June Update: Where Did all the Money Go?
(One of the most beautiful libraries I've been to, in Austin..one of the best beneficiaries of taxes!)
Here we are in the thick of summer. Summer 2023! Where does the time go? I remember when friends used to create dedicated albums after each epic summer, like Summer '05 or Summer '09, but no one does that anymore I guess.
What have I been up to?
Contributed to a few articles on Yahoo! and MoneyGeek.
Traveled to Austin for an interview (hence the beautiful image from the library...why don't we invest in libraries more like Austin??)
Learned how to edit audio clips more precisely for my audiobook.
Found out you can make a six-figure income running ice cream shops...who wouldn't love that!
Won an award for my side hustle from my alumni association
Explored more parks coffee shops, and libraries (never gets old, until the depths of summer of course...but then again, libraries and coffee shops have AC. And as much as I knock on Starbucks, their stores have the most powerful air-conditioning I've ever seen!
It's surely an interesting time in the US. Housing prices are as stubborn as a high school kid waking up for the first day of school after summer. As mortgage rates creep up, many experts say that those who bought or refinanced during the crazy low rates of 2-3% are highly incentivized to stay where they are.
But what about those who have to move for family, work, or personal reasons? What about the millions of older people moving from their single-family homes into 55+ communities, not to mention assisted living?
Keeping Up with the Joneses Passes to the Next Generation
In my parent's community, there are hundreds of new homes expanding an already spread-out suburbia, and let me tell you, it's shocking.
Perusing Zillow, I saw floor plans of homes that sold for $700k during the last bubble being marketed at about double, yes DOUBLE the price now.
Out of curiosity, I went on a bike ride to these new neighborhoods and was shocked to see how many homes are sold and occupied. In addition to being occupied, those I saw were younger, typically young parents, and also had brand-new cars in the driveway.
It looked eerily similar to the 2005 housing and spending craze when realtors boasted about making $50,000 per month yet leased even more expensive cars.
I'll never forget during one of my college jobs at Circuit City (yes, I'm that old..for you Gen Z'ers out there, Circuit City was a competitor to Best Buy), one lady came in and applied for a store credit card to buy TVs, a surround sound system, and more accessories. When she was denied, she claimed "How can that be, we just bought a house and 2 brand-new cars!"
Although I didn't put it together then, I realize now that she was super over-leveraged and wasn't the only one.
We all know what happened in 2008 and beyond.
"My car payment is thankfully under $1,000 per month" *cringe*
I'm sensing the same cracks as I reflect on since back in those good old days before smartphones and social media ruined everything.
Yet now, it seems like there is a disconnect in many places. People have good jobs, yet layoffs are taking over my LinkedIn news feed.
People are driving nice cars, yet the average monthly car payment is at a record high, not to mention an increase in car repossessions.
Rent is going up, and housing prices haven't come down to even 2019 levels, even after an increase in rates, bank failures, and increasing concern about a recession.
No one can predict the future, but if there is anything I recommend you do this summer (other than lots of ice cream and pool time of course) is to learn.
You can go to school but you can't buy class - Student Loan borrower
Watch business news, read the Wall Street Journal, and watch a variety of Youtube (I especially like PBS). Learn about how all these aspects of the economy are related, and how you might be vulnerable.
The other thing I'd recommend is to recognize the vulnerability of your income. Now, if you're in municipal services, healthcare, or another industry that stays constant, you might be safer than others.
However, think of some alternative scenarios. If you lost your income tomorrow, how much longer can you pay rent/mortgage? Can you get rid of any debts right now? If you've been using your savings to beat inflation, can you move back in with your family to build it back up again?
This isn't meant to instill fear, it's something I'd recommend doing no matter what the economic situation we are in. You'll feel a million times better if you have no consumer debt, a healthy positive cash flow, and a savings cushion just in case you have to move on a whim, have a healthcare expense, or need to rely on savings if you lose your income.
Being in that kind of position enables you to take greater risks, such as starting a passion project, because you have a runway of time in which your savings will take care of you while you get new interests off the ground.
"Riding My Bike Like It's 2005" - Lyrics by Bazzi
I vividly remember looking at the MLS and Zillow in January 2010 and talking to a realtor. She told me, among others, that real estate follows a 7-9 year cycle of buyers' market and seller's market. This same realtor told me it was a seller's market and bids were going over asking, in 2013!
Prices have been going up since 2012, but then we had the anomaly of a pandemic, and prices went crazy. How is it that they can be sustained as high as they are though?
Interest rates have been very low for much of that time as well, as we recovered from the Great Recession. However, all the influx from the pandemic relief programs added a lot of fuel to the economy, hence why we are facing some high inflation.
I don't know how some people are making it work. And I also don't understand how we can have such a "shortage" of housing suddenly, even after building millions of homes.
Where were all these people living in 2010-2015? If home prices generally increase with the pace of inflation, what the heck has been happening the last 3 years? I especially want to know what kind of millennials can afford to buy $1.5 million homes. Who are you???
What do you think, are things going to change or are we happy paying a premium for everything these days despite a commensurate increase in income?