Random musing as I was driving past a rather pricey new neighborhood in my county (everything in there was $300K and up) and I got to wondering why developers don’t build more affordable starter homes. I expect the answer is that they make lots more money on the higher-end homes.
Which further led me to thinking about my perception that the “American Dream” is no longer a steady job and home ownership - it’s being richer than the next guy. This isn’t based on any research - just my gut feeling based upon the seeming worship of wealth and veneration of the wealthy.
Am I alone in my cynicism? Do you think people are more interested in making a living that provides for their needs with some extras, or do you think most don’t consider themselves successful unless they make Forbes’ list?
Maybe I’m just not that driven - we’ve mostly done OK, and in retirement, we should be comfortable, barring ridiculous inflation levels. I wouldn’t turn down a mega-bucks jackpot, but I’m satisfied with the life and home my husband and I share.
Depending on the area, the land is a substantial portion to almost entirely the total cost. Actually building the house is cheap. Building a bigger house isn’t much more.
It’s weird. I live in the mountains, 100 miles west of Denver. We have a modest 1700sq ft house on 2 acres.
Just outside of Denver there is a community of huge houses that barely fit on the property. I’m sure they go for a million plus. They are all right next door to each other. Like 10 feet apart. I’m sure they are very nice, but…
My Wife and I are very happy in our home. We like not having neighbors. But, it’s going to get impossible to live here as we age (mostly the insane amounts of snow we get and the altitude).
Well whatever floats your boat or trips your trigger.
It’s not just homes. I was reading some random page on line the other night, and one article was talking about Brooks Brothers suits and Coach bags and some kind of watch I never heard of, all indicative of a certain financial status as if it mattered. And obviously it does matter to someone.
I, on the other hand, wouldn’t know a Brooks Brothers suit from a Men’s Warehouse suit and while my watch cost all of $12, it tells me the time probably as well as your Rolex, within a certain margin of error.
And let’s not get started on cars, or boats, or whatever else one flaunts to display one’s worth. It’s the motivation I wonder about - have you always wanted a Ferrari or have you always wanted to say “I drive a Ferrari!”
Whoever dies with the most toys is still just as dead. But I guess the score matters more to some than to others.
When building a subdivision, the infrastructure, roads and utilities are a major cost and almost independent of the size of the home. Since a developer can sell a larger house for more than a smaller house, it is easier to recoup the necessary infrastructure costs and the profit higher.
Boats can be expensive, that’s for sure. But I doubt many get one to “display one’s worth.” My wife and I are on our boat every chance we get. More money can help you get a boat more suited to your needs, and hopefully one that is more reliable.
I do wonder on how so many people can afford boats that are clearly in the $1 million+ range. I know so people make a ton of money, but there are 100s of very expensive boats around here. I guess the economy is good for the top 1%.
We owned a number of sailboats over the years (physical limitations forced us to quit sailing) and ours were certainly not status symbols. They were our recreation and, on a couple of occasions, our homes. But I find it hard to believe that someone would buy a multi-million dollar yacht that requires a crew to operate just for recreation. I know some are leased out when the owners aren’t using them, but I’d guess more than a couple fall in the “look at my big toy” category. We saw an awful lot of money float by in our days on the Chesapeake, and we’ve watched more than a few mega-yacht TV shows.
Same here, owned a lot of boats which changed depending on family size and types of recreation. Currently own a small cruiser just capable of overnights for a couple – not for status though. As of today, none of my neighbors have seen or are even aware of it. One co-worker has seen it, but no relatives. I only “brag” about it here (cause none of y’all can hassle me for rides).
You’re correct about the big “dock queens” that never seem to leave, but have parties. They like slips by the bar so everyone can see them (or at least that’s what it seems). It’s interesting, since the cost of these machines are phenomenal. And even more interesting, the mechanics tell me the marina is setting new records for boats seized due to non-payment. Last year they salvaged* the largest number ever. I can only imagine what 2020’s impact will be.
*salvaged = expensive parts removed and carved up for recycling. By the time they legally claim them, deferred maintenance ensures too far gone to refurbish. Earlier this year a 40+ footer was hoisted out and set on the bunks. The hull was so waterlogged it collapsed under its own weight.
Majority of Americans live beyond their means. Nearly 80% say that they live paycheck to paycheck. About 40% couldn’t come up with $400 to cover an unexpected bill. In the land of fear of missing out (FOMO), most people look to satisfy short term wants and desires over long term goals of retirement, etc.
Must have the latest model phone, must drive a car that’s not over 3 years old, must have that designer handbag, must have those rims on that F150 extended cab, must have the latest game console, must have those designer labels, must have that boat, must have the latest toys for my kids, must live in that neighborhood…on and on and on.
I think the American dream is to give your children more opportunities than you yourself had. It goes wrong when those kids feel like they have to have at 22 more than their parents have at 50.
Ha! A house wouldn’t go for only $300K around here if it were falling down. 1700 sq ft. houses are over a million. And they don’t have a lot of land.
As for the question, why not a middle ground? People who want to be really rich are likely to be disappointed. But it is okay to want more than just a salary that puts food on the table and a vacation or two. In my book that means making enough that you can get anything you want (I have moderate tastes) while still saving money, and home disasters, like the oven dying, don’t lead to frantic spending cuts.
This is still a largely rural county, tho it is a bedroom community for DC. I think that explains what I think are ridiculous prices. The closer you get to DC, the crazier (IMHO) the prices. Some places are McMansions, but others are just the result of supply and demand and bidding wars.
But that’s not the point of my question. And I consider your middle ground as part of my making-a-living group. As opposed to those who live and work to amass more and more and more than they could ever spend or enjoy. I guess the net worth is its own reward?
Capitalism has ramped up and gotten nastier, IMHO. I want to have enough income that an unexpected emergency like COVID doesn’t put us out on the street. I grew up in the smallest house in the neighborhood, and I’m now in one of the smallest houses in this neighborhood. We build a nice cat porch and I double-shelve books.
I live in one of the higher income regions of a high income state (California). I’ve been continually amazed at the number of people I know with significant 6 figure salaries who seem to live paycheck to paycheck.
However, “just making a living” leaves you open to events like the COVID-19 shutdown, and if you weather these, the quality of life as you age depends on your ability get better than the minimum care, especially as you get old enough to require that care on a continuing basis. If you don’t retire with significant assets (i.e. “get rich”) you’re taking the wrong end of the bet.
I’m assuming an older home in the area is significantly less than $300k?
In my city a starter home (built in the 1950s, in reasonable condition with maybe an upgrade or two) will set you back around $800k. A new construction home, typically double the size and essentially a giant box filling as much of the lot as building codes allow, will set you back somewhere between $1.6 to $2 million.
I suspect you’re seeing the same dynamic play out in your area just at a different price point. New construction is priced at a huge premium, and is apparently highly valued by people in general. It’s hard to know if that’s a reflection of any change in society or if it would be correct to apply that broadly to the population. I think most people will make a more sound choice and buy something a little more modest.
Personally I don’t find new construction to be much of a selling point. I’ve been taken aback by the shoddiness I’ve seen in some of the so called high end new construction. And that’s just obvious stuff, like askew light switches or poorly installed shower plumbing, etc. I’d hate to see what an actual professional inspection would turn up. And you’d think that an advantage of a new house would be a layout or design that better matches how people live today, but most of the ones I see were so fixated on bumping up the square footage that you’d spend your life going up and down stairs, etc. if you lived there.
If you’re actually a bedroom community for DC then I’m sure there are a huge number of DC folks with high professional incomes that would consider that $300k laughably cheap. Then they need to make the money-vs-commute tradeoff decision …
This phenomenon is not new at all; it was/is Keeping up with the Joneses. The competitiveness to be as good as others, even if far beyond what is necessary to have a mere living, is what keeps advertisers in business. Keeps lotteries in business, too.
Our house is a rancher, built in '75 and has just under 1700 sq ft. I could put it on the market today for about $320k, possibly more. I doubt that anything in this neighborhood would sell for under $300k, and I know of one that recently sold for a bit over $550k - all are from 40-45 years old.
We’ve been looking for a place our daughter can buy - anything under $200K in a decent neighborhood is either uninsurable (according to the listing) or in need of a LOT of work. And they seem to get snapped up within days of being listed. She and her husband can’t qualify for a high enough mortgage to get a nice place, so they live with us. Their only hope is for us to die and leave them our house - not much of an alternative for us, tho!
I’d much rather make a fortune. There are a lot of cool things in the world and you only get to see and do a tiny percentage if you aren’t rich.
I don’t live on either coast but you can barely buy a toilet here for 300k and I just sold a 3 bed 2 bath 1000 sqft condo in the bad part of town that had knife fights in the parking lot the last time I lived there. The condo had 40k worth of damage from the last tenant and I still sold it for $210k in 4 weeks.
Living is 1700 sqft with my family of 4 would be unbearable especially during covid. We’re in 2400 currently with plans to expand it to 3100. We lived in 4500 one time and it was just too much to maintain. I understand mcmansions and could live in one what I don’t get are tiny homes next to the highway in the middle of nowhere. A long time ago there was a townhome complex 45 min north of downtown and 15 minutes from the nearest employer. That makes no sense if you going to live some where tiny at least be close to things that don’t suck so you can leave your terrible home.
I think (and I am likely projecting here), that one of the real attractions of that kind of wealth is the stability that comes with it. People see “steady job and home ownership” disappear in an instant for people who did work hard, but made the wrong choice (a company that didn’t fully fund their pension fund, the wrong stocks in their 401k, a company that suddenly went bankrupt out from under them) or got struck by bad luck (medical expenses). Everything can go just like that.
You look at the crazy rich and they’re insulated from that. Or at least it seems like they are.
Also, people have been obsessed with the obscenely wealthy forever. There’s nothing new there.
I have read that construction companies in this area say that they cannot break even on non-luxury homes, so that’s what they’re building. (Of course, who knows if they’re telling the truth)?