Bursting a twentysomethings’ bubble
EVER DRIVEN through Salinas? It’s a sprawling agricultural town about 60 miles south of San Jose. Aside from being the birthplace of John Steinbeck, Salinas is a town known not so much for what it is as for what it’s near. Like those real estate listings say when describing an apartment as “Beverly Hills-adjacent” when it’s actually in Crenshaw, Salinas is “Monterey- adjacent.”
But thanks to the real estate bubble, Monterey could become “Salinas-adjacent.” Earlier this month, the New York Times gave Salinas, if not a raison d’etre, at least a dubious claim to fame: It’s the least affordable place to live.
In the country.
Accompanying the article was a color-coded map of the U.S. that illustrated the least affordable housing markets; the darker a place, the less affordable it was. Most of the country was a light pastel, with parts of the East Coast in darker shades. And several big brown and red blots saturated California.
When I saw this map, the message was clear: We’re in a very dark place in more ways than one. California has the top 11 of the country’s least affordable places to live, based on the percentage of household income that goes toward mortgage payments. Honolulu has nothing on Watsonville.
What will it take to liberate California from its property-at-allcosts fetish? I’ll leave it to the experts to analyze the micro- and macroeconomic factors. For me, the issue is simple common sense.
At 24, I’m well accustomed to tuning out older family and friends as they drone on about their latest financial adventures and how much money they’re making on their real estate investments. I’ve listened to people brag about uprooting their families from their longtime homes to make money. But I know the bubble’s about to burst when my fellow twentysomethings -- recent college grads who just a generation ago took on roommates to make rent -- start obsessing about interest rates and property values.
Routine conversation over drinks now includes sharing strategies for eventually owning property. The numbers casually thrown around aren’t sports scores or student-loan payments; they come in multiples of thousands. (Sample: “You can buy it now for 600 and turn it around in a few years for nine.”) Yet none of us can even afford so much as a condo.
The problem is, people who can’t afford overpriced homes are gobbling them up thanks to interest-only and sub-prime loans. Los Angeles County residents spend, on average, 40% to 50% of their monthly household incomes on mortgages. And with the newly acquired home comes collateral for more loans; in other words, an inflated sense of self-worth. On paper, of course.
I admit that, especially for someone my age, I’m a bit of a traditionalist when it comes to money -- I refuse, for example, to get a credit card. But thinking of a house as a home instead of a get-rich-quick opportunity shouldn’t be such a quaint idea. Nor should buying what you can actually afford.
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Paul Thornton
