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Americans don't believe middle class can afford homes

newsweek.com

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Re: Americans don't believe middle class can afford homes

#41

Post by darth_avocado »

burlesona wrote: post #6

We 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.

Re: Americans don't believe middle class can afford homes

#42

Post by weberer »

sokoloff wrote: post #11

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.

Re: Americans don't believe middle class can afford homes

#44

Post by tyleo »

soggybread wrote: post #15

I've been saving up for the past 8 years and have got a pretty decent deposit built up but the costs of houses in my area are just so expensive that the deposit barely makes a scratch in the overall mortgage costs and I wouldn't be able to afford the mortgage, seems like the more I save up the higher the housing prices go. It absolutely amazes (and infuriates) me that some of the houses I see going for 400-500k now w…

I was in the same situation and the solution is to just get a worse home than you want :(

I just purchased my first home because I could finally afford it after a few lucky cash windfalls. I spent the last 5 years in a 700 sq ft apartment.

What I learned: I would have been much better off buying a worse home 5 years ago that was at least better than the 700 sq ft apartment.

I don’t think saving up that down payment makes as much sense any more. I felt like I was chasing a target which was moving faster than I was.

Re: Americans don't believe middle class can afford homes

#46

Post by blastro »

the_gastropod wrote: post #17

There's a recent Redfin analysis on this. On average, only 16% of homes were affordable for households earning a median income [1]. It's wild how broadly these affordability numbers vary, and just how much less affordable homes are today than they were just 2 years ago. Ohio must either be a very undesirable state to live in, or they're doing something right to keep house prices relatively reasonable: 3 of the top 5…

Can confirm on Ohio being a very undesirable state to live in.

Re: Americans don't believe middle class can afford homes

#47

Post by jeffbee »

atourgates wrote: post #10

They'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…

You don't have to ask realtors whether houses cost too much. The U. Michigan survey of consumers shows that "price reasons for buying conditions for houses" i.e. whether the mortgage is too damned high stands at historically bad levels. Sentiment was never this bad, at any time between WW2 and 2020.

https://data.sca.isr.umich.edu/fetchdoc.php?docid=74465#page...

Re: Americans don't believe middle class can afford homes

#48

Post by chmod600 »

soggybread wrote: post #15

I've been saving up for the past 8 years and have got a pretty decent deposit built up but the costs of houses in my area are just so expensive that the deposit barely makes a scratch in the overall mortgage costs and I wouldn't be able to afford the mortgage, seems like the more I save up the higher the housing prices go. It absolutely amazes (and infuriates) me that some of the houses I see going for 400-500k now w…

Doubling or even tripling in ten years is not a ridiculous rate of growth.

Re: Americans don't believe middle class can afford homes

#49

Post by alephnerd »

the_gastropod wrote: post #17

There's a recent Redfin analysis on this. On average, only 16% of homes were affordable for households earning a median income [1]. It's wild how broadly these affordability numbers vary, and just how much less affordable homes are today than they were just 2 years ago. Ohio must either be a very undesirable state to live in, or they're doing something right to keep house prices relatively reasonable: 3 of the top 5…

> Ohio must either be a very undesirable state to live in

The 3 metros mentioned (Akron, Dayton, and Cleveland) collapsed economically in the 1990s.

Columbus has been growing, but that's also why unaffordability has grown by 46.7% from 2022 to 2023 in the same dataset.

A better model would be Lake County, IL - that's a suburb of Chicago, and Chicagoland is very construction friendly.

Re: Americans don't believe middle class can afford homes

#50

Post by willis936 »

Analemma_ wrote: post #23
burlesona wrote: post #6

We 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…

>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.

As someone staring down never having the ability to get into that club: that's a price I'm willing to pay.

In fact I'm willing to pay much more than that. This is the issue that dictates my vote.

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