Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Home Price to Income Ratio

longtermtrends.net

Post reply on HN
Print view View original

551–560 of 704 posts

Re: Home Price to Income Ratio

#551

Post by bogomipz »

dzabriskie wrote: post #378
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…

This. Here's research to back this statement up: Today's House Prices Are Over 40 Percent More Affordable Than The Housing Boom Peak: https://blog.firstam.com/economics/todays-house-prices-are-o...

And to balance that out, also from your link:

>"The affordability gain from increased house-buying power, however, was offset by the third component of the RHPI, nominal house price appreciation, which reached a record 19 percent compared with a year ago, eclipsing the record for price appreciation of 17.5 percent set in 2005."

Re: Home Price to Income Ratio

#552

Post by enkid »

throw123123123 wrote: post #483
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…

You are a lot worse-off. If you buy at 6%, and then rates go down to 2%, you can refinance and your home is valued at a higher rate. IF you buy at 0%, you bought the house at the peak, and cannot refinance the debt.

But you would have a lower payment because you bought at a lower rate, no?

Re: Home Price to Income Ratio

#553

Post by foopfoop »

ashtonkem wrote: post #176
bakuninsbart wrote: post #55

Earlier quoted context omitted.

Are property rights freedom-preserving? One of the most infuriating bits of my visit to the US West coast was driving up from LA to SF and a lot of the really nice bits of coast not being accessible to the public. There's compromises like germanic Jedermansrecht [0], but overall I think limiting property rights is often a net gain of freedom. I do agree on the problem of NYMBYism though. There's a funny-if-not-so-sad…

> Are property rights freedom-preserving? You’ll find that historically speaking “freedom” and “property rights” are treated as synonymous for some political theorists, including the ones that founded the United States. This is one of the foundational aspects[0] of liberalism that has come to rule the western world; the idea that property rights are sacred and must have an exceptionally high bar for the collective to…

[flagged]

Re: Home Price to Income Ratio

#554

Post by foldingmoney »

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…

https://www.afr.com/property/residential/what-the-national-m....

AUD$955,927 national median and AUD$1.4m Sydney median.

Re: Home Price to Income Ratio

#555

Post by ezoe »

yurishimo wrote: post #530
ezoe wrote: post #509

Earlier quoted context omitted.

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 coul…

You can't just import the foreign culture without the environment that justify the culture.

In Japan, the land is scarce and fragile, humidity weather, constantly facing earth quakes, typhoons. So the house will be damaged faster than the typical western countries.

Each time we face the massive earthquakes, the house building regulation will be updated to mandate new and improved earthquake resistant structure so building built with old regulation lose market values. The same goes for all disasters like tsunami, flooding, land slide and all.

You must also consider the fact that air conditioning wasn't popular 30 years ago. The houses built before that era were optimized for the natural ventilation. it's totally inefficient for the air conditioner.

Old houses also has the Internet issues. Most of the house in Japan are massive condominium. The optical fiber was a thing after 2000s. It takes a lot of money to wire optical cable inside the existing building. So most of the buildings in Tokyo are still using VDSL.

Other infrastructures like power line, water and gas starting to rust so it must be replaced. The cost of doing that to existing house is expensive in Japan and it doesn't increase the value of house that much. Especially for old houses that need replacing because it had gotten so much damage from humidity, earthquakes, typhoons and remember, it was built before the current housing regulation for the resistance for these. So it's more reasonable to just scrap it and rebuild it.

I am living in a standalone old house in Tokyo unlike most of the people. Then, I realized the value of condominium in Tokyo. It works as a gated community, the segregation based on income. We are implicitly achieving the segregation by the condominium.

Re: Home Price to Income Ratio

#556

Post by AmericanChopper »

joppy wrote: post #393
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…

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…

The value of all yielding assets is tied to interest rates. The risk free rate is a bench mark for measuring any type of return, so any time you change that you’re going to influence the valuation of everything.

There’s also a very clear distinction between the idea of housing and home ownership. People need a place to live, they don’t need to have a property investment. You and I need healthcare, but neither of us need to own a hospital.

Re: Home Price to Income Ratio

#557

Post by 01100011 »

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.

Economics isn't a solved problem. People fill in the gaps with whatever fits with their preexisting ideology.

I also tend to think we software "engineers"(haha) confuse our high salaries and prowess in one domain with a general level of intelligence that lets us outsmart experts in other fields.

Really though, this is a very difficult problem, and it very likely won't be solved on an anonymous discussion forum tailored to techno-news.

Re: Home Price to Income Ratio

#558

Post by j7ake »

enkid wrote: post #552
throw123123123 wrote: post #483

Earlier quoted context omitted.

You are a lot worse-off. If you buy at 6%, and then rates go down to 2%, you can refinance and your home is valued at a higher rate. IF you buy at 0%, you bought the house at the peak, and cannot refinance the debt.

But you would have a lower payment because you bought at a lower rate, no?

You would have the same payment as someone at a higher rate because at higher rates, someone would would have purchased the same home at a lower price.

Re: Home Price to Income Ratio

#559

Post by AussieWog93 »

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…

Australia's housing market, like I'm guessing many others, is quite heterogeneous.

Sydney and to a lesser extent Melbourne are both completely unaffordable (A$1m+) to new home owners on an average income unless you're prepared to live in a unit or commute 2 hours a day to the CBD. Brisbane, Adelaide and Perth on the other hand are significantly cheaper and one could still afford a nice family home.

Also worth noting is that the huge boom in prices only really started in the early 2000s. People who bought prior to that period make up a disproportionate number of owner occupiers.

Re: Home Price to Income Ratio

#560

Post by zhte415 »

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 Macs drove subsidising the moral hazard of fixed rate loans into the public conscious, a subsidy for home owners, political suicide to take away. Better (politically) to rob from a generation or two to pay for reckless low interest rates.
Post reply on HN