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Sunday, January 6, 2008

Personal Finance QuickTake: What $1 Million Buys in Homes

There is an interesting story on abcnews.com this morning regarding what sort of home you get for $1 Million today around the world and it was shocking, at least to me.

I knew how expensive New York and London are, but it seems every major city, even now in Central or Eastern Europe, it is getting tougher and tougher to live in the close to the heart of these major cities.

I looking at any issue it is important to look at the ripple-effect of what these prices can mean. A couple thoughts:

  • Salaries - In order to even afford basic housing you are going to have to make a lot more. I don't see salaries (especially mine!) growing fast enough to keep up. Which means...
  • Longer Time at Home - Kids will need to stay longer with their parents to get a real start. This can really hurt retirement planning for the parents though. In many parts of the world multi-generational homes are the norm, we may be headed there as well.
  • Telecommuting Gets More Important - IF you can't afford to live near the office, you can either commute a really long way and time (the norm for a lot of Californians) or telecommute. As a country we are behind Korea and other countries with 3G or even 4G bandwidth. We'll need it if more start working from home.
  • Financial Planning - It is more important than ever to instill the skills and desire to be careful with money as it seems logical that with higher expenses and salaries not keeping up that everyone is going to need every dollar!

In 1977 my parents paid $45,000 for a 3 bedroom, 2 bath home in Omaha. It is probable that my kids could pay $1 Million for the same thing here is Oregon when it comes time! I wonder if the time is coming where more parents try to save for the kids home down payment instead of or in addition to college...


Fiscal Musings said...

I hope that time doesn't come, cause it's just too much to have to pay for for the kids.

RacerX said...

As is college now for most. a great school can run $60k a year!

I does show that we need to be responsible younger and younger!

Thanks for reading!

CatherineL said...

House prices have got ridiculous here too.

In some countries, such as Norway people take out really long mortgages and the children inherit the mortgage when the parents die.

I hope the rest of the world doesn't go that way.

RacerX said...

Wow, I had no idea. I really hope it isn't ever legal here to dump your debts on the next generation.

Nest they will want to bring back debtors prisons!

Thanks for commenting!

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