Is Technology Driven Consumerism Effecting Affordability of Housing?
August 25, 2007
Post Tags: affordability , affordable_housing , american_dream , consumerism , first_time_home_buyer , monthly_expenses , technology-driven-consumerism , Tucson-affordable-housing
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I hear people saying we need more affordable housing. I agree completely. I’ve been thinking a lot about this lately. What is affordable?
When we talk about affordable housing it is often in the context of people that have never owned a home before. Maybe they are young and just starting out. Maybe they have rented all their lives and now want to own a home of their own. Sometimes it does involve people that have lost a home before and are starting over again, but for the most part it is the first time home buyer.
Affordable Housing
An affordable home is usually determined by a calculation like this:
- Annual Income +
- Savings for Down payment -
- Monthly Expenses =
- How much home you can afford
How much home you can afford is what determines what is affordable.
Is Technology Driven Consumerism Effecting Affordability of Housing?
One of the largest variables in this equation is Monthly Expenses. Monthly expenses can in large part determine the amount of saving set aside for the purchase of a home. It used to be owning your own home was part of the “American Dream” and almost everyone wanted their own home and sacrificed to save for a home. People gave up a lot of “things” in their lives to put money away for a home.
Today this still happens, but not to the same extent it used to. Today it seems we want a lot of “New Stuff” and we want it all at the same time. Today we are almost overwhelmed with places to put the money that used to be saved for a down payment on a home.
Here is an example of monthly expenses and technology effecting affordability of housing.
A Young Married Couple with a child both work.
Monthly Expenses:
- $ 520.00 Car Payment her car
- $ 450.00 Car Payment his car
- $ 300.00 Insurance on both cars
- $ 200.00 Cell Phone bill 2 cell phones (conservative)
- $ 180.00 Cable Bill
- $1000.00 Credit Card payment (probably more)
- $ 600.00 Daycare Expense
- $3250.00 Monthly Expenses (This does not include rent)
This adds up to an annual after taxes amount of $39,000.00 dollars. This does not include rent!
Where is the technology in all this?
Transportation
Cars today easily cost $20,000 to $30,000. Of course you can spend more and there are cars that cost less. It used to be you could take your car which was mostly mechanical to a “shade tree” mechanic for service work. Today most cars are almost completely computer driven, operated, and diagnosed. Because cars cost so much more insurance and registration costs more.
If used cars are purchased insurance and registration are less per month as are car payments. It is possible to save enough to buy a used car without a payment. This in turn provides funds which could be set aside for a down payment on a home.
Electronic Gadgets
Cell phones. Almost everyone has a cell phone at least one and most families have a phone for every member of the family. I know of some families that have cell phone bills of $700 or more each month. Cell phones used to be for business or “luxury” item, not today almost everyone considers them a necessity.
Does everyone in the family need a cell phone? Maybe, do they need a 1000 minutes a month ?
Televisions and Cable TV
Digital Televisions HDTV running upwards of $5000.00 to purchase, DVD players, MP3 Players, Monthly Cable Television bills, Computers, Laptops for portability, on and on. These all used to fall into a category of “luxury” items. You didn’t have to have them. Today almost everyone considers most of these “necessary” items.
Combining New Technologies integrated into everyday life and our consumer driven lifestyle is leading me to wonder if anyone can “afford” to buy a home. The answer is no. Unless, there is a willingness to set aside having a new car, expensive cloths, new furniture, new appliances, talking on a cell phone all the time and filling life with gadgets and gizmo’s which eat away at any amount of money which could be set aside for the purchase of a home. Without the discipline of saving there is no affordable housing, at almost any price.
I once heard a story about a group of young ladies in a college dorm describing their “Prince Charming” to each other. The dorm mom was listening to each of the girls and when the discussion was winding down she interjected this one thought. “Let me ask you this question, When you find your Prince Charming, will you be the kind of lady he will want to spend the rest of his life with?”
I know this story is a stretch, but it’s the best I’ve got at the moment. Here is the question. When a home comes on the market you want will you have disciplined your spending and saving to where you can purchase it?
August 26th, 2007 at 7:09 am
Dave - Good points. Things are a lot more expensive today than when we started. Our first new car was $7,400 special order Nova from Detroit. And to think I traded in my ‘67 Chevelle for it. Our first home was $20,000. Cell phones were non existent. Cable TV wasn’t available yet in our area. Our TV was less than 20″ and under $300.
With all the bling of today to include $500 video games sets that all the young people have to have, its a wonder many of them can afford rent, let alone a home.
September 1st, 2007 at 12:28 am
I never know what to think about affordable housing. On one hand I think in some areas its a problem. But, I remember after I got my first house someone told me that there was nothing under a certain price range. And someone should do something about it. Since I just bought a house for less than there price range I started to look up places. When I showed them a list of houses under there price range I started to see the issue. “That house is too old”. “That house is too small”. “That house isn’t close to where I shop”. “I really require a double vanity in the bathroom”.