Home Price to Income Ratio • Hacker News Board

Re: Home Price to Income Ratio

#91

Post by laverya » Mon, Sep 20, 2021, 6:37 PM UTC

nradov wrote: post #60

standardUser wrote: post #21

Earlier quoted context omitted.

Some forms of rent stabilization make perfect sense. But most of the policies implemented in big cities are far too restrictive. There is a lot of policy to be explored between "your rent never goes up forever" and "you can't be immediately evicted for no reason". No one wants the latter, but there are better ways to address that, like much longer notices for rent increases, or requiring multi-year lease options.

San Jose limits annual rent increases to 5%. That seems reasonable (unless inflation gets out of control). Tenants aren't immediately forced out of their homes if the market rate jumps 20% in one year. But landlords can still eventually raise rents to market rates spread out over several years. There's no absolute limit on maximum rent.

If it was inflation + 5%, I'd be fine with that - but a flat 5% limit only works so long as inflation stays low.

Re: Home Price to Income Ratio

#92

Post by zbrozek » Mon, Sep 20, 2021, 6:37 PM UTC

spoonjim wrote: post #68

zbrozek wrote: post #23

Earlier quoted context omitted.

Not the OP, but I'll guess that it's because both of them strongly erode property rights. Another, more freedom-preserving, approach is to make it easier to build build build. Planet Money had a decent introduction a couple years ago.[0] In the current NIMBY climate, my neighbor is struggling with the red tape to repave her driveway. Building a new home around here seems about as improbable as a hobbyist making the f…

How does public housing abridge property rights?

Sorry, I think I conflated "public" with "low-income" housing in reading the comment. They're clearly different, though often uttered together.

Re: Home Price to Income Ratio

#93

Post by spoonjim » Mon, Sep 20, 2021, 6:44 PM UTC

zbrozek wrote: post #92

spoonjim wrote: post #68

Earlier quoted context omitted.

How does public housing abridge property rights?

Sorry, I think I conflated "public" with "low-income" housing in reading the comment. They're clearly different, though often uttered together.

How does low income housing abridge property rights?

Re: Home Price to Income Ratio

#94

Post by djrogers » Mon, Sep 20, 2021, 6:47 PM UTC

Miner49er wrote: post #86

ac29 wrote: post #76

Earlier quoted context omitted.

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.

citation?

Re: Home Price to Income Ratio

#95

Post by Miner49er » Mon, Sep 20, 2021, 6:55 PM UTC

djrogers wrote: post #94

Miner49er wrote: post #86

Earlier quoted context omitted.

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

citation?

https://www.apartmentlist.com/research/homeownership-by-gene...

Re: Home Price to Income Ratio

#96

Post by 88913527 » Mon, Sep 20, 2021, 6:59 PM UTC

teagee wrote: post #4

peterlk wrote: post #3

I think there's a pretty critical piece of analysis missing here: inflation. An alternative explanation might be that housing prices are being driven up by inflation, and wages haven't caught up yet. There are two ways to lower the home value/income ratio: 1. Decrease housing prices 2. Increase wages We haven't seen meaningful wage increases for a long time now, so perhaps it is time. Maybe this is just a symptom of…

Add our current low interest rates to the mix as well and the picture changes dramatically

100%. Though, interest rate based appreciation is likely at its apex, presuming zero is the floor. If we find ourselves with negative rates (after taxes and fees; there was one case of negative rates in Europe, but net inclusive of fees, it was still positive) -- then we're in truly uncharted territory.

At this juncture, it seems most appreciation will arise from supply issues, which aren't new to the post-2008 world. And while we do have lots of unoccupied housing nationally, we don't have it stock in areas where it's most needed: e.g, job centers. You can easily find a $10k home in Detroit if you wish.

The graph would be helpful it broke out metro versus rural areas, in addition to factoring interest rates.

Re: Home Price to Income Ratio

#97

Post by wheelinsupial » Mon, Sep 20, 2021, 7:05 PM UTC

BooneJS wrote: post #52

How is this true? I think our home was 2x our family income. It’s been paid off for a while.

What’s hard to believe about this? Do you think the analysis is wrong?

Since you’ve given an anecdote, I’ll share mine.

I make more than the median income where I live. The closest place that matches 2x my income is more than 100km away from me and it’s a mobile home.

My current apartment is 3.5 times what I earn, but that’s because I bought it 5 years ago when it was 4.3 times what I earned. If I sold this apartment today, then someone earning the median income would be paying at least 7.5 times their income.

30+ years ago my parents bought a house for less than what I paid for my apartment. They also earned more than 2x what I earn now. So they might have been in a similar situation to you had they not gotten divorced. People buying that same house now have to pay 10-12 times income if they make what my parents did. Closer to 20 times income if they earn a median income.

Re: Home Price to Income Ratio

#98

Post by mistrial9 » Mon, Sep 20, 2021, 7:05 PM UTC

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.

California "small house" duplexes are being built at this moment, by the thousands.. maybe permits, maybe not.. just saying what I see

Re: Home Price to Income Ratio

#99

Post by danuker » Mon, Sep 20, 2021, 7:05 PM UTC

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?

Rates depressed by the central bank buying everything deemed "safe".

Very few "natural" investors (as opposed to "artificial" central banks) would accept a 0.25% yearly return on their capital.

https://tradingeconomics.com/united-states/interest-rate

Re: Home Price to Income Ratio

#100

Post by itake » Mon, Sep 20, 2021, 7:06 PM UTC

gp wrote: post #32

While it doesn't directly affect the average person's purchasing power, the same dramatic increase is happening in other asset values as well. [0] One interesting thing to note is that 2019 EV / EBITDA values were already "high," before the coronavirus was spreading. I suspect these two phenomena have different causes overall, but low interest rates are a common factor that cause all asset prices to increase. On the…

I suspect that dual income families could be a contributing factor in increased home prices of single-family homes.

Even 'worse' is dual income, no kid families that are delaying and skipping child costs. Thus with "double" the cash flow and shared costs, couples afford higher prices at a lower cost.