Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Home Price to Income Ratio

longtermtrends.net

Post reply on HN
Print view View original

451–460 of 704 posts

Re: Home Price to Income Ratio

#451

Post by SilverRed »

elihu wrote: post #374
brendoelfrendo wrote: post #238

Earlier quoted context omitted.

This is something that Elizabeth Warren and her daughter Amelia covered in their book "The Two Income Trap." I'm aware that recommending a book by a political figure is fraught, but I'm not aware of any economists who took umbrage with the claim, either. They make the observation in chapter 1 that "Even as millions of mothers marched into the workforce, savings declined, and not, as we will show, because families wer…

> Housing is a great way to establish a level of security for your family and kids; but there's a finite number of houses with proximity to good schools, jobs, and other necessary resources, and so families needed to dedicate larger and larger portions of their income to compete against other dual-income families that were bringing new money to the housing market. One way out of that is simply to increase the supply…

>You get a few thousand people that want to build a house but can't afford land,

This exists in a way. "Off the plan" apartment buildings are sold before the building is actually built. If enough people buy it, the construction goes ahead. If not, you get your money back.

Re: Home Price to Income Ratio

#452

Post by giantg2 »

resonantjacket5 wrote: post #436
giantg2 wrote: post #411

Earlier quoted context omitted.

"Zoning is regulation." Business regulation. "If labor was truly the barrier then when upzoned no construction would take place." Not a barrier, but a factor. You seem to be misunderstanding me. It's not that it can't be done in the populated area, but that it's better done in areas not already in a precarious situation. "Additionally a large reason why labor is so expensive is from the constrained housing in the fir…

"Zoning is regulation." > Business regulation. Are you really not aware that when people are mentioning Texas' easy regulation many times they are literally often talking about zoning? > You seem to be misunderstanding me. It's not that it can't be done in the populated area, but that it's better done in areas not already in a precarious situation. No I completely understand you, and find the "too many dense already"…

"Are you really not aware that when people are mentioning Texas' easy regulation many times they are literally often talking about zoning?"

Source? The ones I have seen say "business-friendly regulations". They also mention companies moving their headquarters to the state, which means taking advantage of incorporating there, which extends to out of state worker, for which zoning does not apply.

The cheaper housing is why many individuals are moving to TX.

"They can accommodate plenty of housing fine."

If the infrastructure is only set up for single family homes and the land is covered in them, then you would need massive infrastructure updates which the cities can't afford, and you would also have to demolish many existing homes to make room - what a waste.

"No there is no circular logic here. As I already noted the larger burden of the cost of housing comes from zoning restricting the amount of buildable land."

Do you have an economics background? Can you explain how the labor cost suddenly decreases as the demand for labor increase and their costs stay the same?

"... and find the "too many dense already" line of logic ludicrous."

My position is more nuanced than that. It seems you've already made up your mind and dont care to explore my position. Good luck.

Re: Home Price to Income Ratio

#453

Post by wildrhythms »

Doches wrote: post #133
topspin wrote: post #111

Earlier quoted context omitted.

"better start finding and implementing real solutions to housing prices right now" They can't. Providing supply will suffer the wrath of BANANA/CAVE/NIMBY anywhere you dream of living. Constraining demand will either get you voted out of office or devastate your political network or both, depending on which policy you attempt. You're competing with a whole planet full of people that want to live here and have more me…

> For 99% of you that means living far away from your preferred locale among people you probably loath. Parent comment is vitriolic but not actually wrong. Myself, I take great comfort in the idea of huge swaths of liberal, well-educated millennials and xennials migrating out of coastal cities and into small towns across the South and Midwest. Can you work remotely? Want to own your own home on a multi-acre lot for $…

I grew up in West Virginia. I'm not going back to 'the south'; people there would slash someone's tires if they found out they're gay. In contradiction to the history of the state, confederate flags fly over every half dozen trailer parks on the 30 mile one-way trip to Walmart (the only supermarket). Multiple bomb and shooter threats every semester at a school with 900 students. My high school graduating class had 1 non-white student to give you an idea of the cultural diversity your child might be exposed to. The jobs are leaving and not coming back. I personally know someone who died of prescription opioid abuse. Would you want to raise a family there?

(By the way, the county where I grew up is considered 'progressive' due to its proximity to the NOVA area)

Re: Home Price to Income Ratio

#454

Post by chuckee »

XorNot wrote: post #407
chuckee wrote: post #397

Earlier quoted context omitted.

> A more relevant metric to consider - monthly mortgage payment to monthly income ratio. I find this attitude baffling. If you bought a car or a phone and paid in monthly installments, you would want to know for how long you'll be paying, not just the monthly amount. Why is a mortgage different? Is it the duration, where your brain sees 20-30 years, and substitutes that with "forever"? How would you feel if, after 30…

Generally because the point at which you stop requiring shelter is because you're dead - so forever is a good proxy. You can do this with all your purchases though: anytime you buy anything, don't look at the sticker price - figure out the equivalent monthly cost for the expected lifetime of the item. This can have a dramatic impact on your purchasing habits.

You're confusing two different things:

-The purchase price of an item (that happens to be paid in monthly installments)

-The monthly cost of owning an item, expressed as price/lifetime (looking only at purchase price, and ignoring maintenance etc.)

For example, if you pay for a car in 96 monthly payments, that does not mean the car will last 96 months. And the car definitely won't last longer if the number of payments is increased to 192.

Re: Home Price to Income Ratio

#455

Post by Aeolun »

game_the0ry wrote: post #375
travoc wrote: post #362

Earlier quoted context omitted.

There are plenty of trailer parks all over the country that will let you plop your yurt down and even plumb it in to local utilities. You may not enjoy your neighbors very much.

Increasingly those trailer parks are being bought by private equity and institutional investors.

What do they do with them? Doesn’t seem like something you renovate and resell?

Re: Home Price to Income Ratio

#456

Post by SilverRed »

qwerty456127 wrote: post #386

To me it feels like home prices are the single most important bug in the economy. If we filter out skilled IT professionals (and other high-paid jobs), fundamentally rich people and also extremely poor (homeless in developed countries and those living in stick/garbage huts in the "3-rd world"), the rest mostly spend almost all their income on paying for their home. We invent new technologies but average homes become…

Seems to me that there are two problems.

As jobs and facilities are becoming more centralized. Cities are expanding and rural towns are shrinking. So even without any population growth, houses that people actually want become more expensive.

And the second problem is the expectation that a piece of land near a city will always be more in demand tomorrow than it is today. This is almost certainly true based on the first point and doubled by the fact that populations are still expanding. This expectation means you can buy a house for way more than you believe it is worth since you know it will be worth even more later.

The only solution I can possibly see is moving more people from single family houses in to apartment buildings which allows virtually infinite supply within close range to jobs and facilities that people demand.

Re: Home Price to Income Ratio

#457

Post by xyzzy123 »

woofie11 wrote: post #434
joppy wrote: post #393

Earlier quoted context omitted.

Whatever the case, what you end up with is an asset whose actual value is tied to the interest rate (interest goes down, people can afford larger loans with the same repayments, therefore houses are worth more). This is a highly leveraged situation: if you take out a $1m loan and then interest rates go up, you're still liable for the whole $1m even though your actual asset might only be worth $900k now. I think this…

Kinda. If I buy a 1M home at 2.5% interest, I have a $4,000 monthly payment. If rates go to 6%: - Housing prices plummet to $600,000, assuming people are willing to spend the same per month. - My monthly payments are identical to had I bought at $600k at 6%. If I stay there, I'm not much worse off. It's harder to pay off the home quickly. - If I move out, and I rent out my home, it covers monthly payments approximate…

Not sure about the US but fixed-rate term in Australia is about 5 years. Nobody would give you a 30 year fixed rate.

You'd eventually have to pay 6% on the $1M.

Re: Home Price to Income Ratio

#458

Post by fshbbdssbbgdd »

joppy wrote: post #393
game_the0ry wrote: post #284

A more relevant metric to consider - monthly mortgage payment to monthly income ratio. Average interest rates in 2007 were 6.34% vs ~2.80% today. [1] * 6.34% / $2,000 monthly payment / 20% down (~$65k) >> $328,319 price of home * 2.80% / $2,000 monthly payment / 20% down (~$98k) >> $489,794 price of home Homebuyers will make purchasing decision based on their monthly mortgage payments, instead of the home price. When…

Whatever the case, what you end up with is an asset whose actual value is tied to the interest rate (interest goes down, people can afford larger loans with the same repayments, therefore houses are worth more). This is a highly leveraged situation: if you take out a $1m loan and then interest rates go up, you're still liable for the whole $1m even though your actual asset might only be worth $900k now. I think this…

I have a ~million dollar fixed rate mortgage. If rates go up, I’ll be sad that the value of my house went down. On the other hand, I’ll be very happy to have a large fixed rate loan. Let’s call my mortgage rate X%, and let us assume that rates go to X+5. Then I can invest money to earn at (X+5)%, which means my loan is essentially a $50k/year annuity. My only wish would be that I could make the loan even bigger.

On the other hand, if the fed decides to allow inflation instead of raising rates, then the value of my loan will melt away and my home’s price will keep going up (that’s what has happened so far).

Re: Home Price to Income Ratio

#459

Post by SilverRed »

hammock wrote: post #319

I have in my head the rule of thumb that you can afford a house 3x your annual income (or a mortgage 28% of your monthly[1]). I don't see the line crossing 3 anywhere on that chart. [1]Which translates to 4.2 on a 80/20 loan

Going of the bank calculators, they all say that they will let me borrow 6x my income.

Re: Home Price to Income Ratio

#460

Post by quantumBerry »

travoc wrote: post #362
quantumBerry wrote: post #354

Earlier quoted context omitted.

Raw land is cheap. Housing codes are what keep people like myself out of the housing market. If I could just dump a yurt on the land, or a cabin like our forefathers, then housing prices would be a total non issue. But a bunch of selfish NIMBYs are so scared of the poors building a yurt instead of a 2000 sq ft brick house for two people and a dog, they'll never allow it.

There are plenty of trailer parks all over the country that will let you plop your yurt down and even plumb it in to local utilities. You may not enjoy your neighbors very much.

Does the trailer park get to overrule local building codes? Will I dislike them because they're poor or because people who live in trailers are just bad people?
Post reply on HN