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Home Price-to-Income Ratios

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Re: Home Price-to-Income Ratios

#151

Post by lotsofpulp »

bequanna wrote: post #42
natoliniak wrote: post #25

Earlier quoted context omitted.

yes, but in many desirable areas a significant portion of buyers are cash only buyers whose monthly payment is $0 (other than property taxes).

Intuitively, I would say the number all cash buyers is a pretty small number in every market. Especially in a low interest rate environment. Most people with the means to pay cash for a property would likely be savvy enough to understand that that they would be better off getting a jumbo mortgage at 3.25% and deploying that capital at a higher rate elsewhere.

> Most people with the means to pay cash for a property would likely be savvy enough to understand that that they would be better off getting a jumbo mortgage at 3.25% and deploying that capital at a higher rate elsewhere.

Sellers want buyers to pay cash to reduce risk of the transaction failing. Fewer parties in the transaction is less risky. Buyers can always refinance the house after they have the title.

Re: Home Price-to-Income Ratios

#152

Post by sokoloff »

dmurray wrote: post #27
bequanna wrote: post #8

Earlier quoted context omitted.

Right. Without factoring in interest rates, this doesn’t really tell us much about how affordability has changed.

The cost of the home is normally quoted in dollars today (what the seller receives), not the total dollars you will pay on your mortgage. So interest rates don't have much to do with affordability.

The typical early stage buyer is financing their home and very often buying within 25% of the mortgage they can qualify for, especially in competitive markets. Mortgage rates absolutely drive this affordability.

When you’re bidding against other buyers, the more they can borrow for a constant monthly payment, the higher the equilibrium price will be.

Re: Home Price-to-Income Ratios

#153

Post by sgc »

leetcrew wrote: post #144
sgc wrote: post #138

Earlier quoted context omitted.

I understand the renter dilemma. The goal would be to propel you towards home ownership. If taxes were higher on investment properties purchase prices would get pushed down, thereby reducing the amount your landlord would need to charge for rent. Rent will go up with inflation regardless, since landlords optimize for profit. But all of a sudden there is less of a difference between what rent costs and a mortgage paym…

so I have two main objections here. the first is that tax breaks for homeowners tend to benefit the middle class at the expense of those who are just below the threshold to qualify for a mortgage. unless you just give them the money or have the government guarantee their debt, this is going to be a problem. if your idea works really well and housing prices drop a lot, this could be a pretty small group, but it's stil…

Rentals are almost 40% or the market so it will have a real effect. Of course this requires more changes to our systems. But given the terrible status of current US social structure, anything you do worth doing will likely fail without a number of changes to support it.

There is nothing that makes 700 sq ft something you can't own and can only rent. That's a condo.

People will still buy and sell depending on their life goals and situations. If you move, you will be more likely to sell rather than hold your old house for a rental. Refis will still exist, along with the pressures they create for some people to sell, etc.

Re: Home Price-to-Income Ratios

#154

Post by dv_dt »

sgc wrote: post #124
dv_dt wrote: post #89

Earlier quoted context omitted.

> It drives home prices up by reducing velocity of home sales because people can afford to stay longer without higher taxes. Why? It doesn't change the total inventory, nor the ratios of how many want a home vs have a home. > The issue that seems to have developed is that towns are building commercial property, as it brings in sales taxes or payroll taxes which total a lot more than property taxes Commercial property…

It does change the ratios of who wants a home since it makes a better investment. IMO prop 13 should only apply to primary residence.

I fully agree that Prop 13 should only apply to primary residences! But I fundamentally think it's wishful & unexamined leaps of thinking that repealing all of prop 13 would somehow lower home prices. I think it's repeal would just cause unnecessary churn in where people live, increase the speed of gentrification, without holding back home prices at all.

Re: Home Price-to-Income Ratios

#155

Post by dv_dt »

bradlys wrote: post #109
dv_dt wrote: post #86

Earlier quoted context omitted.

Right but it's unclear how Prop 13 drives that. If you repeal Prop 13, presumably it forces more people to sell, but that just means different people with closer to market price mortgage ratios. Would make it more or less likely to oppose new development if they're at risk if something changes and the price goes down on their homes?

> it forces more people to sell More availability -> lower prices. A lot of people hold because the income:expense ratio on their property is really great. If your rental home goes from $1000/yr in taxes to the $15k/yr that every new homeowner is paying, you'll see that cut into your rental income. You could try to raise rent by $1000+/month but that won't happen because salaries aren't gonna rise that fast. So, you'…

I think policies forcing people out of homes are bad. And if you look at history, people that get forced out of their homes arent going to a nice farm upstate - they go into declining and more precarious life with less stable housing and financial situations.

Re: Home Price-to-Income Ratios

#156

Post by zornado »

rorykoehler wrote: post #119
thorwasdfasdf wrote: post #94

Earlier quoted context omitted.

that happens anyways. if you own a home and have it paid off, you'll still be paying super high property taxes on that reallly expensive house. and with most 1st world governments taking in 40-55% of all income earned nationwide, we're all just serfs, at the end of the day.

I expect services for the taxes I pay. Paying taxes to my government is basically paying myself because I like living in a functioning society. If the government isn't doing a good job I'll try vote them out. Nothing like serfdom.

The difference is one doesn't have a choice in paying taxes i.e. one is obligated to pay them. If one doesn't pay, one loses their house.

Re: Home Price-to-Income Ratios

#157

Post by bradlys »

dv_dt wrote: post #155
bradlys wrote: post #109

Earlier quoted context omitted.

> it forces more people to sell More availability -> lower prices. A lot of people hold because the income:expense ratio on their property is really great. If your rental home goes from $1000/yr in taxes to the $15k/yr that every new homeowner is paying, you'll see that cut into your rental income. You could try to raise rent by $1000+/month but that won't happen because salaries aren't gonna rise that fast. So, you'…

I think policies forcing people out of homes are bad. And if you look at history, people that get forced out of their homes arent going to a nice farm upstate - they go into declining and more precarious life with less stable housing and financial situations.

Strawman argument. People in $2m homes are not going to live a poor life with less stable housing when they sell. Even if it sold for 50% less. Give me a break.

Re: Home Price-to-Income Ratios

#158

Post by bradlys »

dv_dt wrote: post #154
sgc wrote: post #124

Earlier quoted context omitted.

It does change the ratios of who wants a home since it makes a better investment. IMO prop 13 should only apply to primary residence.

I fully agree that Prop 13 should only apply to primary residences! But I fundamentally think it's wishful & unexamined leaps of thinking that repealing all of prop 13 would somehow lower home prices. I think it's repeal would just cause unnecessary churn in where people live, increase the speed of gentrification, without holding back home prices at all.

Your argument is that more available supply on the market would cause home prices to increase. In econ 101 terms - That doesn't make sense. More supply -> cost goes down.

Lower incomes would actually be better off because it would mean that more properties would sell, lowering the price of homes, and thus rentals would have to come down in price too. Churn in housing market could lead to more housing developments as well - since you have to pay full price of the land you are just sitting on. You'd be better off developing the land than just sitting on an empty lot and paying lots of property tax.

Re: Home Price-to-Income Ratios

#159

Post by [deleted] »

bradlys wrote: post #158
dv_dt wrote: post #154

Earlier quoted context omitted.

I fully agree that Prop 13 should only apply to primary residences! But I fundamentally think it's wishful & unexamined leaps of thinking that repealing all of prop 13 would somehow lower home prices. I think it's repeal would just cause unnecessary churn in where people live, increase the speed of gentrification, without holding back home prices at all.

Your argument is that more available supply on the market would cause home prices to increase. In econ 101 terms - That doesn't make sense. More supply -> cost goes down. Lower incomes would actually be better off because it would mean that more properties would sell, lowering the price of homes, and thus rentals would have to come down in price too. Churn in housing market could lead to more housing developments as…

[deleted]

Re: Home Price-to-Income Ratios

#160

Post by rorykoehler »

zornado wrote: post #156
rorykoehler wrote: post #119

Earlier quoted context omitted.

I expect services for the taxes I pay. Paying taxes to my government is basically paying myself because I like living in a functioning society. If the government isn't doing a good job I'll try vote them out. Nothing like serfdom.

The difference is one doesn't have a choice in paying taxes i.e. one is obligated to pay them. If one doesn't pay, one loses their house.

You're still paying them if you rent though, even if by proxy, and I don't think anyone wants to be homeless.
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