WSJ -- Hidden Costs of Homeownership Are Skyrocketing

Minimizing the “skim” – the Key to Retiring Early.

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In my neck of the woods, $400k houses are a dime a dozen now. Live in a nice area, lots of in State people come here to vacation, fair number retire and move up from the larger urban areas. People move in from out of State,too, but I’d say the growth is more current State residents. But there is an enormous disconnect between what the labor pool earns in wages, and what starter houses cost. I’d be breaking out in hives if I was a young person making $50k a year and was looking/trying to buy a $300-$350k starter home in order to get a first house. Probably not too many of them putting 20% down, hard to come up with $60k making $50-$60k a year.

And as the linked article states, the "hidden"costs are rising fast. I discuss this with friends, and my position is that rising home prices are not really good for home owners when all home sales prices are rising, and property tax and insurance rise because the home prices are rising. Have a friend who is almost giddy about how his home is valued, but when I tell him it doesn’t do any good because if he sells he’ll be buying something that has increased in price just as much as his property did. And even if everybody stays put, the rising home values cause everybody to pay more in taxes, insurance, upkeep.

So, when including home value, are basically 50% of all American homeowners millionaires ?? Sure isn’t an exclusive club anymore,lol. These elevated home values feel like fools gold to me, I’m not impressed with it, don’t like it. As the linked article states, people are going to get priced out of their own homes. Hope they have some liquid assets,too, and maybe they can defer SS to help keep up with what could be spiraling inflationary costs for the forseeable future.


From the article:

“Nearly one in five said they couldn’t afford a $500 emergency repair without going into credit-card debt, according to a February online survey of 1,000 homeowners by tech company Clever Real Estate,”

If you can’t afford $500 for an emergency repair, you can’t afford to own a home. How leveraged are these folks?

I don’t think of myself as an uncaring person, but if you live in a flood zone or where fires are common or hurricanes are known to pass through occasionally, what are you thinking?

Some wounds are self-inflicted.


Re: no net profits from selling when house you buy is also more costly.

Many retirees do cash in by moving to a less costly area or downsizing.

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Re: home ownership inflation.

A friend in the construction business recently pointed out that materials costs are down from their high. But manpower shortages allow firms to ask top dollar. A deck that once cost $5k now get bit at $15 to $50k.

Home improvements or repair gets costly. Its a labor intensive business. Not many robots. Maybe opportunities for more prefab. Can AI cut manpower requirements?

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I’ve been pretty surprised at how housing prices have went up across the region, and even in the Upper Peninsula (UP) of Michigan. From my readings on various sites, wages have not come remotely close to keeping up with rising house prices. Locals up there say they are being priced out of home ownership, many blame the AirBNB craze. The Lake Superior shoreline communities that I really like have shortages of homes for sale, so prices go up. Rents also rising fast. Feel for those local people, the UP used to be an escape from high housing costs, no longer the case. Normal winters there are fierce, to put it mildly, but that hasn’t stopped the short term rental investors from buying up homes.


I’ve seen reports of the same effect in Colorado ranch country. City people buying up vacation homes drives up land values. Ranching becomes more difficult as a result. And then estate taxes make it costly to keep land in the family.

Some would say this is simply inflation. Lots of money in circulation means people have money to spend. So they are willing to pay high prices.

Meanwhile those on fixed income or low skill jobs have trouble keeping up. And homelessness increases.


I have serious doubts that such responses are indeed valid. I would bet money that if you asked the same respondents to total the discretionary spending they have per month, many of those in that 20% would indicate that they spend that much or more.

They might say that they can’t afford it - but for many I think that is only because they are already spending it on wants and not needs.

Heck, I bet most homeowners spend over $200 a month just on entertainment services (home internet, gaming, TV streaming, unlimited data/wifi, Sat Radio, etc.) that is of course discretionary.