It's almost the end of June, and I wasn't invited to speak to any college graduating class. So it seems I've been passed up, again.
To boot, this year I was seriously ready. So these deep thoughts don't go to waste, I address this to all college and university graduates in the U.S.A. Please pass it on to anyone you wish:
I'm honored to be addressing you today. If you find bits of humor in my words, it's because I'm going to soften the blow; but I won't soften the truth of where you're headed.
Although you'll soon hold college diplomas in your hand, your public schools were underfunded, so many of you may not be able to fill out a job app or read a magazine. I'll try to make things clear by prefacing them with, "This means..."
In the early '60s, average homes sold for $12,500, 2.5 times the income of a new college graduate. Today, the median home sells for $218,000--almost 5 times the income of today's graduate. (In Boston, it's 6 times.) This means that instead of a 30-year mortgage, you might need a 60-year.
To put it another way, in 1974 it took 1 full-time wage earner to afford an average home. 20 years later, in 1994, it required 2 full-time wage earners. That was 10 years ago. What will it be in 10 more, in 2014-- 3 or 4? This means polygamy will become more than a religious fad.
Most of your grandparents eventually owned their own homes, and some of your parents do or will. But this means that to do the same, you might have to live a frugal life dictated by a 50-year mortgage.
You graduating today have an average of about $20,000 in student loans, for a B.A. $100,000 of loans is not unheard of, and we're not talking about med school.
Congratulations on graduating! You have now entered American society as an adult. This means you are fully entitled to more debt, interest, penalty and late fees than anyone else ever on the planet.
"It's not your fault." Say that a few times until you start to believe it. It's not your fault if you can't afford to buy a house (unless you hit the lotto). It's not your fault if you can't afford the payments (unless you marry a rich spouse). It's not your fault if you default and wind up moving back home (unless you come into a big inheritance). Say it, because it's true. The numbers don't work in your favor.
If you don't come to believe that, you may find your teenage years' angst was the highlight of your life. You will punish yourself. You will lose self-esteem. This means you will become an alcoholic and recall your college binge drinking as a productive apprenticeship.
So what should you do about a place to call your own?
First of all, while you still have money, you could buy a copy of "Nickel and Dimed: On (not) getting by in America" by B. Ehrenreich. This means homelessness would become part of your future and panhandling, your career.
Secondly you could spend weekends at your parents' house remodeling that attached garage into a fully equipped, separate unit. This means you will always have somewhere nice to live, hopefully with decent rent and not so nosey or noisy landlords.
Lastly, my advice to you is keep the first two ideas as back-ups. You've got a better alternative: just wait.
Wait until after the bird flu pandemic, and sellers will be paying you to live there and watch over their property. This means you may have to wait a long time until enough people get infected, but at least you won't be accruing interest while you wait.
Or: wait until this overpriced housing market hits near-bottom. Word on the street is you can thank the Republican racists for scaring undocumented mexicanos into dumping their homes cheap on an already falling market, before heading back home.
In my neighborhood where the asking price was about $175,000 last year, one home was lowered to $136k. It didn't sell. Today they're asking $112k. I guess it'll go for $108k.
But I think that's still too much. Don't bid on this one; wait until they're all falling. This means you might be cussing me out two years from now because prices went up. (Go to this site to see how bad it's getting: http://www.denverpost.com/search/ci_3953116)
On the other hand, it might mean you're mailing me a case of Maker's Mark because you didn't go into debt for a quarter of a million dollars--not uncommon today.
I could tell you more: about why you should adopt a kid instead of making your wife have one that has your eyes; why you can give up getting a car every few years; why you need to save 25% of your income and what to do with it; etc.
But I've taken a lot of your time, and I know you just can't wait to get out there and on with your life. After all, there're unpteen banks, mortgage and credit card companies also out there eagerly awaiting your checks. Plus, I've got to save some material for next year, in case Mt. Holyoke calls.
Rudy Ch. Garcia