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U.S. home prices are the most unaffordable they've been in nearly 100 years

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Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#71

Earlier quoted context omitted.

We don't know if that is the primary cause though. The US population was growing at a quicker rate for much of it's history, and that population was more rural, and a number of other reasons we can't rely solely on historical data for our predictions of current behavior. With a closer to zero population growth rate and a more urbanized population we would expect there to be fewer houses built. Additionally, the pure…

location, location, location. Much of the housing price increase has occurred in areas that are doing well economically, but have more or less maxed out the building density currently legally allowed by zoning. today you could build so many houses in Detroit and yet that wouldn't really ease the housing crisis in a place like the Bay. there is also, at least anecdotally, a shortage of skilled tradespeople across cons…

Yep I agree that a large contributing factor in all of this has to do with location.

The shortage of skilled labor is another instance where we need to ask why supply is not meeting demand. I think in the case of the supply of skilled construction workers it is not difficult to come up with a plausible explanation that doesn't require any malicious actors.

Anyway, I'm not really trying to make a political point or give everybody my own pet theories as to how this happened. I'm mostly just trying to make the point that the way this issue is generally discussed in the media is economically illiterate at a pretty fundamental level.The observation in the media that supply is not meeting demand is worthless on account of that not being a meaningful statement.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#72

This is to be expected. Sellers are always reluctant to be reasonable when they are on the wrong side of a peak. The raising of interest rates means prices have to adjust. But after so many years of increasing prices sellers are not yet rational. And yes, some more inventory would help. That said, as the population ages, who is going to buy all the McMansions? Price not only need to adjust to interest rate but demogr…

> as the population ages, who is going to buy all the McMansions? The McMansions will be unlivable by that point. They weren't built to last.

This is what people said about Levittown (https://en.wikipedia.org/wiki/Levittown), the archetype for postwar suburban housing developments in the USA. They did wear out, but the owners fixed them. If the housing is still needed, it will be maintained and repaired and improved.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#73
post #18

Earlier quoted context omitted.

Prices actually have adjusted and have fallen somewhat. What life event would cause someone who currently owns a home at a It’s a once in a generation type of rate. You’d have to be a complete fool or have some kind of crazy life circumstance to sell. Over 30% of employers in the US exclusively hire remote employees. Post-pandemic it’s hard for me to imagine someone in the home ownership socioeconomic class giving up…

This seems a bit extreme. If you can afford to move, does interest rate really factor in? If rates get worse you’ve still locked a better rate, if rates get better you refinance. Besides, there’s plenty of reasons to move besides for a job (and not everyone can work remotely or get a remote job with comparable compensation). Yeah, you’re going to pay some more interest if you get a new mortgage, but don’t you just ad…

Yeah I think the HN crowd is vastly overestimating how much people care about rates. Most people are not perfect financial optimizers - they’ll just pay whatever they can maximally afford per month for a house that most closely matches what they need for their present life. Few people are coldly rate rational. You only have to look at what people pay for car loans to confirm this.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#75
post #29
post #18

Earlier quoted context omitted.

Prices actually have adjusted and have fallen somewhat. What life event would cause someone who currently owns a home at a It’s a once in a generation type of rate. You’d have to be a complete fool or have some kind of crazy life circumstance to sell. Over 30% of employers in the US exclusively hire remote employees. Post-pandemic it’s hard for me to imagine someone in the home ownership socioeconomic class giving up…

Unemployment is going to go up somewhat, foreclosures are a thing.

Funny thing about that, COVID has removed a lot of people from the workforce and will continue to do so for the next few years. The billionaires at the top of all the tech companies will live to regret allowing the activist investors to spur them into laying off people.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#76

Earlier quoted context omitted.

How many of those homes are second/third homes? There are a lot of old abandoned homes. I would never live in a home built before 1978. Almost certainly that home is full of lead-based paint and asbestos.

You don’t have a choice in some areas, like the south SF bay (unless you are a multimillionaire). The sources of asbestos are well known and they can be removed cleanly and safely, and lead paint should have been painted over by now with more than a few coats of modern paint — which you can safely touch and lick, if you like.

Just remember to explain to your 2-year-old not to put any of the chips or flakes in their mouth and it's all good.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#77

Earlier quoted context omitted.

Lots of people sitting on 2-3% fixed rate 30 year mortgages are suddenly deciding maybe staying in their current home isn't a bad idea after all. If you need a mortgage to buy a house, what you can afford just got a lot more modest. Sales will pick up a little; some people will need to move for reasons they cannot avoid. Some people who don't have fixed rate mortgages will have to sell because they can no longer affo…

Regulation blocking mortgage porting is unfortunate.

Personally I don't give a shit if people can sit on their house forever at -5% real interest rates or whatever. Just let me build a shack out of chicken wire, 2x4s, and tin roof. If you get to rig the game to get a house the least you can do is let me build something with whatever scraps are left in the financial system.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#79
post #73

Earlier quoted context omitted.

This seems a bit extreme. If you can afford to move, does interest rate really factor in? If rates get worse you’ve still locked a better rate, if rates get better you refinance. Besides, there’s plenty of reasons to move besides for a job (and not everyone can work remotely or get a remote job with comparable compensation). Yeah, you’re going to pay some more interest if you get a new mortgage, but don’t you just ad…

Yeah I think the HN crowd is vastly overestimating how much people care about rates. Most people are not perfect financial optimizers - they’ll just pay whatever they can maximally afford per month for a house that most closely matches what they need for their present life. Few people are coldly rate rational. You only have to look at what people pay for car loans to confirm this.

Right, and further not being perfectly financially rational is quite fine! Finances aren’t the only factor in any decision, nor do they need to be the primary factor.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#80

Earlier quoted context omitted.

Also, of course, one should keep in mind demographic shifts. There are many small towns (and even some city suburbs) with cheap empty houses that many people would never willingly occupy because there are no jobs there.

Also areas like East Cleveland that have a notorious reputation. Even if in that particular case the city was built by John D. Rockefeller, he is even buried there.

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