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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#291

Post by Ekaros »

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.

So are the wages. Or maybe not exactly that bad, but they are no where close.

Re: Home Price to Income Ratio

#292

Post by resonantjacket5 »

giantg2 wrote: post #244
resonantjacket5 wrote: post #232

Earlier quoted context omitted.

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).

Lol, and once you build houses in those new regions, I'd assume those neighbors also block new housing from being built near them? Plus there's still plenty of jobs that cannot be done remotely, I feel generally in the tech world people are highly overestimating the amount of remote jobs proportional to the rest of the population.

Why the companies are moving from California to Texas is exactly because Texas' local zoning laws aren't as stringent allowing for cheaper housing.

The fix really isn't that complicated, it's allow more houses to be built where jobs are demanded. Not quite sure why people always twist and turn justifications for why only 1-story houses should be built.

Re: Home Price to Income Ratio

#293

Post by helen___keller »

madars wrote: post #272
helen___keller wrote: post #215

Earlier quoted context omitted.

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 )

yep, and to GP's point when i was looking for housing, my budget was higher in cambridge for precisely this reason

Re: Home Price to Income Ratio

#294

Post by medvezhenok »

shados wrote: post #276
tshaddox wrote: post #256

Earlier quoted context omitted.

> 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 se…

It's not quite a forced-401k though. Social security could technically be abolished (or payments diluted, etc) via an act of congress (even though politically unfeasible right now) - then you don't get anything out of your "investment". It's much harder to "abolish" a diversified 401k plan unless you abolish all private property (i.e. Russia 1917).

Re: Home Price to Income Ratio

#296

Post by ChuckNorris89 »

quantumBerry wrote: post #285
ChuckNorris89 wrote: post #283

Earlier quoted context omitted.

>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.

I think you misunderstood my comment, but whatever. Still, to follow up on your latest example, the classes below those who own the properties you want to buy get screwed since you're still increasing inequality between the asset owners and the non-asset owners by increasing housing demand. Simple.

Re: Home Price to Income Ratio

#297

Post by shados »

mywittyname wrote: post #275
johntiger1 wrote: post #206

Earlier quoted context omitted.

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.

The math for this ends up being extremely complex. The leverage is one part, and a big one. You have to account for closing costs (especially when selling), and uncertainty around how long you'll stay. But you could theoretically rent it out. But as we've seen, some cities could keep an eviction moratorium going and that could be costly. Housing in some areas skyrocketed in values, but you could be buying a lemon since "no inspection contingency" is the norm in hot markets. Taxes and HoA fees can go up a fair bit too, and there's maintenance. There's a few psychological factors that don't factor in the math, like how you may do renovations that don't translate 1:1 to home value that you wouldn't do if you're renting. On the other hand, rent does go up, generally faster than property taxes.

It's really a toss up based on a lot of variables, but generally, yeah, home ownership will come up ahead. Not always though. While if you invest in a total market index, you're main risk is the entire country tanking, it's different with a home. You're gambling on that ONE PARTICULAR HOME in one particular place. That's a lot riskier than an index fund.

But you get to make holes in the walls without anyone yelling at you, and that's a big plus.

Re: Home Price to Income Ratio

#298

Post by fancifalmanima »

shados wrote: post #260
brendoelfrendo wrote: post #238

Earlier quoted context omitted.

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 wer…

I've thought about this a lot, though if you google around you'll find people who dispute this claim. Still, it makes sense to me. If you have single income households, and all of a sudden everyone's a double income households, you're not any better off. You'll get inflation, especially in housing. People will point out that stay at home moms weren't THAT pervasive, even decades ago (not as pervasive as us younglins…

I'm not going to say that the larger number of women entering the work force has had no effect on home prices, however even if it did it's not necessarily a net negative. A larger workforce leads to more economic output, more innovation (there are countless innovations that have probably failed to be made over the generations due to the impact of women not working) that leads to quality of life improvements, productivity improvements, price drops, and other improvements. Food as a percentage of income has dropped dramatically over the years. Same with technologies like computers and home appliances. Houses are also way bigger than they were decades ago.

I live in a 2 income house with a kid, I'm not sure that the alternative (considering the economy as a whole and not just home prices) is actually preferable.

It's also probably pretty difficult to disentangle the effect on home prices from more women working from the effect on home prices from other things like low interest rates. There's likely not a single cause for this, but rather an outcome of some aggregate of causes. It's entirely possible that more women working does increase home prices some, but that it's only some fraction of the overall increase we've seen, and that families come out ahead on this economically by a wide margin. Especially taking into account the aggregate effect a larger labor force has on output and productivity.

Re: Home Price to Income Ratio

#299

Post by throwaway6734 »

wheelinsupial wrote: post #90
throwaway6734 wrote: post #24

Earlier quoted context omitted.

Most mortgages haves fixed rates

Over what time period? I think I’m America you can get a 30 year fixed rate mortgage. In Canada, 5 years is the most you can get even if the amortization period is 25-30 years.

In the US, 10, 15, 20, or 30 years in my experience

Re: Home Price to Income Ratio

#300

Post by 0xffff2 »

ashtonkem wrote: post #193
giantg2 wrote: post #163

Earlier quoted context omitted.

Remote work could solve a lot of this. I would love to live in a more rural area with cheaper housing. "... a long distance from any of the amenities that most Americans now demand." Like what? Many amenities and services have been moving to the at-home or online model for decades - arcades, movies, shopping, car buying, telehealth, etc. It seems there should be less reliance on physical amenities now than in the pas…

The data seems to imply that remote work is letting high paid workers move from the coasts to smaller cities, not rural towns. The persistent low prices of houses in rural America certainly backs this up. Meanwhile home prices in small cities are skyrocketing. > Like what? Many amenities and services have been moving to the at-home or online model for decades - arcades, movies, shopping, car buying, telehealth, etc.…

The price of houses in rural America seems to also be skyrocketing. My house 40 miles outside of the nearest "smaller city" (population ~20k) has gone up in value over 50% since I bought it 3 years ago.
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