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Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

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Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#31

Post by imtringued »

bko wrote: post #14
j_walter wrote: post #3

What has the square footage and amenities for single family homes done over the same time frame? You aren't comparing apples to apples... https://www.propertyshark.com/Real-Estate-Reports/2016/09/08... Not to mention the average household size (number of people) has been dropping...so the square foot per household member is up drastically...

I would also note that you have to consider mortgage rates. They're on the rise now and I'm not sure if it'll still hold, but last time I looked at it the overall payment is down. In 1987, mortgage rates were about 15%. To put that into perspective, a $100k 30 year fixed rate mortgage would cost you $1,543/mo at 18.45% and only $442/mo at 3.38%. I only hope that rates going up will deflate the real estate prices but…

People compete on monthly payments not the actual house price. Only people who can pay upfront compete on the house price.

Changing interest doesn't change how many people are willing to live in a location. Your monthly payment will just go to the bank instead.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#32

Post by imtringued »

fallingfrog wrote: post #22

I’m thinking out loud here but: Lets game this out. Let’s say that interest rates go up significantly- say, to 12% or something. Ok, so then naively you would probably expect house prices to fall, because people won’t be able to make payments otherwise. But what if you’re someone who bought a house in the low rates/high price era. Are you going to sell? No, because your mortgage is underwater- you can’t afford to sel…

High interest rates turning into bankruptcy and people selling their land to the rich is as old as time itself.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#33

Post by vagrantJin »

rdlecler1 wrote: post #30

We bought our first home last year at a 3% interest rate. The price is up 45% one year later. If we had to buy that same house today with todays interest rate our mortage payment would be double. This is deeply unfair to people who don’t own homes. (Comfortably) Owning a home is a key part of the American dream. We need an Elon Musk for housing. So many of societies problems can be traced to high housing cost.

> Owning a home is a key part of the American dream

This is wierd. Why would owning a home be part of a dream? Owning a home is par for the course in most parts of the world.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#34

Post by Armisael16 »

fallingfrog wrote: post #22

I’m thinking out loud here but: Lets game this out. Let’s say that interest rates go up significantly- say, to 12% or something. Ok, so then naively you would probably expect house prices to fall, because people won’t be able to make payments otherwise. But what if you’re someone who bought a house in the low rates/high price era. Are you going to sell? No, because your mortgage is underwater- you can’t afford to sel…

You generally don’t actually have to pay your mortgage - you just lose the house if you don’t (well, and take a hit to your credit score).

People can and do walk away from a place when they’re underwater.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#35

Post by disgruntledphd2 »

j_walter wrote: post #3

What has the square footage and amenities for single family homes done over the same time frame? You aren't comparing apples to apples... https://www.propertyshark.com/Real-Estate-Reports/2016/09/08... Not to mention the average household size (number of people) has been dropping...so the square foot per household member is up drastically...

The index referred to in the article uses repeat sales of the same house, so should be insulated from these effects.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#37

Post by polski-g »

nabaraz wrote: post #28
PyWoody wrote: post #15

I bought my home in the middle of nowhere in New England four years ago for $220k. I could sell it tomorrow for $400k. If I wanted to test my luck, I'd be able to sell it in 2-3 months for $450/500k. The median _family_ income for my area is $52k/year (2007-2011). Things are fucked for the average person. I keep coming back to the Player Piano[0]. It really is the "Reeks and Wrecks" vs. the Doctors. [0] ( https://en.…

You could sell your house for twice as much but you will have to pay twice as much to buy a new one.

He could move to Missouri and pay half as much.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#38

Post by BirdieNZ »

rdlecler1 wrote: post #30

We bought our first home last year at a 3% interest rate. The price is up 45% one year later. If we had to buy that same house today with todays interest rate our mortage payment would be double. This is deeply unfair to people who don’t own homes. (Comfortably) Owning a home is a key part of the American dream. We need an Elon Musk for housing. So many of societies problems can be traced to high housing cost.

> So many of societies problems can be traced to high housing cost.

While a significant portion of housing costs are due to materials, labour, and regulations that limit how much you can build, a very large amount of house price increases in recent years is found in land price increases, not the house itself.

The Elon Musk for that particular problem is Henry George, and his book Progress and Poverty.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#39

Post by BirdieNZ »

Armisael16 wrote: post #34
fallingfrog wrote: post #22

I’m thinking out loud here but: Lets game this out. Let’s say that interest rates go up significantly- say, to 12% or something. Ok, so then naively you would probably expect house prices to fall, because people won’t be able to make payments otherwise. But what if you’re someone who bought a house in the low rates/high price era. Are you going to sell? No, because your mortgage is underwater- you can’t afford to sel…

You generally don’t actually have to pay your mortgage - you just lose the house if you don’t (well, and take a hit to your credit score). People can and do walk away from a place when they’re underwater.

This is country-dependent. In New Zealand, you cannot walk away from the mortgage. You might be able to if you declare bankruptcy, perhaps.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#40

Post by llampx »

Armisael16 wrote: post #34
fallingfrog wrote: post #22

I’m thinking out loud here but: Lets game this out. Let’s say that interest rates go up significantly- say, to 12% or something. Ok, so then naively you would probably expect house prices to fall, because people won’t be able to make payments otherwise. But what if you’re someone who bought a house in the low rates/high price era. Are you going to sell? No, because your mortgage is underwater- you can’t afford to sel…

You generally don’t actually have to pay your mortgage - you just lose the house if you don’t (well, and take a hit to your credit score). People can and do walk away from a place when they’re underwater.

Doesn't your credit take a major hit though? Then you'd have a harder time buying a new place for some years.
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