2/2/09

Not moving on up!

One of the most interesting things I have noticed living where I do now, is the almost complete lack of a 'property ladder' mentality.

This term was coined to describe the continual desire or action of moving upscale in property, hence ladder. In England there is a very popular TV show of this name, which has been copied here, and follows people as they work hard to move up the property ladder.

England is obsessed with continually upgrading the property you own, either by renovation or moving up. But then the British property market has been the best possible investment you could make for as long as I can remember. In the 7 years I owned my property there, it more than doubled in value. Many people have long viewed their continual move up the property ladder, as their guaranteed pension in later years.

Well with the economic crisis this is no longer the case and now many homeowners there are facing negative equity and repossession. I came from a wealthy area of England and over the years have seen many friends keep moving up, forever increasing their mortgage and now I worry for them.

But it's very different here in northwest Okieland. I just don't see many people moving because it's 'the thing' to have a bigger or newer house. People move because it's necessary; their work moves, they need more space, they want to own rather than rent. Once people are in an ideally sized or suitable home, they just stay there for years. Rather than wanting to go bigger and have a larger mortgage, their aim is to pay off their mortgage and be debt free. I find this an interesting difference, especially having been a Realtor/Estate Agent and also managed repossessions for banks in the past.

Part of the reason is the wages here don't really allow for moving on up for most. But also property values stay at a reasonable level and don't make huge increases. Some might see this as a disadvantage; having been on both sides of this fence, I totally disagree. It is far healthier I think to find your home, get it paid off and then if needed, invest your money making it better - at least it's yours and not the banks!

In some ways the fall in property values may turn out to be a good thing longterm. Property values in many places had got totally out of synch with wages, meaning people had no choice but to take 90% or higher mortgages. First time buyers have found it almost impossible to buy a property and this needs to change.

The Hubster and I live in our ideal home, it's the right size and more importantly it's ours, not the banks. Nothing could tempt us to move up and take on another mortgage, this is our home for life now. When we make improvements we do it for us, for our future, not to increase it's imminent resale value!

It will be interesting to see, whether this economic recession causes people to go back to a more old-fashioned way of thinking on property. Our grandparents would live in the same house for decades and be satisfied. I am not sure this is a mindset the 'credit' generation can truly embrace.

From what I see here, people are able to make better choices in life. Mothers are able to stay home, stress levels seem lower, and there is little peer pressure to move on up and have a huge mortgage.

Back in England I'd have been paying a mortgage probably well into my fifties. Now I am mortgage free at 42 and in a much nicer home.

Bigger is not always better, especially if you can't sleep easy at night!

21 comments:

Betsy from Tennessee said...

Great post, Sarah. I think the economic problem all through this country now has awakened people and made them start saving --and being careful with their money, for the first time in their lives.

We as a country has been WAY too far in debt --and many young adults bought a house that is WAY too much for the money they make. In some ways, I see this as "keeping up with the Joneses."

Many young adult think they have to have a bigger and better house than their friends. The go deeply in debt ---and until now, they could just keep on borrowing. NOW--that hopefully will stop.

I hope people will stay in their homes --and use that money to keep them updated. And I hope people will use their money more efficiently.

Interesting topic...

Hugs,
Betsy

George said...

Very interesting post. I hadn't thought of the British as being so interested in moving up.
I'm sure there are parts of this country where people are very conscious of the 'need' to move up. But you're fortunate to live in a rural area -- rural folk seem to have a great deal of common sense.

MikKnits said...

My husband rolls his eyes at me whenever I tell him that "I could die in this house" because I love my house and my neighborhood. We moved up 5 years ago into the model I always wanted because our family outgrew the one we had, which was considered a 'starter' home by the builder. We are in our 40's and can comfortably live here for at least 10 more years when, hopefully, our economy has more than rebounded. Unfortunately, we have good friends, of retirement age, who bought their home 6 years ago, right before the real estate market here was at it's peak, in the hopes that they could use the profits of it's sale as their nest egg. If they have used any equity for the property upgrades they've made, I'm sure they now owe more than the home is worth.

I'm lucky in that my husband keeps me grounded. Because of him, we pay cash for everything we buy, our cars are paid for, and I feel we live within our means without feeling deprived. In fact, he tries to counsel some of the young people who work for him, only when they ask for advise, of course.

No "keeping up with the Joneses" for us!

Troy said...

An interesting and well written post. I must admit I tried to do both, move up the ladder whilst paying off each mortgage debt as much as possible. My father joked that I bought a new house every four or five years rather than redecorate. There was some truth in that. Paying off debt, downsizing and moving more rural let me retire at 51. I recommend it to any of your readers.

Nobby and Me said...

An interesting post. I remember getting a lecture from a work colleague once about how I should get a mortgage rather than 'pay dead money' in rent - I was 23 at the time and the thought of taking on a mortgage scared me to death, even though property was big business back then. I am still thankful that I didn't dive in and join the herd, we have only bought what we need and luckily while we are abroad the house is easily rentable and paying the mortgage. My hubby always wanted to get a holiday home in France or Spain, and I am glad I put my foot down and said no! My brother, on the other hand, thinks that the slump is a great time to upgrade because even though he can't get as much for his own house as he might have a few years ago, the bigger house he wants will also be cheaper, making trading up more economical right now. Food for thought.

Yogi♪♪♪ said...

We own outright our own home also. It gives us a lot more flexability than having a huge mortgage does in case something happens to my job.

Linda said...

Great post! We have lived in our home for 20 years. We have remodeled and refurbished and will continue to do so as necessary. But, we are here to stay as long as our health allows.

Crystal Jigsaw said...

I guess I could be one of the lucky ones as I don't have a mortgage. I don't want one either! The property market isn't getting any better but the price of houses is slowly coming down. I still get amazed by how much people can afford though, when they are doing run-of-the-mill jobs and possibly not earning a great deal. I reckon a lot of people live way beyond their means.

CJ xx

Sandi McBride said...

We're big on "the family home" here. Mama's house is still Mama's house though she died six years ago. Daddy lives in it, but it's Mama's house. I guess it's a heart thing...My grandmother's house (we called her Mammy) is now owned by my first cousin, but it's Mammy's house...she may live in it and pass it down to one of hers, but it will always be Mammy's house...enjoyed this post, very much. Learning more about you and your life in England is always a plus
Sandi

A Brit in Tennessee said...

Great post Sarah !
I too noticed years ago that folks here are not as driven to improve and move-up the property ladder, as they are in England.

Seems like everyone in England is always into DIY and neighbor competes against neighbor, yet here, each to their own !

I have nominated you for an award- just pop on over to my blog..

Sassy Britches said...

You give me something to think about every day. I am in property ladder mode right now, as I have my dinky little house and will probably only get a little bit bigger one once I settle down with someone. It'll be a good three houses total (minumum) before I'm finished climbing, but I plan to stay in the last one forever too!

Sarah (JOT) said...

Being military, we haven't yet owned our own home - but when the man finally retires and we buy one, it will be just what we need and we'll improve upon it until we die in it. That is our dream. Nothing big - I don't want to clean it alone nor do I want to pay anyone to do it for us.

Nice, sensible post.

pamokc said...

Except for the pamokc family who has decided to buck the trend due to the evil grocery store coming in on our corner!!!! Yikes!!!

Lover of Life said...

I totally agree with this post. We downsized a few months ago, moving into what was our second/vacation home. It feels wonderful to own our home and not owe anything to anyone. Of course, we have tons of furniture in storage from the big home we sold in Minneapolis, but we really don't miss the big house! Now we are watching friends and family struggle to maintain big homes and big lives. It's kind of cozy in a smaller environment, and it feels safe. We really need to get back into thinking of our homes as places to live instead of investments.

Winifred said...

Totally agree with you Sarah. I blame Margaret Thatcher, that's when it all started. I think that government made people greedy and we ended up with people wanting more and more and going into debt to get it.

I think the problem now is that people can't afford a house that is big enough for them and a family when they make their first purchase so eventually they have to move up. The prices were ridiculous.

I just hope that the recession encourages people to live within their income and not on an overdraft and credit cards. Younger people will find it hard to change their lifestyles.

The fact is there's no point in saving due to the very low interest rates now. Older people who relied on their savings to supplement their pensions are going to be hit very hard.

Daryl said...

I shouldnt speak for the rest of America but I do think that more people live the way your neighbors in OK do than the way they do in UK... I know I would love a larger apartment with another room where Husband could work and give me back both the living room AND the dining alcove ... but that isnt going to happen ... so I will settle for him painting the apartment we do have ...

Silverback said...

Although from an earlier generation I only bought my first house in 1983 and got in at the start of the boom years. Last year, before prices really started to fall, it had increased in value by almost 700% and even today is still a huge investment for me. I paid the mortgage off a decade ago and have no desire to move as long as I live in England. I was also brought up to only buy what I could afford and to save up for what I couldn't.

As a result I have no debt of any kind.

Being in this fortunate situation allows me to sleep at night, even as I watch my other savings disappear before my eyes.

I agree that, no matter how catastrophic for many, this crisis has certainly been a wake up call and I hope we all learn from it. Boom may again follow bust but it's a very slippery slope and one best avoided.

Stuart Peel said...

Tell me about the book baby !!

Expat mum said...

I think it depends on the part of the US you live in as here in Chicago no one buys any property (unless it's brand new) without knocking out a wall or two. They also definitely have to inch their way up the property ladder because even small flats are expensive. It's probably why in the UK people do it. You just can't buy a huge rambling place straight away the way you can in some parts of this country.
(And I have to confess, although this house suits us fine, if you told me I was going to be in it for another 20 years I would die of boredom anticipation.)

Kay said...

Very interesting post, Sarah and food for thought. I guess there can be a more positive side to this terrible time we're having right now. We hate moving and don't want to contemplate doing it again.
Your house is beautiful. I can see why you'd want to stay there forever.

Janet said...

I have formulated several responses to this post but none of them really say what I want to say. I'm gonna come back to
this. %-)