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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

#521

Post by pickleglitch »

win311fwg wrote: post #312
pickleglitch wrote: post #129

Earlier quoted context omitted.

The median monthly rent for houses and apartments in the U.S. in 1970 was $108, or around $930 in today's dollars. So, in today's dollars, that would be $11,160/year. Median household income in 1970 was $9,870, or $84,714 in today's dollars. Median rent in the us today is around $1,750, or around $21,000/year. Today's median income in the us is around $89,000. So, housing cost has nearly doubled, while wages have onl…

> So, housing cost has nearly doubled That is in line with expectations: 1. The average house is ~60% larger than in 1970. More house equates to higher costs. 2. In 1970, the typical working-class man would spend time in a public house 5-6 nights a week. Today, third places are nearly nonexistent. Houses, largely driven by the internet opening it up to the world, has become more than a place to eat and sleep. Monetar…

This is only part of the picture. Part of the reason houses are so much larger today is cultural, but I would argue a larger part is that economies of scale scale make it more profitable to build larger houses, so that's what developers build.

Also, the average cost of raw, undeveloped land in 1970 was about $197/acre, or about $1690/acre in today's dollars. Today the average cost of raw, undeveloped land is about $4,350/acre.

All of the other costs associated with building a house are higher as well. There are more regulations, materials are more expensive, etc. Labor is probably the only part of the equation that isn't much different after adjusting for inflation.

So it's not just that we all decided to buy larger houses and that's why they are more expensive. There are a lot of structural issues at play.

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

#522

Post by greenie_beans »

reducesuffering wrote: post #328
greenie_beans wrote: post #294

Earlier quoted context omitted.

housing is expensive everywhere, not just in SF and NYC. def expensive in Austin. how do the zoning laws in SF make NYC more expensive?

Housing in SF and NYC are on some level substitute goods. Many of the people living there are mobile and the ones deciding prices on the margin. If SF rent was $10k and NYC was $3k, many are going to leave SF to get a similar type of lifestyle in NYC for cheaper, raising demand for NYC housing. If SF zoning laws allowed building an incredible amount of housing, lowering rents to $2k, while NYC is at $4k, many people…

yeah i don't think NYC people are gonna leave SF for NYC. those are two totally different cities with different experiences and different culture. you can live an urban lifestyle in all 50 states btw

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

#523

Post by greenie_beans »

danaris wrote: post #478
greenie_beans wrote: post #381

Earlier quoted context omitted.

yeah for sure and i didn't say that isn't a cost. i said it's a small part of the cost, almost negligible compared to the cost to actually build

Ah, yes, that mythical "cost to actually build." As in, the cost to build things in ways that completely ignore regulations. Regulations about building materials that won't collapse, and won't catch fire, and won't give everyone living there cancer. Regulations about safe electrification; safe, clean, adequate water; wastewater systems that won't drown the lower floors in raw sewage. Do you know about the Grenfell To…

idk you definitely need a lot of money to build a building, i didn't realize that was up for debate. also we are not talking about code regulations, we're talking about local regulations

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

#524

Post by greenie_beans »

cucumber3732842 wrote: post #417
greenie_beans wrote: post #380

Earlier quoted context omitted.

it most certainly is not going to cost me $100k in engineering to design a SFH in arguably one of the most regulatory burdened states in the US: vermont

>it most certainly is not going to cost me $100k in engineering to design a SFH in arguably one of the most regulatory burdened states in the US: Vermont I can do that easily. Give me a ~10ac property where what isn't steep is stream or bog. I want to clear ~1ac total for 5-houses on 2ac each and the road to reach them needs to cross a stream and traverse some bog (read: offsets). The houses will have to be on piles…

i said "a SFH" not a neighborhood development with nice and fake numbers, and a scenario totally disconnected from reality. if costs that much to build in an area that shouldn't have a structure then that's on you.

thankfully we have regulations that disincentive those projects. there are plenty of other spots to build especially in the denser areas

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

#525

Post by win311fwg »

pickleglitch wrote: post #521
win311fwg wrote: post #312

Earlier quoted context omitted.

> So, housing cost has nearly doubled That is in line with expectations: 1. The average house is ~60% larger than in 1970. More house equates to higher costs. 2. In 1970, the typical working-class man would spend time in a public house 5-6 nights a week. Today, third places are nearly nonexistent. Houses, largely driven by the internet opening it up to the world, has become more than a place to eat and sleep. Monetar…

This is only part of the picture. Part of the reason houses are so much larger today is cultural, but I would argue a larger part is that economies of scale scale make it more profitable to build larger houses, so that's what developers build. Also, the average cost of raw, undeveloped land in 1970 was about $197/acre, or about $1690/acre in today's dollars. Today the average cost of raw, undeveloped land is about $4…

> So it's not just that we all decided to buy larger houses

If we haven't all decided to buy larger houses, who is buying them? Are you suggesting that they all sit empty? That data doesn't support that. Life isn't like Field of Dreams. If you build it, they won't necessarily come. You have to offer what the buyer wants, else they'll say "no thanks".

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

#526

Post by win311fwg »

epistasis wrote: post #482
win311fwg wrote: post #470

Earlier quoted context omitted.

I've heard the same thing about supply and demand many times myself which seemed strange at first, but when I dug deeper I learned they aren't using the traditional definition for supply and demand, so what they were communicating was technically true, if meaningless. They weren't speaking the same language. When I dug even deeper, I discovered that, pretty consistently, they don't understand the concepts anywhere, b…

> but when I dug deeper I learned they aren't using the traditional definition for supply and demand, so what they were communicating was technically true, if meaningless Can you provide some of those definitions that do work? Because I've spent a lot of time talking about this and never been able to come to a shared understanding that also matches the material world.

> Can you provide some of those definitions that do work?

No. They don't work. That is how they end up so confused.

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

#527

Post by estearum »

arwineap wrote: post #508
estearum wrote: post #474

Earlier quoted context omitted.

No I do "run houses." I bought a house, rented it out, paid a bit for maintenance throughout, covered the entire mortgage the entire time, then sold it for 50% highly levered capital gain in ~4 years. It's not because I'm an awesome landlord or property manager. I did the bare minimum. It's because the location appreciated thanks to the community surrounding the house, which is the driving force of the vast majority…

You were lucky to not have to deal with vacancies, non payments, turnover, rehabs, or capex. I don't think your experience is the common, and it certainly won't scale like that. One tenant losing their job, getting some sort of medical issue, or even a poorly trained pet can reverse 2 years of profit. These happen all the time. Personally, the keyboard jockeys talking about how easy contractors have it is hilarious,…

If you buy in an area with appreciating land values (i.e. most of them, given the dynamics of land and population), then you have to be a dummy to lose money owning land.

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

#528

Post by estearum »

ligne wrote: post #295
arwineap wrote: post #188

Earlier quoted context omitted.

> But the vast majority of such people's financial outcome is actually from being a landlord, that is doing literally nothing except holding a piece of paper granting them monopoly on a plot of land This is how I know that you've never tried to run houses. If you hire out a property manager and all of your maintenance you are not making money. I have to be an electrician, a plumber, a painter, a drywaller, an enginee…

"And that's to make a measly 8% on my money." Amazing how many people insist on being landlords despite it apparently being a life of sawdust and sackcloth.

Seriously. These posts are always like: "bro I had to text plumbers and then pay them to fix problems. I had to like... work... like 4 days a month... texting plumbers."

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

#529

Post by xphos »

throwaway041207 wrote: post #158
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...

In my neck of the woods (New England), home prices have doubled since March of 2020. I have yet to read a comprehensive overview of how this happened and how we get out of it. Of course, people went nuts offering over the asking price when interest rates were super low so I understand, to some degree, that baselines were reset. But the current housing market doesn't feel sustainable. I don't understand how a proper m…

I think there is a huge problem that the American Zeitgeist views houses as the only way to build generational wealth. It turns housing into an investiment and investiments need to be defended (NIMBY) and it puts a perceptional view that if house values are not rising America or heaven forbid going day the economy is in doomsday.

The problem with a house as investiment is that, its 1 consoldated undiversifed asset that ruins you if it goes down. Its bad strategy for your children because it makes it so houses will one day be unobtainable this generation or the next. We can try to build it out but I think a lot of the issues with building houses is that we have a shortage of the people that build houses and its a project that is not really DIYable anymore in the places that need houses. (the last point might be a stretch but you know)

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

#530

Post by xphos »

stephen_g wrote: post #283
amazingamazing wrote: post #174

Earlier quoted context omitted.

It is very simple. Housing is not built.

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…

I think you have the hit the nail on the head, if you have unoccupied or a lot of buildings going out of the market at the same or similar rate as new units coming online than you are falling behind. I didn't do the background research on Austrialia but this I think happens a lot in the US we have a bunch of poorly built things that need to be rebuild in 30-50 years so we are not increasing active housing as much as new construction sometimes suggests
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