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Home buyers need 80% more income to buy than 4 years ago

washingtonexaminer.com

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Re: Home buyers need 80% more income to buy than 4 years ago

#51

Post by dukeofdoom »

dukeofdoom wrote: post #12
amluto wrote: post #6

Earlier quoted context omitted.

Conversely, perhaps that $343k home actually shouldn’t be worth that much. In a properly functioning market (e.g. no perverse incentives to own a unit and decline to rent it instead of renting it for less money, along with genuinely unpenalized liquidity such that a long-time owner can sell and buy something different without paying utterly absurd taxes and fees), prices should tend toward the market-clearing price.…

I think it's easy to say that, until you had to build one for that price. The lot alone and hook up fees, taxes would probably hover around 1/3-1/2 of that price. Then House it self is a lot of labor to construct. Even moving the materials sometimes is very labor intensive. Plumbing, Bathrooms, Lighting, there's a lot that goes into it. Immigrant and cheap manual labor is probably what makes it affordable.

This guy built a house entirely alone after his old one burned down. He has a timelapse of the entire process and the costs along the way. He spent 120k in Europe. It's possible to do it for cheaper, but you have the hard hard work yourself. This is somewhat modest home, and probably near the limit of what is feasible to do by yourself. And this guy has carpentry skills most people would not have. https://www.youtube.com/watch?v=NBusSKZQbl0

Re: Home buyers need 80% more income to buy than 4 years ago

#52

Post by aodntkem »

dragontamer wrote: post #42
rtev wrote: post #11

This appears to be what happens when rich people that don’t need houses buy them anyway as investments. There should be laws preventing a person from owning more than three houses in the United States.

Just build houses, which naturally will cause the price of houses to decline. Investors are allowed to speculate. But speculation must be risk, sometimes you win and sometimes you lose.

this sounds alright in textbooks, but in reality housebuilders realise they make more money when house prices rise as they build..

Re: Home buyers need 80% more income to buy than 4 years ago

#53

Post by Auracle »

lostinroutine wrote: post #41
Auracle wrote: post #39

Earlier quoted context omitted.

The other way that everyone outside of Canada seems to ignore is get a handle on the demand side of things.

Could you elaborate on Canada's approach? Are you referring to adjustable rate mortgages?

No, although that also would help (though I don't think the downside is worth it).

I'm talking about people up north realizing that massive amounts of immigration isn't exactly great for home/rental pricing. "Build more homes" is easy to say but hard to do - you need skilled workers, there's only so much land in specific areas, NIMBYism, etc. "Reduce immigration" for some is hard to say but in practice is easy to do, and it has the exact same effect.

Re: Home buyers need 80% more income to buy than 4 years ago

#54

Post by supertrope »

mock-possum wrote: post #46

> Auto loan debt increased by $12 billion to $1.61 trillion I really can’t understand how people are so desperate to drive a new car that they’d go into debt to do it. Why would you sign up for years worth of payments on a $15k+ car when you could just buy a used one outright for like $4k, and not have to worry about it? A house, sure, you then own real estate, you even can borrow money against the value you’ve alrea…

Those $4,000 cars now cost $10,000.

https://www.iseecars.com/what-happened-to-affordable-cars-st...

https://site.manheim.com/en/services/consulting/used-vehicle...

Re: Home buyers need 80% more income to buy than 4 years ago

#55

Post by supertrope »

Auracle wrote: post #53
lostinroutine wrote: post #41

Earlier quoted context omitted.

Could you elaborate on Canada's approach? Are you referring to adjustable rate mortgages?

No, although that also would help (though I don't think the downside is worth it). I'm talking about people up north realizing that massive amounts of immigration isn't exactly great for home/rental pricing. "Build more homes" is easy to say but hard to do - you need skilled workers, there's only so much land in specific areas, NIMBYism, etc. "Reduce immigration" for some is hard to say but in practice is easy to do,…

If the electorate wants to restrict immigration so be it. But it won't solve housing shortages caused by restrictive zoning. When apartments, duplex, townhomes, condos, etc. are literally illegal this will cause a shortage. Parking minimums mandates, setback requirements, floor area ratio rules, may issue permitting processes push down supply and push up cost.

Just imagine if we banned building new grocery stores or expanding existing ones. Lines would get longer and longer and produce would quickly go out of stock. And then instead of fixing the root of the problem, we banned people from moving to the area due to grocery shortages.

Re: Home buyers need 80% more income to buy than 4 years ago

#56

Post by s1artibartfast »

aodntkem wrote: post #52
dragontamer wrote: post #42

Earlier quoted context omitted.

Just build houses, which naturally will cause the price of houses to decline. Investors are allowed to speculate. But speculation must be risk, sometimes you win and sometimes you lose.

this sounds alright in textbooks, but in reality housebuilders realise they make more money when house prices rise as they build..

This artificial scarcity rationale is more of a conspiracy theory than realistic possibility.

It would require hundreds of thousands or even millions of construction workers to coordinate, and also have a way to prevent new builders from competing. If you really think it is true, you should go into construction, undercut the competition, and get rich quick.

The real answer is much more boring. High costs of land, labor, and regulation.

If you ignore these three things, you can build your own livable starter home for ~100k in materials.

Re: Home buyers need 80% more income to buy than 4 years ago

#57

Post by pfannkuchen »

aodntkem wrote: post #52
dragontamer wrote: post #42

Earlier quoted context omitted.

Just build houses, which naturally will cause the price of houses to decline. Investors are allowed to speculate. But speculation must be risk, sometimes you win and sometimes you lose.

this sounds alright in textbooks, but in reality housebuilders realise they make more money when house prices rise as they build..

Who generally makes more money overall - luxury brand with a small market or run of the mill brand with a massive market?

Re: Home buyers need 80% more income to buy than 4 years ago

#58

Post by pfannkuchen »

paulddraper wrote: post #19
rtev wrote: post #11

This appears to be what happens when rich people that don’t need houses buy them anyway as investments. There should be laws preventing a person from owning more than three houses in the United States.

So..... Now they have to permanently "rent" them (maybe from a company they have ownership in)? Maybe we should just build more houses.

Builders really seriously need to make condos/apartments with sufficiently sound proofed walls, floors and ceilings. I would happily live in a condo if I was confident that I wouldn’t be able to hear my neighbors and have my sleep disrupted etc.

Re: Home buyers need 80% more income to buy than 4 years ago

#59

Post by aodntkem »

s1artibartfast wrote: post #56
aodntkem wrote: post #52

Earlier quoted context omitted.

this sounds alright in textbooks, but in reality housebuilders realise they make more money when house prices rise as they build..

This artificial scarcity rationale is more of a conspiracy theory than realistic possibility. It would require hundreds of thousands or even millions of construction workers to coordinate, and also have a way to prevent new builders from competing. If you really think it is true, you should go into construction, undercut the competition, and get rich quick. The real answer is much more boring. High costs of land, lab…

I can only speak for the UK market where land with permission to build upon is scarce. Land in desirable areas is always scarce and I would imagine that includes many US cities.

In the U.K. there are only a few housebuilders that operate at any scale, and they have the best links into gaining owrmission and buying land to develop.

‘Landbanking’ is the keyword for the phenomenon in the UK, but ultimately the housebuilders slow building when prices aren’t rising to maximise their return. It’s economically rational.

My view is that government should step in and build competing social developments to house those that can’t afford market rent. The first order effect — less homeless, greater security — is nice, the second order effect is even more powerful in my opinion.

Anchoring prices towards cost of production. The UK housing market is now, since we privatised social housing, another asset class and logically the operators of that asset only consider financial returns — not social ones.

As I understand it planning permission doesn’t exist in many parts of the US and so ‘building your own’ is feasible. The only problem is that mass transit into desirable cities also doesn’t exist and so urban sprawl and you have to commute even more insane distances to leverage that land that can be built upon.

This is the area where fundamentalist market thinkers miss the key role government can play because they’re that far down the ‘government is the problem’ rabbit hole they can’t imagine positive market intervention because the market itself is the holy arbiter of creation

Re: Home buyers need 80% more income to buy than 4 years ago

#60

Post by pyuser583 »

aodntkem wrote: post #59
s1artibartfast wrote: post #56

Earlier quoted context omitted.

This artificial scarcity rationale is more of a conspiracy theory than realistic possibility. It would require hundreds of thousands or even millions of construction workers to coordinate, and also have a way to prevent new builders from competing. If you really think it is true, you should go into construction, undercut the competition, and get rich quick. The real answer is much more boring. High costs of land, lab…

I can only speak for the UK market where land with permission to build upon is scarce. Land in desirable areas is always scarce and I would imagine that includes many US cities. In the U.K. there are only a few housebuilders that operate at any scale, and they have the best links into gaining owrmission and buying land to develop. ‘Landbanking’ is the keyword for the phenomenon in the UK, but ultimately the housebuil…

How do you feel about taxing land, but not the structure built on it?
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