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Used to Be Good

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A friend gave each of her adult children a gift of $100,000 to use as a downpayment on a house. The total number of children is 4. Actually, I think one of the kids got much more because she wanted to buy in DC. Knowing my friend, it’s not her last half-mil she shared so easily.

The friend recently retired from my college, which is the lowest-paying PhD-granting institution in the state. Her husband is a school teacher.

Theirs isn’t inherited wealth. Their kids had free lunches from school growing up. The husband is first-generation college graduate. They are in their seventies now.

What I’m saying is, this used to be a pretty great economy.

18 responses to “Used to Be Good”

  1. ed Avatar
    ed

    It used to be much easier. Housing and just about everything else was cheaper back then. Boomers and some Z gens are really the most spoiled generation.

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  2. methylethyl Avatar
    methylethyl

    In 2000, I rented a comfortable 3bed/2ba house with a generous den that could be used as a fourth bedroom plus a fenced yard, in a safe neighborhood in town near an elementary school, for $600/mo. I shared it with three roommates, so we each paid $150/mo and split the utilities.

    This year, my family is renting a comparable 3/2 house (but no fence, and on a highway), in a rural area, for $1300/mo (and it was a complete miracle we found it at all: normally a house like this would go for a minimum of $1900/mo). In two decades, the price of housing for renters has more than doubled. In that same time, the price of gas has tripled.

    Minimum wage then was $6.50/hr. I don’t live there anymore, but minimum wage now is $8.65/hr.

    Officially, the inflation between 2000 and now has been only 58%. HA! HAHA! Good joke, eh? But who cares because now we can have smartphones, right?

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    1. methylethyl Avatar
      methylethyl

      Just for kicks, I went and looked up 3/2 house rentals in the town I used to live in, back in 2000, to see what they were going for now. In the whole town, there was only one listed for less than $2200/mo, a bargain at $1650, and in all those cases, you’d be stuck living in the high-crime student ghetto around the university. Nothing at all for rent in my old ‘hood. I guess it gentrified? So the rent has more than tripled at my old digs. I’m glad we moved out to the sticks!

      58% my arse.

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    2. Clarissa Avatar
      Clarissa

      God, when I hear what the apartments I rented in 1998-2003 now go for, it makes my hair stand on end. Rents have doubled. Public transportation costs more than doubled. It never gets talked about but I remember what it was like vividly.

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      1. methylethyl Avatar
        methylethyl

        Yes. What I’m seeing is rents have tripled or better– and this is not in the big city. This is in small and midsize towns with not much going on. Gas has done the same, and I don’t remember what groceries were like then, but they’ve gone up 20-50% just over the last year and some things, like chicken legs, have doubled.

        Incomes, however, have not doubled or tripled. We sacrificed a huge chunk of savings and lived on wishes and fairydust for two years so my husband could go back to school, and get a better job. On paper, we doubled our income. In reality, we are just barely staying ahead of inflation, and every dollar we put in the bank is losing 20 cents a year.

        Inflation is how you steal from people who save up for big purchases.

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        1. Clarissa Avatar
          Clarissa

          My grocery bill is consistently 30% higher than normal. I haven’t changed anything about what I buy. Gas has gone up by exactly 50% since this time last year. Thank you, president Biden.

          Eating out at my favorite (non-fancy) lunch places has doubled in cost. The Indian buffet went from 7,99 to 15,99. All in just under a year.

          I hope people who voted for Biden are very happy.

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  3. el Avatar
    el

    Have prices for houses and the apartments (for sale, not rent) also doubled in USA? They had in Israel.
    In 2005-2006 more or less prices went up a lot suddenly. Today the flat we live in that my mother bought costs more than twice compared to its price in 2005.

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    1. Clarissa Avatar
      Clarissa

      It goes in waves. A bubble forms (like in the years before 2008), then it bursts, then it swells again. Right now the housing market is overheated. My friends were trying to buy and they had to make offers without ever seeing the houses because they’d get snapped up so fast. Finally, they bought the same kind and size of house as ours but older and shabbier and $100,000 higher than we paid in 2014. That’s 50% higher.

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    2. methylethyl Avatar
      methylethyl

      Tripled, in a lot of places.

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  4. el Avatar
    el

    A general question: Americans talk about renting an apartment vs buying a house. Don’t people own apartments / flats ? In Israel most people live in flats regardless of owning or renting status.

    Surely, there are nice neighborhoods with flats where middle class families live too?

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    1. valter07 Avatar
      valter07

      In big cities a lot of people own apartments. Especially if they want to live not far from downtown (assuming that downtown is not a business desert and has some attractions and some life). And this is considered completely socially acceptable, even if it is clear that one could buy a house in the suburbs instead.
      In smaller cities (e.g. typical university towns of ~100K people) apartments are generally for rent and those who own their homes own houses.

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      1. Clarissa Avatar
        Clarissa

        It’s just that with small kids, it’s so inconvenient. Getting into an elevator with a stroller, a baby, a toddler and grocery bags is so complicated. You can’t send them out to play on their own. You can’t leave the building 50 times a day. With a house, you have a fluid existence between inside and outside. Maybe not as relevant in Montreal but in warmer regions, I don’t want to pack a bag and put on shoes every time my kid needs to pop outside.

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    2. Clarissa Avatar
      Clarissa

      My parents live in a condo. My sister did, too, but with kids it’s better to be in a house. It’s not any cheaper because you have condo fees that can be ludicrous.

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      1. valter07 Avatar
        valter07

        —It’s not any cheaper because you have condo fees that can be ludicrous.

        This probably depends on the city, but at least in Montreal the solution is to buy a condo in a three-four story building that does not have any fancy add-ons that increase the condo fees, such as swimming pools, fitness centers, picnic areas on the roof, etc. Or elevators, for that matter.
        If we had a house that costs as much as our condo, we’d have to spend a lot of additional time in transit. And in this scenario one also has to take into account either the increase of the cost of public transportation (probably less than condo fees, but not very convenient), or the cost of the second car+ downtown parking. Downtown parking alone costs more than our condo fees…
        But living with 3-12 y.o. kids in a condo would indeed be cumbersome, I agree.

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        1. Clarissa Avatar
          Clarissa

          God, yes, the parking. I’ve been complaining about the $169 I pay for a yearlong campus parking spot, and then my sister heard me and wasn’t kind. :-)))

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    3. methylethyl Avatar
      methylethyl

      If you own your apartment, it’s usually called a condo?

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  5. Just George Avatar
    Just George

    You could say that the economy used to be good and is now bad, but if you did that, it would mean that there were two economies when really there is only one.

    In my opinion a better way to look at it is to say that there is and always has been only one economy, where the previous generation borrowed money to spend for themselves that was supposed to be paid by those in the future who are their children.

    Fast forwarding to today, you have a bunch of old people whose government took out loans to give them cash standing next to young people whose government didn’t take loans for them or gave them anything, but rather charges the young taxes to pay for the loans taken to give money to the previous generation.

    When you look at it that way, it means that baby boomers giving money to their kids to put down deposits on property are giving their kids money that was withheld from them, in an economy that sucks for everyone except bankers.

    Liked by 1 person

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  6. William Avatar
    William

    Its funny in a gallows humor type of way. Once upon a time you could buy a loaf of bread for about $0.15 or so, heck they don’t even have the emblem for cents on the keyboard now. Sure you didn’t make as much money during the month, but things were a lot cheaper and you got more for your money too. Take bacon for instance. Now its somewhere between $6 and $10 for about a 1lb. Back when my GP was growing up it wasn’t sold in 1lb lots but in 5lb lots and was comparatively cheaper too. Houses cost about $20,000 and cars about $1,500, you could go to college while working a summer job. Heck companies weren’t requiring degrees and 5 years experience for a beginning job, you would get on the job training instead of being expected to already have it. You would work at a company and then when you retired you could expect a pension. But then we were taken off the gold standard, and our money was inflated “officially” 2% every year for half a century or so and here we are with everything going straight to hell in a hand basket.

    As for rents being raised, its not just arbitrarily being raised, there are generally good reasons for raising the rent. Also it might surprise you, but generally for the first 15 years or so an owner generally doesn’t make all that much from his rental property. As long as there is a mortgage to pay, your likely not going to have any or well much anyway income coming in until its paid off. Odds are you will probably have to pay in some more too for repair work and when tenants don’t pay. The ones making lots of money generally have a great many rental units or have several paid off rental units. Please also keep in mind each of those rentals has to be bought and paid off before earning any money from rents, and housing prices have steadily gone up for well practically sense the 60s or so, even when we had the crash in 07-08 the price of housing recovered and continued going up just a couple of years later.

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A conservative literary critic and college professor

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