probably buried in the 600 pages I didn't look at. Eyeballing the numbers the median size looks like it some where around 1800 square feet, and the mean is clearly well over 2000. Note this includes vacation homes and mobile homes so understates the size of primary residence.

Clifp, thanks!!! I looked through the document and it says that the median size is 1758 square feet (so your estimate was good!), with median lot size of 0.36 acres, median value of $165,344, and median year of construction was 1964. (The median size of new homes is 2258 square feet.) These are Census 2000 numbers. All this is on p. 4, Table 1A-3, and p. 10, Table 1A-7.

A median size of 1758 square feet is larger than I had thought, but nowhere near McMansion size.

[OAG]

Quote:

Originally Posted by HFWR I recently shredded 20 years worth of **** important documents... I believe humans will have to adjust and adapt to a future with more competition for resources. One way or another...

Get rid of all records (minor exceptions like personal documents or needed for filing tax returns) older than a month. That way later you can make up numbers for expenses and/or income in arguments. You can embellish away and you can not even prove it to yourself.