Average priced $525,000 home nationwide, now requires $3,387 monthly in principle and interest alone (dollars, compared)
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Car loans and home loans are more expensive with high interest rates, why is this a surprise. The move is to fight inflation and reduce demand, basic economics and math.
Fight inflation? Does that include student loan forgiveness?
But a real estate bubble is still a real estate bubble - I don’t care what causes it, but it will pop.
Someone will come in here and tell me I’m wrong for X reason(s) - and I totally could be. But if I was a young family and my $600,000 house that I put $60K down on, and am paying $2500 (w\o taxes & insurance) is now valued below $300K, I just might walk. Especially if I could find a rental for $2K a month, no property taxes, no upkeep and the cost of groceries (and everything else) going up.
That extra $500-$1000 a month savings might make it worth my while.
I would not walk if I plan to stay in that home for at least 10 years.
Now if you are going to stay in that house for 5 years or less, then yeah, walk or run if you have to
I would not walk if I plan to stay in that home for at least 10 years.
Now if you are going to stay in that house for 5 years less, then yeah, walk or run if you have to
I agree.
But if you have two kids, two insane car payments, grocery bills and inflation is thru the roof?
Let's say you put 10% down that was your profit from your first home. That can seem like not real money ... only numbers on a piece of paper. Not money that you actually saved week to week, month to month.
Walking away to save an instant $1000 a month? Yeah. I can see a lot of people doing that.
Car loans and home loans are more expensive with high interest rates, why is this a surprise. The move is to fight inflation and reduce demand, basic economics and math.
its not interest rates that are making it unaffordable.....
the Levitt houses (Levittown, Long Island) cost about 4l to build, and sold in the 50's for 5-6k
why should a tiny house of 1400sf, on a tiny lot of 60x100 or less, be going for 500k or more
OP's numbers are true but not the best measure of housing affordability, which is indeed among historic lows nationwide.
Median price lets you know that half the homes are lower priced. It gives you a good idea if you can afford the half more expensive homes or one of the half lesser expensive homes.
Average means that all of those $10 million dollar mansions get averged in. That is meaningless to the middle class. So your city has 400 listings and median is $400,000 but a with a bunch of multi-million dollar homes the average is $500,000.
I much prefer median house value over average.
^^^People need to read this post and give him some rep for this.
Additionally, in a year or so after a couple more interest rate pops and a recession the housing numbers will be far lower.
I don't know how people are affording this. There is something that has to give and it is usually the kids that suffer because both parents are forced to work.
My parents home they bought back in 1973 in California for $32k is now Zillow has it at $1,117,700. I believe my day paid $250 a month on the mortgage. He made about $25k a year back then so the mortgage was 10% of his gross income. No wonder we had little worries back then. Cars were paid for cash and there was no cable or cell phones or anything else like that. Rabbit ears and free TV. They sold it in the 90's and retired in Arizona. Who would have known prices went this crazy.
The house is the most valuable asset of the Boomer generation. And if there's one thing you can count on the Boomers for, it's that they'll see to themselves. Houses won't depreciate markedly until the boomers have cashed out. But - there are no young buyers? Enter Blackrock.
During the pandemic, the 1% gained about 4.8 trillion. That money has to go somewhere. And housing is a great investment - rent provides a steady income stream. People don't just up and leave on a whim. And ultimately, everybody needs some sort of roof over their head.
It wouldn't be hard to push back. Lower property taxes on your primary dwelling, boom. The attractiveness of a house as an investment just dropped. But that would lead to house prices falling, Boomers losing money, and they're not having that.
the problem is not the boomers or even the older gen x..... the problem is more to do with the younger genx and the now in their 40's genY (millennials) ... they are the generation of I want it now, mobility and upward mobility..... same goes for the end of pensions. .the yuppies wanted mobility (hence the 401k)...the biggest problems we have are from those born in the late 70's, 80's, and 90's...the generation of I want it now, instant gratification
as far as lowering property taxes...keep dreaming, the government will never do that, the government is PART of the reason for these high prices..the higher the value of the house, the more the government )town and county) can get
My parents home they bought back in 1973 in California for $32k is now Zillow has it at $1,117,700. I believe my day paid $250 a month on the mortgage. He made about $25k a year back then so the mortgage was 10% of his gross income. No wonder we had little worries back then. Cars were paid for cash and there was no cable or cell phones or anything else like that. Rabbit ears and free TV.
yep same here on Long Island.... my parents bought a home in 66' for about 17k, my dad's final salary before retirement in 1982 was just under 29k.... the same house today is valued on Zillow for 750k... I just retired back in December with my final salary at 80k.. I could not afford the house based on today's values
As some have said, renting will make more sense to many, especially in this environment.
But, yikes, these numbers are insane. When I bought my $469k condo in Honolulu in 2016, my pre-HOA fees mortgage and taxes were $2,300 on a 3.75% loan; I've since refinanced to a 2.75% loan and my pre-HOA fees mortgage and taxes are $1,875 a month. There's no way I'd be buying a place in Honolulu today at these interest rates, where the same priced property would require a full grand more per month (again before HOA fees)!
yep same here on Long Island.... my parents bought a home in 66' for about 17k, my dad's final salary before retirement in 1982 was just under 29k.... the same house today is valued on Zillow for 750k... I just retired back in December with my final salary at 80k.. I could not afford the house based on today's values
There is something wrong with all of this. To get to the same percentage of income my dad had I would have to make $600k a year. I do ok but no where near that number.
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