> just stepping into adulthood and financial responsibility.

I am older than that (40 and my wife is 35) and while we have been independent professionals for a while, we now have a 1 year old so this summer for the first time in our lives we bought a house and a car.

It was definitely harder to find a house (mainly less availability driving competitive bidding) and it took a little longer to find a car and we ended up having to pay MSRP.

However the thing I can say is - the incremental cost/hassle of having to do these things during the pandemic supply crunch is almost irrelevant compared to having to do this stuff at all. We paid say 3% more for the car and ok maybe 10/20% for the house than we would have otherwise, obviously that's painful but if I was "just stepping into adulthood and financial responsibility" I'd look to avoid this stuff altogether.

EG: do you need to own a house? If you're a single person, "throwing away" money on a relatively inexpensive rental might be much wiser than "investing" in a house in a seller's market. Likewise, if you're young and single then you should relatively easily (depending on where you live of course) arrange your life to not need a car. It was very easy for us in NYC, of course may be different for you.

The point is that in my mind, "adulthood and financial responsibility" don't have to translate "got my own house and car" but simply "making wise financial decisions given my situation" so if there's room to be flexible, be flexible.

When I was in my early 20s, someone gave me this exact advice. I didn't have much money and they said that real estate was too expensive and I should just invest/rent. Fast forward to today, I paid 8x more for my small sad house than I would have then and my investments on my small amount of money didn't make up the difference.

The market is so screwed up that even a crash that halved the price would still be 4 times price back then.

Finance guy here, two things. You are looking at it in retrospect. "I should have bought a house" is no different than "I should have bought X stock" when you're looking at the price history backwards. At the time, it could have gone up or down. EG we just bought a house, I have many reasons to expect that it could drop in value over the next bunch of years.

Second, you may not be doing proper calculations. I would not have - before I bought a house. Do you count property taxes, upkeep, larger water and electricity bills, possibly longer commute times/needing a car, relative lack of mobility, air conditioner/heating/roofing/siding/repair, lawn maintenance, etc.

Yes sure, if I bought this house 10 years ago, it would have been great. But I wouldn't know 10 years ago that I'd want this house, and for example dealing with all the above shit as a single man would have been stupid. There were also points in my life where I was very open to relocation for the right job, something home ownership would have put friction on.

it's very common to think of only a pro or a con of a decision (if I bought earlier, it would have only cost X) but you're not factoring the risk that existed at the time, nor the commitment you're creating on yourself, not the carrying costs I described above.

May not be relevant to you but I feel fine about "losing out" on 20 years of house appreciation (if I bought at 20 not 40) because I avoided all that stuff for 20 years, too.

Whatever helps you sleep at night :D

My parents bought a detatched home at 20 with minimum wage jobs. I bought a townhouse at 40 with a high paying career. My kid is going to be 60 by the time he can afford a home.

It's fucked. Buy now.

> It's fucked. Buy now.

Ok you certainly should go for it, but I'll give you one analysis that I have. We bought in a NYC suburb (for a bunch of reasons) and here's what I think constitutes price risk for me.

At the end of the day, a house is worth what someone can and is willing to pay for it. Right now, there's reasons the demand is high for near-NYC housing because (a) people aren't sure they need to be near NYC long-run and don't want to risk it (b) it's an easiest move to make to leave the city and not go far (c) supply is low because with covid, fewer people are willing to have an open house (d) now everyone is in a rush to upsize so space is at a premium.

All of these are demand factors that can change. EG: (a) it may become clear in 1-2 years that permanent remote is an option for many people, relieving demand pressure on NYC and the area. (b) once people are comfortable with leaving the city they may be comfortable moving further afield. (c) the pent-up supply of folks who didn't sell in 2020/2021 may come to market, especially if a and b occur, causing people to want to sell before it's "too late" (d) everyone who needed up upsize may have done it, relieving that pressure.

Also, for New York state specifically, with the number of wealthy people leaving the states, it feels inevitable that state and property taxes will rise, making all of this even less attractive.

And finally, interest rates are ridiculously low right now, rising rates will be a damper on prices when that happens.

Obviously there plenty of reasons it could also go up, but if your model is so simple "it's fucked so it's always goes up" you may get fucked too.

> All of these are demand factors that can change.

Don't forget: Cities actually allowing housing stock to increase. Very unlikely but hopefully not impossible...

Agreed. Same with stocks. It's all gambling.

Reminds me of what I've heard Porsche aficionados say: "You can't pay too much for a classic Porsche. You can only buy it too soon".

They're not making any more of them, and demand and prices only go up (until maybe one day they don't, I don't know).

>They're not making any more of them, and demand and prices only go up (until maybe one day they don't, I don't know).

You can say that about anything - limited run beanie babies, bitcoin, whatever. It's all true until it's not.

In the case of classic Porsches, next time you hear someone say that, ask them (a) what's gonna happen once boomers die out. Do genX/Z/millenials give a shit about a classic Porsche the way a boomer would? (b) what happens if/when we replace ICEs with electric and the gas station infrastructure goes away (not saying it will happen but it's one likely future path.) In the world where you can't get gasoline, is a classic car still valuable?

I don't know the answers to these questions but unless the person who is giving you advice has modeled this out, their advice is of no value.

NYC (esp. Manhattan and parts of Brooklyn) is pretty exceptional in the US with respect to there being no expectation of car ownership. You can get by in other cities out of school (especially given app-enabled rides, Zipcar, etc.) but the general expectation is car ownership.

As for housing, it's perfectly normal to rent for a while until you know you want to settle down in a location for an extended period of time.

Rents are going through the roof, too.

And when you try getting that hole in the roof fixed, you might run into even more problems:

"Roofing Industry Faces Unprecedented Supply Disruption" (April 27, 2021)

https://www.roofingcontractor.com/articles/95590-roofing-ind...

Wonder how much of that is driven by people actually being home to answer the door when roofers knocked during Covid. Completely anecdotal but I got a new roof during the covid lock down and so did 3 of my neighbors and its mainly due to being home to answer the door and the roofer being able to get insurance to cover the cost.

I get it if insurance covers it (without jacking your rates for perpetuity to pay for it), but alas, how do you work from home while being re-roofed?

The fact that you can weather the extra costs doesn't mean it's "no big deal," which is how your posts comes across to me.

The point of my post was to give the OP some pragmatic advice, on the bigger-deal lever he has in his life. Obviously there's a marginal drop-off of who can afford X if X goes up even a little.

CPI is showing a 45% increase in used car prices over the last year.

The difference being that lots of people want to keep those inflated housing prices high (nimbyism), whereas nearly everyone wants car prices to go back to normal.

Nimbyism exists, as do more concrete constraints in urban locations but...

The way house prices work, often, is more or less banks determining prices via mortgage eligibility. Banks agree that a house is worth X. They lend X. That becomes the price. Buyers tend to be available.

People are so quick to see that credit expansion fuels price inflation in other areas, even the economy at large, but somehow diminish or ignore this with housing.

Obviously, supply constraints avoidable or otherwise, affect supply. In any given year though, the supply of housing does not change a ton. Where they do, you don't tend to have wild inflation... though you do often see bigger houses.

It's impossible to decouple housing from monetary policy. Housing is one of the few ways that buying power gets from A to B, where B is not a financial institution or direct spending.

>> whereas nearly everyone wants car prices to go back to normal.

There is a significant voice that would like to price cars out of private ownership. Traffic, pollution, safety, urban sprawl ... pick your evil and someone wants to eliminate private cars for that reason.

I regularly read about how the next wave of cars will all be somehow "shared", that we will whistle and they will appear at our doorsteps ready to carry us off to our 9-to-5 jobs in shiny glass office towers. I just don't see that happening anytime soon. Total conversion to electric cars in 10 years, maybe. Conversion to total ride-sharing and/or mass transit, doubtful in 30.

That's like 0.1% of people

Car prices won't go back to normal again though. They will come up clever financing schemes to make people pay but the prices will never be reduced.

There's huge inflation in many things related to making cars (chips, steel, shipping costs as many cars are still being shipped across the ocean, labor costs, etc.). We are likely to be in the very beginning of significant inflation cycle, with probably double digit inflation which will eventually drop to 4-4.5%. I wouldn't expect to prices to drop any time soon, nor have 2% inflation. My bet is that fewer and fewer new cars will be sold in the next few years (3-5) with prices rising 4-10% each year.

It's not just cars, the prices are rising across the board (not evenly), so we have pretty high inflation if you add in the items official estimates excluded.

This is mostly just a reflection of the fact that the value of the dollar has declined precipitously over the last 18 months. Dollar prices are sticky, so it can take a bit of a shock for inflation to “kick in”, but we’ve had plenty of shocks to go around.

I don't think it's fair to attribute "most" of this to inflation. Car prices have been rising much faster than many other components of CPI, so even in real rather than nominal dollars cars are getting more expensive.

The stuff people actually care about has been rising faster than CPI. Cars, housing, meat, metals, lumber, etc. are all going through the roof. Inflation is a vector, and any reduction to a scalar involves taking the dot product of that vector with a weight vector. Under my personal weight vector, and I suspect most people’s weight vector, inflation is a lot higher than CPI.

Food prices are insane right now. I used to leave the grocery store with a spend of ~$90 now I average ~$120. Its anecdotal but it adds up.

I'll add a bit of a pedantic point: the dollar hasn't really lost any value _against other currencies_ (DXY) over the past year. In fact, it is a little higher.

It has lost value against lots of commodities and "real" goods.

When do we get 30 year loans to buy a car?

I don't think it's necessarily NIMBY or at least my understanding of it that makes people want to keep housing prices elevated. If I buy a house at an inflated price, I want the house value to continue to rise as a large degree of my financial security is tied up in that house. My ability to refinance, take cash out and eventually even sell that house are tied to it continuing to escalate in value. In the US this is particularly true as so much of out net worth is essentially our home value. As inflation increases and peoples ability to save is even further reduced this will become even more of an issue.

NIMBY-ism doesn't make people want housing prices to rise.

The wish to inflate housing prices causes NIMBY-ism!

I would say it is more self perpetuating. With housing prices growing as they are, people are saving less for retirement and putting that money into their house with a plan to cash out, move to the country, and retirement.

I live in a country with a working public transport system.

I'd prefer it if ICE cars were as expensive as possible in order for the planet not to burst into flames.

Not really a great time for anyone really, at least from the vantage point you're referring to.

If you're an established adult who owns a house and two cars, your assets have skyrocketted. You're having a great time.

how? can you capitalize on that upside somehow? sell them, live in a tent until prices are down?

Obviously most people can’t do this but a family member was recently approached by the dealer who sold him his most recent work truck. He’s driven like 30k miles on it in the past 2 years and it was a $75k Chevy diesel. Dealer offered him $90k to buy it back from him (to sell to someone else) and my family member said “Sure”. So he made $15k on an asset that should have lost 1/2 its value by now. Obviously rare and hard to take advantage of but some people are absolutely capitalizing on the weirdness.

I assume that in most situations like this the original person with the truck would have to replace that truck. In this case he now has to pay 90k for the truck he originally paid 75k for.

Perhaps, but it's not uncommon for these places buying new-off-the-lot high end trucks (my family members' included) to have a dozen+ vehicles at their disposal. He's planning on using his 5-year old similar HD truck until the market thaws a bit, but it's also overkill for most everything he does. One of the many work vans his business owns can likely do 95% of the work. They're mostly just buying the big ones for clout and due to generous tax writeoffs.

Or hobble along with a "free" $15k clunker until prices go back down.

But what does he drive now? If the truck was just a toy that didn't need replaced, then good for him. But that's not the case for the majority of people.

There are lot of construction workers driving around 20 year old trucks. Those who own a company and don't use the truck as a limo to show off to customers value the extra money in their pocket. The more the truck is abused, the older it will be (concrete and rocks are abusive to the body of trucks so those industries get the oldest ones)

You can pull out home equity in a cash out refinance. Borrow at 2.5%, then roll that into index funds averaging 8%, and turbo-charge your retirement goals.

"put it all on black!"

yeah. That might work out, but my investments are diversified more. I have real estate in the form of my house. I have stocks and bonds in my 401k. I have government in my social security. They are completely separate, so if any one fails I'm still okay. (well if the government fails I'm probably in trouble no matter what, but social security is limited at best)

Is this US real estate, US stocks, US bonds, and US social security? :-)

I've tried to diversify to more international mutual funds, but they also tend to have higher fees.

My 401k does have some international funds. While it is good to have a bit, they are as you say higher fees and so not always a good investment.

I'm not sure they are really diversification though. The major US companies have a lot of international exposure already so you don't gain much diversification. And of course they don't really protect you from a collapse of the US government (odds are either they are hit as well, or you can't prove you own them anymore)

You fret about not being able to trade up because everything is expensive, but at least you live without dread of housing affordability. Find satisfaction with your position. Try to find a way to leverage it for the sake of your children.

Heard of someone who sold while the real estate market here is superheated and plans to rent until it drops. Personally, I don't expect it to drop for a while yet (it hasn't really dropped for decades here).

HELOC's are very common. You can cash out on all that new home equity and install solar panels, build an extension, put in a pool....

That's assuming you have the cash-flow to float the new loan. If you bought the home 5+ years ago, that might be true, but for anybody who bought recently, that's probably not an option.

I capitalized on it by buying a new car and selling my old one. I sold a 3 year old camaro for $1000 less than I paid for it. I didn't get very much off MSRP of the new car, but I got way more value from a three year old camaro than I ever expected to get.

So... you got more for your used car and paid more for your new one.

Which is exactly the point being made by the parent comment that you can't capitalize on the upside. You'd have to sell and step out for a while.

What do you mean I can't capitalize on the upside?

Sure, my purchase costs went up some, but no where close to the additional value I got over normal for my sale. Put it this way, I paid a few hundred dollars, maybe a thousand dollars more for the car than I would normally, but I sold my old car for thousands more than I normally would have been able too.

That's capitalizing on the upside for sure.

Used cars used to be worth x% of a new car.

Today, they are worth x+y% of a new car.

If you trade up now, you will pay less for the new car than if you traded up two years ago.

Similar situation for houses. Even if we assume all houses have inflated by the same rate, you can still downsize and cash out. Your existing $600K house is inflated 25% and you can sell for $750k. You downsize to a $400k house which is inflated to $500k. You oversold for $150k, but only overpaid by $100k and you pocket the difference.

I bought another house and am renting the old one out. The new house has an interest rate at 2.3% while inflation is over 5% with conservative estimates.

Yeah they are not liquid assets… my concern is if one of my cars dies…

Trade it in. You'll still pay MSRP on the new car, but you will get way more for your trade in than it is worth.

The chasm between the lower class and even the middle class is widening by literally the week.

It's been "not a good time" since 1975. Prior to that, at least in first world countries, you could start with less intelligence and have a much better chance at class improvement and even financially secure retirement than now.

On the other hand, if you're in politics, finance, or executive business management, it's been a really, really great last 40+ years.

Incomes are way up for the top ~30% of earners, not just the ultra-wealthy.

> stepping into adulthood and financial responsibility

The timing of my life events is one of the things I am most grateful of.

I graduated in 2014 and within a couple years I bought a house. Strong job market for an employee and low interest rate.

I know people that were getting PhDs, because they started undergrad in the aftermath of the housing bubble and couldn't find jobs when finished. I also know people that decided to buy a house before the bubble and are still stuck underwater, preventing them to pursue opportunities not in their area. I also know people that went into medicine as tuition became ridiculous and have no way of servicing their student loans.

I guess what I'm getting at is count your blessings. Others may not be as fortunate as you.

but stop and think for a second about all those short term profits Wall Street made by outsourcing all of our crucial manufacturing! Those congressional bribes don't pay themselves either! /s

the worst part is our government is rewarding them for bad behavior, the article mentions the billion dollar chip subsidy program. So these companies made money outsourcing and will now make more by bringing it back. Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty

What short term profits? The car industry has among the lowest margins in the entire economy.

Moreover the chips were never outsourced. Toyota never made its own chips, nor is it feasible to. You seem to have some sort of idealized view where a company internally manufactures everything it needs starting from raw materials. That’s not how it works, and that’s never how it worked.

"silicon valley" is the name because of all the chips that used to be made here, US used to lead the world in chip manufacturing

Toyota is just a symptom, every other car manufacturer and other industries are facing shortages as well. The US economy is now strangled because our supply chain got outsourced for "efficiency" that didn't account for potential disruptions

> Instead they should put a massive tariff on any chip not made in the US. Companies that invested here would be rewarded for loyalty

Voters would have rewarded politicians who supported these tariffs by voting them out of office for making all their toys more expensive. Everyone likes cheaper stuff and more stuff in the short term.

voters have complained about stuff being made in China for years and if it was framed from a nation security perspective you'd get wide bipartisan support. The current chip subsidy program literally just got wide bipartisan support, it's extremely popular

Now that the effects have been felt, yes. But not a few decades ago when the majority were enjoying cheaper goods. Even now, I do not see broad support for tariffs in order to bring production back to the country.

It's a bit too easy to blame this only on Wall Street. First of all companies have outsourced their production facilities to lower production costs. The parties benefiting from this were:

- shareholders (more profit)

- consumers (lower prices)

Second, you could say shareholders == Wall Street, but you could just as well say that shareholders are pension holders, banks, insurances and small private investors. All of these simply want to have return on their investment that is as high as possible. If that's good or bad is an interesting question, but the bottom line is that very few people are without blame here.

you'll notice I also blamed congress for effectively being bribed to allow this to happen. The government's job should be to prevent stupidity like this from happening, Department of Defense at the very least should have been sounding the horn of how our supply chain issues are national security issues

plenty of people have been warning for decades how the reliance on manufacturing from other countries could have major consequences. The fact that a small island like Taiwan is probably the most important geo-political issue in the world could have been prevented with a little bit of long term planning

Spend 5K on a really nice commuter electric bicycle. You'll be doing a solid for the Environment and you'll have an EV that makes you fitter.

I live 50km from work now (thankfully looks like mostly remote forever, the COVID silver lining), but I used to bike to work before I had kids.

I don't know that I'd do it again. The number of avoided-death-by-split-second close calls that I racked up in about five years is just too high... Now that I'm a bit older and have children, seems irresponsible.

This is in a city with relatively developed bike infrastructure, including separated lanes in some places. (Some) drivers just don't give a damn, and while I wish it was different, I don't see it changing any time soon either.

This is so sad. We did not build cities for humans but for machines that, we thought, would serve humans well. We got it so wrong.

My problem with 5K on an electric bike is the 50 mile commute one way to work in inclement weather.

I think the 50 mile one-way commute may be more of the problem here. I can't imagine traveling that far for work daily.

Fair enough - doesn’t sound like you were ever the target audience for a commuter bike to begin with.

The three most cycle heavy cities in Europe all get more rainfall than London.

(Amsterdam, Copenhagen, Malmö)

Something else is the problem. Maybe infrastructure or terrain.

If you have a kid that's not a workable solution, moreover, safety is a huge issue on 2 wheelers.

I’ve taken my son on an e-bike daily since he was 11 months old - he loves it compared to being in the car. There are a range of products on the market handling up to 4 kids and with creature comforts like rain shields.

I use one of these: https://yubabikes.com/cargobikestore/electric-boda-boda/

A relative uses one of these in the Boston area, year round:

https://www.ternbicycles.com/us/bikes/472/gsd

A friend loves this for their family:

https://www.r-m.de/en-us/bikes/packster-70/

Not cheap, but an order of magnitude less than a car ($10k/year by AAA’s numbers) over the lifetime of the bike.

For anyone with a small commute I’d recommend this too. Our Yuba (spicy curry) has around 3000km on it over 2.5 years, is going strong, and I’ll still be commuting ~30km per week over the next year with it taking my 4 year old to daycare then going to work. I’ll likely continue commuting with him on it to kindergarten and perhaps early grade school.

It wasn’t cheap initially ($7000 CAD), but the cost per km drops enormously every year while the bike still rides as well as ever. The kids have all loved it, too. My youngest is disappointed when we drive places - he wants to walk or ride all year.

We do have a temperate climate which helps. Our cold days in winter are typically around 5 degrees outside of cold snaps, but even then we rarely dip below 0.

It’s a major quality of life improvement for us. They’re amazing grocery getters, you don’t get all sweaty on them, kids tend to love it, and they’re quite a bit easier to buy, maintain, and park than a car.

We went with the spicy curry because of its insane cargo capacity (we’ve used it for its full capacity many times, especially while bike camping), but you can spend far less if you don’t need to carry that weight.

Seconding everything you wrote, especially “It’s a major quality of life improvement for us”. When we visit friends & family who live in typical car-centric neighborhoods we’re reminded of just how much time they spend sitting in cars, which is especially rough on kids. The bigger house & yard just doesn’t seem worth an extra couple hours a day sitting strapped into a car seat.

We've come to a similar conclusion. We're fairly priced out of our market when it comes to the yard and picket fence situation - with 3 kids, a 4 bdr home would cost us around 1.5M CAD to get something we'd actually enjoy livinh in and reasonably close to work. It would be old - maybe from the 60s or 70s. A similar sizes home we could afford would induce a 1-2 hour daily commute for my wife. Meanwhile, a condo near work that will fit us is around $500k less... Sort of affordable.

When you weigh the pros and cons though, the condo can be alright. It's not my ideal at all but the things like the yuba can make that lifestyle so much more livable. More time with the family, more time to get out of the home if we want to, quick grocery shops, less money on commuting, etc - I think it could be alright. We fortunately live in a small city where you're only an hour drive from nature, so I suppose we could turn that into our "yard".

The last thing I want is my kids sitting in a car for 30-60 minutes every morning on their way to school. Or on a public transit bus, transferring and rushing around so they can sit in school for 6 hours only to bus back the same way. I know plenty of kids do it and they're fine, it's all fine, but it's not what I want for them. I wouldn't want it for myself. There's something to be said about shedding ideals (especially with living situations) but letting my kids be kids is one I don't want to compromise on.

My problem with dropping 5K on a bike is that they get stolen

In the US city that I live in, cars get stolen an awful lot too. And not just puffers (cars left with the keys in the ignition to warm up on a cold day) -- I've heard of plenty of locked recent-year cars stolen from private locked garages with no keys at all. I believe car theft is up at least 500% from pre-covid.

And that's to say nothing of the opportunistic catalytic converter thefts if you park your car on the street overnight.

Most of these thefts utilize "relay attacks" that simulate the key being in close proximity to the car, using directional antennas to interrogate the key that's sitting in the house and then relay it back to the car. The solution is to disable the proximity feature, but that's inconvenient.

Where I live I'd guess the rate is 100 bikes stolen for every car.

With a bike you don't expect it to be there after locking it in the street for more than 15 minutes. I don't know anybody personally whose car was stolen.

In France, all bikes must now be marked to prevent theft https://www.bike-eu.com/laws-regulations/nieuws/2021/01/fran...

Is there similar plans in the US or at least some states?

High end bike parts are also in short supply. Popular electric bikes also have months long waiting lists.

FWIW, my local bike shop has a pile of electric-assist commuter/townie bikes ready for riders. Supply chain for bikes is definitely broken right now, but they're out there - you just have to look and wait and look some more.

This is great in theory but not so great when you are food shopping for a family or you need take the kids to get new shoes.