U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old Today, 06:53 AM
 
1,856 posts, read 624,625 times
Reputation: 1425

Advertisements

Quote:
Originally Posted by mathjak107 View Post
Just look at the list of cities I posted in the link You have lots of cities that likely will not conform. NEw York was actually towards the bottom of the list.

Home values are determined like stocks are ...fear , greed ,perception and the desire to live in that house in that area determine price ...to think other wise Is like saying all stocks should trade for no more then the historical average p/e of the markets ..

It is an incorrect assumption
Everyone needs a house to live in, while no one needs to own stocks. Stocks are inherently more speculative than housing because the risk profile of the average person buying a house is different than that of the average person buying stocks.
Reply With Quote Quick reply to this message

 
Old Today, 07:00 AM
 
72,909 posts, read 72,721,455 times
Reputation: 50426
Quote:
Originally Posted by Avondalist View Post
Everyone needs a house to live in, while no one needs to own stocks. Stocks are inherently more speculative than housing because the risk profile of the average person buying a house is different than that of the average person buying stocks.
Irrelevant,, the same forces determine prices ...fear ,greed ,perception and the demand to live in that area in that house.

Prices FLOAT WITH WHAT THE MARKET DETERMINES IS THE CORRECT PRICE AT THAT POINT IN TIME.

not some national chart showing median or average price nationwide...free markets don’t work like that
Reply With Quote Quick reply to this message
 
Old Today, 07:00 AM
 
1,856 posts, read 624,625 times
Reputation: 1425
Quote:
Originally Posted by mathjak107 View Post
The wrong assumption is that it is only locals that live and work in a given area so prices are based on their incomes ...but you take any number of desirable places and it is not just about the locals it’s about what transplants or outsiders can afford ...

When you have millions of retirees potentially leaving high cost of living areas for the more desirable cheaper areas it is that money that influences prices too .

Don’t forget a retiree with what is now a 600 or 700k paid off house who saw 3% appreciation has a whole lot more than a local in cheapsville who saw the same 3% inflation and has a 200k house they can sell and move somewhere cheaper .

Plus the higher wages in these high cost areas likely are giving them a higher social security check then locals .


So naturally if they want to live in a desirable area they will be willing to pay more than locals and prices will reflect that fact..


Trying to come out with some universal value is just crazy and it will never work out that way just like every stock will never trade at some average p/e ratio
Your point is understood that not every housing market is the same. However that does not mean a national average is a useless metric. There are numerous nationwide policies and norms ultimately set by the federal government via the tax code and regulations that impart some uniformity to the national housing market.

Also I don't know why you keep using value-laden terms like "desirable" and " cheapsville". It just makes you look like you are tooting your own horn and doesn't add anything to the discussion.
Reply With Quote Quick reply to this message
 
Old Today, 07:03 AM
 
Location: Washington State
19,136 posts, read 9,857,429 times
Reputation: 16298
Quote:
Originally Posted by Avondalist View Post
After house prices crashed, they reverted back to the historical trendline, which is 3x local incomes.

JP's Real Estate Charts: Inflation-adjusted housing prices

People think 2000-2006 or 2010-now is how housing markets are "supposed" to work and the 2009 prices were a bargain. In reality the 2009 prices were historically normal and real estate has mostly been overpriced since 2000.

It's really sad that we've lost sight of this. Your primary residence should be seen as a cost to be minimized, so the old way was better in that respect.
That chart needs to be updated that you posted only ran through 2014. Yeah prices are high but interest rates are low so the out of pocket isn't too bad. People also are buying much larger houses today so that's going to cost more if you want it.
Reply With Quote Quick reply to this message
 
Old Today, 07:05 AM
 
72,909 posts, read 72,721,455 times
Reputation: 50426
Quote:
Originally Posted by Avondalist View Post
Your point is understood that not every housing market is the same. However that does not mean a national average is a useless metric. There are numerous nationwide policies and norms ultimately set by the federal government via the tax code and regulations that impart some uniformity to the national housing market.

Also I don't know why you keep using value-laden terms like "desirable" and " cheapsville". It just makes you look like you are tooting your own horn and doesn't add anything to the discussion.
Yes , it is a useless metric to anyone buying a house ..it is as useless a metric as median income for the country when selecting an area to live in and basing it on. Your lifestyle you want.

Prices are determined by desirability which creates demand ,period .....cheapsville is not a derogatory term , it is just a catch all to represent the low cost of living areas of the country rather than name them one by one
Reply With Quote Quick reply to this message
 
Old Today, 07:06 AM
 
1,856 posts, read 624,625 times
Reputation: 1425
Quote:
Originally Posted by mathjak107 View Post
Irrelevant,, the same forces determine prices ...fear ,greed ,perception and the demand to live in that area in that house.

Prices FLOAT WITH WHAT THE MARKET DETERMINES IS THE CORRECT PRICE AT THAT POINT IN TIME
That's a bold claim. For one you didn't even mention cost to build and cost of improving land. You're only describing the demand side.

Ascribing prices to only psychology is just as doctrinaire as an efficient markets purist ascribing prices only to fundamentals and claiming arbitrage is impossible.

Both fundamentals and psychology factor into prices in the short term. I would argue over the long term psychology is just noise.
Reply With Quote Quick reply to this message
 
Old Today, 07:08 AM
 
1,856 posts, read 624,625 times
Reputation: 1425
Quote:
Originally Posted by Tall Traveler View Post
That chart needs to be updated that you posted only ran through 2014. Yeah prices are high but interest rates are low so the out of pocket isn't too bad. People also are buying much larger houses today so that's going to cost more if you want it.
Potentially a factor but you'd need to know build costs per square foot to know.
Reply With Quote Quick reply to this message
 
Old Today, 07:11 AM
 
72,909 posts, read 72,721,455 times
Reputation: 50426
Quote:
Originally Posted by Avondalist View Post
That's a bold claim. For one you didn't even mention cost to build and cost of improving land. You're only describing the demand side.

Ascribing prices to only psychology is just as doctrinaire as an efficient markets purist ascribing prices only to fundamentals and claiming arbitrage is impossible.

Both fundamentals and psychology factor into prices in the short term. I would argue over the long term psychology is just noise.
You can argue all you like but you would be wrong ....there are so many areas that went from desirable to undesirable over the long term ..in fact we had a house in the poconos in pa .... the area was so hot at one time local newspapers had a special section devoted just to housing there .

The area turned over the years and-today homes sell for less then they did more then a decade ago.

Desirability determines prices and when that drops long or short term markets float to where that demand represents.

In fact desirability gets down to individual homes ...there are homes that move day 1 for top dollar and homes on the same block that dirt unsold because homes are highly personal.

There can be 50 homes for sale in the area ...but the only one that counts is the one my wife finds desirable.....
Reply With Quote Quick reply to this message
 
Old Today, 07:30 AM
 
1,856 posts, read 624,625 times
Reputation: 1425
Quote:
Originally Posted by mathjak107 View Post
You can argue all you like but you would be wrong ....there are so many areas that went from desirable to undesirable over the long term ..in fact we had a house in the poconos in pa .... the area was so hot at one time local newspapers had a special section devoted just to housing there .

The area turned over the years and-today homes sell for less then they did more then a decade ago.

Desirability determines prices and when that drops long or short term markets float to where that demand represents.

In fact desirability gets down to individual homes ...there are homes that move day 1 for top dollar and homes on the same block that dirt unsold because homes are highly personal.

There can be 50 homes for sale in the area ...but the only one that counts is the one my wife finds desirable.....
Saying desirability determines prices is almost a tautology. What makes up desirability?

I would say things like building size, build quality, availability of jobs nearby, number of local amenities are all "sticky" factors that contribute to desirability. I would also call them fundamentals.

Things like anticipation of appreciation and confidence that current income will continue or grow are speculative. I would call that psychology.

There can be long term changes in fundamentals. The general westward movement of the US population is an example of this.

Also you continue to ignore the supply side, namely the cost of building new homes to meet demand, and the cost of maintaining existing homes so they don't fall into disrepair.
Reply With Quote Quick reply to this message
 
Old Today, 07:46 AM
 
4,833 posts, read 12,039,573 times
Reputation: 3517
Quote:
Originally Posted by Avondalist View Post
After house prices crashed, they reverted back to the historical trendline, which is 3x local incomes.

JP's Real Estate Charts: Inflation-adjusted housing prices

People think 2000-2006 or 2010-now is how housing markets are "supposed" to work and the 2009 prices were a bargain. In reality the 2009 prices were historically normal and real estate has mostly been overpriced since 2000.

It's really sad that we've lost sight of this. Your primary residence should be seen as a cost to be minimized, so the old way was better in that respect.


Market forces drive the price of housing, not some theoretical benchmark.

Secondly, if most people thought the cost of their primary residence should be minimized, the average home size would be 1,000 square feet or less.
Reply With Quote Quick reply to this message
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.


Reply

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top