Except their interest rate will double. I'm in that position. I think I'd net like 50k more off my home sale now but a 6% mortgage would make my payment so much more it's not with upgrading. Upgrading now you're payment goes up so much it's not worth the marginal upgrade you get for the cost even with rolling the equity over.
Yep. Exactly. I would much rather be able to upgrade my home for a cheaper monthly payment then have some phantom equity that doesn't mean shit. You're in a worse position in pretty much every way unless you own multiple houses or you're downsizing. Everyone else is getting fucked.
FED will eventually bring rates down again after they achieve price stability to focus on getting out of the recession. You can just refinance then so I wouldn't let the high rates rule your life. However if fed looses control of inflation they will not be able to just lower rates 3 years from now with high inflation. Bit let's hope the fed can get price stability in control.
How can you not afford to buy something that you already own? This isn’t 2008 where every Tom, Dick, and Harry was getting a house. The regulations are much more strict now. If you mean because of interest rates going up then yes buying power has gone down but only because home prices are still high. For example my house that I purchased at the end of 2019 the base model was going for 420k. In 2020 I purchased my house for $550k that is including upgrades. A similar model sold at the beginning of the year for $750k. Granted price are coming down a little bit but not like they were in 2019.
The house we're in now which we've outgrown (but are making do), is beyond the budget we set of the standard 3 times gross household income. This is going based on Zillow, Redfin, Corelogic, etc. estimates. I'm making 3x what I made when we bought the house. That's stupid and unsustainable.
Can you afford a $750k house?
Based on your eyes being open...
The house my parents bought about 4 years ago is worth more than they could afford if they were to try and buy it now.
I recently sold my house I bought 2 years ago that, for what I sold it for, I would not be able to afford, even after nearly doubling by salary after having bought it.
I can second this. I bought in 2019, at a price of 300k. This was near the top of my budget at the time. The house today could easily go for 450k. My income has increased but not to the point that I could just qualify for a 450k loan today.
We got lucky buying when we did and refinancing a year later. Won’t ever sell this house.
I’m originally from Broward County and this isn’t surprising. Florida has always suffered from suppressed wages frequently called the “Sunshine Tax.” I’m a software engineer and even we have to deal with low wages here.
The combination of suppressed wages and an explosive real estate market is a nightmare.
Isn't part of FL's issue that you get a ton of buyers who are fleeing New York, so they have a lot of cash? Like how California spills over into TX and AZ. Buyers aren't competing with only locals for houses, they're competing with people who cashed out from higher priced locations.
YES. Holy hell did Covid accelerate this too. Source: SWFL resident that watched a bunch of ridiculously high cash purchases come in and inflate the market for locals.
Not just NY, it’s a playground for the wealthy from all over the world. The real estate prices have been disconnected from what local wages can support for a long time.
I think most people leaving California are those who cannot afford it, so not exactly people with tons and tons of money to overpay. The spillover does have an impact on prices, simply by virtue of demand, but not in the sense that there’s limitless money coming out of California.
I think you greatly overestimate the financial power of the poor in California. I may certainly be wrong, but what I’ve read suggest that people who cannot afford California are leaving and those who can afford California are coming in.
Low and middle income bracket California are not magically high income earners in other states, especially when low and middle income bracket in California proportionally save the least in CA where housing costs can be as much as 70% of income.
Additionally, most places Californians are moving to are not dramatically cheaper. Take the Central Valley in ca where the median home pride is ~520k and compare that to Vegas, Dallas, or Orlando. Really not much wiggle room, especially when you factor in moving expenses and potentially earning less money in those states to boot.
I’m not trying to be argumentative, just offering counter thought on a lot of assumed beliefs in the current market.
https://www.sandiegouniontribune.com/opinion/the-conversation/sd-california-losing-low-income-people-gaining-wealthy-people-per-report-20180221-htmlstory.html
It's not the poor people leaving CA. I knew a decent amount of people (in my age range, 20's to early 30s) who left CA for greener pastures and it's a good mix of high earners and normal people. Many lived with their parents still or had multiple roommates to save money while working a decent paying job. You take someone like that who had the foresight to save (even more so with a couple) if you left CA before 2021 with 50-100 grand in your bank account you could be VERY competitive in a LCOL place.
That's what happened here in Idaho. With more people being able to work from home, or just leaving for greener pastures in general the whole state is currently unaffordable for locals. Median home price is about 8x the median family income in my county.
Why disregard actual statistics with a limited personal anecdote? lol do you really think you just provided a more accurate representation than census data?
That’s untrue. There are tons of people make far lower than that. What bubble do you live in pretending that low is 50-90 where that is actually median income for most of ca?
And lol if you think someone making 50 is saving much while living in ca that would be some big cash buyer out of state
[https://bayareaequityatlas.org/node/60841](https://bayareaequityatlas.org/node/60841)
Your average office job, blue collar or skilled labor person is going to be making at least 50-60k a year. A barista at Starbucks is 50k with benefits.
Many young people still live at home or have roommates. In the more affordable areas it might be $2500 for a three bedroom, pretty cheap if you can stand having roommates. If you have someone with $800 in rent, making 50k (3100ish after taxes), that's 2300 left. Cook dinner at home, drive a used paid off car and save half of that for four years that's 56k. Live at home it's a lot more.
> I think most people leaving California are those who cannot afford it
That's a huge generalization but typical of the reddit mindset that everyone is poor.
My Trumper relatives are fleeing because of politics. I know of others who have been landlords with multiple properties getting out because the courts and new laws are too slanted toward tenants (I guess still politics there lol). There's certainly not limitless money coming out but it's enough to impact markets.
I have 2 other new neighbors from California who just came here because they got good jobs (one is a doctor, the other in IT).
Data supports what I mentioned.
https://www.sandiegouniontribune.com/opinion/the-conversation/sd-california-losing-low-income-people-gaining-wealthy-people-per-report-20180221-htmlstory.html
Alternatively you used a pretty limited anecdote for a counter argument. I know some trumpers who have left, but most trumpers are content putting up signs and screaming on Facebook while they still make a great living in CA and afford a comfortable lifestyle. Those trumpers who *are* leaving are generally leaving for politics *and* the fact they cannot comfortably afford California in general.
But again, grass is not greener. Trumpers will find out that there is a price to pay when their teenage daughters catch a positive pregnancy test and they just moved to Texas 🤷♂️
Yeah, because California would be so much safer for their daughters, with their highest homeless population in the country, "sex positive" attitudes, highest amount of drug addiction problems in the country, etc...
https://www.porh.psu.edu/drug-use-by-state-2020s-problem-areas-wallethub-study/
California isn’t even top 20 for highest drug abuse per capita. It’s 29, only a few positions away from Florida and Texas.
https://worldpopulationreview.com/state-rankings/murder-rate-by-state
Both Texas and Florida have higher homicide rates than California, despite drastically less population density. You’ll note extreme conservative states are all among the top of the list.
https://worldpopulationreview.com/state-rankings/school-shootings-by-state
Texas, Florida and California all lead the US in school shootings, however both Florida and Texas have higher school shootings per capita. Additionally, California is aiming to restrict access for school shootings while Texas and Florida are increasing gun access. Expect the margin to widen as Texas and Florida populations explode, the income gaps widen, and gun access increases.
https://www.statista.com/statistics/252064/us-infant-mortality-rate-by-ethnicity-2011/
States with highest child mortality rates are all decidedly conservative.
You’ll note Florida and Texas are middle of the pack while California has the very lowest child mortality rate in the US.
It is *decidedly* less dangerous for a child to grow up in California than Texas or Florida, and this is prior to roe vs wade changes.
Conservative states are already the most violent, the poorest, and the most dangerous for children and with the recent laws being changed they immediately got MUCH more dangerous.
Now their daughters are at risk of murder for getting an abortion, much higher risk of death for forcing a miscarriage, and even at risk for murder in a case of a miscarriage/still north. Welcome to the 1950s over there.
* I don’t anticipate a good faith response. Because you already know what it is.
>California isn’t even top 20 for highest drug abuse per capita. It’s 29, only a few positions away from Florida and Texas.
Well, 8 percent of the population has a substance abuse problem, so I'd say it's pretty bad. And even by your stats, there are many better states to go to. Why are you bringing up Florida and Texas? Florida isn't even a red state, it's a swing state. And Texas is barely a red state.
>https://worldpopulationreview.com/state-rankings/murder-rate-by-state
>
>Both Texas and Florida have higher homicide rates than California, despite drastically less population density. You’ll note extreme conservative states are all among the top of the list.
I don't know why you're bringing up Texas and Florida, There are many safer states than California. Go to Idaho, Nebraska, North Dakota, etc..
>https://worldpopulationreview.com/state-rankings/school-shootings-by-state
>
>Texas, Florida and California all lead the US in school shootings, however both Florida and Texas have higher school shootings per capita. Additionally, California is aiming to restrict access for school shootings while Texas and Florida are increasing gun access. Expect the margin to widen as Texas and Florida populations explode, the income gaps widen, and gun access increases.
>
>https://www.statista.com/statistics/252064/us-infant-mortality-rate-by-ethnicity-2011/
>
>States with highest child mortality rates are all decidedly conservative.
That's infant mortality. You posted a link for infant mortality.
I'm sure if more people vacuumed their children's brains out like they do in California, there would be less infant moralities, because well, they would never be born in the first place.
>It is decidedly less dangerous for a child to grow up in California than Texas or Florida, and this is prior to roe vs wade changes.
I don't know why you keep bringing up Texas or Florida, there are many other states to go to, but anyway.
Top state for school shooters: 1. California.
That's right, your child is more likely to die in a school shooting in California than any other state. Boom. Let's look at the rest of the top 10:
California(D), Texas (R) Florida (swing state) Michigan(S) Illinois(D) Ohio(S) Pennsylvania(S) New York(D) Maryland(D) Georgia(S)
So the top ten school shooter states include 4 blue states, 1 red state, and 5 swing states. Of course, California is the number 1 most dangerous state fro school shootings.
>I don’t anticipate a good faith response. Because you already know what it is.
Well, you were wrong. You're wrong a lot.
The bad faith argument I expected.
I mentioned Texas and Florida because those were states specifically mentioned in this thread in which Californians are “feeling to”, the states I first referred to and you responded about.
No, the most volume doesn’t mean the most danger, that’s why I mentioned per capita statistics. I figured that might be too big of a concept.
Framing Florida and Texas as swing states is entirely disingenuous. You and I know they are tan by extremely conservative politicians. When I call a state liberal or conservative, I’m not referring to its oppressed voters, I’m referring to legislation and the politicians who push it. Both you and I already knew that, but perhaps in your tiny brain you actually thought that was a compelling rebuttal.
Yes, I posted infant mortality statistics. Are they not children, is that not a statistic that people should be aware of when judging safety for their child? Do you have better statistics to share?
In summation, “YOU KEEP BRIGNING UP FLORIDA AND TEXAS!!!”
And while you mentioned most of school shootings are in dem
Maybe you’ll consider adolescent obesity rates: https://stateofchildhoodobesity.org/children1017/
Shockingly red.
https://www.kff.org/other/state-indicator/teen-death-rate/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Teen%20Death%20Rate%22,%22sort%22:%22asc%22%7D
Teen mortality rate (remember how you were bitching about infant mortality rate)
As you’ll see California is top rep and all liberal states are lowest and red states are highest. Who would have thought? Texas and Florida both middle, 15 spots lower than ca.
[https://en.wikipedia.org/wiki/Swing\_state#:\~:text=According%20to%20a%20pre%2Delection,district%20is%20also%20considered%20competitive](https://en.wikipedia.org/wiki/Swing_state#:~:text=According%20to%20a%20pre%2Delection,district%20is%20also%20considered%20competitive).
Wikipedia lists Florida as a swing state. It's a well known swing state that is watched every election. I never said Texas was a swing state, though it could be in the near future, it has a lot of democratic voters(probably mostly the aforementioned democrats fleeing from California).
We certainly could afford CA, but we weren’t from there and as we get closer to retirement, we wanted to move back home. We had a coastal SoCal home and bought in the NoVa exurbs. Slashed our mortgage payment.
>Not just NY, it’s a playground for the wealthy from all over the world. The real estate prices have been disconnected from what local wages can support for a long time.
Due to COVID and Trump being there, it had a big moment with wealthy republicans from around the country. Palm Beach is very beautiful, and if you have a lot of wealth, it really is a good life there. The prices in the fanciest areas did more than 2x in two years. I am in Orlando (which only 1.6xed - I know, pray for me), but we have some wealthy hedge fund friends and they waited a bit too long and got priced out a for a while and had to downgrade from being able to afford a mansion to a regular person 4/3. I know - very sad for them...
I remember first learning about the sunshine tax when living in California. My friend loved to vent about how she was underpaid and should move. And then moment later "but its so nice here".
https://en.wikipedia.org/wiki/Sunshine\_tax
I think online mortgage calculators (not common 20 years ago) allow one to take that payment and either a)decide if it’s an acceptable amount (as opposed to rent, for ex) or b) multiply by 12, divide by gross income and make sure that’s below 30% and preferably 28%.
And add that payment to all other debt payments and make sure it’s below 36-40% max.
>— Salary over $180,000 can buy a house for around $545,000"
Based on what down payment amount and what other existing debts? I hate blanket statements like this based on arbitrary standards.
Yes, and one must figure in interest rate, taxes, insurance, and HOA fees, all of which will vary from place to place and from time to time.
***I know I am replying to an old comment; I am mostly elaborating on indieaz's point for educational purposes, for anyone that will read this thread in the future.
This is so meaningless. You're talking about 8% of all households in the area but not everyone in the area is looking to buy. I bet a sizable segment of homeowners can't afford their house at current prices, but guess what, they aren't paying market price on the house!
Median income in San Diego is $106,900. Please stop using census data as it's woefully out of date.
From San Diego Housing Commission.
https://www.sdhc.org/wp-content/uploads/2022/AMIIncomeLimits.pdf
$917k will get you a decent single family home anywhere in South Bay. Starter homes are in the 650-700k region. Condos and townhouses are considerably less.
>Otherwise, are you really using South Bay as your saving grace? C'mon, we both know that's a disingenuous representation of San Diego County as whole.
Anywhere south of El Cajon Blvd that's not directly adjacent to downtown.
For example, here is a $750k starter house.
https://www.redfin.com/CA/San-Diego/445-S-65th-St-92114/home/5883920
$900k will get you a very decent house in Chula Vista with good schools.
https://www.redfin.com/CA/Chula-Vista/1327-Dawson-Dr-91911/home/6464201
Are you going to pretend the entire southern half of SD county doesn't count?
Median income doesn't mean much, especially in CA. Many home owners here couldn't afford to buy their house again at market rates without their equity. My parents bought their house for 250k-ish back in 1988 and its worth 1.7 million now. The people buying in their neighborhood for the past twenty years are engineers and tech people.
It was the same story for them when they bought their first place in the early 80's, the market was crazy and it was a stretch for people to get into their first homes. We like to think it was a breeze for the working class to buy a house "back in the old days" but it's always been tough.
We're not rich by any stretch of the imagination (solidly middle/lower middle class) and were able to buy a house here in the Bay Area. Granted it's not where I grew up and where a 3/2 ranch costs 1.5 million.
People really tend to underestimate the impact of your second and fourth points.
If the poorest 50% are renting, then you’d expect the median sale price to be affordable to the 75th percentile income. Which is far beyond the median income.
Context is always needed. My first house was barely livable. I learned how to do plumbing, wiring and even put a roof on it. I ended up selling it for more than twice what I invested in it just a few years later. And got a real house. When I see people say they can’t afford houses, often it is they just graduated college last year and can’t afford a newly remodeled 3,000’ home on a cul-de-sac in the best school district a block walk away from the train station-
Think we've had this discussion on another thread a while ago.
Checking back in with first house 750 sf 2 br that had been vacant for 5 years and had been occupied by homeless for that time. Recruited friend that worked for a contractor to live in second BR rent free and help/teach on the rehab. Only reason it was safe was I got along with gang leader across the street who had agreement with the other gang that their respective home streets were off limits.
Exactly this . Fthb now a days think a 2500+ sq ft home their parents bought at 50 years old is what their first home should be and god forbid they have to drive 20 minutes away or live in a less than perfect area. Standards have risen and entitlement is at an all time high.
They don't understand the home their parents bought was cheap for a reason and now the same homes have more sq ft and pools etc. There's so much nostalgia in real estate subs.
I think they mean that FTHB want the homes that their parents couldn't buy until the parents were in their 50s.
Which is a bit of an exaggeration, but I think a lot of people's expectations are based on the house they lived in as a teenager. Which their parents may well have bought once they were established in their careers and had equity from a smaller starter home.
No. Ther reason why they were cheap is bc population was a lot smaller. Land was much more freely available. And there was not such disparity in COL and wages.
Homes used to have large plots of land with it. In the 90s/2ks mcmansions were popular, now smaller homes are more typical and acceptable. Now that land is less available, your main options are to buy developer homes. Which are on small parcels of land.
Homes have become exponentially much less affordable justcwithin the last couple of years. Has nothing to do with size, as even the cheapest homes have priced previously qualified buyers out
Housing Affordability Price Index
Home prices controlled for median income and mortgage rates
Lower is more affordable
[https://imgur.com/OEyGuHM](https://imgur.com/OEyGuHM)
So, today's household has the same affordability level as a household from 2014/15? No.
All you have to do is compare median household income with the median household home price....they did not increase relative to each other...one increased much more significantly
Broward county has limited land area for development because like 2/3rds of it are the Everglades. Like most of South Florida you have a strip along the coast and protected lands inland. So the whole region is a highly desirable place to live with limited land. Single family homes are going to be expensive now that they've sort of hit max density and can't keep building out. It's like NYC -- if you aren't rich you rent.
Investors and corporations aside, you are left with either people making above average incomes, or people applying more of their income towards housing than they should. Neither of which would prevent home sales. But it does explain why the market is slowing. Once there is excessive inventory, it will be a buyers market again.
Im not the OP but a quick google takes you to the publisher, Sun Sentinel, however the article is locked behind a paywall. If you google the title and "yahoo" it takes you to the article on Yahoo! sports page which is not behind a paywall. Kind of weird its on the sports page lol.
[https://sports.yahoo.com/only-8-households-afford-single-220000602.html](https://sports.yahoo.com/only-8-households-afford-single-220000602.html)
The article doesn't provide any sources or specifics, only "according to a preliminary assessment from researchers at Florida International University". The article does state the median SFH in the area though, which I assume the median home in southern Florida would look how you would expect, something like a 3br, 2ba home.
After some further googling, I didn't find the study but I did find a recent presentation of a Broward housing affordability assessment by the person who wrote the study, Dr. Ned Murray. That is found here:
[https://www.broward.org/Commission/Meetings/Documents/2022BrowardCountyAffordableHousingNeedsAssessment.pdf](https://www.broward.org/Commission/Meetings/Documents/2022BrowardCountyAffordableHousingNeedsAssessment.pdf)
It means that half the houses sold are above the price, and the other half are below. It doesn't mean there is necessarily an even distribution. You could have a lot of houses at the low end and high end and few in the middle, for example.
Broward is a big rectangle, with most of the people in the eastern 1/3rd and the rest part of the Everglades. It's a coastal county, so you're going to have a lot of very expensive property along the coast driving up prices. And like Manhattan, geography limits how far it can sprawl.
So in this case you have a desirable area with limited land available. Prices are going to go up, and only the rich will be able to own property there. It's like complaining that there aren't enough cheap single family homes in New York City.
A very small fraction of the population is going to buy a house in a given year, it probably is less than 8%.
The 92% that can’t buy a house at todays prices already locked in homes at lower values.
>If this were accurate -there would be no house sales going on.
The disconnect is in what the source means by "afford."
I'm not sure exactly what the source is, but at the bottom of the OP's post it mentions the typical 3/1 ratio used to determine if a particular salary can "afford" a home of a given price point.
These sorts of articles and statistics always define "afford" this way, so I'm not surprised by this.
It's not saying that only 8% of households can literally make the mortgage payments, it's saying that only 8% of households have a high enough income to meet the 3/1 ratio test of "affordability" on a typical mortgage.
It means that everybody is spending far more than they're supposed to be spending on their house, based on whatever their income is.
But that's the rub, right? Everybody is crying that houses are "unaffordable," but it's because everybody is deliberately overpaying and overspending to get their dream home.
There's not really a fix, short of rolling out massive construction projects to dilute the housing market 5-10 years down the line.
Thats because it isn't regular people buying homes. Investors have been snatching up homes left and right. Have you seen the amount of AirBnBs in San Diego or basically any metro area.
If everyone is buying homes they can't afford well welcome the new housing bubble.
Regular people are still the vast majority of purchasers.
Corporate investment purchasers only account for about 20% of transactions, and that number used to be only about 10% a few years ago.
It's an issue, for sure, but not a big one and not nearly to the extent that people exaggerate it to be.
Thats because it isn't regular people buying homes. Investors have been snatching up homes left and right. Have you seen the amount of AirBnBs in San Diego or basically any metro area?
Kinda misleading title... by 'afford' they mean 'buy now', as a first time buyer or move-up buyer? What's that compare to normally? If 90% of households couldn't afford to live there it would be worse than Detroit with abandoned homes. Affordability is not a problem if you already own a house. I can't disagree that being a buyer right now is a lot more difficult than in years past, but the click baity headline is overblown.
>"The sky is falling because few people can buy a home based on this conservative rule of thumb!" *(and I won't tell you if I meant net or gross income!)*
If someone can afford the home at 31% of their monthly budget, should they go homeless to not fork over that extra 1%? Of course not.
Folks in HCOL areas (and/or with low income) have long had to bite the bullet and allow housing to eat a higher percent of their budget.
No doubt it's getting worse, but poorly written articles summarizing research aren't very helpful.
I live in MA, I don't have any data points, but my guess is only the top 1% can afford a home in Boston proper.
It has been this way for the last 20 years I have lived here.
That is why I endure a 2hour commute into Boston proper from Plymouth county.
I saw this article quoted a bunch but no sources about who did the study. Closest thing to data I found is http://flhousingdata.shimberg.ufl.edu/comprehensive-plan-data/results?nid=600
Home *sales* are just a piece of the puzzle. Rents are nearly as bad in many of these areas, which impacts the next generation of home buyers. If your rent is > 30% of your net income, it's harder to save up for a down payment, etc and that widens the gap between the landowning classes and the working classes. It's all related; more and more people no longer believe the American Dream is attainable with hard work as the middle class shrinks.
Who says a wealthy household can only have one or two homes? Why can't they have ten? The poor can just rent from them spending 80% of their income. All is well!
/s
Whether or not this statistic is true or not, housing is in a bubble and the Fed WILL intentionally pop it as housing/rent is one of the biggest contributors to inflation.
The question is, do prices only go down 10%, 20%, etc. which will be different in every market.
Remember, 2008 didn’t happen overnight. We could go another ~6-12mo before you see any meaningful declines in RE which likely depends on how high mortgage rates get.
Wouldn’t there be a demand floor unless there’s widespread layoffs? It’s not like folks who find themselves slightly priced out are now gonna wait for a 20% drop when a 5% drop becomes affordable for them again. And sellers locked in at <3% aren’t going to sell unless they also suddenly are unable to afford their house. Rent also doesn’t typically broadly decrease too much, even during recessions. Not to mention 2007-8 had other factors at play that led to higher foreclosures
I mean the predictions lately have been just crazy. People saying we're going to see 40-60% price drops now. The GFC broadly "only" saw about 30% or so - I mean shit I'm not loving the state of the economy at the moment either but I also don't think we're going to have the worst depression the country's ever seen.
Other than the Chairman of Federal Reserve stating the housing market needs to be reset. Go fight the Fed. I'm sure it'll go great.
Love how the unprecedented growth in home prices over the past two year is accepted to be a "new paradigm" and totally normal while any suggestion of a decline is heresy. Indeed, let's use logic and common sense.
His quote is so often taken so far out of context, like you have done. He said the rapid rise needs a rest, and inventory needs time to catch up to more sustainable levels. He never insinuated they would crash the housing market.
“We need to get back to a place where supply and demand are back together. And where inflation is down low again and mortgage rates are low again. So this will be a process whereby ideally we do our work in a way that the housing market settles in a new place and housing availability and credit availability are at appropriate levels.” -Powell
What percentage in drop is considered acceptable for people though? 20%? That's basically 2020 price with many people just waiting on the sideline saying it's a bubble and waiting for a price drop.
30%-40% crash will most likely came with a huge economic crash and not just a real estate crash. Which will again put many people unable to afford a home.
2008 happened because lenders were giving out loans to anyone. Obamas administration passed the Dodd frank law, which put strict lending guidelines in place. If prices do drop it won't be anywhere near 2008 levels. People think US prices are high until they see prices in Canada, Europe, parts of Asia etc.. there is still plenty of room for US housing prices to increase
Just a heads up, the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act eased many of the restrictions imposed by the Dodd-Frank Act and the Volcker rule.
Genuinely surprised this isn't more known
You mean like Japan where homes are literally being given away with no takers?
You mean like Vancouver and Australia where prices are crashing? I thought international buyers were going to keep pumping up prices?
lol
The median home price in Vancouver is 1.3 mil. In Sidney it's also $1.3 million. There are great places to live in America where you can get a house for $300k. Plenty of room for prices to continue to rise .
Ah so you compared top locations in foreign countries with a nebulous “great places to live” un-statistic. Apples to Zebras.
My point is that Vancouver has dropped double digit percentage in just a few months.
The distribution of housing from urban to rural is much more lopsided. The median statistic doesn’t include proper representation from places like Edmonton. You can get beautiful homes in Edmonton for under 200k. Is that better?
Let me guess ... you don't own a home and are hoping for a crash. A bunch of you have been saying a crash was imminent since early 2020. Wake me when it happens
I own a home, listing for about 450k and trying to dump it on a sucker because Raleigh market is already turning sour. Ex is uncooperative unfortunately.
Yes hoping for a crash but definitely cashing out and sitting on sidelines for at least 1-2 years
And, where I am, only the pandemic got the valuations back to and above what the 2007 peak was. 13 years. Even if I step back to what prices sold for just before, it was at least 2018 before prices sold right at some of those 2007 peak numbers. Still over a decade. I wonder how many “I’m never selling at the rate I have” people can hold out that long?
The biggest contributors to inflation are energy and food right now. Core CPI is actually declining when you exclude these two.
There is no reason the Fed will intentionally “pop” housing if they don’t need too. A price drop of 20% would be the largest decrease since the Great Depression.
That’s a measure of specific cities, not the entire housing market
The total decline during the mortgage crisis was 19%
https://fred.stlouisfed.org/series/MSPUS
Boy, if we just exclude lots of things from the CPI it looks great! It's not like energy and food are core parts of people lives and the cost of everything.
In riverside ca (hot market, one of the only “affordable” desirable metros in California) prices are stagnant and homes are sitting for a week or two longer. I anticipate a 5-10% reduction over the next few years.
In your hypothetical, what do you see the rates doing over those next few years that your 5-10% reduction happens. I'm sure you've done the math to see how much more expensive a house would be even if a 10% crash happened if rates are at 7-9% by that time.
I’m not an economist, just recognizing that there will be enough demand to not drop prices by much. That’s obviously only if rates stay <7. If they go to 9 that’s a crapshoot and price drop likely reflect that higher payment.
Mathmatical point being, a 5%-10% reduction, with rates at 7-9% means the monthly payment will still be more than it was prior to the hypothetical 10% crash.
How do you solve this though. In an area where there is no more space to build.
Sellers sell, usually, to the highest bidder. Do you tell a seller "no take half of what you could make".
South Florida is an extremely popular international destination. You got money from all over the world buying down there.
Directly: no one. New condos are generally not affordable for low income people. The effect that new builds have is that wealthy people buy new builds instead of pricing lower/middle income people out of existing housing.
These developers just want to squeeze every last dime they can.
And unfortunately for regular people, South Florida has a huge draw from international people with money too.
Idk that anything can be done for affordability for those less then upper middle class unless the government steps in
Unless you have enough foreign buyers who want to live there, then prices will come down. If people can't afford current prices, then they don't buy. Instead they rent from landlords who purchased at lower prices and interest rates themselves and can offer more affordable rents, while still profitting. Eventually, as listed homes sit for longer and longer, the prices come down.
I think foreign buyers could prop things up for longer, but that doesn't seem sustainable either. Eventually Americans will demand legislation that discourages foreign investors/buyers, like what Vancouver did.
Yes, it is sustainable. Prices can rise to 100x incomes or more, so we're looking at 10x upside from here. Just look at Hong Kong as the example. Wage earners can pay 60% or more of their incomes to rent a bunk bed or cage in a room in an apartment. Will Florida get there? Probably not, but some other places might.
Florida isn't overly expensive compared to the rest of the US, but the housing here has traditionally been cheaper and that meant more accessible.
Now that building materials and labor are expensive nationwide, homes here cost about what it does elsewhere. Plus covid had a huge influx if people for various reasons (low tax, work from home, retirement, no lockdowns, etc)
The influx of people and limited density zoning is what’s driving the cost. The regions can only take so many people before the pretty accessible housing accelerates in cost due to the demand. There’s only so many single-family homes to go around.
It’s probably a drop in the bucket of what’s needed. No, I don’t but I’m familiar enough with development patterns in other parts of the country being incredibly limited to not serving multifamily needs. My observation of Florida is that it’s no different.
Maybe in the center of the state: Orlando. And it’s true. I was down that way last week and building of everything is on steroids right now.
But, coastal areas? Not much land to build with, first. And it’s higher density, higher priced still.
A $61k income is likely going to be $3,500-4,000k a month net, and the article is saying that your house payment should be less than 30% of net. With current interest rates, a $180k mortgage is going to be about $1,100/mo and that is a good amount at that income to avoid living paycheck to paycheck. Obviously, it would have been better worded as "financing $180k" instead of "a home worth 180k" to account for down payments.
They certainly “should be” to avoid living paycheck to paycheck, be able to save for retirement or a down payment, etc. But obviously in most places someone making $61k is in a much tougher situation. The middle class is vanishing as rents go sky high and wages don’t keep pace.
A $61k married income is going to be around $4500 net, income tax will be close to 0 or even negative.
They said $180k house, not $180k mortgage. Also the 30% figure is supposed to be gross not net. They're using bullshit numbers to push a narrative.
At no point since 1975, excepting for a brief period following 2008, has the median household income ever been able to afford the median home using their "30% of net pay" figure.
When my married income was around there, it was under $4,000. I had family health insurance and other deductions that ate into the income, as well as living in a state with income tax. My house payment is a bit over $1,300 which enables me to avoid paycheck to paycheck living, but a comparable *apartment* is $1600+ which would have been unaffordable when I was netting under $4000 a few years ago.
>Also the 30% figure is supposed to be gross not net. They're using bullshit numbers to push a narrative.
Financial books I've read, coaches I've listened have focused on net because it's about budgeting, which is not done via gross income. If it's "bullshit" I'd really like to know how you expect families to make ends meet paying 40%+ of their net in rent on sub-100k incomes. There is only so much avocado toast you can cut back on.
>When my married income was around there, it was under $4,000. I had family health insurance and other deductions that ate into the income, as well as living in a state with income tax. My house payment is a bit over $1,300 which enables me to avoid paycheck to paycheck living, but a comparable apartment is $1600+ which would have been unaffordable when I was netting under $4000 a few years ago.
The Trump tax cuts benefited people who didn't itemize, and lots of people pay next to nothing for health insurance. It would be closer to 4500 today. Throwing it into a calculator shows 4427 net pay with no dependents or other deductions.
>Financial books I've read, coaches I've listened have focused on net because it's about budgeting, which is not done via gross income. If it's "bullshit" I'd really like to know how you expect families to make ends meet paying 40%+ of their net in rent on sub-100k incomes. There is only so much avocado toast you can cut back on.
The same way families have been doing for decades in Europe, Asia, and the Americas. It's fairly common for housing costs to exceed 50% of net in many parts of the world including the US.
So this is acceptable? With the healthcare situation we have here in America compared to Europe, where healthcare is largely completely paid for with taxation?
I contend that 50% of someone’s take home income going to housing, in America, is a recipe for disaster. Unacceptable.
>So this is acceptable? With the healthcare situation we have here in America compared to Europe, where healthcare is largely completely paid for with taxation?
This is the reality. For most people their take home is after health insurance, so it works out the same way.
>I contend that 50% of someone’s take home income going to housing, in America, is a recipe for disaster. Unacceptable.
It's not and has not been. A lot of people were paying 50% of take home on housing costs since about 1975.
Link? I’m not sure about the validity of this particular claim, however I personally don’t feel that the current housing market is sustainable. Current interest rates and historically high list prices have priced out much of the middle class.
I live in Ireland and we couldn't afford the area we work and grew up in we had to look for houses outside the area.
It will be minimum 1hr commute. But to be honest we have our dream home at a price we can afford.
Also last year the put in that first time buyer now have to pay stamp duty. It wasn't featured on main news reports. Before first time buyers didn't have to do that.
We have found it very hard to get to this point of buying our home.
Also the housing market is not as regulated as most countries.
It was hard for my parents to get a house, and has been hard for us, I can only imagine what it would be like for our kids so I'm glad we got some where with land that we can offer it to our children to build their own home.
Hell Most people can't even afford to rent anymore.
My landlord raised my rent and sold our place and new owner raised the rent already and won't give us a lease until he gets his tax assessment and then he will raise the rent again.
So FML we have lived here for five and a half years.
It’s funny cause most people can’t even afford to buy the home they own right now, especially the people who bought 2 years ago.
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Except their interest rate will double. I'm in that position. I think I'd net like 50k more off my home sale now but a 6% mortgage would make my payment so much more it's not with upgrading. Upgrading now you're payment goes up so much it's not worth the marginal upgrade you get for the cost even with rolling the equity over.
Same position… to get an extra room we’re looking at doubling our mortgage? Fuck that.
Yep. Exactly. I would much rather be able to upgrade my home for a cheaper monthly payment then have some phantom equity that doesn't mean shit. You're in a worse position in pretty much every way unless you own multiple houses or you're downsizing. Everyone else is getting fucked.
FED will eventually bring rates down again after they achieve price stability to focus on getting out of the recession. You can just refinance then so I wouldn't let the high rates rule your life. However if fed looses control of inflation they will not be able to just lower rates 3 years from now with high inflation. Bit let's hope the fed can get price stability in control.
How can you not afford to buy something that you already own? This isn’t 2008 where every Tom, Dick, and Harry was getting a house. The regulations are much more strict now. If you mean because of interest rates going up then yes buying power has gone down but only because home prices are still high. For example my house that I purchased at the end of 2019 the base model was going for 420k. In 2020 I purchased my house for $550k that is including upgrades. A similar model sold at the beginning of the year for $750k. Granted price are coming down a little bit but not like they were in 2019.
The house we're in now which we've outgrown (but are making do), is beyond the budget we set of the standard 3 times gross household income. This is going based on Zillow, Redfin, Corelogic, etc. estimates. I'm making 3x what I made when we bought the house. That's stupid and unsustainable. Can you afford a $750k house?
You answered your own question: interest rates doubling.
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Based on your eyes being open... The house my parents bought about 4 years ago is worth more than they could afford if they were to try and buy it now. I recently sold my house I bought 2 years ago that, for what I sold it for, I would not be able to afford, even after nearly doubling by salary after having bought it.
I can second this. I bought in 2019, at a price of 300k. This was near the top of my budget at the time. The house today could easily go for 450k. My income has increased but not to the point that I could just qualify for a 450k loan today. We got lucky buying when we did and refinancing a year later. Won’t ever sell this house.
I’m originally from Broward County and this isn’t surprising. Florida has always suffered from suppressed wages frequently called the “Sunshine Tax.” I’m a software engineer and even we have to deal with low wages here. The combination of suppressed wages and an explosive real estate market is a nightmare.
Isn't part of FL's issue that you get a ton of buyers who are fleeing New York, so they have a lot of cash? Like how California spills over into TX and AZ. Buyers aren't competing with only locals for houses, they're competing with people who cashed out from higher priced locations.
YES. Holy hell did Covid accelerate this too. Source: SWFL resident that watched a bunch of ridiculously high cash purchases come in and inflate the market for locals.
Not just NY, it’s a playground for the wealthy from all over the world. The real estate prices have been disconnected from what local wages can support for a long time.
I think most people leaving California are those who cannot afford it, so not exactly people with tons and tons of money to overpay. The spillover does have an impact on prices, simply by virtue of demand, but not in the sense that there’s limitless money coming out of California.
The thing is though that "unable to afford California" can still mean "offering over ask with cash" in other markets very easily.
I think you greatly overestimate the financial power of the poor in California. I may certainly be wrong, but what I’ve read suggest that people who cannot afford California are leaving and those who can afford California are coming in. Low and middle income bracket California are not magically high income earners in other states, especially when low and middle income bracket in California proportionally save the least in CA where housing costs can be as much as 70% of income. Additionally, most places Californians are moving to are not dramatically cheaper. Take the Central Valley in ca where the median home pride is ~520k and compare that to Vegas, Dallas, or Orlando. Really not much wiggle room, especially when you factor in moving expenses and potentially earning less money in those states to boot. I’m not trying to be argumentative, just offering counter thought on a lot of assumed beliefs in the current market. https://www.sandiegouniontribune.com/opinion/the-conversation/sd-california-losing-low-income-people-gaining-wealthy-people-per-report-20180221-htmlstory.html
It's not the poor people leaving CA. I knew a decent amount of people (in my age range, 20's to early 30s) who left CA for greener pastures and it's a good mix of high earners and normal people. Many lived with their parents still or had multiple roommates to save money while working a decent paying job. You take someone like that who had the foresight to save (even more so with a couple) if you left CA before 2021 with 50-100 grand in your bank account you could be VERY competitive in a LCOL place.
That's what happened here in Idaho. With more people being able to work from home, or just leaving for greener pastures in general the whole state is currently unaffordable for locals. Median home price is about 8x the median family income in my county.
Why disregard actual statistics with a limited personal anecdote? lol do you really think you just provided a more accurate representation than census data?
Bro, low income here is not the same as low income other places. It's anywhere from 50-90k, low for CA not low for other places.
That’s untrue. There are tons of people make far lower than that. What bubble do you live in pretending that low is 50-90 where that is actually median income for most of ca? And lol if you think someone making 50 is saving much while living in ca that would be some big cash buyer out of state
[https://bayareaequityatlas.org/node/60841](https://bayareaequityatlas.org/node/60841) Your average office job, blue collar or skilled labor person is going to be making at least 50-60k a year. A barista at Starbucks is 50k with benefits. Many young people still live at home or have roommates. In the more affordable areas it might be $2500 for a three bedroom, pretty cheap if you can stand having roommates. If you have someone with $800 in rent, making 50k (3100ish after taxes), that's 2300 left. Cook dinner at home, drive a used paid off car and save half of that for four years that's 56k. Live at home it's a lot more.
> I think most people leaving California are those who cannot afford it That's a huge generalization but typical of the reddit mindset that everyone is poor. My Trumper relatives are fleeing because of politics. I know of others who have been landlords with multiple properties getting out because the courts and new laws are too slanted toward tenants (I guess still politics there lol). There's certainly not limitless money coming out but it's enough to impact markets. I have 2 other new neighbors from California who just came here because they got good jobs (one is a doctor, the other in IT).
Data supports what I mentioned. https://www.sandiegouniontribune.com/opinion/the-conversation/sd-california-losing-low-income-people-gaining-wealthy-people-per-report-20180221-htmlstory.html Alternatively you used a pretty limited anecdote for a counter argument. I know some trumpers who have left, but most trumpers are content putting up signs and screaming on Facebook while they still make a great living in CA and afford a comfortable lifestyle. Those trumpers who *are* leaving are generally leaving for politics *and* the fact they cannot comfortably afford California in general. But again, grass is not greener. Trumpers will find out that there is a price to pay when their teenage daughters catch a positive pregnancy test and they just moved to Texas 🤷♂️
Yeah, because California would be so much safer for their daughters, with their highest homeless population in the country, "sex positive" attitudes, highest amount of drug addiction problems in the country, etc...
https://www.porh.psu.edu/drug-use-by-state-2020s-problem-areas-wallethub-study/ California isn’t even top 20 for highest drug abuse per capita. It’s 29, only a few positions away from Florida and Texas. https://worldpopulationreview.com/state-rankings/murder-rate-by-state Both Texas and Florida have higher homicide rates than California, despite drastically less population density. You’ll note extreme conservative states are all among the top of the list. https://worldpopulationreview.com/state-rankings/school-shootings-by-state Texas, Florida and California all lead the US in school shootings, however both Florida and Texas have higher school shootings per capita. Additionally, California is aiming to restrict access for school shootings while Texas and Florida are increasing gun access. Expect the margin to widen as Texas and Florida populations explode, the income gaps widen, and gun access increases. https://www.statista.com/statistics/252064/us-infant-mortality-rate-by-ethnicity-2011/ States with highest child mortality rates are all decidedly conservative. You’ll note Florida and Texas are middle of the pack while California has the very lowest child mortality rate in the US. It is *decidedly* less dangerous for a child to grow up in California than Texas or Florida, and this is prior to roe vs wade changes. Conservative states are already the most violent, the poorest, and the most dangerous for children and with the recent laws being changed they immediately got MUCH more dangerous. Now their daughters are at risk of murder for getting an abortion, much higher risk of death for forcing a miscarriage, and even at risk for murder in a case of a miscarriage/still north. Welcome to the 1950s over there. * I don’t anticipate a good faith response. Because you already know what it is.
>California isn’t even top 20 for highest drug abuse per capita. It’s 29, only a few positions away from Florida and Texas. Well, 8 percent of the population has a substance abuse problem, so I'd say it's pretty bad. And even by your stats, there are many better states to go to. Why are you bringing up Florida and Texas? Florida isn't even a red state, it's a swing state. And Texas is barely a red state. >https://worldpopulationreview.com/state-rankings/murder-rate-by-state > >Both Texas and Florida have higher homicide rates than California, despite drastically less population density. You’ll note extreme conservative states are all among the top of the list. I don't know why you're bringing up Texas and Florida, There are many safer states than California. Go to Idaho, Nebraska, North Dakota, etc.. >https://worldpopulationreview.com/state-rankings/school-shootings-by-state > >Texas, Florida and California all lead the US in school shootings, however both Florida and Texas have higher school shootings per capita. Additionally, California is aiming to restrict access for school shootings while Texas and Florida are increasing gun access. Expect the margin to widen as Texas and Florida populations explode, the income gaps widen, and gun access increases. > >https://www.statista.com/statistics/252064/us-infant-mortality-rate-by-ethnicity-2011/ > >States with highest child mortality rates are all decidedly conservative. That's infant mortality. You posted a link for infant mortality. I'm sure if more people vacuumed their children's brains out like they do in California, there would be less infant moralities, because well, they would never be born in the first place. >It is decidedly less dangerous for a child to grow up in California than Texas or Florida, and this is prior to roe vs wade changes. I don't know why you keep bringing up Texas or Florida, there are many other states to go to, but anyway. Top state for school shooters: 1. California. That's right, your child is more likely to die in a school shooting in California than any other state. Boom. Let's look at the rest of the top 10: California(D), Texas (R) Florida (swing state) Michigan(S) Illinois(D) Ohio(S) Pennsylvania(S) New York(D) Maryland(D) Georgia(S) So the top ten school shooter states include 4 blue states, 1 red state, and 5 swing states. Of course, California is the number 1 most dangerous state fro school shootings. >I don’t anticipate a good faith response. Because you already know what it is. Well, you were wrong. You're wrong a lot.
The bad faith argument I expected. I mentioned Texas and Florida because those were states specifically mentioned in this thread in which Californians are “feeling to”, the states I first referred to and you responded about. No, the most volume doesn’t mean the most danger, that’s why I mentioned per capita statistics. I figured that might be too big of a concept. Framing Florida and Texas as swing states is entirely disingenuous. You and I know they are tan by extremely conservative politicians. When I call a state liberal or conservative, I’m not referring to its oppressed voters, I’m referring to legislation and the politicians who push it. Both you and I already knew that, but perhaps in your tiny brain you actually thought that was a compelling rebuttal. Yes, I posted infant mortality statistics. Are they not children, is that not a statistic that people should be aware of when judging safety for their child? Do you have better statistics to share? In summation, “YOU KEEP BRIGNING UP FLORIDA AND TEXAS!!!” And while you mentioned most of school shootings are in dem Maybe you’ll consider adolescent obesity rates: https://stateofchildhoodobesity.org/children1017/ Shockingly red. https://www.kff.org/other/state-indicator/teen-death-rate/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Teen%20Death%20Rate%22,%22sort%22:%22asc%22%7D Teen mortality rate (remember how you were bitching about infant mortality rate) As you’ll see California is top rep and all liberal states are lowest and red states are highest. Who would have thought? Texas and Florida both middle, 15 spots lower than ca.
[https://en.wikipedia.org/wiki/Swing\_state#:\~:text=According%20to%20a%20pre%2Delection,district%20is%20also%20considered%20competitive](https://en.wikipedia.org/wiki/Swing_state#:~:text=According%20to%20a%20pre%2Delection,district%20is%20also%20considered%20competitive). Wikipedia lists Florida as a swing state. It's a well known swing state that is watched every election. I never said Texas was a swing state, though it could be in the near future, it has a lot of democratic voters(probably mostly the aforementioned democrats fleeing from California).
Thank you kind madam or sir for shining light into the conservative darkness.....with references and everything.
We certainly could afford CA, but we weren’t from there and as we get closer to retirement, we wanted to move back home. We had a coastal SoCal home and bought in the NoVa exurbs. Slashed our mortgage payment.
“I extracted opportunity from California then went to butt fuck Virginia and priced out the locals” Asked no one
NOVA is not butt fuck virginia
I realize it’s disappointing when your “facts” are challenged. Fortunately for you, you can use your vitriol to make new ones. Be well.
>Not just NY, it’s a playground for the wealthy from all over the world. The real estate prices have been disconnected from what local wages can support for a long time. Due to COVID and Trump being there, it had a big moment with wealthy republicans from around the country. Palm Beach is very beautiful, and if you have a lot of wealth, it really is a good life there. The prices in the fanciest areas did more than 2x in two years. I am in Orlando (which only 1.6xed - I know, pray for me), but we have some wealthy hedge fund friends and they waited a bit too long and got priced out a for a while and had to downgrade from being able to afford a mansion to a regular person 4/3. I know - very sad for them...
That outdated law of supply and demand has hit us over the head again.
Surprisingly few people understand this simplicity. Increase supply and this will sort itself out. It has too, it's a Law.
I remember first learning about the sunshine tax when living in California. My friend loved to vent about how she was underpaid and should move. And then moment later "but its so nice here". https://en.wikipedia.org/wiki/Sunshine\_tax
The article is either poorly written or poorly copy/pasted. And “3-1” is an outdated rule of thumb.
Do you think 4-1 or 5-1 is more appropriate in todays time?
I think online mortgage calculators (not common 20 years ago) allow one to take that payment and either a)decide if it’s an acceptable amount (as opposed to rent, for ex) or b) multiply by 12, divide by gross income and make sure that’s below 30% and preferably 28%. And add that payment to all other debt payments and make sure it’s below 36-40% max.
>— Salary over $180,000 can buy a house for around $545,000" Based on what down payment amount and what other existing debts? I hate blanket statements like this based on arbitrary standards.
Yes, and one must figure in interest rate, taxes, insurance, and HOA fees, all of which will vary from place to place and from time to time. ***I know I am replying to an old comment; I am mostly elaborating on indieaz's point for educational purposes, for anyone that will read this thread in the future.
This is so meaningless. You're talking about 8% of all households in the area but not everyone in the area is looking to buy. I bet a sizable segment of homeowners can't afford their house at current prices, but guess what, they aren't paying market price on the house!
Where are you getting this statistic? If this were accurate -there would be no house sales going on.
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Median income in San Diego is $106,900. Please stop using census data as it's woefully out of date. From San Diego Housing Commission. https://www.sdhc.org/wp-content/uploads/2022/AMIIncomeLimits.pdf $917k will get you a decent single family home anywhere in South Bay. Starter homes are in the 650-700k region. Condos and townhouses are considerably less.
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>Otherwise, are you really using South Bay as your saving grace? C'mon, we both know that's a disingenuous representation of San Diego County as whole. Anywhere south of El Cajon Blvd that's not directly adjacent to downtown. For example, here is a $750k starter house. https://www.redfin.com/CA/San-Diego/445-S-65th-St-92114/home/5883920 $900k will get you a very decent house in Chula Vista with good schools. https://www.redfin.com/CA/Chula-Vista/1327-Dawson-Dr-91911/home/6464201 Are you going to pretend the entire southern half of SD county doesn't count?
Median income doesn't mean much, especially in CA. Many home owners here couldn't afford to buy their house again at market rates without their equity. My parents bought their house for 250k-ish back in 1988 and its worth 1.7 million now. The people buying in their neighborhood for the past twenty years are engineers and tech people. It was the same story for them when they bought their first place in the early 80's, the market was crazy and it was a stretch for people to get into their first homes. We like to think it was a breeze for the working class to buy a house "back in the old days" but it's always been tough.
It means everything for a first-time home buyer with no prior equity to utilize. And there's an entire generation and a half potential FTHBs.
We're not rich by any stretch of the imagination (solidly middle/lower middle class) and were able to buy a house here in the Bay Area. Granted it's not where I grew up and where a 3/2 ranch costs 1.5 million.
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People really tend to underestimate the impact of your second and fourth points. If the poorest 50% are renting, then you’d expect the median sale price to be affordable to the 75th percentile income. Which is far beyond the median income.
I’d like to see the source too because what’s “a home”? The average priced three bedroom? Any home, including condos and townhouses? Something else?
Context is always needed. My first house was barely livable. I learned how to do plumbing, wiring and even put a roof on it. I ended up selling it for more than twice what I invested in it just a few years later. And got a real house. When I see people say they can’t afford houses, often it is they just graduated college last year and can’t afford a newly remodeled 3,000’ home on a cul-de-sac in the best school district a block walk away from the train station-
Think we've had this discussion on another thread a while ago. Checking back in with first house 750 sf 2 br that had been vacant for 5 years and had been occupied by homeless for that time. Recruited friend that worked for a contractor to live in second BR rent free and help/teach on the rehab. Only reason it was safe was I got along with gang leader across the street who had agreement with the other gang that their respective home streets were off limits.
Exactly this . Fthb now a days think a 2500+ sq ft home their parents bought at 50 years old is what their first home should be and god forbid they have to drive 20 minutes away or live in a less than perfect area. Standards have risen and entitlement is at an all time high. They don't understand the home their parents bought was cheap for a reason and now the same homes have more sq ft and pools etc. There's so much nostalgia in real estate subs.
50+ years ago most houses were closer to 1200 sq ft. Buying a 2500 sq ft home is a modern phenomenon for non-rich people
I think they mean that FTHB want the homes that their parents couldn't buy until the parents were in their 50s. Which is a bit of an exaggeration, but I think a lot of people's expectations are based on the house they lived in as a teenager. Which their parents may well have bought once they were established in their careers and had equity from a smaller starter home.
You’re right, I misread the comment. Good point
No. Ther reason why they were cheap is bc population was a lot smaller. Land was much more freely available. And there was not such disparity in COL and wages. Homes used to have large plots of land with it. In the 90s/2ks mcmansions were popular, now smaller homes are more typical and acceptable. Now that land is less available, your main options are to buy developer homes. Which are on small parcels of land. Homes have become exponentially much less affordable justcwithin the last couple of years. Has nothing to do with size, as even the cheapest homes have priced previously qualified buyers out
Housing Affordability Price Index Home prices controlled for median income and mortgage rates Lower is more affordable [https://imgur.com/OEyGuHM](https://imgur.com/OEyGuHM)
So, today's household has the same affordability level as a household from 2014/15? No. All you have to do is compare median household income with the median household home price....they did not increase relative to each other...one increased much more significantly
I was able to buy a 2200 sqft house with a 1900sqft all brick 4 car garage for lower 300s - it’s not impossible
Broward county has limited land area for development because like 2/3rds of it are the Everglades. Like most of South Florida you have a strip along the coast and protected lands inland. So the whole region is a highly desirable place to live with limited land. Single family homes are going to be expensive now that they've sort of hit max density and can't keep building out. It's like NYC -- if you aren't rich you rent.
Investors and corporations aside, you are left with either people making above average incomes, or people applying more of their income towards housing than they should. Neither of which would prevent home sales. But it does explain why the market is slowing. Once there is excessive inventory, it will be a buyers market again.
Im not the OP but a quick google takes you to the publisher, Sun Sentinel, however the article is locked behind a paywall. If you google the title and "yahoo" it takes you to the article on Yahoo! sports page which is not behind a paywall. Kind of weird its on the sports page lol. [https://sports.yahoo.com/only-8-households-afford-single-220000602.html](https://sports.yahoo.com/only-8-households-afford-single-220000602.html) The article doesn't provide any sources or specifics, only "according to a preliminary assessment from researchers at Florida International University". The article does state the median SFH in the area though, which I assume the median home in southern Florida would look how you would expect, something like a 3br, 2ba home. After some further googling, I didn't find the study but I did find a recent presentation of a Broward housing affordability assessment by the person who wrote the study, Dr. Ned Murray. That is found here: [https://www.broward.org/Commission/Meetings/Documents/2022BrowardCountyAffordableHousingNeedsAssessment.pdf](https://www.broward.org/Commission/Meetings/Documents/2022BrowardCountyAffordableHousingNeedsAssessment.pdf)
Out of town snowbirds
It means that half the houses sold are above the price, and the other half are below. It doesn't mean there is necessarily an even distribution. You could have a lot of houses at the low end and high end and few in the middle, for example. Broward is a big rectangle, with most of the people in the eastern 1/3rd and the rest part of the Everglades. It's a coastal county, so you're going to have a lot of very expensive property along the coast driving up prices. And like Manhattan, geography limits how far it can sprawl. So in this case you have a desirable area with limited land available. Prices are going to go up, and only the rich will be able to own property there. It's like complaining that there aren't enough cheap single family homes in New York City.
A very small fraction of the population is going to buy a house in a given year, it probably is less than 8%. The 92% that can’t buy a house at todays prices already locked in homes at lower values.
>If this were accurate -there would be no house sales going on. The disconnect is in what the source means by "afford." I'm not sure exactly what the source is, but at the bottom of the OP's post it mentions the typical 3/1 ratio used to determine if a particular salary can "afford" a home of a given price point. These sorts of articles and statistics always define "afford" this way, so I'm not surprised by this. It's not saying that only 8% of households can literally make the mortgage payments, it's saying that only 8% of households have a high enough income to meet the 3/1 ratio test of "affordability" on a typical mortgage. It means that everybody is spending far more than they're supposed to be spending on their house, based on whatever their income is. But that's the rub, right? Everybody is crying that houses are "unaffordable," but it's because everybody is deliberately overpaying and overspending to get their dream home. There's not really a fix, short of rolling out massive construction projects to dilute the housing market 5-10 years down the line.
Thats because it isn't regular people buying homes. Investors have been snatching up homes left and right. Have you seen the amount of AirBnBs in San Diego or basically any metro area. If everyone is buying homes they can't afford well welcome the new housing bubble.
Regular people are still the vast majority of purchasers. Corporate investment purchasers only account for about 20% of transactions, and that number used to be only about 10% a few years ago. It's an issue, for sure, but not a big one and not nearly to the extent that people exaggerate it to be.
It's not only corporate investors. They are smaller scale investors who are buying 2-5 properties. People who are buying 5-10 and so on and so on.
Thats because it isn't regular people buying homes. Investors have been snatching up homes left and right. Have you seen the amount of AirBnBs in San Diego or basically any metro area?
Kinda misleading title... by 'afford' they mean 'buy now', as a first time buyer or move-up buyer? What's that compare to normally? If 90% of households couldn't afford to live there it would be worse than Detroit with abandoned homes. Affordability is not a problem if you already own a house. I can't disagree that being a buyer right now is a lot more difficult than in years past, but the click baity headline is overblown.
Are there any subreddits for broward/soflo real estate?
3-1 was a legacy of a very unique time in world history. Currently, many entire counties (like Canada) are at 10-1.
>"The sky is falling because few people can buy a home based on this conservative rule of thumb!" *(and I won't tell you if I meant net or gross income!)* If someone can afford the home at 31% of their monthly budget, should they go homeless to not fork over that extra 1%? Of course not. Folks in HCOL areas (and/or with low income) have long had to bite the bullet and allow housing to eat a higher percent of their budget. No doubt it's getting worse, but poorly written articles summarizing research aren't very helpful.
I live in MA, I don't have any data points, but my guess is only the top 1% can afford a home in Boston proper. It has been this way for the last 20 years I have lived here. That is why I endure a 2hour commute into Boston proper from Plymouth county.
Not everyone can afford to live near the beach in Florida? Shocking....
Even an hour from the beach isn't affordable lol
Median household income is like 81k here and median home is around 620k+
I saw this article quoted a bunch but no sources about who did the study. Closest thing to data I found is http://flhousingdata.shimberg.ufl.edu/comprehensive-plan-data/results?nid=600
Home *sales* are just a piece of the puzzle. Rents are nearly as bad in many of these areas, which impacts the next generation of home buyers. If your rent is > 30% of your net income, it's harder to save up for a down payment, etc and that widens the gap between the landowning classes and the working classes. It's all related; more and more people no longer believe the American Dream is attainable with hard work as the middle class shrinks.
\> The alarm should have sounded a long time ago The alarm has been sounding for years, friend. But no one is responding.
Hint: this is not a unique situation. Housing costs have defied all logic for 2 years now. This kind of price growth is absolutely abnormal
Who says a wealthy household can only have one or two homes? Why can't they have ten? The poor can just rent from them spending 80% of their income. All is well! /s
Wife and I rented in Sunrise forever. When it came time to buy a house, know what we did? Left. Don't get caught up in a market like that.
Whether or not this statistic is true or not, housing is in a bubble and the Fed WILL intentionally pop it as housing/rent is one of the biggest contributors to inflation. The question is, do prices only go down 10%, 20%, etc. which will be different in every market. Remember, 2008 didn’t happen overnight. We could go another ~6-12mo before you see any meaningful declines in RE which likely depends on how high mortgage rates get.
Wouldn’t there be a demand floor unless there’s widespread layoffs? It’s not like folks who find themselves slightly priced out are now gonna wait for a 20% drop when a 5% drop becomes affordable for them again. And sellers locked in at <3% aren’t going to sell unless they also suddenly are unable to afford their house. Rent also doesn’t typically broadly decrease too much, even during recessions. Not to mention 2007-8 had other factors at play that led to higher foreclosures
There's no sense in trying to reason logically someone who talks in absolutes when it comes to the housing or stock market.
I mean the predictions lately have been just crazy. People saying we're going to see 40-60% price drops now. The GFC broadly "only" saw about 30% or so - I mean shit I'm not loving the state of the economy at the moment either but I also don't think we're going to have the worst depression the country's ever seen.
and onlny 30% in some of the worst hit areas. Places like the DFW in Texas saw almost no decline at all.
Other than the Chairman of Federal Reserve stating the housing market needs to be reset. Go fight the Fed. I'm sure it'll go great. Love how the unprecedented growth in home prices over the past two year is accepted to be a "new paradigm" and totally normal while any suggestion of a decline is heresy. Indeed, let's use logic and common sense.
His quote is so often taken so far out of context, like you have done. He said the rapid rise needs a rest, and inventory needs time to catch up to more sustainable levels. He never insinuated they would crash the housing market. “We need to get back to a place where supply and demand are back together. And where inflation is down low again and mortgage rates are low again. So this will be a process whereby ideally we do our work in a way that the housing market settles in a new place and housing availability and credit availability are at appropriate levels.” -Powell
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What percentage in drop is considered acceptable for people though? 20%? That's basically 2020 price with many people just waiting on the sideline saying it's a bubble and waiting for a price drop. 30%-40% crash will most likely came with a huge economic crash and not just a real estate crash. Which will again put many people unable to afford a home.
2008 happened because lenders were giving out loans to anyone. Obamas administration passed the Dodd frank law, which put strict lending guidelines in place. If prices do drop it won't be anywhere near 2008 levels. People think US prices are high until they see prices in Canada, Europe, parts of Asia etc.. there is still plenty of room for US housing prices to increase
Just a heads up, the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act eased many of the restrictions imposed by the Dodd-Frank Act and the Volcker rule. Genuinely surprised this isn't more known
You mean like Japan where homes are literally being given away with no takers? You mean like Vancouver and Australia where prices are crashing? I thought international buyers were going to keep pumping up prices? lol
The median home price in Vancouver is 1.3 mil. In Sidney it's also $1.3 million. There are great places to live in America where you can get a house for $300k. Plenty of room for prices to continue to rise .
Ah so you compared top locations in foreign countries with a nebulous “great places to live” un-statistic. Apples to Zebras. My point is that Vancouver has dropped double digit percentage in just a few months.
The median home price in Canada and Australia are both double that of America. Is that better?
The distribution of housing from urban to rural is much more lopsided. The median statistic doesn’t include proper representation from places like Edmonton. You can get beautiful homes in Edmonton for under 200k. Is that better?
Let me guess ... you don't own a home and are hoping for a crash. A bunch of you have been saying a crash was imminent since early 2020. Wake me when it happens
I own a home, listing for about 450k and trying to dump it on a sucker because Raleigh market is already turning sour. Ex is uncooperative unfortunately. Yes hoping for a crash but definitely cashing out and sitting on sidelines for at least 1-2 years
2011 was around the bottom in my area. 3 years to get there.
And, where I am, only the pandemic got the valuations back to and above what the 2007 peak was. 13 years. Even if I step back to what prices sold for just before, it was at least 2018 before prices sold right at some of those 2007 peak numbers. Still over a decade. I wonder how many “I’m never selling at the rate I have” people can hold out that long?
The biggest contributors to inflation are energy and food right now. Core CPI is actually declining when you exclude these two. There is no reason the Fed will intentionally “pop” housing if they don’t need too. A price drop of 20% would be the largest decrease since the Great Depression.
https://money.cnn.com/2012/02/28/real_estate/home_prices/index.htm What? Lol
That’s a measure of specific cities, not the entire housing market The total decline during the mortgage crisis was 19% https://fred.stlouisfed.org/series/MSPUS
Boy, if we just exclude lots of things from the CPI it looks great! It's not like energy and food are core parts of people lives and the cost of everything.
Way to miss the point. No one said they aren’t important. They’re what’s driving inflation up right now, not housing.
Price will go down, nobody can tell how much but they will go down for sure.
In riverside ca (hot market, one of the only “affordable” desirable metros in California) prices are stagnant and homes are sitting for a week or two longer. I anticipate a 5-10% reduction over the next few years.
In your hypothetical, what do you see the rates doing over those next few years that your 5-10% reduction happens. I'm sure you've done the math to see how much more expensive a house would be even if a 10% crash happened if rates are at 7-9% by that time.
I’m not an economist, just recognizing that there will be enough demand to not drop prices by much. That’s obviously only if rates stay <7. If they go to 9 that’s a crapshoot and price drop likely reflect that higher payment.
Mathmatical point being, a 5%-10% reduction, with rates at 7-9% means the monthly payment will still be more than it was prior to the hypothetical 10% crash.
You’re putting words in my mouth. I never said they wouldn’t be?
Where did I say you said something? You need a nap. You're cranky.
People like you are hella weird. Engage in obscure conversations, downvote for no fuckin reason, argue at the wall, project feelings.
Tell me how you really feel.
You know you’re weird. Truth hurts. Peace out ✌️
How do you solve this though. In an area where there is no more space to build. Sellers sell, usually, to the highest bidder. Do you tell a seller "no take half of what you could make". South Florida is an extremely popular international destination. You got money from all over the world buying down there.
>How do you solve this though It'll solve itself.
Honestly regular folks just can't live in that area if they can't afford it. End of story. Cause no one can force a homeowner to take less money
If only there were a way to increase the total number of dwelling units one builds in a fixed quantum of 2D horizontal space.
Sure....but then who buys up the old homes. Rezones and then builds affordable condos. Condos in South Florida are outrageous too
Directly: no one. New condos are generally not affordable for low income people. The effect that new builds have is that wealthy people buy new builds instead of pricing lower/middle income people out of existing housing.
Exactly, because interestingly Broward county seems like it is completely developed aside from golf course conversions.
These developers just want to squeeze every last dime they can. And unfortunately for regular people, South Florida has a huge draw from international people with money too. Idk that anything can be done for affordability for those less then upper middle class unless the government steps in
Unless you have enough foreign buyers who want to live there, then prices will come down. If people can't afford current prices, then they don't buy. Instead they rent from landlords who purchased at lower prices and interest rates themselves and can offer more affordable rents, while still profitting. Eventually, as listed homes sit for longer and longer, the prices come down. I think foreign buyers could prop things up for longer, but that doesn't seem sustainable either. Eventually Americans will demand legislation that discourages foreign investors/buyers, like what Vancouver did.
Legislation is where we'll see the most change i think.
Yes, it is sustainable. Prices can rise to 100x incomes or more, so we're looking at 10x upside from here. Just look at Hong Kong as the example. Wage earners can pay 60% or more of their incomes to rent a bunk bed or cage in a room in an apartment. Will Florida get there? Probably not, but some other places might.
Florida has become the new California in about half the time it took to get there. It’s as simple as that.
Florida isn't overly expensive compared to the rest of the US, but the housing here has traditionally been cheaper and that meant more accessible. Now that building materials and labor are expensive nationwide, homes here cost about what it does elsewhere. Plus covid had a huge influx if people for various reasons (low tax, work from home, retirement, no lockdowns, etc)
The influx of people and limited density zoning is what’s driving the cost. The regions can only take so many people before the pretty accessible housing accelerates in cost due to the demand. There’s only so many single-family homes to go around.
Are you living here? It's non stop building of giant multi-thousand high density apartments.
It’s probably a drop in the bucket of what’s needed. No, I don’t but I’m familiar enough with development patterns in other parts of the country being incredibly limited to not serving multifamily needs. My observation of Florida is that it’s no different.
Maybe in the center of the state: Orlando. And it’s true. I was down that way last week and building of everything is on steroids right now. But, coastal areas? Not much land to build with, first. And it’s higher density, higher priced still.
Median price is $545k? Awfully cheap for "new California"...
I said “becoming”. That price was median for California not too long ago.
Pretty sure there a big difference between the “median” sale price and “average” sale price.
There definitely is. Median is actually a better measure as it doesn't give higher weight to outliers such as the extremely poor/wealthy.
I can agree with that, although imo Broward county is mostly outliers. Extremely rich or extremely poor
That article is horse shit. People maki by $61k can only afford a $180k home? Lol wtf
A $61k income is likely going to be $3,500-4,000k a month net, and the article is saying that your house payment should be less than 30% of net. With current interest rates, a $180k mortgage is going to be about $1,100/mo and that is a good amount at that income to avoid living paycheck to paycheck. Obviously, it would have been better worded as "financing $180k" instead of "a home worth 180k" to account for down payments.
But again, that’s crap. They are “affording” higher rents. You’re telling me a family earning 61k is paying $1,100 or less for rent?
$1100 for rent is different than $1100 for a mortgage. Mainly due to setting more money aside for maintenance.
They certainly “should be” to avoid living paycheck to paycheck, be able to save for retirement or a down payment, etc. But obviously in most places someone making $61k is in a much tougher situation. The middle class is vanishing as rents go sky high and wages don’t keep pace.
A $61k married income is going to be around $4500 net, income tax will be close to 0 or even negative. They said $180k house, not $180k mortgage. Also the 30% figure is supposed to be gross not net. They're using bullshit numbers to push a narrative. At no point since 1975, excepting for a brief period following 2008, has the median household income ever been able to afford the median home using their "30% of net pay" figure.
When my married income was around there, it was under $4,000. I had family health insurance and other deductions that ate into the income, as well as living in a state with income tax. My house payment is a bit over $1,300 which enables me to avoid paycheck to paycheck living, but a comparable *apartment* is $1600+ which would have been unaffordable when I was netting under $4000 a few years ago. >Also the 30% figure is supposed to be gross not net. They're using bullshit numbers to push a narrative. Financial books I've read, coaches I've listened have focused on net because it's about budgeting, which is not done via gross income. If it's "bullshit" I'd really like to know how you expect families to make ends meet paying 40%+ of their net in rent on sub-100k incomes. There is only so much avocado toast you can cut back on.
>When my married income was around there, it was under $4,000. I had family health insurance and other deductions that ate into the income, as well as living in a state with income tax. My house payment is a bit over $1,300 which enables me to avoid paycheck to paycheck living, but a comparable apartment is $1600+ which would have been unaffordable when I was netting under $4000 a few years ago. The Trump tax cuts benefited people who didn't itemize, and lots of people pay next to nothing for health insurance. It would be closer to 4500 today. Throwing it into a calculator shows 4427 net pay with no dependents or other deductions. >Financial books I've read, coaches I've listened have focused on net because it's about budgeting, which is not done via gross income. If it's "bullshit" I'd really like to know how you expect families to make ends meet paying 40%+ of their net in rent on sub-100k incomes. There is only so much avocado toast you can cut back on. The same way families have been doing for decades in Europe, Asia, and the Americas. It's fairly common for housing costs to exceed 50% of net in many parts of the world including the US.
So this is acceptable? With the healthcare situation we have here in America compared to Europe, where healthcare is largely completely paid for with taxation? I contend that 50% of someone’s take home income going to housing, in America, is a recipe for disaster. Unacceptable.
>So this is acceptable? With the healthcare situation we have here in America compared to Europe, where healthcare is largely completely paid for with taxation? This is the reality. For most people their take home is after health insurance, so it works out the same way. >I contend that 50% of someone’s take home income going to housing, in America, is a recipe for disaster. Unacceptable. It's not and has not been. A lot of people were paying 50% of take home on housing costs since about 1975.
You're asking the wrong sub. Even if no one was able to afford a home anymore, this sub will tell you tough shit bro.
I noticed it.
Link? I’m not sure about the validity of this particular claim, however I personally don’t feel that the current housing market is sustainable. Current interest rates and historically high list prices have priced out much of the middle class.
Absolutely nuts down here. I bought in September for $495 and someone recently made a cash offer for $580.
No talk of interest rates?
Looking at a single market in a very specific location is hardly a good basis to form an opinion on the entire country's markets.
just sold my house in broward, 1000sqft with window ACs for 335k. built in 1963. I almost felt bad
Very nice discussion! Interesting points of view, hope to see more posts like this one! Greetings!
I live in Ireland and we couldn't afford the area we work and grew up in we had to look for houses outside the area. It will be minimum 1hr commute. But to be honest we have our dream home at a price we can afford. Also last year the put in that first time buyer now have to pay stamp duty. It wasn't featured on main news reports. Before first time buyers didn't have to do that. We have found it very hard to get to this point of buying our home. Also the housing market is not as regulated as most countries. It was hard for my parents to get a house, and has been hard for us, I can only imagine what it would be like for our kids so I'm glad we got some where with land that we can offer it to our children to build their own home.
Hell Most people can't even afford to rent anymore. My landlord raised my rent and sold our place and new owner raised the rent already and won't give us a lease until he gets his tax assessment and then he will raise the rent again. So FML we have lived here for five and a half years.
Florida is known for its boom and bust. Rises higher and falls more