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Location: Live:Downtown Phoenix, AZ/Work:Greater Los Angeles, CA
27,606 posts, read 14,592,398 times
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Quote:
Originally Posted by Phil P
This all makes me wonder why people think home prices will be an ever increasing asset comparable to the stock market. While I know a lot of housing is bigger and of better quality build and on the whole US cities are significantly nicer, there comes a point when rental and therefore housing prices are going to only go as high as people can afford, at which point they'll track wage growth.
The thing is, there has been wage growth, but only among the top 5% of earners, so out of 100 people, 5 have no problem affording housing, while the other 95 have problems, because housing prices are based on total dollars in a local market, not caring how it's distributed
$463 for a 1br in Pittsburgh in 2000. Now it will cost $1000+. The sad part is with our US economy the way it is, the salaries are about the same as in 2000.
This is because zoning laws restrict new construction in many neighborhoods and thus create a scarcity that drives prices up and up. Tokyo fixed this problem in the early 90s by reforming their zoning laws.
New York City rents have MASSIVELY increased, way outpacing inflation
There are two major factors at play. The first one everyone knows; foreign buyers. The other one is that it's less New York than it used to be, so it's more attractive to mundanes. That's why you have a whole apartment buildings that are Michigan State buildings. New York is always had a huge transplant population, but it was a very self-selecting population. Now, New York appeals to people who like Starbucks.
This all makes me wonder why people think home prices will be an ever increasing asset comparable to the stock market. While I know a lot of housing is bigger and of better quality build and on the whole US cities are significantly nicer, there comes a point when rental and therefore housing prices are going to only go as high as people can afford, at which point they'll track wage growth.
One factor is that in high-demand cities, people are willing to pay a much larger percentage of their incomes to live there. Some cities are transitioning to this type.
Location: Live:Downtown Phoenix, AZ/Work:Greater Los Angeles, CA
27,606 posts, read 14,592,398 times
Reputation: 9169
Quote:
Originally Posted by Happiness-is-close
Builders need to start building more affordable housing and apartment complexes. The demand is there but they aren't building for some reason.
It's because affordable units are less profitable. And land has gotten so expensive, that if profit isn't maximized, then it's not worth it to the developer to pursue the project, unless they can get government subsidies, but those are hard to come buy as tax revenues are down most places
It's because affordable units are less profitable. And land has gotten so expensive, that if profit isn't maximized, then it's not worth it to the developer to pursue the project, unless they can get government subsidies, but those are hard to come buy as tax revenues are down most places
Then that is what needs to be done. We all need a place to live and this is getting ridiculous.
Location: Live:Downtown Phoenix, AZ/Work:Greater Los Angeles, CA
27,606 posts, read 14,592,398 times
Reputation: 9169
Quote:
Originally Posted by mhays25
One factor is that in high-demand cities, people are willing to pay a much larger percentage of their incomes to live there. Some cities are transitioning to this type.
Except corporate owned complexes (80% of apartments most places) have income to rent requirements ranging from 40x annual in NYC (if you make $40k, you can only qualify for $1k/month) to 2.5x to 3x monthly elsewhere (here in Phoenix, at my wage of $52k/year, which is around $4,300/month, at 3x the most I could qualify for is $1,430/month). So if you can't meet those requirements, you have to go to a mom&pop complex or get roommates
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