I always appreciate thoughtful reader feedback, and always enjoy reading what you guys think about what I have to say. Reader Rachel Elizabeth, who noted that she works in real estate, left a comment about my last post on the housing bailout.
She writes… “not all of the people that are being “bailed out” are people that bought houses that they couldn’t afford.”
Some of her friends, who are also realtors, were making good money back when the market was up, but with the housing market crash they just don’t have enough money to pay their own mortgages. Also, she points out that there are a lot of people who were able to pay a 20% downpayment and then later got laid off or reduced hours and are in trouble and in need of bailout help. She also points out that the government is offering a $8000 tax credit for first-time home buyers.
I can’t say those people don’t deserve a bailout. To be 100% honest I’m bitter because in the Bay Area, $8000 is pocket change when it comes to affording a house. You’re supposed to buy a house that’s 3 times your yearly income. Granted, I’m 25, and my income hopefully will increase over the years. But I make pretty good money now (and I’m grateful for that) and even with the housing crash, there is no way I could afford a house here. The cheapest 2br condos in the area go for $600,000. Following the income rule, I’d need to be making $200k a year just to afford that. At my $60k salary, I really should only buy a condo/house worth $180k. You can’t get anything for that around here, except maybe a closet.
My good friend in NJ recently bought a house with her fiance because she felt she needed to own a house right away to be all grown up and successful. Then, she got laid off, and even though her fiance has a good job they’re struggling with payments. And their house is much less expensive (for its size) than a comparable purchase in the Bay Area. They paid $400k for something that would easily be $1.5M around here, give or take a few thousand.
I’ve kind of accepted that I will have to rent for the rest of my life. I just will never be able to afford to own. I grew up with the idea in my head that if I couldn’t afford a house, I was a failure. These days, it’s not just the American dream, it’s the American necessity. But I’m trying to get over thinking that — you can be a success and live the American dream and rent for the rest of your life. Can’t you?