This is a tangent on the Steve Job’s daughter thread…
I’ve listened to an excellent seminar put on by a ‘futurist’ that made similar statements, the difference between the haves and have-nots is NOT stuff. The poorest famlies still have a TV, cellphone, walkman, iPod, whatever. When you look at a THING list, it’s all there.
The other thing that has me wondering is: We have more and more McMansions popping up in Denver. We have a Parade of Homes event that generates 5 to 15 $1Million+ houses a year and have done so for 25-30 years. All by itself it’s generated, say, 150 homes worth more than 2 million dollars…and they’re just the obvious ones.
Who are all these people that can afford these homes?
And yet, I see something like a picture of Rio de Janero where the bay is chock full of $20+ million dollar boats and realize that as rich as us 'mericans are, there’s a segment of the population where we don’t even rate on the scale.
There was a show on the teevee last night (actually several back to back) dealing with ultra-rich real-estate…I can see there being a ‘market’ for 15 million dollar homes on the beach in Barbados, but it just astounds me that Denver could support, what, 1000 million-dollar-plus homes…then you look at nearby Evergreen where you can’t set foot in ANYTHING for less than $600k or so.
The wife and I are pulling down pretty good money, with two kids and a mid 100,000’s combined income. With that, it’s pretty hard to justify more than our $350k mortgage.
In our area, I see the same huge mansions going up and I have the same question in my mind: how in the heck do they afford it?! I’m usually given this answer: either their parents paid for it and/or they are in hock to their eyeballs over it. I’m still greatly confused.
The poorest families who have richer friends, maybe-- a hand me down tv is free. Same for a $10 radio or $20 CD player when you get a new one.
Cellphones, though, I don’t necessarily believe, since you have to pay to use them. Several of my co-workers don’t even have home phones; one or two have cell phones instead of home phones. And we’re fairly well off, we have jobs and (for the most part) cars to get there!
I also have to say that I don’t think I’ve ever been within touching distance of an iPod. Not everyone has one, after all.
I was thinking specifically a pay-as-you-go phone. They’re $30 or so and don’t HAVE to cost an arm and a leg…actually, basing this on my misfit brother-in-law, WE bought him a phone for xmas, got him on a $30 a month plan, and the pitched it for a Cricket phone as the ‘monthly bill was too much of a burden’. But that’s a whole nutter kettle of fish.
Actually, I can answer some of my question myself. Interest only loans have gotten REAL popular around here…so you live in a house for 15 years, and haven’t paid a penny down on the principle. I got wrangled into it for the second mortgage. Kinda wish I hadn’t, but going to a conventional loan would add a good $600 a month to the bototm line. The first is a pretty low rate conventional loan and I intend to keep it that way.
The folks I work with, who presumably make about as much money as I, appear to live better than I (we) do. They have bigger, fancier homes (with jacuzzi tubs and marble kitchens!) and snazzier cars, better toys, etc., but I do sometimes wonder how many paychecks away they are from losing those things.
I wonder, too, how ‘wants’ become ‘needs’. Cell phones are no longer a novelty and for many people, they may even be a necessity. I had a plumber out recently who used his phone in the course of his work to call for help and pricing and to keep waiting customers updated on his progress. I suppose the company paid for the phone, but he may well use it for non-work stuff, too.
I fear a technological divide in the future job market, too- the “have/have nots” v. “the know how to use it/ don’t know hows”. My work went all-computer a couple of years ago. Some folks were so distressd about it they threatened to quit! I understand their fear. Heck, some of them can’t type, much less use a computer, so the transition was definately (sp?) painful for them. I tried to make 'em feel better by pointing out that technology is a trend that is not going away and they would likely have to learn to do that stuff here or at their next job.
Well, you have to keep in mind how much money some professions make. Take doctors – $150,000 a year is sort of the low end, and specialists and surgeons often make considerably more. I’ve heard that a hardworking orthopedic surgeon can make a million bucks a year. Lawyers are also making decent money, as are corporate execs. Plus, it’s not that uncommon for a doctor to be married to a doctor, a lawyer to a lawyer, and so on. If the couple is pulling in two or three hundred thousand a year, they can afford a million-dollar house. There’s another category of possibles, and that’s the baby boomers who got sizable inheritances from their frugal parents.
Of course, it’s also true that there are people out there who are overleveraged and will go belly up at the first sign of trouble.
Somehow, I think you are about to be informed by Doper doctors and lawyers that a J.D. or an M.D. does not put you in a McMansion. I used to date a broke lawyer. And there simply aren’t enough corporate execs to fill all the McMansions.
My understanding for subtext in conversations with several McMansion owners - its often cashing out of the stock market. Options have made a lot of fairly average people fairly wealthy, and although they don’t necessarily have the continuing income, they were able to buy the house.
The other shocker to me, how many of the million dollar homes are owned by people who own construction companies. Other small business owners as well, but construction and its related fields can be really lucrative if you own the company.
I think that that particular case is better explained by the fact that cell phones are only marginally more expensive (or sometimes less than) traditional land lines now. My mother pays $26/mo for her land line, plus additional for each minute of long distance. She also spends $20-50 on a phone every few years. I spend $40/mo on my cell phone, long distance included, and they give me new or very discounted phone every year. In addition, my phone keeps my calendar, my phone book, and takes really crappy pictures, and I can check my email on it, anywhere. So I’m paying slightly more (depending on long distance usage), but getting much more out of it.
But I agree with the sentiment. I spend money on toys like iPods and video games and my boat, too, but I’m careful to think of them as just that: toys, not essentials. And I save money in other places, like driving a 10-year-old car and seldomly going out to eat.
Actually they’re the one’s I’d EXPECT to be there as the really expensive house doesn’t really COST that amount of money to build. Figure half to 2/3rds of a houses cost are in materials and labor. If the guy is in the business, can work favors, and gets the stuff wholesale, he can make a killing on his house.
The Golden Windfall and/or Inheritance angle, I hadn’t thought of that…
Come up to Boulder - there is a whole subculture of people who have inherited wealth here. I’ve heard it said that 30% of Boulder residents are independantly wealthy. I worked at a previous job with two people who were in that boat. They worked only to fill up their day. One of them got laid off and was out of work for two years - with a wife who didn’t work and three kids. He finally got a part-time job and celebrated by buying an Acura SUV.
I would point the finger at the stock market. Some people get rich because they earned stock options from their employers. Others got rich the old fashioned way, by buying and selling. Let’s say you’re a standard middle-class family, and by 1995 you’ve managed to put away $250,000 in your retirement accounts. If you’re decently smart and willing to spend a couple hours a day watching stock tickers, you could have turned that in $500,000 by 2000.
Lastly, some people earned their fortunes in real estate. My grandparents scooped up a nice beachfront property in La Jolla in 1963 for $22,000. They sold it in 1986 for about $700,000, which allowed them to purchase a McMansion in Orange County for their golden years.
I think I’ve got it figured out…hopping from one house to another in different markets…a $350,000 rat hole in LA would make an excellent downpayment on a $500,000 house in Denver.
That’s another way. I know a number of LA or Bay Area refugees who have ended up in beautiful homes in other parts of the country with money left over.
Nah, it’s true - the country is getting wealthier, and the price of many products steadily decreasing all the time. It’s a function of many things, but is best tied into the economic concept of “productivity growth” - we constantly learn all the time how to do the same tasks better, faster, cheaper, more efficient.
What I’m interested in is this: You, yourself earn over 6 figures, an amount unthought of by your parents - why are you surprised to find that your good fortune is not so much “fortune” but an increasingly common outcome of the society that you live in?
That should be “efficiently” and “… unheard of by your grandparents”. To be honest, that last is a bad sentence all around, especially taken literally - y’all know what I meant!
I have a friend who got a job with Proctor and Gamble, based in Cincy. He lived in San Diego, had a house that he bought in 1999 for $250,000, was worth $450,000 when he sold it. By filtering only for price, the following site can quickly show you what sort of sh*thole $450,000 buys in SD (his home was depressingly representative):
He actually bought a lot less house and a lot more property, but the principle is the same - I didn’t want to search through a ton of Cincy MLS listings to find an equivalent, to be honest.
When my wife and I moved to Knoxville, TN we were approved for a loan of $350,000 but bought a house that cost “only” $97,000. Within walking/biking distance of 3 grocery stores, the mall, 49 movie screens, high school, Best Buy, the place was a freaking steal and has already been reappraised at $150,000.
