EvenBob
EvenBob
Joined: Jul 18, 2010
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June 21st, 2011 at 4:56:20 AM permalink
We got the house we live in now, in 1984. Paid off the mortgage in 1997. The monthly payment when it was paid off was a whopping $620 a month. I'm constantly hearing of people these days who have payments of $1800 a month, $2200 a month, or higher, and these are average middle class people. I choke when I hear this, are they insane? How do they sleep at night, knowing if either of them lose their jobs, they're toast? And apparently, $2200 is cheap, there are lots of people paying over $3000 a month for properties that are under water. We've lost so much value on this property since 2008, we've decided to never sell it, its our 'default' house. Just leave it to the children, let them fight over it. If your mortgage payment is eating up 50% of your take home pay, something is wrong with your lifestyle..
"It's not enough to succeed, your friends must fail." Gore Vidal
cardshark
cardshark
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June 21st, 2011 at 7:43:08 AM permalink
I would question your sample. It is too small to be credible. I think the people you are hearing from earn more than the average American, or have made some bad decisions. The median mortgage payment in the USA in 2005 was $1,295 per month, according to the US Census Bureau.

Anyway, here's the math:

1984 was 27 years ago. $620 in 1984 equates to $1,300 in 2011 dollars when you factor in increases in CPI (inflation).

However, an even better measure would be to compare using the GDP per capita increases from 1984 to 2011. This is a better indication when we want to compare how the price of something compares through time with wage increases considered. $620 in 1984 would equate to $1,760 in todays dollars.

So, as you can see, mortgage prices aren't that far off from what they were in 1984, especially when we consider the cost as a percent of the average wage. In other words, the percent of salary that the mortgage costs for the average American is roughly the same or even perhaps slightly lower than what it was in 1984.
odiousgambit
odiousgambit
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June 21st, 2011 at 7:44:11 AM permalink
George Will said on some tv program the other day that if housing prices drop another 10%, then 33% of American homes will be underwater with their mortgages
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
cardshark
cardshark
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June 21st, 2011 at 7:46:39 AM permalink
I should add that while I don't think mortgage prices today are less affordable than in 1984, what has gotten significantly worse in the USA (and Canada, for that matter) is credit card debt. I don't have the exact figures, but the average amount of credit card debt has skyrocketed since 1984. That eats into income, leaving less to pay the mortgage.
fremont4ever
fremont4ever
Joined: Nov 24, 2009
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June 21st, 2011 at 7:59:50 AM permalink
Quote: EvenBob

We got the house we live in now, in 1984. Paid off the mortgage in 1997. The monthly payment when it was paid off was a whopping $620 a month.



I got my house in 2002 and my mortgage is less than that ($560). That's the one advantage of living in Michigan.
rJz
rJz
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June 21st, 2011 at 9:36:53 AM permalink
$2300 a month, up to $3300 a month by the time you add taxes and insurance.
Mosca
Mosca
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June 21st, 2011 at 9:45:55 AM permalink
I dunno, somewhere around $700 with the taxes included. If it weren't for my wife I'd rent. We have like a year left on it, put over 50% down. I'm not much of a handyman or homeowner. My idea of cutting the grass is, "Here's $20. Cut the grass for me."
NO KILL I
thecesspit
thecesspit
Joined: Apr 19, 2010
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June 21st, 2011 at 10:01:53 AM permalink
I pay about 20% of my gross income as a mortgage payment (~28% net). Property taxes, insurance and strata fees push that to around 34% of net income, which is bit higher than I'd like, but it's less than the 40% of net that I've seen floated as the upper limit (29% of gross is the recommendation I can find on a quick search).
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
konceptum
konceptum
Joined: Mar 25, 2010
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June 21st, 2011 at 11:54:17 AM permalink
Here in Phoenix, as in many other places, the housing market took a huge hit. I bought a condo at the height of the market. Appraised at $145k, and I got it for $115k. Quite a deal, huh? Now the estimated value is around $18k. The mortgage payment on that is $1000 a month, on a 30-year fixed loan.

I gave up on it, and found myself a house. 2 1/2 times bigger, and my mortgage payment is $550 a month, on a 15-year fixed loan, although I pay more than that each month. I'm waiting for the condo to get foreclosed on. And, yes, I'm happy to be contributing to the continuing decline of the housing market.
EvenBob
EvenBob
Joined: Jul 18, 2010
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June 21st, 2011 at 4:54:42 PM permalink
Quote: konceptum

Appraised at $145k, and I got it for $115k. Quite a deal, huh? Now the estimated value is around $18k. .



Is this a typo? Its now worth $18,000?
"It's not enough to succeed, your friends must fail." Gore Vidal

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