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Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

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Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#421

Post by smallmancontrov »

jermaustin1 wrote: post #249
pc86 wrote: post #189

Earlier quoted context omitted.

This is at least 80% of the problem. The system is behaving exactly as you'd expect it to with even an Econ 102-level understanding. New supply isn't being built, or is being severely hamstrung, and more people want the supply and are willing to sacrifice (often too much) to get it. Add in rent-seeking behavior, both figuratively and literally, and prices quickly double in even mediocre areas with minimal long-term p…

Even if new stock were built, new homes in Houston start around $300k for a 3/2 configuration, but those are bought up nearly instantly because not many are built, and the remaining stock are $400-700k. I grew up with 6 family members in a 3/2 house that was 1250sqft. Houses today start at 2000+ square feet in the USA. We DON'T need that. On top of that, there is very limited stock of homes for people who no longer h…

> And it is because we are all comparing ourselves to each other and wanting to appear

No. No no no! It's because capitalism rations by price and weights by wealth. Once inequality cooks up enough the whims of the wealthy outweigh the needs of the poor.

It is not the strength of those whims that squishes the poor, it is the strength of those whims multiplied by relative wealth that squishes the poor. The whims did not grow out of control. The multiplier did. Extreme inequality is the problem.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#422

Post by javanissen »

ryandrake wrote: post #418
pc86 wrote: post #285

Earlier quoted context omitted.

The answer is still build more (which you basically admit yourself in your first sentence). Homes skew larger and more expensive precisely because it's so hard to build them so developers need to make more money from each one. The fixed costs per unit are too high, so the ones that need to be lowered or eliminated should be. That will incentive building more units not just more expensive units. You'd see a lot more 1…

Build Moar seems to be too simplistic. There's just too much demand and too much investment capital seeking profit. No matter how much you build, most of the housing supply is going to get sponged up by investors, landlords, and private equity, and the price isn't going to go down. You'd probably have to 4X to 5X the current housing supply to make a dent in prices.

When investors buy housing they almost always rent it out, increasing the supply of rentals and decreasing rent prices relative to the alternative universe in which no new housing is built.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#423

Post by Spooky23 »

bantunes wrote: post #36
gravypod wrote: post #12

Earlier quoted context omitted.

In 1970 a $300/month apartment would be ~$2000/month in today dollars. I do think rents are too high as productivity and supply chains are much more efficient. I think in the 70s we were still using black pipe for gas, iron septic lines, and copper pipes for water. But, I don't think new builds or renovations are cheaper inflation adjusted (harder to estimate). Cost of money (inflation), building, and maintenance is…

How many apartments were $300/m in 1970?

My parents bought the home we grew up in, which is located middle of Queens/NYC for ~$30k around 1977/8. It sold most recently for $3M. Rents were typically well under $300mo. $150 in not so great areas. That was a high inflation time though.

Today, I live in a small city in a house I bought for about $200k 20 years ago. IIRC, it sold for $80k around 1992. Worth about $450k today. A decent 2BR apartment rents for like $2k here, a nice one >$2700.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#424

Post by bellowsgulch »

littlexsparkee wrote: post #309
bellowsgulch wrote: post #230

Earlier quoted context omitted.

They don’t need to. They only need to eat up all the low end housing.

I don't know that this would help the market all that much - these are often informal units, not up to code (and not cost effective to remedy), overcrowded (meaning fewer units made available than population share would suggest would come onto the market), and in neighborhoods outside of the core

I don’t know where you live, but in cities with millions of people in the southwest this is not even remotely true.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#425

Post by beej71 »

amazingamazing wrote: post #289
stephen_g wrote: post #283

Earlier quoted context omitted.

Not that simple. In Australia over the last 10 years, the number of dwellings increased by 19% while the population increased by a smaller 16% [1]. Yet house prices still doubled. This is the same trend that has continued for decades, growth in number of dwellings has tended to outstrip population growth but house prices shot up since 2001 when the tax settings were changed to massively benefit speculation. We also h…

We are talking about America. In your case housing would be even higher if it were not built. People continue to make things more complicated than it is. Build, and keep building until it is cheap. Also, you would need to consider the specific places.

The claim is that if you increase supply the price will drop. The counter-example is a case where supply was increased and the price doubled. The question is why did that happen?

It very much looks like the "just build" model is insufficient to explain what's happened in that case.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#426

Post by holistio »

dgellow wrote: post #247
holistio wrote: post #142

Yet if I open X, I'm being told constantly that my European mind can't comprehend how poor we are and the richest European country is poorer than the poorest US state.

The US has an insane K-shaped economy[0]. People in the upper part of the K arm live in a completely different country than the rest of the population 0: https://en.wikipedia.org/wiki/Recession_shapes#K-shaped

I'm aware of the phenomenon, but thanks for letting me know about its name.

It looks like people on the upper arm of the K are not only experiencing the economy differently but are also grotesquely unaware of the lower arm.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#427

Post by pc86 »

altairprime wrote: post #364
pc86 wrote: post #324

Earlier quoted context omitted.

I've yet to hear anyone say why "build more" isn't a valid answer to lowering the cost of housing. Even if new builds stay at exactly the same price they're at today, the price of older homes will decrease as supply increases. And I don't just mean in this thread, I mean ever. It's always hand-wavey "it doesn't work like that" when the evidence suggests that it does.

The underlying issue is that converting single-family suburbia to medium-density multifamily ‘ruins the neighborhood’, and cities don’t have the courage to eminent domain homes and replace them with apartment buildings themselves, so they outsource the housing function to the Free* Market, which is most definitely not interested in terminating the SFH market. Between the profitless-ness of apartments for the real est…

I asked why "build more" isn't a valid answer and your response is that we need to dethrone capitalism and Reddit-tier nonsense about HOAs?

Why is your solution "put 3 families in this single-family home" and not "build more single-family homes?" If the market isn't "interested" in "terminating" single-family homes what makes you think it would be a good thing to do so, other than the fact that it would hurt a cohort of people you seem to hate?

If you got rid of height caps, minimum lot sizes, and loosened zoning capitalist developers you hate so much would jump at the chance to build medium (and even high!) density housing. No need to have the government steal homes from people to do it.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#428

Post by danaris »

WarmWash wrote: post #67

The problem is absolutley that housing is too expensive, which of course a bunch of realtors are not going to point out. Increasing wages will not fix the housing crisis, and will just drive prices higher. How convenient for a bunch of realtors...

I don't think you're wrong; however, multiple things can be true at the same time.

In this case, housing prices are ridiculously high, and wages are ridiculously low, if you compare both to the overall cost of living excluding housing.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#429

Post by treis »

bluefirebrand wrote: post #384
treis wrote: post #204

Earlier quoted context omitted.

What we spend on housing has doubled. That doesn't mean the cost has doubled. It means that we buy a lot more housing than we used to. Real estate cost is local and there are parts of america where the prices have gone nuts. But there's a lot more where it hasn't and housing is affordable.

> But there's a lot more where it hasn't and housing is affordable In many of those places salaries have been stagnant or work has dried up So we have a weird situation where someone living in a big city with a large salary is priced out of real estate by high prices, and someone living in a smaller city with more reasonable real estate prices is priced out by a lower income It's not universal of course, but it's a s…

Most of the sunbelt isn't like that. You can buy a 4 bedroom house in Atlanta for 270k and a 2/1 for like 160 and salaries are fine.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#430

Post by epistasis »

win311fwg wrote: post #387
epistasis wrote: post #372

Earlier quoted context omitted.

And yet, the new "too expensive" housing is 98% occupied, so there are slightly wealthier people who are actually paying to alleviate the housing shortage crisis with their higher rents. Yet the same people lobbying to block the building of these new apartments are still saying that "nobody lives there" because it doesn't fit their mental model of the world.

> And yet, the new "too expensive" housing is 98% occupied Too expensive housing doesn't get build.

Well, occasionally a developer does mess up! So it sits empty for a year or two, then prices fall to the true price, and only that individual developer lost out. The city still got its property tax, an empty new building for a year or two is no worse than an empty lot for anybody, etc. etc. etc.

But people that claim to hate developers find this sort of situation, a developer that built too expensive housing and ends up eating a loss, much worse than the current state of people being displaced all the time.

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