Americans don't believe middle class can afford homes • Hacker News Board

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

#81

Post by rco8786 » Tue, Jan 23, 2024, 5:52 PM UTC

kube-system wrote: post #31

rco8786 wrote: post #8

Earlier quoted context omitted.

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.

> Median home price is $387,600 as of November '23, for a payment of $2716. An actual mortgage payment would probably be closer to 3,000-3,200 after escrowed PMI, taxes, insurance, on a typical loan.

As mentioned in my post "this ignores taxes and insurance". OP just said mortgage payment so I was only looking at that specifically. Taxes and insurance varies wildly by location.

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

#82

Post by rco8786 » Tue, Jan 23, 2024, 5:54 PM UTC

darth_avocado wrote: post #22

rco8786 wrote: post #8

Earlier quoted context omitted.

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.

$2716 is still 40% of your pretax household income at the median household income of $78k annually. Post tax, if you include all the other home ownership costs (taxes, insurance, upkeep), this comfortably exceeds 50% of your income, which is unaffordable at that income levels.

Totally agree - just think it's important to work with statistically realistic figures when discussing these sorts of things.

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

#83

Post by Sohcahtoa82 » Tue, Jan 23, 2024, 5:55 PM UTC

chmod600 wrote: post #48

soggybread wrote: post #15

I've been saving up for the past 8 years and have got a pretty decent deposit built up but the costs of houses in my area are just so expensive that the deposit barely makes a scratch in the overall mortgage costs and I wouldn't be able to afford the mortgage, seems like the more I save up the higher the housing prices go. It absolutely amazes (and infuriates) me that some of the houses I see going for 400-500k now w…

Doubling or even tripling in ten years is not a ridiculous rate of growth.

For a stock, maybe not. But for a house? It is absolutely beyond ridiculous for a house to double in 10 years. Are you kidding me?

That's far beyond the rate of inflation. Unless there are significant improvements to the house or the surrounding area, the value of house should not rise faster than inflation, at least not by some significant margin.

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

#84

Post by vidanay » Tue, Jan 23, 2024, 5:55 PM UTC

lucidguppy wrote: post #12

Feedback systems with long delays are going to be easier to destabilize than systems with short feedback cycles. There's a lot of "memory" in housing prices. Houses are just about the hardest item to build in America today. You need land, and you cannot make them in a factory. All cost cutting measures have been in materials (to the point where quality is degrading). Regulations push new players out of the market - i…

> you cannot make them in a factory

You most certainly can build 80% of a house in a factory.

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

#85

Post by quickslowdown » Tue, Jan 23, 2024, 5:56 PM UTC

dragontamer wrote: post #77

financypants wrote: post #56

Earlier quoted context omitted.

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.

Seems like financypants lives in a beautiful world where corporations aren't greedy shitbags engaged in price gouging

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

#86

Post by everybodyknows » Tue, Jan 23, 2024, 5:58 PM UTC

Analemma_ wrote: post #23

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. We can't have this, because a huge fraction of household wealth is tied up in people's houses. If you stop protecting them as investment accounts, you nuke the retirement accounts of 100 million people. To be clear, I completely agree with you that this system has to be dismantled before it gets worse, and a lot of this suppose…

> nuke the retirement accounts of 100 million people

Your house is only a "retirement account" if you're willing to take out a reverse mortgage, move into some much cheaper home, or share a living room with other old folks in an "assisted living" institution.

Some of us on the other hand would prefer a future unencumbered by debt, "aging in place" in our own homes.

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

#87

Post by sofixa » Tue, Jan 23, 2024, 5:58 PM UTC

brianwawok wrote: post #34

atourgates wrote: post #10

They're not wrong. Check out the graphs on this page: https://www.longtermtrends.net/home-price-median-annual-inco... The Home Price to Median Household Income Ratio is higher than it's been in 70 years. Between 1965 and the year 2000, it fluctuated between 3.5 and 4.5. At the top of the housing bubble in 2008, it hit 6.8. Right now it's at 7.6. And I don't believe the housing price data this index uses (from S&P Cor…

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.

> that buyers want more house

Is it that buyers are wanting more house or that builders make more profit selling more house due to red tape and zoning?

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

#88

Post by bovermyer » Tue, Jan 23, 2024, 6:00 PM UTC

skywhopper wrote: post #65

bovermyer wrote: post #20

I can afford to buy a house, and I'm middle class. The trouble is, that house would be in the middle of nowhere, with Starlink being the only viable internet option. Nowhere else is going to have house prices under $200k for something family-livable.

Not true at all, there are plenty of small-to-mid-sized cities with good Internet (fiber even!) where you can buy a 3 bedroom home in good shape for well than that. Topeka, Dayton, Peoria, Paducah...

That's fair. I have cultural requirements in mind that would preclude those particular cities, but I should have done more research prior to posting.

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

#89

Post by sofixa » Tue, Jan 23, 2024, 6:02 PM UTC

ta1243 wrote: post #66

dragontamer wrote: post #30

Earlier quoted context omitted.

> We can't have this, because a huge fraction of household wealth is tied up in people's houses. If you stop protecting them as investment accounts, you nuke the retirement accounts of 100 million people. So the question is if the wealthy can remain wealthy, or if the poor can get houses? I'm sorry, but... as a Catholic the choice is obvious to me. Blessed are the poor, etc. etc. We should favor those who don't have…

> I'm sorry, but... as a Catholic the choice is obvious to me In the UK the 13th largest landowner is the church. If it used its lands to build at average density of Hackney it could house 2.5 million people.

That's just regular church stuff in countries with organised centralised religion. That's why one of the major things the French Revolution did was first sell bonds against Church land, then directly sell off that land. It was wasted on the Church and the state needed the money and more productive use out of it (taxes, because of course Church land wasn't taxed).

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

#90

Post by floxy » Tue, Jan 23, 2024, 6:02 PM UTC

skepticATX wrote: post #9

In most ways the lives of middle class Americans are better than that of their counterparts 30 years. We have an idealized view of what prior generations’ middle class looked like. Home ownership is the one exception. We need to build denser, and we need to build actual communities that are livable without needing to drive 30 minutes to go to the grocery store. The middle class of today has every right to be infuriat…

>needing to drive 30 minutes to go to the grocery store.

I understand that this is hyperbole, but in this age-of-big-data, is there a way to quantify this? I'd like to see a histogram of miles from nearest grocery store vs. number of homes/apartments.