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Earlier quoted context omitted.
Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.
interesting, so interest rates go down and prices go up then?
In 2020, those houses are around ~$1.8-2M, so ~22.5-25 times the annual income of someone that has their job today. In Melbourne and Sydney generally, housing is 10 and ~13x annual income. Above 6-8 is already considered _extremely unaffordable_. Sydney is 2nd only to Hong Kong in housing un-affordability.
It's a profound change across a generation. Among my college-educated friends, the only one's thinking of buying property are either high income (doctors, investment bankers) or buying in markedly worse (thus cheaper) areas than they lived in as children.
I wonder if this is due to stagnant wages, excessive home price inflation, or both.
Comparing income vs median sales price across time isn’t quite as interesting as income vs. total monthly payment (principal + interest).
I wonder if this is due to stagnant wages, excessive home price inflation, or both.
Earlier quoted context omitted.
Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.
Right. Without factoring in interest rates, this doesn’t really tell us much about how affordability has changed.
Say what you will about Texas government, but they know how to stay out of people's way and let housing supply keep up with demand efficiently. California on the other hand, is absolutely pathetic when it comes to this. So absurd watching a state whose booming economy is funneling most of that money to property owners pockets. A huge and abject failure that will be in future economics textbooks as the example of how…
By far the majority of renters I know in CA, in SF and Santa Monica, have largely abandoned any hope of homeownership and live incredibly spendy lifestyles while they can afford to be in the area. Eventually, they will wise up, move out of their expensive rentals and turn frugal - likely outside of these cities with a good possibility of leaving the state. In their absence, new young folks in their high-earning high-…
IDK, most people in know in California seem to be saving 30-50% of their post tax income. That's clearly not the case anywhere else in the world.
Comparing income vs median sales price across time isn’t quite as interesting as income vs. total monthly payment (principal + interest).
Existing residents aren’t necessarily buying new houses at 8x multiples. And the new arrivals to an area might be tech workers pulling in $400k, and can afford that $1.2M house with just a 3x multiple.
Over 8x seems to be a CA thing mostly (one tile in Oregon bordering CA). Wonder if we can thank prop 13 for that? (Frozen property tax that constrains supply and encourages ani-development stance by removing the tax consequences of appreciating property)
I doubt you can lay all the blame on prop 13. It passed because CA home prices went crazy in the 70s. My parents bought a home in 1973 for $34k and sold it for $95k in 1978 (the year prop 13 was enacted). A 3x increase in 5 years.