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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

#81

Post by hayst4ck »

superkuh wrote: post #10

From 1950 to 2008 the USA built ~25 million homes per (edit, not year) decade. From 2008 to 2018 it was about 7 million. In recent years building rates have mostly recovered but there's still that gap in production combined with everything else the last handful of years. This isn't to discount the shift of ownership from human persons to corporate persons, that's a factor too. But just numbers of available houses ver…

If home prices are going up, that means that demand exceeds supply. If home prices are going up everywhere that means demand is exceeding supply everywhere.

If homes are a good monetary investment, that means home prices are going up, which means supply is not keeping pace with demand.

If home prices are going up at a rate faster than wages, then they are becoming more expensive for our children. Not in a round-a-bout way, but in a direct causal relationship way.

Homes can either be affordable or an investment, not both. If homes are to be affordable that means more need to be built.

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

#82

Post by angmarsbane »

dangus wrote: post #18
chiefalchemist wrote: post #2

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…

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…

Divorces, deaths in the family, growth in the family, people move to be close to certain hospitals / schools etc. Maybe one half of a marriage gets a remote role but the other doesn’t.

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

#83

Post by Rury »

pzo wrote: post #43
superkuh wrote: post #10

From 1950 to 2008 the USA built ~25 million homes per (edit, not year) decade. From 2008 to 2018 it was about 7 million. In recent years building rates have mostly recovered but there's still that gap in production combined with everything else the last handful of years. This isn't to discount the shift of ownership from human persons to corporate persons, that's a factor too. But just numbers of available houses ver…

So in those 7 decades there has been build 175 million houses. Population of usa is around 350 million. Most people probsbly also not living alone and some houses that were build before 1950 probsbly still are in use just maybe modernized. Not familiar with USA market but wondering: Are current houses just more fragile and fell apart within 50 years?

Don't forget that houses get torn down and rebuilt. It doesn't happen often but it happens.

In the US, modern houses tend to be larger, have better insulation (from what I've experienced), but can be cheap in some aspects (e.g. interior doors tend to be hollow, whereas older houses typically had solid doors). Overall though, I'm not sure if new or older homes were better built. I know some really well built old homes, but some very poor built ones too, and this goes for modern homes as well. Most should last 50 years though.

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

#84

Post by ec109685 »

rootusrootus wrote: post #31
meghan_rain wrote: post #22

Earlier quoted context omitted.

What do you mean by transactions? House sales?

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…

Sitting on a home with 2-3% interest is all well and good, until the value drops and you’re sitting on a much worse asset.

I.e. if you own a second home with a 3% interest rate, should you sell now or collect rent on it?

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

#85

Post by almost_usual »

xupybd wrote: post #40
rootusrootus wrote: post #33

Earlier quoted context omitted.

> As interest rates rise people will no be able to afford their mortgages I really wonder how many people in the last 10 years actually felt like buying a variable rate mortgage was a good idea? People on fixed rate mortgages are staying put, and watching inflation deflate the value of their debt.

It amazes me that in the US you can fix for the life of your mortgage. Here in NZ 5 years is close to the max.

It’s an insanely great deal. In California you pretty much lock your property taxes as well with Prop 13.

Not to mention you can write off mortgage interest up to $750,000 mortgage debt come tax season. Saved me 20k+ in income tax.

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

#86

Post by [deleted] »

OrvalWintermute wrote: post #38
xupybd wrote: post #14

Earlier quoted context omitted.

The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.

In my HCOL area we are already seeing prices nosedive after they sit on the market for a few months. The discounts are around 15% off peak, and this is just the start.

[deleted]

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

#87

Post by xupybd »

KerrAvon wrote: post #69
xupybd wrote: post #14

Earlier quoted context omitted.

The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.

COVID is not over. It’s just getting started.

What do you mean by that?

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

#88

Post by ActorNightly »

Beaver117 wrote: post #32

It's all just a game looking at the charts until the real estate "investment" companies are invaded by thousands of homeless people and the CEOs executed. Are people just supposed to not live anywhere? How long will this last? Just learn from history.

Don't fall for the socialism anti-landlord brainrot.

People have plenty of places to live. This is more about the fact that people want to have the same financial opportunity to own a house. It sucks that the older generation had an opportunity to buy a house that has risen in value, with an area that got gentrified with more stuff around them, and were able to refinance during Covid at like 2-3%, while the younger generation is SOL. This is a very valid reason to address, but has nothing to do with homelessness.

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

#89

Post by danielmarkbruce »

testrtt3222 wrote: post #55
danielmarkbruce wrote: post #28

Earlier quoted context omitted.

This is important and few seem to look at the simple supply/demand. It explains the housing crises in 06/07/08 and the subsequent situation too.

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…

Just look at the data: https://tradingeconomics.com/united-states/housing-starts

Additional supply did come on, and has dropped recently in response to rates.

It's really not more than high school supply/demand. There are just a good number of factors which make up each at each location, and at least one of them is large and unpredictable (interest rates). There is always a lag on the supply side because only so many houses can be built at any time. It's the same for many commodities like oil and gas.

Actually computing a good supply or demand curve has always been the difficult part, not the theory. But supply lag and interest rates make up a big component of property supply and demand.

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

#90

Post by xuki »

echelon wrote: post #35
hn_throwaway_99 wrote: post #30

This article is missing perhaps the most important graph, which is median income to some common monthly payment metric (e.g. average monthly payment for a 30 year mortgage with 20% down). Reason being that the article mentions interest rates, but then just shows graphs comparing to sales price. Ironically, showing a metric that took interest rates into consideration would probably highlight why the current situation…

> Owners won't sell at a loss if they don't have to Supply and demand. If supply drops and demand doesn't... That's what /r/REBubble refuses to acknowledge. Nobody's giving up their 2% if they don't have to.

There won’t be a meaningful drop unless unemployment starts to tick up.
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