This is something I've never heard talked about. But did the housing bubble actually get people into homes they wouldn't have gotten otherwise?
(But which they could actually afford if they were disciplined?)
Linda and my combined income for each of the years 2001, 2002, and 2003, was almost exactly 30,000.00. That's literally, two minimum wage jobs. (Hence, the title of this blog.)
By late 2003, it was time to buy a house, I agreed finally with Linda, but I didn't want to be house poor, or have a house that constantly needed fixing.
I expected to be turned down. Or, at best, to get a house that wasn't much better than a trailer.
But they call them "starter" houses for a reason.
But we had a couple things going for us. We had a minimum 10% down cash -- depending on the house -- and despite our troubles with credit cards, to my great surprise, we still had pretty good credit scores, and we had zero debt.
But, of course, in hindsight, I can see that probably would've been given the mortgage even without those things. Because of the bubble.
We found a house that was much better than I could've expected -- in a nice neighborhood, about 20 years old but well kept up, and a third of an acre with great bones for landscaping and ...well, I was really surprised we qualified.
Thing is, Linda and I were more than willing to pay at least 50% of our income on housing -- even more, actually. I made double payments for a couple of years, so even though the value of the house has probably dropped below what we paid (at 2003 prices) we made a pretty good dent in the debt over the years.
And it's a nice house, a house we can live in for many years.
What I'm saying is, in the old days we wouldn't have qualified, or we wouldn't have qualified for as nice a house as we got.
One thing I knew, from our problems with credit cards, was that I didn't want any fancy financial shenanigans. I wanted a fixed, 30 year mortgage, taxes included.
I'm not saying we are paragons of discipline. We could just as easily got caught up in some of the more extreme bubble thinking IF -- I hadn't already been crushed by several bubbles in my business. Sports cards, comics, pogs, beanie babies, pokemon -- all had hammered me.
The credit card problems we had for a decade came from the fact that I fell for not just one, not just two, but three different bubbles.
By the time we bought the house I had been thoroughly humbled.
Still, looking back, I think we qualified for a nicer house than we would before or after the bubble. So in our case, it worked.
I wonder how many "little people" actually benefited...
4 days ago