UTExan said:

---

One way to drive down home prices is by zoning for smaller homes (800-1000 sq ft) in areas that have space to build them. It would allow singles and young couples to purchase at 80-150k, get the tax advantages and start building a wealth base. Putting people in small crappy apartments with no ability to generate equity is stupid and hopefully, some smart town or city on the outskirts of a major metro area will figure this out.

---

Sounds like a colonia.
Cities don't want zoning like that. Small homes = cheap = higher density and higher crime.

UTExan said:

---

fka ftc said:

---

UTExan said:

---

One way to drive down home prices is by zoning for smaller homes (800-1000 sq ft) in areas that have space to build them. It would allow singles and young couples to purchase at 80-150k, get the tax advantages and start building a wealth base. Putting people in small crappy apartments with no ability to generate equity is stupid and hopefully, some smart town or city on the outskirts of a major metro area will figure this out.

---

Even if you got the lot for free your numbers are not workable. Well, maybe in Colony Ridge.

Fun fact, VDLs exist in many older communities located within commuting distance, particularly in places like Houston.

I have spent copious amounts of times looking at the situation you describe. Even when the numbers work from an affordability, the market is simply not there (even entry level home buyers demand the best schools, newest features, short commute).

Resetting expectations is the biggest challenge.

---

What if you have very small lots in parts of a town considered less than desirable? Granted it would be high density, but if you located these homes in places 50-70 miles from large city limits, would there not be sufficient housing demand for them? A first time buyer's other option is a condominium.

---

There is a good thread on the RE forum about urban infill in Houston.

https://texags.com/forums/59/topics/3401117

Its an interesting follow and there are some economics in there that are telling.

There are lots in Texas City, La Marque, Angleton and a metric **** town of them in Freeport.

I had the Freeport ones offered at no cost and the numbers still do not work. Freeport is 61 miles from Houston, less to the Med Center.

Overall point is that there is not an easy solution for entry level, which has seen the build to rent market to continue to gain momentum, particularly in both Houston and Dallas.

Definitely Not A Cop said:

---

tk111 said:

---

Definitely Not A Cop said:

---

Down payment percent gross income: 45%
Total payment percent of gross income: 16%
Average house size: 1800 sqft
2023
Down payment percent gross income: 102%
Total payment percent of gross income: 46.3%
Average house size: 2500 sqft

So the house size has increased 40%, while the down payment is more than twice the amount. Economics were favorable in the 80's.

---

Nitpicking...but the median is 2200 sqft. (hph was using medians not means, which is better because it is less thrown around by the weight of ridiculously huge houses). Sorry..im a statistician...I can't help myself

---

Thanks.

Median in the 80's was 1595 sq Ft.
Median today is 2200 sq Ft.

37% increase.

---

See! you overestimated by 3%! lol


I feel even worse for the fact that we re-financed in 2020 at what has to have been the lowest of the low. I kid you not - 1.5%. We have maybe 14 years left to payoff because we always put extra on our payments but it practically makes almost no difference how long we take to pay off the rest now.

tk111 said:

---

Definitely Not A Cop said:

---

tk111 said:

---

Definitely Not A Cop said:

---

Down payment percent gross income: 45%
Total payment percent of gross income: 16%
Average house size: 1800 sqft
2023
Down payment percent gross income: 102%
Total payment percent of gross income: 46.3%
Average house size: 2500 sqft

So the house size has increased 40%, while the down payment is more than twice the amount. Economics were favorable in the 80's.

---

Nitpicking...but the median is 2200 sqft. (hph was using medians not means, which is better because it is less thrown around by the weight of ridiculously huge houses). Sorry..im a statistician...I can't help myself

---

Thanks.

Median in the 80's was 1595 sq Ft.
Median today is 2200 sq Ft.

37% increase.

---

See! you overestimated by 3%! lol


I feel even worse for the fact that we re-financed in 2020 at what has to have been the lowest of the low. I kid you not - 1.5%. We have maybe 14 years left to payoff because we always put extra on our payments but it practically makes almost no difference how long we take to pay off the rest now.

---

Yeah I'm currently stuck in a holding pattern right now. Sold the house earlier in the year, now waiting for either price or interest rates to come down. Just parked the initial investment in the house in a HYSA at 5%, and adding to it to afford the same size house once the market adjusts one way or the other.

Build to rent is a factor, but land price and homebuilding costs in general are bigger factors.

Part of the problem at least is what people are demanding and expecting to get in a home:

I remember the first house I lived in: small, on a small lot, inexpensive construction, no amenities, no frills. It was a place with heat and a/c you could eat, sleep, and live in. Pretty basic.

Consumer demands on quality, technology, and size have changed, increasing average costs, as has regulation and code compliance. On top of that, they aren't making more land, just more people.

We bought our first house in 2005 before the huge runups that occurred shortly there after and again the last few years. Cheap rates and lower borrowing standards have caused the home price index issues but the answer is to not increase salaries to meet those increased costs (more inflation) nor is it to artificially depress home prices. Artificially keeping mortgage rates lower also no good.

What is good? Youngins cutting back on their lifestyles and dramatically lowering expectations of what their first home will be (maybe older, worse neighborhood, mediocre schools, long commute).

Its not the people of the 1980s that had it easy, its way out of whack lifestyle expectations of younger generations these days (I am Gen X and would include us in that as well).

fka ftc said:

---

tk111 said:

---

See! you overestimated by 3%! lol


I feel even worse for the fact that we re-financed in 2020 at what has to have been the lowest of the low. I kid you not - 1.5%. We have maybe 14 years left to payoff because we always put extra on our payments but it practically makes almost no difference how long we take to pay off the rest now.

---

Understanding there are psychological components to this decision, but when savings rates exceed borrowing rates, you may want to be saving and not paying extra on that super cheap debt,

---

Meant to say we used to before we refinanced.

JobSecurity said:

---

not really an "inflation" problem, it's a supply and demand problem. Unfortunately with no obvious solution.

If the fed wasn't focused on a soft landing there might be hope, but I don't see this dropping outside of a recession

---

there will be a recession pretty soon- just a question how severe it will be.

To be clear I was not trying to be critical at all. Some want to get rid of debt from a psychological standpoint or simply from a philosophical one, which is completely respectable.

LMCane said:

---

JobSecurity said:

---

not really an "inflation" problem, it's a supply and demand problem. Unfortunately with no obvious solution.

If the fed wasn't focused on a soft landing there might be hope, but I don't see this dropping outside of a recession

---

there will be a recession pretty soon- just a question how severe it will be.

---

If we elect Trump, I think we avoid one.

I wasn't blaming BTR developments for overall housing costs but they are a big reason that I don't see the supply of for sale homes cutting in to the already existing deficit we're faced with. Zoning issues are still a challenge though that is highly variable from city to city. Generally speaking though there is still quite a bit of push back against townhomes, duplexes, and other similar dense residential uses from the NIMBY types.

You can't blame people for not choosing to live in small homes on small lots when those kinds of houses simply aren't being built anymore. The "starter home" of today is still on a 50'x100' lot and if you're near any decent sized city you'll be lucky to find one for under $300,000.

LMCane said:

---

JobSecurity said:

---

not really an "inflation" problem, it's a supply and demand problem. Unfortunately with no obvious solution.

If the fed wasn't focused on a soft landing there might be hope, but I don't see this dropping outside of a recession

---

there will be a recession pretty soon- just a question how severe it will be.

---

We already had one, and probably are still in it. Someone like Desantis, a successful conservative, coud help that.

Liberals like Trump, who started us down recession road, and Biden who took Trumps idiocy and turned it 11, aren't the ones to fix it.

hph6203 said:

---

techno-ag said:

---

What did we ever do back when the interest rates were near 18%?

Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.

---

You have to save 2.5x as long to purchase a home that costs 3x as much monthly. Interest rates are a portion of the equation, but they matter WAY less than price relative to income. Even at 0% interest rates it's more expensive/difficult to buy a home than it was in the early 80's.

1980
Median House Price: 47,200
Median Household Income: 21,000
20% Down: 9,440
Interest Rate: 17%
Tax: 864/yr (72.00/mo)
HOI: 250/yr (20.80/mo)
P&I: 539.00
Total Payment: 631.80
Down payment percent gross income: 45%
Total payment percent of gross income: 16%

2023
Median House Price: 416,000
Median Household Income: 81,500
20% Down: 83,200
Interest Rate: 7.5%
Tax: 7615 (634.59/mo)
Insurance: 2204 (183.67/mo)
P&I: 2327.00
Total Payment: 3145.26
Down payment percent gross income: 102%
Total payment percent of gross income: 46.3%

---

No one says you have to buy a $400k house you can't afford…

techno-ag said:

---

What did we ever do back when the interest rates were near 18%?

Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.

---

And I'm sure these home prices reflected the 18 percent interest rate?

Oh, no they didn't, so this is just bullsheet and not useful to anything in the modern housing market. Got it.

Definitely Not A Cop said:

---

Down payment percent gross income: 45%
Total payment percent of gross income: 16%
Average house size: 1800 sqft
2023
Down payment percent gross income: 102%
Total payment percent of gross income: 46.3%
Average house size: 2500 sqft

So the house size has increased 40%, while the down payment compared to income is more than twice the amount. Economics were favorable in the 80's.

---

Now do the amenities.

Heck the roof itself is 2.5x what it was back then for the same square foot home because of the massive pitch difference.

Put formica in. Put linoleum in instead of tile. Put those cheap ass windows in we had back then. Put in a non tiled walk in shower/bath instead of both. No fence versus a privacy wood fence. Etc

fka ftc said:

---

To be clear I was not trying to be critical at all. Some want to get rid of debt from a psychological standpoint or simply from a philosophical one, which is completely respectable.

---

Yeah it was interesting at the time to look at it because we do generally believe in getting rid of debt quicker regardless of the ultimate amount we'll pay, and also had to weigh the options of a little higher rate with a longer term + continuing to pay extra vs a shorter term with lower rate and just riding it.

I think you misread my post. I was making $950/month gross so taking home about $700. Not sure where the $9500 take home comment came from. That worked out to $5.70/hour assuming 2,000 working hours in a year. And as someone else pointed out inflation at that time was double digit.

JobSecurity said:

---

not really an "inflation" problem, it's a supply and demand problem. Unfortunately with no obvious solution.

If the fed wasn't focused on a soft landing there might be hope, but I don't see this dropping outside of a recession

---

The monetary base is the highest in US history. The M2 money supply is the largest in US history. Yes, it's inflation.

You can't look at just housing as far as inflation goes; inflation is an aggregate measure. And that aggregate measure has started rising again. It's around 4% right now. Housing is part of that. We have surpassed peak housing prices when rates were half what they are now.

I never saw the prices come back down after lumber prices got so high during Covid. I think there's profits being made.

Funky Winkerbean said:

---

I never saw the prices come back down after lumber prices got so high during Covid. I think there's profits being made.

---

It is still largely a seller's market, so why would they lower prices?

Logos Stick said:

---

Definitely Not A Cop said:

---

Down payment percent gross income: 45%
Total payment percent of gross income: 16%
Average house size: 1800 sqft
2023
Down payment percent gross income: 102%
Total payment percent of gross income: 46.3%
Average house size: 2500 sqft

So the house size has increased 40%, while the down payment compared to income is more than twice the amount. Economics were favorable in the 80's.

---

Now do the amenities.

Heck the roof itself is 2.5x what it was back then for the same square foot home because of the massive pitch difference.

Put formica in. Put linoleum in instead of tile. Put those cheap ass windows in we had back then. Put in a non tiled walk in shower/bath instead of both. No fence versus a privacy wood fence. Etc

---

Amenities have improved but that is just home building practices across the board. There isn't a market for small houses with lesser amenities. Most have been bulldozed for McMansions at this point. When anything that style and in a lower price range goes on the market, cash buyers come in for 20% over asking to make it a rental. Which is understandable. I'd do the same thing. But there really aren't many options left for 1,500 sq foot houses without updates.

Funky Winkerbean said:

---

I never saw the prices come back down after lumber prices got so high during Covid. I think there's profits being made.

---

Then you haven't been paying attention. It's way down from COVID highs. Any chance it had at getting back to pre COVID levels was killed by inflation.

Logos Stick said:

---

JobSecurity said:

---

not really an "inflation" problem, it's a supply and demand problem. Unfortunately with no obvious solution.

If the fed wasn't focused on a soft landing there might be hope, but I don't see this dropping outside of a recession

---

The monetary base is the highest in US history. The M2 money supply is the largest in US history. Yes, it's inflation.

You can't look at just housing as far as inflation goes; inflation is an aggregate measure. And that aggregate measure has started rising again. It's around 4% right now. Housing is part of that. We have surpassed peak housing prices when rates were half what they are now.

---

I think his point, and I could be wrong, was it's not JUST an inflation problem.

M2 money primarily driven by Trump fiscal stimulus during Covid was the very definition of inflation. Money generated without any nominal production of valuable goods.

It's also a supply problem to a large degree...A very large number of homeowners are locked in under 3.5% on 30 year mortgages without a reasonable way to get out of that mortgage and not 1) trade down for equivalent price 2) take a huge hit in debt service coverage....Ultimately, they just stay put and put a big ole wet blanket on the velocity of housing transactions.

Here's something no one is discussing...

only Americans believe there is some Constitutional right to buy a house at a young age.

in the rest of the world, people rent

or an entire family pools their resources to buy a home.

what's wrong with renting?

Renting may be more financially beneficial than buying..

My wife and me bought our first property in 1990.

We assumed a loan, which you can't do now. We did it to save closing cost.

It was an 8.5% mortgage, 9.5% the second year and 10.5% from year 3 to 30. The mortgage was about six months old when we assumed it.

Welcome to our world. I guess boomers didn't have it so good after all. We refinanced to a lower rate twice before we moved in 1999. I think our 1999 mortgage was about 6% and we live in the same house and paid it off years ago

There would be less wrong with it if it weren't for the continued escalation of rental prices over the past decade. Renting used to be a more affordable alternative to buying. At this point a nice 2 bedroom apartment costs as much as the monthly mortgage on an average home in a good area. If you rent anything that's not a complete crap hole you're almost stuck in a cycle of renting unless you have a six figure household income and no kids.

fka ftc said:

---

Its not the people of the 1980s that had it easy, its way out of whack lifestyle expectations of younger generations these days (I am Gen X and would include us in that as well).

---

And it's not just in homes, it's in almost everything. Consumer expectations are crazy across the board. Think of the difference in vehicles now compared to the 1980s. Base model cars and single cab trucks. The same people that can't afford a house today would never be caught dead in those. Dining out, concert tickets, subscriptions, etc. It all makes a difference.

I wish we could compare the average budget of a 30yo from each decade.

Save terrible for things that are truly terrible, this is not life and death. If interest rates stay up, prices will normalize or decrease. You can thank the Biden administration

NoahAg said:

---

UTExan said:

---

One way to drive down home prices is by zoning for smaller homes (800-1000 sq ft) in areas that have space to build them. It would allow singles and young couples to purchase at 80-150k, get the tax advantages and start building a wealth base. Putting people in small crappy apartments with no ability to generate equity is stupid and hopefully, some smart town or city on the outskirts of a major metro area will figure this out.

---

Sounds like a colonia.
Cities don't want zoning like that. Small homes = cheap = higher density and higher crime.

---

Austin is about to allow three homes on a single family lot. The minimum lot size is 7500 sqft. That's moving to a 2500 sqft minimum lot size. The goal is to increase density.