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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#81

Post by cudgy »

patrickthebold wrote: post #69
6gvONxR4sf7o wrote: post #62

I’d love to see the same charts in terms of monthly payments on a new mortgage, rather than sticker price. The price itself matters in terms of downpayment, but ultra low interest rates are a huge factor. Right now, interest rates are so low that a huge mortgage has the same payments as a small one years ago would have been. Especially when you take inflation into account.

One thing I think people overlook is that there's a hidden cost to buying at low interest rates: if rates go up that will eat into your resale value, and it's less likely you can refinance at a lower rate in the future. If you bought at a high interest rate and then rates drop you really make out, and that's less likely to happen to people buying now.

Also, artificial low rates are causing increased inflation of prices, which means cash buyers and buyers that would pay off their mortgage quicker are at a disadvantage.

Re: Home Price to Income Ratio

#82

Post by nradov »

toomuchtodo wrote: post #80
nradov wrote: post #63

Earlier quoted context omitted.

That is an example of what economists call the free rider problem. European countries get cheap drugs only because they are effectively being subsidized by Americans. https://www.investopedia.com/terms/f/free_rider_problem.asp Outcome differences are due more to public health and social factors like obesity. Expensive drugs or lack thereof have only a tiny impact at the population level.

US pharma spends an outsized amount on sales and marketing, expenses that could be eliminated if public funding was spent directly on R&D. Europeans aren’t free riding; they’re paying a reasonable rate for these goods while Americans are shouldered with extraction of revenue for pharma profits and those inefficient (and arguably unnecessary) sales and marketing expenses. Only two countries in the world permit marketi…

There is already a lot of public funding for basic biomedical research. Actual drug development is another thing entirely. If this were publicly funded then funding would be allocated based on political priorities rather than realistic scientific and economic assessments. That misallocation of resources would overwhelm any savings from reducing sales and marketing expenses.

But in general the traditional drug development approach of finding small molecule drugs to treat specific diseases is running out of steam. Most of the low-hanging fruit has already been picked.

Re: Home Price to Income Ratio

#83

Post by swiley »

tempfs wrote: post #41
standardUser wrote: post #5

Some very clever and influential people better start finding and implementing real solutions to housing prices right now. If they don't, expect overwhelming support from Millennials for massive expansions to public housing and rent control, if not even more draconian measures.

1. Residential homes are no longer allowed to be 'investment properties' aka every person(or married couple) can own exactly one house. Corporate entities except for Banks(even then can only own it for the time it takes to sell it in the case of foreclosure) can't either. 2. Only actual Americans can own property in America. Single-fam, multi-fam, land,etc. doesn't matter. Exactly no one needs to rent houses if mulit…

There are good reasons to be a renter, it’s hard enough getting an apartment in the time between accepting a job offer and your start date, I couldn’t imagine hunting for a house/condo in that time.

Re: Home Price to Income Ratio

#84

Post by JamesBarney »

antisthenes wrote: post #34
mrfusion wrote: post #19

Earlier quoted context omitted.

Rent control really doesn’t make sense. If we could make things cheaper by passing a law we’d do it for everything. Rent control won’t work for the same reason a price control for food or cars won’t work. https://freakonomics.com/podcast/rent-control/

> If we could make things cheaper by passing a law we’d do it for everything. Price controls for medicine are proven to work, based on single payer European systems. They cost cheaper and provide better outcomes than the US system. Yet here we are.

The way price controls affect supply is people build less of the thing who's price your controlling.

Since medicine is mostly a technological good, it lets the rest of the world freeride off America paying for much of medical R&D.

Re: Home Price to Income Ratio

#85

Post by milkytron »

cudgy wrote: post #81
patrickthebold wrote: post #69

Earlier quoted context omitted.

One thing I think people overlook is that there's a hidden cost to buying at low interest rates: if rates go up that will eat into your resale value, and it's less likely you can refinance at a lower rate in the future. If you bought at a high interest rate and then rates drop you really make out, and that's less likely to happen to people buying now.

Also, artificial low rates are causing increased inflation of prices, which means cash buyers and buyers that would pay off their mortgage quicker are at a disadvantage.

> artificial low rates

What do you mean by artificial here?

Re: Home Price to Income Ratio

#86

Post by Miner49er »

ac29 wrote: post #76
Miner49er wrote: post #71

Earlier quoted context omitted.

That's still way lower then older generations.

Of course it is, Millennials are as young as 25 this year. Its doubtful many can afford a house just a few years out of college (and even more doubtful if they didnt go to college). Even those that can may not be ready to settle down and commit to such a large purchase.

Yeah, but it's still also lower then it was for the older generations when they were at the same age.

Re: Home Price to Income Ratio

#87

Post by [deleted] »

throwaway6734 wrote: post #24
zzleeper wrote: post #22

Earlier quoted context omitted.

Agree. From experience, people look into how much they would pay monthly and their income. This then begs the question: what will happen once rates go up even a bit, and houses suddenly require a 50% larger monthly payment.

Most mortgages haves fixed rates

[deleted]

Re: Home Price to Income Ratio

#88

Post by cudgy »

milkytron wrote: post #85
cudgy wrote: post #81

Earlier quoted context omitted.

Also, artificial low rates are causing increased inflation of prices, which means cash buyers and buyers that would pay off their mortgage quicker are at a disadvantage.

> artificial low rates What do you mean by artificial here?

For example, Interest rates are so low that the traditional alternatives of stock investments are no longer present. Traditionally, a bond would include a rate that is beyond inflation. Nowadays, government bonds return rates below inflation. This is artificially low and creates a bubble in the stock market (and other assets like real estate) since the traditional option to put money in bonds has been artificially devalued.

Re: Home Price to Income Ratio

#90

Post by wheelinsupial »

throwaway6734 wrote: post #24
zzleeper wrote: post #22

Earlier quoted context omitted.

Agree. From experience, people look into how much they would pay monthly and their income. This then begs the question: what will happen once rates go up even a bit, and houses suddenly require a 50% larger monthly payment.

Most mortgages haves fixed rates

Over what time period? I think I’m America you can get a 30 year fixed rate mortgage. In Canada, 5 years is the most you can get even if the amortization period is 25-30 years.
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