How do you afford your rock-n-roll lifestyle?

[wordplay]

M and I (and many other DC area residents, I imagine) have spent part of the morning talking about this article in this morning's Washington Post.

The mind boggles. The average household income in the US is around $46k. And the average household income in our county is just over $82k. Will someone please explain to me, then, how it is that we can't break into the housing market here for under $500k, and really need to go past $600k for something our family of four can live in longterm? What kind of insane financing deals must people be getting themselves into? And what ARE the guidelines for financing property right now? My personal comfort zone was that I never wanted to buy a house that was more than twice our annual income, but I'm starting to think that was way, way too conservative. Is there a ballpark for this?

And look at the numbers of people without health insurance - it's disgusting. I've spent all year bitching to anybody who would listen about how our health insurance over the last year (COBRA coverage, since M. is self-employed - best part of me going to work for the state is that we don't have to carry our own insurance anymore, yay!) ran us over $1100 per month. That's over $13k per year, or almost 30% of that $46k that the average American household is bringing in. Absolutely absurd, and well past shameful.

Aren't we all so glad that this administration wants to repeal the estate tax? What a difference that will make to most American households! < /sarcasm>

Comments

[didi75.livejournal.com]

I feel your pain. Just a couple of months ago we were anticipating buying a house here, but now it looks like it probably won't happen...ever! Or at least not in the foreseeable future. I know we can't even begin to fathom a mortgage for a $600,000 house. Jeez.

Btw, I accepted the offer and I'm going to be up there by 9/12.

[wordplay.livejournal.com]

D, there are NO WORDS for how excited I am. I think this is a good move for your family and of course, I'm v. selfishly excited. *bounces all over the place* I want to hear a recounting of the negotiations, too!

[didi75.livejournal.com]

*bounces with you* :D :D

[neotoma.livejournal.com]

Health Insurance is going to be a make or break issue in the next decade or two. It's just insane, and *every* industrialized nation does health care better than we do.

Especially because catastrophic health care costs are the main cause of bankruptcy.

The only thing we can do is keep talking -- maybe enough of them will wise up and see that voting for rich people's interests doesn't make sense if you're never going to be rich.

[dramawench.livejournal.com]

It's such a hard thing to deal with. I always said that when I bought a house, I wouldn't want to live so far out in the suburbs and have one of those horrible commutes into the city. But even in Atlanta, where we have a very healthy housing market, my sister had to move to almost 40 miles outside the city to afford a house. That is just insane.

I do have to say that your use of a Cake song in your title? Makes me love you even more :D

[rivkat.livejournal.com]

Yeah, after a day of real estate shopping in the area (in 2004!) we realized that our under-$500k plan was not going to work out. There are a lot of dangerous financing schemes around, like interest-only and ARMs. We ended up with a second mortgage, which I grew up thinking was like an invitation to penury, but we are lucky and can afford the monthly hit.

As for health insurance, I just despair about what we can do. That seems to be the tactic -- wear people down, make them think that nothing can change so why bother trying.

[wordplay.livejournal.com]

which I grew up thinking was like an invitation to penury

Yes, this is exactly it - trying to fold my old-fashioned ideas about finance into the new model of property mortgaging. To be honest, I'm not even sure that buying property is even worthwhile in the current market - it's certainly beginning to slow down and stagnate here, and the rental market is still very workable, and I'm starting to think I need to throw off ALL of the conventional wisdom and stay in a rental and invest all of that extra income that would go toward a house payment into an IRA or something. I think it's possible that the housing market is so upside down that its value as an investment is pretty limited, but it makes me very anxious.

[vertigo66.livejournal.com]

A LOT of people do interest-only loans for like the first 5 years or so. They're banking on building equity through rising home prices. But if you buy now, that's one thing you can't count on because the market is really slowing down. It's scary, and I'm glad we bought our house 12 years ago when the market was *really* stagnant.

[malakym.livejournal.com]

I hear so many people having to make these 3% downpayments on property (which requires additional mortgage insurance) or crazy interest only mortgages just to afford homes. And with interest rates rising, we're going to have a lot of families with huge problems with their loans - the problem's already starting with Adjustable Rate Mortages hitting their first adjustment period after the crazy low rates a couple of years ago.

It's gonna blow up and blow up BIG.

[karadin.livejournal.com]

I think we were lucky to get ahead of the curve. My house is very modest, (most of the rooms are 10 x 10, a one and a half story with one bathroom and three plus bedrooms, unfinished basement, on a narrow city lot. When the person who owned it purchased it two years before the price was $71K, when it was sold to us it was $115K, and now five years later it is apparantly worth $175K, and that's without any renovations! Our market in the midwest is below that of houses on either coast, but catching up. Right now there are plenty of houses on the market, starter homes like ours, and no one can afford them! Luckily we got a fixed rate, 30 yr mortgage at a low rate, but it sucks to know that if we were buying the same house now, we couldn't afford it!

[wordplay.livejournal.com]

*nods* We bought a home in Austin at the tail end of the tech boom and sold it three years later for a 40% profit. Sometimes I really miss the 90s. :))

[moony]

Yeah, the health insurance thing is a complete joke. Last night, the doctor told me about this awesome medication he could give me that would help my nausea but had no side effects. The only problem was that it would cost hundreds of dollars for a single prescription, without health insurance. I can't find health insurance that isn't ridiculous, and without a college education I don't qualify for the few jobs out there that do offer insurance. It's terrible and stupid. I hate being a second class citizen because I don't have health insurance.

[chinawolf.livejournal.com]

I'm sorry to barge in like this, but there is one thing I don't understand about the health insurance problem in the US: why are you not insured? Here (=Germany), if you do not qualify for normal health insurance, which I guess would be the equivalent of being insured via your work [but actually the only reason you don't qualify for it is if you earn too much money], you can buy private health insurance. It is insanely expensive, of course, the student rate about six times as much as the normal insurance and comparable to what I pay for a one-room appartment as rent, but it will probably come to a zero if you have to see a doctor more than three or four times a year; plus, you get better medicine/care when you're privately insured.

Is it not *possible* to insure yourself privately in the US? Or is it a matter of not wanting/being able to pay a couple hundred dollars per month for private insurance?

[aegeus.livejournal.com]

The affluence thing isn't really new, the counties around DC have been very high on those list for as long as I can remember. The housing and health insurance stuff is a little worrying now, though. : /

[insheepsclothng.livejournal.com]

Housing is crazy in every decent urban area... Although ours is just badly planned. In theory we get a lot for our housing buck here - public transport, arty & entertaimenty things in the city, restaurants, a diverse and interesting populace, etc. In practice, the public transport is iffy, a lot of areas are dead, and way too many of the 600k+ houses are in dull, soulless suburbs. Bleh.

I love our little condo but can't imagine living here with kids... And the health care situation is just, gah. Again, families get screwed much more than single/childless people.

[isiscolo.livejournal.com]

I can't bring myself to pay that much for health insurance, so we are woefully underinsured, with basically catastrophic coverage only for around $3000/year for the two of us. (My gall bladder removal surgery was about 50% covered, for example.) I get my migraine meds from Canada for $15/pill instead of locally for $20.

Here, heh, the housing market is even (relatively) worse. The 2b1ba next door is for sale for $415K (but it's not selling). Anything in the $350K range seems to be snapped up quickly, though. Local average annual income is under $40K.

[wordplay.livejournal.com]

That is truly insane. How do people buy property? DO people buy property, or is there a lot of outside investment and a thriving rental market?

[hermorrine.livejournal.com]

Because of what I do, the health insurance thing is of special interest to me... if this country ever were to go to socialized medicine, I'd be out of a job. :)) That said, I know that the overall quality of care is better in this country than in many others (and I can tell people will want to argue with me on this - yes, it's a generalization, and no, I don't have time to provide you with data to back the generalization up, so don't bother), but that doesn't mean I don't think that the system could improve without going completely to socialism.

And the change in cost of living does worry me about the possible move to CA. I know quite well that it's much more expensive there.

[gnomad.livejournal.com]

I've always wondered about the housing market too. A household with $82k and a minimum amount of existing debt, should be able to afford something in the range of 250k. The problem is that 250k will buy you a 2 bed/1 bath condo in the DC area. Not so bad for singles, but a family is out of the question.

I'm sadly one of those 13% without health insurance. I can only hope I don't get hit by a car until I get a job with benefits.

[misscake]

The housing market here is insane. Our house has more than doubled in value in 6 years. That's why so many people (me!) live so far away (and why our commutes are the second worst in the nation). Really, it can't be sustained for too much longer. The question is how far down will the prices come?

And yes, government health insurance is a definite benefit!

[in-a-tizzy.livejournal.com]

You haven't been able to find a house here for less than 500 in years. My sister commutes from Providence, Rhode Island to Boston everyday and it's not even like she lives in a decent school district. For less than 5 hundred I think you'd have to be either somewhere really dangerous or 2 hours outside the city.

Our house more than doubled in value in the first 5 years we lived here (we've been here for 7). Housing here is even more nuts than it is down there (or at least it was last time I checked.)

Half of my family's budget goes to health insurance. Half. 50%. *wishes she was Candian*

*crawls back into sickbed*

[kupukello.livejournal.com]

Out of curiosity, how much taxes does the Average American Family with their $46K yearly income pay?

(Here the average person makes 25ke a year, so a "family" probably then makes 50ke, and pays taxes around 30% of that, but at least we don't need health insurances)

Here the rule of thumb is that if you take more LOAN than 2*yearly income, then you're in trouble. And since the downpayment for a home is usually 30%, well, the Average Finn then buys a house with 140ke. With that money you can purchase a roomy cupboard with a window in Helsinki, or a manor somewhere up north.

[sundancekid.livejournal.com]

The only reason my dad doesn't quit his job (which he actually needs to, for, ha, health reasons) is so we can have health insurance. It's ridiculous. *seethes*