Why are housing prices so high? No one can afford them. (2014, 5%)
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There are plenty of affordable homes available in most states, they just are not where people want to live. That's the way it's always been, the more desirable the area, the higher home prices will be. Where I grew up in Lafayette, CA the median house is at $1.9 million. Go about 30 minutes down the highway to Bay Point CA and it's only $630k, down in the far southern part of the state in the desert, Thermal CA it's just $304k.
Here where I live now in Sammamish, WA it's $1.5 million, but you can go SE to Yakima WA and it's just $346k. If you really want to buy a house, you just have to find a place with less amenities, less desirable climate, fewer good pay jobs, and away from your extended family and friends.
Not true. I bought my house 10 years ago for an affordable price and it's in a nice neighborhood. It would cost twice as much today as it did then and I would not consider that affordable. A middle class person should not only be able to afford a house in a slum and historically that has not been the case. Current prices are madness, but I understand why people who are profiting off of that would want us to think otherwise.
If house prices are going to double every ten years but median incomes are not, how is that sustainable? At least elina was honest when she implied regular Joes were just going to have to rent from now on. From what I understand homeownership has been much less common in Europe than here for years now so it would seem normal to someone from there. Seems kind of sad to me though. Home ownership has typically been a way for regular folks to build equity. When my father died my mother was able to sell their house, downsize and live off the proceeds. Had they had to rent their whole adult lives she'd be in big trouble right now.
Q: "Why are housing prices so high? No one can afford them."
A: Every home that sells is afforded by the buyer who purchases it. Perhaps you can't afford a house you are looking at, but the people with whom you compete with can.
Ouch this hits home. I've argued that we American's are idiots.. We CONTINUE to buy these homes even at hugely inflated prices. We CONTINUE to over extend our credit just because the bank will approve the loan.
This is detrimental to people like me who want to be more financially conscious. Now, if I want to live in a nice, safe neighborhood where my kids can have friends, I have to join the Jones's and over spend.... keeping the snowball rolling.
I have a friend who just bought a $1.2M house.. He knows good and well it was $700k two years ago and is likely going to land in the $800k area in a few years, but he did it anyway - at 7%!!! This means his house payment is about 4x what it would have been.. Those are very material numbers we seem to just say "oh well" to.
I feel terrible for my nieces and nephews. They will never be able to buy and have said as much.
The situation has really deteriorated from the 70s when we bought a house in SoCal on a waitress and printer salary. I was 22. These kids have no chance. Even with the good jobs they have.
A loaf of bread and a house are over 10X more than back then. Salaries have not risen 10X.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by Sand&Salt
I feel terrible for my nieces and nephews. They will never be able to buy and have said as much.
The situation has really deteriorated from the 70s when we bought a house in SoCal on a waitress and printer salary. I was 22. These kids have no chance. Even with the good jobs they have.
A loaf of bread and a house are over 10X more than back then. Salaries have not risen 10X.
When we bought our first house in 1978 it was $50k, and I had just gotten a big promotion to a salary of $15k. My wife made about half that, and our mortgage payment was $369. Today our income is almost exactly 10 times higher than then, and that same house is valued at $761,000, that's about 15 times higher, but if we had stayed there, it would be paid off, with $761,000 in equity.
The US government's been printing money they don't have, for 30 years or so, and artificially keeping the prime rate so low, that all that money's been flowing into stocks and housing.
A realistically sustainable mortgage rate would probably look something like 6-8%. Since most people buy houses based on the monthly payment, mortgages at 2% for a decade have warped the housing market (and other markets) in all kinds of weird ways.
I feel terrible for my nieces and nephews. They will never be able to buy and have said as much.
The situation has really deteriorated from the 70s when we bought a house in SoCal on a waitress and printer salary. I was 22. These kids have no chance. Even with the good jobs they have.
A loaf of bread and a house are over 10X more than back then. Salaries have not risen 10X.
There are a few reasons for this.
1) Wall Street investment companies started buying single-family homes in earnest in 2010.
2) Builders have been underbuilding since 2013.
3) People are staying in their homes longer than in the past. The average length in a home is 10 years now. This reduces the inventory on the market which isn't being made up by new construction.
4) Baby boomers are aging in place rather than moving into assisted living so their homes aren't coming on the market.
5) Baby boomers as a generation have huge homeownership rates. They have second homes and rental homes as well as owning their own homes. They control a massive amount of real estate.
6) Millenials have paid off their school loans and have entered the market as well.
All of this has led to a severe housing shortage in many cities. There are very inexpensive places to live in the US, but there aren't jobs there. Gen Z and Millenials want homes, but they are still working and need to be near a city with job opportunities.
We will get more inventory on the market once the boomers start to die, but we have a ways to go before that happens.
In 2009, the median home price was 3 times the median salary which is very affordable. This current situation is a result of the consequences of the Great Recession, two large generations, keeping interest rates too low for too long, and Wall Street entering the single-family home market.
I feel bad for young people trying to navigate all of this who might have to start paying for buyer agents with the lawsuit because more than ever, they need good buyer agents to help them navigate.
Inventory here is back to pre-lockdown levels, I don't get it.
To which of the 600,000+ housing markets are you referring?
Quote:
Originally Posted by wokarK
. But you can google "San Antonio housing inventory", or copy and paste the link.
San Antonio is not the United States.
San Antonio is merely one of 39,000+ municipalities in the US and 0.46% of those municipalities do have artificially inflated housing values caused by the very bad policies of the Departments of HUD and Transportation.
San Antonio is also one of 595 separate economies in the US or a mere 0.17% of all economies in the US.
In some of those 595 separate economies the Cost-of-Living is extraordinarily high, again due to the very bad policies of the government, and in some it is very low and in the majority it moderate or slightly above or below moderate.
A few months ago I posted a link to new homes in the $180,000s.
While that is the situation in the economy where I live it does not logically follow that is the situation in all of the 595 economies in the US or all of the 39,000+ municipalities in the US or all of the 600,000+ housing markets in the US.
In San Antonio, I would venture to guess there's probably 30-40 housing markets and not all buyers are seeking housing in all of those markets so they're not all competing against each other just as a buyer in Chicago isn't competing against a buyer in San Antonio unless by chance they were seeking to relocate or seeking an investment property.
You should understand that Redfin and Zillow are not your friends because they're bank-rolled by real estate industry trade associations including realtors' associations and they artificially inflate prices to the advantage of the real estate industry and realtors and investors which is harmful to you.
Your inventory graph does not make any distinctions so we don't know if the housing inventory is for new houses, existing houses or both.
I don't know how people are affording rents too. In my neck of the woods rents for a 2br/1bth in a crummy apartment are 2,700 - 3,500 now. Not everyone makes great money and salaries have not adjusted for inflation (maybe for new hires). Unless the global markets collapse, I dont see home prices dropping. UBS had an article that they expect interest rates to drop 2.5% next year. Who knows if thats accurate, but if it does there still is no houses in inventory and prices/rents will continue to climb.
There are plenty of affordable homes available in most states, they just are not where people want to live. That's the way it's always been, the more desirable the area, the higher home prices will be. Where I grew up in Lafayette, CA the median house is at $1.9 million. Go about 30 minutes down the highway to Bay Point CA and it's only $630k, down in the far southern part of the state in the desert, Thermal CA it's just $304k.
Here where I live now in Sammamish, WA it's $1.5 million, but you can go SE to Yakima WA and it's just $346k. If you really want to buy a house, you just have to find a place with less amenities, less desirable climate, fewer good pay jobs, and away from your extended family and friends.
Exactly. I moved to the Bay Area married. We eventually bought a townhouse for $180k (goes for $900k now). So, we got divorced. I worked full time and finished a BS in Biz Admin w/Acctg. Got a local job with a good company, then another and then transferred out to suburbs NW of Portland. It was not my first choice because my first choice was to have at least $10M and stay where I was living -- LOL...
Of course, now the area I live is more desirable than it was... ...and it feels like home.
Prices here have slipped 10% (so far). The problem is that a lot of young couples are making a lot of money. Due to the labor shortage and retirements where I work young people are moving up rapidly. A lot of young people stayed in school when the economy was bad and now that there is a lot of employment opportunities it is really paying off for them. Not being part of a couple is disastrously expensive (ask me how I know).
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