Our rates have continously went down while appraisals continually go up.

Not sure if this has been mentioned as I'm not going throught 9 pages. During and after Covid we had shortage of materials in all phases of construction. Builders were willing to pay out the ass for material and labor. That material and labor hasn't gone down to pre covid pricing. Those guys are still wanting to make that same overhead. During the same time with very low interest rates investors buyers and your normal buyers would be getting into bidding wars. We had houses sell for 100k over asking weekly which cranked up builder margins. Builders are still wanting that margin today.

fka ftc said:

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This is going to be a rare one for fka ftc, so give me a moment to fully develop.

I am going to admit to some error and short sightedness in the broader discussion I have lamented.

I have mentioned before I have a friend in the lobbying business, particular to the housing industry. I discussed this thread as he is older, wiser and vastly more experienced than I, but likely anyone who has posted on this thread.

He has a child in their mid 20's thinking about that first time home buying experience.

His counsel... well, that its a complex one and not easily blamed on this and that.

Below is a fantastic article he pointed me to. I advise folks to read it. Be warned, it does NOT back me up and contradicts me in several areas. But it backs me up in others.

For the younger folks, I will actually apologize. I will say sorry for not respecting or even considering the economic environments you yourselves experienced, and more importantly, when you experienced them.

Honestly, those things are the sorts that define different generations. So I will work to have a better understanding of the frustration you feel by working hard and being fiscally responsible and still frustrated by housing costs, particularly home ownership.

I would also still encourage you to seek opportunity in tough markets as it may be a path to success, however you may define that.

https://hub.jhu.edu/2023/08/29/affordable-housing-crisis/

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The quoted assistant professor first blames the problem on lack of new construction due to construction monopolies, but then states "Consider, for instance, that 100 of the largest homebuilders in the U.S. now account for about half of all new single-family home sales, up from just over a third decades ago." That doesn't sound like much of a monopoly to me.

He goes on to blame restrictive zoning regulations, e.g., that prevent multi-family dwellings in neighborhoods. I agree removing zoning will definitely lower home prices!

Finally, he suggests "The federal government, meanwhile, should stimulate demand, with housing and rental vouchers supplementing the high housing expenditures." I learned in Econ 101 that more demand increases prices, so not sure what his point is here.

On the monopolies I had the same reaction, but then you have to look at that on a smaller lever. So in certain metros, a Pulte and Ashton Woods may have over 90% combined.

Also confused by the voucher area, need to look at that again.

Part of my diatribe yesterday is about adjusting expectations and people moving "down" in the market to soften demand in the starter / first move up.

Overall I thought it interesting about the younger folks being dually frustrated by doing some things right and not being able to afford the same as those just a few years older.

The cost of a car, now

BREAKING: Home ownership is now unaffordable in 80% of US counties, per ATTOM.

— unusual_whales (@unusual_whales) October 2, 2023

Personally, I've done most of that except living somewhere with an hour commute. I doubt the average millennial does all that though. This is all reasonable advice.

Holy hyperbole, batman.

The knuckle draggers of my generation may be doing this, but the savy among us are not.

Agthatbuilds said:

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BREAKING: Home ownership is now unaffordable in 80% of US counties, per ATTOM.

— unusual_whales (@unusual_whales) October 2, 2023

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Cut back on iphongs, dining out, 10 streaming services, vacays, new cars, etc. Stop buying name brand foods, etc.

We have a spending problem, not a revenue problem.

Agthatbuilds said:

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BREAKING: Home ownership is now unaffordable in 80% of US counties, per ATTOM.

— unusual_whales (@unusual_whales) October 2, 2023

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If unusual_whales says it, you know it's legit.

Logos Stick said:

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Agthatbuilds said:

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BREAKING: Home ownership is now unaffordable in 80% of US counties, per ATTOM.

— unusual_whales (@unusual_whales) October 2, 2023

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Cut back on iphongs, dining out, 10 streaming services, vacays, new cars, etc. Stop buying name brand foods, etc.

We have a spending problem, not a revenue problem.

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People can obviously make choices that's frees up some money to spend on housing....

However, we're beyond that being a viable strategy for most. Housing is too far inflated for those sorts of budgetary tricks to open up a lot of housing for any particular buyer

techno-ag said:

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Definitely Not A Cop said:

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hph6203 said:

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techno-ag said:

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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.

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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%

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Thanks. Some people's inability to admit that economics were more favorable to them in the past is strange. And that's not to absolve the idiocy towards our current economic policies that this generation is perpetuating. I'm sure the millenials will be gaslighting the 30 year olds the same way in 30 years.

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I think it's more modern expectations that are out of whack. A young grad expects $100,000 job on day one. Wants a 5 bedroom $750,000 house with 0 down at 3%.

Examples only of course, but you get the point.

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So your response to actual stats and math is strawman rhetoric? Well, I for one am convinced...

techno-ag said:

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Definitely Not A Cop said:

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hph6203 said:

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techno-ag said:

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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%

---

Thanks. Some people's inability to admit that economics were more favorable to them in the past is strange. And that's not to absolve the idiocy towards our current economic policies that this generation is perpetuating. I'm sure the millenials will be gaslighting the 30 year olds the same way in 30 years.

---

I think it's more modern expectations that are out of whack. A young grad expects $100,000 job on day one. Wants a 5 bedroom $750,000 house with 0 down at 3%.

Examples only of course, but you get the point.

---

This honestly wasn't that crazy of an expectation 3 years ago. Except maybe the down payment part.

Homeowners insurance policy rates are just staggering right now; throw in property taxes and I don't see how home ownership is feasible on a long term basis for most folks.

techno-ag said:

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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.

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Yes but the house you were buying for $80k back when those rates were prevalent are now selling for $280k.

GoodBullShark said:

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techno-ag said:

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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.

---

Yes but the house you were buying for $80k back when those rates were prevalent are now selling for $280k.

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Inflation adjusted, it's the same.

An $80k house in 1980 is $298k in today's dollars.

We a long way from 2019.

It's a real shame that covid came along accidentally screwed that up.

Oh well. i'm sure everything gonna be fine.

Logos Stick said:

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GoodBullShark said:

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techno-ag said:

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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.

---

Yes but the house you were buying for $80k back when those rates were prevalent are now selling for $280k.

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Inflation adjusted, it's the same.

An $80k house in 1980 is $298k in today's dollars.

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Now do average wages…. And graduating compensation. It's rough out there for young folks

Third base

Rocag said:

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UTExan said:

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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.

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Unfortunately that's not really where the market in land development is going. The hot new thing is "Build To Rent" communities which I believe are going to be truly awful for our communities, especially in 10-20 years when serious maintenance issues start popping up. I've heard them described as "The slums of tomorrow" and I don't know that I can disagree with that.

And I'm a bit of a hypocrite here as I've designed a couple of BTR neighborhoods. Sadly it's what the developers are willing to put up money to build and we do have a pretty bad housing shortage which this at least somewhat helps.

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This is happening about a mile from the upscale golf course community I live in.

Tiny houses are gonna be built next spring--- all for rent. The developer decided on this after zoning turned down apartments. It sucks to be near that coming blight.

In 1973, my dad was making 14k per year. He bought the 900 square foot house in inner city Houston that I grew up in for 14k.

The same little house now 50 years older and in an even worse neighborhood, pops up as 165k on Zillow.

Tell me again how the problem is discretionary spending?

In August, home prices climbed a seasonally adjusted 0.68% from July, hitting a record high for the fourth consecutive month, per Black Knight.

— unusual_whales (@unusual_whales) October 4, 2023

Dill-Ag13 said:

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Logos Stick said:

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GoodBullShark said:

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techno-ag said:

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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.

---

Yes but the house you were buying for $80k back when those rates were prevalent are now selling for $280k.

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Inflation adjusted, it's the same.

An $80k house in 1980 is $298k in today's dollars.

---

Now do average wages…. And graduating compensation. It's rough out there for young folks

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Yep.

Graduated from A&M in 97. Got married in 2000. Wife and I had a combined income at the time of about $100k. Bought first house summer of 2000. $130k north Austin, newly built. That same house is now $350-400k. I know this because I drive by the new subdivision close by almost every morning.

Very few couples three years out of college are realizing household incomes in the $300k+ range which is what it would take to stay on par. They can cut out the frivolous spending, and should, but it's not really going to matter. They are priced out.

BREAKING: Median-priced single-family homes and condos are becoming unaffordable compared to historical averages in 99% of the counties in the U.S, per ATTOM.

— unusual_whales (@unusual_whales) October 10, 2023

techno-ag said:

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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.

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Yeah, this is an awful take. 20% down on a home back in the 80's was what, 15-20k? That same house is now selling for $500k, making the 20% down 100k and wages have not kept pace.

Agthatbuilds said:

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BREAKING: Median-priced single-family homes and condos are becoming unaffordable compared to historical averages in 99% of the counties in the U.S, per ATTOM.

— unusual_whales (@unusual_whales) October 10, 2023

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This is excellent news. It means that home prices will have to retreat as no one will be able to afford homes at the current prices.

crowman2010 said:

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techno-ag said:

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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.

---

Yeah, this is an awful take. 20% down on a home back in the 80's was what, 15-20k? That same house is now selling for $500k, making the 20% down 100k and wages have not kept pace.

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In 2005 at the age of 27 I put $50k down on a $203k house. My wife did not contribute but if we had been DINKs we could have put $100k down.

Neither one of us drove new cars every 3 years, had the latest phones, shopped at Old Navy or the sales at Dillards, dined in almost exclusively and had cheap furniture.

fka ftc said:

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Agthatbuilds said:

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BREAKING: Median-priced single-family homes and condos are becoming unaffordable compared to historical averages in 99% of the counties in the U.S, per ATTOM.

— unusual_whales (@unusual_whales) October 10, 2023

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This is excellent news. It means that home prices will have to retreat as no one will be able to afford homes at the current prices.

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Of course, it could be offset by speculators and corporations buying up sfh and renting them

Agthatbuilds said:

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fka ftc said:

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Agthatbuilds said:

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BREAKING: Median-priced single-family homes and condos are becoming unaffordable compared to historical averages in 99% of the counties in the U.S, per ATTOM.

— unusual_whales (@unusual_whales) October 10, 2023

---

This is excellent news. It means that home prices will have to retreat as no one will be able to afford homes at the current prices.

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Of course, it could be offset by speculators and corporations buying up sfh and renting them

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Speculators don't oft buy houses in a market that is at high risk of becoming stagnate and retreating.

There are what I would call "investors" who are buying homes and renting them to their family and others in their community. Seeing this in DFW market where a group will get together to buy a house and rent it to someone they know in their circle. That is also slowing a bit.

But that rental market faces same affordability pressures. Rising rates leads to rising carry costs and needs to be offset by rising rent - at a time where people have less and less to spend on housing.

One of the biggest problems in Texas in particularly is that housing supply has not kept up with housing demand and still lags far behind. Not sure Texas overall will see relief, particularly with all our new residents.

People's idea of a starter home changed a lot since I was a kid.

fka ftc said:

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Agthatbuilds said:

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BREAKING: Median-priced single-family homes and condos are becoming unaffordable compared to historical averages in 99% of the counties in the U.S, per ATTOM.

— unusual_whales (@unusual_whales) October 10, 2023

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This is excellent news. It means that home prices will have to retreat as no one will be able to afford homes at the current prices.

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Not in red states they won't. Blue states will absolutely come crashing soon.

Squadron7 said:

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People's idea of a starter home changed a lot since I was a kid.

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Lots of starter homes can be found here:
https://mobilehomehq.com/properties/

To your point, people are unwilling to accept the fact that when you are starting out, choices have to be made.

Jabin said:

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hph6203 said:

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techno-ag said:

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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%

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To make sure that apples are being compared to apples, what are the square footages of the average houses in 1980 & 2023? My guess is that 2023 is substantially larger. Also, what amenities are in each house? Does the 2023 house include granite countertops, 10' ceilings, luxury master baths, etc.?

The reason I ask is that I bought my first house back in 1982 and it was right at that medium price. However, it had been built in 1920, did not have central air, the heat was 2 gas furnaces in the floor with no ductwork, shag carpet that was already out of date and tacky, one bath, a tiny kitchen, and so forth.

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the thing is builders have to build bigger more expensive houses in order to actually make a profit. land and development is expensive. materials and labor are expensive. it's damned hard to build the 1500 sq ft houses of the past.

Yes, I would be interested to see if even just the price of land per acre has outpaced wages.