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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#281

Post by CountDrewku »

everdrive wrote: post #139
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…

And yet no one is promoting vasectomies. I know exactly how to reduce demand without increasing supply, but it'll take about 30 years.

The birth rate is already dropping in the US....

Re: Home Price to Income Ratio

#282

Post by reidjs »

Doches wrote: post #138
loeg wrote: post #103

Earlier quoted context omitted.

The solution is to build more housing. California has historically been terrible about that but SB9 and 10 are significant steps in the right direction.

The solution, like it's been for pretty much all of American history, is to _move_. We're a migrant people; when opportunity calls or the cost of living where you are gets too high, we go west in search of greener, cheaper, less heavily-zoned pastures. Seems fitting that in the 21st century we flip that on its head. Cost of living in SF or Seattle got you down? Go East, young man! Head down to Texas or east to Ohio,…

Most of my friends and family live here. I would rather fix the problems here than move.

Re: Home Price to Income Ratio

#283

Post by ChuckNorris89 »

quantumBerry wrote: post #267
ChuckNorris89 wrote: post #246

Earlier quoted context omitted.

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 forei…

> it would however hurt the middle class since If the middle class are the ones buying the properties, then they're the ones selling them. Therefore it actually injects money into the middle class, foreign capital that never existed in that country. >he 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 Tho…

>If the middle class are the ones buying the properties, then they're the ones selling them.

Sorry but since you make no distinction between someone owning and selling a house ($500k asset in Austria) and someone who doesn't own a house and call them both middles class is just plain wrong.

The property owner middle classer is significantly better off than than the other and would benefit even more from your intention of buying while the other middle classer is worse off without a property to his name and will suffer more from being in competition with you.

Sure, one guy profits, but you can't possibly tell me with a straight face someone else doesn't get screwed from this wealth driven game of music chairs which is the property market right now.

Re: Home Price to Income Ratio

#284

Post by game_the0ry »

A more relevant metric to consider - monthly mortgage payment to monthly income ratio.

Average interest rates in 2007 were 6.34% vs ~2.80% today. [1]

* 6.34% / $2,000 monthly payment / 20% down (~$65k) >> $328,319 price of home

* 2.80% / $2,000 monthly payment / 20% down (~$98k) >> $489,794 price of home

Homebuyers will make purchasing decision based on their monthly mortgage payments, instead of the home price.

When interest rates fall, the home's price goes up but the monthly payment can stay the same. Therefore, increases in home (and other asset, since lower bowering costs can drive institutional investment in assets higher and non-linearly) prices can be driven higher without any change in supply / demand dynamics.

Some hypotheticals to consider:

* as rates approach and touch 0, what will drive up home prices then?

* what happens when rates go up?

[1] http://www.freddiemac.com/pmms/pmms30.html

Re: Home Price to Income Ratio

#285

Post by quantumBerry »

ChuckNorris89 wrote: post #283
quantumBerry wrote: post #267

Earlier quoted context omitted.

> it would however hurt the middle class since If the middle class are the ones buying the properties, then they're the ones selling them. Therefore it actually injects money into the middle class, foreign capital that never existed in that country. >he 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 Tho…

>If the middle class are the ones buying the properties, then they're the ones selling them. Sorry but since you make no distinction between someone owning and selling a house ($500k asset in Austria) and someone who doesn't own a house and call them both middles class is just plain wrong. The property owner middle classer is significantly better off than than the other and would benefit even more from your intention…

You just said the middle class was the competition for these houses. If the middle class are the ones who own these houses it follows they are the ones selling them. You seem upset you were caught up in your fallacious logic and fail to understand it's the middle class making the money off these sales.

Re: Home Price to Income Ratio

#286

Post by mywittyname »

rayiner wrote: post #257
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…

Segueing from “rich” to “multi-billionaires” is a neat trick by rich professionals to divert attention from themselves. Five years ago, we moved into a 3,000 square foot house in the Annapolis suburbs. We are right on the water so it cost a princely $485,000. But it was easy to get a house in the neighborhood for $300,000 or so, or just 4 times the county’s median income. As a result, the neighborhood has lots of you…

Well, and most people have fucked up views on what defines "upper middle class". There was a topic on reddit the other night where the most popular posts were saying, without jest, that upper middle class starts at $10 million bucks in liquid savings (and ends around $50MM).

That seems to be a typical view on income and wealth in this country: people's opinions are wealth are out or proportion with reality by factors of like 100. For reference, upper middle class technically starts at around $120k/yr, so $10MM could pay 80 years of an upper middle class income. So there's no conceivable way an actual upper middle class family could actually save enough to be consider what the public thinks of as upper middle class.

Re: Home Price to Income Ratio

#287

Post by shados »

galangalalgol wrote: post #213
helen___keller wrote: post #121

Earlier quoted context omitted.

> On the housing side, I suspect consumers purchase the house that their cashflow can comfortably support, not necessarily the one where they believe it is correctly valued, because the assumption that house values only increase means purchasing a well constructed house is almost never a "bad deal." I'd agree with this. I think housing in my area is wildly overpriced, but I still bought a 100 year old condo for a sol…

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.

It depends where, as cities have some level of freedom in the shenanigan they implement in their tax structure.

Normally though, taxation is just a matter of the property value. Often, cities with lower housing cost have higher tax rates (because the people working the sewers aren't any cheaper and they need to get paid).

Many cities also have owner occupant or primary residence abatements, so the landlords pay more in taxes than the resident owners. Some cities though split homes in one of several categories, and single families may be taxed differently from multi family or condos. Sometimes multi family and condos are taxed less to encourage higher density construction, but it wouldn't change anything if you're a landlord or not (aside for the tax abatement). Landlords can deduct some of their expenses from their business' taxes though, and I think (don't quote me) their property taxes are part of that. Your millage may vary.

Re: Home Price to Income Ratio

#288

Post by sparrc »

topspin wrote: post #111
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.

"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…

> Providing supply will suffer the wrath of BANANA/CAVE/NIMBY anywhere you dream of living

TBH I would have said the same thing 5-10 years ago, but I think this notion is outdated now.

I live in a famously NIMBY city (Seattle) and things have changed a lot in the last 5 years. I would guess that single-family zoning will be gone within 5 years.

Although I don't buy it, some people even argue that SFH zoning is already gone in Seattle due to ADU/DADU reforms.

Re: Home Price to Income Ratio

#289

Post by topspin »

CountDrewku wrote: post #281
everdrive wrote: post #139

Earlier quoted context omitted.

And yet no one is promoting vasectomies. I know exactly how to reduce demand without increasing supply, but it'll take about 30 years.

The birth rate is already dropping in the US....

And yet the population is not. Ergo, you're competing not just with your fellow citizens, but the whole planet.

Re: Home Price to Income Ratio

#290

Post by hcurtiss »

blake1 wrote: post #265
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.

Do you mean fiscal policy? You absolutely can infuse trillions of dollars into the economy without causing inflation after the economy takes a $4T hit from a pandemic; the government spending will be what prevents disastrous deflation. People worry about inflation, but forget how awful deflation is. (And on a side-rant, it’s really bizarre how the hyperinflation of Weimar Germany is cited as enabling the rise of the…

I've never understood how deflation could ever be a concern in countries that print their own money. Can you not just print your way out of it every time?
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