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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

#131

Post by whitemary »

KerrAvon wrote: post #72
whitemary wrote: post #9

Earlier quoted context omitted.

> 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.

Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain.

Also, Levittown construction and materials are not comparable in any meaningful way to McMansions.

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

#132

Post by junofan »

pphysch wrote: post #106

There's a lot of noise about supply, demand, investment cycles, AirBnB, but the elephant in the room is that USA housing is a casino and the banks are the "house", which always wins. The banks only care that housing prices remain astronomical--the mechanics are not important--so that mortgages must be taken out. And, as recent history shows, the mortgage casino is "too big to fail" because of the globally-systemic ro…

It’s pretty unusual that we have people approach residential real estate in this hyper-financialized way. It’s a weird 1930s way to inject liquidity, and we have better tools now.

An individual is fucked if something happens to crater the price of their house. Nobody hedges, really. It’s a toxic system.

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

#133

Post by mint2 »

hayst4ck wrote: post #81
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-bou…

Demand for homes may exceed supply but ask what that demand really is.

A big chunk of that demand is for 2nd or 3rd or even 4th properties as investment rental properties. Can’t afford a house in the sf Bay Area, no problem, go buy 4 investment properties in the Midwest! I know people who’ve done that.

Also look what houses are built, they aren’t starter homes in many areas. They are “luxury” (luxury per home marketers, sq ft, and price, I won’t go down the rabbit hole of what I personally think).

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

#134

Post by NDizzle »

ec109685 wrote: post #84
rootusrootus wrote: post #31

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…

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?

If you have a second home at 3% that means your first home is paid off. You wouldn’t get that rate for an income property.

There are several good reasons for selling it, mostly emergency or retirement reasons. I would keep it and rent it. Inflation is more than double that 3%, “officially”.

What a great problem to have.

Anecdotal data, regarding value drops. I’m in a 30 fixed at 3% in Arkansas. Houses I was looking at in a new subdivision were around $410 when I was looking, this time 2020. They are now in the $700s, and that’s with the current interest rate. So 3 years of mortgage payments, down payments, you’re looking at an outstanding balance on the loan of… around $300k?

The value drop people think needs to happen probably won’t ever happen. Especially since the USD is turning into Monopoly money due to terrible fiscal policy.

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

#135

Post by randcraw »

hayst4ck wrote: post #81
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-bou…

Another explanation is that the average new house costs more than it used to. Housebuilders have chosen to build bigger homes at a higher finish level because there's more profit in it. New affordable housing is becoming rarer.

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

#136

Post by FredPret »

mint2 wrote: post #133
hayst4ck wrote: post #81

Earlier quoted context omitted.

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-bou…

Demand for homes may exceed supply but ask what that demand really is. A big chunk of that demand is for 2nd or 3rd or even 4th properties as investment rental properties. Can’t afford a house in the sf Bay Area, no problem, go buy 4 investment properties in the Midwest! I know people who’ve done that. Also look what houses are built, they aren’t starter homes in many areas. They are “luxury” (luxury per home markete…

That makes zero sense. Do you think those rental units disappear off the market? There isnone unified housing market, rent and buy. People can still rent if they can’t buy.

Building more will inevitably fix the housing market, even if one investor owns every single new house.

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

#137

Post by bagels »

Pokepokalypse wrote: post #115
Rury wrote: post #83

Earlier quoted context omitted.

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…

Modern homes have much better insulation and energy efficiency (like LED bulbs), etc. But I think it's also true that a lot of builders can get away with cutting corners, and the materials that go into homebuilding are also often of lesser quality (like wallboard from China that outgasses toxic sulfur fumes). Modern plumbing is mostly snap-fit plastic tubing rather than copper pipes. It's a LOT cheaper to install. Su…

This is not new. My 1954 bay area house: the builders mixed scrap wood in to the foundation concrete to make up for undersizing the order, broken roof boards were patched with coffee cans and other garbage (coffee can had a 1940s date, it was there since built). These are just the most obvious examples.

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

#138

Post by LoganDark »

justrealist wrote: post #101
blurbleblurble wrote: post #93

Earlier quoted context omitted.

There are ~30 vacant homes per homeless person in the US. Tell me how that makes any sense.

Taking a mentally ill fentanyl addict from San Francisco and dropping them in a condemned house in Scranton PA is not actually going to solve the problems you think it will.

> a mentally ill fentanyl addict

In a lot of cases they wouldn't have become mentally ill or a fentanyl addict if they weren't homeless. Yes, addiction drives tons of people into homelessness, but homelessness can also cause addiction since a homeless life kinda sucks.

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

#139

Post by whitemary »

rootusrootus wrote: post #41
RDaneel0livaw wrote: post #12

Earlier quoted context omitted.

ENTIRE vinyl villages of McMansions will be unlivable. They aren't even built to last the standard 30y mortgage because the builders know the initial buyers will sell and move on. Cheapest possible 2x4's with worst insulation ever known, all covered up in plastic siding. But hey, it's 10k sq ft right?

That's a bit hyperbolic. Inspections are a thing, and modern houses are generally built just fine. And nobody uses plastic siding on a brand new house (well, almost nobody, you can probably find rare examples). A modern house uses hardieplank fibercement siding probably 99% of the time. These days vinyl siding is mostly a retrofit choice, not new construction.

The cheap 2x4s are the most significant point of failure. The houses will twist and warp to many extremes during their lifetimes. The first symptom of doors that won't open/shut properly usually shows in the first 10 years of these houses. In a 1920s home built with domestic timber, that process would take a lifetime. After 30 years, this contributes to all sorts of creaks and leaks. Repairs are questionable and don't last as long because the frame of the structure is unstable.

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

#140

Post by danielmarkbruce »

steveshurley44 wrote: post #127
danielmarkbruce wrote: post #89

Earlier quoted context omitted.

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…

I think that's what the person above you meant as well, that prices being high due to a lack of supply is not controversial nor is it very interesting.

None of it is especially interesting or controversial... it's just a lot of details which make up the supply and demand.

There is no pithy "this is the deep reason why", which is what it seems they want to hear.

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