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Originally Posted by moorhosj1
This isn’t really how inflation or wages work, but yes purchasing a house is risky. For the average college-educated person, wages increase from 20s to 30s to 40s and peak in your 50s. Combine that with the fact that mortgages don’t increase with inflation and you have the world we live in.
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right, so why make it even more risky? lets also not forget that wages have remained stagnant for the vast majority of americans over the past several decades and purchasing power is far less than what it used to be...inflation has hit big ticket items like equities, cars, college education, healthcare, and housing orders of magnitude higher. incomes have nowhere near kept up with these things, hence the extreme wealth inequality we are dealing with today.
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Your scenario leaves out so much of reality, like opportunity costs or the fact that if you have to take a job at a coffee shop it will be tough to carry ANY size mortgage. If I bought a smaller house, my mother-in-law wouldn’t have been able to move in during COVID, my family wouldn’t be able to grow, and my home value wouldn’t increase as much.
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the opportunity cost to buying less house than i can afford is i can save more of my paycheck on something other than housing (i.e. retirement, which americans are woefully underprepared for). it may even allow someone to stop working early, in turn buying freedom from work obligations as opposed to have a big house to clean and pay off for another 15 years. if you need the space, than by all means take it. but encouraging people to buy at the extreme end of their budget when they dont need to is reckless.
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Nobody is saying to take on a payment you can’t afford, but if you are in the first 15 years of your career, it’s likely your wages will increase over time. Ignoring this is as silly as ignoring past recessions.
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final note, but ageism is a real thing in the workplace and there are more than a few 50-somethings forced into unwanted early retirements who find themselves locked out of careers going to younger people who are willing to work for a fraction of the cost. or who cant get their careers back after untimely late career recessions at the peak of earning power. lots of people plan to work for a certain number of years, and that is not always fully in your control. as automation and AI takes increasingly outsize roles in our workplaces (the numbers are readily available for how many good paying white collar jobs this is likely to impact), ill personally create the financial cushion while i can as opposed to the extra 2 bedrooms and whatever on-trend finishes i dont really need.
back to regular scheduling.