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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#191

Post by TameAntelope »

m_ke wrote: post #179
TameAntelope wrote: post #158

Earlier quoted context omitted.

How long will you and your Reddit pals keep saying this before you realize how untrue it is? Last prediction I heard was that everything was going to crash today. Now it's next week. Next week will it be November? 2022? 2024? 2030? Over and over again, I see newly minted retail investors discover the only hard part about investing; actually knowing when things will happen. If you can't say when the MOASS (or whatever…

I don't hold a single share of public stock nor crypto and have never posted on any investing forums. Evergrande could end up tanking the Chinese real estate market and a take bunch of banks down in the process unless the CCP steps in and nationalizes it.

It could indeed do that highly unlikely and globally catastrophic thing, or it could be mitigated substantially by the amount of time and resources that "bunch of banks" have now that this has been going on for some weeks.

Ever since Taleb wrote about "Black Swan events", it feels like people are falling over themselves to identify the next one at every opportunity, and when (through random chance) some group or person gets it right, it's going to be paraded about as some kind of indication of their sage wisdom.

Re: Home Price to Income Ratio

#192

Post by taurath »

maxsilver wrote: post #136
tharne wrote: post #108

Earlier quoted context omitted.

It consistently shocks me how rarely this is brought up as a solution. Price of something too high? Increase the supply.

Because it doesn't actually work. It helps a tiny little bit, in the places that are actually somewhat constrained (like SF/BayArea specifically). But it's not any kind of significant fix. Housing is an investment asset for stock market folks, it doesn't follow a Econ-101 understanding of "supply" and "demand" in any meaningful way. The Midwest and the South are both way ahead of California on the whole "just build m…

We don’t build enough - density levels are extremely low compared to much of the world. Most US cities have a small downtown dense area and are surrounded by single family homes. Even the Bay Area is something like 80% single family zoned.

NYC on the other hand is a good example of what you’re talking about - it’s expensive to live there and pretty dense already. But Tokyo for example had 150k housing starts on a recent year, which is more than LA, NYC, Boston, and Houston combined (source: https://www.google.com/amp/s/www.wsj.com/amp/articles/what-h...) - amp link to get around paywall.

I think there’s tons of evidence that we just don’t build enough myself. In bangkok, another market, they’re throwing up more new tall buildings every year than almost the entire USA does.

Re: Home Price to Income Ratio

#193

Post by ashtonkem »

giantg2 wrote: post #163
ashtonkem wrote: post #147

Earlier quoted context omitted.

> The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there. I’ve said this plenty of times; America has plenty of homes, it just doesn’t have enough homes where people actually want to live. You can get a home in my parents home town (which they left) for $60-100k right now. The issue is that there are no jobs and even fewer services. It was probably a great place…

Remote work could solve a lot of this. I would love to live in a more rural area with cheaper housing. "... a long distance from any of the amenities that most Americans now demand." Like what? Many amenities and services have been moving to the at-home or online model for decades - arcades, movies, shopping, car buying, telehealth, etc. It seems there should be less reliance on physical amenities now than in the pas…

The data seems to imply that remote work is letting high paid workers move from the coasts to smaller cities, not rural towns. The persistent low prices of houses in rural America certainly backs this up. Meanwhile home prices in small cities are skyrocketing.

> Like what? Many amenities and services have been moving to the at-home or online model for decades - arcades, movies, shopping, car buying, telehealth, etc. It seems there should be less reliance on physical amenities now than in the past.

My parents town’s nearest major store is a Walmart 45 minutes away. There is a significant difference between “we need less amenities now” and “we need no amenities”. Committing to an hour and a half drive for anything Amazon can’t deliver is sub ideal.

Re: Home Price to Income Ratio

#194

Post by pishpash »

flyinglizard wrote: post #164
jandrese wrote: post #153

Earlier quoted context omitted.

It doesn't matter so much if a country is taxing their own rich if they allow rich people from other countries to buy real estate.

I’ve never seen any data showing that housing bubbles are attributed to “the rich”. The housing market is made of tens of millions of individual home owners, not some moguls cornering the market.

Leveraged asset buyers have an influence when inventory is so low.

Re: Home Price to Income Ratio

#195

Post by tov247 »

standardUser wrote: post #5

Some very clever and influential people better start finding and implementing real solutions to housing prices right now. If they don't, expect overwhelming support from Millennials for massive expansions to public housing and rent control, if not even more draconian measures.

The solutions are political not technical. Housing needs to be something that isn't used primarily to make money. Cooperatives, Vienna-style PPPs, and a society where if your house price doesn't constantly increase you can afford to retire.

Re: Home Price to Income Ratio

#196

Post by epistasis »

taurath wrote: post #157
jandrese wrote: post #124

How much of this is a result of our "don't tax the rich" policies that created a staggering amount of wealth at the top that has nowhere else to go? So many ultra rich investors are looking for something, anything, to invest in. Plus there is the feedback loop of massive growth you get as the bubble inflates. Is this a direct result of our fiscal policy? Have we destabilize the economy in order to create the richest…

The amount of private equity in housing is really underreported I think - still the vast majority of people owning second homes or additional property are doing it for investments, but there is nothing stopping an “uber for housing” where they use VC money to buy up massive amounts of properties and influence pricing. I believe this is one of Zillow’s primary models. My take is that we need to treat housing as an act…

I think the problem is as much in the ownership as it is in anything else.

In China, where housing costs are skyrocketing as well, there are protests when enough housing is built to start to make it affordable again.

Putting the majority of a person's life savings into their house is, in the end, a pretty bad idea.

Re: Home Price to Income Ratio

#197

Post by munk-a »

splistud wrote: post #190
pfisherman wrote: post #57

Earlier quoted context omitted.

This jibes with my experience of buying a house about 6 months ago. My reasoning was that we were experiencing rapid asset inflation fueled by low interest rates and COVID stimulus, and our cash was losing its value relative to housing by the month. I figured that this propping up of asset prices is likely to continue, as any administration that lets housing / 401k values collapse will get massacred in elections.

People are working, unemployment has been falling like a stone since 2017. That money is going to go somewhere (and for most that is not 'the bank'). It's going to get spent or put into investments. We're going to continue to see strong commodity prices (and most of these have been rising into the headwind of a stronger dollar) until unemployment creeps up, or real wages falls too far behind inflation rate. I think t…

I think there is an issue with that logic - it doesn't account for the ever accelerating wealth inequality. People are working a ton right now - and creating massive amounts of value. It's so freaking easy to get consumer goods delivered next day that we're all forgetting that this service would likely cost fifty+ dollars in the early 90's - there are similar trends across the economy.

The issue is that a lot of that created value is being isolated out of circulation and is pooling in investors that can, at a moments notice, pull the rug out of a number of great companies if they sense a panic. Wealth inequality creates the opportunity for instability in the form of extreme sudden market rushes alongside reducing the purchasing power of most folks. We're in a rough spot.

Re: Home Price to Income Ratio

#198

Post by ashtonkem »

km3r wrote: post #161
ashtonkem wrote: post #147

Earlier quoted context omitted.

> The real problem isn't supply at all, it's the distribution of supply and the choices of people to live there. I’ve said this plenty of times; America has plenty of homes, it just doesn’t have enough homes where people actually want to live. You can get a home in my parents home town (which they left) for $60-100k right now. The issue is that there are no jobs and even fewer services. It was probably a great place…

The same problem of the house price to income ratio shows there is as much of a housing shortage in rural America as well. "Solving" housing by moving all high CoL people to rural America is just going to price out all those with lower CoL area salaries. Our vacancy rate nation wide is low, likely well within the frictional margins that need to exist for a healthy market.

This is certainly happening in small cities right now, as prices skyrocket.

Re: Home Price to Income Ratio

#199

Post by flyinglizard »

jandrese wrote: post #186
flyinglizard wrote: post #164

Earlier quoted context omitted.

I’ve never seen any data showing that housing bubbles are attributed to “the rich”. The housing market is made of tens of millions of individual home owners, not some moguls cornering the market.

The term you want to look for is "investment properties", or in some cases "foreign investment".

“Rich people” investment properties are a negligible share of the total housing market so this theory most often used as a scapegoat by the “eat the rich” crowd.

If anything, more real estate investment would create more housing stock. Someone’s not building enough.

Re: Home Price to Income Ratio

#200

Post by drunkpotato »

nostromo wrote: post #165
jandrese wrote: post #124

How much of this is a result of our "don't tax the rich" policies that created a staggering amount of wealth at the top that has nowhere else to go? So many ultra rich investors are looking for something, anything, to invest in. Plus there is the feedback loop of massive growth you get as the bubble inflates. Is this a direct result of our fiscal policy? Have we destabilize the economy in order to create the richest…

What "don't tax the rich" policies? 61% of Americans pay zero income tax. Why are the rich getting tremendously rich? Because the Federal Reserve has printed money at an astonishing rate, which inflates asset prices. Who owns the most assets? The rich do. People are so focused on taxation (because it's something the average poor or middle class understands) when the real issue is the Fed (something most Americans are…

That income tax statistic is misleading. Most Americans do pay social security payroll taxes, which are income taxes, they’re just not called “income tax.”
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