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| Has the war made life in the US incredibly expensive as well? (Page 2/8) |
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maryjane
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JUL 15, 11:47 AM
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I think (in North America anyway) the war is (mostly) a scapegoat. [This message has been edited by maryjane (edited 07-15-2022).]
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Jake_Dragon
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JUL 15, 02:55 PM
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| quote | Originally posted by maryjane:
I think (in North America anyway) the war is (mostly) a scapegoat.
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I agree with you. I would never expect the current administration to do anything less and not just the guy currently in charge, there are 40 year government veterans that have been pointing fingers for as long as they have been in office. (yeah I know the current guy is also one of those crowd.) I hope that the contributions to this smoke screen end at just sending money and are not escalated to joining the conflict. But end of the day inflation started before the war and has continued thanks to the policies of our administration.
Back to Cliff, no I do not think the war has made life in the US incredibly expensive but it has contributed.
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82-T/A [At Work]
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JUL 15, 08:46 PM
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| quote | Originally posted by Wichita:
What has been utterly ridiculous, but doesn't much effect me other than property taxes, is the insane housing prices. I've never seen housing prices rise so fast and I have no idea how. It isn't like wages has kept up with these housing prices and I have absolutely no idea how a typical normal average family even affords them. It is beyond me.
Did people just suddenly inherit a load of money from dead boomer parents or something?
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I was thinking about that the other day. I'm convinced the reason why housing shot up so quickly was because of a convergence of a few things:
1 - The availability and ability of "work from home" jobs: COVID kind of brought this out... both my neighbors work from home, and even I now work from home. It's crazy how many people are working from home:
2 - Foreign Investors: I suspect in addition to what I'm going to say in #3, I think everyone potentially saw inflation coming. The only thing that really protects you against inflation, are hard assets. Gold is something that people fiddle with, and I'm not into it. But real estate is something that's tangible, it's a limited quantity, and people need it. Here in South Florida, 1 out of every 3 homes being purchased was done by a foreign investor or a corporate investor.
3 - Insanely Low Interest Rates: The insanely low interest rates we had just a few months ago are unlike anything we've ever seen in the history of our country. Not since 2006-2007 (which also caused a mad-rush to buy) did we see low interest rates. I was shocked, but I looked up prime interest rate by quarter / by year, and couldn't believe it. Under Carter, the interest rates hit 20%... but even under Reagan, they dropped to maybe 9% near the end. I'll have to try to find the link... but based on how high interest rates have historically been, the interest rate NOW is still considered a fantastic deal. It's absolutely crazy when you think about it... we were paying ~3% interest on home loans. People could afford SIGNIFICANTLY bigger and more expensive homes simply due to the fact that they were basically just paying taxes and principle.
I think when it comes down to it... with all those things combined, people just went for broke and decided to go for it, knowing that interest rates would eventually go back up, and with there being a shortage... it's like being on a cruise ship and a buffet. Everyone gets crazy because they think the ship will run out of food (which they never do).
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Patrick
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JUL 15, 09:28 PM
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| quote | Originally posted by 82-T/A [At Work]:
Insanely Low Interest Rates: The insanely low interest rates we had just a few months ago are unlike anything we've ever seen in the history of our country... People could afford SIGNIFICANTLY bigger and more expensive homes simply due to the fact that they were basically just paying taxes and principle.
I think when it comes down to it... with all those things combined, people just went for broke and decided to go for it, knowing that interest rates would eventually go back up...
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Yep, "broke" is a good way of putting it. All those people who overextended themselves and bought bigger/nicer houses than they could actually afford, simply because mortgage rates were (temporarily) low... are now screwed with the mortgage rates taking a large jump upwards. (Not sure about the States, but they certainly have in Canada.) Monthly mortgage payments will swell beyond reach. The piper has to be paid eventually. For a lot of people, homes will now need to be sold... for less than they were bought for.[This message has been edited by Patrick (edited 07-15-2022).]
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Lambo nut
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JUL 16, 12:40 AM
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| quote | Originally posted by Patrick:
Good luck with that. You know what some of these guys are like. They can't take a dump without blaming whomever for the need to do so.
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And yet you couldn't contain yourself and had be the first one to stir up sh!t. Look in the mirror much?
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Patrick
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JUL 16, 01:20 AM
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| quote | Originally posted by Lambo nut:
And yet you couldn't contain yourself and had be the first one to stir up sh!t.
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Struck a nerve, eh? Too bad.
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blackrams
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JUL 16, 05:53 AM
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| quote | Originally posted by Patrick:
Yep, "broke" is a good way of putting it. All those people who overextended themselves and bought bigger/nicer houses than they could actually afford, simply because mortgage rates were (temporarily) low... are now screwed with the mortgage rates taking a large jump upwards. (Not sure about the States, but they certainly have in Canada.) Monthly mortgage payments will swell beyond reach. The piper has to be paid eventually. For a lot of people, homes will now need to be sold... for less than they were bought for.
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Based on the above posting, I have to assume that variable home loans are a big deal in Canada. Initially low interest rates that can rise/fall within agreed upon limits (normally set by the lender). If so, those can be a real problem and I'm surprised people use them. Other than variable mortgages, I don't see interest rates breaking anyone. You buy a home with a set mortgage; you've agreed to (that you can afford), you make the payments for as long as the loan lasts or till you go broke. If people buy a home they can't afford, who's fault is that?
My home is paid for. Considering maybe buying another or take over the payments from one of those folks who did fall into the variable mortgage trap. I didn't set that trap but, I see no reason to not pick up the pieces when someone else's dreams fall apart.
Edited: Oh, to respond to Cliff's initial question. Yes, it is already very expensive for middle- and lower-income families. Everything we consume is affected by the price of energy (fuel). Being on a fixed income (retired), I've considered going back to work just to keep the boat afloat but, we're not taking on water (yet) and limiting our travels somewhat allows us to keep going without too much pain but, I know folks that are hurting financially, the price of fuel is really stretching their resources.
Rams[This message has been edited by blackrams (edited 07-16-2022).]
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MidEngineManiac
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JUL 16, 06:33 AM
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| quote | Originally posted by Patrick:
For a wide variety of reasons, I feel very fortunate to be living in this part of the world.
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Well, you can just keep that left-coast wack-job, pronoun-using multi-cultural-leftist-whatever hell hole.
Remember, I've been to that coast, in both countries...3 times.
I am perfectly happy having Marlboros-smoking, moonshine-drinking, AR-toting bunch of damn Michigan rednecks 2 miles away from me.
Now who wants to have a beer and go blow up a tree ?
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MidEngineManiac
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JUL 16, 06:43 AM
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| quote | Originally posted by blackrams:
Edited: Oh, to respond to Cliff's initial question. Yes, it is already very expensive for middle- and lower-income families. Everything we consume is affected by the price of energy (fuel). Being on a fixed income (retired), I've considered going back to work just to keep the boat afloat but, we're not taking on water (yet) and limiting our travels somewhat allows us to keep going without too much pain but, I know folks that are hurting financially, the price of fuel is really stretching their resources.
Rams
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We are the same. Prices are kicking the crap out of us, and some of my little "projects" are taking a lot longer than they should just because of waiting on finances...
But we are not in debt to anybody, have a roof and food, a good town to live in with mostly friendly people, and some resemblance of health.
We will get through this.
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82-T/A [At Work]
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JUL 16, 08:13 AM
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| quote | Originally posted by Patrick:
Yep, "broke" is a good way of putting it. All those people who overextended themselves and bought bigger/nicer houses than they could actually afford, simply because mortgage rates were (temporarily) low... are now screwed with the mortgage rates taking a large jump upwards. (Not sure about the States, but they certainly have in Canada.) Monthly mortgage payments will swell beyond reach. The piper has to be paid eventually. For a lot of people, homes will now need to be sold... for less than they were bought for.
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I could go on forever on this... the dynamic is so significant, but when it comes to housing, I call this latest generation the "HGTV" generation. Because of all the shows on HGTV, Social Media, and the pressures of needing / wanting to feel like you've made it... most younger families today skipped the entire "starter home" process. They went directly for luxury homes, homes that included things like solid wood cabinets, quartz countertops, stone facades, 4+ bedrooms, etc. In doing this, many of them have over-extended their budgets. Many people do this because they need to compete with their friends on Facebook, Instagram, etc... where everyone has a luxury home with luxury appliances, etc.
I don't know about the comment though about their mortgage rates increasing. Most people today purchase homes at a fixed interest rate. 30-Year "Fixed." It's not like it was in 2007 when you had a lot of people with adjustable rate mortgages.
I have two mortgages, one on my rental property, and one on the home I live in today. Both of them are about 3% interest rate. That rate will never change, and it'll stay the same for the life of the mortgage. Most people have mortgages like this too, so it's probably more a feeling of "they got in while the getting was good." But moving forward, a $400k home that would have normally cost you $2,200 a month (with insurance + taxes), is now going to cost people $2,750 with today's rates if you were to buy that $400k home today at 6% instead of 3%.
If interest rates continue to climb and go back up to around what they were in the 80s and 90s... then I suspect people will have to start buying smaller tract homes like people had in the 50s and 70s. Unless supplies / materials go WAY down in price, which could lead to people being able to buy larger homes for a comparable price.
One thing is for sure, rents are going to keep going up... and homes in desirable areas are only going to increase in value.
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