Cost of real estate versus your salary, it's gotten way expensive

Remember mortgage burning parties? When people paid off their mortgage they burned the note and threw a party. Now hardly anyone pays off their mortgage; they just keep refinancing and pay toward their house until the day they die.

A few years ago I got curious about wages and prices. I discovered that since I was born wages went up 4 times but the cost of living went up 6 times. Today we have to earn 50% more to have the same standard of living that people did when I was born.

My dad bought a big house in the country and paid off his home before he turned 30. He raised 3 kids and we had things like snomobiles, go-karts, and motorcycles. He worked at a time when a good employee for a good comapny didn’t have to fear for loosing their job. He now enjoys a comfortable retirement. He did all of this with a high school diploma and a willingness to work hard.

I have a college degree and I’m at the top of my flied but in a lot of ways I’m worse off than my dad. My dad retired at 60 but I’m not sure I’ll be able to by 70. I have a good job but should a corporate bean counter decide that they can save a few bucks I might be downsized or my job outsourced to another country. I’m older than my dad was when he paid of fhis house note but the bank owns most of my house. I’m only raising one daughter but I can’t even afford all the things my dad bought for me and my brothers when we were kids.

They say that my generation (late baby boomers) will be the first generation that will be worse off than the last. Things continue to get worse. I worked my way through college working in book stores, restaurants, and temping. Today these jobs pay about the same as they did when I did them decades ago but the cost of everything else has gone up. I worked my way through college on low wage jobs but my neice can hardly make rent doing the same kinds of jobs. She already has a huge debt from her student loans and her degree hasn’t helped her find a better job than someone fresh out of high school could get.

To avoid being house poor buyers should buy a house about 2.5 times their salary. In some markets this is impossible for middle income earners though.