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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#231

Post by throw0101a »

willcipriano wrote: post #160
the_gastropod wrote: post #143

Earlier quoted context omitted.

Right, vs REAL inflation, which is measured by whatever I think happens to be too expensive right now.

I mostly just look at the money supply. Print 10% more money, that's 10% inflation. It may not be uniform throughout the economy, or take effect immediately but that's 10% more money chasing the same assets. It's all has to go somewhere.

> Print 10% more money, that's 10% inflation.

No: If you're approved for a $100K loan, you are credited with $100K balance to draw from your account, and the money supply is recorded as going up by $100K.

But if you don't withdraw any money from the account (e.g., a HELOC that you intended only for emergencies), then how can it be inflationary if it's not circulating in the economy? But it is registered as increased money supply.

Re: Home Price to Income Ratio

#232

Post by resonantjacket5 »

giantg2 wrote: post #188
km3r wrote: post #159

Earlier quoted context omitted.

No, vacancy rates are at near all time lows. Any reputable study will show we have a housing shortage. Even in rural America, house prices are skyrocketing. We need to build more, ideally near transit hubs as to minimize the effect on infrastructure, and reduce our environmental impact.

Tons of empty houses in the Appalachian region. The vacancy rate may be at a low, but it is still about 10%. Sure, we still need to build more houses, but the point here is that distribution is important to both. If you build houses in a HCOL area, the cost will be higher. We should be looking at redistributing to areas with the highest rates of vacancy an LCOL. Part of why prices are going up is inflation and cost o…

Those aren't really useful homes then.

The housing crisis is more accurately an imbalance of houses-to-jobs in a metro area.

Re: Home Price to Income Ratio

#233

Post by quantumBerry »

ChuckNorris89 wrote: post #217
polskibus wrote: post #203

Earlier quoted context omitted.

Hey, you can leave US you know. Europe will probably gladly have you.

Please don't. The housing market is fucked in EU urban areas now too. Without an inheritance you can't afford to buy anything decent around a developed city with jobs even on a tech salary. As selfish as this may sound, the last thing we need is more foreign competition on the housing market with bigger pockets. It would be fair that if people from the US want to buy property here with their foreign megabucks, we sho…

Yes, because nothing would ruin Albania or Georgia more than a few tech workers siphoning profits from US into their local economies.

Re: Home Price to Income Ratio

#234

Post by Rebelgecko »

I wonder, is there a similar metric that tracks the average monthly mortgage payment over time instead? I think for most people's purposes that's a more relevant number and won't have the confounding factor of interest rates (except to the extent that interest rates influence home prices, so maybe this would end up mirroring the case shiller index?)

Re: Home Price to Income Ratio

#235

Post by giantg2 »

km3r wrote: post #161
ashtonkem wrote: post #147

Earlier quoted context omitted.

> The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there. I’ve said this plenty of times; America has plenty of homes, it just doesn’t have enough homes where people actually want to live. You can get a home in my parents home town (which they left) for $60-100k right now. The issue is that there are no jobs and even fewer services. It was probably a great place…

The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well. "Solving" housing by moving all high CoL people to rural America is just going to price out all those with lower CoL area salaries. Our vacancy rate nation wide is low, likely well within the frictional margins that need to exist for a healthy market.

"The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well."

Not necessarily. You can't use the overall picture data to make claims about localized or subcategories of data. Especially if the bulk of the people live in suburban and urban areas.

Re: Home Price to Income Ratio

#236

Post by jeffbee »

ChuckNorris89 wrote: post #217
polskibus wrote: post #203

Earlier quoted context omitted.

Hey, you can leave US you know. Europe will probably gladly have you.

Please don't. The housing market is fucked in EU urban areas now too. Without an inheritance you can't afford to buy anything decent around a developed city with jobs even on a tech salary. As selfish as this may sound, the last thing we need is more foreign competition on the housing market with bigger pockets. It would be fair that if people from the US want to buy property here with their foreign megabucks, we sho…

I know in Berlin they consider themselves to be having a housing crisis but last I checked apartments in desirable districts of Berlin were like a quarter of Bay Area housing prices, for example < €1000/mo for a 2 bedroom / 50 m^2 apartment.

Re: Home Price to Income Ratio

#237

Post by resonantjacket5 »

maxsilver wrote: post #136
tharne wrote: post #108

Earlier quoted context omitted.

It consistently shocks me how rarely this is brought up as a solution. Price of something too high? Increase the supply.

Because it doesn't actually work. It helps a tiny little bit, in the places that are actually somewhat constrained (like SF/BayArea specifically). But it's not any kind of significant fix. Housing is an investment asset for stock market folks, it doesn't follow a Econ-101 understanding of "supply" and "demand" in any meaningful way. The Midwest and the South are both way ahead of California on the whole "just build m…

> Housing is an investment asset for stock market folks, it doesn't follow a Econ-101 understanding of "supply" and "demand" in any meaningful way.

You are partially right that Econ-101 doesn't explain it well, but if you take Econ-201 it does explain how housing supply/demand works. Why it doesn't work as easy as 101 is that the location matters for the 'good' unlike say cars which can be shipped in from anywhere. And also zoning artificially constrains land from being used for housing.

Re: Home Price to Income Ratio

#238

Post by brendoelfrendo »

itake wrote: post #100
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.

This is something that Elizabeth Warren and her daughter Amelia covered in their book "The Two Income Trap." I'm aware that recommending a book by a political figure is fraught, but I'm not aware of any economists who took umbrage with the claim, either. They make the observation in chapter 1 that "Even as millions of mothers marched into the workforce, savings declined, and not, as we will show, because families were frittering away their paychecks on toys for themselves or their children. Instead, families were swept up in a bidding war, competing furiously with one another for their most important possession: a house in a decent school district."

Housing is a great way to establish a level of security for your family and kids; but there's a finite number of houses with proximity to good schools, jobs, and other necessary resources, and so families needed to dedicate larger and larger portions of their income to compete against other dual-income families that were bringing new money to the housing market.

Re: Home Price to Income Ratio

#239

Post by throw_nbvc1234 »

johntiger1 wrote: post #206
pfisherman wrote: post #57

Earlier quoted context omitted.

This jibes with my experience of buying a house about 6 months ago. My reasoning was that we were experiencing rapid asset inflation fueled by low interest rates and COVID stimulus, and our cash was losing its value relative to housing by the month. I figured that this propping up of asset prices is likely to continue, as any administration that lets housing / 401k values collapse will get massacred in elections.

Why not invest in the market then?

Two, somewhat hypothetical questions, I'd have to answer first.

What would happen to the if everyone suddenly agreed that there was a hard-cap to how much the global economy can grow; Especially if that cap was somewhat near to where we are today?

How do you solve the core problem of "climate change" (which I'll define here as the unsustainable use of natural resources) without essentially implementing a hard cap of the global economy. This question isn't just about electricity versus oil. It's about trash, disposable (or planned obsolescence) consumer goods, fish/wildlife, forests, ect...

You could interpret the change in climate is just a single symptom of this runaway train. And any effort to pull the brakes is likely to cause the whole train to derail and crash. Maybe we'll make it to mars before then. Or maybe there will be a massive decrease in human life (war or another pandemic) and this whole question will solve itself.

Re: Home Price to Income Ratio

#240

Post by jdavis703 »

Doches wrote: post #133
topspin wrote: post #111

Earlier quoted context omitted.

"better start finding and implementing real solutions to housing prices right now" They can't. Providing supply will suffer the wrath of BANANA/CAVE/NIMBY anywhere you dream of living. Constraining demand will either get you voted out of office or devastate your political network or both, depending on which policy you attempt. You're competing with a whole planet full of people that want to live here and have more me…

> For 99% of you that means living far away from your preferred locale among people you probably loath. Parent comment is vitriolic but not actually wrong. Myself, I take great comfort in the idea of huge swaths of liberal, well-educated millennials and xennials migrating out of coastal cities and into small towns across the South and Midwest. Can you work remotely? Want to own your own home on a multi-acre lot for $…

> Live among people you disagree with -- we're all still Americans, it'll be OK

I grew up in the American south, and migrated to California as an adult. As a Black person I can say this doesn’t work as well in practice. It’s better than the old days (when my mom was growing up segregation was still legal and the military warned her parents to be back on base before sunset.) But I’d much rather live in a welcoming area.

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