Quote:
Originally Posted by blankall
But if you look at the average incomes, if you were making 50k per year after taxes (which is what this article states many recent graduates were making), with lower rents and food prices, you could easily find a way to put aside 50k in 3 years even on one income. That was probably enough to buy a starter home (AKA a condo) outright and then save up for the real deal. Good luck doing that now.
Interest rates killed you back then, but you had much more opportunity to build capital through saving. The ratio of income to home price was many times higher.
The article points out that after tax income is 60k now. However, the price of food, rent, etc... has all gone up several times. It would take you 10-20 years of saving to buy a condo outright now. That's once you manage to land that 60k after tax (around 80-90k prior to tax) job. So basically, in 1984 you could probably own a condo outright fairly easily by the time you were in your early 30s and be looking to upgrade to your first full fledged home.
Currently, good look doing that before 45 or 50. And how are you supposed to fit having kids into that plan too.
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While all this is true, there is one other factor that has been touched upon in this thread but not focused: single income vs. dual income.
Less than one third of married women in the US held full-time jobs in 1984. Dual incomes are pretty much the norm now. Perhaps out of necessity, but it does raise the household income average considerably.
So the question of home affordability in 2012 has to take into account the differences between single people (somewhat replicating the single income from the 80s) and couples who have dual incomes. And the associated costs of that - day care vs. stay at home parent.
And hell, why go back only one generation? If I grew up in my grandparents time, I would be a farmer with a far smaller social safety net, dependant on god and the weather for a good crop.
Are today's grads better or worse off than their counterparts of 30 years ago? Can't say. Better in some, worse in others. All you can truthfully say is that they are in a different position with different needs and priorities.