The real estate mirage

Boomers: “your starter home shouldn’t be a Bentley”

My local estate market out here in the real world: https://t.co/vDb8G8t1H4 pic.twitter.com/Wzl49HQaiq

— LuInAlaska Matchmaker & Mentor (@luinalaska) April 19, 2024

Yeah, the math just doesn't work in major cities. Here's an extreme example:

This was my first childhood home in what was at the time a sleepy little middle class street in Los Angeles. 1800 sq foot ranch.

It looks basically the same today.

My parents bought it in the late '70s for $60,000. Sold in the mid 80s.

Now worth $4 million. pic.twitter.com/XiWKlhJ2GC

— Peachy Keenan (@KeenanPeachy) April 19, 2024

As I've written before. Let's see some numbers about the house that my retired barber bought and compare that to the reality of today.

• Time: Early 70s.
• Profession: Barber (with stay at home wife)
• Annual income: $20,000
• Loans: From dad and friends
• Price of house: $55,000
• Loans paid off in 3 years!

An example in the news from last year:

• Annual income of professional couple: $200,000
• Looking at house near Toronto
• Price of house: ~$1.2 million
• Bank refuses loan!

So, a barber working alone could afford to buy an average house fifty years ago in Canada. Today, an educated, credentialed, and hard working couple working full time while making 10 times the income of that barber can't even get a mortgage! And note this is comparing the same Greater Toronto Area of Canada.

I would bet a $1,000 that the barber could sell his house for an easy $1.5 million in the red-hot real estate market now.