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Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,574,670 times
Reputation: 16698
Quote:
Originally Posted by moguldreamer
For about 6 or 8 years during the 1980s, I argued the exact same thing. I looked around Silicon Valley and said to myself, "in a few years, networking technology will improve to the point where the high paying engineering jobs will be sent overseas and to remote places in the USA to be done by telecommuters -- so I'm not going to buy that overpriced condo/townhouse/single-family-home becaus the price of real estate is going to plummet like an anvil attached to the leg of Wiley Coyote in a Road Runner cartoon."
Well, as you can see, I suck at forecasting the future. Hell, I have a hard enough time forecasting the past.
Yup
In the early 2000s people told me don’t buy, it’s going down, it can’t stay up.
After waiting year after year it didn’t and prices went up .could have bought for,275k
I bought at 600k and sold a year later at 700k.
It did drop to about 550k during the recession. Today it’s about 1.2 million.
I opened up a random house on zillow in this area, and this is the kind of thing I'm talking about:
You're supposed to shell out or finance an extra $250k 3-4 years later because? I don't really know. And again, inventory is back to normal here, and rates are 2x higher than they were in 2019.
Both the U.S. and Canada have seen record immigration rates in contrast with less housing starts than we had in the 70s. Its a classic "supply and demand" problem where demand for housing is outstripping the supply of housing at an ever increasing rate. Until this trend reverses to the point where supply begins to outstrip demand, prices will continue to increase.
Remember: The market doesn't care if YOU can afford a home, only that SOMEONE can afford a home.
As for the effect of interest rates on housing affordability, do you really think the average Joe who purchased a home for $1 million four years ago is going to take a loss of $400,000 and sell it for $600,000 just so housing becomes more affordable? When people have invested hundreds of thousands in their home they are not likely to sell at a loss unless it is the only economic option available, and even then will probably try to hold on until the mortgage holder forecloses on them.
The average Joe who purchased a house for $1 million 4 years ago would probably list their house for closer to $2 million now, that's what I'm talking about.
I don't know what kind of immigrants are buying houses in that price range in south central Texas either, or what kind of average Joe can afford a house for over a million in the first place.
But what were the average purchase price to average earning ratios back then?
That is about as relevant as the average waistline-to-IQ ratio.
Quote:
Originally Posted by Serious Conversation
Around here, the best city in the area has a median sale price of around $400,000 with median household of around $50,000. It's not really the rates that are the problems - it's very high prices and relatively low incomes in many areas.
(Median sale price)/(median household income) is a meaningless ratio.
You can purchase a house with ZERO income when you're just executing an asset class transfer. It isn't always about income; sometimes it is about wealth.
Last edited by moguldreamer; 11-15-2023 at 01:48 PM..
...what kind of average Joe can afford a house for over a million in the first place.
How about an Average Joe engineer or low-level engineering manager who works for Apple or Amazon or Meta (Facebook) or Dell or Google or Tesla or Cisco or Intel or AMD or X (Twitter) or IBM or Oracle or Salesforce or Service Now or Adobe or Qualcomm or SAP or Intuit or... well, you get the idea.
How about an Average Joe engineer or low-level engineering manager who works for Apple or Amazon or Meta (Facebook) or Dell or Google or Tesla or Cisco or Intel or AMD or X (Twitter) or IBM or Oracle or Salesforce or Service Now or Adobe or Qualcomm or SAP or Intuit or... well, you get the idea.
Maybe he should have said “average salary Joe” instead? I get that the houses being sold are affordable to the people who are buying them. But you seem to ignore the large segment of the population that have “decent” salaries who still can’t afford to buy in some areas.
I opened up a random house on zillow in this area, and this is the kind of thing I'm talking about:
You're supposed to shell out or finance an extra $250k 3-4 years later because? I don't really know. And again, inventory is back to normal here, and rates are 2x higher than they were in 2019.
You can't just look at prices like that. What if that house was a fixer and the seller put $150,000 into it to improve it? Just looking at the price history doesn't tell you if there were significant improvements along the way.
You can't just look at prices like that. What if that house was a fixer and the seller put $150,000 into it to improve it? Just looking at the price history doesn't tell you if there were significant improvements along the way.
It's the whole market, not just one house. Houses are priced 70% to 100%+ over what they were in 2020. There are no real improvements on these homes, if anything they're older and potentially have more issues.
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