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Home Price to Income Ratio

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Re: Home Price to Income Ratio

#671

Post by lottin »

bogomipz wrote: post #668
lottin wrote: post #667

Earlier quoted context omitted.

> So no, when rates go up to x+5 you will never be able to find bonds that pay x+5. What? If the current rate is x, this means that this is the rate a bond being issued right now is paying. If the rate goes up to whatever, it means that bonds being issued right now are paying whatever.

No, there is an inverse relationship between between interest rates and bond prices. This is an axiom in the bond market. See: https://www.investopedia.com/ask/answers/why-interest-rates-...

Yes, I know that. We are talking about rates.

Re: Home Price to Income Ratio

#672

Post by Geee »

wffurr wrote: post #620
Geee wrote: post #526

Earlier quoted context omitted.

What do you want to learn? Modern economics is mostly a guessing game of what actions governments and central banks implement. Will they print money and how much, will they bail out the banks or let them fall, will they lower or raise the interest rates, is there more stimulus coming, what kind of subsidies and social policies they implement etc. Some economists think that it's good that they have so much power and o…

...and what actual effect any of those actions has! That's the part that's mysterious to me and would be particularly interesting to learn. And more to the point, what can or should I do on an individual level? The OP was about home price to income ratio, and just like in one of the threads, I basically shopped based on monthly payment, not total price. I don't have any anchoring on the value of a particular structur…

I don't know. These policies either increase or decrease economic activity. If economy is accelerated too much it tends to create bubbles and then a big crash. Most people think that we're in a huge bubble right now. No one knows if it will pop or if they will just keep propping it up.

This video explains the basic mechanisms pretty well: https://www.youtube.com/watch?v=PHe0bXAIuk0

Re: Home Price to Income Ratio

#673

Post by SilverRed »

qwerty456127 wrote: post #592
SilverRed wrote: post #456

Earlier quoted context omitted.

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 fir…

> 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 This is convenient in a lot of ways (e.g. apartment-first cities have better public transport and less segregation) but doesn't really solve this particular problem. The apartments still are very expensive and the prices grow rapidly. Again…

Apartments are still expensive but they are affordable. The average person could realistically buy one while house/land prices are rising much faster than savings so if you aren't already able to buy, you become further and further behind.

The HK problem seems to be that they are so overpopulated that even apartments have run out of space. Most of the world does not have this problem and will never have this problem because the enviornment would collapse before the population of Australia or the US fills apartments on every block of land available.

Re: Home Price to Income Ratio

#674

Post by bogomipz »

lottin wrote: post #671
bogomipz wrote: post #668

Earlier quoted context omitted.

No, there is an inverse relationship between between interest rates and bond prices. This is an axiom in the bond market. See: https://www.investopedia.com/ask/answers/why-interest-rates-...

Yes, I know that. We are talking about rates.

Rates on bonds are meaningless without considering yield.

Re: Home Price to Income Ratio

#675

Post by RC_ITR »

throw0101a wrote: post #223
dpweb wrote: post #118

Earlier quoted context omitted.

When it's all assets going up, it's not the assets cost more, it's the dollar is worth less. So for all the help and assistance. Housing is LESS affordable than ever before. You cannot infuse trillions of extra dollars into the economy without inflation. There's no magic pill - there must be consequences.

Lots of money supply in Japan, and are their asset prices going up? * https://fred.stlouisfed.org/series/MYAGM2JPM189S Their central rate has been Stocks and equities in the US have been going up for 10+ and the infusion of "trillions of extra dollars" wasn't present for all of those years. Canada has had increasing home prices, barely slowing down in 2008, and it hasn't had QE.

Yes they are - https://www.bloomberg.com/news/articles/2021-09-03/japanese-...

Re: Home Price to Income Ratio

#676

Post by fshbbdssbbgdd »

bogomipz wrote: post #674
lottin wrote: post #671

Earlier quoted context omitted.

Yes, I know that. We are talking about rates.

Rates on bonds are meaningless without considering yield.

Rate and yield are the same thing. Whenever I’m paying a rate, somebody else is earning a yield. Whenever I’m earning a yield, someone else is paying a rate.

Re: Home Price to Income Ratio

#677

Post by exporectomy »

thayne wrote: post #549
exporectomy wrote: post #417

Earlier quoted context omitted.

Home ownership is not an essential need. People aren't excluded from housing because of that risk. They can just rent from a landlord who's taking that risk themselves.

True. Renting has other risks though. The Landlord can increase the price dramatically at least as often as you renew your contract (usually a year in the US), or force you to move out because they sold the property, or really almost any reason. And because moving has such a high transaction cost, landlords can often get away with treating tenants pretty badly, because putting up with a bad landlord is often less bad…

It's almost as if playing in the rat race isn't easy or fair. Moving to a rural area or living on social welfare is usually also an option but you have to quit the rat-race to do that and miss out on all the wealth and social status.

Re: Home Price to Income Ratio

#678

Post by bogomipz »

fshbbdssbbgdd wrote: post #676
bogomipz wrote: post #674

Earlier quoted context omitted.

Rates on bonds are meaningless without considering yield.

Rate and yield are the same thing. Whenever I’m paying a rate, somebody else is earning a yield. Whenever I’m earning a yield, someone else is paying a rate.

They are related but they are certainly not the same thing.

Re: Home Price to Income Ratio

#680

Post by fomine3 »

ezoe wrote: post #509
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…

Currently in Japan, interest rates for home loan are so close to zero. About 1% for fixed rate, 0.5% for 10 year fixed rate, less than 0.4% for variable rate. New homes are built rapidly and supply is plentiful. When we say home, it almost always mean condominium. Yet, the house price is rising in Japan. I can think of a few reasons for that, like mere fact that home loans are available to virtually anyone who is emp…

Add: interest rates for home loan is virtually minus for 10 years, thanks to gov's tax reduction for 1% of loan debt.
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