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by dragons
3672 days ago
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people who are deeply in need are very frugal at spending their money This article gives some of the logic behind redistributing income this way: https://www.washingtonpost.com/news/wonk/wp/2015/04/14/where... The rich save more than the poor, and the more they have, they more they'll save. Money that's being saved isn't being spent, which means less business for everyone from the dry cleaner on the corner to the owner of a five-star hotel. In turn, that means less work for everybody and a lethargic economy. To be sure, banks can invest the money that the wealthy save, which can stimulate the economy as well. Yet many observers... are worried that as a global society, we've accumulated too much in the way of savings already. |
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Also aren't many families living in paid out homes and don't spend anything on housing at all? 19.9% of all units in the USA are owner-occupied without a mortgage, and 12.4% are vacant. Meaning 22.71% of families are neither renting nor paying a mortgage (homeless aside). Which would imply that those who are spending anything on their housing, spend about 46%, if the average for all household is about 35% as the chart on your link suggests. Nearly half. Which is simply hard to believe. Was that the case, housing would have been the cornerstone of U.S. economy.
Total outstanding mortgage debt is 13.7 trillion, which is less than 1x total household income in the USA. So spending 35% of income on housing, all debt could be paid in 3 years even interest included. Because about 60% of people own their homes vs rent, even not counting that they pay typically more then renters, it could mean paying out all mortgages in 5 years, which certainly isn't the case.
Other way around, total value of all U.S. homes is 27.5 trillion, about 12.4% are unoccupied (if you are paying a mortgage on a second home you don't occupy, this isn't a housing expense, this is an investment). which leaves 24.1 trillion for occupied homes. If housing is 35% of all income of Americans, it means 5 years worth of all 'housing' expenses will pay for all homes in America - including those already paid out. And less than 4 years if you exclude those paid out.
Something is wrong here. I think these estimates are about 3x wrong.
http://www.fool.com/investing/general/2015/03/23/heres-the-a...
this chart suggests average share of income Americans pay in mortgage are ca. 14% of their income. renters probably pay less, but even if not, 22.7% pay nothing because they own their homes outright. Which leaves 10-11% of income spent on housing, not 35%. Even less if you remember that interest on mortgage is tax-deductible, so definitely under 10%.