NB: The Y axis of the first chart does not start at 0.
Home Price to Income Ratio
271–280 of 704 posts
Re: Home Price to Income Ratio
#272Earlier quoted context omitted.
Is there a difference in the property tax there for multifamily vs single family dwellings? Around here people pay almost double their mortgage in property taxes for a single family dwelling, but landlords have managed to get much lower taxes for multifamily dwellings.
In my municipality I'm not aware of a difference between multifamily vs single family, but there aren't many single families anyways. Property tax is absurdly low, with a very nice deduction for owner-occupied units. My effective tax rate is around 0.3% (Municipality: Cambridge, MA)
Cambridge is atypical: it has tons of biotech, FAANG offices, etc to tax, so the city ends up having one of the lowest residential property tax rates in the state. In fact, Cambridge's residential rate is almost 2x less than those of each of its neighbors (Arlington, Belmont, Boston, Somerville, Watertown. https://joeshimkus.com/MA-Tax-Rates.aspx)
Re: Home Price to Income Ratio
#273Earlier quoted context omitted.
Absolutely. Although it's more likely that they'll just remain stagnant, which would be just fine.
People being underwater happens to mean that the banks have bad loans. We have seen that movie before. Interest rates will not be allowed to increase faster than the property market can absorb. You can count on that; the political imperative could not be more clear. The next crisis will probably be some novel flavor of financial recklessness.
Exactly and the market is confident the the government would intervene to prevent another housing market collapse which just compounds the effect further.
Re: Home Price to Income Ratio
#274Earlier quoted context omitted.
People are working, unemployment has been falling like a stone since 2017. That money is going to go somewhere (and for most that is not 'the bank'). It's going to get spent or put into investments. We're going to continue to see strong commodity prices (and most of these have been rising into the headwind of a stronger dollar) until unemployment creeps up, or real wages falls too far behind inflation rate. I think t…
I think there is an issue with that logic - it doesn't account for the ever accelerating wealth inequality. People are working a ton right now - and creating massive amounts of value. It's so freaking easy to get consumer goods delivered next day that we're all forgetting that this service would likely cost fifty+ dollars in the early 90's - there are similar trends across the economy. The issue is that a lot of that…
Very complex situation, and we likely agree on some of it. I won't rehash that part. Some seldom-described (or taboo) opinions:
Part of the dislocation (behavior inconsistent with historical macro economics 101) is caused by dollars exiting the system faster than they used to. Remember the graphics/vids we all saw of people passing dollars around the community and the total supply expands? Now, good portions of those dollars are naturally shunted out of our system to where the manufacturing took place. Worse, some of the money in the graphics that went to Bill's hardware store disappears (because Bill's store is still in town, but he has a subsidiary in a foreign country and captures most of his revenue there).
Then there's income inequality. In addition to the depredations of two generations of greedy bastards, we have to understand that we import (legally or not) way too much unskilled/lowskilled labor, and that this has a negative affect on the entire bottom half (more-or-less) of the wage structure in our nation. It has a salutory affect (though i think one that is smaller than some imagine) on the top half, in that pressure on wages for unskilled to middling skilled workers results in more return on work and investment at the top of corporate structures, and other fields that compete with them for talent.
Re: Home Price to Income Ratio
#275Earlier 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?
You can do both. But housing has the benefit of high leverage-to-cost ratio.
One can get 20% leverage at ~4% on a stock portfolio.
One can get 2000% leverage (5% down) at 2.9% on a house.
Granted, the leverage on the house requires paying interest and 1/3600th of principle each month. But, unlike the stock portfolio, it's not callable.
Re: Home Price to Income Ratio
#276Earlier quoted context omitted.
Social security is more of a forced 401k. You will get back the money (in theory), but yes, it's not progressive and impact the poor more than the rich. It's a bit of an iffy one. If the social security system rolled up into federal income tax, it would be much more progressive, but it would likely receive significant pushback in the political space (not knowing its history, I assume it was structured as a separate t…
> Social security is more of a forced 401k. You will get back the money (in theory) Don't you get the value of the money back for all taxation, according to any theory that approves of taxation?
Not nearly as directly though. Social security is basically money in -> money back. A glorified forced 401k, or at worse a kind of retirement insurance. It's a bit more separated. When I pay taxes, I don't get a direct return for it, I get (in theory) a fully functioning society.
Social security would be a little closer to a sewer and water bill from the city (which you have to pay if you're a owner, but you get a sewer in exchange. Whether you like it or not). It's still not a great analogy because Social security is more deferred. It's really its own thing. Still, it doesn't work quite like a tax either.
I personally wouldn't mind if it did though. It's one of those things where we'll pay for it one way or another. If there's an entire generation of people who can't properly retire and pay medical bill, we will pay for them through taxes anyway. May as well do it preemptively and efficiently.
Re: Home Price to Income Ratio
#277Some 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.
The solution is to leave cities that aren't affordable. Sorry, but you may not get to live beach-side or be in walking distance from your hipster coffee joint in downtown SF.
I really think a lot of the problem is our generation grew up watching too many movies and they just think it's normal to live in some high end condo in Manhattan while working for Enterprise Rent-A-Car. That's not realistic.
Re: Home Price to Income Ratio
#278Earlier 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 $…
Hey, you can leave US you know. Europe will probably gladly have you.
Yeah you might wanna look up housing prices there. Most young people don't own and the average size of the places they live in is much smaller.
Re: Home Price to Income Ratio
#279Why does this graph start its y-axis at 3?
Re: Home Price to Income Ratio
#280Earlier quoted context omitted.
Simple solution would be to put a property and sales tax ramp on additional homes. Make landlords who own N homes pay 1.5^N the normal rate.
The issue then becomes silly games with shell corporations hiding how many homes people own, which pushes homes into the hands of larger landlords who can afford to pay someone to play those silly games.
Don't allow corps to own housing.