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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

#241

Post by bobthepanda »

bbradley406 wrote: post #232
testrtt3222 wrote: post #71

Earlier quoted context omitted.

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 gi…

Wages for construction workers have not kept up with inflation, much like other fields. Unless you're a Master - tier specialist in your field, you will probably be making at best $15/hr to $25/hr with minimal (if any) benefits. There's simply few reasons to enter the field and risk long term health issues when you can make the same amount, or better doing paperwork in an office.

we also had a whole new category of job (gig economy) and a massive increase in a related category (delivery) show up for unskilled work. In general there seems to be a labor mismatch now, and existing regulations certainly don't help (e.g. you need to not have smoked weed in the last six months to hold a CDL to drive a truck around, and these days that probably eliminates a good chunk of that skill segment)

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

#242

Post by chiefalchemist »

tstrimple wrote: post #237
chiefalchemist wrote: post #235

Earlier quoted context omitted.

Agreed. But I'd like to perhaps interpret it a slightly different way. What if house construction was "branded". That is, aside from (possibly uninforced) local standards a company built homes AND committed to their quality. Given how sloppy new home construction has become, perhaps buyers would trade less home for say 10 years of peace of mind? I realize long term guarantees are tough. Obviously. Nonetheless, the cu…

Home warranties were fairly common when purchasing. They are meant to cover things you don't find right away during the inspection. Unfortunately market forces, especially lately, have made these less available for purchasers as competition for houses is too high.

Sounds like it's a race to the bottom. No one can differentiate with better quality goods and work because no one is willing and able to do it.

The lower the price the better. Regardless how it'll cost you later, affect long term value, etc.

If anything it makes the argument to not buy new. Instead go for something in the 10 to 15 yr range that's had the structural bugs worked out but might need updated appliances.

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

#243

Post by dakial1 »

Isn't this a business opportunity for construction companies? Or is the price of building homes increasing at the same pace? Maybe that's a graph that is missing there?

Quick Google search took me here: https://reventureconsulting.com/the-myth-of-surging-construc...

Graph shows a spread opening in 2021(don't know if his analysis is sound)

Why wouldn't construction companies build more homes? Maybe because they know it will adjust again?

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

#244

Post by mlyle »

thaumasiotes wrote: post #191
mlyle wrote: post #164

Earlier quoted context omitted.

> If they have a mortgage on the house, someone gets screwed, and that someone is the bank that issued the mortgage. The mortgage is secured by the house. You can just let them take it. If you have 25% equity in the house, and something happens that knocks down the value by 30%... the person getting screwed is you.

OK, you have a $750,000 mortgage on a $1,000,000 house, plus $250,000 in equity. Then the price declines and you have a $750,000 mortgage on a $700,000 house, plus $175,000 in meaningless equity. You can sell the house and pay the bank $50,000, screwing the bank, or you can deliver the house to the bank and pay them $0, screwing the bank much harder. Meanwhile, you've lost... the opportunity to take out a second mort…

> You can sell the house and pay the bank $50,000, screwing the bank

Prepayment doesn't really screw the bank.

> or you can deliver the house to the bank and pay them $0, screwing the bank much harder.

And wreck your credit in the process-- and perhaps even owe the money, depending on whether your mortgage is non-recourse.

> Meanwhile, you've lost... the opportunity to take out a second mortgage against the equity you had in your house? What was the equity doing for you?

Meanwhile you've lost your entire down payment and your ability to purchase another house now. You either have to take a credit hit walking away and forfeit the down payment, or just stay stuck where you are now overpaying for a house vs. current values.

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

#245

Post by dangus »

post-it wrote: post #26
dangus wrote: 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…

> Over 30% of employers in the US exclusively hire remote employees. [X] Doubt

Here's my source: https://www.smallbizgenius.net/by-the-numbers/remote-work-st...

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

#246

Post by dangus »

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.

And I think this type of opinion goes too far in the other direction and essentially accuses the common person of being a complete ignoramus.

> 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

Right, and if you ditch a 3% mortgage in favor of a 6% mortgage your monthly spend goes way less far. You're looking at a loan payment that increases by about 40%.

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