From: bqueiser@magnus.acs.ohio-state.edu (Brian J Queiser)
Subject: Re: FORD TAURUS taillight RIPOFF!
Organization: The Ohio State University
Date: Tue, 15 Dec 1992 22:00:23 GMT

In article <r7!r1v+@dixie.com> jgd@dixie.com (John De Armond) writes:

>bqueiser@magnus.acs.ohio-state.edu (Brian J Queiser) writes:

>>>Am I the only one for which the concept of paying more for a daily
>>>driver than I did for my first house somehow rings bogus?

>>I hear the same rantings from my father-in-law.  This is 1 9 9 2.
>>It's soon ganna be 1 9 9 3.  It is not 1 9 7 0.  The average home today
>>costs over $100,000.  When my daily driver costs more than that, I'll know
>>I've hit it big, or it's 2050.  What's bogus about inflation?  Higher
>>standard of living?  And what's wrong with jellybean mobiles?  :^)

>An average house does NOT cost $100k anywhere except the left coast
>and some areas in the NE.  I can assure you that nice houses can be had
>in this area in the 70K range.  Starter houses can be had in the 30s.

At the risk of turning this into rec.autos.houses . . .

I did read that the average U.S. home was somewhere just over $100,000.
This was from an article in the Cleveland Plain Dealer about a year or so
ago.  My parents-in-law built a brand-new home in an average Cleveland
suburb about two years ago for just over $200,000.  It's got about 2500
sq ft, not including the basement or garage and it sits on .5 of an acre.
The house they sold was one in which they lived for 20 years; it went
for $131,000.  Both homes have 4 bedrooms, a couple of baths and all the
rest of the stuff in an average (there's that word again) home.  Their
new one is a little larger, is in a nicer school district, and has a few
modern neat-o things (but nothing extravagant).  My father-in-law is
a technical manager for a major paint manufacturer in their research center.
He makes, I'm guessing, about $60,000.  His wife works part-time for,
what seems to me, grocery money.  So, you see, right there I've explained
a very common upper middle-class situation.  Always keep in mind that
5% of our population has 95% of the wealth in this country.  That stacks
the deck heavily in my corner.

I don't doubt that nice homes can be had for $70K or even less, but you've
got to realize that a decent, relatively young 4 bedroom home in the
'burbs cost way over $100,000.

>The house I bought in 1975 for 12k happens to be back on the market for
>$38k.

You are in a good situation, but was your home new in 1975, or was it
10-20 years old?  Your home, however, is not keeping up with the average
(there's that word _again_), rate of real estate appreciation, which
is about double every decade (in other words, your home, which costs
$12,000 in 1975 would be worth $48,000) in 1995).  This could be because
your home is on the other side of the bell curve and is not appreciating
as fast because maybe you're in an older neighborhood, your school dstrict
is going to pot, or your home is slowly decaying.  Please don't take
any of this personally.

>       Higher standard of living?  I'll bet ny standard of living as
>a journeyman technician making $25k a year back then was vastly better
>than that of journeyman engineers making 60k today.  My house cost 11k or
>44% of my annual income and it had a 15 year note which meant that
>after I lived in it 5 years, I had some equity to pay on the next one.

Most financial advisors advise the home buyer to finance double what they
make in year (gross) after they've put down 15-20% of the home price.
They also usually advise one to buy a car that has an MSRP that is roughly
half their annual salary (gross).  This is advice for today's financial
climate and is not exactly the same as the advice that might have been
given in 1975 or whenever.  This advice also assumes that the buyer has
very little, if any, other debt (like credit cards, other cars, etc)

>That $100k house every yuppy puppy fresh out of school thinks he has to
>buy is 270% of the typical 36k starting salary.  The only way he can afford
>it is to take out a mortgage for half a century.  At the end of 5 years he'll
>have maybe 37 cents of equity.

This is true.  That is why financial advisors advise home owners to get a
15 or 20 year mortgage if they can afford it, or make an additional payment
every year.  Most of the time, this cannot be done because the average (AGAIN!)
homebuyer usually mortgages him/herself to his/her monthly payment limit.
However, since payments stay constant and inflation, standard of living,
and job advancement pay raises give the homeowner more money every month,
the pay schedule advised may be met eventually.

>My brand new 75 Datsun 280Z cost about $4000 or
>16% of my salary and I got it on a 2 year note which meant it was paid for
>before it wore out.  Your $20k jellybean is, maybe a half to a third of
>your salary.  The only way you can afford it is to put a 5 or 6 year loan
>on it.  You're upside down on the loan the day it drives off the lot.
>Hell, we had two new cars and a house and still has enough money to
>tuck 10% in savings AND have a good time.  How many newlyweds can
>say that these days?

You see, you're smart.  Most, and I do mean MOST, people are not.  But it
is getting harder and harder for newlyweds to simply _find_ the deals
these days, even if they're looking for them.  Why?  My guess is because
there is a *market* for $20,000 cars; there are people *willing* to charge
up $15000 on their Visa and pay 15-22% APR.  And dammit if we all aren't
paying for things nowadays that in good old 1975 you weren't, like:
airbags, ABS, big money insurance, not to mention the crazy cost of higher
education.

The other thing is this:  More and more households today have two incomes.
The market is adjusting to this continuously; maybe someday you're gonna'
have to marry to make it.

>What's wrong with inflation?  It fools those who don't bother to think
>into believing their lifestyle is improving when actually they are
>going in the hole.

I wasn't saying anything was wrong with inflation.  I was saying that it
is one of the contributers to the cost today of items we're talking about.
I think I just wasn't clear; sorry.

>Besides... These "aero" cars of today all look like 4 wheel turds.
>Man, I hope I can keep my classics running until THIS fad passes.

That's YHO.  I'd get used to them if I were you (nobody's sayin'
you gotta' give up your classics, tho).

Regards,

Brian

bqueiser@magnus.acs.ohio-state.edu
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I am the engineer, I can choose K.
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Department of Engineering Mechanics
Ohio State University
Columbus, OH