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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#521

Post by m_ke »

kadomony wrote: post #503
soperj wrote: post #280

Earlier quoted context omitted.

Don't allow corps to own housing.

This is what pisses me off the most. America's housing is being sold to the wealthy, who then just turn around and siphon the rest of the wealth out of the middle-class and younger generations by forcing them into renting because the barrier to break into homeownership simply eclipses them.

There's a whole cottage industry of house hackers now thanks to biggerpockets who specialize in BRRRing, as in buying, doing minor renovations, raising rents and then cash out refinancing to have money for the next downpayment.

Re: Home Price to Income Ratio

#522

Post by shados »

whimsicalism wrote: post #351
shados wrote: post #260

Earlier quoted context omitted.

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…

> 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. ?? The growth in output would offset the increase in dollars bidding for the same goods - ie. more people working would mean more supply and also more $$ bidding for goods. Seems absurd to say "you're not any better off."

Yes, thats why median home prices didn't really go up that much higher than inflation when adjusted for interest rate decreases.

People don't want "a home". They want THAT home (or at least, a home in THAT area). Yes, there are supply issues because of zoning and NIMBY policies, but even super dense areas like Manhattan have significant supply issues.

So you have income increases that can't be offset by the output, because supply is limited.

Re: Home Price to Income Ratio

#523

Post by alliao »

robocat wrote: post #180
greesil wrote: post #128

Earlier quoted context omitted.

You can if you're in a liquidity trap. Question is, are we in one now?

I imagine creating cash to solve a liquidity trap is like continuously taking laxitives for a constipation problem... At some point you get a different problem! On topic: my experience of housing prices in NZ is that people bid up house prices to the point that they can only just afford the mortgage payments. Creating more housing doesn't "fix" the problem, because the more wealthy buy two or more houses, and are hap…

yeah on those cheap short term rates, they aren't cheap.

https://www.interest.co.nz/borrowing

kiwi dollar is the original bitcoin.. small usage, wild volatility, widely traded.

Re: Home Price to Income Ratio

#524

Post by kjkjadksj »

wyclif wrote: post #448
shados wrote: post #252

Earlier quoted context omitted.

Yup. Don't forget the whole "frequently choose not to have a kid" part, and it becomes extremely one sided. Dual income families aren't new, but 2 high earners professionals with no kids aren't just the occasional doctor/dentist/lawyer couples anymore. I'm a software engineer myself in one of the high paying tech hubs, and married the same. When we went to look for a home and toured open houses, all you saw were pair…

What do you think are the best books to recommend to people who don't have enough financial literacy? This is a common theme in this kind of HN thread but I haven't seen many recommendations or lists of books that can help people level up in their financial wisdom. The bigger problem is that everyone wants to live in the same place (usually in urban centers, where the jobs are, and where you don't have to drive an ho…

There are a lot more reasons to live somewhere than commuting convenience alone. The reports of the death of the city have been greatly exaggerated. It turns out city dwellers need a lot more infrastructure than just a local brewery. Namely a functional school district and a population that isn’t 97% white and strongly skewed conservative.

Re: Home Price to Income Ratio

#525

Post by irrational »

> Historically, an average house in the U.S. cost around 5 times the yearly household income.

I just purchased a house in July for 3.7x my yearly household income. The above fact makes me feel better about the purchase ;-)

Re: Home Price to Income Ratio

#526

Post by Geee »

wffurr wrote: post #477

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.

What do you want to learn? Modern economics is mostly a guessing game of what actions governments and central banks implement. Will they print money and how much, will they bail out the banks or let them fall, will they lower or raise the interest rates, is there more stimulus coming, what kind of subsidies and social policies they implement etc. Some economists think that it's good that they have so much power and other economists think that they shouldn't intervene at all and let free market solve everything.

It's all mixed with politics, and generally policies are implemented to keep people short term happy, but long term not so happy.

Re: Home Price to Income Ratio

#527

Post by yurishimo »

TedDoesntTalk wrote: post #518
RayVR wrote: post #438

Earlier quoted context omitted.

This is only true in states with non-recourse loans. Many states have full recourse home loans that would require the homeowners declare bankruptcy to "walk away"

Yeah, and I don’t think bankruptcy disappears from your credit report after 7 years like other items. Does it?

Bankruptcy does eventually disappear I think, or if it doesn't there are legal requirements not to hold it against you after X years without a problem on your end. It's been a while since I've looked into it.

Re: Home Price to Income Ratio

#528

Post by hiram112 »

CountDrewku wrote: post #277
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.

The solution is to leave cities that aren't affordable. Sorry, but you may not get to live beach-side or be in walking distance from your hipster coffee joint in downtown SF. I really think a lot of the problem is our generation grew up watching too many movies and they just think it's normal to live in some high end condo in Manhattan while working for Enterprise Rent-A-Car. That's not realistic.

Yeah a lot of older millennials grew up on shows like Friends. We were disappointed in our mid-20s when we discovered our entry-level job wouldn't afford that large condo in downtown SF or Manhattan.

But it has got out of hand. I earn 90% more than most full time workers. And like 50%+ of "households" out there, it's just me, so no dual income. And I don't think it's appropriate to expect 40 year olds to still live with a bunch of roommates like they did when they're 22.

Forget the 2K ft^2 apartment in Manhattan or Mission District, I can't even afford the starter home out in Jersey or East Bay or Beltway DC. These aren't the mythical "McMansions" that everybody always uses to deflect from the affordability crisis - these are the exact same properties on tiny lots that a single-earning non-college-educated factory worker or postman or paper pusher could easily afford for his family in previous generations.

And if I - earning 2x-3x more than most workers - can't afford these basic homes, how the hell does everyone else who earns the median income of $60K do it?

Re: Home Price to Income Ratio

#529

Post by addaon »

TedDoesntTalk wrote: post #518
RayVR wrote: post #438

Earlier quoted context omitted.

This is only true in states with non-recourse loans. Many states have full recourse home loans that would require the homeowners declare bankruptcy to "walk away"

Yeah, and I don’t think bankruptcy disappears from your credit report after 7 years like other items. Does it?

7 years (Chapter 13) or 10 years (Chapter 7).[1]

[1] https://www.lexingtonlaw.com/education/how-to-remove-bankrup...

Re: Home Price to Income Ratio

#530

Post by yurishimo »

ezoe wrote: post #509
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…

Currently in Japan, interest rates for home loan are so close to zero. About 1% for fixed rate, 0.5% for 10 year fixed rate, less than 0.4% for variable rate. New homes are built rapidly and supply is plentiful. When we say home, it almost always mean condominium. Yet, the house price is rising in Japan. I can think of a few reasons for that, like mere fact that home loans are available to virtually anyone who is emp…

Japan is really cool in regards to housing. You have a sort of dichotomy of either really old houses, or brand new. I forget which YouTube video I watched that explained that it's rare to find a house older than a decade or two in a Japanese city because people don't want to live in them. Houses are constantly torn down and replaced with new ones with the latest and greatest features.

I think something like that could work to reduce housing costs in the USA, but it would likely require a brand new city to be the guinea pig to prove the concept here. Something like those self-contained retirement towns that spring up, but maybe when the residents die, they rebuild them? Macabre, but interesting!

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