Who is buying these homes? (collection, 2015, income, 100k)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I understand that I can’t afford a home. I don’t understand how median homes can cost 3x the median salary. That’s just not a sustainable model. I mean I have no clue where a 180k salary falls on a bell curve for the town, but I’m guessing it’s pretty far to the right, and still I can’t buy. And as I understand it from watching Zillow and talking with a realtor homes aren’t staying on the market long.
Econ 101, Supply and Demand. West Coast cities (and a few East Coast ones) have a supply problem, so if you didn't inherit something there, the price to buy in is steep. The vast majority of the population can't afford to buy a home there now.
In Rust Belt cities that are losing population, you see the opposite happen. As people leave and try to sell their homes, there is higher supply than demand. As a result, even with only slightly lower median income in Metro Detroit or Cleveland, the housing prices are dramatically lower than in most cities.
You're not the only one that has trouble grasping this subject. I see so many of those listicles of "Top 10 Overpriced/Underpriced Markets," looking only at median income and median home price. By those metrics, low supply markets are considered overpriced, and declining markets are seen as underpriced. In reality, there are a lot of other stats you should looks at to try to understand a housing market, as proxies for the only thing that really matters, supply and demand:
1. Number of months supply of listings.
2. Average sale price to list price premium or reduction.
3. Average time on market.
4. Household wage growth in area (This is a more difficult number to find).
5. New home building permits in an area (Tricky, as a low number could mean either a lack of land to build new houses on or simply lack of demand for new houses, you have to know the market to know which it is).
I’m looking at moving to an area where the median household income is only $60k/yr, but the median three bedroom home is $600k.
How does that even work?
My household income will finally be more than sustenance level, but even grossing more than 3x the median I can’t afford a freaking $600,000 home (well not without a down payment and sticking to the rule of 28).
This is a crazy world we live in.
Sounds like an area that's very desirable to live in so you'll have people that buy homes there but are not necessarily working in the local economy. For example, people that have retired may have built up a fortune and they can buy a $600K house and have very little income.
In the Seattle area, we also have a large number of foreign buyers just buying with cash. My son has income in the range of yours and is trying to buy a house in the $900K range....he bought a small house in 2011 that has appreciated about $250K and can use that and some savings to have a serious down payment. At least in the area, average incomes are quite high.
I dont think that many jobs are specific to sydney or Melbourne. Unless you are in a position to be a CEO, or cure some rare diseases, or maybe top investment banker etc. Its only a small fraction of the workforce.
As far as median incomes are concerned Melbourne is actually the second lowest major city in Australia (Adelaide been the lowest) and Perth is by far the richest.
Housing costs are far more about supply and demand in my opinion.
I agree it is probably only a small proportion of the workforce, but I think it causes a price pressure at the top which impacts downwards. My kids work in a specific area of finance which causes them to be pretty much stuck in Sydney. Brisbane was always a good option for relocating somewhere cheaper, but it seems for the past quite a few years it has had quite high unemployment. People working in construction management currently have far more opportunities in Sydney and Melbourne. My BIL has been working all round the country in that field and now it is in Sydney where he is in demand.
Yes it is all about supply and demand. But the demand is linked a lot to employment opportunities. Look at how the prices in Perth are in the doldrums.
Sounds like an area that's very desirable to live in so you'll have people that buy homes there but are not necessarily working in the local economy. For example, people that have retired may have built up a fortune and they can buy a $600K house and have very little income.
In the Seattle area, we also have a large number of foreign buyers just buying with cash. My son has income in the range of yours and is trying to buy a house in the $900K range....he bought a small house in 2011 that has appreciated about $250K and can use that and some savings to have a serious down payment. At least in the area, average incomes are quite high.
They have brought in some new regulations in NSW to try to reduce the number of foreign buyers and it seems to be working. Also helped by stricter regulations in China. It will probably stabilise prices here, which have increased at least 50% in the past four years. I know Vancouver has had some similar success. Has Seattle tried anything to stop the foreign buyer pressure?
They have brought in some new regulations in NSW to try to reduce the number of foreign buyers and it seems to be working. Also helped by stricter regulations in China. It will probably stabilise prices here, which have increased at least 50% in the past four years. I know Vancouver has had some similar success. Has Seattle tried anything to stop the foreign buyer pressure?
No, Seattle hasn't adopted any measures to stop or slow foreign buying as far as I'm aware. It's a dilemma because those buyers are bringing cash that is helping sellers and the economy overall but making it very difficult for people working in the local economy to buy a desirable house To be fair, Seattle hasn't had yet nearly the foreign buying that Vancouver saw at its peak.
No, Seattle hasn't adopted any measures to stop or slow foreign buying as far as I'm aware. It's a dilemma because those buyers are bringing cash that is helping sellers and the economy overall but making it very difficult for people working in the local economy to buy a desirable house To be fair, Seattle hasn't had yet nearly the foreign buying that Vancouver saw at its peak.
I don't get the past tense with Vancouver. My sister's house on West 19th in Dunbar went up another $500K last year. There is no sign of a slowdown. She's paying city property taxes on over $3 million valuation. People are being chased out of their homes by the property taxes. All that does is accelerate the teardowns to construct new homes with a 2nd wok kitchen that sit unoccupied.
I kinda suspected that myself, but this conversation could be much more useful if we knew the exact area.
If it's California, prop 13 would contribute to a huge disconnect between median income and home price.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
