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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#471

Post by amrocha »

simonsarris wrote: post #70
tempfs wrote: post #41

Earlier quoted context omitted.

1. Residential homes are no longer allowed to be 'investment properties' aka every person(or married couple) can own exactly one house. Corporate entities except for Banks(even then can only own it for the time it takes to sell it in the case of foreclosure) can't either. 2. Only actual Americans can own property in America. Single-fam, multi-fam, land,etc. doesn't matter. Exactly no one needs to rent houses if mulit…

Doesn't that sound insane from a mile away? By the time you are done making exceptions, you'll have infinity carve outs. This is not a solution so much as a way to squish the problem into a different, weirder shape. 1. Everyone is forced to sell their lakehouses, cabins, ADUs? Detached mother-in-laws? (wtf is "Exactly one house?") No one is ever able to rent a single family home ever again? Right now 14.5 million hou…

You know public housing is a thing right? You don't need to rent from the private market, that's just how it is right now

Re: Home Price to Income Ratio

#472

Post by jrochkind1 »

woobar wrote: post #415
llbeansandrice wrote: post #372

Earlier quoted context omitted.

Why do people think you need 20% down? You don't need 20% down on a mortgage. There are first-time home buyer loans where you can put down as little as 0% and for conventional loans you just have to buy personal mortgage insurance if you're below 20% down. This is such a weird home buying myth and I don't understand how it sticks around.

Also, if you want to avoid paying PMI you can get a second mortgage to cover most of the down payment. With current low rates even if the APR for a second mortgage is 1% higher, one can save a lot by paying this high rate on a much smaller portion of the ballance.

I thought most lenders stopped allowing that after the last housing bubble. Are they doing it again? Hmm.

Re: Home Price to Income Ratio

#473

Post by zbrozek »

spoonjim wrote: post #93
zbrozek wrote: post #92

Earlier quoted context omitted.

Sorry, I think I conflated "public" with "low-income" housing in reading the comment. They're clearly different, though often uttered together.

How does low income housing abridge property rights?

You're forced to rent or sell at certain prices for a certain number of units as a condition for your permit to build. So you're not building what you want to build, nor are you pricing it at market rates.

Re: Home Price to Income Ratio

#474

Post by firecall »

jrochkind1 wrote: post #470
xyzzy123 wrote: post #457

Earlier quoted context omitted.

Not sure about the US but fixed-rate term in Australia is about 5 years. Nobody would give you a 30 year fixed rate. You'd eventually have to pay 6% on the $1M.

Damn, I would assume houses must be much cheaper in Australia than in the US? Or only the very very rich can afford to buy their own home? (Or is it amortized over more than 5 years, you just have a balloon you need to refinance?) In the US, where 30-year mortgages are standard, the LARGE majority of homeowners would not be able to afford payments on their home amortized over only 5 years.

I dont have information that can compare Apples to Apples as such, as in US vs AU values.

But I can say that prices are rising rapidly here in Australia.

The already expensive Sydney market rose on average ~$1200 a day over the last quarter!

Melbourne isn't far behind!

We too have low interest rates!

Whats not clear is how people are paying for the houses. Where is the money for deposits coming from, and how are they servicing such huge loans?

Dual incomes and parents assisting would account for a lot of it. But what happens if/when the parents need the money back and the DINKies decide to have children and either lose the dual income or get slugged with child care fees!

https://www.theguardian.com/business/grogonomics/2021/sep/16...

Re: Home Price to Income Ratio

#475

Post by firecall »

quantumBerry wrote: post #354
kimburgess wrote: post #345

Earlier quoted context omitted.

While this is accurate, a more concerning secondary impact is the increased deposit. In Australia specifically, house prices are soaring. The most in-demand markets increases are currently ~$1200 per day [1]. For many people their home is a more 'productive' than they are, greatly outpacing their own earning potential. Those who already have wealth can buy in, or continue to buy in and leverage themselves into the ma…

Raw land is cheap. Housing codes are what keep people like myself out of the housing market. If I could just dump a yurt on the land, or a cabin like our forefathers, then housing prices would be a total non issue. But a bunch of selfish NIMBYs are so scared of the poors building a yurt instead of a 2000 sq ft brick house for two people and a dog, they'll never allow it.

Raw land is not cheap in many parts of Australia.

Even in Adelaide metro and suburban areas, land is not cheap anymore!

Re: Home Price to Income Ratio

#476

Post by imwillofficial »

victorbstan wrote: post #396
quantumBerry wrote: post #354

Earlier quoted context omitted.

Raw land is cheap. Housing codes are what keep people like myself out of the housing market. If I could just dump a yurt on the land, or a cabin like our forefathers, then housing prices would be a total non issue. But a bunch of selfish NIMBYs are so scared of the poors building a yurt instead of a 2000 sq ft brick house for two people and a dog, they'll never allow it.

I think what you’re looking for is a “shanty town”. Plenty in third world countries especially by dumping sites. Enjoy your life.

What a shitty comment. You’re missing the GPS commentary on zoning laws artificially pricing people out of home ownership completely.

Re: Home Price to Income Ratio

#477

Post by wffurr »

I never learn anything in these threads. It seems like everyone is just talking past each other with their pet theories and no particular way to tell which if any are correct or useful.

Re: Home Price to Income Ratio

#478

Post by elihu »

SilverRed wrote: post #451
elihu wrote: post #374

Earlier quoted context omitted.

> Housing is a great way to establish a level of security for your family and kids; but there's a finite number of houses with proximity to good schools, jobs, and other necessary resources, and so families needed to dedicate larger and larger portions of their income to compete against other dual-income families that were bringing new money to the housing market. One way out of that is simply to increase the supply…

>You get a few thousand people that want to build a house but can't afford land, This exists in a way. "Off the plan" apartment buildings are sold before the building is actually built. If enough people buy it, the construction goes ahead. If not, you get your money back.

Huh, that's interesting. I didn't know that's a thing.

Re: Home Price to Income Ratio

#479

Post by perl4ever »

jrochkind1 wrote: post #470
xyzzy123 wrote: post #457

Earlier quoted context omitted.

Not sure about the US but fixed-rate term in Australia is about 5 years. Nobody would give you a 30 year fixed rate. You'd eventually have to pay 6% on the $1M.

Damn, I would assume houses must be much cheaper in Australia than in the US? Or only the very very rich can afford to buy their own home? (Or is it amortized over more than 5 years, you just have a balloon you need to refinance?) In the US, where 30-year mortgages are standard, the LARGE majority of homeowners would not be able to afford payments on their home amortized over only 5 years.

I don't know about Australia, but it sounds like the comment you responded is saying that mortgages there are something like a US 5/1 ARM, not that they are paid off in five years.

That is, the interest rate is guaranteed for five years and then it periodically adjusts.

Re: Home Price to Income Ratio

#480

Post by stana »

woofie11 wrote: post #434
joppy wrote: post #393

Earlier quoted context omitted.

Whatever the case, what you end up with is an asset whose actual value is tied to the interest rate (interest goes down, people can afford larger loans with the same repayments, therefore houses are worth more). This is a highly leveraged situation: if you take out a $1m loan and then interest rates go up, you're still liable for the whole $1m even though your actual asset might only be worth $900k now. I think this…

Kinda. If I buy a 1M home at 2.5% interest, I have a $4,000 monthly payment. If rates go to 6%: - Housing prices plummet to $600,000, assuming people are willing to spend the same per month. - My monthly payments are identical to had I bought at $600k at 6%. If I stay there, I'm not much worse off. It's harder to pay off the home quickly. - If I move out, and I rent out my home, it covers monthly payments approximate…

"If I move out, and I rent out my home, it covers monthly payments approximately exactly."

You cannot borrow for rent, so rents follow income growth more closely. So in some expensive real estate markets, if no income growth, rent might not cover your mortgage repayments.

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