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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#241

Post by b9a2cab5 »

throw0101a wrote: post #223
dpweb wrote: post #118

Earlier quoted context omitted.

When it's all assets going up, it's not the assets cost more, it's the dollar is worth less. So for all the help and assistance. Housing is LESS affordable than ever before. You cannot infuse trillions of extra dollars into the economy without inflation. There's no magic pill - there must be consequences.

Lots of money supply in Japan, and are their asset prices going up? * https://fred.stlouisfed.org/series/MYAGM2JPM189S Their central rate has been Stocks and equities in the US have been going up for 10+ and the infusion of "trillions of extra dollars" wasn't present for all of those years. Canada has had increasing home prices, barely slowing down in 2008, and it hasn't had QE.

Japanese asset prices would otherwise be deflating, so the "infusion" has absolutely had an effect.

The CAD has tracked the USD pretty closely in terms of value so even if there wasn't explicit QE there was definitely sufficient inflation to devalue the Canadian dollar.

Re: Home Price to Income Ratio

#242

Post by ItsMonkk »

throw0101a wrote: post #223
dpweb wrote: post #118

Earlier quoted context omitted.

When it's all assets going up, it's not the assets cost more, it's the dollar is worth less. So for all the help and assistance. Housing is LESS affordable than ever before. You cannot infuse trillions of extra dollars into the economy without inflation. There's no magic pill - there must be consequences.

Lots of money supply in Japan, and are their asset prices going up? * https://fred.stlouisfed.org/series/MYAGM2JPM189S Their central rate has been Stocks and equities in the US have been going up for 10+ and the infusion of "trillions of extra dollars" wasn't present for all of those years. Canada has had increasing home prices, barely slowing down in 2008, and it hasn't had QE.

Lyn covers this topic fairly well in her article on Japan[0]. In short, private debt in Japan has shrunk by 300 trillion yen over the past 25 years. The growth of the money supply is all coming from public debt.

It matters who gets the new money and what they spend it on.

[0]: https://www.lynalden.com/economic-japanification/

Re: Home Price to Income Ratio

#243

Post by ChuckNorris89 »

jeffbee wrote: post #236
ChuckNorris89 wrote: post #217

Earlier quoted context omitted.

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.

When was that? Prices are higher now for something decent. Also I was taking about buying property not renting.

>districts of Berlin were like a quarter of Bay Area housing

So what? Nothing touches Bay Area prices, even in the US. And then there's the income difference as well.

Try comparing to something more similar like Texas. Last I checked average dev wages in Austin are easily 2x more than average dev wages in Berlin while buying a house there costs the same. So who's buying power is stronger then?

Buying something decent in Germany now, in the current market is nearly impossible without an inheritance.

Re: Home Price to Income Ratio

#244

Post by giantg2 »

resonantjacket5 wrote: post #232
giantg2 wrote: post #188

Earlier quoted context omitted.

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.

Remote work can unbound that, at least within a low percentage situation, like under 10% vacant. Not to mention that some companies are moving out of higher cost areas to lower cost ones (like CA to TX).

Re: Home Price to Income Ratio

#245

Post by Rebelgecko »

JTbane wrote: post #30
ido wrote: post #10

Earlier quoted context omitted.

Why do you consider the 2 examples you gave “draconian”?

Econ 101 says that rent control (in effect a price ceiling) just results in scarcity (people are unable to get ANY housing), rather than actually reducing the cost of housing.

It also exacerbates other problems that go hand in hand with urban areas, such as traffic. Most people would rather stay in their rent controlled apartment and drive an hour to work instead of having to move and pay the current market value

Re: Home Price to Income Ratio

#246

Post by ChuckNorris89 »

quantumBerry wrote: post #233
ChuckNorris89 wrote: post #217

Earlier quoted context omitted.

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.

Of course it wouldn't ruin the countries themselves, the countries would profit somewhat, but it would however hurt the middle class since now they have more competition on the housing market that's much wealthier so you're increasing inequality.

Just because the country is profiting from your megabucks, doesn't mean the average Joe is.

Look at Austria. The most touristic areas are profiting a lot from all that foreign tourist money, but a lot of the locals can't afford to live there anymore as all that tourist money is only going into a few pockets. Those who don't already own something or have an inheritance have been royaly fucked by that tourist money. It increases inequality between the haves and the have-nots.

Re: Home Price to Income Ratio

#247

Post by throw0101a »

gruez wrote: post #47
mint2 wrote: post #12

I’d be interested in seeing the total cost after accounting for interest in the loans, or monthly cost compared to monthly income. Most people don’t pay cash, and they pay more than the asking price due to interest. So high interest rate periods look artificially lower because they ignore a substantial amount of the price

Exactly. https://awealthofcommonsense.com/wp-content/uploads/2021/03/... That said, it doesn't do much for down payment.

Corresponding post:

* https://awealthofcommonsense.com/2021/03/what-if-housing-pri...

Re: Home Price to Income Ratio

#248

Post by twofornone »

taurath wrote: post #183
Doches wrote: post #133

Earlier quoted context omitted.

> 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 $…

I think there’s plenty of real reasons people don’t do this economically, but don’t downplay the social parts of it - we have very Balkanized communities in the US. Ask a minority what it’s like going on a road trip sometime - I guarantee there’s many places where they won’t want to stop. Living in a place with no amenities, an extremely regressive/borderline extreme social climate and a lack of economic opportunity…

>I guarantee there’s many places where they won’t want to stop.

As someone who recently made the jump to a rural area, these problems are almost entirely imaginary. The notion of backwards, ignorant, racist rednecks occupying all the rural lands is nothing but a bigoted stereotype.

Southern hospitality is real; and while rural peoples will be more likely to notice and acknowledge cultural differences, they generally are open minded and just as respectful of nonwhite neighbors as white ones. It's the city folk who don't understand the roles that politeness and respect play in southern living, necessary for the unbelievably high trust society that only really exists outside of cities.

The truth is that urbanites have been hypersensitized to so called racism, and completely mislead as to what rural/conservative culture is actually like. But I don't mind a bit, that means more cheap land for me.

Re: Home Price to Income Ratio

#249

Post by somethoughts »

exporectomy wrote: post #162
jandrese wrote: post #124

How much of this is a result of our "don't tax the rich" policies that created a staggering amount of wealth at the top that has nowhere else to go? So many ultra rich investors are looking for something, anything, to invest in. Plus there is the feedback loop of massive growth you get as the bubble inflates. Is this a direct result of our fiscal policy? Have we destabilize the economy in order to create the richest…

It's fun to blame the super rich but I'd say it's fundamentally due to a combination of population shift from rural to urban areas https://ourworldindata.org/grapher/urban-and-rural-populatio... and normal homeowners stopping densification out of fear of reducing the value of their own home or just not wanting the riff-raff living near them. These people are really the ones doing a directly harmful thing for pure sel…

Agree! It's also the densification of urban areas. Where once each occupant had a private office, now 5-6 SW engineers occupy the same office space footprint. That has implications for already dense urban office and associated housing needs.

Re: Home Price to Income Ratio

#250

Post by b9a2cab5 »

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…

An increase in wages (real or nominal) without any increase in housing supply just leads to more money chasing the same supply which means higher rents. We are seeing this play out as we speak in every major city in the U.S.

The solution is not to pay people more, it's to increase the supply of housing to the point that people can pay drastically less for housing. Look at China: apartment towers on every street, each 30+ floors easily. Where is that kind of density in the U.S.?

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