Comments on: Mortgage Slaves

By: Personal Finance - Thecreditcardfiles.com » Wealth Banes: 3 Habits That Will Ruin Your Finances

Thu, 04 Jun 2009 02:04:28 +0000

[...] House poor homeowners [...]

By: Will Habits Wealth 3 Ruin That Your Finances Banes: | Inbudget Credit and Finance Advice

Tue, 26 May 2009 12:40:30 +0000

[...] home foreclosure level House poor homeowners Widespread credit card debt problem Unfathomable amount of student loan [...]

By: * Wealth Banes: 3 Habits That Will Ruin Your Finances

* Wealth Banes: 3 Habits That Will Ruin Your Finances — Tue, 26 May 2009 02:00:04 +0000

[...] seeing all kind of problems as a result. These problems include:Unprecedented home foreclosure levelHouse poor homeownersWidespread credit card debt problemUnfathomable amount of student loan debtBut you [...]

By: Test Drive Your Home Ownership Experience | Moolanomy

Test Drive Your Home Ownership Experience | Moolanomy — Mon, 23 Jun 2008 14:34:04 +0000

[...] find yourself sacrificing savings for other financial goals — Then you are going to be “house poor“. You should look for a less expensive house, or find more ways to trim your expenses. You [...]

By: Saturday Weigh In, Link and Updates

Saturday Weigh In, Link and Updates — Sat, 14 Jun 2008 09:08:57 +0000

[...] 2 months ago I made a prediction that Toronto was in a housing slump and it’d be clear to everyone by today.� Its still uncertain (although I still feel the market is cooling), so I guess I’ll call myself wrong on this count.� Please keep this in mind any time I make predictions in the future .� I keep counseling friends and family to hold off buying, so I hope I’m not leading them astray. [...]

By: The Financial Blogger | April Monthly Top Ten

The Financial Blogger | April Monthly Top Ten — Wed, 07 May 2008 09:35:36 +0000

[...] Mortgage Slaves by Fours [...]

By: Mr. Cheap

Mr. Cheap — Mon, 21 Apr 2008 14:25:13 +0000

jrochest – I agree with Mike, very good analysis. I think people who complain about being house-poor often resent giving up luxuries. As you say, its possible to afford the houses people are buying these days (perhaps they go from being rich to normal rather than to poor .

Holding off on renos until they can afford it is totally the way to go.

By: Four Pillars

Four Pillars — Mon, 21 Apr 2008 03:45:15 +0000

jrochest – I think this is the right thread.

You are bang on with your analysis – if they can hold off on the top level renos then that will help their financial situation.
The other factor is that maybe the couples thought they could buy an expensive house and still have lots of money left over for vacations etc. Reality sucks sometimes.

Mike

By: jrochest

jrochest — Mon, 21 Apr 2008 01:51:18 +0000

Sorry, just realized I posted to the wrong thread…

By: jrochest

jrochest — Mon, 21 Apr 2008 01:49:08 +0000

One quick point about the original article — for all the distress being expressed, most of the buyers profiled bought well within a reasonable budget. They AREN’T house poor!

I can’t guestimate the first couple’s salary, so I won’t speak to them. But the assistant professor & lobbyist (who intended to go to law school) probably make something like 140,000-150,000 per year: he’s at York , where salaries start in the 90-100 thousand range, and she’s got to be able to bring in at least 50 grand a year: even in law school she’ll get a stipend of close to 30,000. They bought for 381, which means that they paid 2.54 times their salaries. If they are living only on his salary and she’s not paying anything towards the cost, they’re still at 3.81 times their income. Tough, but do-able.

The lesbian couple who bought in Roncesvalles paid 262,000 on a salary that’s probably about 100 – 120 thousand a year. They should be okay too: the baby would make it tough, as would the layoffs. But they should be just fine, according to the most conservative estimates.

The gay couple who bought for 470,000 would have a salary close to the first couple: I’m assuming 150,000. They’re in a tougher situation, but they are still only paying 3.13 times their income. Plus they had a downpayment, and they have no other debt.

As others on this thread have pointed out, what’s killing them is the assumption that they have to gut-and-retrofit the house to HGTV standards the minute they moved in. I’m sure the places were shabby and hellish ugly. But you can live with shabby and hellish ugly, and most first time buyers do. Paint does wonders.

The article is also amusing because it’s obvious how the author (whom I’ve met, a nice woman) did her research: she talked to people she knew and/or went to school with. This is why all the couples fall in the same demographic, and all work in media or academia.

The people who are really struggling are the families with 50,000 a year incomes who are trying to buy a 250,000 house.