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Home Price-to-Income Ratios

jchs.harvard.edu

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Re: Home Price-to-Income Ratios

#91

Post by mNovak »

Jaygles wrote: post #24

I almost don't want to buy property as a protest to the horrible policies we have regarding basic necessities. Why should property owners be entitled to a major portion of my productivity/success? I'll rent the cheapest apartment I can find until the next housing crash or we have some sensible policy put through that negates the investment aspect of housing.

I'm not sure if this argument makes a lot of sense.. If you're renting, property owners are definitely still acquiring the fruits of your productivity. Moreover you lose out on all aspects of housing security and can readily be displaced if said 'cheapest apartment' stops being so affordable.

If you're imminently expecting a housing crash, then sure, go for it.

Re: Home Price-to-Income Ratios

#92

Post by RickJWagner »

I grew up in the 70s in a two-story house with 4 bedrooms (5 if you count the unfinished basement) with Mom and Dad, plus 8 kids. A total of 10 people in the house. No air conditioning until later years, two bathrooms, no garage.

My wife and I, with our 3 kids, currently live in a house that's bigger and has 5 bedrooms and 3 1/2 bathrooms and of course the cars are housed. It's more luxurious in every way than the house I grew up in.

I think this situation is not uncommon. Sure, houses cost more. So do cars. Both last longer, are more energy efficient, have more amenities, and are better in just about every way. I'm not surprised they cost more.

Re: Home Price-to-Income Ratios

#93

Post by gowld »

nextos wrote: post #72
OJFord wrote: post #34

Earlier quoted context omitted.

Is property ownership a basic necessity though? Or is its prevalence as an ideal a product of a burgeoning middle class through the last century? I understand it's not even so common (or common as a goal) now in continental Europe, they think it's some silly English thing to care so much about home ownership.

Well, in England being a tenant has been a terrible experience for me despite paying premium prices and trying to aim at high quality properties with reputable landlords and agents. I've spent 5 miserable years. So I can totally understand why people tend to buy. Most people I know currently letting are either low income or moving jobs and cities. You have very few rights (even in comparison to Wales or Scotland). So…

Why do you live in England and not Belgium? Is it because quality of life is so much better that it's worth the housing hassles?

Re: Home Price-to-Income Ratios

#94

Post by thorwasdfasdf »

rorykoehler wrote: post #46
OJFord wrote: post #34

Earlier quoted context omitted.

Is property ownership a basic necessity though? Or is its prevalence as an ideal a product of a burgeoning middle class through the last century? I understand it's not even so common (or common as a goal) now in continental Europe, they think it's some silly English thing to care so much about home ownership.

It absolutely is a basic necessity unless you wish to remain a serf for life.

that happens anyways. if you own a home and have it paid off, you'll still be paying super high property taxes on that reallly expensive house. and with most 1st world governments taking in 40-55% of all income earned nationwide, we're all just serfs, at the end of the day.

Re: Home Price-to-Income Ratios

#95

Post by dv_dt »

imtringued wrote: post #57
dv_dt wrote: post #43

Earlier quoted context omitted.

Prop 13 just removes property tax consequences driving transactions, not housing price concerns of anti-development / anti-density owners. IF you drive those owners out via property tax increases, you have new owners just as concerned with the same anti-density drivers, maybe even more because they're in even greater debt at a higher price and can less absorb a feared price decrease.

New owners want to get the most out of their purchase. This means multifamily buildings.

People who can develop multifamily buildings have better rent profit margins if property taxes are controlled - how does repealing prop 13 change the (re)zoning motivators (pro or con).

Re: Home Price-to-Income Ratios

#96

Post by gowld »

rorykoehler wrote: post #46
OJFord wrote: post #34

Earlier quoted context omitted.

Is property ownership a basic necessity though? Or is its prevalence as an ideal a product of a burgeoning middle class through the last century? I understand it's not even so common (or common as a goal) now in continental Europe, they think it's some silly English thing to care so much about home ownership.

It absolutely is a basic necessity unless you wish to remain a serf for life.

Most people have been serfs for most of the history of civilization. They prefer it to scratching a life out of the dirt in the frontier.

Re: Home Price-to-Income Ratios

#97

Post by thorwasdfasdf »

bradlys wrote: post #69

While we're on this subject - does anyone know how median household income is actually calculated within the USA? I feel like there's some weird distortion bubble within the bay area because I've seen the data on household income within the bay area and the amount of households under $100k/yr seems way too low. Individuals under $100k/yr would make sense but households? No - it doesn't add up. For instance, the media…

gotta remember 75% of SF is rent controlled. Plus, if your income is below 60% or 40$ of median income you can get nearly free housing from subsidized housing.

Re: Home Price-to-Income Ratios

#98

Post by mNovak »

OJFord wrote: post #34
Jaygles wrote: post #24

I almost don't want to buy property as a protest to the horrible policies we have regarding basic necessities. Why should property owners be entitled to a major portion of my productivity/success? I'll rent the cheapest apartment I can find until the next housing crash or we have some sensible policy put through that negates the investment aspect of housing.

Is property ownership a basic necessity though? Or is its prevalence as an ideal a product of a burgeoning middle class through the last century? I understand it's not even so common (or common as a goal) now in continental Europe, they think it's some silly English thing to care so much about home ownership.

I think for the vast majority of people (no complex investment strategy, pay bills and go on with life) home ownership is incredibly valuable, both for stability and security, as well as for a decent investment to leverage later in life.

Re: Home Price-to-Income Ratios

#99

Post by kaybe »

salty_biscuits wrote: post #40

This plot suffers from my pet peeve for geographic display of data. Small areas will have all the interesting details (e.g. extreme outliers in inner city areas), and you just can't see them from a zoomed out perspective.

Do you have a favourite solution for this problem?

Re: Home Price-to-Income Ratios

#100

Post by fiter »

RugnirViking wrote: post #12
ianmobbs wrote: post #3

I wonder if this is due to stagnant wages, excessive home price inflation, or both.

A bit of both, and also a sprinkle of the interest rates going from almost 20% at points in the 80s, to essentially 0% today, meaning people can afford to borrow a lot more at once, and home sellers profiteering off this.

Just to give an example: a 30 year mortgage for $300,000 at 4% is about $1400 per month where a 30 year mortgage for $100,000 at 17% is about $1400 per month. That can explain a 3x multiplier in the home price to income ratio assuming that people purchase based on what they can afford monthly.
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