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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#301

Post by disordinary »

toomuchtodo wrote: post #80
nradov wrote: post #63

Earlier quoted context omitted.

That is an example of what economists call the free rider problem. European countries get cheap drugs only because they are effectively being subsidized by Americans. https://www.investopedia.com/terms/f/free_rider_problem.asp Outcome differences are due more to public health and social factors like obesity. Expensive drugs or lack thereof have only a tiny impact at the population level.

US pharma spends an outsized amount on sales and marketing, expenses that could be eliminated if public funding was spent directly on R&D. Europeans aren’t free riding; they’re paying a reasonable rate for these goods while Americans are shouldered with extraction of revenue for pharma profits and those inefficient (and arguably unnecessary) sales and marketing expenses. Only two countries in the world permit marketi…

But, because healthcare is public in NZ you wouldn't bother with the brand names as you'll have to pay for them (generics are funded by the taxpayer through Pharmac, which is the crown entity that is responsible for buying all publicly funded medication for NZ).

It's like Private hospitals, we have them, but very few people use them as the public system is better equipped and paid for by the tax payer.

Re: Home Price to Income Ratio

#302

Post by shadilay »

mywittyname wrote: post #286
rayiner wrote: post #257

Earlier quoted context omitted.

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…

I think a bigger factor is that wealth is almost entirely defined by where you live. 120k/yr would be a lot in Iowa but not so much in SF.

Re: Home Price to Income Ratio

#304

Post by throwdecro »

game_the0ry wrote: post #284

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…

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

Which is crazy, right? People max out their "borrowing power" at low interest rates and take on huge loans, without considering that the declining interest rates that fueled past appreciation don't have much room left to move down, and that they'll be underwater on that huge loan if interest rates go up* and the value of the property declines.

*EDIT: To be clear, I mean interest rates on new loans being higher than they were before, not that the loan is variable-rate.

Re: Home Price to Income Ratio

#305

Post by bequanna »

lvl100 wrote: post #270

I wonder what would happen if we stop financial institutions from “investing” in residential real estate.

Do you mean stop institutions from purchasing residential real estate or are you referring to providing mortgage loan liquidity?

Re: Home Price to Income Ratio

#306

Post by a_c »

https://www.numbeo.com/property-investment/

Asian cities are way more expensive than american and european ones. Home price with a multiple of 15x to annual income is surely high.

> Price to Income Ratio is the basic measure for apartment purchase affordability (lower is better). It is generally calculated as the ratio of median apartment prices to median familial disposable income, expressed as years of income (although variations are used also elsewhere).

Hong Kong is having a price to income ratio of 44.69 https://www.numbeo.com/property-investment/country_result.js... with Price per Square Meter to Buy Apartment in City Centre of HK$ 253,655.52 (32k USD)

Side question, is the data highly sought after that the website is fetching US$20 to download?

Re: Home Price to Income Ratio

#307

Post by munk-a »

flyinglizard wrote: post #199
jandrese wrote: post #186

Earlier quoted context omitted.

The term you want to look for is "investment properties", or in some cases "foreign investment".

“Rich people” investment properties are a negligible share of the total housing market so this theory most often used as a scapegoat by the “eat the rich” crowd. If anything, more real estate investment would create more housing stock. Someone’s not building enough.

I don't actually think new housing developments are a really high RoR and building your own house has a high barrier of being able to support and house yourself while floating the full value of the house you're trying to build - for that reason new home owners almost never buy their own house. Additionally arguably the most valuable part of owning a home is the appreciating value of land - and land most steadily appreciates in stable communities (where a plant closure won't suddenly tank the market) and the best of these are urban centers where the market is extremely stable. All that is a long way to say that investors specifically want to buy that condo that's right next to your office and they're much less interested in investing in some development out in the boonies that will only gradually accrue value (and be impossible to exit for the year or so that the units are actually under construction).

Lastly, we've got NIMBY - this is the source of nearly all our housing woes because if you could buy up all those single homes in SF and convert them to condo towers we'd solve the housing crisis overnight - but that would "ruin the neighborhood" and, more importantly, depreciate the value of all those inflated house prices - and that's why all the neighborhood councils will continuously vote to perpetuate the shortage of housing.

People do want to build more housing - but people who own the land are stubborn assholes. When it happens that an investor manages to secure a full block of single family homes in a downtown core they'll almost always try and convert it to condos - but then they've got to fight against the NIMBYism and they'll usually lose because as every 80's movie ever taught us: "The evil developer is trying to tear down the community center - we've got to stick up for the neighborhood and win that tournament!"

Re: Home Price to Income Ratio

#308

Post by kyleblarson »

rjbwork wrote: post #154
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 was ready to buy an estate in the Georgia mountains earlier this year - then I saw the internet connection options. Then I looked up how much it would cost me to get a decent wired connection out there. Totally unviable for tech workers to live in most of the solid red areas of the country strictly due internet capabilities, or lack thereof.

Extrapolating from 'rural mountainous Georgia' to all red states, including Texas and Florida is a bit of a stretch. I live in a remote mountain town in North Central Washington and there are dozens, if not hundreds, of remote tech workers. I have good internet through a local ISP and starlink is now prevalent in our area as well.

Re: Home Price to Income Ratio

#309

Post by quantumBerry »

ChuckNorris89 wrote: post #296
quantumBerry wrote: post #285

Earlier quoted context omitted.

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.

I don't follow. The total wealth inside country starts out here:

value of house + value of rest of economy.

Now someone foreign comes into the country to live there and work in tech from abroad. They buy a house. Now the wealth inside the country looks like this:

value of house + foreign money paid for house + value of rest of country.

You can see that the wealth inside the country has increased. If it is the middle class owning those houses, then the wealth of middle class has changed by the difference in value between the value of the house and what it was sold for. The middle class then further benefits from whatever money the foreign worker spends in the country, which is a net gain for the middle class, plus the injection into the economy of the foreign money paid for the house. The only way the middle class end up worse off here is if the foreigner doesn't live and work here, and is just a foreign landlord (siphoning money out of the country) -- which is something I think we can both agree is detrimental.

I will say here in the US people have a lot of problems with foreign landlords and people who buy property here and don't live here. But only the most backwards rednecks have serious issue with an honest foreigner who buys a normal middle class house to live their lives, especially if they are injecting foreign capital into our economy.

Re: Home Price to Income Ratio

#310

Post by pjerem »

throwdecro wrote: post #304
game_the0ry wrote: post #284

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…

> Homebuyers will make purchasing decision based on their monthly mortgage payments, instead of the home price. Which is crazy, right? People max out their "borrowing power" at low interest rates and take on huge loans, without considering that the declining interest rates that fueled past appreciation don't have much room left to move down, and that they'll be underwater on that huge loan if interest rates go up* an…

I don’t know how it works in US but can’t you just opt for fixed interest rates ?
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