Deputy Travis Junior said:

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SockStilkings said:

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I think the housing affordability "crisis" is not a crisis at all and could use a healthy dose of resetting expectations.

There are a lot of assumptions made by younger folk about how "easy" others had it.

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In 2000 and 2010, the median household incomes were $42k and $50k respectively. Today it's 75k (increases of 78% and 50%).

Eyeballing the OP's graphic here, but in 2000 and 2010 the housing indexes were about 100 and 150. Today it's at 310 (increase of 210% and 107%).

Your opinion is not based in reality.

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You can keep slicing those figures however you want. My opinion is based on experience and knowledge of the housing industry.

There is an affordability issue. But its not just as simple as wages increased by x% and housing increased by 3x% and no one but wealthy people, investors and corporations can afford a home anymore.

You personal experience in home buying is part of the issue. You wanted this house in that location with these features and you extended yourself to purchase it. The market will not soften much if people keep solving for how to afford a particular home.

That graph you like to point to in the OP and those figures reflect consumer behavior as well as other market forces including wages, interest rates, loan standards, etc.

Reminds me of the basic tenet of car salesmen. "Tell me what you want your monthly car payment be and we will figure out how to get you into to that bright, shiny premier class SUV." When reality is your butt should have been at the used car dealership looking for a good deal.

But it seems some do not want to admit their consumer behavior has anything to do with housing affordability.

Logos Stick said:

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https://fred.stlouisfed.org/series/CSUSHPINSA

https://finance.yahoo.com/news/home-prices-set-record-in-july-140213592.html




Enjoy your high priced home at 8% interest. We've obviously got inflation well under control.

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Raising interest rates was the goal of curbing inflation, don't you understand that? Speaking of which....current inflation rate is 3.67. Still not 2 percent (the goal), but certainly not 7-8 percent anymore.

richardag said:

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Definitely Not A Cop said:

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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.

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Agreed, but what is the answer? My guess is reduced the federal government, dramatically.

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Preventing foreign businesses from purchasing residential property in the US would be a start imo. Drastically attacking regulations and entitlements driving up material costs and labor would be another.

Definitely Not A Cop said:

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You are continuing the argument nobody on this thread has been actually making. Everyone understands your point. People need to stop buying houses they can't afford. What is being flatly denied by people is that housing has outpaced wages. Every time someone tries to show the math that proves it, the response is to shift the argument that expectations are too high, instead of just admitting that yes, housing has outpaced wages and economic conditions were more favorable in the past.

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Housing has outpaced wages. Economic conditions have been more favorable at times, less favorable at other times.

What does that do to actually solve the problem? Do you have any ideas of solving the problem?

I am not making a separate argument. I am offering part of the solution. That solution does require that one accept some facts other than housing prices have outpaced wages.

tysker said:

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Quote:

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We couldn't afford much and definitely not a house regardless of urban or suburbs. So we scraped by and lived on the cheap for years. First house in 2007 was a $400k house and our mortgage rate was 5% out the gate and ended up at 7% because we were on a custom loan. So about what rates are now.

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What would that house been worth say in 2010 had there not been a housing bailout? Would you have been able to refi down if the value dropped to $335k?

It's hard to remember we Gen Xers also got a nice bailout (along with the Boomers) with a decade-plus of ZIRP which boosted the prices of our financial assets and real estate.

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Not sure. I was told there would be no math.

Yeah, and I'm not stating that we Gen X'ers haven't had some luck along the way with timing. My only point was that even with "optimal" conditions some of us were not able to capitalize on them.

At current mortgage rates, housing affordability is the worst on record, per the National Association of Realtors.

Read more: https://t.co/Ehs3dpAXlw

— unusual_whales (@unusual_whales) October 12, 2023

Home prices have soared so much that 98 out of 100 biggest US cities are overvalued relative to historical levels, per BI.

— unusual_whales (@unusual_whales) October 13, 2023

Pfft just drink less Starbucks.

Can we just rename the thread the Daily unusual_whales Twitter Fear Porn thread?

You're welcome to post opposing information that simply isn't something how you feel

Agthatbuilds said:

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You're welcome to post opposing information that simply isn't something how you feel

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Housing prices are high. What are your solutions?

And least I and a few others offer solutions. Drink less starbucks, embrace mobile home / country living, relocated to Colony Ridge, etc.

Yes, housing is high. The problem is that your "solutions" aren't going to solve the problem for the vast majority of people.

Simply saving more is not sufficient, because savings have been eating up by inflation. So, the things older generations did are no longer sufficient.

So, yes, save in every way you can. It still won't be enough

Agthatbuilds said:

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Yes, housing is high. The problem is that your "solutions" aren't going to solve the problem for the vast majority of people.

Simply saving more is not sufficient, because savings have been eating up by inflation. So, the things older generations did are no longer sufficient.

So, yes, save in every way you can. It still won't be enough

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So, you have any ideas?

Only a crash can reset the market to a sufficient degree, imo.

You could increase supply but that takes a long time and building prices are so absurd, I don't see that actually bringing down prices.

Interest rates could keep going up, making even fewer people available to purchase a home and decrease demand enough to have home prices retreat.

This isn't simply a strictly home purchase price cost. It's everything- taxes are up, utilities are high, maintenance costs are high.

In my opinion, there's little a potential purchaser can do in this current market except make more money or wait

For all you free market types, keep in mind that cheap, affordable housing is due almost entirely to government intervention in the marketplace, including subsidies. The availability of inexpensive, high quality housing that has existed in America for the last 50-75 years is a historical and worldwide anomaly.

If that were the case then why is it that the places with the most homelessness and home pricing issues are the places with the most government intervention?

Jabin said:

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For all you free market types, keep in mind that cheap, affordable housing is due almost entirely to government intervention in the marketplace, including subsidies. The availability of inexpensive, high quality housing that has existed in America for the last 50-75 years is a historical and worldwide anomaly.

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Curious as to what you mean here. I am aware that in certain areas government intervention has been a necessity or you simply did not have a working class needed to support a city be able to live in that city outside of slums.

One could argue individual car ownership, suburbia and such were market factors that drove SF homeownership for many. Trying to understand what your take it on how government intervention led us to the current housing affordability issues.

Jabin said:

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For all you free market types, keep in mind that cheap, affordable housing is due almost entirely to government intervention in the marketplace, including subsidies. The availability of inexpensive, high quality housing that has existed in America for the last 50-75 years is a historical and worldwide anomaly.

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So none of that was due to the fact that we are essentially the only free market on the planet? Do you not think that because of our unique system of government that was historically based in free market principles and less government intrusion that it could be the primary reason we were a historical and worldwide anomaly?

You seem to have somehow identified and missed the obvious in the same sentence.

The government subsidies and intervention in the market include:

• deductibility of home mortgage interest
• purchase of home mortgages en masse by FNMA and Sallie Mae (and other govt entities?) to keep mortgage prices down
• government intervention in the credit markets to keep interest rates down. Did you really think that those low interest rates were due solely to market forces?
• government mandated and protected property systems and mortgage filing systems
• antitrust exemption for realtor associations, particularly the MLS

Back in the past (the 50s or so?), the federal government started off on a clearly stated policy of encouraging home ownership. Those items listed above are the result. Prior to that point, home ownership was not nearly so common in the U.S.

Look around the rest of the world. The rest of the world does not have nearly the level of home ownership that the US does, even in economies that are wealthier than us.

No, they do not but you are also ignoring the underlying macro difference in how this country was set up and run vs any other country in the world. Yes, there is government intervention in the home market here that generally encourages it, but that's inside of a larger vision and philosophy of how the US operates.

And you can also clearly take a strength to a weakness with too much of it and the government intervening is a perfect example of that. See school loans for a prime example.

tk111 said:

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It's really terrible. I know a number of young couples just a few years removed from college that have been very successful and are still absolutely crushed at their prospects of getting a home due to the overwhelming double-whammy that is prices and interest rates.

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Wishing my wife wasn't a realtor lately. Brutal.

Jabin said:

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For all you free market types, keep in mind that cheap, affordable housing is due almost entirely to government intervention in the marketplace, including subsidies. The availability of inexpensive, high quality housing that has existed in America for the last 50-75 years is a historical and worldwide anomaly.

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Markets have been artificially distorted since the creation of the federal reserve. We've been operating in an increasingly Keynesian economy for 100 years. Eventually someone has to pay the price. What we don't yet have is the completion of the cycle, i.e. the mass devaluation of asset pricing once manipulation of the dollar can no longer be achieved and the dollar rises despite government interference.

Fast forward 10-20 years and you will see the whole picture. The whole cycle. Not just the boom. It's inevitable.

SockStilkings said:

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Agthatbuilds said:

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You're welcome to post opposing information that simply isn't something how you feel

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Housing prices are high. What are your solutions?

And least I and a few others offer solutions. Drink less starbucks, embrace mobile home / country living, relocated to Colony Ridge, etc.

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What's seems to be the problem? Wages aren't keeping up? So ? House prices are high, but that implies that people are still buying. After all, if consumers aren't buying, prices will fall. So what problem are you trying to address ?

Dimebag Darrell said:

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tk111 said:

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It's really terrible. I know a number of young couples just a few years removed from college that have been very successful and are still absolutely crushed at their prospects of getting a home due to the overwhelming double-whammy that is prices and interest rates.

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Wishing my wife wasn't a realtor lately. Brutal.

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We talking Nicklebag Darrell or ThreePenny Darrell?

Being a realtor is likely not going to be a fun experience for the next couple of years except for some niche markets. Best of luck to her (and to you).

deddog said:

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SockStilkings said:

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Agthatbuilds said:

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You're welcome to post opposing information that simply isn't something how you feel

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Housing prices are high. What are your solutions?

And least I and a few others offer solutions. Drink less starbucks, embrace mobile home / country living, relocated to Colony Ridge, etc.

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What's seems to be the problem? Wages aren't keeping up? So ? House prices are high, but that implies that people are still buying. After all, if consumers aren't buying, prices will fall. So what problem are you trying to address ?

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SockStilkings is not the one clamoring that the high prices are a problem and offered solutions that would ease the pricing, such as letting the demand fall.

fka ftc said:

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deddog said:

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SockStilkings said:

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Agthatbuilds said:

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You're welcome to post opposing information that simply isn't something how you feel

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Housing prices are high. What are your solutions?

And least I and a few others offer solutions. Drink less starbucks, embrace mobile home / country living, relocated to Colony Ridge, etc.

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What's seems to be the problem? Wages aren't keeping up? So ? House prices are high, but that implies that people are still buying. After all, if consumers aren't buying, prices will fall. So what problem are you trying to address ?

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SockStilkings is not the one clamoring that the high prices are a problem and offered solutions that would ease the pricing, such as letting the demand fall.

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Agreed , I guess my comment was targeted with the OP in mind

While I generally agree with your premise the bigger issue, imo, has been the implicit taxpayer backing of GNMA and FHLM. This implicit guarantee foretold the government bailouts during the financial crisis. Once the government stepped in to bail out the overspending habits of it's citizens and their households, nothing was left off the table.

Now the government bails out everyone all the time. And what we're left with is inflation.

Never fear for those wondering how they will ever buy a home with these unaffordable housing costs... Own Your Own Home Joe is here to help!

https://www.whitehouse.gov/briefing-room/statements-releases/2023/10/16/white-house-announces-new-actions-on-homeownership/

Quote:

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Synopsis below is from an email summary received with the above link.

A Tax Credit for building homes in low income neighborhoods (Requires legislation)
The initiative calls for funding of a Neighborhood Homes Tax credit. Modeled after the Low Income Housing Tax Credit, this would be federal tax credit to be used to rebuild homes in distressed neighborhoods and retain middle-income homeowners. The credit is designed to cover the gap between development cost and market value.

Downpayment Assistance (Requires Legislation)
A $10 billion down payment assistance program that would ensure first-time homebuyers whose parents do not own a home can access homeownership alongside a $100 million down payment assistance pilot to expand homeownership opportunities for first-generation and/or low wealth first-time homebuyers.

ADUs
FHA will adopt a new policy allowing prospective borrowers to use a portion of the actual or prospective rental income from an Accessory Dwelling Unit (ADU) to be added to the borrower's effective income for purposes of qualifying for an FHA-insured mortgage.

The proposal calls for Congress to act on several provisions while others will be done administratively. Interestingly, the press release talks about steps the Administration has taken to lower the cost of borrowing through the FHA and USDA program. At the same time, HUD has proposed adding an energy efficiency requirement for all newly constructed homes which will add thousands of dollars to the cost of homes for low income buyers.

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I don't think this is the right way to do it, but there is a looming problem among a lot of cities in that a lot of homes built 70 or 80 years ago during the post-war boom are starting to fall apart and are coming into disrepair. These are often generational family homes and people don't have the ability to afford what it takes to renovate. These are the neighborhoods they seem to be targeting. People who can afford to renovate don't want to because it's a cost sink -- neighbors can't afford to renovate and their home values don't justify the cost of renovation. So the houses just start falling apart.

I think there are some manufacturing techniques on the horizon which will bring the cost of home building way down to allow a lot of people to have housing that is much less expensive. Very intrigued by the 3D printer technology.

Not a Bot said:

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I don't think this is the right way to do it, but there is a looming problem among a lot of cities in that a lot of homes built 70 or 80 years ago during the post-war boom are starting to fall apart and are coming into disrepair. These are often generational family homes and people don't have the ability to afford what it takes to renovate. These are the neighborhoods they seem to be targeting. People who can afford to renovate don't want to because it's a cost sink -- neighbors can't afford to renovate and their home values don't justify the cost of renovation. So the houses just start falling apart.

I think there are some manufacturing techniques on the horizon which will bring the cost of home building way down to allow a lot of people to have housing that is much less expensive. Very intrigued by the 3D printer technology.

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In the Texas (and other states) coastal counties hit by hurricanes the last ~20 years there has been quite a bit of work done to replace that aging housing. The LMI requirements along with home ownership, inadequate / no insurance to a large extent focused these programs.

I would be for the expansion of these CDBG programs beyond just disaster recovery as it indeed does revitalize the housing inventory to address the exact issue you describe.

Just handing out money is often the poorest use of government assistance.

🔊 ... 🚨🚨🚨
"I will never be able to afford a house."

"How did my parents have 3 children, and a 4 bedroom house and 2 vehicles and only my Dad worked?"

"I am being completely radicalized by the rental market."

"My children will never be able to have the life I lived,… pic.twitter.com/QC0ECiRgd4

— Wall Street Silver (@WallStreetSilv) October 17, 2023

tk111 said:

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It's really terrible. I know a number of young couples just a few years removed from college that have been very successful and are still absolutely crushed at their prospects of getting a home due to the overwhelming double-whammy that is prices and interest rates.

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Maybe the scale of "starter homes" will shrink back closer to long term norms. Cheap capital and low interest rates for decades helped the typical middle class starter home go from a 1,500 sf, 3BR 1-story back in the early 1970's to a 3,000 sf, 4BR, 2-story by the 2010's. I'll bet young couples with good jobs could still go out today and buy a new 1,500 sf, 3BR house without a lot of trouble.

Buck Turgidson said:

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tk111 said:

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It's really terrible. I know a number of young couples just a few years removed from college that have been very successful and are still absolutely crushed at their prospects of getting a home due to the overwhelming double-whammy that is prices and interest rates.

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Maybe the scale of "starter homes" will shrink back closer to long term norms. Cheap capital and low interest rates for decades helped the typical middle class starter home go from a 1,500 sf, 3BR 1-story back in the early 1970's to a 3,000 sf, 4BR, 2-story by the 2010's. I'll bet young couples with good jobs could still go out today and buy a new 1,500 sf, 3BR house without a lot of trouble.

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It depends on where you are, but I think that's generally correct.

Where I'm at property values have just shot through the roof though. Modestly updated 1950's - 1990's; 1,200ft^2 - 1500ft^2; 3/2/2's will sell between 480k - 650k where I'm at...in 2019 they were going for half that. So starter homes are now half a mil, and if you want something for less it'll be a 1890's - 1950's 700ft^2 home with a garage IF you're lucky...there are condos, and townhomes in rough areas for 150k-300k but some of those areas are no go zones for me.

Housing market needs a correction, and I've been watching trends in my area with morbid curiosity since 2020.