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Home buyers need 80% more income to buy than 4 years ago

washingtonexaminer.com

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Re: Home buyers need 80% more income to buy than 4 years ago

#4

Post by pocketarc »

> The income needed to comfortably afford a home is up 80% since 2020

Based on the $343,000 house price, and the 3%/7% rate difference they mention between 2020 and 2024, the mortgage on a house the exact same price would've gone up from $1900/mo to $2650/mo. That alone is already a 40% increase.

Obviously houses prices have inflated along with everything else, but the pain is really mostly coming from the increased mortgage rates. Even a cheaper house would still be painfully more expensive today.

What I wonder is... when would it make sense to try to return to a low interest rate environment (if ever)? Is there a point where we think it will?

Re: Home buyers need 80% more income to buy than 4 years ago

#6

Post by amluto »

pocketarc wrote: post #4

> The income needed to comfortably afford a home is up 80% since 2020 Based on the $343,000 house price, and the 3%/7% rate difference they mention between 2020 and 2024, the mortgage on a house the exact same price would've gone up from $1900/mo to $2650/mo. That alone is already a 40% increase. Obviously houses prices have inflated along with everything else, but the pain is really mostly coming from the increased…

Conversely, perhaps that $343k home actually shouldn’t be worth that much. In a properly functioning market (e.g. no perverse incentives to own a unit and decline to rent it instead of renting it for less money, along with genuinely unpenalized liquidity such that a long-time owner can sell and buy something different without paying utterly absurd taxes and fees), prices should tend toward the market-clearing price.

Sadly, in real estate, one can easily own a $1M house, prefer to live in a $800k house, and have a situation in which making that trade results in a net loss of cash.

Re: Home buyers need 80% more income to buy than 4 years ago

#8

Post by turnsout »

chrsw wrote: post #5

I was wondering why in my neck of the woods a small 2 bedroom has a mortgage of about $4500/mo.

The number of luxury condos in big cities has always confused me. I guess the market is dual-income couples with high salaries? Even coming from the software world, I wonder what these people do. Finance?

Re: Home buyers need 80% more income to buy than 4 years ago

#9

Post by lifestyleguru »

turnsout wrote: post #8
chrsw wrote: post #5

I was wondering why in my neck of the woods a small 2 bedroom has a mortgage of about $4500/mo.

The number of luxury condos in big cities has always confused me. I guess the market is dual-income couples with high salaries? Even coming from the software world, I wonder what these people do. Finance?

> the market is dual-income couples with high salaries

This is some kind of memic impossibility. It's impossible to move into a city for a high paying job AND have a partner AND the partner earning a lot too. The closest I've ever been was when my job and the relationship disintegrated at the moment the partner got such job after over 5 years of searching, and I really don't feel like trying again ever.

Re: Home buyers need 80% more income to buy than 4 years ago

#10

Post by d6e »

zrn900 wrote: post #2

Capitalism working its magic. As the resources and people to exploit abroad dwindled, it started eating itself from inside out to profit as was predicted. https://www.reddit.com/r/canadahousing/comments/tose5z/landl...

This is a cartel, not capitalism. It's literally voters doing regulatory capture and preventing new housing because they want their property values to go up.
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