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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#491

Post by throw123123123 »

hcurtiss wrote: post #290
blake1 wrote: post #265

Earlier quoted context omitted.

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?

The problem is that you can get both at the same time: deflation of asset prices and inflation of goods prices.

Re: Home Price to Income Ratio

#492

Post by xyzzy123 »

perl4ever wrote: post #479
jrochkind1 wrote: post #470

Earlier quoted context omitted.

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.

Yes, this.

Re: Home Price to Income Ratio

#493

Post by perl4ever »

foldingmoney wrote: post #486
jrochkind1 wrote: post #470

Earlier quoted context omitted.

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.

>Damn, I would assume houses must be much cheaper in Australia than in the US? The median home price in Australia is about US$725k. So no.

I looked for some official statistics, and while I'm not sure if I'm in the right place, it paints a rather different picture from yours. The figure for housing costs implies a typical home value of more like 300K USD or 400K AUD.

Also, if this is accurate, Australia is more of a nation of homeowners than of renters.

https://www.abs.gov.au/statistics/people/housing/housing-occ...

"66% of Australian households owned their own home with or without a mortgage.

32% of households rented their home.

Average weekly housing costs were: $484 for owners with a mortgage; $53 for owners without a mortgage; and $366 for renters."

484 AUD/week = 1500 USD/month 366 AUD/week = 1150 USD/month

It also says housing costs for renters have increased 51% in 20 years (to 2018) which is an average of 2% annually.

"housing costs are defined as the sum of rent payments; rate payments (water and general); and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to buy, add, or alter the dwelling)"

Re: Home Price to Income Ratio

#494

Post by fshbbdssbbgdd »

throw123123123 wrote: post #485
fshbbdssbbgdd wrote: post #458

Earlier quoted context omitted.

I have a ~million dollar fixed rate mortgage. If rates go up, I’ll be sad that the value of my house went down. On the other hand, I’ll be very happy to have a large fixed rate loan. Let’s call my mortgage rate X%, and let us assume that rates go to X+5. Then I can invest money to earn at (X+5)%, which means my loan is essentially a $50k/year annuity. My only wish would be that I could make the loan even bigger. On t…

The problem is that in a scenario of rates going up, both houses and general stock investments will go down together. They rarely diverge.

If rates go up to X+5, then I ought to be able to find bonds that pay X+5, no?

Re: Home Price to Income Ratio

#495

Post by resonantjacket5 »

giantg2 wrote: post #452
resonantjacket5 wrote: post #436

Earlier quoted context omitted.

"Zoning is regulation." > Business regulation. Are you really not aware that when people are mentioning Texas' easy regulation many times they are literally often talking about zoning? > You seem to be misunderstanding me. It's not that it can't be done in the populated area, but that it's better done in areas not already in a precarious situation. No I completely understand you, and find the "too many dense already"…

"Are you really not aware that when people are mentioning Texas' easy regulation many times they are literally often talking about zoning?" Source? The ones I have seen say "business-friendly regulations". They also mention companies moving their headquarters to the state, which means taking advantage of incorporating there, which extends to out of state worker, for which zoning does not apply. The cheaper housing is…

> Source? The ones I have seen say "business-friendly regulations".

Zoning also is for businesses too. For example Elon's relatively fast approvals for their new factories

> the infrastructure is only set up for single family homes and the land is covered in them, then you would need massive infrastructure updates which the cities can't afford

Again another ludicrous claim. Seriously every country around the world can build this infrastructure for supporting beyond 1 story tall. America is not some special snowflake here. Yes it'll cost some money to upgrade it -- not it's not rocket science nor some giant cost.

You're just working backwards justifying why American cities couldn't accommodate anything beyond 1 story tall then grabbing any reason to block it.

> Do you have an economics background? Can you explain how the labor cost suddenly decreases as the demand for labor increase and their costs stay the same?

I could ask the same to you do you have an economics background? But in any case yes I do.

Regarding the labor cost, I was responding to why you think labor costs are a barrier to housing and while it's true, the root cause to solve it goes the other way around. Aka even if labor costs were flat it wouldn't solve the housing crisis.

> My position is more nuanced than that. It seems you've already made up your mind and dont care to explore my position. Good luck.

It can be as complicated as you want but as the end of the day if it's stemming from blocking housing it really isn't that special.

Re: Home Price to Income Ratio

#496

Post by quantumBerry »

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.

Please explain how the people in these shanty towns would be better off if the only house they can afford (a shack) is demolished for failure to meet code and they end up homeless. You paint a perfect picture of people who would be ruined by our building codes.

Re: Home Price to Income Ratio

#497

Post by sanp »

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 think the rate is fixed for 5 years and then readjusted for another 5 years. The terms of the loan is a lot longer

Re: Home Price to Income Ratio

#498

Post by aidenn0 »

moosedev wrote: post #463
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.

30 year fixed rate is actually the “normal”/common mortgage in the US. I moved to the US from the UK, where mortgages look more like Australia’s, and I still find it amazing you can fix such a low rate for so long here.

The weird thing is that 5 year adjustable rates are higher then 30yr. fixed. That only makes sense if interest rates will go down over the next 5 years, which seems unlikely to me.

Re: Home Price to Income Ratio

#499

Post by throwawaythekey »

perl4ever wrote: post #493
foldingmoney wrote: post #486

Earlier quoted context omitted.

>Damn, I would assume houses must be much cheaper in Australia than in the US? The median home price in Australia is about US$725k. So no.

I looked for some official statistics, and while I'm not sure if I'm in the right place, it paints a rather different picture from yours. The figure for housing costs implies a typical home value of more like 300K USD or 400K AUD. Also, if this is accurate, Australia is more of a nation of homeowners than of renters. https://www.abs.gov.au/statistics/people/housing/housing-occ... "66% of Australian households owned t…

Nice data but that it's from 2018 before the covid boom...

> The nation's median property price lifted by 1.5 per cent last month (to $666,514)

https://www.abc.net.au/news/2021-09-01/property-housing-core...

That's a >50% increase over ~3 years and from the article 20% over the last year.

Re: Home Price to Income Ratio

#500

Post by neltnerb »

stana wrote: post #480
woofie11 wrote: post #434

Earlier quoted context omitted.

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.

Although true, for sure, when considering cash flow -- it's a fairly big upside that at the end despite having tenants pay most of the principal you end up owning it. Extra risk, etc, but housing prices falling is exactly the risk you're going into with wide eyes open so it's just a gamble.

But at the end, there's a decent shot you have full ownership of a house worth even more than you paid, and even if it loses most of its value you still own a place you can live in perpetuity paying only maintenance and property taxes. The renters don't get that, so it does kind of seem fair if they do not, in fact, cover your mortgage for you.

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