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It would be interesting to hear from the inner looper, gentrification crowd on this topic. I see they have remained quiet. These are typically the very liberal types who have usually been very bleeding heart about all things being very equal and fair. I'm curious to read their take on the affordability of homes that once belonged to families who for generations lived close to the urban core and now can no longer afford to stay.
Since this discusison seems to persist, I just want to say that I disagree with the editorial in the title.
The market is the market. A $250K home that goes on the market for $250K and sells for $250K is a $250K home. Period. For everyone who buys and sells into that market, that's just the reality. It's not "bad news" for buyers, it's just what things cost at this snapshot in time. Once buyers buy in, unless the bottom falls out for some reason that no one I've heard of is anticipating, they'll be able to sell their homes for more than they paid for them. The article in the OP fails to make that case.
To suggest anything else, without presenting a case for some reason that home prices are going to drop, is just needless fearmongering.
The issue is not that the bottom will fall out or that people will not sell their homes for more then they paid for them. The issue is best stated by L2:
Quote:
Originally Posted by L210
......If you're focusing on the middle class, lower-middle class, and working class who are now priced out of owning a home, then this is a bad thing. It makes it more difficult for these people to build wealth and change their socioeconomic status.
This is exactly what I see happening, not just with new home purchases but with used home purchases and with rentals (both housing and apartment) as well. A degree of the middle, (especially the) lower middle and low income classes are being priced out of somewhere to live. While this is not happening with every single person, this seems to be an increasing trend.
Those that are not priced out of apartments/houses are stretched thinner and there is very little disposable income. More reaching the breaking point. The rubber band is snapping for them. So they either house hop, have to have to make tough choices between either paying the electric bill or eating every night, or they end up in shelters.
Yes, black and white, what a home buys and sells at is market. However, if the market is being inflated or at least is increasing at a rate that is not sustainable by a large portion of the locals, it becomes an affordability issue for local residents, not necessarily an affordability issue for anyone in the country. The issue is not so much with people selling their home and moving into a another home (as with this market they will have been able to sell higher so they could buy higher) but it is an issue with first time home buyers and renters (either apartment or housing). This is the group that is hit hardest.
Again this is an excellent response by L2:
Quote:
Originally Posted by L210
When used homes are going for much higher prices, then it is an affordability issue. People can't even afford to buy a used home in a decent neighborhood.
The article stated this and it is important:
"The macroeconomic factors are positive, strong," says Fitch analyst Samuel So. "Home prices are just growing too fast compared to the fundamentals." This is what I alluded too in my responses. It is unfortunate that the article did not allude to what these "fundamentals" are other then just "nominal income growth".
So the question remains, if it is true that "home prices" are growing too fast for the fundamentals" of a local area then why is this the case?
This thread (or threads like it) will "persist" as long as the issue remains. Its not "fearmongering" when it is an actual issue that is being discussed already among the community just because it has been introduced to this forum.
If you're a homeowner, this market's a great thing. The home you bought in '07 is worth a lot more than it was a decade ago. We shouldn't begrudge people the opportunity to profit from their investment in a home.
It sounds like what is needed is more attention to creating an entry-level path to home ownership. I have read that the mayor has a committee of officials and citizens on Housing and it has been holding hearings and listening sessions. While the committee's work has been a pubic process, it hasn't been well-covered by the media. I do anticipate that some policy initiative on affordable housing will likely come out of that.
In the northern city I lived in before I moved here, there were tight land-use controls and a requirement that developers making new residential developments of a certain size include affordable housing in those developments. I don't think that would be popular in Texas, if it's not already prohibited under state law. But it did create opportunities for newer prospective homeowners to buy in.
Those opportunities still exist, Bo - but folks today seem to think that their first house should be a 2000 sq ft 4-2-2 in gated communities. Our first house was on the west side of SA - in a neighborhood that most wouldn't consider living in - because it was what we could afford. It was a 900 sq ft 3-1-1 that we considered ourselves lucky to have. Lived there about 5 years, saved our money and moved up to a larger home.
Our own kids are no different - both wanted a "house like mom & dad have". I had to remind them of where WE started - not what they remembered.
As a young adult in the late 1970s newly settled into a career, and having been egged on by a friend of my mom's who was a realtor at the time, I purchased my first home in San Antonio, an existing 1250 square foot 3-2-2 with assumable financing. My mom's realtor friend was making dire predictions of escalating home prices in the San Antonio market, which seemed to be outstripping most people's income growth, and even more worrisome were 30-year fixed interest rate mortgages, which were hitting 10% at that time, IIRC. The fear was that the escalating home prices, combined with what seemed to be ever-rising interest rates, were going to price many prospective home buyers with less than generous incomes out of the market - permanently. Better to jump in sooner than later was the mantra, at the time.
So here we are nearly forty years later, and interest rates have certainly come down, but San Antonio home prices have continued to escalate, particularly in recent years. As some have mentioned, home builders have all but abandoned the lower end of the market, which I think exacerbates the affordability problem. That 1250 square foot home I bought, which would have been considered a pretty decent size back then, is pretty much a joke by today's standards. Try to find a new subdivision offering sub-1500 square foot homes today.
If you're a homeowner, this market's a great thing. The home you bought in '07 is worth a lot more than it was a decade ago. We shouldn't begrudge people the opportunity to profit from their investment in a home.
It sounds like what is needed is more attention to creating an entry-level path to home ownership. I have read that the mayor has a committee of officials and citizens on Housing and it has been holding hearings and listening sessions. While the committee's work has been a pubic process, it hasn't been well-covered by the media. I do anticipate that some policy initiative on affordable housing will likely come out of that.
In the northern city I lived in before I moved here, there were tight land-use controls and a requirement that developers making new residential developments of a certain size include affordable housing in those developments. I don't think that would be popular in Texas, if it's not already prohibited under state law. But it did create opportunities for newer prospective homeowners to buy in.
^^^^^^^^^^^^^^
so much truth in the statement above.
that being said, my homes value has outpaced my increase in income over the same period.
I haven't received a recent appraisal, but I'm assuming I'm in the neighborhood of my home value being tens of thousands or more than what I bought it at. This over a 4 1/2 yr. timeframe. I worked hard to get that home (which was a starter), and in today's market I do intend turn that investment around to get into my next home.
but for others, now you'd need to be making quite a bit more than I did 5 years ago to get into my house. but that's the real estate market. I bought low and now the market is high. If you're being priced out of a home, then you need to continue saving up. That equation hasn't changed a bit.
If you're a homeowner, this market's a great thing. The home you bought in '07 is worth a lot more than it was a decade ago. We shouldn't begrudge people the opportunity to profit from their investment in a home.
Not everyone wants to cash out and move every time the values skyrocket. Some people buy a home to stay in for awhile.
The problem isn't so much the market value of the homes but how BCAD and COSA keeps wanting more and more money and are finding ways to tax you to death for it.
If you're a homeowner, this market's a great thing. The home you bought in '07 is worth a lot more than it was a decade ago. We shouldn't begrudge people the opportunity to profit from their investment in a home.
It sounds like what is needed is more attention to creating an entry-level path to home ownership. I have read that the mayor has a committee of officials and citizens on Housing and it has been holding hearings and listening sessions. While the committee's work has been a pubic process, it hasn't been well-covered by the media. I do anticipate that some policy initiative on affordable housing will likely come out of that.
In the northern city I lived in before I moved here, there were tight land-use controls and a requirement that developers making new residential developments of a certain size include affordable housing in those developments. I don't think that would be popular in Texas, if it's not already prohibited under state law. But it did create opportunities for newer prospective homeowners to buy in.
Yes, better entry level paths to first time ownership would be a great thing. Ownership of a home goes a long way towards decreasing homelessnes, improving socio-economic standings of a community and decreasing crime. Not just for here in San Antonio but for anywhere in the US and the world.
Here are some ideas, although, I don't expect them to go over well with some.
1. Give federal rebates for first time home buyers. The rebates would be similar to rebates offered on "green" items for sale now. The amount of the rebate would be based on an individuals income and the goal of getting the mortgage payment as close to 35% - 50% of a persons income as possible. This rebate would only apply to first time homebuyers. This rebate would come with restrictions, such as the owner must own the home for 30 years and if the seller sells before this 30 years, any profit is not given back to the seller but instead added to a pool of money to help fund the rebate program.
And/or
2. The second idea is to federally limit the bank rate of first time home buyers. This percentage rate would not exceed a certain percentage say, 1%. Second (or more) time home buyers wouldn't qualify for these benefits and would be charged the normal bank rate (right now I think the "normal" is around 3%) as they have equity in their home. If they can sell higher, they can buy higher and vice versa. They have equity and are not as negatively effected by steeping home sales prices. In fact, they very likely are benefited by rising home costs depending on where they choose their next home.
Drastically rising home prices doesn't hurt current home owners, it hurts first time home owners and renters (home and apartment). A large number of people trying to provide a basic need (shelter) for them and their families.
Sorry - but asking "The Government" to subsidize is asking the TAXPAYER to subsidize. And program after failed program has shown that subsidizing things simply devalues them in the eyes of the recipient. I've met many people that made very little that did what it took to save and scrimp enough to buy their homes. There are already programs out there that require as little as 3-4% down payment - and the mortgage payment on a $100k home is in the sub-$1k/mo range.
Bought our first home for $32k back in the late 70's, making less than $6/hr. Worked a LOT of side jobs to come up with the down payment and to pay off other loans (car, etc) so that we could qualify. Looking back, that crackerbox is something I'd not want to live in today - but back then, it was like a castle to us. It also made us better appreciate what we had.
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.... has to make it political.....
