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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

#201

Post by stanleydrew »

onion2k wrote: post #165
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…

If home prices are going up everywhere that means demand is exceeding supply everywhere. Only if the houses are selling at the higher price. There are a lot of empty, unsold houses where the owner is refusing to reduce the price. Property economics is weird.

I think "home prices are going up everywhere" means actual closed transaction sale prices are going up, not listing prices.

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

#202

Post by s1k3 »

switch007 wrote: post #113

Interest rates jumping from 1.2% to 4.5% had zero cooling effect on house prices in my area. Probably quite a few people are still on existing fixed mortgages. Prices have jumped, as a double whammy. It’s all about supply: there is very very little and it’s a desirable area. Even if rates stay at around 4-5% in a few years when all of the low-rate fixed mortgages have ended, prices will have risen, and I would guess…

When the interest rate goes up that fast existing homeowners are less inclined to sell because their monthly payments will go way up buying a comparable house elsewhere. So you end up reducing supply when it happens so fast and so much.

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

#203

Post by s1k3 »

dalyons wrote: post #73
noisenotsignal wrote: post #49

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.

It’s not about optimizing it’s about cash flow. If you get a 500k mortgage today at the current rate of ~7% your monthly payment is about 3500/mo. That same mortgage financed 2 years ago around ~2% is a monthly payment of 1800. For the SAME house you are paying basically double the amount per month. This isn’t optimizing a few bucks per month it’s about not being able to afford the same house.

Every homeowner knows this and if they’ve ever had the incling to move int rh last year theyve done the math and realize it simply doesn’t make sense. People won’t move right now unless life forces them to.

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

#204

Post by ghaff »

EVa5I7bHFq9mnYK wrote: post #179
pzo wrote: post #43

Earlier quoted context omitted.

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?

Yes, Americans build everything of wood, rather than cement or bricks, like in the civilized world. Remember the tale about 3 little pigs? After 50-70 years it falls apart and needs to be teared down.

So someone who gets their construction knowledge from a children's fable confidently asserts that an entire country, really an entire continent, just doesn't know how to properly build houses.

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

#205

Post by chiefalchemist »

havblue wrote: post #37
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.

If it's an expensive neighborhood in a region with a growing economy then I would think the McMansions would be fine.

While I understand social expectations run in cycles, families are smaller, costs higher, etc. McMansions had a moment. Unless there are reasonable ways to divide them (e.g., family w/ an apartment for older parent(s)) to me it seems unlikely that moment will happen again soon.

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

#206

Post by angmarsbane »

nostromo wrote: post #50
pzo wrote: post #43

Earlier quoted context omitted.

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?

Families/households are also smaller so we need more homes, all else being equal.

There are more divorced families too, so a family unit that previously occupied one home now occupies two.

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

#207

Post by irrational »

KerrAvon wrote: post #67
irrational wrote: post #47

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.

You never remodel or have to repair holes in the walls of your home? In my experience, we would have lead based paint particles floating all around the house from all the projects and fixes we do.

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

#208

Post by pandaman »

9991 wrote: post #177
pandaman wrote: post #150

Earlier quoted context omitted.

"Cache buyers" does not really mean people buy houses with their disposable funds. It means only that the deal does not involve a mortgage contract. The deal can still be financed through a loan, just not a mortgage. During the highly competitive market in 2021 people had been takin such loans to make cache offers and beat competition [1]. Also we had massive emigration from the states with high RE prices such as CA…

Does your misspelling of “cash” mean anything other than signaling you know CS?

Sorry, it's a typo.

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

#209

Post by Overtonwindow »

yawnr wrote: post #119
Overtonwindow wrote: post #42

We are so fortunate to have bought our home in 2019 before the pandemic. We locked in 2.85% on a 30 year fixed and never look back.

Congrats, genuinely. In my mid 30s with what I thought was a lot of money saved and can’t afford a 2 bedroom apartment. Feels hopeless.

Do not despair! The best thing we did was to find a good realtor, who knew a good lender, and they gave us the truth about exactly what we needed to do to qualify for an FHA loan. A down payment is no longer necessary; for US citizens.

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

#210

Post by LocalH »

brabel wrote: post #173
drewrbaker wrote: post #151

Earlier quoted context omitted.

In 2019 I purchased land in Mt Washington, about 15mins outside downtown Los Angeles for $200k. My father is a builder back home in Australia so we know more about building that most. Even the after 3+ years, we finally received permits. The city is making us widen the road ($75k), extend a water main 12 feet ($75k), move 3 power poles (can’t get LADWP to tell us what that’s going to cost yet as they have to design i…

> move 3 power poles > House will be 3200sqft > Construction budget is $2m > impossible for new construction by family’s Sorry, but this looks like one of the most incredibly out-of-touch rich people comments I've ever read. You're building a freaking castle in the middle of the city, moving roads around, and then you go on to say "families" can't build?? Maybe you're right and even building a modest home in the subu…

Did you miss where they stated the city is making them do that stuff?
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