I grew up with three siblings, my mom, and my dad in a 3 bedroom, 1 bath house. In some ways, it was really idyllic. We had a big yard, fish, gerbils, a rat, cats, dogs and horses. We ice skated in our own back yard. We rode horses. We built clubhouses, climbed trees, and borrowed my mom's jewelry to be "pirate treasure" and bury it and dig it up again. We took a week long vacation every year, and often smaller trips as well.
It was also pretty tough, money-wise. As a single man, Dad had no savings and no credit. He lived in a studio apartment, and ate out daily. He was 50 when my parents got married. It was my mom's second marriage, so my parents started their married life as a family of four. Then, they had two more kids. When I, the baby, was six months old, my dad was encouraged by his employer, the fire department, to retire as a consequence of heart problems. I no longer remember the exact nature of the problem - whether it was a heart attack, a-fib or what. But his boss felt that firefighting was too physically difficult for Dad anymore, that it would aggravate his health and endanger himself and his co-workers. So, at 56, with 4 kids and a mortgage, Dad retired. Dad was, for the record, bitter about this.
They'd planned on mom being a stay at home parent, but now, if we wanted to eat, Mom had to work. Dad did not want to feel that she was the primary breadwinner, though, so she worked 20 hours a week. Every now and then Dad would take on a part time job - distributing seeds to retailers, night watchman at a warehouse. But mostly, we lived on his pension and Mom's paycheck.
I realize now that we would have qualified for all kinds of government assistance, but I can only see my parents requesting and accepting that help if it was a matter of life or death. And it never was; we could only invite friends for dinner on spaghetti night, because there wasn't enough to share on any other night, but we always knew we'd be fed. I usually owned one pair of pants at a time, but we had clothes. Vacations meant sleeping in a tent and cooking on a camp stove, but we went some amazing places.
And we never, ever worried about losing our home. My parents bought the house in 1960, and paid it off when I was in my teens. I remember how relieved my mom was, how much of a weight it took off of them.
It would be impossible to do that today. I'm not exaggerating - it would be sincerely impossible. Can you imagine buying a home on part time wages and a pension? Can you imagine raising four kids on part time wages and a pension? Can you imagine doing it without any assistance, from family or church or government? Of course you can't. But my parents did it. They were careful. We did without a lot of things. But it never, ever felt perilous, because it could be done.
My husband grew up a couple of miles from our house, with his two sisters and his mom and dad. Their house was a 2 bedroom, 1 bath, built in 1927. The house was 1204 square feet. I don't know what they paid for it, but the average home price when it was built was $6000. In 1956, the year my inlaws were married and bought their house, the average price was $11,700.
My parents' house was built in 1959; when they bought it a year later, the average home price was $12,400. It was, at 1318 square feet, slightly larger than my inlaws' home. For years, people expected to have a bedroom for the parents, and one for the children. By the time my parents got married, people expected a third bedroom, so they could separate the boy children and the girl children.
I remember my parents being flabergasted when their house first assessed at $50,000. "Can you imagine?" they said, over and over. It seemed like an incredibly large sum to them.
The first home we bought was a single wide trailer on an acre and a third; we paid $29,500 in 1987. It had 3 bedrooms and 1 full and one half bath in roughly 700 square feet. In 1989, we bought a factory built ("manufactured") home with 3 bedrooms and 2 bathrooms. It was 988 square feet; we paid $50,000. Nothing was being built anymore without 2 bathrooms, or at least one full and one half bath. People usually expected a "master suite," a bedroom with an attached bath.
Our current home was built in 1972, when the average home price was $39,500. This house had 4 bedrooms and 2 baths (no master suite). The owners added a family room, 2 more bedrooms and another bath (in the new master suite). We bought it at 2304 square feet in 1994 for $110,000.
I'm sure you noticed, but I'll point it out anyway. Houses have been getting larger and larger for decades. Things that are considered "standard" were once luxurious. Our former house, with a separate laundry room (something my mother never had - her washing machine was in her kitchen) almost qualifies as a "tiny house," as those are considered to be anything 900 square feet or smaller.
So, why am I bringing this up? Why all the numbers? I'm getting to that.
I (too) frequently see something in the news about homelessness, and they'll have a family just like the one I grew up in - only something happened to them. "We were doing OK until Bobby got sick." "We were fine until my car accident." Usually, both parents will be working, but they'll go from "comfortably middle class" to homeless faster than they ever imagined possible - especially if there's a single income (like, having a single parent household).
My parents had no health insurance. And life happened to us - a traffic accident for my brother, my sister being bitten by a dog who nearly severed her upper lip, me having an illness (strep throat becoming scarlet fever) that should have hospitalized me. Part of the difference, for us, was the policies and expectations of our doctors, dentists, orthodontists. Every single time I remember getting any health care at all, my mother would say to the receptionist, "I need a payment plan." The receptionist would say, "Certainly. How much can you pay per month?" She'd write it down - even if it was $5, even if we already had a balance - and that was that. You can't do that any more. Even if you can find a doctor who'll take uninsured patients - and good luck - you can't just set up payments with the provider, on the day of service, for whatever you think that you can afford.
I was 7 when my brother was in the accident that not only caused soft tissue damage, but broke the bones and cartilege in his face. He needed reconstructive surgery, and they feared that he might lose the sight in one eye. That's exactly the kind of thing that can derail families who have very little financial leeway. At that point, if we'd been paying rent somewhere, it might have been the breaking point. Or, it could have started an avalanche. The last time that I lived in a rented apartment, the rent went up three times in twelve months. About a year after my brother's accident, we bought a family car that quickly became known as The Lemon, because it always needed some kind of repair. About the same time, my sister had her dog bite accident, and she too needed a reconstructive surgeon. Of the six of us, four needed glasses, two needed orthodontics. Imagine all of that happening, all at once, to a family on a tight budget.
If we had been renting, if we had fallen behind on mortgage payments, if there had been a variable interest rate or balloon payment, if we had to choose between medical care and food, everything may have unraveled for us. Maybe we could have moved in with relatives, but with six of us, it would be nearly impossible long term. Maybe my brother and sister would have had to leave before they were really ready, because we had no room. My sister is the only one of us with a university degree; maybe that would not have happened if we were homeless. Maybe my dad, in his mid 60s with health issues, could have found a job in, say, retail; maybe not. All of this is conjecture, because we never had to find out.
Instead, we stayed in our own home, Mom planned our meals around grocery store sales, and I have great memories of backyard campouts, getting permission for my friends to ride horses with us, and posters on my bedroom walls. The house not only held all of us, but housed various family members at times of crisis or relocation or out of town visits, over several decades.
That's not the only way that our parents' homes benefitted us, of course. Grandparents on both sides of the family rented to our children, at below market rates. Both grandparents' homes were offered to our children after their grandparents' passing. My son and his wife are buying one of those homes, with terms that make it comfortable for them. Our home's mortgage was paid off by money from my inlaws' estate. Money from both families' estates gave us down payments for "investment" condos.
We bought the condos specifically in order for our family members to have somewhere affordable to live. Long term, we may live in one ourselves, or sell them, or use the rental income during retirement. (Because, owning homes gives you choices.) But, mostly, our motivation was to give our kids somewhere affordable to live.
I realize how enormously privileged we are to even be able to make that choice, believe me. It sounds obnoxiously affluent to even say it out loud. But, I stand behind that decision.
The first one we bought was a 2 bed, 2 bath model, not far from our home. Everything went seamlessly. The mortgage agent said, "Just so you know, I can qualify you for 5 more at this price." We put it up for rent (our kids were either living elsewhere or still in school), asking only a small amount over our mortgage payment. (You've gotta have a cushion for repairs and emergencies.) We got a lot of inquiries that ended with, "It's cute, but I can't afford that much." We rented to strangers for a while, and when they moved out, my nephew's family moved in.
Two or three years later, we put an offer on a 1 bed, 1 bath condo. It's adorable, and in a bigger complex, so there are more amenities (playgrounds and tennis courts, as well as a pool, clubhouse, BBQs.) It cost half what the 2 bed condo cost. But, local prices were starting to skyrocket, and we wanted something that our youngest could afford, even if the only job she ever held was her high school job at a fast food place. (At my age, I look at market rates for even studio units, and think, "Who can afford that?")
We didn't anticipate any problems. Our credit is good, we had the down payment, we were remembering what the mortgage agent said last time - "5 more at this price" - and this was, I can't emphasize this enough, half the cost of our other condo (which made sense to me, as it's half the bedrooms and bathrooms). So, we didn't get financing in place first, since we anticipated it being a breeze.
It was not. Our first choice of mortgage company wouldn't finance it. Neither would our second choice mortgage company, or our credit union. The problem? "There are too many rentals in that development. Choose another development with more owner occupied units." But we didn't want another development, we wanted that one. Meanwhile, the owner was getting grouchy because he'd received an all cash offer right after he accepted our offer, so now he was tied up waiting for us, instead of closing a cash sale.
The fact that we bought the condo at all is due to two things - 1. our realtor has known us for years, and was willing to work a little bit harder, take a little longer, and be a little bit unconventional, and 2., we know someone who has a large family trust, and was willing to loan us the money at just over bank interest rates.
Which, of course, got me thinking; the price and payment should have put the condo in the price range of people with limited incomes. Someone working for minimum wage, or just over, could afford it even without making 40 hours a week; they'd probably need 30 or so - and that's a single person (or couple with a single income). Then there'd be more owner occupied units, too, so everyone would be happy, right? But here's the thing: if middle aged people with great credit, low debt and no current mortgage couldn't get financing, how could somebody young, working in a fast food place, qualify? Banks don't want the loan, and young people (let's face it, any people) are unlikely to know someone wealthy enough to give them a private loan. See the problem?
And it's not like this was a slum that no one would want to live in. Aside from the fact that I'd personally be happy there (or I wouldn't have bought it), looking for renters was a stark contrast to looking for renters just two years earlier. We heard from friends, relatives, acquaintences, strangers, and friends and relatives of our friends, relatives and acquaintences. We were again asking only a bit over our payment, but this time, nobody asked if we could go lower or said, "It's cute, but I can't afford that much." We had families of three and four asking if we'd consider them, even with only one bedroom. I felt quite overwhelmed by the need, and referred everyone to our property manager. She did all the credit checks and made the final choice.
What had changed? Rents in our area skyrocketed, with the news that a couple of large companies with good wages were going to be locating here. Many rental prices doubled; some tripled. Renters who'd been in the same place for years suddenly could no longer afford their homes. We made the national news for our "housing crisis." And everything new being built was "luxury units," because, "that's where the demand is."
This, of course, is not true. It's where the money is.
In making inquiries about putting a house on an inherited piece of land, one of my family members found out that even owning the land free and clear doesn't make things easier. In asking about the cost to put a modest sized home - less than 2,000 square feet - on the vacant land, the answer from the owner of a local construction company was, "Here's the approximate cost per square foot. But I can tell you right now, nobody's going to be willing to work on a house that size. The money is in 3,000+ square foot custom and executive homes. No one's going to turn down one of those to come build a smaller house, especially one without the high end finishes." The same applies for apartments; nobody wants to build units for baristas, maids and fast food workers, because the money is in "luxury units." This is true no matter how many hotel rooms, fast food restaurants, discount stores and gas stations (and their employees) there are in my city (that depends on tourism).
Of course, it isn't just my city. My brother lives in another state. He is recently retired; he's living on Social Security and a small amount of savings. He's rented the same home for years. (He previously owned a house, but lost it in a contentious divorce with an ex who exploited a legal loophole to take virtually everything.) For years, his rent remained the same. Then, the landlord died, and the heir "doesn't want to be a landlord" (which is absolutely his right), so he's selling the house. This means that my brother was dumped back into shopping for a home literally decades after he last had to, he's been paying 1990s era rent, and he has no wiggle room in his budget. Oh, and throw in a looming deadline.
Waiting lists for low income senior apartments are 2 years long. Most senior housing in his state is in mobile home parks, meaning that he'd have to buy a mobile home and then rent the space, putting himself at risk when the lot rent goes up (and you know that it will go up). Plus, lot rent was often more than he had available, more than the rent he'd been paying. (Plus, after he dies, he couldn't pass the house down to anyone, unless they were over 55.) There are programs designed to help low income seniors buy homes, but they will not cover condos, mobile homes, factory built homes, or older houses. There's renter's assistance, but it will not cover living anywhere owned by a member of your family. You know - you can't get help for anything that would actually be affordable for a senior living on Social Security.
He got one call back from a woman with an assistance program who said, "Oh, sure, we have a great house right in your area that I can get you into." The mortgage would have left him with $400 a month to cover everything else - food, utilities, gas, clothing, medical care. That's not doable. Just his glasses and dental care could potentially eat all of that up, if he needed them both in the same month. He lives where it not only snows, it snows a lot, so he needs heat. You can't even eat ramen noodles and take the bus on $400 a month.
He has siblings, he has other family members; he immediately had offers to live in 3 different homes, rent free. But, all of those would mean moving to another state, shopping for doctors (he's diabetic, he has an ulcer that tends to bleed, and he has a heart attack and bypass surgery in his past), giving up his friends and what he loves, hiking and photographing his area. I mean, it's certainly doable. But, aside from concerns like doctors and interstate moving costs, a man who's lived on his own since the last century does not want to move into somebody's spare bedroom, like he's a college kid.
He panicked, the rest of the family panicked, everyone scrambled, there was a deadline. Do you know what - who - saved him? Our grandmother and our mother, who've been dead for years.
Grandma had a vacation home - what we call a cabin and she called a cottage. When she died, our mom put the money from the sale of the cottage in a separate account, and just let it sit there. When Mom died, it went to her children. Some of it was still left - almost enough for a down payment on a home. But, my brother couldn't qualify, because he was retired, on Social Security. Family members offered to buy a home, but the one he wanted was a factory built house, and the bank wouldn't let them buy it unless they were going to live in it. The bank would approve them for other homes, but then my brother couldn't afford the payments, and nobody in the family can afford to make them for him. But, with Grandma's money, and relatives willing to co-sign, and the bank being happy because one of the applicants was going to live in the house, and family members being able to pitch in the rest of the cash needed, he now has a home.
It's a beautiful home, he owns it; this is a happy ending. But, in the middle of all of this, we were stopped at the McDonald's attached to the store where we were grocery shopping. There was a woman who appeared to be homeless, sitting at one of the tables eating food she'd gotten in the store. My husband bought her a McDonald's meal and a drink, so she'd be a customer, and get to sit there and have a meal out of the January cold. We've done stuff like this before. But, as he sat down, my husband said, "I just had to. I look at her and think, if everything didn't work out, that could be your brother."
Without so many pieces - my grandma, my mom, sellers who were willing to come down on price, a realtor who worked his butt off looking for inexpensive properties, mortgage company employees who worked their butts off to get financing that worked, and relatives willing to put up money and co-sign, and other relatives willing to offer a free room if the purchase fell through, yeah, my brother could be homeless. I feel that reality on a gut level.
Our oldest brother is in his 70s. He has more education than my husband and I combined, is multi-lingual, has a great work ethic, has an educated, hard working wife, and told me the last time I talked to him that neither he nor his wife was able to retire, that they probably never would be. Why? Their home - a modest, older home - still has a mortgage. Instead of paying it off, they've helped their children and grandchildren over the years. So now, they keep working, instead of retiring - but everyone has somewhere affordable to live.
If we either rented or sold our condos for market rate, my husband could retire now. Instead, he keeps working, and we rent below market rate, so that others can have affordable homes. Because if you work, but can't afford anywhere to live, it's not just you who suffers. Society starts to crumble.
We don't all own a Bailey Brothers Building and Loan. We all ride on the choices of our parents, our grandparents, our great grandparents. But we can all try to make it easier not just for us, but for everyone else.
