Originally Posted By davewasbaloo Interest rates were put up by another .25% - that's a full 1% rise since august in 2006. In real terms that means that an average persone with a $200,000 mortgage is now putting out $126 more a month than 9 months ago, yet average pay increases are about 2%. How does that compare to the US currently?
Originally Posted By fkurucz Fixed rate mortgages are still just below 6%. Adjustable rate mortgages (ARM) are actually running a bit higher than mixed (if they are prime). Sub prime mortgages can be much higher (10% or more), What is causing a lot of the foreclosure pain here are subprime ARMs that are resetting from their initial low interest "teaser" rates (in some cases as low as 1%). The way the teasers work is that during the first year the borrowers monthly payment is setup with the teaser rate. What actually happens is that during the first year the loan incurs negative amortization, but the borrower sees a low monthly payment. Then after a year the load "resets" and the borrower pays the real interest rate. If they are subprime borrowers (with poor credit rating) the reset rate will be significantly above market rates. It is at this point that the borrower can no longer afford the monthly payment. During the housing bubble the borrower had two options: 1) Sell the house for a tidy profit. 2) Refinance into another negative amortization loan, and maybe take some cash out to buy something (maybe a car). The problem is that house are no longer appreciating, which precludes options 1 & 2. In fact, many subprime borrowers are finding that their houses are worth substantially less than the balances on their mortgages (did I mention that these are no money down loans?). The US real estate market is in very bad shape at this moment. Millions of loans are scheduled to reset in the next 12 months, and it doesn't look good.
Originally Posted By davewasbaloo Ouch. Thanks for this fkurucz. So it's hard everywhere. I know we had something similar, a fixed low rate for our first two years and then, bam our payments went up another $600 a month, add this latest interest hike and ouch, we felt it again. Luckily market prices are still rizing so we have about $65,000 equity on our 3 year old house, but we cannot really climb up the property latter due to the crazy house prices and interest rates. It kind of makes it eaier to bare if I understand the same issue is happening back home.
Originally Posted By fkurucz In some markets the median house price is as much as 10 times the median household income. Even in "affordable" markets we are seeing ratios in the 5-6x range, as opposed to the historical 3x range. Unlike the UK market, which appears to continue in its bubble, the US bubble has popped. Some believe that the US bubble popped due to excess inventory. The number of new homes built has been twice that of new household formation. In the hottest markets houses were passed from flipper to flipper, in many cases they were never occupied.
Originally Posted By vbdad55 Dave -- as far as average increases - 2% - 3% is what is generally quoted here also, but I can tell you that my corp ( with 400,000 ) workers 125Kin US -- the average increase my be 3% - but the coverage for those is less than 50% of the population, and has been for a few years. I think people are playing with statistics - and for those actually getting raises it might be 3% -- a more accurate figure would be to take the raise amounts as a % of the total compensation for all workers - that would be more telling, and a lower number
Originally Posted By vbdad55 ^^^^^^^^^^ I don't think this is any different than data that has been in Newsweek articles and the like -- I believe it to be fairly common -
Originally Posted By vbdad55 <a href="http://www.salary.com/aboutus/layoutscripts/abtl_default.asp?tab=abt&cat=cat012&ser=ser041&part=Par497&isdefault=0" target="_blank">http://www.salary.com/aboutus/ layoutscripts/abtl_default.asp?tab=abt&cat=cat012&ser=ser041&part=Par497&isdefault=0</a> remembering merit increases are for those actually receiving them -- also keeping in mind - employee contributions to health care costs are far outstripping any increase received...many people taking home less money today than 5 years ago. the last 3 years has seen my employee contribution to health care for my family increase 20+% each year.And all the while benefits decreasing and co pays increasing --
Originally Posted By fkurucz The Fortune 500 have been justifying tiny raises because official inflation numbers are low. IMHO, those numbers are BS, and that real inflation is much, much higher. As vb mentioned, healthcare in the US is eating us alive. Those of us fortunate enough to still have insurance are consoled with the line that "we receive the highest quality care in the world", but many of us increasingly question that claim. We are certainly paying Champagne prices for our care, but sometimes it feels like we are getting cheap beer. Maybe this thread should be moved to World events?
Originally Posted By davewasbaloo You are probably right. I put it in here to get a wide view from our community. I really wish there was a good resource to compare cost of living vs. professions across the globe.
Originally Posted By fkurucz ^^To illustrate: In the US we can set up accounts to pay for unreimbursed heathcare expenses (usually through our employers) that allow us to pay for these expenses with pretax dollars. We have to estimate how much we will need at the beginning of the year, and then the monies are periodically deducted from our paychecks and deposited into these accounts. The caveat with this system is that it is a "use it or lose it" system, so we tend to be very conservative with our estimates. That said, we set aside $4000 every year, and its usually gone by September. This is on top of our health insurance premiums, which can easily be $1000 per month, and as vb mentioned employers are picking up less and less of that tab. We are quickly heading to a situation where only a minority of families will have health insurance. For the first time, the Fortune 500 is beginning to favor the idea of a national health system, as they no longer wish to be burdened with providing insurance to their employees.
Originally Posted By davewasbaloo Ok, that's really interesting (I was too young to know about these things when we left the states, but I know my Mom's health insurance seemed to cover jack). Currently I pay about $600 a month national health contributions and an additional $84 a month for private medical to cover my family. It seems high I suppose in comparison at about $8000 a year, but it cost us nothing to have our babies, Sarah's surgery on her foot, my slipped disks a couple of years ago, my monthly appointments for BP and weight loss. I do pay for my meds, but it is $12 for a 2 month perscription of BP meds. My Dental checkups cost $24, and my last root canal was $130. All in all, I suppose we are better off. The national health is great, but we have insurance too to get in quicker, or take care of issues (my back would not have been treated if I just counted on the NHS).
Originally Posted By vbdad55 I am paying more than you are per month ( family of 4 ) - and basically figure it is covering roughly 80% of most costs - I pay the rest. Now there is a 'cap' on out of pocket on major medical, but for my family that is about $8K -- over and above the $8K plus per year I am paying for insurance.
Originally Posted By davewasbaloo Wow! I suppose I'm going through my usual bi-annual "should we move back to the states" phase. Every year I decide to stay, but I wonder how young people starting out or on lower incomes cope. I remember my mom saying it took about 3 years to pay off my post natal care as a baby. And I know we found it tough going when I broke my leg and arm in the 80's in California. I remember my aunt went to the poor house when she was diagnosed with Cardio Myopathy and died a few years later. My mom has the same disease and thankfully receives free treatment (she is contribution exempt as a disabled person) here in the UK.
Originally Posted By fkurucz >>Every year I decide to stay, but I wonder how young people starting out or on lower incomes cope.<< The uninsured cope by using the emergency room at the local hospital as their "family doctor". By law, the ER cannot turn them away if they cannot pay. The hospital will send a bill, but these are tossed into the dust bin by the recipients. I know more than a few people who do this.
Originally Posted By fkurucz >>Wow! I suppose I'm going through my usual bi-annual "should we move back to the states" phase.<< If you are serious, I would suggest waiting a year or two. Houses, especially in the really bubbly markets, should be much cheaper.
Originally Posted By davewasbaloo I often am serious, but I would only really want to return to California, and we know how expensive that would be. Also the career aspect comes into play.
Originally Posted By fkurucz I think some portions of the California market will become cheaper. Some, like say La Jolla or Bel Air, will be remain unbelievably expensive, but suburban SoCal is being ravaged by foreclosures as we speak. Foreclosures in San Diego are at an all time high, and the market there is far from bottoming out. Also, many expect the dollar to continue sinking, which will give you more buying power when you use the proceeds from the sale of your UK residence. Of course, the trick will be to find a good job. Corporate America just can't seem to shake its love affair with the lay off.
Originally Posted By davewasbaloo Sounds familiar - sadly I had to manage another round a few weeks ago - 180 people. And offshoring is very popular too. Not fun.
Originally Posted By mrichmondj << Foreclosures in San Diego are at an all time high, and the market there is far from bottoming out. >> And the number of high-rise condos still being built in the city is comical. The housing bust hasn't even begun to start.
