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Americans don't believe middle class can afford homes

newsweek.com

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Re: Americans don't believe middle class can afford homes

#71

Post by lcfcjs »

rco8786 wrote: post #8
SubiculumCode wrote: post #2

Well...they are kinda right. 3k a month mortgage when the interest rate was low, now I imagine it would be closer to 4k per month. Housing prices might not be growing as fast but I haven't seen them dropping.

A 4k payment is a ~$580k house at 7.5%. Median home price is $387,600 as of November '23, for a payment of $2716. Not to say things aren't tough out there. Just that a $4k mortgage is still 30%+ more than what people can expect to pay at the median. This ignores taxes and insurance of course.

[dead]

Re: Americans don't believe middle class can afford homes

#72

Post by matthewdgreen »

gadders wrote: post #39
burlesona wrote: post #6

We spent 40 years believing that house prices were fine because the debt load didn't matter because interest rates would go down forever. Prices are based on the seller extracting the maximum ability to pay from the buyer, so payments were effectively fixed, and every drop in interest rates was perfectly offset by an increase in the purchase price. Then we hit interest zero, there was nowhere left to go. Now we're fi…

>>We have to increase supply to meet demand. You can also reduce demand by reducing immigration (legal and illegal).

It's hard to build a lot of new housing in a labor shortage.

Re: Americans don't believe middle class can afford homes

#73

Post by atourgates »

beisner wrote: post #59
brianwawok wrote: post #34

Earlier quoted context omitted.

Also look at these graphs https://www.statista.com/statistics/529371/floor-area-size-n... The average new construction house size changes from 1500 square feet in 1975 to 2500 square feet in 2022. So yes, some of the higher cost of housing is simply that buyers want more house. I know my personal house is nearly double the size of house I grew up with, despite only having 3 kids vs my parents 2.

This doesn’t necessarily follow - it may be that the average potential buyer wants the same amount of house as before, but due to supply issues the lower end of potential buyers can’t afford to buy anything at all. And size doesn’t scale linearly with price - it’s usually sublinear. So it could be that the only homes that get built/sold are larger because nobody is building homes for middle-lower income price ranges.

I can't find it at the moment, but in the last year or so there was a really informative "why aren't developers building more affordable housing" article on (I believe) NPR.

There were lots of factors, but basically it comes down to the fact that it's significantly more profitable for builders to build bigger, more expensive houses than smaller, more affordable houses.

AKA, a builder will make much more profit on a single $750K house, than building 3x $250k houses.

So I'm sure the reason houses are getting bigger is some combination of consumers wanting bigger houses, and bigger houses being what's available.

Re: Americans don't believe middle class can afford homes

#74

Post by Sohcahtoa82 »

burlesona wrote: post #6

We spent 40 years believing that house prices were fine because the debt load didn't matter because interest rates would go down forever. Prices are based on the seller extracting the maximum ability to pay from the buyer, so payments were effectively fixed, and every drop in interest rates was perfectly offset by an increase in the purchase price. Then we hit interest zero, there was nowhere left to go. Now we're fi…

> We're going to have to have a cultural shift towards housing as shelter, not investment.

I've been saying this for years.

Real estate investing is an absolute cancer on society. It is utterly unreal to me that people think their house should go up in value over time higher than the rate of inflation without doing any improvements.

But it's not even just that, but people and corporations buying up houses for the sole purpose of renting them out, which merely furthers wealth inequality. The owners are financial vampires, taking advantage of the fact that a bank will tell someone "We don't think you can afford a $2,000/month mortgage" when their current rent is $2,500/month.

I think what upsets me the most isn't the widening inequality, but that so many of these landlords have a savior complex, thinking they're doing a huge service. No, you took a home off the market for the sole purpose of enriching yourself. The demand for rental properties pushes house prices up, locking more people out of home ownership.

We need severe disincentives for purchasing single family homes for the purpose of renting them out.

I'm sure someone is going to accuse me of being a sour renter, but nope. I've owned my house since 2015. In 2019, I could have bought a second house to rent out, but I chose not to because it's incredibly immoral.

Re: Americans don't believe middle class can afford homes

#75

Post by benreesman »

betterprojects wrote: post #4

We can barely agree on what the definition of middle class is. A quick search shows one source quoting anywhere between $48,500 to $145,500 a year which is a very broad range. Part of this is cost of living varies significantly in different parts of the US. With the current average salary, average home price, and current interest rates, people aren't wrong that housing is very unaffordable in most places.

When I was young in the days of yore, “middle class” was something like “median household income”, maybe a bit more but not double, which got you a 30-year fixed in a part of town that was safe but not swanky, and was easily had by a worker with a college education or trade, or a hard worker, great saver, without.

“Upper middle class” was your doctors and lawyers, but the typical kind (the 100-week partner guy was fucking “RICH”). They had nice houses in desirable parts of town.

“Lower middle class” were workers without differentiated skills or educated folks with really bad money habits / some other issue like that. With my folks it was some college but dropped out to start a family (have me), got in tax trouble young. Lower middle class almost always rented forever.

“Poor” was like, no skills or flat lazy, or conspicuous drug problem, or something like that. They rented in bad parts of town. But rented.

That’s context or color, not numbers. But we were “the poor relations” relative to the spiffy college graduates or the folks with two incomes, and had IRS trouble, and rented in unglamorous but perfectly nice places.

Sounds crazy now.

Re: Americans don't believe middle class can afford homes

#76

Post by hotpotamus »

dragontamer wrote: post #64
Analemma_ wrote: post #60

Earlier quoted context omitted.

I mean I agree with you. But what I'm trying to convey is, if you go to voters and say, "here's a policy update that will fix the housing crisis and secure a future for the next generation, but it will also subtract $400K from your total wealth", they're going to not just say no, but fight you to their last breath. Proposed policies need to account for this if they're going to have a realistic hope of success. And no…

The wealthy throughout history have often made sacrifices when wealth was obviously unfair. Or when wealth was needed to move society forward. What a wealthy person wants isn't necessarily greed, and we need to stop thinking like that. Even in Roman times, wealthy got together to fund various projects for the greater good. What the wealthy want most of all, is if you take their wealth, that it truly does go towards a…

If they care more about their daughter finding a house, and they have 3, then why don't they give her one?

Re: Americans don't believe middle class can afford homes

#77

Post by dragontamer »

financypants wrote: post #56
burlesona wrote: post #6

We spent 40 years believing that house prices were fine because the debt load didn't matter because interest rates would go down forever. Prices are based on the seller extracting the maximum ability to pay from the buyer, so payments were effectively fixed, and every drop in interest rates was perfectly offset by an increase in the purchase price. Then we hit interest zero, there was nowhere left to go. Now we're fi…

I am personally very curious to know when interest rates are not perfectly offset by increased purchase price. I believe this is a popular belief that is wrong. That can’t possibly be the case, not even in the majority of mkts.

This past year.

Interest rates went up, and then prices went up. No offset occurred, everything just became dramatically more expensive.

Bam. Theory already busted.

Re: Americans don't believe middle class can afford homes

#78

Post by dragontamer »

hotpotamus wrote: post #76
dragontamer wrote: post #64

Earlier quoted context omitted.

The wealthy throughout history have often made sacrifices when wealth was obviously unfair. Or when wealth was needed to move society forward. What a wealthy person wants isn't necessarily greed, and we need to stop thinking like that. Even in Roman times, wealthy got together to fund various projects for the greater good. What the wealthy want most of all, is if you take their wealth, that it truly does go towards a…

If they care more about their daughter finding a house, and they have 3, then why don't they give her one?

Houses that are good for wealthy retired people are not so good for young couples raising children.

In particular, the school systems that are around such homes. Location, Location, Location.

Secondly: those houses have tenants. They're not sitting empty.

Thirdly, for the young couple. Being tied to your parents financially basically makes them a slave-owner of you. When the parents drop by or use the yard to store project-cars, or refuse to fix issues with the house... the young couple is not in a position to fix those issues themselves without pissing off the parents. (Its not their house after all). So getting their own house leads to a better relationship between child and parent anyway, and should be preferred.

Re: Americans don't believe middle class can afford homes

#80

Post by Sohcahtoa82 »

wesselbindt wrote: post #21
betterprojects wrote: post #4

We can barely agree on what the definition of middle class is. A quick search shows one source quoting anywhere between $48,500 to $145,500 a year which is a very broad range. Part of this is cost of living varies significantly in different parts of the US. With the current average salary, average home price, and current interest rates, people aren't wrong that housing is very unaffordable in most places.

The notion of "middle class" is a convenient propaganda piece. Turns out most folks consider themselves middle class. So as a politician, you can score easy points by saying scary stuff like "the middle class is disappearing" or "I'm here to help the middle class". The moment you start using more meaningful classifications (for example proletariat, which has a precise definition), you alienate some part of your voter…

> The notion of "middle class" is a convenient propaganda piece. Turns out most folks consider themselves middle class.

Yup. I've met people living paycheck-to-paycheck, never having much more than 1 paycheck's worth of money in their bank account, that think they're middle class. Shit, I've seen people that are on food stamps that think they're middle class.

The worst part is that so many of them will vote against their own best interests because they think they'll be millionaires one day.

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