Posted on 02/12/2023 2:18:40 PM PST by nickcarraway
In 1988, a newly married Fiona Emery and her husband bought a flat in the Melbourne suburb of Newport for $65,000.
Key points:
Fiona Emery and her husband bought their first property for $65,000
The Reserve Bank of Australia increased interest rates for the ninth time in a row this week
A finance academic says a recession is a possibility for Australia
When they returned from their honeymoon, interest rates had reached 17 per cent.
"We had no money, no savings, we were so young," Ms Emery said.
Three decades later, and a few moves in between, Ms Emery now lives in a Ballarat home with what she described as a "small mortgage".
The teacher said it was a very different story for her three children, aged between 19 and 27 years.
"I feel for them … the world was very different then to now.
"Buying a house will be much tougher for them ... I think we had it better in the late 80s."
Ms Emery pointed out that the value of the first property she bought was roughly 1.5 times the combined annual income of her and her husband.
"For my son to buy a 'reno-delight' in Ballarat, he'd probably have to spend about 4.5 times his income," she said.
As for the criticism levelled at millennials and Generation Z by some of their elders, Ms Emery said it was not fair to compare the different generations — a sentiment echoed by several economists.
"I try not to say, 'Back in my day...' to my kids," she said.
Recession possible, finance academic says
Regardless of generation, the Reserve Bank of Australia (RBA)'s latest interest rates hike will do little to lift the spirits of anyone staring down increased mortgage repayments.
Adding salt to the wound is the possibility of the dreaded "R" word becoming a reality for Australia, according to Deakin Business School Behavioural Finance Academic Erica Hall.
"The RBA is walking a tight-rope at the moment and they want to get inflation down... but it's at this inflection point where you don't want to overshoot and end up in a recession," she said.
A sign saying "Reserve Bank of Australia" on the exterior wall of the RBA's Sydney headquarters On Febuary 7, 2023, the RBA increased interest rates for the ninth time in a row. (ABC News: Daniel Irvine) What was "for sure", Ms Hall said, were further interest rates hikes.
"I would say, though, that we're closer to the top of the tightening cycle than the bottom," she said.
With that in mind, Ms Hall said it was a good move to direct discretionary funds into extra mortgage re-payments if possible.
"Just have a buffer so that in case something does go awry, as much as we do want economies to tick over, we also want to make sure we can keep a roof over our heads," she said.
On the matter of discretionary spending, Ms Hall said regional tourism operators may benefit from holiday-makers choosing to ditch international travel and the costly strings attached.
"Maybe people will go domestically instead because it might be more cost-effective," she said.
"You're not going to have to pay for airfares, worry about currency exchange rates. But there are many moving parts, and each individual's situation is going to be a bit different."
I have in-laws who grew up in the 50s and 60s. Life was simple — get a college degree, get hired by a big company like IBM, rise up through the ranks, get that sweet pension, Buy a cheap house which soars in value, retire to Florida with millions in your portfolio, and a steady on-going income for life. No special effort required. Basic, simple decisions. They did it. Anyone can do it. If you didn’t do it, I guess you’re dumb.
For them, the world has not changed, and everything they did can still be done by anyone today. I try to tell them that things have changed, but they think I’m one of the dumb ones.
I grew up in the 70s and 80s. I consider myself quite lucky. Not as lucky as they were, but I was fortunate. I’ve done OK and I can’t really complain. But I don’t have millions and I don’t have a big fat pension from a major corporation.
My kids are unlucky. Their world is a lot tougher. I feel bad for them but they work hard and they do the best they can with what has been dealt to them in the 21st century.
Meanwhile, my in-laws express amazement that the kids haven’t bought a sweet house in a major US city yet. San Francisco maybe. Or NYC. Why aren’t they living there? What’s the problem? Are they stupid?
I’m ready to sell mine and move to Florida. Might be a bad idea. I just think that market conditions and local governments work against homebuilding. Here in Calif.-how much do solar requirements add to costs? It’s funny because ADU units just might go a long way towards solving the problem.
Those same naysayers are here on FR and they don’t listen.
They just think every younger person is a lazy complainer.
Societal timing, which one has zero control over, is huge for quality of life.
Yes. But people, especially young folks need to move to a place that is favorable for their quality of living. Austin, TX and New York City, NY are both fun places to live. But you can't survive there. Why not move to Peoria, Illinois, instead?
Back in 1987 I joined my current company which I will retire from within the next five years.
10% went to my 401K right from the start. Never wavered. Even when things got tight, I never reduced or stopped putting into the 401k. 35 years later I have more than enough to retire at my current income for rest of my life. Social Security, if there, will just be gravy.
I have my own grown children (Millenials) doing the same and they are on track.
It's not magic. It's just disciplining yourself to live below your means while saving for the future.
The reason is globalism.
In the 50s-60s, Americans had to compete with other Americans.
In the 70s-80s, Americans had to compete with other 1st world countries.
Today, Americans have to compete with ever third worlder, on both sides of the border.
It’s a race to the bottom and the uniparty is laughing all the way to the bank.
Some do, some stay at their parents.
By definition, most young don’t try to move to NYC or Austin.
The cost of living is too high for many.
Between school debt, housing, and first decade of income levels, many can’t move.
In 1950 the population was about 150 million, now with our illegals counted, it’s about 350 million.
Add in getting a good job and being a white male.
Your In-Laws appear to have a superiority complex, which really means they remain skittish and insecure even now.
Perhaps even somewhat envious that others are living a less predictable, less regimented kind of life.
I started around 2000, and there was zero growth in the market for about 15-20 years which included .com crash and 2008 crash. Since about 2015 there’s been steady growth in the market up until Biden.
So we got 15 years of no growth. But I kept plugging away with my contributions and it finally started paying off. The one thing i would say is that after every crash, 2008, 2020 etc. is the time to pump as much money in as you can to buy stocks cheap.
That said, I definitely have worries about the long term outlook of the US economy and stock market. The neoCONs and leftists have killed the golden goose with their insane policies of offshoring, open borders, meaningless wars, corporate welfare, destruction of our manufacturing base etc. Many structural problems are in place and only getting worse. I felt like I was doing well until the Biden inflation doubled the cost of everything. Now, i’ll never be able to afford the house I want to upgrade to. It was within reach before the biden inflation. 2% COLA and 100% increase in prices. And 0 stock market growth. That’s the biden economy.
You got it! Instead of lifting the 3rd world up, the globalist morons are pushing us down to their level... while they live in gated communities and spend their free time cooking up schemes at their country clubs.
You over simplify, and underrepresent.
N=3 means nothing statistically.
You can be proud of your achievements without trashing others.
If it’s so simple, why don’t more do it?
How about the 67.3%of our population that are within a sigma of the normal IQ distribution?
Were both your parents around?
What did University cost you?
Where were you raised?
Does your career field have to compete against third world shithole incomes?
Be happy everything worked out for you.
What you describe here is "dollar cost averaging", that is, you do not try to time the market (as many try to do). In the long run, that is a good strategy.
I'm still bullish on the American economy only because there are over 300 million of us living at a rather high standard of living.
Yes, we have many problems but if our system ever collapsed, well, we'd all be in the same boat.
Sure, if you could get a mortgage in the first place and hang on with insurance and property taxes paid you have done well.
Absolutely. Don’t forget the globalist f***s in government greasing the skids to enable it all while laughing on their way to the bank.
You hit nail on head. Most people do not do what is most logical. I wish I had an explanation for that but many make bad choices.
Just as an example, when the U.S. stock market crashed back in 1987, and Japan was said to be the preeminent economic power of the future, I hung tight while others were bailing. Within a year, my losses were made up for and more.
What I see from your post is envy. Bad choices were made. I do not mean to trash people for their bad choices. I'm hoping to help them for the future.
Also, I did not go to University. I went into the Marine Corps after high school and went into my career after that. Never had a college degree. But I read a lot.
Things did work out. They sure did and I'm grateful for that.
It was Reagan who put the globalists in power by pushing for free trade, deregulation and doing anything the business community wanted. Fact!
And now we’re bringing those third worlders here.
Well done, but you got the huge stock market runup in the 90s. I got 15 years of stagnation from 2000-2015 to start my career off.
I agree with 10% no matter what right into the 401K. It will pay off over the long haul.
sad but true.
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