101–110 of 183 posts
If 66% of households are in owner-occupied housing, how small is this middle class that can’t afford homes? Is the median (or even 40th percentile) household not middle class? https://fred.stlouisfed.org/series/RHORUSQ156N
Note that the survey is about perception, not whether or not they actually can afford it.
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This doesn’t necessarily follow - it may be that the average potential buyer wants the same amount of house as before, but due to supply issues the lower end of potential buyers can’t afford to buy anything at all. And size doesn’t scale linearly with price - it’s usually sublinear. So it could be that the only homes that get built/sold are larger because nobody is building homes for middle-lower income price ranges.
I can't find it at the moment, but in the last year or so there was a really informative "why aren't developers building more affordable housing" article on (I believe) NPR. There were lots of factors, but basically it comes down to the fact that it's significantly more profitable for builders to build bigger, more expensive houses than smaller, more affordable houses. AKA, a builder will make much more profit on a s…
"believe" is a funny word to use for a mathematical equation
I just turned 30. If I can’t afford a house in the next 10 years I’m going to be a lifelong renter. Why get a 30 year mortgage at 40, to only pay it off at 70 and then die in two decades? It feels like the wrong thing to do but…I really don’t know how else to look at it. Sure. I could afford a house today where I grew up. But I’d have to surround myself with the highly undesirable culture (in my opinion) in those pla…
1) Inflation hedge. 2) At some point in the next 30 years, you will be able to sell your home at / above what you paid for it, just due to the cyclical nature of things.
I'm not saying real estate always goes up... but for example, I bought at age 41. $515k. Current estimated value, $900k. When the kids are all graduated and out of the house (when I'm 53-54ish) I can sell this, buy something outright in cash, and increase my saving rate from ~35% to about 60% without any change in my current standard of living.
I grew in upper middle class southern California. I work in tech for the last 7 years. My parents house went from $500K when they bought in 1995 to +$3M today. If my math is right, that would mean the all-in payment (principal, interest, taxes) would be around $20,000/month at today's rate. Assume you do not want to spend more than 1/3 of your income on housing, your household would need to make $720,000/year.
Nominally, I make a lot more than my parents did at their peak, but in real terms, I can't afford a home in the neighborhood I grew up in.
Anecdotally, the only people I know that can afford to live in my old neighborhood are young people who get help from their parents or people who bought way before covid and rolled up their existing equity into their new home purchases. Among the upper middle class people I know, no one can afford that area or they are not interested bc they think the cost is not worth it.
What's going to happen to the firefighters, cops, and teachers in that area?
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Also look at these graphs https://www.statista.com/statistics/529371/floor-area-size-n... The average new construction house size changes from 1500 square feet in 1975 to 2500 square feet in 2022. So yes, some of the higher cost of housing is simply that buyers want more house. I know my personal house is nearly double the size of house I grew up with, despite only having 3 kids vs my parents 2.
This doesn’t necessarily follow - it may be that the average potential buyer wants the same amount of house as before, but due to supply issues the lower end of potential buyers can’t afford to buy anything at all. And size doesn’t scale linearly with price - it’s usually sublinear. So it could be that the only homes that get built/sold are larger because nobody is building homes for middle-lower income price ranges.
Feedback systems with long delays are going to be easier to destabilize than systems with short feedback cycles. There's a lot of "memory" in housing prices. Houses are just about the hardest item to build in America today. You need land, and you cannot make them in a factory. All cost cutting measures have been in materials (to the point where quality is degrading). Regulations push new players out of the market - i…
> You need land, and you cannot make them in a factory The land part is true, but there are people working on the second part. One of the more exciting ones I’ve seen recently is Cover [0]. They do the majority of building in their factory and only the foundation work and assembly is done onsite. But they’ve got enough flexibility to adapt their designs to the lot and they help buyers with the permitting hassles, so…
Even if the material and labor were free, an empty lot here in Boulder would cost over $500k, and you won't find any. I imagine it's the same problem in most cities (though maybe not so expensive).
(I posted this before -- https://news.ycombinator.com/item?id=36961000 ) I grew in upper middle class southern California. I work in tech for the last 7 years. My parents house went from $500K when they bought in 1995 to +$3M today. If my math is right, that would mean the all-in payment (principal, interest, taxes) would be around $20,000/month at today's rate. Assume you do not want to spend more than 1/3 of your i…
Earlier quoted context omitted.
This past year. Interest rates went up, and then prices went up. No offset occurred, everything just became dramatically more expensive. Bam. Theory already busted.
Seems like financypants lives in a beautiful world where corporations aren't greedy shitbags engaged in price gouging
Earlier quoted context omitted.
This past year. Interest rates went up, and then prices went up. No offset occurred, everything just became dramatically more expensive. Bam. Theory already busted.
Seems like financypants lives in a beautiful world where corporations aren't greedy shitbags engaged in price gouging
Cheap houses in particular get voted off of most city councils or other local politics. It only costs $20k per trailer in a trailerpark IIRC, and so trailer parks can build hundreds of housing units for under 10-million invested.
Or various apartment buildings can be built with similar cost-efficiencies. Or Row-homes, or multiplex homes, etc. etc.
The issue is convincing the public that low-cost housing is to the benefic of society and that its a good thing to build. Most people see them as ways of attracting drug-dealers, black people / minorities, or turning a neighborhood into a Ghetto.
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So build enough low-cost housing. Build enough medium-cost housing. Etc. etc.
The problem is that in most municipalities, people are only happy when high-cost housing is built. But that's just not sustainable.