BREAKING: Housing market affordability is so bad that Zillow says it will take you 13.5 years to break even on a purchase from July onward, per Fortune.

— unusual_whales (@unusual_whales) November 8, 2023

Agthatbuilds said:

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BREAKING: Housing market affordability is so bad that Zillow says it will take you 13.5 years to break even on a purchase from July onward, per Fortune.

— unusual_whales (@unusual_whales) November 8, 2023

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These kids should really adjust their expectations

Tex117 said:

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Agthatbuilds said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare 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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The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.

Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.

So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.

Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.

I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.

The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.

The primary life lesson I attempted to gift to my son: "Don't be a victim".

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All of that text to not address the macro issue. Wow.

One can discuss the macro economic conditions. Which are a fact. Period. End of discussion. Without then swinging into "these darn kids" and their 8 dollar avocado toast. There are two different issues. You may be right. Probably are, but its a strawman to what is actually being discussed.

But the fact that home affordability being at its worst since 1984 has absolutely NOTHING to do with the expectations of a younger generation and all to do with policy decisions. You are proposing a way for an individual to try and navigate the market (again, probably right...and not one poster has disagreed with this). But that's not what the post you quoted is talking about.

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You can throw out your macroeconomics stats and manipulate them all you want to make yourself feel better. You act like everyone bought their house in 1984 at the perfect time in history. Even if that did happen, nobody was making money then either. At least our lifestyles reflected a lower economic lifestyle than present day America.

My parents bought their first home in 1973 for $17,000 after living in military apartment housing for the first 15 years of their marriage. That sounds cheap even for then but it was really a dump. The problem is that when they bought the house they couldn't afford furniture or air conditioning. My mother didn't get A/C until she lived in her west Texas house for 25 years. My "air conditioning" as a kid at night was lifting my bed sheet in the air and letting it settle down so the air would feel cool against my sweaty skin. So how good did they have it with "housing affordability" back in the day compared to the twenty somethings now?

Tell me one person in the 2000's that would give up air conditioning in their Houston apartment so they could go to law school? We both know the answer - no one. But my UT friend did it in the late 80's - you know, in the milk and honey days when it was easy and houses were cheap. Nobody lives in a house with a dirt floor these days or lives in a house with grass growing through the floor boards. That was my friends job in high school, to trim the grass with scissors in his living room. No Starbucks or avocado toast for him! He is a multimillionaire now. He just laughs about how f'ed up he started in life. He started his adult life in the Marines and he would laugh in anyone's face that would talk about the sob stories of today.

I will say it again. I had it better than my parents. And the next generation had it better than me. Maybe our edge is we were tougher than this generation. But again, we were not as tough as the generation before us ...

This generation is probably living the best lives of any generation in history yet they are determined to prove how bad of a deal they got to be born into this era. Maybe using the "miserable factor", they are correct.

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Stop. This thread is not the soapbox for you to get on your stump and lecture anyone about anything. Save it for your kid.

Discussing FACTS (not manipulated....simple facts). Discussing the issues associated with 2+2=4 (a fact, just like how its a fact that housing affordability is at its lowest since 1984), is NOT the same as whining and complaining about 2+2=4 and doing nothing to try and account for that fact in individual behavior.

You see that, yes? You see what the quote you quoted, and see what you are saying, Right?

Happens time and time again on this topic. We went through it with Fka as well, and we were all actually getting somewhere discussing how this all works from a macro perspective....for builders, buyers, the whole bit).

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Got it - I will stand down from the soap box!

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(You aren't wrong with your point, of course, just to be clear).

So, what do you think about the home affordability affecting the builders ability to try and meet demand?

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Ok, you asked! Since "macro" is what is being discussed, I think home builders need to build less expensive homes. People need homes and home builders need to sell homes. But as I see things from the sidelines with a macro perspective, people want homes that are nicer than are economically feasible. That comes from unrealistic expectations from the buyers. They won't buy homes that aren't to their standards so they rent. So builders are forced build nicer homes and they get expensive. A poster on this thread mentioned that he wouldn't pay x amount for a house that looked right into his neighbor's window. That's a current generation problem.

I had a friend that was Class of 83. He bought a house in Katy when Katy was new. 3 bedroom 2 bath, 2,000 square feet, $100,000. Looking back, it was all builder grade finish out but at the time I could not believe how nice it was and I couldn't believe anyone would (or could) spend one hundred thousand dollars (Dr Evil pinky to the mouth) on a house. Now, I would not step my toe in a house like that. And neither would anyone else with a college degree. Expectations have changed.

So, being off the soap box of course, i believe today's buyer's expectations exceed affordability. My experience with my son's friends, and from reading these types of threads, is that housing is affordable today if expectations are lowered. There are affordable houses out there, people just don't want to live in the houses they can afford. I get it, it's tough to swallow. But this generation isn't the first to swallow that bitter pill.

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How does this square with what Agbuilder is saying? I asked a similar question.

Re-read the original post you quoted. The home affordability numbers were literally talking about the AVERAGE. This isn't reflecting expectations of buyers.

How is it so freakin hard when it comes to residential real estate to have discussions about macro policy decisions affecting the market like any other asset class, yet everyone comes crashing in with off topic discussions about how an individual can buy that asset class? I don't see this with stocks, bonds, or anything else. Just smacks of ego and justification of life choices rather than an academic discussion.

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There are almost no builders I can name that can build a house for productions prices as a one off. The drhortons of the world have completely cornered that market.

That does two things it allows such companies to have major control in the market by mwteri g the amount of homes at those price points that are built. They'll even cancel your contract if there a big price jump and they can sell you build for more

2. It forces people into communities far away from city centers amd mostly controls resale values

The house most people really want is probably unattainable

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So, to GaryClare's question, why don't you just build a cheaper house? (I know you answer this for me already).

(Your posts on this thread have been really enlightening).

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I get the question but it's a bad question.

You are effectively asking the home builder to ignore Economics 101 (supply and demand; scarcity) to do this, or you are asking him to change his overall business model. When in doubt, apply basic Economics and you can generally stumble across the answer.

DR Horton focuses on quantity and AgThatBuilds focuses on quality which results in two different classes of homes.

The issue we currently have are all of the inputs that go into these decisions and outcomes of which there are many macro-economic issues (costs, policy, etc). These home builders are simply playing the hand that has been dealt to them from these macro issue inputs. Correspondingly, a change in the inputs, either up or down, can flex what you can and can't get for your money in either class of home.

GaryClare 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%

---

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.

---

The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.

Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.

So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.

Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.

I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.

The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.

The primary life lesson I attempted to gift to my son: "Don't be a victim".

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Well said, sir, well said! I regret I have but one star to adorn your post. I award you the coveted blue diamond response post.

I am becoming familiarized with the real estate market in Clarksville, Tennessee. It is about 45 minutes from Nashville. There are 527 houses under $300,000 and the area appears to be nice. Here are a few examples of houses in that area.

I am curious to get thoughts on the reasons homes cannot be built in this price range. I know they are not new construction but there are some nice looking houses. I realize it's not Austin or in the middle of Nashville. But these are very attainable houses.

What are the thoughts on these examples?

https://www.realtor.com/realestateandhomes-detail/1763-Broadripple-Dr_Clarksville_TN_37042_M80544-42814?from=srp-list-card

https://www.realtor.com/realestateandhomes-detail/238-Rossview-Rd_Clarksville_TN_37043_M89142-78315?from=srp-list-card

https://www.realtor.com/realestateandhomes-detail/1481-Coronado-Dr_Clarksville_TN_37042_M92472-27055?from=srp-list-card

https://www.realtor.com/realestateandhomes-detail/455-Needmore-Rd-Ste-4_Clarksville_TN_37040_M76587-52790?from=srp-list-card

https://homeandmoney.com/blog/moving-to-clarksville-tn/

That first link is roughly 1500 sq ft conditioned. That means to build it new today you'd need to build at 185 per conditioned sq ft, which probably means closer to 165ish total framed sqft.

I know nothing about Tennessee build cost but there's now way you could do that here new.

The second one is 192 sq ft. Maybe, if you didn't need the lot, other covered spaces andor utilities you could pull it off

The third one looks like a spec so someone did it.

The last one is 167/ sq ft conditioned. No way.

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%

---

Holy Sh@t balls...

Agthatbuilds said:

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Tex117 said:

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Agthatbuilds said:

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I dont want to overly bias you. I'm in what I would consider a niche market.

The guys who build spec home can build for less than 250 sqft and many less than 200. This is austin, BTW. Our product is very different than theirs.

And the production builders build for less than that but the market sets the rate for their homes and they can help control that market by increasing or decreasing the number they build every year.

Here's an analogy:

Production builders build Kia souls
Spec builders build Hyundai elantras
Semi custom/build on you lot guys build Camrys
We build high end bmws and Mercedes, with the occasional Maserati or lambo
Others build lambos and Ferraris
Some build Maybach

We need more souls, elantras, and camrys.

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Then why don't more builders more into that space? Not "exciting" enough? Need more volume to turn a profit? (more like commodities)?

And why is Austin right now so difficult to build in? (I have theories, of course, but want to hear yours).

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Austin is difficult to build in because:

The city is an absolute nightmare to work with, at every phase. Permitting, codes, city directives, inspections, tree/environmental people, zining requirments-The list is endless. I spent about 5 grand to protect one tree because the tree inspector kept threatening to red tag my job recently.
You want to call the permit department to get a question answered?? Call the general 311 line, get transferred over, and wait a week for a return call. Want to go into the office? Sign up for a slot a week in advance because no one goes into the office anymore.

Need a tpole or power transfer wait starts at 2 weeks, can last as long as 4 and they give no notice when it's your day.

The land is difficult. You mostly either have expansive clay or solid rock, usually on some sort of challenging topography. Either of those conditions can add 10s of thousands to a project

Existing land is sparse- there's almost 0 open buildable lots in austin proper. Therefore, one must buy an existing house for the land, tear it down and start over. That comes with its own set of challenges. One time, the city wouldn't let me tear down a house because some judge lived in it long ago. We had to then move the house. Where it went, I have no idea, but it's not in austin. So, what was the point? This problem means clients are almost guaranteed to spend and extra 500k-1 million just acquiring the land

Architecture/engineer- austin is a Architect driven market..we do really nice homes. The city requirements basically demand an architect be involved to some degree and that adds costs. Same with the engineer- all of our homes have a structural engineer, a mechanical engineer and sometimes a lighting "engineer." Yes, the houses are much better, but the soft costs are crazy

Labor- there's not enough skilled labor and those that do exist and are any good are super expensive. My framer went from about 16/sqft in 2018 to wanting 26 or 28 today. My plumber had to pay his crew chief 80 grand a year just to keep him. His new guys get 20+/hr to dig holes

Everything is relatively expensive here from an overhead perspective- gas, insurance, theft control, site security, trash hauls (city makes you recycle or pay a fine if the sqft is above a certain number), surveys, testing and so on. It all gets passed through to the client in one way or another.

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I think of that Samsung plant going in Hutto. Where are those houses going and how much are people going to have to pay? How many will have to rent first. Will there be enough houses?

Agthatbuilds said:

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That first link is roughly 1500 sq ft conditioned. That means to build it new today you'd need to build at 185 per conditioned sq ft, which probably means closer to 165ish total framed sqft.

I know nothing about Tennessee build cost but there's now way you could do that here new.

The second one is 192 sq ft. Maybe, if you didn't need the lot, other covered spaces andor utilities you could pull it off

The third one looks like a spec so someone did it.

The last one is 167/ sq ft conditioned. No way.

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We build in Houston for about $150/sf (no lot cost - teardown, rebuild on owner's land). That includes demo and margin that would make even custom builders blush. That's for a house that is on average 1450sf. Note that is includes demo costs and lot prep.

I think your costs are a bit out of whack. We do have some volume pricing with materials but not the impact that would account for the difference. Are your numbers including lot acquisition? Lot price can make for substantial differences for obvious reasons.

Now, all that said, I do not think we would make much margin if we had to sell the finished home on the open market. My gut, knowledge and experience would say that you could not, which means the margin we make would evaporate and is the reason you do not see traditional builders doing it.

Redassag94 said:

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I think of that Samsung plant going in Hutto. Where are those houses going and how much are people going to have to pay? How many will have to rent first. Will there be enough houses?

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Samsung could subsidize the housing. Many a steel mill, paper mill, and chemical plant did this, particularly in the 1940's and 1950's.

That wonderful community of Lake Jackson, designed by Alden Dow and largely built for workers at the plants his siblings owned.

It is many of those homes (same in Port Arthur, Beaumont, Texas City, Houston, etc) that are absolutely beyond their intended life cycle and need replaced.

One option may be companies subsidizing housing costs to attract workers, particularly in roles where WFH is not an option.

Just a thought.

YouBet said:

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Tex117 said:

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YouBet said:

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Tex117 said:

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Agthatbuilds said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare 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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The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.

Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.

So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.

Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.

I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.

The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.

The primary life lesson I attempted to gift to my son: "Don't be a victim".

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All of that text to not address the macro issue. Wow.

One can discuss the macro economic conditions. Which are a fact. Period. End of discussion. Without then swinging into "these darn kids" and their 8 dollar avocado toast. There are two different issues. You may be right. Probably are, but its a strawman to what is actually being discussed.

But the fact that home affordability being at its worst since 1984 has absolutely NOTHING to do with the expectations of a younger generation and all to do with policy decisions. You are proposing a way for an individual to try and navigate the market (again, probably right...and not one poster has disagreed with this). But that's not what the post you quoted is talking about.

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You can throw out your macroeconomics stats and manipulate them all you want to make yourself feel better. You act like everyone bought their house in 1984 at the perfect time in history. Even if that did happen, nobody was making money then either. At least our lifestyles reflected a lower economic lifestyle than present day America.

My parents bought their first home in 1973 for $17,000 after living in military apartment housing for the first 15 years of their marriage. That sounds cheap even for then but it was really a dump. The problem is that when they bought the house they couldn't afford furniture or air conditioning. My mother didn't get A/C until she lived in her west Texas house for 25 years. My "air conditioning" as a kid at night was lifting my bed sheet in the air and letting it settle down so the air would feel cool against my sweaty skin. So how good did they have it with "housing affordability" back in the day compared to the twenty somethings now?

Tell me one person in the 2000's that would give up air conditioning in their Houston apartment so they could go to law school? We both know the answer - no one. But my UT friend did it in the late 80's - you know, in the milk and honey days when it was easy and houses were cheap. Nobody lives in a house with a dirt floor these days or lives in a house with grass growing through the floor boards. That was my friends job in high school, to trim the grass with scissors in his living room. No Starbucks or avocado toast for him! He is a multimillionaire now. He just laughs about how f'ed up he started in life. He started his adult life in the Marines and he would laugh in anyone's face that would talk about the sob stories of today.

I will say it again. I had it better than my parents. And the next generation had it better than me. Maybe our edge is we were tougher than this generation. But again, we were not as tough as the generation before us ...

This generation is probably living the best lives of any generation in history yet they are determined to prove how bad of a deal they got to be born into this era. Maybe using the "miserable factor", they are correct.

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Stop. This thread is not the soapbox for you to get on your stump and lecture anyone about anything. Save it for your kid.

Discussing FACTS (not manipulated....simple facts). Discussing the issues associated with 2+2=4 (a fact, just like how its a fact that housing affordability is at its lowest since 1984), is NOT the same as whining and complaining about 2+2=4 and doing nothing to try and account for that fact in individual behavior.

You see that, yes? You see what the quote you quoted, and see what you are saying, Right?

Happens time and time again on this topic. We went through it with Fka as well, and we were all actually getting somewhere discussing how this all works from a macro perspective....for builders, buyers, the whole bit).

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Got it - I will stand down from the soap box!

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(You aren't wrong with your point, of course, just to be clear).

So, what do you think about the home affordability affecting the builders ability to try and meet demand?

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Ok, you asked! Since "macro" is what is being discussed, I think home builders need to build less expensive homes. People need homes and home builders need to sell homes. But as I see things from the sidelines with a macro perspective, people want homes that are nicer than are economically feasible. That comes from unrealistic expectations from the buyers. They won't buy homes that aren't to their standards so they rent. So builders are forced build nicer homes and they get expensive. A poster on this thread mentioned that he wouldn't pay x amount for a house that looked right into his neighbor's window. That's a current generation problem.

I had a friend that was Class of 83. He bought a house in Katy when Katy was new. 3 bedroom 2 bath, 2,000 square feet, $100,000. Looking back, it was all builder grade finish out but at the time I could not believe how nice it was and I couldn't believe anyone would (or could) spend one hundred thousand dollars (Dr Evil pinky to the mouth) on a house. Now, I would not step my toe in a house like that. And neither would anyone else with a college degree. Expectations have changed.

So, being off the soap box of course, i believe today's buyer's expectations exceed affordability. My experience with my son's friends, and from reading these types of threads, is that housing is affordable today if expectations are lowered. There are affordable houses out there, people just don't want to live in the houses they can afford. I get it, it's tough to swallow. But this generation isn't the first to swallow that bitter pill.

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How does this square with what Agbuilder is saying? I asked a similar question.

Re-read the original post you quoted. The home affordability numbers were literally talking about the AVERAGE. This isn't reflecting expectations of buyers.

How is it so freakin hard when it comes to residential real estate to have discussions about macro policy decisions affecting the market like any other asset class, yet everyone comes crashing in with off topic discussions about how an individual can buy that asset class? I don't see this with stocks, bonds, or anything else. Just smacks of ego and justification of life choices rather than an academic discussion.

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There are almost no builders I can name that can build a house for productions prices as a one off. The drhortons of the world have completely cornered that market.

That does two things it allows such companies to have major control in the market by mwteri g the amount of homes at those price points that are built. They'll even cancel your contract if there a big price jump and they can sell you build for more

2. It forces people into communities far away from city centers amd mostly controls resale values

The house most people really want is probably unattainable

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So, to GaryClare's question, why don't you just build a cheaper house? (I know you answer this for me already).

(Your posts on this thread have been really enlightening).

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I get the question but it's a bad question.

You are effectively asking the home builder to ignore Economics 101 (supply and demand; scarcity) to do this, or you are asking him to change his overall business model. When in doubt, apply basic Economics and you can generally stumble across the answer.

DR Horton focuses on quantity and AgThatBuilds focuses on quality which results in two different classes of homes.

The issue we currently have are all of the inputs that go into these decisions and outcomes of which there are many macro-economic issues (costs, policy, etc). These home builders are simply playing the hand that has been dealt to them from these macro issue inputs. Correspondingly, a change in the inputs, either up or down, can flex what you can and can't get for your money in either class of home.

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What are you talking about and who are you talking to? If you understood the flow of the thread, you would know that I was restating the question that Gary posted about "builders should just build cheap houses."

Agbuilder already explained the many costs associated with doing so.

I'm not asking him to ignore anything about the economics of this and had asked him to explain how it all comes together for his end of the market when there are in fact clear market forces that would indicate a high demand. (Which he did and greatly improved this thread with his expertise).

So go bark up another tree. You missed the mark with this one.

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I'm talking to you, obviously. There is no barking here. Explaining the issue at a higher level since you seemed to have not understood it the first time at a more detailed level.

If the question was already answered, then don't ask the same question again.

So sensitive.

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Im sorry you can't follow the flow of the conversation. It was being factious. Clearly. Just in case that's too big of word. https://www.merriam-webster.com/dictionary/facetious

Quote:

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One option may be companies subsidizing housing costs to attract workers, particularly in roles where WFH is not an option.

Just a thought.

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You think that would artificially raise home prices in that area all but kicking out anyone that didn't work for that company?

For a builder grade home of that size with little to no bells on it, my prices are probably out of whack.

To answer the other posters question of why we don't just build those sort of homes, it's because I cannot build at 150 and stay in business. If that 150 includes the builder fee, that means the build costs would need to be around 125 or 130.

I just cannot fathom how that'd be possible in the current market. Those are early 90 prices for us.

I know you get this but for the other posters- what fka and I are discussing here and the question the other poster posed- we are comparing markedly different products.

I walked a house for someone wanting to buy a couple months back in lago Vista. This was a new build of about 1300 sqft, very builder grade(vinyl floors, vinyl windows, quartz tops, production cabinets, scratches and dent appliances) and it was listed for 350k. The finish out, to me, was awful- bad paint, bad drywall, appliances half worked, had a roof leak and so on. But, I'm very very biased in what a "good" finish out look like. For my friend, it was fine and worked for them. For me, I thought I'm on the wrong side of this business.

Could it not also deflate surrounding markets by opening up a lot more options for people not working for the plant, increases the supply side?

I guess I mean only if compared it's build their own neighborhoods. A subsidy will only raise the cost of all the houses.

I know if I owned a home there and wanted to sell and found out the plant was offering 5k to help buy a home, my price would immediately go up 5k

I use production subs where possible and my vendors take care of me as much as they can, it's still tough to build under 200.

Houston is 100% a different labor and materials market. Home construction has been lower than Austin msa for decades.

You managed to reply to YouBet but quote me, so I will try and answer.

In theory you would be correct. But… those housing subsidies would make the home attractive to those receiving the subsidy and UNattractive to those having to pay full price, so it works itself out regardless. Plus it puts some housing stock on the market.

Part of the price pressures is indeed lack of affordable starter homes not 1.5 hours outside a city.

But one of the drivers of that is that it is more profitable to build 1st move up, 2nd move up houses if you control for initial lot costs.

Texas in particular has been under housed before the great pause following 2008 (Texas was not a dip but more of a pause IMO). That has gotten considerably worse as demand continued to greatly outpace supply - people and companies moving to Texas a huge factor.

It was said a bit snarky above, but it is Economic 101 on what a builder chooses to build. It's what maximizes profit, which they are sort of bound to do if they are a good company.

Agthatbuilds said:

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Could it not also deflate surrounding markets by opening up a lot more options for people not working for the plant, increases the supply side?

I guess I mean only if compared it's build their own neighborhoods. A subsidy will only raise the cost of all the houses.

I know if I owned a home there and wanted to sell and found out the plant was offering 5k to help buy a home, my price would immediately go up 5k

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Yup.

Interesting about your first point though. Maybe? But is housing deflation that is neighborhood specific (not like a recession where everything lowers), ever a good thing? (I have no idea).

fka ftc said:

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You managed to reply to YouBet but quote me, so I will try and answer.

In theory you would be correct. But… those housing subsidies would make the home attractive to those receiving the subsidy and UNattractive to those having to pay full price, so it works itself out regardless. Plus it puts some housing stock on the market.

Part of the price pressures is indeed lack of affordable starter homes not 1.5 hours outside a city.

But one of the drivers of that is that it is more profitable to build 1st move up, 2nd move up houses if you control for initial lot costs.

Texas in particular has been under housed before the great pause following 2008 (Texas was not a dip but more of a pause IMO). That has gotten considerably worse as demand continued to greatly outpace supply - people and companies moving to Texas a huge factor.

It was said a bit snarky above, but it is Economic 101 on what a builder chooses to build. It's what maximizes profit, which they are sort of bound to do if they are a good company.

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How does this square with what Agbuilder said? (not being snarky).

Clearly builders act in order to maximize profit. Ive not once suggested otherwise (Gary Clarke mentioned in a post why don't builders just build more? I facetiously asked Agbuilder that. Most of the last few pages have been dedicated to discussing the economics of builders and why even in spite of demand, builders can't meet that demand. (Why in the mid 2010's builders couldn't do it something we haven't discussed).

Agbuilder seems to understand what I'm asking (as in what are the driving factors that go into the analysis of whether to build or not). A huge contribution to this thread.

Housing costs are not nearly so high in cities whose real estate is not red hot. Most cities in the middle of America are still affordable.

Is it a viable option for 20 and 30-somethings to consider relocating, even if it means changing jobs or even careers?

I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

You were not being snarky, was referring to the Econ 101 comment made to you.

I think Agthatbuilds and I are in agreement, just from different points in the market.

Agree, he brings a ton of information. Agree you have asked good questions.

Stat Monitor Repairman said:

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I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

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Every effing time.

Go look at the original post and explain to me how whatever you are saying in anyway addresses the issue of the home affordability index.

Or we can skip all that and you can admit right now that whatever you are saying is HOW to navigate the market rather than discussing the mechanics of the market itself.

How many times do we have to go through this? How is this so hard for you all?

Stat Monitor Repairman said:

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I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

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To be honest, we need to give serious thought to not moving all jobs to urban centers. Whether some of that is work from home or others is distributing manufacturing, research, etc.

We were in Ireland over the summer and they have a real, real problem in rural areas with any young people to work. It's basically a country of rural retirement communities and crowded urban centers.

Any kids born in the rural areas see the only path as going to university and then getting a good job and living in the urban areas.

We would do well by solving affordable housing by reinvesting in middle America.

fka ftc said:

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You were not being snarky, was referring to the Econ 101 comment made to you.

I think Agthatbuilds and I are in agreement, just from different points in the market.

Agree, he brings a ton of information. Agree you have asked good questions.

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Im very much enjoying reading both yours and Agbuilds discussion on this topic. Its really good stuff.

It seems that the in the financial news, there isn't as much information discussing the builder side issue. In other words, one hears alot "there is a lack of supply." So, the easy thought is, well, why don't builders build more to meet demand. What they don't discuss enough are the issues that builders are facing.

fka ftc said:

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Stat Monitor Repairman said:

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I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

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To be honest, we need to give serious thought to not moving all jobs to urban centers. Whether some of that is work from home or others is distributing manufacturing, research, etc.

We were in Ireland over the summer and they have a real, real problem in rural areas with any young people to work. It's basically a country of rural retirement communities and crowded urban centers.

Any kids born in the rural areas see the only path as going to university and then getting a good job and living in the urban areas.

We would do well by solving affordable housing by reinvesting in middle America.

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Isn't this kinda happening and driving up some of the home prices in middle America?

(But overall, I think you are right in that this needs to very much be a part of the solution).

Yes, but when people choose to WFH from a remote area, they are choosing the better locales of middle America, not areas that could really use the reinvestment.

That may require a more robust strategy. I brought up Lake Jackson before. Dow in the last 10 years has brought in office jobs to that area. That resulted in housing prices increasing but also resulted in good paying jobs moving back in, which reinvigorates the schools, attracts companies like HEB to build new stores, infrastructure, and such.

Though some may consider Lake Jackson a "suburb", it's a bit unique as there is about 20-30 miles between suburban development and Lake Jackson. So to see that buildup happen due to a company reinvesting in a "rural" area is a good indicator.

Samsung building a factory in Hutto is great, but building it in Hearne, Caldwell, Rockdale, Snook can make for a real game change.

Just spitballing.

Tex117 said:

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YouBet said:

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Tex117 said:

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YouBet said:

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Tex117 said:

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Agthatbuilds said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare 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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The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.

Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.

So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.

Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.

I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.

The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.

The primary life lesson I attempted to gift to my son: "Don't be a victim".

---

All of that text to not address the macro issue. Wow.

One can discuss the macro economic conditions. Which are a fact. Period. End of discussion. Without then swinging into "these darn kids" and their 8 dollar avocado toast. There are two different issues. You may be right. Probably are, but its a strawman to what is actually being discussed.

But the fact that home affordability being at its worst since 1984 has absolutely NOTHING to do with the expectations of a younger generation and all to do with policy decisions. You are proposing a way for an individual to try and navigate the market (again, probably right...and not one poster has disagreed with this). But that's not what the post you quoted is talking about.

---

You can throw out your macroeconomics stats and manipulate them all you want to make yourself feel better. You act like everyone bought their house in 1984 at the perfect time in history. Even if that did happen, nobody was making money then either. At least our lifestyles reflected a lower economic lifestyle than present day America.

My parents bought their first home in 1973 for $17,000 after living in military apartment housing for the first 15 years of their marriage. That sounds cheap even for then but it was really a dump. The problem is that when they bought the house they couldn't afford furniture or air conditioning. My mother didn't get A/C until she lived in her west Texas house for 25 years. My "air conditioning" as a kid at night was lifting my bed sheet in the air and letting it settle down so the air would feel cool against my sweaty skin. So how good did they have it with "housing affordability" back in the day compared to the twenty somethings now?

Tell me one person in the 2000's that would give up air conditioning in their Houston apartment so they could go to law school? We both know the answer - no one. But my UT friend did it in the late 80's - you know, in the milk and honey days when it was easy and houses were cheap. Nobody lives in a house with a dirt floor these days or lives in a house with grass growing through the floor boards. That was my friends job in high school, to trim the grass with scissors in his living room. No Starbucks or avocado toast for him! He is a multimillionaire now. He just laughs about how f'ed up he started in life. He started his adult life in the Marines and he would laugh in anyone's face that would talk about the sob stories of today.

I will say it again. I had it better than my parents. And the next generation had it better than me. Maybe our edge is we were tougher than this generation. But again, we were not as tough as the generation before us ...

This generation is probably living the best lives of any generation in history yet they are determined to prove how bad of a deal they got to be born into this era. Maybe using the "miserable factor", they are correct.

---

Stop. This thread is not the soapbox for you to get on your stump and lecture anyone about anything. Save it for your kid.

Discussing FACTS (not manipulated....simple facts). Discussing the issues associated with 2+2=4 (a fact, just like how its a fact that housing affordability is at its lowest since 1984), is NOT the same as whining and complaining about 2+2=4 and doing nothing to try and account for that fact in individual behavior.

You see that, yes? You see what the quote you quoted, and see what you are saying, Right?

Happens time and time again on this topic. We went through it with Fka as well, and we were all actually getting somewhere discussing how this all works from a macro perspective....for builders, buyers, the whole bit).

---

Got it - I will stand down from the soap box!

---

(You aren't wrong with your point, of course, just to be clear).

So, what do you think about the home affordability affecting the builders ability to try and meet demand?

---

Ok, you asked! Since "macro" is what is being discussed, I think home builders need to build less expensive homes. People need homes and home builders need to sell homes. But as I see things from the sidelines with a macro perspective, people want homes that are nicer than are economically feasible. That comes from unrealistic expectations from the buyers. They won't buy homes that aren't to their standards so they rent. So builders are forced build nicer homes and they get expensive. A poster on this thread mentioned that he wouldn't pay x amount for a house that looked right into his neighbor's window. That's a current generation problem.

I had a friend that was Class of 83. He bought a house in Katy when Katy was new. 3 bedroom 2 bath, 2,000 square feet, $100,000. Looking back, it was all builder grade finish out but at the time I could not believe how nice it was and I couldn't believe anyone would (or could) spend one hundred thousand dollars (Dr Evil pinky to the mouth) on a house. Now, I would not step my toe in a house like that. And neither would anyone else with a college degree. Expectations have changed.

So, being off the soap box of course, i believe today's buyer's expectations exceed affordability. My experience with my son's friends, and from reading these types of threads, is that housing is affordable today if expectations are lowered. There are affordable houses out there, people just don't want to live in the houses they can afford. I get it, it's tough to swallow. But this generation isn't the first to swallow that bitter pill.

---

How does this square with what Agbuilder is saying? I asked a similar question.

Re-read the original post you quoted. The home affordability numbers were literally talking about the AVERAGE. This isn't reflecting expectations of buyers.

How is it so freakin hard when it comes to residential real estate to have discussions about macro policy decisions affecting the market like any other asset class, yet everyone comes crashing in with off topic discussions about how an individual can buy that asset class? I don't see this with stocks, bonds, or anything else. Just smacks of ego and justification of life choices rather than an academic discussion.

---

There are almost no builders I can name that can build a house for productions prices as a one off. The drhortons of the world have completely cornered that market.

That does two things it allows such companies to have major control in the market by mwteri g the amount of homes at those price points that are built. They'll even cancel your contract if there a big price jump and they can sell you build for more

2. It forces people into communities far away from city centers amd mostly controls resale values

The house most people really want is probably unattainable

---

So, to GaryClare's question, why don't you just build a cheaper house? (I know you answer this for me already).

(Your posts on this thread have been really enlightening).

---

I get the question but it's a bad question.

You are effectively asking the home builder to ignore Economics 101 (supply and demand; scarcity) to do this, or you are asking him to change his overall business model. When in doubt, apply basic Economics and you can generally stumble across the answer.

DR Horton focuses on quantity and AgThatBuilds focuses on quality which results in two different classes of homes.

The issue we currently have are all of the inputs that go into these decisions and outcomes of which there are many macro-economic issues (costs, policy, etc). These home builders are simply playing the hand that has been dealt to them from these macro issue inputs. Correspondingly, a change in the inputs, either up or down, can flex what you can and can't get for your money in either class of home.

---

What are you talking about and who are you talking to? If you understood the flow of the thread, you would know that I was restating the question that Gary posted about "builders should just build cheap houses."

Agbuilder already explained the many costs associated with doing so.

I'm not asking him to ignore anything about the economics of this and had asked him to explain how it all comes together for his end of the market when there are in fact clear market forces that would indicate a high demand. (Which he did and greatly improved this thread with his expertise).

So go bark up another tree. You missed the mark with this one.

---

I'm talking to you, obviously. There is no barking here. Explaining the issue at a higher level since you seemed to have not understood it the first time at a more detailed level.

If the question was already answered, then don't ask the same question again.

So sensitive.

---

Im sorry you can't follow the flow of the conversation. It was being factious. Clearly. Just in case that's too big of word. https://www.merriam-webster.com/dictionary/facetious

---

Goodness. I'm following the conversation. I'm not disputing any of the details that the experts on here have shared. I replied with a high-level response because you asked a question that had already been answered which you state right in your post had been answered. I was just trying to provide an overlay reason for what's going on because the housing industry cannot escape basic economics and it seems like you are trying to find a problem that somehow avoids the guardrails of economics.

A question phrased as "Why don't you just build a cheaper house?" is the type of question a left-wing dunce who is ignorant of economics asks. And I'm not saying that is you, but that question is a dunce question.

And after it's all been explained you ask it again...so don't ask questions that you know have already been answered and you won't get answers to those questions trying to enlighten you.

Hope we are good now.

YouBet said:

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Tex117 said:

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YouBet said:

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Tex117 said:

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YouBet said:

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Tex117 said:

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Agthatbuilds said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare 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.

---

The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.

Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.

So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.

Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.

I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.

The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.

The primary life lesson I attempted to gift to my son: "Don't be a victim".

---

All of that text to not address the macro issue. Wow.

One can discuss the macro economic conditions. Which are a fact. Period. End of discussion. Without then swinging into "these darn kids" and their 8 dollar avocado toast. There are two different issues. You may be right. Probably are, but its a strawman to what is actually being discussed.

But the fact that home affordability being at its worst since 1984 has absolutely NOTHING to do with the expectations of a younger generation and all to do with policy decisions. You are proposing a way for an individual to try and navigate the market (again, probably right...and not one poster has disagreed with this). But that's not what the post you quoted is talking about.

---

You can throw out your macroeconomics stats and manipulate them all you want to make yourself feel better. You act like everyone bought their house in 1984 at the perfect time in history. Even if that did happen, nobody was making money then either. At least our lifestyles reflected a lower economic lifestyle than present day America.

My parents bought their first home in 1973 for $17,000 after living in military apartment housing for the first 15 years of their marriage. That sounds cheap even for then but it was really a dump. The problem is that when they bought the house they couldn't afford furniture or air conditioning. My mother didn't get A/C until she lived in her west Texas house for 25 years. My "air conditioning" as a kid at night was lifting my bed sheet in the air and letting it settle down so the air would feel cool against my sweaty skin. So how good did they have it with "housing affordability" back in the day compared to the twenty somethings now?

Tell me one person in the 2000's that would give up air conditioning in their Houston apartment so they could go to law school? We both know the answer - no one. But my UT friend did it in the late 80's - you know, in the milk and honey days when it was easy and houses were cheap. Nobody lives in a house with a dirt floor these days or lives in a house with grass growing through the floor boards. That was my friends job in high school, to trim the grass with scissors in his living room. No Starbucks or avocado toast for him! He is a multimillionaire now. He just laughs about how f'ed up he started in life. He started his adult life in the Marines and he would laugh in anyone's face that would talk about the sob stories of today.

I will say it again. I had it better than my parents. And the next generation had it better than me. Maybe our edge is we were tougher than this generation. But again, we were not as tough as the generation before us ...

This generation is probably living the best lives of any generation in history yet they are determined to prove how bad of a deal they got to be born into this era. Maybe using the "miserable factor", they are correct.

---

Stop. This thread is not the soapbox for you to get on your stump and lecture anyone about anything. Save it for your kid.

Discussing FACTS (not manipulated....simple facts). Discussing the issues associated with 2+2=4 (a fact, just like how its a fact that housing affordability is at its lowest since 1984), is NOT the same as whining and complaining about 2+2=4 and doing nothing to try and account for that fact in individual behavior.

You see that, yes? You see what the quote you quoted, and see what you are saying, Right?

Happens time and time again on this topic. We went through it with Fka as well, and we were all actually getting somewhere discussing how this all works from a macro perspective....for builders, buyers, the whole bit).

---

Got it - I will stand down from the soap box!

---

(You aren't wrong with your point, of course, just to be clear).

So, what do you think about the home affordability affecting the builders ability to try and meet demand?

---

Ok, you asked! Since "macro" is what is being discussed, I think home builders need to build less expensive homes. People need homes and home builders need to sell homes. But as I see things from the sidelines with a macro perspective, people want homes that are nicer than are economically feasible. That comes from unrealistic expectations from the buyers. They won't buy homes that aren't to their standards so they rent. So builders are forced build nicer homes and they get expensive. A poster on this thread mentioned that he wouldn't pay x amount for a house that looked right into his neighbor's window. That's a current generation problem.

I had a friend that was Class of 83. He bought a house in Katy when Katy was new. 3 bedroom 2 bath, 2,000 square feet, $100,000. Looking back, it was all builder grade finish out but at the time I could not believe how nice it was and I couldn't believe anyone would (or could) spend one hundred thousand dollars (Dr Evil pinky to the mouth) on a house. Now, I would not step my toe in a house like that. And neither would anyone else with a college degree. Expectations have changed.

So, being off the soap box of course, i believe today's buyer's expectations exceed affordability. My experience with my son's friends, and from reading these types of threads, is that housing is affordable today if expectations are lowered. There are affordable houses out there, people just don't want to live in the houses they can afford. I get it, it's tough to swallow. But this generation isn't the first to swallow that bitter pill.

---

How does this square with what Agbuilder is saying? I asked a similar question.

Re-read the original post you quoted. The home affordability numbers were literally talking about the AVERAGE. This isn't reflecting expectations of buyers.

How is it so freakin hard when it comes to residential real estate to have discussions about macro policy decisions affecting the market like any other asset class, yet everyone comes crashing in with off topic discussions about how an individual can buy that asset class? I don't see this with stocks, bonds, or anything else. Just smacks of ego and justification of life choices rather than an academic discussion.

---

There are almost no builders I can name that can build a house for productions prices as a one off. The drhortons of the world have completely cornered that market.

That does two things it allows such companies to have major control in the market by mwteri g the amount of homes at those price points that are built. They'll even cancel your contract if there a big price jump and they can sell you build for more

2. It forces people into communities far away from city centers amd mostly controls resale values

The house most people really want is probably unattainable

---

So, to GaryClare's question, why don't you just build a cheaper house? (I know you answer this for me already).

(Your posts on this thread have been really enlightening).

---

I get the question but it's a bad question.

You are effectively asking the home builder to ignore Economics 101 (supply and demand; scarcity) to do this, or you are asking him to change his overall business model. When in doubt, apply basic Economics and you can generally stumble across the answer.

DR Horton focuses on quantity and AgThatBuilds focuses on quality which results in two different classes of homes.

The issue we currently have are all of the inputs that go into these decisions and outcomes of which there are many macro-economic issues (costs, policy, etc). These home builders are simply playing the hand that has been dealt to them from these macro issue inputs. Correspondingly, a change in the inputs, either up or down, can flex what you can and can't get for your money in either class of home.

---

What are you talking about and who are you talking to? If you understood the flow of the thread, you would know that I was restating the question that Gary posted about "builders should just build cheap houses."

Agbuilder already explained the many costs associated with doing so.

I'm not asking him to ignore anything about the economics of this and had asked him to explain how it all comes together for his end of the market when there are in fact clear market forces that would indicate a high demand. (Which he did and greatly improved this thread with his expertise).

So go bark up another tree. You missed the mark with this one.

---

I'm talking to you, obviously. There is no barking here. Explaining the issue at a higher level since you seemed to have not understood it the first time at a more detailed level.

If the question was already answered, then don't ask the same question again.

So sensitive.

---

Im sorry you can't follow the flow of the conversation. It was being factious. Clearly. Just in case that's too big of word. https://www.merriam-webster.com/dictionary/facetious

---

Goodness. I'm following the conversation. I'm not disputing any of the details that the experts on here have shared. I replied with a high-level response because you asked a question that had already been answered which you state right in your post had been answered. I was just trying to provide an overlay reason for what's going on because the housing industry cannot escape basic economics and it seems like you are trying to find a problem that somehow avoids the guardrails of economics.

A question phrased as "Why don't you just build a cheaper house?" is the type of question a left-wing dunce who is ignorant of economics asks. And I'm not saying that is you, but that question is a dunce question.

And after it's all been explained you ask it again...so don't ask questions that you know have already been answered and you won't get answers to those questions trying to enlighten you.

Hope we are good now.

---

No. We aren't. You can't read or understand context. (Of course it's a dunce question… that was the effing point).

Try reading my definition of facetious. See if you can understand it. And start there.

Why does this thread just beg for moronic posts?

Tex117 said:

---

Stat Monitor Repairman said:

---

I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

---

Every effing time.

Go look at the original post and explain to me how whatever you are saying in anyway addresses the issue of the home affordability index.

Or we can skip all that and you can admit right now that whatever you are saying is HOW to navigate the market rather than discussing the mechanics of the market itself.

How many times do we have to go through this? How is this so hard for you all?

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I see what you are saying but you got to acknowledge that we 16 pages deep on here discussing related matters.

Everyone on here is lucky to have run the gauntlet by seeing all this coming, getting stable and locking in at 2-3% in early 2022. But we got 2 generations of folks that are up **** creek paying $1800+ a month for some POS one bedroom in Austin.

Two generations are doomed for the foreseeable future on that front.

The mechanics of the market are ****. Could be a decade to settle out, if ever.

Lilk someone said above folks got to adjust their expectations in that they may not live better than their parents, and that gonna be a bitter pill to swallow.

The mechanics of the market is that every swinging **** globally is trying to park money in single family real estate due to impending collapse of the global economy.

We all on the deck of the Titanic fighting over lifeboats, and some are in a better position than others, for the most part by chance.

Stat Monitor Repairman said:

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Tex117 said:

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Stat Monitor Repairman said:

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I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

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Every effing time.

Go look at the original post and explain to me how whatever you are saying in anyway addresses the issue of the home affordability index.

Or we can skip all that and you can admit right now that whatever you are saying is HOW to navigate the market rather than discussing the mechanics of the market itself.

How many times do we have to go through this? How is this so hard for you all?

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I see what you are saying but you got to acknowledge that we 16 pages deep on here discussing related matters.

Everyone on here is lucky to have run the gauntlet by seeing all this coming, getting stable and locking in at 2-3% in early 2022. But we got 2 generations of folks that are up **** creek paying $1800+ a month for some POS one bedroom in Austin.

Two generations are doomed for the foreseeable future on that front.

The mechanics of the market are ****. Could be a decade to settle out, if ever.

Lilk someone said above folks got to adjust their expectations in that they may not live better than their parents, and that gonna be a bitter pill to swallow.

The mechanics of the market is that every swinging **** globally is trying to park money in single family real estate due to impending collapse of the global economy.

We all on the deck of the Titanic fighting over lifeboats, and some are in a better position than others, for the most part by chance.

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We are, but when this thread is at its best is when Agbuilder of fka (and others) are discussing just how this all permeates and not giving unsolicited advice about "these blasted kids and their expectations." Especially since no one on this thread is asking for it.

You may be right on the expectations (which is a complete failure of the current generation at the levers of power to not leave the economy in a place where their kids should have it better...at least in theory, but thats for another thread). But, how is this relevant to the home price affordability index and how it affects the broader market?

What is happening is that olds are using this actual fact of home price availability to support their bashing on "kids are lazy, should adjust expectations, and smacks of arrogance, ego, and I got mine." Which is funny because it was not kids that created this environment,..and further, that these are the kids they raised.

Home prices (and interest rates) will modulate at some point. Just like it did in the 80s. Things even out... Ebb, flow, and cycle.

Whats interesting is identifying the issues both will the supply side (building) and the demand side (population, income, etc.) and seeing what policies can help alleviate the issue.

Redassag94 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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Holy Sh@t balls...

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I would like to see this on a sqft basis. Houses are a lot bigger today.

I did some math.

1980 median size: 1,600 sqft
2018 median size: 2,389 sqft

1980 is about 67% of 2018. Smaller houses are a little more expensive per sqft. So, let's say 75% of 2023 prices to ballpark normalize for size.

Median house price of 75% of 2023 = $315k; ($315k * .2) / 81.5 = 77% -> still bad, but not as bad

The reality is that home prices are inflated right now because home prices have 5+ years of future inflation baked in. Foreign investors that hold dollars are looking for a place to put them that has an inflation hedge. RE is a good choice.

General question unrelated to above:

For those posters around younger folks dealing with the high cost of housing ...

Is there a general expectation among that demo that home prices and interest rates will stabilize?

Tex117 said:

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YouBet said:

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Tex117 said:

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YouBet said:

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Tex117 said:

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YouBet said:

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Tex117 said:

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Agthatbuilds said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare said:

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Tex117 said:

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GaryClare 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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The reason old people don't have the ability to realize the economics were more favorable back in the day is probably because most of us lived quite differently than the young people do now. After 40 years of working 10 to 12 hours a day, things are starting to go pretty well for me. It's kind of like I'm an overnight success except it took two thirds of my life to get here. I now watch in wonder as the younger people buy luxuries that I would not even consider buying now. And I can afford pretty much anything I want to buy. But when I was in my twenties living off of the average college graduate salary, I lived in an apartment that you had to turn on the lights when you got home to allow time for the roaches to clear out and you turned on the A/C only long enough to knock the edge of the mugginess of the apartment. I had a fan and actually sweated at night to stay cool - in Houston. If I ever ate out it was at Whataburger or Taco Bueno, and that was rare. I didn't even have a credit card. When our generation ran out of cash you quit spending money. I remember looking at pictures at the store with the nice matting and framing and just did it myself with a print, a poster board for the mat and a frame from Target. It was not even a consideration to buy a "store bought" framed picture. I bought my clothes from Marshalls. I don't take my shirts to the cleaners, I did them myself on Sundays - saving a dollar a shirt. I bought used furniture and graduated up to damaged new furniture. Vacations? Please. There was no way I was spending money on a vacation. A Coke in a machine was 25 cents and I wouldn't buy one. Now I see the long lines at Starbucks? That's laughable. People paying $8 for whatever it is they buy there. I still won't go into a Starbucks. Potato chips and candy bars, no way, then and now. Back then (and pretty much still now) I went to the grocery store and only bought items with items with no ingredients - beef on sale, chicken, green beans, carrots, potatoes, etc.

Interestingly enough, my recent college graduate son says you can eat for $3 a meal - beef that is on sale and vegetables. He also likes Annie's Mac and Cheese. 20 years ago, an expense analysis showed we were spending too much on our Friday Mexican Food night. That led to "Nacho Night" at the house that led to a $300 a month savings. Before taxes you have to make $500 to take home $300. So I needed $6,000 a year extra salary to eat Mexican at a restaurant every Friday instead of having a better Mexican food night at home. Alcohol? If you are drinking alcohol, especially at a restaurant, you have no credibility with complaints on how "the current economic environment is so bad". People, young and old, feel like it is a divine right to have drinks whenever they want to have one. Stop drinking! Your body doesn't need the ethanol anyway! I watch people spend more on alcohol than food at a restaurant. Now a decent meal meal for two and a few drinks at a moderately priced place is $80. I ask my son's friends, who complain about not having any money, how often they eat out. "Pretty much very night". I just shake my head. And I know this is blasphemy, but if you are going to any, or all, of the Aggie football games - take a look at that one.

So you might say that this frugality is negligible in the big picture. It is not. I am currently on my 7th and 8th house. And every one of them was bought on a razor's margin. Life is a game of inches and every inch counts. You cannot get the same house as your parent's house. I think another problem with the present generation is that they lived too well in college and they expect to live better now that they have a job. I didn't live as well as my son or any of my son's friends lived in college until I was in my 30's. The way you "get into the housing market" is by starting off with a 1,600 square foot house in a blue collar neighborhood. Say $300,000. You need $60,000 to get into it. Can you find $10,000 a year with the average college graduate salary of 60 to 75k? Have you thought about a second job on nights and weekends? You could scrap up a down payment after 5 years working a side deal. Then I hear, "I am about quality of life" or "I am too tired to work a second job". Then I tell them to eat better (as in real food), quit drinking, work out 3 days a week, go to bed earlier and then you will not "be so tired". Then I get the eye roll and the "oh, Mr. Clare!" Then they trot off to dinner and their $2,000 a month apartment. Then it's Call of Duty with their online friends.

Relative to getting a house, you can't disqualify a house because it's not in the perfect neighborhood, up to date or you think of all the renovation it needs to get it to your unrealistic standards. Google "formica" and "linoleum". Forget "tile" and "wood flooring". Buy a house, live in it, fix it up yourself on weekends, build equity and move up. Live like that, with that strategy, for 30 years and you will probably end up with a nice house. Or live in a nice apartment with really nice amenities right now and watch the inflation this country is creating price you out of ever getting into a house and subsequently being behind the economic boulder your entire life. And you can keep complaining your whole life about your hard luck story, your unfortunate timing in life and how life isn't fair.

I could go on and on but 99% of the young people on here are going to give me the virtual eye roll. Maybe this will help the 1%. But I will say none of you young people will have any credibility when you whine and play the victim card when you live a life that is the 100% complete opposite of the lifestyle of the people you are criticizing.

The bottom line is your life is economically significantly better than my life. And my younger life was better than the life of the old guys before me who got on boats to go to Europe and the Pacific during WWII. And their lives were better than their old guys who went through the Depression. And their lives were better than their old guys who had to worry about getting killed by the Comanches. And their lives were better than their old guys who had to come over from Europe because they didn't have potatoes to eat. It goes on and on.

The primary life lesson I attempted to gift to my son: "Don't be a victim".

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All of that text to not address the macro issue. Wow.

One can discuss the macro economic conditions. Which are a fact. Period. End of discussion. Without then swinging into "these darn kids" and their 8 dollar avocado toast. There are two different issues. You may be right. Probably are, but its a strawman to what is actually being discussed.

But the fact that home affordability being at its worst since 1984 has absolutely NOTHING to do with the expectations of a younger generation and all to do with policy decisions. You are proposing a way for an individual to try and navigate the market (again, probably right...and not one poster has disagreed with this). But that's not what the post you quoted is talking about.

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You can throw out your macroeconomics stats and manipulate them all you want to make yourself feel better. You act like everyone bought their house in 1984 at the perfect time in history. Even if that did happen, nobody was making money then either. At least our lifestyles reflected a lower economic lifestyle than present day America.

My parents bought their first home in 1973 for $17,000 after living in military apartment housing for the first 15 years of their marriage. That sounds cheap even for then but it was really a dump. The problem is that when they bought the house they couldn't afford furniture or air conditioning. My mother didn't get A/C until she lived in her west Texas house for 25 years. My "air conditioning" as a kid at night was lifting my bed sheet in the air and letting it settle down so the air would feel cool against my sweaty skin. So how good did they have it with "housing affordability" back in the day compared to the twenty somethings now?

Tell me one person in the 2000's that would give up air conditioning in their Houston apartment so they could go to law school? We both know the answer - no one. But my UT friend did it in the late 80's - you know, in the milk and honey days when it was easy and houses were cheap. Nobody lives in a house with a dirt floor these days or lives in a house with grass growing through the floor boards. That was my friends job in high school, to trim the grass with scissors in his living room. No Starbucks or avocado toast for him! He is a multimillionaire now. He just laughs about how f'ed up he started in life. He started his adult life in the Marines and he would laugh in anyone's face that would talk about the sob stories of today.

I will say it again. I had it better than my parents. And the next generation had it better than me. Maybe our edge is we were tougher than this generation. But again, we were not as tough as the generation before us ...

This generation is probably living the best lives of any generation in history yet they are determined to prove how bad of a deal they got to be born into this era. Maybe using the "miserable factor", they are correct.

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Stop. This thread is not the soapbox for you to get on your stump and lecture anyone about anything. Save it for your kid.

Discussing FACTS (not manipulated....simple facts). Discussing the issues associated with 2+2=4 (a fact, just like how its a fact that housing affordability is at its lowest since 1984), is NOT the same as whining and complaining about 2+2=4 and doing nothing to try and account for that fact in individual behavior.

You see that, yes? You see what the quote you quoted, and see what you are saying, Right?

Happens time and time again on this topic. We went through it with Fka as well, and we were all actually getting somewhere discussing how this all works from a macro perspective....for builders, buyers, the whole bit).

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Got it - I will stand down from the soap box!

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(You aren't wrong with your point, of course, just to be clear).

So, what do you think about the home affordability affecting the builders ability to try and meet demand?

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Ok, you asked! Since "macro" is what is being discussed, I think home builders need to build less expensive homes. People need homes and home builders need to sell homes. But as I see things from the sidelines with a macro perspective, people want homes that are nicer than are economically feasible. That comes from unrealistic expectations from the buyers. They won't buy homes that aren't to their standards so they rent. So builders are forced build nicer homes and they get expensive. A poster on this thread mentioned that he wouldn't pay x amount for a house that looked right into his neighbor's window. That's a current generation problem.

I had a friend that was Class of 83. He bought a house in Katy when Katy was new. 3 bedroom 2 bath, 2,000 square feet, $100,000. Looking back, it was all builder grade finish out but at the time I could not believe how nice it was and I couldn't believe anyone would (or could) spend one hundred thousand dollars (Dr Evil pinky to the mouth) on a house. Now, I would not step my toe in a house like that. And neither would anyone else with a college degree. Expectations have changed.

So, being off the soap box of course, i believe today's buyer's expectations exceed affordability. My experience with my son's friends, and from reading these types of threads, is that housing is affordable today if expectations are lowered. There are affordable houses out there, people just don't want to live in the houses they can afford. I get it, it's tough to swallow. But this generation isn't the first to swallow that bitter pill.

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How does this square with what Agbuilder is saying? I asked a similar question.

Re-read the original post you quoted. The home affordability numbers were literally talking about the AVERAGE. This isn't reflecting expectations of buyers.

How is it so freakin hard when it comes to residential real estate to have discussions about macro policy decisions affecting the market like any other asset class, yet everyone comes crashing in with off topic discussions about how an individual can buy that asset class? I don't see this with stocks, bonds, or anything else. Just smacks of ego and justification of life choices rather than an academic discussion.

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There are almost no builders I can name that can build a house for productions prices as a one off. The drhortons of the world have completely cornered that market.

That does two things it allows such companies to have major control in the market by mwteri g the amount of homes at those price points that are built. They'll even cancel your contract if there a big price jump and they can sell you build for more

2. It forces people into communities far away from city centers amd mostly controls resale values

The house most people really want is probably unattainable

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So, to GaryClare's question, why don't you just build a cheaper house? (I know you answer this for me already).

(Your posts on this thread have been really enlightening).

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I get the question but it's a bad question.

You are effectively asking the home builder to ignore Economics 101 (supply and demand; scarcity) to do this, or you are asking him to change his overall business model. When in doubt, apply basic Economics and you can generally stumble across the answer.

DR Horton focuses on quantity and AgThatBuilds focuses on quality which results in two different classes of homes.

The issue we currently have are all of the inputs that go into these decisions and outcomes of which there are many macro-economic issues (costs, policy, etc). These home builders are simply playing the hand that has been dealt to them from these macro issue inputs. Correspondingly, a change in the inputs, either up or down, can flex what you can and can't get for your money in either class of home.

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What are you talking about and who are you talking to? If you understood the flow of the thread, you would know that I was restating the question that Gary posted about "builders should just build cheap houses."

Agbuilder already explained the many costs associated with doing so.

I'm not asking him to ignore anything about the economics of this and had asked him to explain how it all comes together for his end of the market when there are in fact clear market forces that would indicate a high demand. (Which he did and greatly improved this thread with his expertise).

So go bark up another tree. You missed the mark with this one.

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I'm talking to you, obviously. There is no barking here. Explaining the issue at a higher level since you seemed to have not understood it the first time at a more detailed level.

If the question was already answered, then don't ask the same question again.

So sensitive.

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Im sorry you can't follow the flow of the conversation. It was being factious. Clearly. Just in case that's too big of word. https://www.merriam-webster.com/dictionary/facetious

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Goodness. I'm following the conversation. I'm not disputing any of the details that the experts on here have shared. I replied with a high-level response because you asked a question that had already been answered which you state right in your post had been answered. I was just trying to provide an overlay reason for what's going on because the housing industry cannot escape basic economics and it seems like you are trying to find a problem that somehow avoids the guardrails of economics.

A question phrased as "Why don't you just build a cheaper house?" is the type of question a left-wing dunce who is ignorant of economics asks. And I'm not saying that is you, but that question is a dunce question.

And after it's all been explained you ask it again...so don't ask questions that you know have already been answered and you won't get answers to those questions trying to enlighten you.

Hope we are good now.

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No. We aren't. You can't read or understand context. (Of course it's a dunce question… that was the effing point).

Try reading my definition of facetious. See if you can understand it. And start there.

Why does this thread just beg for moronic posts?

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Sure...sure.

You are butthurt. Own it.

Tex117 said:

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fka ftc said:

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Stat Monitor Repairman said:

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I think thats the reality of the situation.

There is affordable housing for millenials and GenZers ... but the housing is just not in places that they want to live.

In other words a case of Champagne taste on a beer budget.

Same vein as jobs with a living wage. They out there but you got to be willing to travel and perhaps live in inhospitable places ... something that most don't want to do.

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To be honest, we need to give serious thought to not moving all jobs to urban centers. Whether some of that is work from home or others is distributing manufacturing, research, etc.

We were in Ireland over the summer and they have a real, real problem in rural areas with any young people to work. It's basically a country of rural retirement communities and crowded urban centers.

Any kids born in the rural areas see the only path as going to university and then getting a good job and living in the urban areas.

We would do well by solving affordable housing by reinvesting in middle America.

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Isn't this kinda happening and driving up some of the home prices in middle America?

(But overall, I think you are right in that this needs to very much be a part of the solution).

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Upper middle class flight out of urban areas was a massive contributor to the price increases of the last two years. I wonder if a significant return to office shift would actually be a factor in reducing prices in the suburbs and exurbs. Personally I don't see that happening and I think WFH is here to stay, but that would be one of the only things that could reduce demand for those areas. Supply obviously can't increase, and current valuations are not dissuading buyers, so reducing demand is really the only option.