But the mortgage payment is in the process of skyrocketing. Even if home values drop, the majority of people are going to have less ability to buy a house as more of that money will go to the bank.
That rewards savers. It also means savers end up saving more money, as higher interest rates reduce demand for loans creating downward pressure on the real estate market.
The spenders of what they didn't have got rewarded for long enough.
Even when I was a forklift driver, a job available in practically every middle-sized low COL midwest city, I could save $10k a year by only spending on necessities. That's only like 15 years to buy a house somewhere like a middle-sized Midwest town with forklift jobs. Not too shabby if you can buy a house by 33.
The piggy-bank method does work. Maybe more people should be doing it rather than us having a system inflating the hell out of our economy through loans with negative real interest rate.
I just Googled it and the average forklift driver salary is $40k. After tax and retirement you’re taking home around $2500/mo. After putting $1200 in your piggy bank you’re left with $1300 to pay for rent, food, gas, car, phone. I seriously do not think that is possible, let alone pleasant.
Of course, one may choose to work harder than average to make more than the average.
> I seriously do not think that is possible
Rents can be very low in these kinds of places, especially if you're young and willing to share a house with others. I personally knew a couple who spent less than $20k a year on all household expenses; granted it was a few years ago, but they weren't even in a very low CoL area.
The downvoters are being pedantic. Sure you could save 400k in cash with thrift and gumption, but the simple fact is that almost no one does, and certainly not enough people to soak up all the excess housing stock as rates continue to rise. A person could save that, but people do not.
The spenders of what they didn't have got rewarded for long enough.