What defines them as middle class then?
It seems more like "Americans believe middle class has shrunk, drastically."
Americans don't believe middle class can afford homes
161–170 of 183 posts
Re: Americans don't believe middle class can afford homes
#162They're not wrong. Check out the graphs on this page: https://www.longtermtrends.net/home-price-median-annual-inco... The Home Price to Median Household Income Ratio is higher than it's been in 70 years. Between 1965 and the year 2000, it fluctuated between 3.5 and 4.5. At the top of the housing bubble in 2008, it hit 6.8. Right now it's at 7.6. And I don't believe the housing price data this index uses (from S&P Cor…
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.
Buyers want more house? Or builders want richer buyers?
Starter homes generally just don't get built, as it generally costs more per square foot to build a start home than a larger home (as some of the features are going to mostly cost the same regardless of the floor plan, such as some of the kitchen outfitting). The reduced supply moreover makes it so smaller houses don't even end up costing much less, because there's enough demand for them from people who not only don't need the space, but would prefer not paying the utility bills and dealing with the maintenance.
Re: Americans don't believe middle class can afford homes
#163Earlier quoted context omitted.
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…
> significantly more profitable for builders to build bigger, more expensive houses This is also the reason why car buying also sucks so much now. There is more profit it bigger higher trim cars full of features than smaller reliable basic cars.
Some of this is also fuel economy regulation. You can't make an F150 the size they were in 1992 without onerous fees because of the gas mileage the engine will get (while still being able to meet the needs of anyone who wants a truck, such as towing capacity). The regulations are written so that larger vehicles are permitted to have lower gas mileage. As a result, we see the ever growing trucks and SUV's on the road when people would kill for small trucks that companies just will not make anymore.
Re: Americans don't believe middle class can afford homes
#164Earlier quoted context omitted.
At least by me, 100% buyers wanting more space. Each kid gets their own bedroom. A home office. Maybe a movie room. Compare that to the 1950s boomer house, that has 2 kids in 1 bedroom, and no "extra" rooms.
> Each kid gets their own bedroom. A home office. Maybe a movie room. With dropping fertility rates I'm sure there are plenty of people with 1 or even no kids that don't need those rooms. Home office will be entirely domain dependent (I don't see e.g. a couple of dentists needing or wanting a home office). So the fact that the default house is pretty massive means that all sorts of people are priced out entirely.
Anecdata; my dad is a dentist I've been in 20 or 30 dentists' homes for parties and such, they all have home offices which are glorified library / trophy rooms.
Re: Americans don't believe middle class can afford homes
#165Earlier quoted context omitted.
> Those cities of course, there is not a house for everyone, but there are plenty of houses in unpopular cities. So build houses where people want to live. As I already said earlier: the problem is that we stopped building houses at respectable rates. Its going to be a decade before we catch up to where the population wants to live.
What happens when you build houses where people want to live? More people want to live there.
> What happens when you build houses where people want to live?
You create immeasurable value, wealth, and dignity to hundreds, thousands, or even tens-of-thousands of people.
So we should do that. Full stop.
Re: Americans don't believe middle class can afford homes
#166We spent 40 years believing that house prices were fine because the debt load didn't matter because interest rates would go down forever. Prices are based on the seller extracting the maximum ability to pay from the buyer, so payments were effectively fixed, and every drop in interest rates was perfectly offset by an increase in the purchase price. Then we hit interest zero, there was nowhere left to go. Now we're fi…
The problem is that people who could afford it, bought homes at a higher price. They will not sell it for less than they bought it for. Combined with high interest rates, total cost of ownership is a through the roof. This wouldn’t have been a problem if this was an asset that everyone doesn’t need and the supply was more.
It's not that they won't sell at a loss.
It's that they won't sell at a loss AND take on a new mortgage with a rate that is 2-3x what their existing mortgage costs to service.
Owning a home creates losses of its own. I'd know, with my water heater going out, furnished basement flooding in a freak incident, and a tree falling on my roof, all in the same year. If I could get 3% on a different home, it wouldn't take a ton of enticing. Not doing it at 7% for anything though.
Re: Americans don't believe middle class can afford homes
#167Earlier quoted context omitted.
> We're going to have to have a cultural shift towards housing as shelter, not investment. I've been saying this for years. Real estate investing is an absolute cancer on society. It is utterly unreal to me that people think their house should go up in value over time higher than the rate of inflation without doing any improvements. But it's not even just that, but people and corporations buying up houses for the sol…
I totally agree with this stance. Among my peer group a couple of folks own a second property they rent out and the "if we didn't where would our tenant live?" vibe is bizarre. They'd live in a house, maybe even being able to afford the one you rent to them.
Nah, they'd live in a house that they rent from Blackrock. Possibly at a lower rent due to reduced demand without small landlords in the fray, and due to a lower cost of financing for Blackrock, but it'd take actually banning residential rentals to seriously move the needle rather than just change who the landlords are.
Re: Americans don't believe middle class can afford homes
#168We spent 40 years believing that house prices were fine because the debt load didn't matter because interest rates would go down forever. Prices are based on the seller extracting the maximum ability to pay from the buyer, so payments were effectively fixed, and every drop in interest rates was perfectly offset by an increase in the purchase price. Then we hit interest zero, there was nowhere left to go. Now we're fi…
> We're going to have to have a cultural shift towards housing as shelter, not investment. We can't have this, because a huge fraction of household wealth is tied up in people's houses. If you stop protecting them as investment accounts, you nuke the retirement accounts of 100 million people. To be clear, I completely agree with you that this system has to be dismantled before it gets worse, and a lot of this suppose…
You don't need to sell it to a millenial or zoomer. You sell it to a company, who rents it to a millenial or zoomer.
Re: Americans don't believe middle class can afford homes
#169Earlier quoted context omitted.
What happens when you build houses where people want to live? More people want to live there.
> What happens when you build houses where people want to live? You create immeasurable value, wealth, and dignity to hundreds, thousands, or even tens-of-thousands of people. So we should do that. Full stop.
Everybody deserves a luxury condo in SF? This is not going to end well, even the communists decided this was a bad idea. Full stop.
Re: Americans don't believe middle class can afford homes
#170Earlier quoted context omitted.
Because historically in the United States at least, the ability to pass down your wealth to your children has been one of few reliable ways to ensure your children aren't themselves thrown into the meat grinder of poverty. Hence why huge swaths of it are called "generational poverty:" their parents didn't have shit, and they too will not have shit. That the privileged groups have leveraged this to keep their children…
How about raising the floor of poverty? As a wealthy parents you can already afford massive leg-ups with your children by supporting their education and offering the opportunities. How does inheriting 300k when they turn 50 help?
In the current market, it's the only way many millennials and zoomers will ever own a home.