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sybrib you sound jealous of the people that have money in the bay area.
That's because you didn't read all my posts.
The oldest baby boomers are retiring now. I've said this many times before, since the housing correction was prolonged up to the point where boomers are starting to retire, there will not be another boom in housing until the last boomers die of old age around 2050.
Gen X is too small to buy up all that housing. The Millennials will have to buy the bank a McMansion before they can buy themselves a starter house due to their exorbitant student loans.
Between high college costs and rampant unemployment, the Millennials are going to be renting for a very, very long time. The only solution I see for them is to keep living with their boomer parents until their parents die and then inherit the house. Maybe that's the solution that will play out.
My wife and I are two "Millenials" who recently graduated from top So Cal business schools with near $200K in student debt.
We worked hard and the bump in pay from our previous positions, plus the increase in future earning potential, makes that expense worthwhile.
Even so, there is no question in our minds that it makes a lot more sense to rent than to own, until such time as we can afford to pay 20% down, with 6 months of our combined salary saved up.
Given these goals and our current savings rate, it will be 11 years before we can afford to purchase a home.
Note that our combined salary is more than double the median income for our area. Yet, due to our back end debt, it makes no sense to purchase a home. I joke with my parents that we already own a home - it's called an education.
This is no charity case and I don't expect anyone to shed tears because some b-school graduates making twice the median income can't afford a house. The point is that our purchase will be delayed.
I wrote about this more than a year ago.
The next generation of home buyers has too much college debt to buy a house
Housing market alone is going to stifle housing market being so overpriced. Student debt is just icing on that cake.
Well-said. My thoughts entirely, to me it's all finally hit the fan the real story will be how many fools buy into manipulated bullshit again after seeing the horrific results.
What kills me is just the idea of what these so-called "non-profit" universities are charging. It is as insane IMHO as someone thinking an average house sales price should be anywhere over 150K.
I cant believe people actually fell for the student loan bs! it was a rip off right from the start. there were never any guarantees you could get a good job or any job at all. I have a degree, but I got it in the 70's. back when education (& loans)WAS a good deal, but even then NO GUARANTEES. and back in those days one could get 3 jobs in a week, take your pick. You didnt need a college degree to get a job. so this is progress? every time the govt offers anything & starts dangling that carrot..youre gonna pay for it. become self sufficient! get thru this WITHOUT THEM... doesnt anyone seem to remember the 'FREE TRADE AGREEMENT? that started this whole mess? I never hear anyone talk about it any more. deals, nego, payoffs, special rights corp greed institutionalized..this is what our country has become...and BUYER BEWARE
A student loan jubilee (e.g. something like $X,000 paid down of student loans) would be a big economic stimulus, and it would at least help the right people for the most part.
Why? In two years, outstanding student loan debt increased 25% from 400 billion to 550 billion for the period 2008 to 2010.
What stimulative impact did that have on the economy?
And who are the "right people" to help?
Tuition prices are increasing for two keys reasons.
1) Government and government related institutions continue to subdize higher education. In alll of human history, any time a government subsidizes an activity the cost will never fall despite increases in demand.
2) Higher education is also a political plantation to place campaign workers that help elect politicians to higher offices. This quid pro quo market is evidenced by the amount of tuition that never makes it to the classrom, but instead is used to fund bloated salaries for low skill labor that maintains the campus.
yep. theyre controlling (poorly or not for our benefit) schools, jobs, housing taxes the stock market..on & on.and spending like drunken sailors. they have abused and corrupted their powers.the same circumstances on which our country was founded. now where are we to go? or what are we to do? for myself, Im battering down, staying put and waiting...but for what? the uncertainty is killing me. I wish I had a crystal ball.
How will buy the boomers houses in 10 years, when they want to retire?
Boomers are already in their 70's. How long can we keep predicting what the Boomers will do in ten years?
I think Student loans are default more than ever, it will become popular to just ignore them, and seek other unrelated careers.
I think there will be protective legislation passed in the next 10 years, that will make paying back school loan more optional than ever. School loans have enjoyed a spot at the front of queue for a long time.
More people are going to start viewing a classic college education as a waste, and opt to not get a degree. But instead there will be more online learning resources, people will use instead.
As an alternative to a "collapse" in higher education due to "bubble" conditions may simply be a steady reduction in the number of individuals who pursue a higher education degree. Ultimately, our fellow "average" citizens will wake up and realize that college is just too expensive, causing ever increasing numbers to just say no. Interestingly enough, this may result in an increase in a skilled and unskilled labor pool for manufacturing jobs, etc. Funny...just what this country needs. Could we be on the long road to a more balanced work force of production vs. service professionals?
Boomers are already in their 70's.
Sorry to tell you this TOT but the baby boom was 1946 to 1964. The first baby boomer to hit 70 won't be until 2016.
As an alternative to a "collapse" in higher education due to "bubble" conditions may simply be a steady reduction in the number of individuals who pursue a higher education degree. Ultimately, our fellow "average" citizens will wake up and realize that college is just too expensive, causing ever increasing numbers to just say no. Interestingly enough, this may result in an increase in a skilled and unskilled labor pool for manufacturing jobs, etc. Funny...just what this country needs. Could we be on the long road to a more balanced work force of production vs. service professionals?
We can only hope. My great hope is that we start to value people that actually DO something for a living, people that build things and support the infrastructure of this country. It would also be nice to see us reject the cheap disposable crap that is being manufactured and sold and barely used and discarded, and start making things that work well and last.
I was just having a conversation with someone yesterday about stoves, most are cheaply made and full of electronics that go bad quickly, they take a ton of natural resources to make, but last a few years and are thrown out and replaced. The thing is, there are 100+ year old stoves that people still use and maintain, simple gas stoves that you light with a match and work great. Let's get back to building quality things, and appreciating the people that build and maintain them for generations.
There's another perhaps even bigger reason why the housing market could be stifled due to lack of purchasing power of today's younger generation: Unemployment. 20-somethings today are in the highest percentage group of those without a job. Partly because boomers are now working longer before retirement since their houses and stock portfolios have fallen. Students with loads of debt certainly doesn't help either.
I was just having a conversation with someone yesterday about stoves, most are cheaply made and full of electronics that go bad quickly, they take a ton of natural resources to make, but last a few years and are thrown out and replaced
The gas stove in the house we rent is barely 10 years old yet is falling apart. The handle comes loose all the time even after being re-tightened. The ignitors break all the time and the motherboard for the time fried last year. I remove the burners to clean them once a year and they're rusting out. The parts are cheap though but still- its a POS. On the other hand most of the appliances we own ourselves- the mixer, blender, and toaster are all from the 40's-60's and built like tanks. They'll probably still be around long after I'm gone.
Huffington just had an article stating student loan debt rose 25% since 2008.
A student loan jubilee (e.g. something like $X,000 paid down of student loans) would be a big economic stimulus, and it would at least help the right people for the most part.
Jubilee? And who are these right people? Are they stupid people who take out loans that that they cant' possibly pay back for something that they can't even use?
Who is better prepared to create Web content than a college educated Liberal Arts major.
What puzzles me is that if one looks at the future of job growth, much of it will have to do with the Web...and not just applications, but content.
Which just so happens to be the easiest field to learn on your own. Tons of great resources online, all for free.
it will still have plenty of legs to keep on truckin' before its eventual collapse.
hehe, I think you're right. The reset switch on the currency is inevitable at this point. It is a puzzle as for when and how it actually occurs.
Come to think of it - anyone saving for their kids in a 529 plan? lol, that thing would be meaningless if it cannot keep up with higher education fee inflation.
Given the highly uncertain economic times we live in, how are any of you saving for their kids college? precious metals? or something else? or just forget-about-it-the-kid-can-take-care-of-him/herself approach?
And who are the "right people" to help?
On any given day, I will take people willing to educate themselves over banksters and irresponsible house buyers. You should too. Some of you are suggesting that some of these people did the wrong math and aren't getting jobs commensurate with the education they got loans for, which could be true, but that has a lot to do with false marketing. Even so, there are many people who were perfectly responsible and who still ended up with tons of debt, because that's how it is -- education costs have gone way up since the boomer generation. Boomers paid almost nothing for good educations.
Could we be on the long road to a more balanced work force of production vs. service professionals?
It seems rather naive to think that unskilled workers will create a "balanced work force" of any sort here. There are plenty of unskilled workers all over the world that are cheaper than those here. That doesn't mean we can't have a manufacturing renaissance, as some are predicting, but it's going to be with more skilled workers, not with drones.
It would also be nice to see us reject the cheap disposable crap that is being manufactured and sold and barely used and discarded, and start making things that work well and last.
I'm not sure what this has to do with anything. What cheap crap are you identifying here? And how would we be rejecting that stuff? Where are those items made? I'm not sure what you're suggesting here.
That's exactly why it's good to invest in college related stocks.
hoo-wee......(as in pig-calling)
the great American way - celebrate your entitlement by investing in others' misfortunes. See you at the demise of the empire, kiddo.
the math is simple....a cool trillion in house-buying prevention.
Higher education lines up with GM & Enron for world-class stupidity.
(there's an oxy-moron in there, somewhere...)
If the high loan debt is not going to hurt the housing market then how is it going to help housing market?
If the high loan debt is not going to hurt the housing market then how is it going to help housing market?
It is going to make housing more affordable for those who didn't rack up student loan debt.
Tude says
It would also be nice to see us reject the cheap disposable crap that is being manufactured and sold and barely used and discarded, and start making things that work well and last.
I'm not sure what this has to do with anything. What cheap crap are you identifying here? And how would we be rejecting that stuff? Where are those items made? I'm not sure what you're suggesting here.
The economy used to be centered around local manufacturing and tradespeople. There was also a large economy centered around people actually FIXING things. What cheap crap? All of it...appliances, clothing, tools, musical equipment, cars, bikes, furniture. Everything you see in your house. All of these things used to be made to last longer, and be maintained. Now it is all made cheaply and quickly in a factory halfway around the world by nearly slave labor and made to be disposed of.
All of these things used to be made to last longer, and be maintained.
What specifically used to last longer? People say this all the time, but what sorts of things are we talking about. What cars aren't lasting as long? Last I remember, Chryslers built in the late 70s and early 80s rusted through the bottom so that your feet could touch the ground. That doesn't happen any more on a modern car.
I can maintain stuff too, it just costs me too much money. The repair on half the stuff I buy would cost me 50% or more of the purchase price in many cases (plus shipping and whatnot). In that case, it's easy to see why people don't bother. Why should we spend more money for crappier service? What price ranges are we really talking about here?
I'm all for local manufacturing, and I've suggested numerous times that it could come back. But what exactly was better about the olden days? Give me concrete examples here rather than just nostalgia.
This is no charity case and I don't expect anyone to shed tears because some b-school graduates making twice the median income can't afford a house. The point is that our purchase will be delayed.
Is it just me or do we keep getting better posters lately?
What specifically used to last longer?
Cars have improved quite a bit but the quality of the housing construction has dropped quite a bit. Electronics were made to last a lot longer a decade or 2 ago as well. I have a 20 yr old tube TV that is still going strong but my 5 yr old LCD is starting to go already and that doesn't seem to be unheard of either. I want to say the clothing seemed to be better made 10 yr or so ago too but that is harder to pin down since I most always buy the cheap stuff. The fabric just seems flimsier and the stitching is mediocre to terrible.
Cars have improved quite a bit but the quality of the housing construction has dropped quite a bit. Electronics were made to last a lot longer a decade or 2 ago as well. I have a 20 yr old tube TV that is still going strong but my 5 yr old LCD is starting to go already and that doesn't seem to be unheard of either. I want to say the clothing seemed to be better made 10 yr or so ago too but that is harder to pin down since I most always buy the cheap stuff. The fabric just seems flimsier and the stitching is mediocre to terrible.
I have a motto "Buy good and buy once."
I always refuse extended warranty and tell the clerk that if the product fails before what I would expect its life to be, I'll just never buy this brand again.
Though I avoid buying appliances and television from Johnny come lately companies, like Samsung, and LG. Because who in the hell are they? How can people say they are good products they just sprouted up on the scene around 2005 or so.
I'll buy Samsung phones, but I don't expect them to last beyond 2 years 3 tops, which they rarely do. but for the price, and by the end of the life, I'm ready for a new phone anyway. As by two years, they've gone through 2 or more generations of that model.
I look at how long their Cell phones last, and I'd never buy a Samsung dishwasher, fridge, washing machine or LCD television. The same goes for LG.
I am also NOT an early adapter of new fanged technology.
I finally broke down and bought a Whirlpool High Efficency Washer and Dryer, because it seemed to have the best form factor nomenclature, door hinges, and quality baskets.
I kick the shit out of tires before I buy something and have a TON opinions, if you're there to sell me, you'll be disappointed.
But FWIW, I've had good luck with everything I've bought in the last 15 years. We usually pitch perfectly good working items by time we replace them.
Our 12 year old Hitatchi rear projection 60 inch T.V. in the living room looks as good as the day we bought it. Although we all now have a LCD in our rooms, there's always someone watching TV in the living room on the Hitachi.
Two of the biggest drivers of our nations decline are out of control health care expenses, and University tuition. If we can't fix these problems we'll NEVER get out of the mess we're in. Note that the Democrats have done NOTHING to address either of these issues. The problem with the Republicans is that they don't even believe these ARE issues.
Note that the Democrats have done NOTHING to address either of these issues.
Oh yes they have: they've made taxpayer-subsidized UC and CSU educations more accessible to the kids of illegal aliens.
Republicans is that they don't even believe these ARE issues.
That's because for the rich, they're not issues.
The trend of tuition inflation is certainly alarming and not sustainable in the long term, but I think the typical student debt amounts are still not so high as to impact the housing prices more than marginally. The mean undergrad debt at graduation is ~25 K, as I recall. This is a LOT more than it used to be in relative terms, sure, but it's only ~3% of a decent house in a good Silly Valley neighborhood, isn't it? A change of mortgage rate from 4.5 to, say, 4.8% would affect the total monthly debt payments more than adding that 25 K to the debt.
When people borrow 800 K that they need to pay back for 30 yrs., I'm frightened. Not so much for 25 K that can be paid in a year with a good B.S. And there are many forbearance and suspension programs to not pay temporarily if can't - not quite so for mortgages.
My wife had graduated as a BSN 4 yrs. ago with 43 K debt, which is much above average. Her salary as a CNA prior to college was $ 13 - 14/hr, now $ 33 - 35/hr as an RN with good annual increases and ~$ 45 - 60/hr for (plentiful) overtime, not even speaking of much better benefits, job security, and choice of work. She has paid that 43 K back in slightly over a year, and has 30+ years upside going forward. You tell me college is expensive? For clueless poly. sci. and theater majors, perhaps.
The mean undergrad debt at graduation is ~25 K
Could be that way till now. Going forward it may be a lot higher, though as the college finances are getting it from both ends: escalating expenses with reduced government funding, mom and dad losing their jobs or at best soldiering on in stagflation.
Could be that way till now. Going forward it may be a lot higher, though as the college finances are getting it from both ends: escalating expenses with reduced government funding, mom and dad losing their jobs or at best soldiering on in stagflation.
I don't want to predict the future. As for now, the drop of housing prices since 2007 far more than offsets the growth of mean student indebtedness, such that the average (stud. loan + mortgage balance) is down, not up. That's even before considering a major decrease of interest rates since 2007 (which have dropped on st. loans too)
Oh yes they have: they've made taxpayer-subsidized UC and CSU educations more accessible to the kids of illegal aliens.
I am an independent but I think it is much better then having non educated illegal alien.
out of control health care expenses, and University tuition
You have some point there. Those can be easily offset by subsidizing it through tax with tax increases of course,if not then we are slowly heading toward third world country situation. Most youth in third world country don't go to college.
Cars have improved quite a bit but the quality of the housing construction has dropped quite a bit.
Yes, cars have improved dramatically. I'm glad you acknowledge this, because most people don't. Usually a fear of computerization bugs them.
Housing construction is a market issue -- many people don't care about quality construction for some bizarre reason. I don't quite understand this. However, I doubt the run of the mill tract house is that much worse than a 50s tract house, and the modern one is better insulated and ventilated and much safer.
I have a 20 yr old tube TV that is still going strong but my 5 yr old LCD is starting to go already and that doesn't seem to be unheard of either.
But that has nothing to do with quality. The tube was originally not nearly as reliable. Even your 20 year old TV is well into the product development cycle for CRTs. Yes, tube TVs are somewhat rock solid these days, but they weren't always. In addition, are you really going to buy a 40" tube -- with its attendant size, weight, power consumption, etc.? Is that your solution?
LCD is a different technology, and one that has gone through less development. Nonetheless, even now, you can buy a longer lasting LCD than you could a few years ago. In addition, there's a lot of user error too -- people use their stuff in less than ideal conditions and use weird settings (almost everyone I know has their screen set to be way too bright and to have bizarre contrasts because they think it looks better), and yeah, in those less than ideal conditions, stuff doesn't last as long. But I don't think that indicates a fundamental flaw in LCD TVs.
Though I avoid buying appliances and television from Johnny come lately companies, like Samsung, and LG. Because who in the hell are they? How can people say they are good products they just sprouted up on the scene around 2005 or so.
You mean Samsung the company founded in 1938 and LG the one founded in 1947? Sounds more like xenophobia than anything else. Also, if you think Samsung has only sold in the US since 2005, you must live in a cave. Samsung built a TV assembly plant in NY in 1985. Many of these "johnny come lately" companies were there in the background anyway, by making component parts or making white-labeled products.
When do you think the last year was that GE manufactured a TV?
I'll buy Samsung phones, but I don't expect them to last beyond 2 years 3 tops, which they rarely do. but for the price, and by the end of the life, I'm ready for a new phone anyway. As by two years, they've gone through 2 or more generations of that model.
I look at how long their Cell phones last, and I'd never buy a Samsung dishwasher, fridge, washing machine or LCD television.
Two big problems:
1) cell phones become obsolete, but most of the time they still work -- I've kept the same cell phone for 4+ years before, and mostly got mocked for doing so. It worked fine, but my phone wasn't cool.
2) trying to extrapolate from cell phones to dishwashers, fridges, and washing machines seems highly misguided, considering that the basic technology in these things is more mechanical and physical than electrical.
The problem with Tude's original complaint is that it's one thing to spend $50 to fix a $1500 vacuum cleaner (as could be the case back in the day). It's another to be able to buy a decent $100 vacuum cleaner. I didn't make up that $1500 price -- that was the estimate by this person on Amazon of the price she paid for a Rainbow vacuum in 1985.
Even the example of musical equipment example -- yeah, I could buy a shitty guitar made of laminate in Mexico or Asia for really cheap. It might not even sound that bad. Or I could buy a Martin made of solid wood for a hell of a lot more, but I do have to pay for it. This was always the case -- you always paid dearly for a bespoke guitar handmade by your neighborhood luthier back in the day.
Oh yes they have: they've made taxpayer-subsidized UC and CSU educations more accessible to the kids of illegal aliens.
I'm not espousing any particularly ideology here, but as someone said above, isn't that better than having uneducated undocumented immigrants? This really doesn't cost us very much considering how few undocumented kids there are relative to the entire universe of UC students, and the amount of taxpayer subsidy provided to UC keeps dwindling in any case.
Furthermore, are we really going to blame people who were *kids* when their parents brought them here? That seems short-sighted. For one thing, these kids probably have almost no connection to their supposed home country. If you're a kid, and your parents brought you here, it's in our best interest to educate you and make you a contributing member of society. We should be happy that people want to better themselves.
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