Home Ownership!! What to do, What to do? The American Dream?
American dream of owning a home is dead, majority of renters say
Note: All of the referenced have plenty of graphics for a skim.
by The Guardian (Mar 12, 2024)
https://www.theguardian.com/society/202 … GTUS_email
"The American dream of owning your own home is dead, according to the majority of renters surveyed in a new poll shared exclusively with the Guardian, and the areas they live in have become so unaffordable they are “barely livable”."
What say you?
What's it like in your neck of the woods?
Is it regional?
Who do we blame?
How long has it been going on?
What would you advise a Gen Z or Millennial? How about the soon to arrive Gen Alpha?
The Poll is Real Estate Survey / The Status of Real Estate in 2024:The Harris Poll Thought Leadership Practice
https://theharrispoll.com/wp-content/up … h-2024.pdf
State of the Nations Housing 2023
https://www.jchs.harvard.edu/sites/defa … g_2023.pdfI bought my home at the height of the recession in the 80's. - my mortgage was over 10% and the seller was getting out from under a veteran's mortgage of nearly 12%. My grandson (21 years old) bought a home last year.
Home ownership is not dead, just temporarily harder to come by. It will change, and if it doesn't perhaps we will go back to the 1000 sq ft houses from the 80's. It is absolutely that localized markets can be extremely difficult (my own is one such), but it is not impossible, particularly with the higher wages being paid today (another 16 year old grandson just got a job at MacDonalds paying $15 - Idaho minimum wage is still $7.25).Thanks for the input. Yup, perhaps a matter of perspective. Us matured seniors have the luxury of lived life experience to have optimism, perhaps.
I know in my neck of the woods, here in San Diego County in the news weekly is three things:
** Affordable housing shortage
** People more so seniors becoming homeless because of housing
** Lack of areas to develop within the metro San Diego city area that can utilize mass transitAs population has increased, so has the cost of land, while the availability of land has gone way down.
The only real solution is to live further away, and hope that one day you can buy into that favored position in town.
Wilderness: I bought a house in 1983 in my thirties for $60K (household income about $40K/year) with a 13% mortgage. Kept it three years and made $10K on it.
These things fluctuate. My children are in their 40s, all make more than $100K/year and own homes worth $400K-$700K. Times change The American Dream of owning a home took a major hit when the housing market crashed through good intentions turning to greed and stupidity. But it is still there.
32 Years of Housing Data
https://www.huduser.gov/datasets/ahs/ahs_taskc.pdf
Tracking the American Dream. 50 Years of Housing History
https://www.huduser.gov/portal/Publicat … D-7775.pdf
Average Rent by Year [1940-2024 ]: Historical Rental Rates
https://ipropertymanagement.com/researc … nt-by-year
Personal Opinion:
Prior to the increase in interest rates that began in earnest is 2022. It was never easier to get a home in the State of Florida. Each State is different. The programs set up during the previous 6-8 years prior to 2022 made is very easy for any first-time buyer to purchase a home that had a steady, provable, income (not self-employed).
Doubly so if they were a "first responder" or teacher.
I am sure in places like San Francisco, Los Angeles, NYC and their immediate suburban areas, the cost of owning a home is out of reach for many.
Those who have an adventurous spirit and are willing to work hard and travel to areas where housing is affordable and jobs are available probably will have little trouble.
I look at something like this:
Number of renter occupied homes in the U.S. 1975-2022
https://www.statista.com/statistics/187 … ince-1975/
And it looks normal to me... as population increases, one would expect the number of people renting to increase as well.
I think what has changed is the belief by many that they are owed a House, Car, along with their cellphone, internet, food, etc. the concept of having to bust your arse to get those things, to do what is necessary to achieve those things has been lost in more people than still have that drive and understanding that you can't get something for nothing.
My grandfather built the house that I visited as a child, my father built the first two homes I lived in as a child. From a plot of land, to pouring the foundation, to framing, wiring, roofing, etc. they did it all (with help from friends).
They worked their jobs, and during their off time they built their homes.
My grandfather was a French Canuck he came to America with nothing, my father grew up in what today would be called 'projects'.
That is the American way... working your ass off and earning what you have... or it was... these generations coming up don't see it that way.Thanks for the input, links, and perspective.
The first link caused curiosity more than anything as the data appeared to be through 2005. That was almost twenty years ago.
For instance, "Between 1973 and 2005, median monthly housing costs for renters increased from $133 to $694, an average annual increase of over 5 percent."
Though I am sure it is relational, today average rent here in San Diego County is $2,997. To purchase a median priced home supposedly you need an income of $206K. Realizing of course, to me, that is sticker shock. Medium income is approximately $99K. So definitely two incomes are needed, right?
Looking at the third link the years 2021 - 2023 makes a statement regard inflation and Biden. No matter, the younger generation are stuck with it.
I couldn't look at Statista as they put in behind a paywall for me because I have used them too much this year. Rule, rules, rules ha-ha"That is the American way... working your ass off and earning what you have... or it was... these generations coming up don't see it that way."
Ken, I concur that evolution continues its progression, and it appears that certain individuals are content with minimal accomplishments.
Nonetheless, there are those who possess an indefinable quality, which I refer to as "it." They not only persevere but excel, unhindered by obstacles. Conversely, those lacking in distinct attributes tend to assimilate and make do with less. The dichotomy between the haves and the have-nots remains a perpetual reality.
The American dream is alive and well, but many don't hold the same values as those that do as you say "work their ass off".
It’s not a dissimilar picture in Britain; but it’s been going on a lot longer. When I got married it was easy to buy a house, even for people on low income; but all that changed with ‘Thatcher’s Britain’, when house prices sky rocketed from just 3 times the annual salary to 7 times the annual salary and more.
On the more positive side – In the late 1980s Margaret Thatcher did introduce laws giving renters of Council Houses (local government owned social housing) the ‘right to buy’ (with generous discounts e.g. the market value of the ‘home’ less all the rent paid to local government over the years.
Since then the ‘right to buy’ scheme has been extended by all governments, and other schemes introduced over the past 10 years to make it easier for first time buyers; such as the ‘Life Time’ ISA introduced by the Conservative Government in 2017. An ISA is a tax free savings account introduced by the Labour Government in 1999. A Life Time ISA is a tax free savings account introduced by the Conservative Government in 2017 whereby your savings are locked until you either use it for a deposit on a house or when you retire – At which point, whether it’s for a mortgage or retirement, the Government gives you a ‘grant’ of 25% of whatever savings you have in your Life Time ISA to a maximum of £1,000 per year e.g. you save £4,000 a year for 10 years towards a mortgage (£40,000); the Government will give you £10,000 ($12,800).
Another scheme introduced by the Conservative Government in 2021 is called the ‘First Home Scheme’; whereby the Government will pay ‘first time buyers’ up to 50% of the cost of their first home, provided it's a new build.
First Home Scheme Explained https://youtu.be/tQwgtxIt53QThanks for the input. I like that there are programs for first time buyers. There are some here too, though different in how they are structured from the 'First Home Scheme'. They are more centered on financing tools. The biggie for many is the amount for a down payment.
That was my hurdle. Saving for a down payment meant not putting money in a retirement financial tool. Cognitive dissonance between the two values. I chose retirement and lived within my means if not lower. Of course, one consideration, was not married comes in to play as in two income family unit.I didn’t have your problem because (unlike now), when we were buying our first home back in the late 1970s, house prices were still cheap and affordable, so raising the money for a deposit on a mortgage was easy – even for people on low income.
And of course I didn’t have to save for my retirement because both my works pension and State Pension would give me a liveable, and comfortable, income in my retirement.
Of course, things are a lot different now, where housing is very expensive and unaffordable for a lot of people; but certainly, one of the hurdles in getting on the property ladder is, as you highlighted; “Saving for a down payment”. In that respect, in the UK, there’s the Life Time ISA, as mentioned in my previous post; but also, introduced in April 2021 by the UK Conservative Government is the new Government backed ‘Mortgage Guarantee Scheme’ which (subject to the usual credit checks) guarantees the buyer a 5% deposit mortgage – which makes mortgages more obtainable for first time buyers, especially those on lower incomes.
UK Government Mortgage guarantee scheme explained: https://youtu.be/f3h1q6Frb-o
Yes, not just being married, but civil partners, and friends living together (joint ownership of property) does help to spread the ‘cost of living’. Although it can have its funny sides at times e.g. in our family I pay the household bills and my wife covers the cost of shopping – so for a while, when the UK (under EU law) was transitioning from the old incandescent or halogen light bulbs to low energy lightbulbs; at the time the new low energy lightbulbs was a lot more expensive to buy, but saved a lot money on the electricity bill: I think you can guess the rest e.g. my wife would buy the cheaper lightbulbs (to save on her shopping bill), which meant I was paying far more on electricity bill than I would have liked because we weren’t at that time using the low energy bulbs.Thanks for the input, Arthur!
From observation, at least as of today in the UK, there is more opportunity to be a home owner in contrast to the US as far as I know. I am only familiar with the various financing tools, and not an expert. I do know the GI Bill for veterans gives decent benefits for home ownership.
Way back when there was opportunity for 'no down' to get into homes. I don't know much about that. And, there were variable rate mortgages.
From Bank of America comes:
"Adjustable-rate mortgages (ARMs), also known as variable-rate mortgages, have an interest rate that may change periodically depending on changes in a corresponding financial index that's associated with the loan. Generally speaking, your monthly payment will increase or decrease if the index rate goes up or down."
With an adjustable-rate mortgage, your interest rate may change periodically by Bank of America
https://www.bankofamerica.com/mortgage/ … gage-loans
I thought about that route, though I found the risk unacceptable when it came to bottom line. I considered factors such as:
** Saving for a down payment rather than retirement
** How much could I save without a mortgage
** What happens if the mortgage rate goes up cutting into my retirement savings
** Yes, the equity would increase, however when retirement comes when I need the money for retirement, and I sell, what would the expenditure be to house myself after selling.
Today, a down payment, conventionally varies by state of course. Take a peek at the article next for what is expected if curious or anyone else.
Mapped: The Median Down Payment for a House, by U.S. State
https://www.visualcapitalist.com/cp/med … -by-state/
The high is 28.6%
The low is 9.2%
For that to make sense analytically one has to consider the state and the employment opportunities. By state I include tax structure, i.e. income tax, sales tax, property tax.
The only people I speculate that can take advantage of that is remote workers. To me, without research, regard trade/profession wages/salary will be proportional.Looking at median down payment amounts for first time home buyers is a little misleading. Typically, down payments for a conventional loan run about 3%, and some loans have no down payment at all.
But there are ways to get that down payment if one is needed. Our first home was a mobile home in a trailer park; 8 years later we sold it for enough to put a down payment on a regular house. As you mention, the GI bill can be a great help. My parents bought several (near) shacks and remodeled them while living in them; eventually they paid cash for the home they lived in the rest of their lives. I followed, kind of, by finishing off basements and making other improvements in every house I've owned.
Only once did I consider (and use) an ARM loan. Our first real house was purchased at the height of the 80's inflation bubble, at 10.5%. Two years later I refinanced with an ARM that could change 2% per year, limited to being between 3% (it's starting rate) and 9%. Savings the first year paid for closing costs and I plowed that back in. Second and third years were pure gravy (at 5 and 7%), and it could never get back to the 10.5% I had already been paying. A real winner.Hooray! I mean that sincerely. Your success story is what the youth needs to hear and your children are fortunate to be able to hear it. Wisdom!
What, perhaps, is ominous is that many of our youth are doing just what I did and shared through research on the web. Perhaps, they aren't aware of a 3% down or what that means. Their responsibility.
Wise financial counseling should be an elective class both in high school and college I feel and think. Matter of fact toss in Home Economics. I took that my senior year of high school. It had its advantages.
First, it was co-ed meaning half pretty much were football players and then, of course, girls. Many lessons learned, besides academic.
Second, that class introduced me to economics financially speaking as we leaned about microeconomics.Thanks.
One of the problems, perhaps, is that our school system (K-12) is aimed at producing college bound students rather than trade school. As a result our kids are coming out not knowing how to just get by in today's world. We need required "trade school" type classes in how to live, including budgeting day to day expenses at a realistic wage for beginning workers.Agreed emphatically while adding some life experience. Although I was not a business owner per se, where I worked I had the liberty to exercise my entrepreneurial spirit with changes in job description to the extend of creating a job for myself, my last one for 14 years.
A long way around with some bragging tossed in to say, one of my mentors was from SCORE (Service Corps of Retired Executives) for a quarter of a century. I think organizations such as that one along with the old fraternal orders like the Elks and Rotary Club members are needed to counsel our youth. Maybe they do? I would like to see them making themselves available to high school students. I know some had high school shoot offs they sponsored. Maybe they still do?
Get Free Business Advice from a SCORE Mentor
https://www.score.org/find-mentor?gad_s … gLLBvD_BwE
Note: Maybe I should get off my butt and make myself available to SCORE?This seems like it could do no harm and likely do a great deal of good.
Yes, perhaps you should! These kids need some help.
Your first point is a good question; It would seem to suggest so (from our conversation in this forum) e.g. that "there is more opportunity to be a home owner in the UK, in contrast to the US" - I don't know if that is the case, but I guess comparing the percentage of Americans with Britain's who own their own home might be a good indicator of any differences or similarities in this respect.
To this end, for England and Wales; currently (2023) 63% of households own their own home, and 32.8% of households own their own home outright e.g. no mortgage, or mortgage paid off.
How does this compare with the USA?
Yes, we also have VRM (variable rate mortgages); and the other popular mortgage in the UK is the FRM (Fixed Rate Mortgage). Fixed Rate Mortgages in the UK are typically 2 & 5 years fixed term e.g. the interest rate is fixed for 2 or 5 years regardless to what happens in the market.
So when people are buying homes at a time when interest rates are low, or it looks as if interest rates are likely to rise, then people will tend to opt for a 5 year fixed term loan; then 5 years later (depending on market conditions) they can choose on whether to take out another fixed 2 or 5 year term, or just switch to the simple variable rate mortgage.
When we bought our homes, we just went for a simple variable rate mortgage and stuck with it until we paid off the mortgage – there were some tough years e.g. the inflation bubble in the 1980’s (as mentioned by wilderness in a recent post above), but there was also some good years after that, where our mortgage repayments was very low.
Thanks for the link on ‘down payments’; I scanned through that, in conjunction with comments made by wilderness above – It certainly seems complex, and I haven’t got my head around all the points wilderness makes e.g. “conventional loan run about 3%” etc.
I assume that what wilderness means by a “conventional loan” is a ‘bank loan’, rather than a mortgage – or am I missing something in translation?
Anyway, in the UK you could get a bank loan, and even an unsecure bank loan if your credit rating is good, for a deposit on a house; but the sums required to buy the house (excluding the deposit) would require a mortgage –
Currently in the UK:
• The average interest rate for a 2 year fixed rate mortgage = 5.22%
• The average interest rate for a 5 year fixed rate mortgage = 4.84%
For clarity, a 5 year fixed rate mortgage doesn’t mean that it’s a loan that you pay off in 5 years; it means that every 5 years you renegotiate the interest terms with your mortgage lender for a typical 25 year or 30 year mortgage.Thanks for the reply!
Quite frankly, having never purchased a home through a financial tool, thus gaining an education of the ins-n-outs a lot of what you shared went over my head. Swoosh! In other words, no need to educate myself on home purchasing as it wasn't in the cards.
I know my two brothers and their wives, e.g. home purchasers, are well versed with it. One brother/wife have capitalized on it with the purchase of a vacation home on a lake. Their home has its own pier for their motorized boat. We have our family July 4th celebration there.
Me, I paid cash for my mobile home back in 2006. No mortgage! It has doubled in value or a little more since then. However, to capitalize on that and sell means I would have to have new housing.
Alas, rent in my area is about $2,300 (£1,804). My space rent is about a quarter of that. Who knows what the purchase of a new home or condo mortgage would be. Seems to me, prudence dictates to sit still where I am at.
Median home price in my area is approximately $1 million (£784,130)
Median condo price in my area is approximately $700K (£548,891)
Recently, on the local news they have had a couple stories about how long it would take the average person or family unit to save for a down payment of 20% (Traditional it seems). Perhaps, the 3% down Wilderness shared is available. Again, the financial tools for financing a home, well, 'Swoosh'.
Anyway, peek at the article next;
It takes 50+ years for a single person to afford a San Diego starter home by Axios San Diego (Mar 13, 2024)
https://www.axios.com/local/san-diego/2 … years-save
Perhaps, that means one should get the hell out of the area/state! Alas, well, common sense dictates what that entails. Firstly, an income that essentially is greater than what they leave relational to cost of living and etc. to capitalize on purchasing while saving enough for the down payment. Certainly a puzzle to be solved seeking a solution set.
Family support, might be key with many . . .Thanks for the link and info:
Wow, 50+ years for a single person in USA to raise enough for a deposit on a starter home; that’s frightening. Checking on housing market websites in the UK, it takes on average 13.5 years for a single person to save enough money for a deposit on a house.
For comparison (out of curiosity) I checked the latest rent & house prices for Bristol and for the UK (excluding London); as follows:
RENT UK (data updated daily)
• Average Rent in Bristol = £1,859 ($2,367) per month
• Median Rent in Bristol = £1,600 ($2,037) per month
• Average UK rent (excluding London) = £1,220 ($1,553) per month
Interestingly, the rent in your area is almost identical to the rent in Bristol.
MORTGAGE UK
Currently, the average monthly mortgage payment in the UK is £1,441 ($1,835) per month e.g. a little cheaper than renting in large southern cities like Bristol.
HOUSE PRICES UK (Based on latest sales figures)
• Flats (Apartments) average price in Bristol = £276,433 ($351,927)
• Terrace House average price in Bristol = £381,136 ($485,224)
• Semi-detached average price in Bristol = £411,432 ($523,794)
• Current value of my house (3-bedroom semi-detached) = £180,000 ($229,158) e.g. stigma of being an ex-council house!
• UK Average house price (excluding London) = £284,691 ($362,440)Thanks for the reply, Arthur!
What stood out for me is pricing of homes for the UK while considering it will vary by region I would speculate. San Diego County, where I live, is one of the highest housing markets for the nation and there is a high demand.
One of the big pushes is to build affordable housing. New housing developments be they apartment type buildings or stand alone home neighborhood development are to have a percentage be affordable.
Housing prices across the US most definitely varies. For some exploring peek at the link next. There is a history of median home prices for the US in table format. There is an interactive map for the states. That is revealing.
Average House Price by State in 2023 by the Ascenty (a Motley Fool service) Published date Feb 28, 2024
https://www.fool.com/the-ascent/researc … ice-state/
To give some perspective with you, Wilderness, and myself we discover:
UK Average house price (Excluding London = £284,691 ($362,440)
Wilderness lives in Idaho = $431,787 (£339,162)
Myself (California) = $737,677 (£579,433)
Myself specific to San Diego County = $949,000 (£754,424)
Median income Single earner (Apr 1 - May 14, 2023) by the Census Bureau
https://www.justice.gov/ust/eo/bapcpa/2 … _table.htm
UK (I'll leave that up to you)
Idaho = $62,738 (£49,279) / Alternative source = $76,918 (£60,417)
California = $75,235 (£59,096) / (Alternative source = $81,575 (£64,075)
An alternative source is Median Household Income by State Note: Key stated is household. by Wisevoter
https://wisevoter.com/state-rankings/me … -by-state/
I did some poking about for a 3% down.
3 percent down mortgages: A guide to your options by Bankrate (Jan 10, 2024)
https://www.bankrate.com/mortgages/3-pe … age-guide/
"Mortgages that only require a 3 percent down payment are often part of a special program, and they’re open to anyone who meets the program requirements. Typically, you must be a first-time homebuyer or not have owned a home over the past few years to qualify; generally, you must also meet the program’s income limits."
The ins-and-outs of the various programs are shared. Not a terribly long read while a skim is worth it.Thanks for the links; and yep, it’s very similar pattern to the UK, including the recent dip in house prices since 2022 e.g. as you speculated, house prices do vary by region; London being the most expensive, and housing getting cheaper the further you get from London – The South East (outside of London) being the 2nd most expensive housing, the South West (where I live) being the 3rd, and the North East being the cheapest housing.
Wages and cost of living follows the same general pattern e.g. London with highest cost of living, and highest wages; and the North East of England with the lowest wages and lowest cost of living.
House prices also vary across cities e.g. East London is cheaper than West London; East Bristol (where I live) is cheaper housing than West Bristol etc.
Likewise, in the UK, there is a big push to build ‘affordable housing’ (social housing); it’s been part of the Conservative’s Election Manifestos since 2010, but the Conservative Government has consistently fallen far short of their targets – which come the General Election later this year will lose them some votes for ‘broken promises’.
However, when developers apply for planning permission for residential development, local governments will always stipulate that the planning applications must include x% ‘social housing’ (affordable housing).
Thanks for providing the American median income figures for comparison:
* The UK average median wage for a single earner is £34,963 ($44,511);
* In the Bristol area (where I live) the median wage is £33,450 ($42,585); and
* The median wage in London is £44,370 ($56,487).
This compares with the figures you gave for America, copied below:-
* Idaho = $62,738 (£49,279) / Alternative source = $76,918 (£60,417)
* California = $75,235 (£59,096) / (Alternative source = $81,575 (£64,075)
As clearly shown above, average wages in the UK are significantly less than what the average American earns, but then again Britain is a Nanny State (which irks wilderness) so (although things are much smaller in Britain, the houses, road, cars etc.) we don’t need such a high income to enjoy a similar standard of living as Americans, and to be able to afford holidays (vacations) and splash out on expensive luxury items.
For example, we’re planning to go on a week’s holiday (vacation) in Cornwall in June, and a 2nd week’s holiday, in Wales in July. And when we get back from our summer holidays we intend to replace our existing cast-iron bath with a manufactured in Britain P-shaped whirlpool bath shower with LED lights; the cost alone, without the installation (labour) costs will be around $3,000; and then you can easily add another $2,000 for labour costs for installation, including the pluming and electrics.
The first short video shows all the typical features of a whirlpool bath, including LED lighting: https://youtu.be/8NUIkghrFo4
The second short video shows a typical P-shaped bath shower (identical to a whirlpool bath but without the jets e.g. I couldn’t find a P-shaped whirlpool bath shower on YouTube) – but viewing the two videos together should give you an idea of what we intend to splash out on later this summer: https://youtu.be/AMgJo4yl3-kThanks! One thing, obviously, is the difference between states for here each with their own political bent, social structure, and industry type. That is why I like using my state, California, for compare/contrast with our dialogue.
It is a more liberal state in the context of the 50 states and comparatively with the UK it is close, somewhat, in population, land mass, and major cities when considering the other states. The conservative state with population, land mass, and major cities comparative for the UK would be Texas. Since I don't live there, of course, I don't have a lens to look through, really, except through research.
Of course, naturally, I use the lens of San Diego County while you use Bristol.
As inferred, cost of living makes a difference. Using myself as an example with my income from Social Security if the circumstances remained the same, I.e. owning my mobile home, owning my car, and having no need for major investments for my home I could live much more shall we say elegantly in another state. However, relocating would break me.
Cost of Living Index by State 2024 / Defining the Cost of Living Index by World Population Review
https://worldpopulationreview.com/state … x-by-state
A quick peek one discovers California is 4th from the top with a 134.5 index. The low is Mississippi at 83.3. A big difference. Easily, one sees the contrast being a difference of 51.2 points. My money would stretch 38% farther if I did my math right.
Backing up a step or two. "Cost of living indexes are calculated by first determining a baseline for comparison. When comparing costs across states, the average cost of living in the United States is used as the baseline set at 100. States are then measured against this baseline. For example, a state with a cost of living index of 200 is twice as expensive as the national average. Likewise, living in a state with an index of 50 will cost about half the national average."
What about with the world perspective. Using World Population Review again we discover:
U.S. = 74.2
U.K. = 63.6
And, if I considered Sweden, which I do at times if I won the lottery
Sweden = 60.9
Cost of Living by Country 2024 by World Population Review
https://worldpopulationreview.com/count … by-country
Backing up a step again we discover:
"Determining the cost of living in a region or country is a complicated process. As such, each source has its own equation for determining cost of living. Most sources express cost of living as a number (often referred to as an index) which is then compared to a baseline country or city. For example, Numbeo uses New York City as a baseline with the value of 100.00, so countries whose average cost of living is lower than that of New York City would have a cost of living index lower than 100.00 and countries with a higher average cost of living would have an index of higher than 100.00."
So, moving to another state or becoming an expat would benefit me. I have considered that for a few years now.
Edit: Note: I really doubt the influence of political bent in another state would impact me. What would, speculatively, impact me most would be generational since I am a senior. Then, again, without exploring, maybe that does indicate a political bent. I don't know. Culture I am unsure.
Of course, going to the UK most likely culture would have the greatest impact. Going to Sweden it would be language followed by culture.
However, with both, it is the the ability to maintain an equal footing. In that I mean I own my home and car now and their use/life expectancy would last my lifetime. I am not sure the, shall we say, exchange rate would be equivalent. However, financially, if my available (discretionary) monies remained proportional to today, I would be better off in both alternatives.Yep, it makes perfect sense for you to use your State and for me to use my city (Bristol) for comparisons; as we each know our own respective areas best.
Yeah, absolutely, “Determining the cost of living in a region or country is a complicated process.”, and it rather difficult to get a true perspective just from figures: In that respect, I had a look at a few YouTube videos of ‘expat’ Americans living in Britain, to get their perspective e.g. they have the benefit of experiencing first-hand what it’s like living in America and Britain.
One that I found fascinating to watch is:-
The honest reality of living in the UK | Expat in the UK (she’s a Canadian, not American – but the similarities between America and Canada are sufficient, I think, to get a broad picture of her perspective of the differences between North America and Britain across the pond): https://youtu.be/yoepyy2nK1kThanks for sharing, Arthur!
That video I found to be firstly, quite honest. I did take into perspective her generation as compared to mine - baby boomer, born 1954, thus age 69 today. As I am sure you are aware that affects perspective.
With that in mind, already my 'old guy' stuff is kicking in as I don't remember half of the video, now, with less than 5 minutes passing by. ha-ha
I do remember her discussing mass transit and cars. One thing we discussed in the past being the size of the roads. I ponder if I could make the switch to driving on the left side of the road. She brought up the NHS. The cost of living in London, i.e. the big city life. That's about all that is on the tip of my tongue for now.
Unpacking what she covered I took to heart as I have considered moving to Sweden, 'if I won the lottery'. However, one has to take into context my position in life and what my future projects.
Oh yeah, one thing she discussed is the weather. I live in San Diego County as you know and is known as 'Sunny California'. hint - hint.
My winter average temp is around 65ºF (18ºC). The lows at night maybe 45ºF (7º C) (Though on occasions it is below freezing - 32ºF (0ºC) The day time highs 84ºF (29ºC). It is not rare during summer months to breach into the 90s (32ºC).
Rain has its season, but nothing compared to Sweden, the UK, or even the states of Washington and Oregon north of California.
I am sensitive to the cold in my 'old guy' days. ha -ha So, that would be a consideration for me to relocate. I in essence am spoiled by the weather I am blessed with.
Climate and Average Weather Year Round in Escondido by Weather Spark for 2016 - 2024
https://weatherspark.com/y/1842/Average … Year-Round
Anyway, I play the lottery every Mon morning getting two $1 (£0.79) California Super Lotto tickets. Their jackpot is less than the other two multi-state lotteries, but hey, I am not that greedy. Besides the other's tickets are $2 each (£1.57).
I am inspired, now, for later to today to look into expat YouTube's for Sweden just for the heck of it.
My friend in Sweden has already lived in the US. She moved here back in '78 at the age of 17 right out of school. She moved to New York city. She had a job waiting with an upscale family to be a nanny. I admire her bravery and courage. How does that modern adage go . . . 'Living the dream'. She did that!Yep, that’s what attracted me to that particular video; was her honesty.
I know what you mean about age related perspective; I’m only two years younger than you myself – albeit my memory is still good, but I do rely heavily on ‘To-Do’ lists as a memory prompt (civil service training).
To recap her 7 personal Pros and Cons of living in Britain are:-
PROS:
• Strong British Sense of Identity
• Good Public Transport – so little or no need of a car
• NHS
• Better work/life balance than in North America
• Charm and Character of British Architecture
• British Pubs Atmosphere
• Great Homebase e.g. for easy, quick and cheap travel to any other part of Europe
CONS:
• Recent Cost of Living crisis
• The Weather – Rain, rain, rain
• Horrific Traffic (during rush hours) – due to small historic British roads
• Missing friends and family back in North America
• Large variety of different accents, making it difficult for her to understand some people.
• Feeling Lost e.g. living alone on the other side of the pond
• Small Homes in UK compared to North America
Switching to driving on the other side of the road isn’t as hard as people imagine e.g. mainland Europe drives on the ‘right-hand’ side; so when we used to take our annual two weeks holiday in France and Belgium my wife would drive all the way; driving on the left to get to the car ferry port in Dover, then 90 minutes later driving on the right in France (or when we used to drive-on-drive-off car train, just 30 minutes later: And although it was nerve racking the first time she did it, she found it surprisingly easy to adapt.
Yep, California weather is most certainly much sunnier, and warmer than England. Although the British climate has changed dramatically over the last 30 years, so now we get warmer winters and hotter summers – but still not as warm as California.
The coldest months in Britain these days tends to be Jan & Feb, and our hot summers can be anytime from April to September.
This January in Bristol for example:
• From 8th Jan to 19th Jan: -1ºC (below 32ºF) at night, and around 3ºC (37ºF) during the day.
• For the rest of Jan, before and after above date range: average of about 5ºC (41ºF) night-time temperature, and around 10ºC (50ºF) during the daytime.
In the summer months in Bristol, there is generally a 10ºC differential between day and night temperatures e.g. if its 22ºC (72ºF) during the day, it’ll drop back to about 12ºC (53ºF) over night.
Certainly, historical, average summer temperatures in Bristol would be around 22ºC (72ºF); but over the last 20 years all that has changed e.g. we now get heatwaves most years, which can sometimes last for months. So summer temperatures in Bristol these days of between 30ºC (86ºF) and 40ºC (104ºF) are becoming a frequent norm, almost an annual occurrence.
UK Heatwave: Record 40.3C (105ºF) temperature 2022: https://youtu.be/h-opUY1ZO54
With regards to rain, it rained 17 days in Jan this year, and that can be very much the norm most of the year round in Britain, except during the heatwaves of course.
I’m also sensitive to the cold; a medical condition I’ve had since childhood, call ‘cold intolerance’ (but it’s not hypothyroidism e.g. that’s the first thing my doctor checked); but it did mean that as a child I couldn’t play in the snow like the other kids – That was in the days when we used to get snow of course – But it does mean that I do have to be careful to keep warm during the British winters.
If you find any good Swedish videos along similar lines to the Canadian, I’d be interesting in see them – and good luck with the lottery.Thanks for the reply and summary of her pros and cons. What struck me that I missed was the cost of living, which we discussed on another thread or elsewhere. Most of the other elements I think I may more easily adapt to if I became an expat there. That may be because of being an 'old guy'. I don't have the same 'priorities' in life that she did/does.
Yes, I will share later what I discover with a YouTube of becoming an expat in Sweden.Yep the ‘cost of living’ crisis she referred to (caused by the war in Ukraine) has adversely affected everyone in the UK, although as the economy is readjusting the crisis is easing off now e.g. over the last six month the cost of fuel and electricity have dropped considerably from their peak over the last couple of years – But she did mention that (on reflection) they’ve also had a cost of living crisis in Canada; but I get the impression that the Ukrainian was has affected the American economy so adversely?
In fact, during the peak of the cost of living crisis, things got so bad that the Conservative Government gave every single household (regardless to their wealth/income) $500 to ease the pain that winter.
Every household in UK to be given £400 ($500) under new Conservative Government Plan (winter of 2022): https://youtu.be/RCdaDIqRw58
As briefly explained in the above video, the UK Government paid for it's generous handout to every household in the UK, by imposing a win-fall tax on the British oil/gas industry who had made exceptionally huge profits that year by profiteering on the dramatic rise in the price of natural gas at the time, due to the Ukrainian war.Thanks!
Today, with the cost of living increase, is the discussion mainly being the price of goods due to the forces of inflation from two causes - the pandemic and federal spending. Though measured inflation is now somewhat tame, the prices of goods are what are killing the pocket book due to previous years of inflation. As most know, when prices go up they rarely come down. Of course the ins -n - outs is arguable.
We didn't receive a cost of living crisis aid from the federal government. However, during the pandemic we did receive what is known as stimulus checks (3). They were:
Round 1, March 2020: $1,200 (£951) per income tax filer, $500 (£396) per child (CARES Act) [President Trump]
Round 2, December 2020: $600 (£475) per income tax filer, $600 (£475) per child (Consolidated Appropriations Act, 2021) [President Trump]
Round 3, March 2021: $1,400 (£1109) per income tax filer, $1,400 (£1109) per child (American Rescue Plan Act) [President Biden]
The Ukraine war did affect our fuel/gas/petrol prices and some other commodities.
The Ukraine war’s effects on US commodity prices by Federal Reserve Economic Data (FRED)
https://fredblog.stlouisfed.org/2023/10 … ty-prices/Yeah, I know that I only mentioned the Ukrainian war in my last post; but to be correct, for the ‘cost of living crisis’ the three causes are Brexit, Pandemic and Ukrainian War.
Yep, exactly the same in the UK as you said for America “Though measured inflation is now somewhat tame, the prices of goods are what are killing the pocket book due to previous years of inflation.”
Yeah, generally “when prices go up they rarely come down”, and wages generally go up more or less in line with inflation so that cost in ‘real terms’ remains the same; but there are certain ‘goods’ that don’t increase with inflation e.g. new technology – they tend to stay the same price, so that they become more affordable to the masses – thus an increase living standards.
And the cost of petrol (gas) is volatile - tied to the price of oil in $, which is just as likely to fall as rise (depending on world market) e.g. the cost of petrol in the UK is 25% cheaper now than it was 18 months ago; which means that as a proportion of the cost of other goods, including food, is link to the cost of transport, with the cost of petrol falling, so some products have fallen in price.
Likewise, the cost of natural gas spiked a couple of years ago, due to the Ukrainian war, becoming 9 times more expensive than renewable energy at one point; and as about 25% of our electricity in the UK currently comes from natural gas, so the cost of electricity spiked the year before last, forcing the cost of products that’s heavily dependent on electricity e.g. manufacturing and food preparation etc. to sky rocket; but as the price of natural gas has fallen back a little, so as production costs.
I guess that (the above if’s and buts) is where as you said, the “ins -n - outs is arguable” comes in.
Thanks for the link; looking at it, the graphs lines for America is a remarkably close match to what happened in the UK.
Thanks for the data on the American Federal Government ‘stimulus cheques’ (Round 1, 2 & 3). Looking at the figures, the UK Conservative Government handout was a lot more generous:
In attempt to combat the covid virus, the UK Government put the whole country in lockdown for over a year e.g. only keeping essential services running – effectively shutting down the British economy for over a year – which meant that the vast bulk of British workers couldn’t work, or go out, but had to stay at home.
However, to keep people from starving, and to enable them to pay their household bills, while not having an income from employment; the UK Conservative Government paid every British worker who was not working in essential services 80% of their normal wage; and paid the unemployed an extra £20 ($25) per week for the period of the lockdown.
Government to pay 80% of wages for those not working in coronavirus crisis: https://youtu.be/iOoWFwh7DqQThanks, Arthur! Yup, the UK and US sought to 'help out' the average Joe/Jill during the pandemic with the lock downs and the consequences of it such as job loss and forcing businesses to close depending on each state here in the US.
Sorry about that; our "conventional loan" is what you would call a FRM, although 30 years is the normal term. Shorter terms are available, but most opt for that 30 year. These loans typically require about 3% down, although that is variable as well.
Our FRM never changes the interest until paid off. It can be paid off early, taking out a new mortgage as desired, but if left alone it never changes.
Of course, your FRM is what we call a variable rate as it must be redone every 2-5 years. Our ARM (adjustable rate mortgage) adjusts every 1-5 years, normally every year or possibly 2, but the "adjustments" to be made are based on certain benchmarks and are not renegotiated. They just happen according to the original agreement and whatever those benchmarks do.Thanks for the clarity – most informative.
Yeah, I can see some fundamental differences with FRM and ARM, and how they are applied, between the UK & USA.
• The difference with the FRM between USA & UK, as you described. Wow – a FRM for the full 30 years without changing; that’s quite impressive.
• The difference with the ARM between USA & UK, is that in the UK the interest rate paid on the ARM is closely linked to the Bank of England’s ‘Base Rate’ e.g. every time the Bank of England raises or lowers the Interest rate (base rate) then the interest paid on ARM mortgages changes accordingly, to keep in line with the Bank of England’s ‘base rate’.
While the UK Government has control of fiscal policy, the Bank of England is responsible for keeping inflation at 2%, and controls ‘monetary policy’ as a tool to do so: Therefore, generally, when inflation is too high the Bank of England will be inclined to raise interest rates, so that mortgages will go up (sucking money out of the economy to reduce ‘demand’, to bring it back in line with ‘supply’) – classic economics. Conversely, when inflation and economic growth are low the Bank of England will be inclined to lower interest rates to put money into the pockets of home owners paying mortgages as a way of stimulating economic growth e.g. encourage people to spend, to increase ‘demand’, which in turn stimulates an increase in supply’ (economic growth, leading to greater employment and less unemployment etc.).
Mortgage lengths in Britain are similar e.g. typically 25 years or 30 years; or optionally, as we did when we bought our first home – 35 years; although it’s 5% not 3% that’s the lowest ‘down payment’ (deposit) for a mortgage in the UK, regardless to whether it’s FRM or ARM.
It always fascinates me (and makes me shudder) to hear just how much of one's earnings are taken away to give to someone else in your country. It is not something I would ever be happy with.
I guess you think it’s a “rob from the rich to give to the poor” (redistribution of wealth); but it’s not quite like that in the UK, especially under a Conservative Government.
It’s more of a case of “spread the cost – spread the risk”; not dissimilar to how insurance works.
Besides, in the UK, it’s not just the poor who benefits from the Government handouts; the wealthy benefit as well e.g. in the UK there are numerous government benefits that are not means tested, such as the NHS, child benefit, disability benefit, free education until the age of 19, State Pension etc., and in 2020 the Conservative Government replaced the old style ‘Employment and Support Allowance’ (ESA) which was introduced by Labour in 2008, and which was means tested with a ‘New Style Employment and Support Allowance’ which is now NOT means tested (so that wealthy people don’t need to touch their savings to pay their bills) – ESA is a benefit which you can claim if “You’ve lost your job and you’re too sick to work, and you need help with living costs e.g. rent.”
Over and above the above mentioned; in Britain everyone (regardless to how wealthy they are) benefits from Government support at various times throughout their lives; a recent example being the winter before last (during the energy crises, just after the start of the Ukrainian war) – that winter the Government gave every single household (regardless to their wealth) £400 ($512) payment to help towards the cost of their winter fuel bills – so millionaires and billionaires got the same $512 grant that winter from the UK Government as an unemployed person.
Also, under economic theories, such a methodology is largely self-financing e.g. the trickle-up economic theory; whereby in the government giving the less well-off more ‘disposable income’, they will spend that extra money in the shops, which in turn increases the sales and profits of the shop owners, who then pay more in taxes because of increased profit, and employ more people because of increased demand for their goods; which equates to more people in employment paying taxes, and fewer unemployed that have to be supported by the Government.
The political philosophy in Britain leans heavily in striving towards an equitable society, rather than ‘survival of the fittest’ – different cultural and social values than in the USA.You misunderstood; I was referring only to the schemes to give money to those buying a house.
But your "trickle up" concept is indicative of the thinking. Take money from a shop owner and give it to the poor. They will spend it at the shop, giving the owner back what was taken...minus the cost of goods sold, minus taxes, minus labor costs, minus, minus minus. He may get 3 cents on the dollar.
The winner is not the shop owner with more business, the winner is the poor person that was given what the shop owner had earned.“….the schemes to give money to those buying a house.” – That includes the ‘Life Time ISA’ introduced by the Conservative Government in 2017. An ISA is a tax free savings account e.g. you don't pay any tax on the interest; ISA's were introduced by Labour in 1999, and apart from the Life Time ISA, which is limited to a maximum of saving £4,000 a year (for obvious reasons); the maximum you can save in all other ISA's per year is £20,000.
FYI, the Life Time ISA benefits the middle class more than it benefits the working class in that if your working class you’d be struggling to save £100 a month in the ISA, and therefore the 25% tax free bonus you get from the Government for a deposit on a house is going to be significantly less than someone in the middle class who can afford to save the £400 per month (maximum allowed savings on this particular ISA), therefore the eventually 25% tax free bonus from the Government for the middle class is going to be 4 times greater in monitory terms.
In fact ISA's benefit wealthier people more that poorer people in that wealthier people are able to save more money, and thus take greater advantage of the 'tax free' (no tax on the interest); especially if you are wealthy enough to be able to put £20,000 ($25,500) in savings each year.
You completely misunderstand the economic theories; it doesn’t work like you describe; if it did then your scenario would quickly lead to recession, not economic growth.
Money in the economy isn’t a fixed physical sum that can only be increased or decreased by taxes and printing more money etc. Money in the economy is like a ‘balloon’ that inflates and deflates in line with an expanding or contracting economy e.g. stimulate economic growth through fiscal policy (such as tax cuts or by increasing government benefits etc.) and you stimulate the growth of money circulating in the economy. The timing and targeting is critical – governments using fiscal policy in this way at the wrong time and targeting the wrong section of the economy can have the reverse effect to intended e.g. government hands out (through either tax cuts or increasing benefits) at a time of high inflation can fuel inflation and make the situation worse – Also, doing it too much too quickly, can also fuel inflation and make things worse (disrupting the balance between supply and demand). In economics, changes in fiscal policy should be ‘slow and steady’ to give time for ‘supply and demand’ to balance out, while at the same time stimulating economic growth without high inflation.
I don’t follow your logic, it’s not in accordance with well establish economic theories e.g. If a shop owner sales increase by 50% because people have more money in their pockets to spend, then that is more profit for the shop owner – and if his business increases dramatically, because more people have disposable income, then it will make good business sense to higher extra staff to expand his business.
Regardless to how it’s done, stimulating economic growth is a win-win for all. Albeit, there are two opposing economic theories on the subject; trickle up (favoured by left-wing governments), and trickle down (favoured by right-wing governments) – both of these economic theories can in theory work in their own way, if the economic conditions are right (and as long that they are not just done for political gain rather than economic benefit); albeit, there are political arguments for and against each of the two opposing theories.
This short (2 minutes, 30 seconds) video explains trickle-up vs trickle-down economics: https://youtu.be/mybOUF6DOyoYou did not follow the shop owner example at all.
Given: a shop with 10,000/month in sales and a 300 profit (3%). Take 200 from the shop owner and give it to someone else to buy products with - that owner now has only 100 to spend on himself.
They spend the 200 in the same store that it came from, buying 200 worth of products. This results in a profit for the store of 6. The store owner is still out 194.
You simply cannot produce wealth by taking it away from people; all you can do is redistribute what is there.After carefully reading your comment; I can see where the error in your assumptions is:
Working with your example scenario, FYI the Government does NOT “Take $200 from the shop owner and give it to someone else to buy products with….”
In practice, the Government finds the money “to give someone else to buy products with” from within the existing Government Budget without raising taxes. An example of that was Boris Johnson’s (then Prime Minister) “Eat Out to Help Out” scheme during the pandemic e.g. after several months of lockdown in the UK (Government forcing non-essential businesses such as restaurants to close their doors), in an attempt to revive the restaurant business, for the month of August 2020 the UK Government (many would say foolishly, for various reasons) paid for 50% of the cost of a meal in a restaurant (up to maximum of £10 per person) for anyone willing to eat out in a restaurant that month!!! - In this case, as with many Government initiatives to try to stimulate economic growth through Government Injection of Cash; the UK Government did NOT raise taxes to pay for the scheme.
In the end, in August 2020, the UK Government paid up to 50% of the cost of 160 million meals to those willing to take up the offer, at a cost of £849 million ($1 billion) to the Government – but the Government did not raise that money by raising taxes.
https://en.wikipedia.org/wiki/Eat_Out_to_Help_Out
Moving onto your last point; in fact, in economics (not just theory, but well established) is that when Governments ‘inject cash’ into the economy, if it’s correctly targeted, it doesn’t just ‘redistribute what is there’ – it does actually ‘produce wealth’, typically a 10 fold increase over 18 months to two years e.g. the Government injects $5 billion into the economy (as a handout to the low paid), over the next 2 years, as that money circulates it will typically create around $50 billion in wealth; and being taxed at every key stage during its circulation, can generate anything up to $10 billion in taxes.
Banks create money and wealth, and make their profits using the exact same above principle, as described in this short video: How Banks Create Money https://youtu.be/O5DaC1Ujrrg
SCENARIO
Now to the nitty-gritty of your example:
Yeah, 3% is also typical in the UK for the large supermarket shops, although for the small ‘local shops’ (who have a higher market and lower turnover) (hence their food is far more expensive that the supermarket), typically their net profit is generally around 5% in the UK.
Using your example would work because, in your example the show owner makes just £3,600 profit a year, and therefore as its way below the ‘tax threshold’ (the point at which a business starts paying taxes) the shop owner wouldn’t pay any taxes anyway.
So, let’s try using some more realistic figures that match the real world e.g. typically a corner shop (small local shop) in the UK will average between £60,000 & £70,000 profit per year.
Let’s take the £70,000 as the base line; the tax the shop owner will pay on that £70,000 profit will be:-
• 19% less the ‘tax threshold’ of £12,570 = paying 19% tax on £57,430 = £10,911 paid in tax: Which leaves the shop owner with £59,088 net profit per year, after tax.
Now moving on: The point that you are missing is that when a Government gives a handout to the lower paid as an economic stimulus to boost economic growth, it doesn’t increase the tax rates; it works within its existing budget; so when lower paid people end up with a bit of extra cash in their pocket, they will spend it in the shops, boosting the shop owners turnover and profits – and that money will continue circulating in the economy for the next 18 months to two years, generating money and wealth, all of which are taxed at key points, which generates additional Revenue for the Government:-
This short 2 minute video explains ‘The Velocity of Money’ (which is the point I’ve been trying to make): https://youtu.be/g7TftRQrnIA
This short 1 minute video also covers the topic (and puts forward both opposing sides of the economic argument): https://youtu.be/4hjsRN6Mw8U
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