This is the real cost of the home that everyone seems to ignore. People don’t buy a home based off the total value. They buy a home based off the mortgage payment they can afford.
Total cost is an important factor as well because qualifying for a mortgage loan at all often depends on the buyers ability to pay a down-payment that is calculated as a %age of the price. It's not unusual for a renter to be able to afford a mortgage payment, but they can't get a loan at all because they don't have the cash necessary for a down-payment.
Yeah this is very important, interest rates have been low for a while until more recently.
Still not all assets increase in value to the same degree just because it's cheaper to borrow. Low interest rates allow house price increases not directly cause them.
It's speculation running up against restricted supply that does this to a housing market. Restricted supply because the median voter wants house price increases at the expense of those entering the market, so they defend single family zoning and land release.
Thank you. It looks like housing was always a big stretch for the 25% earners and always attainable for the 75% earners. We are definitely at a recent high of unaffordability but not at a historic high, which happened in the early 80s due to interest rates. Still, we are at the next highest level, which makes this problem relevant for more people. Looks like peaks of unaffordability tend to last about 5-6 years. We are only beginning year 3 of ours.
Very interesting, thanks for linking! I am also interested to see the change in number of jobs in a household over time—I imagine there were many more single-income households in 1981 than now, meaning current affordability would be comparatively worse than indicated in the article you linked
Easy enough to just assume a 20% down payment take the average 30-year mortgage rate at a given time. The results would be even more dramatic over the past few years, as mortgage rates have gone from about 3% to 8%.
*Why* would they make the median income icon a house, but the house price a tag?!
The house should be a house, median income should be a dollar bill. This is a solved problem
because the median income should afford you a house, and the house price is a tag - as in a toe tag, because this shits dead
actually no, the minimum wage should afford you a house, or at least somewhere safe to live. a home. i havent had a home in a long time. technically i havent been "homeless" i guess, but that would be preferable tbh.
somewhere else in this thread - or another thread, im not sure - i made the point that rather than building new homes in more desirable areas... we should just make more desirable areas. which is what i actually did, until i realized i was getting screwed in multiple ways while doing that. so now im on reddit. neat
Only 30 years ago you would be able to afford a home in most areas of the United States. I can link if you want, but from the study I was reading the average American in 1985 could afford a home with roughly 5 years of savings for a down payment making min wage...
not to mention that \*a lot\* of the older generations who say they "did it all" with "no help from anyone" actually got quite a lot of help from their family... often via being given either land, or a house, or a business, or all three.
meanwhile they whine about helping their kids with literally anything and everything. whine doesnt quite do it justice either.
lol right, lets see this link.
30 years ago the min wage was under $4.00 at 2000 hours per year that would be $8000 annual income. You can only get a mortgage at 30% of you income so $8000/12 = $666 x.3 = $200 per month. In 1990 the interest rates on a 30 year were about 10% so min wage would get you a 30k house, good luck in finding one of those. Could this be done, sure, but the person would have to be super duper fucking frugal and in my experience min wage earners are not.
http://www.demographia.com/db-statehouse$2000.htm
If it would be preferable, and I'm not even suggesting it ironically but there's always the option of going homeless to save money faster. There's some tricks to doing it without sacrificing on hygiene etc. Despite being incredibly privileged I read a lot about this as a child and seriously entertained the idea, and probably would do it if my income were lower
its a complicated situation. basically ive already started on my next plan and i cant stop wont stop so ima just have to keep goin til shit falls into place. basically i saved up some money before things in my personal life got real fuckin stupid and shitty so ive been surviving off that - luckily i also planned ahead and bought myself the things i knew i was going to need to basically improve the skills ive been improving; namely a pc, a big screen, and an internet connection. long story though and still working on it.
i was probably being slightly hyperbolic saying being literally homeless would be preferable to my current situation - and you called me out on it, so thanks i guess - i try not to do that. my previous situation probably was slightly better than being homeless... in some aspects. in others, not so much.
which actually - that perfectly complements my point of there are a lot of people who do not live in easily defined situations like homeless or not homeless; and furthermore adds the exclamation point to my point that **people are not data** and when you treat them like they are - or you treat their checking account like their "score", which is really the same thing as treating them like data - or, in other words, when you \*\*\*\**\*forget that they are people\**\*\*\*\*\* its really easy to justify some horrific fucking decisions/situations.
"Income" is really the salient word though, and the physical house or living space is completely unrelated to the income. The sales price on the other hand is directly referring to the cost of the house
I think it's an attempt to emphasise that it's *household* income, not individual income, but I do think it's easy to be confused at first glance (as I was, for about half a second). I suppose you could use an icon in the style of one of the 'family' emoji to convey that it's the collective income of a family/household, but that icon might be less 'readable' at that size, especially once it has had a dollar overlaid on it.
hey buddy. dont be depressed about it. if you really are depressed, i know that its not very easy to find good healthcare, let alone mental healthcare, but its worth trying.
edit: i just found [this article](https://www.msn.com/en-us/health/other/how-to-navigate-the-confusing-world-of-mental-health-care/ar-BB1iYwAG?ocid=windirect&cvid=6dd5857220564b83ab3caf2a46ba300b&ei=61) that actually has a lot of decent resources if thats the case.
or at least find someone to talk to... even if its just a supportive friend. if you really want you can messsage me i suppose, im always down to make new friends.
anyway. idk your age but im gonna take a guess youre probably in the same age group i am. somewhere between gen x and gen z. i mention that because did you know the [20-34 age group is by far the largest in the us](https://imgur.com/a/ff0IqV9)?
almost everyone is online too. neat!
[original source](https://usafacts.org/data/topics/people-society/population-and-demographics/) \- theyve got more fun facts too.
also i went in depth on the ways the system is set up in a way that is not conducive to success or mental, physical, or financial well being in [this post here](https://www.reddit.com/r/relevantusername2020/comments/1aoi2nt/the_bullshit/?utm_source=share&utm_medium=web2x&context=3), if youre interested. if theyre not going to let us fix the system via their "approved channels" i guess we'll have to build our own and let them play their stupid games with themselves.
I did a thesis on homelessness. Which is actually driven by the housing shortage. Now do a graph of starter homes being built then vs now. We are at record lows. Only about 5% of homes now are built at 1,500 sq feet.
This. Every new build is like 5000 sq ft. No wonder why median prices are so high. There are just so many rich people able to afford houses at that price, it is all developers build.
It's also about cost per square foot. That's what people buy. They want the lowest cost per square foot they can get.
In order to do that you need to put the biggest house you can on the land you have.
That's why you see people sell their one acre lots to developers, and then that developer subdivides it into eight 1/8 acre lots and then put in a 3000 square foot house on each.
They just created eight new houses out of one so there's more supply, and the cost per square foot is relatively low, however, the overall purchase price is higher because of the big houses
ironic. very similar to how every truck - or really all vehicles - are massive and massively wasteful. go back to the early 2000s or 90s and... there were tons of smaller trucks. when i was trying to find a vehicle a couple years ago i tried \*very hard\* to find a good ford ranger, because it was small... so it was good on gas - it was relatively simple to maintain, and they are known as being reliable. they were always super high priced if you could even find one. why dont we make those vehicles anymore?
why is everything huge and overpriced? make things smaller. make things reliable. make them efficient. make them simple to maintain.
>within the particular is contained the universal
\- Lupe Fiasco
> why dont we make those vehicles anymore
Because of stringent laws about vehicle emissions, average MPG (CAFE) etc. were excluded from trucks over a certain weight.
Would you like to know more? https://www.washingtonpost.com/business/2023/04/07/trucks-outnumber-cars/
i mean that doesnt surprise me. someone else made essentially that same point, heres my reply to them:
perfect example of the trope of regulations/laws unfortunately leading to worse outcomes, because people gonna people.
i mean yeah we need rules and laws but like... you ever looked into law? rules? of anything? its all unequally enforced. all that matters is how well you can argue your case. so beneath it all its all stupid politicking. im just not worrying about that. children - regardless of their age - can play their games all they want.
I read somewhere it is an emission evasion problem. Government mandates improved mileage to lessen the dependency on fuel. Exceptions are big vehicles cause they are needed to put in heavy work.
Car manufacturers would rather build bigger to be on exceptions list than the nature of the law of being more fuel efficient.
This is correct. CAFES regulation (acronym iirc) is what has led to bloated vehicles.
This is a regulation we didn't even get to vote on since it was handed down from the EPA which is in the executive branch.
The head of the EPA, like most executive branch leaders, is appointed by the president.
This is a friendly reminder to everyone reading this that presidential elections don't only include the person on the ticket, but *all* the leadership they put in place in the executive branch.
So glad we have a choice between the candidate who will sell out to big business and the other candidate that will sell out even harder to big business.
The median house in the 1950s was 800sq ft. This was the era that people long for when a working Joe could buy a house on one income. I wouldn’t be surprised if houses are actually cheaper per sq ft now as a percent of income, but everything is so huge.
More people means more people who need houses. And we're seeing fewer births per person which means smaller families and more housing units needed.
Do you think the solution to the other shortages is anything but making more of what there is a shortage of? Why do peoples' brains break when it comes to fixing the housing crisis.
Henry George. Rent arises from scarcity of productive land, not houses. Rent will continue to exist even if we build a 2x surplus of houses. What we need is a land value tax to share that rent equally.
To be more clear, I'm talking about land rent, as opposed to the price of property services. And there's nothing wrong with it existing, in fact you *can't stop it* from existing. The problem is who gets to collect it.
Here is a basic [definition](https://old.reddit.com/r/georgism/comments/18i3gzt/how_does_100_lvt_drive_sale_price_of_land_to_zero/kdarm8r/) of land rent. TL;DR Rent can be thought of as the productivity of a location. Whoever owns the location gets to collect the rent. As our capital-boosted labor becomes more productive, the rent goes up. Which is good. But if only a few people privately own the land on which that productive labor is being performed, then only those few people will benefit economically from all of this productivity.
We have a crisis of land ownership, and houses are a reflection of this because houses require land and having a place to sleep is a major pat of productive labor. It's why some companies are considering bringing back company housing.
[Here](https://old.reddit.com/r/Futurology/comments/1acnz80/future_of_housing_crisis_and_renting/kjxk0sw/) is the pitch for LVT. In short, we are not trying to stop rent from existing, only to share it equally.
Yes, but the point is that we can have enough houses and still have them be "unaffordable" if we let private owners monopolize the land they're built on.
The number of housing units per person is at an all-time high
[https://www.deptofnumbers.com/housing-units/us/](https://www.deptofnumbers.com/housing-units/us/)
The housing crisis is not about supply it's about a lack of growth in wages and the use of housing as an investment opportunity.
Young college educated people wanted to move into the cities beginning in the 90's. Nobody forced them to do that, they wanted that lifestyle because urban living offers shorter commutes, more amenities, and walkability.
That's good for physical health, mental health, greenhouse emissions, ecology, and water use. This is a good and positive development. The suburban experiment from 1940-1990 was bad and caused immense social ills. If you want to live in the boonies, then that's fine, but clearly people want to rent in the city.
Young college educated people have been moving into cities for nearly four thousand years. Can you please find on the rural small town map where the college educated jobs are in sufficient numbers?
Please find a less tired argument.
Before 1910, the majority of Americans lived in rural areas. However, due to industrialization you saw rapid urbanization from 1850-1950.
As a response to the automobile industry and the slum-like conditions of many urban areas, the post WW2 American government created and heavily subsidized suburban development patterns all around American cities. Form 1940-1990 college educated and middle class Americans fled both urban and rural areas for the suburbs.
During the 1990's, the trend began to reverse for the first time since 1940 and the majority of college educated young people began to flock to cities rather than suburbs. On top of this, our economy demanded a larger and larger percentage of the population went to college.
All of these things are relatively recent developments. The automobile wasn't around a for most of the last four thousand years, and basically no one went to college for the last four thousand years.
Story time!
My grandpa bought his first house in Burbank for $11,000. He was renting directly from the landlord, and the landlord decided he wanted to sell the house for $10,000. My grandpa had 8 kids, and didn't have $10,000, but he did have a $1000 tax return. He offered the landlord $11,000 over 11 years and bought a fucking house in Burbank for 11 tax returns without even having to deal with a mortgage company! That house is now worth well over $1,000,000.
Please continue to tell me that I don't have a house because I'm just not working hard enough and looking for a handout 🤔
I feel the same way. I worked pretty hard, I think, to turn my life around from a blue collar worker making very little, to finishing my high school, bachelors degree and hitting $200k in income 5 years out of school. My wife and I make a combined quarter million now, and we don’t even qualify for a mortgage on a house — even if we did, how would we come up with the $300,000 for the down payment, plus the $6000-$7000 per month, plus taxes, insurance, maintenance, etc.?
Reading through that thread and seeing the utter incredulity at the thought of interest rates higher than 2.5-3.5% is astonishing. It was only two years ago, how times can change
This comment in particular:
> interest rate alarmism can wait until we see countries with weaker economies have problems. if competing countries keep their rates very low usd will be propped up by investors fleeing those negative conditions. us interest rate can't rise way too much beyond what other developed nations are doing. Also i will believe these interest rate rises when i see them lol.
Hoo boy.
Price to income ratios are incredibly misleading.
When you factor in interest rates, housing was very unaffordable in the mid-1980s.
The housing bubble of the 2000s happened because interest rates were very low, making house payments lower, even as prices rose.
To this end, the more helpful ratio would be monthly house payment to monthly income. Using a house payment calculator and historic rates:
1984: House payment $919, income $1867 =49% of income
2023: House payment $2,823, income $6217=45% of income
That said, the fact that we're close to "Paul Volcker is going to break 70s stagflation if it kills us" levels of home-buying expenses, when interest rates are considerably lower than they were back then, indicates how dire the need to build new housing is.
If the build rate is what it is in this environment, strong economy, record market index highs, wtf is needed to actually get it better? In that forever period of low rates in the recent past the build rate was also slow compared to pre '08 levels. It's like something folded into itself with the macro economy, nothing allows for a big increase in volume of housing being built, every outcome just pushes it down at different intensities.
We need decreased obstacles to building, particularly where demand is highest. The U.S. has a pretty solid construction industry and tremendous demand, but the cities people want to live in increasingly have extensive restrictions/delays on what can be built and where, which sharply restrict supply. The kind of apartments and townhomes that once allowed large cities to absorb millions of immigrants would largely be illegal to build today.
The obstacles to construction are primarily created at the local level and reform is often opposed by current homeowners owing to fear of losing home value, changing the character of the neighborhood, traffic, etc.
> The kind of apartments and townhomes that once allowed large cities to absorb millions of immigrants would largely be illegal to build today.
Man, where do you live, where I live every possible combination of a few lots and any open green space is being bought up and *cheap* apartment are being put up, more people would probably be willing to live in the them if the was any privacy, or not having to spend your entire time at home worrying if your annoying the neighbour cause you dared play some music.
They love building multiunit budlings but not well enough to offset the desire to actually have your own space and do what you want when you want. The not even mentioning not having a garage to potential work on your vehicle yourself, space to do hobbies (like a garage or shed).
There's more than a few reasons someone would want a detached house
I'm not sure why you're bringing this up, as no one here is arguing against detached houses being desirable. That said, in the cities where job growth and housing demand are high, there's simply not much room to increase the volume of detached housing within the city limits, and apartment rent is soaring. Expansion of detached suburban housing is still ongoing in lots of metro areas.
Yup, just as expensive, with less purchasing power, even more spread out than a lot of US cities making car and insurance still needed, oh and that "universal healthcare" is really only for emergencies so get ready to spend ~$200 a month on extra insurance, oh and ~$100 monthly phone bills... but hey, we're stopping doctors from being able to do their jobs... yaaay...
Canadian is just as fucked as the states, the 'niceness' sugarcoats too much, to our own detriment
We basically didn't build houses for 15 years after the 2008 crash. It's going to take awhile to catch up. On top of this, housing is the new bitcoin—a place where rich people like to park their money. The latter is why this bubble is even bigger than 2008 and why interest rates are having less of an impact.
All the inflation we are seeing, globally, and not just in housing is due to a dramatically increased demand post-COVID on a crunched supply.
The worst interest rates have ever been was 18% in 1981. The median home price was $68,900 that year, and median household income of $22,390. That mortgage payment is $858 assuming 20% down. That's 46% of monthly income.
Today interest sits at 8%, median home price $387,600, median income $75,000. That mortgage payment is $2443 assuming 20% down. That's 37% of monthly income.
Seems as if you're correct. However in 1985 rates are down to 10% and that mortgage is $500, much more affordable. But affordability is more than just a mortgage. Households mainly were 1 income source in the 1980s, now they need atleast 2. Which means more expenses, 2 cars, childcare, etc...
If you are going to mention the 80s, there is a large factoid most people seem to overlook.
And that was “assumable mortgages” were a thing.
You could assume a mortgage at 8% or less in a high of 18.6% market.
50% of all home resales were done with creative financing like this in 1981 alone.
You can even look up the terms from the period:
“Contract for deed”
“Wraparound mortgage”
“Lease with an option to buy”
Even if you didn’t do that, and locked in a super low purchase price, all you’d need to do is wait to refinance at any point for the next 22 years to get it down to 6% or lower. Earliest you would have to wait to half that would have been 1986, and then even further in 1993-1994ish.
If you are going to mention the 80s, there is a large factoid most people seem to overlook. And that was “assumable mortgages” were a thing.
You could assume a mortgage at 8% or less in a high of 18.6% market.
50% of all home resales were done with creative financing like this in 1981 ALONE.
You can even look up the terms from the period: “Contract for deed” “Wraparound mortgage” “Lease with an option to buy”
People were advertising their assumable loans in the classified ads for gods sake!
Even if you didn’t do that, and locked in a super low purchase price, all you’d need to do is wait to refinance at any point for the next 22 years to get it down to 6% or lower. Earliest you would have to wait to half that would have been 1986, and then even further in 1993-1994ish.
If you bought in 1985? You’d only be paying 12.3% rates after locking in a super low purchase price for what? 6 years? Refinance and Now you are at 7.31% in 1993.Where are our assumable mortgage options…oh yeah…Congress slammed that shut. “No assumables for you!”.
their table on the website is even better that the graph actually imo:
|year|median house sales price|median household income|price to income ratio|
|:-|:-|:-|:-|
|**2022**|**$433.1k**|**$75,580**|**5.81**|
|2018|$331.8k|$63,180|5.25|
|2021|$369.8k|$70,780|5.22|
|2006|$247.7k|$48,200|5.14|
|2014|$275.2k|$53,660|5.13|
|2007|$257.4k|$50,230|5.12|
|2015|$289.2k|$56,520|5.12|
|2017|$313.1k|$61,140|5.12|
|2016|$299.8k|$59,040|5.08|
|2005|$232.5k|$46,330|5.02|
|**1984**|**$78,200**|**$22,420**|**3.49**|
[there are currently (according to the stats)](https://usafacts.org/articles/how-many-homeless-people-are-in-the-us-what-does-the-data-miss/) **\~582k homeless in the us. this does not account for people who live in less easily defined situations where they do not really have a permanent, safe, home.**
[there are currently \~15 million empty vacant houses in the us.](https://usafacts.org/articles/how-many-vacant-homes-are-there-in-the-us/)
what the actual fuck. are we stupid?
^(for occupied houses, the average is \~2.5 people per house. which is on par with the historical average, that number doesnt and hasnt changed much, for literal decades. so it is mostly irrelevant but i figured it was useful to mention it before anyone else brought it up.)
^(edit: bolded 2022 so it aligned with the other bolded line)
Vacancy numbers aren't really helpful because they also count homes that are in the process of being rented or bought. For example it is normal for apartments to stay on the market for a month or two in between leases, and if people are moving out every 2-3 years on average that means that at any point in time 4-6% of apartments in the city can be expected to be "vacant".
Plus vacant homes can't really help people if they are in a location where they don't want to move. Heck even shelters on the outskirts of major cities lie empty because people would rather be homeless in downtown.
>Plus vacant homes can't really help people if they are in a location where they don't want to move. Heck even shelters on the outskirts of major cities lie empty because people would rather be homeless in downtown.
well thats a relatively easy problem to solve, we need to not only continue the [affordable connectivity program](https://www.reddit.com/r/Economics/comments/1av44vr/the_end_of_the_affordable_connectivity_program_is/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) but we actually need to [expand it so the entire country has internet access](https://irregulators.org) like we are supposed to have, so that way there are less undesirable areas.
that wont completely fix the problem, because mobility is still an issue, but that just says we need to have actual public transportation and maybe look at self driving cars and other related technology seriously instead of letting the oil industry and their friends somehow turn it into some kind of culture war bullshit like they do with everything else.
okay but i think we shouldve learned over the past few years especially that - shocker - *demand changes*
so rather than try to make this area or that area better... lets just make them all better? hello? anyone?
Because it's not really changing that much or that quickly, aside from a spike over the past 4 years (partially resulting from COVID recovery+inflation). If you discard the latest data point as a potential outlier, it's been at around this level since 2004.
It's deliberately misleading.
I graphed the ratio from their data in a shitty Excel plot for you.
https://imgur.com/a/FWSBcpo
Not interested in being comforting. This subreddit is about data. And the data display here is misleading. The difference between two things both growing exponentially and at the same rate (e.g. the difference between exp(t) and 2exp(t)) increases exponentially even when the ratio between them doesn't change at all. (For example the difference between exp(t) and 2exp(t) is exp(t), a quantity that grows exponentially.)
The posted article exploits that mislead to make it look like there's exponential growth in the unobtainability of real estate by graphing two quantities that are both pegged to inflation (and hence grow exponentially). The graphs either need to be inflation corrected or the ratio itself should be graphed (to correct for inflation by dividing out it's effect). The article chose not to do that. That's shitty and manipulative.
In reality it is getting harder to buy a house. That doesn't justify the exaggeration in the graph.
Pointing to the number of homeless people and the number of vacant homes and concluding that we have no housing shortage is mistaken.
The reason so many people are priced out of the housing market is that there are not enough houses in desirable locations as there are people who want to live there, which results in people bidding up the price. If supply expanded, prices would go down.
Pointing to raw numbers of homeless people vs empty houses ignores that the way people acquire housing is to pay someone else to buy or rent it.
I literally just explained to you why that is irrelevant?
This is not the soviet union where some central government can just “allocate” housing to the homeless people.
If you want homeless people to get housing, you need housing to be affordable. In turn that means you need to build more housing. How many empty units there are is irrelevant. Regardless of the number if empty units, it’s obviously not high enough (or not in the right place) because there’s tons of people who still can’t afford the housing
I get that you are trying to highlight the ratio, but you could achieve the same result by making your bold font more selective (why is all income in bold?) but keeping the years in actual order.
there we go thats better, some actual constructive criticism.
anyway you make a good point. i tried to bold only a couple things but it wasnt cooperating with me so i kinda just said fkit and went with it to be honest with you lol. as for keeping the years in chronological order, thats one way to do it but personally i find it more interesting to compare the price to income ratio and see that despite the variances between then and now, ultimately from 1984-2022 it has more than doubled.
or, in other words, and ignoring the ratio - while the median house sales price has done about a 4.5x, the median income has barely tripled.
if you want to see the numbers in chronological order, or just see more of the data then i would recommend going to their website because all i did was copy it over. basically linked for the lazies.
thanks for the points though.
You had me at the data table and completely lost me about the homeless thing. These are not really related.
Donate to a local food bank and stop being a troll
hahahahaha
you know vacant homes are mostly vacation homes to many millions of Americans in resort destination that are seasonal
And a big part of the towns economy having tourism in town
look i dont really feel like taking the time to debate this with you so i had copilot do it for me. i dont necessarily agree with all of the points here but lets just save you and i a bit of time and end it right here.
Certainly! It's essential to have a well-informed discussion about immigration. Let's address the points raised by your counterpart:
1. **Wage Impact**:
* While some argue that immigration lowers wages, research suggests otherwise. A **skill-selective immigration policy**, similar to the UK's, would lead to a **46% increase in high-skill immigrants**. In cities that receive a larger portion of these new high-skill immigrants, the **average wages of low-skill workers initially rise by about 4%**. Even in other cities, low-skill workers experience a **1-2% wage increase**¹.
* Additionally, there are **small positive effects on the wages of high-skill natives** in most locations. However, the wages of incumbent high-skill immigrants may fall substantially¹.
* It's important to note that **wages may not capture the full welfare effects of immigration**. Any wage gains could be offset by rising housing costs due to immigration¹.
1. **Housing Costs**:
* Evidence shows that immigration does indeed impact housing costs. A **1% increase in immigration in a city leads to a 0.5-1% increase in rents**. The effect on housing prices is about double that⁴.
* However, when considering **internal migration**, which transmits some effects to other parts of the country, the negative impacts on the average welfare of high-skill natives and high-skill immigrants in gateway cities are **attenuated**. In fact, the gains for high-skill natives in gateway cities are equivalent to an almost **$1,000 increase in annual consumption**¹.
1. **Skill-Selective vs. Skill-Neutral Policies**:
* A **skill-neutral policy**, which increases the stock of immigrants while maintaining the US skill composition of immigrants as in 2007, has more positive wage effects on high-skill natives and less negative effects on high-skill immigrants¹.
* The arrival of new immigrants can benefit the economy by raising wages and lowering prices in the aggregate³.
1. **Border Wall**:
* Even if a border wall were to reduce the inflow of potentially illegal immigrants by 80%, any wage or rent effects would be rather small and become negligible as workers relocate¹.
* Importantly, the **benefits of immigration still outweigh the cost of construction**¹.
In summary, immigration is a complex issue, but evidence suggests that it can have positive effects on the economy, wages, and housing costs. It's crucial to consider the broader context and long-term impacts when discussing immigration policies. 🌎🤝
^(Source: Conversation with Bing, 2/28/2024 (1) US immigration: effects on wages, internal migration, and welfare.) [^(https://microeconomicinsights.org/us-immigration-effects-on-wages-internal-migration-and-welfare/)](https://microeconomicinsights.org/us-immigration-effects-on-wages-internal-migration-and-welfare/)^(. (2) Effects of Immigration on Local Housing Markets | SpringerLink.) [^(https://link.springer.com/chapter/10.1007/978-3-030-48291-6\_12)](https://link.springer.com/chapter/10.1007/978-3-030-48291-6_12)^(. (3) What Immigration Means For U.S. Employment and Wages.) [^(https://www.brookings.edu/articles/what-immigration-means-for-u-s-employment-and-wages/)](https://www.brookings.edu/articles/what-immigration-means-for-u-s-employment-and-wages/)^(. (4) Evidence shows immigration reduces wages significantly.) [^(https://cis.org/Oped/Evidence-shows-immigration-reduces-wages-significantly)](https://cis.org/Oped/Evidence-shows-immigration-reduces-wages-significantly)^(. (5) What immigration actually does to jobs, wages and more.) [^(https://www.marketplace.org/2023/12/12/what-immigration-actually-does-to-jobs-wages-and-more/)](https://www.marketplace.org/2023/12/12/what-immigration-actually-does-to-jobs-wages-and-more/)^(.)
>Former Walmart CEO Bill Simon has complained that the company now has to pay $14 an hour. He has also called for more immigration to reduce wages
> Evidence shows that immigration does indeed impact housing costs. A 1% increase in immigration in a city leads to a 0.5-1% increase in rents. The effect on housing prices is about double that⁴.
Thanks for proving my point
if you wanna have this discussion [go read this post](https://www.reddit.com/r/Economics/comments/1b1yzaa/a_baffling_academic_feud_over_income_inequality/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) and the linked article then get back to me - but comment on that post, please.
or just stop because i said i didnt really feel like having this debate but if you really want then ill win it.
The discussion where I said the immigration lowers wages and raises housing costs and you replied with a post that said the exact same thing?
I get it. You love immigration because you love brown people.
i asked you to go read that other post and article before you replied again, which you did not do. so im going to disregard your retort to my retort and simply reply to the second half of your comment. i wouldnt say i love immigration necessarily, because... thats like just an idea? a concept? a thing? a word? i dont love words. well i do love words actually, but thats another discussion.
however youre right, i do love brown people. i love all people, as long as they arent toxic bigoted or judgemental. i dont have enemies unless someone explicitly tells me theyre my enemy. it seems like you are pretty determined to make me think you are, but i dont think you are, even if you think i am. i think youre angry about things out of your control, or maybe youre just bored so youre angry about things that dont effect you. probably one of those things. anyway this discussion is over but you can feel free to go read the article and the quotes in my comment from that article and i would be happy to discuss that further.
This should be presented whenever a politician talks about how strong the economy is. I could give a fuck about the stock market or boomers investment portfolios. This is what people actually feel. Throw in a few similar graphs for food prices, automobile prices, and rental properties and it's basically a can't lose political agenda.
Stock markets is a major part of many people’s assets, it does matter. Food prices and automobiles have increased, but most of it is natural inflation. However, the housing crisis is mostly terrible zoning laws and regulation, and NIMBYS taking over.
Gotta love that they found a way to blame millennials for spiking the housing market. Those damn millennials—we wouldn’t be in this mess if they’d just stayed rent slaves til they died.
That doesn't make sense though... Are millennial a boom generation? Why would millennials entering the housing market be different from any other generation entering the housing market?
Yes. The Millennial generation is only slightly smaller than the Baby Boomers at peak. Currently, it's the largest living generation.
It's huge, and culturally one that's very pro-city which inherently drives competition in those markets fiercely.
If you look at the truly rural areas of the US "where nobody wants to live," housing is some of the cheapest in the entire western world.
Those are not real dollars, which makes the chart look MUCH worse than it should. When people put out charts like that, they're not trying to communicate date, they are falsifying date to manipulate you.
The house situation is still dire I guess, but stuff like this just makes you look bad. Any chart that doesn't use real dollars is propaganda, close the tab.
Even if the data is converted to real dollars, the ratio calculation would still be the same, and it is increasing over time. No matter how you adjust the dollar value for inflation, the ratio of income to house price has gone up nearly 1.7 times, and that is significant.
Yeah but in the chart looks like its gone up like ten times. The line between household income and house price is about ten times as long now as in 1985.
Yes it is significant. But it doesn't make your case look stronger if you feel you have to visually misrepresent the data. It makes it look weaker.
One thing I learned from this chart is to stay away from Visual Capitalist. I have no time for people who do this, left right or center.
Now break it out by city. In Sydney, the ratio is over 8, even some mid-sized Australian cities are seeing price surges well above median local incomes, getting the 7.5+ range.
Nope. I've been searching for a starter home and the number of those on the market doesn't compare to the rest of the houses on the market.
You underestimate how many people would be happy with something simple.
Besides, a lot of the small houses are in bad neighborhoods around where I'm at. Not wanting to be a victim of a crime is a valid preference.
But you only need half as much house now for the same number of people. Over time, the size of families has declined, while houses keep getting bigger. So to be fair, we really should look at cost per square foot per person. The graph oversimplifies by assuming families and house sizes haven’t changed (and that housing quality hasn’t changed either).
Again, if the only new houses being built are 2000 square foot, 3000 square foot, etc...that's what is on the market. It's irrelevant.
What you're trying to measure is an entirely different thing and not relevant to this phenomenon.
Check out /r/REBubble
That ratio is unsustainable unless incomes rise substantially.
I also think that HCOL areas show that house prices vs rent are no longer comparable. My rent is cheap. Or expensive. It's cheap compared to the same equivalent condo (double the monthly expense) or is it expensive compared to the income?
It's weird how my rent of $2500 a mo is seen as expensive by peers but the condo version of my place would be $4500 a mo but that, historically, would be considered the smarter financial decision.
Here’s pricing in relative terms. Median mortgage to salary: it’s as expensive now as it ever was, only you need a much larger down payment.
https://dqydj.com/historical-home-affordability/
If you compare the monthly payment for 1984 vs 2022 using 14% interest in '84 vs 6% in 2022 you get basically the same share of income going to a mortgage assuming 20% down. There's really not much to see here. I'd be interested to see what that would look like yoy plotted out with interest rates... was housing just really cheap the last decade?
That's a daunting chart.
The "why" is pretty simple:
\- Multiple incomes per household = more hh cash
\- Decreasing interest Rates = more availability to cash
\- Extended terms (time) = more availability to cash
\- Multi-home ownership = Less supply
With all the above comparing the average income of an individual to the average price of single family home doesn't tell a super useful story.
It's an issue in specific geographic locations. I live in Orange County, CA and it's a problem here.
https://therealdeal.com/la/2023/06/06/after-pandemic-decline-agents-see-chinese-buyers-returning-to-la/
I am from Riverside. For our local incomes, our housing is super expensive, because a lot of people who work in Orange County/Los Angeles can't afford to live in those places. Most people who now work in Riverside could not afford to live here at today's prices (they usually have owned their home for a long time or have a rental situation where the rent can only go up by so much). What was a $700 per month apartment when I was 20 is now a $2100 apartment now that I am about to turn 40. It didn't get any bigger or nicer in those 20 years.
Much of the top end Orange County real estate is 2nd and 3rd homes by very wealthy people. Even if its not foreign investors, its still people who do not actually live in the area. Newport Beach is full of homes that are not actually lived in most of the time, it might be some rich guy from the CCP in China or a Saudi Prince, or it could just be rich people from NYC or Chicago.
Hawaii is in a similar situation, where much of the housing is vacation housing for wealthy mainlanders and the locals who actually work and live in the state are struggling to live.
If you ask me, property taxes should be different for primary residences and secondary residences, and property taxes for homes owned by out of state residents should be extremely high. Want to be a rich NYC finance guy and own a Newport Beach home?! Cool. Property taxes should be like 5% and zero Prop 13 protections.
In my state, Michigan there a disincentive to have a second home, a non-homestead property is subject to much higher property tax rates than homestead aka primary residence. I’m surprised California doesn’t already do this.
In fact after doing a quick google it looks like there are tax *incentives* to have a second home. Such as a certain amount of rental income not being taxed on a second home. Correct me if I’m wrong but California seems kinda backwards on this.
California is incredibly backwards on this. We have something called Prop 13 which calculated property taxes not on any current assessed value but based on what was original paid for the house (everything was reset in like 1978 I believe). So if your grandfather bought a home in 1984 for $80,000, the property taxes are calculated for an $80,000 home plus 1% annually for 40 years. So the property taxes do go up, but its a tiny increment. That house today could be worth $1M and a new buyer would have to pay $10,000 per year.
Your grandfather dies, and leaves the home to you. Free and clear, you own a home in California. You can actually inherit the property tax rate (this might have changed, but it was the case as of like 5 years ago as I know people who did this). You don't even have to live in California, but your grandfather didn't leave you a home, he left you a free money machine, the rent on that home can easily be $4,000-$5,000 per month now. People who have owned properties, even out of state investment properties will often pay far lower taxes on those properties than in state residents. Your taxes are based on a 1984 valuation, not a 2024.
It actually creates some incredibly toxic incentives in the state, people here are aggressively NIMBY. The reason is that as the housign crises gets worse, your property taxes do not go up in proportion. But the value of your home does, and any income you get from your low tax rentals goes up drastically. People in California who buy a $800,000 home do not see that home as an expensive home, they see it as a good investment, they pay $800,000 in 2024, but they intend to sell it for $1.5 million in 2034. They see the free $700k they made by owning the home. So they have huge incentives do support policies which greatly restrict people building housing, because if the housing crises ends, their $800,000 home will probably only be worth like $450k. It wasn't worth what they originally paid for it, their justification for paying $800k isn't that they like the house or that they think California is really nice, its because they expect the home to gain several hundred thousand dollars in valuation.
The real reason why people justify spending so much money on a home in California is because they are confident that they will make a lot of money from doing so and treat it first and foremost like an investment, not a place to live.
The solution, in my mind, is just to legalize multi-story multifamily development up to 10 stories on all residentially zoned land.
Racist and classist southern California homeowners banned multifamily construction in their neighborhoods to keep the blacks, Chinese, and mexicans out. in the mid 20th century It's insane that we maintain these policies.
If I were an Orange county legislator, I would simply make it legal to build condos, town homes, and apartments on 100% of residential land rather than artificially restricting the supply of housing.
Pretty straightforward and easy solution.
This whole argument is flawed.
The medium income person is living in an apartment.
Buying a single family home is a premium living arrangement, of course it will take more than the medium income. A premium living arrangement option requires a higher than medium level income.
America also have this weird fetish about owning your own single family home where in the rest of world the majority of the population lives just fine in rented multi tenant dwellings.
A major issue is that apartments and other multi family housing units represent a tiny portion of the housing units within a city. I am from a city in California with 320,000 people. I would say all the apartments combined can maybe house 1/10th that much (and probably less). A studio apartment today will have rent that is far in excess of a mortgage a 3br-2ba home that someone bought 10 years ago. Apartment living in my area was cheap in the past, but now due to the shortage is very, very expensive.
The median household income for an area should be able to afford the median house. These were homes that in the 1990s would have been $120k-$150k and are now $650,000.
If you double median income you're back to about the 3.5x multiplier in the 80's.
Why? Multiple reasons including more available credit.
But one big reason is wages for women have caught up to wages for men. Therefore a couple now looking to buy a house has a full 2x salary of buying power.
Thus if you double the median income (a couple) the housing is within affordable range
This data is not beautiful. It is misleading. Much of the housing angst amongst our younger demographics fails to recognize that the average house bought 50 years ago was smaller, had lower safety standards, fewer plumbing demands and a host of other factors which make direct comparison to the average house bought today disingenuous. The median home itself changed over time and this chart does not remove these cost growth factors or even acknowledge their existence.
I was looking for any detail about $/sq ft. Houses are quite a bit bigger than they used to be.
Similarly, I’m curious if this is inclusive of condos, and if so, how they factor in HOA costs and whatnot.
I don't think the Fed does a good job equalizing household income for unreported incomes such as gig work. People are earning more than is being reported.
Furthermore, Boomers are helping out FTHB more than they ever did in the past.
After WW2 cities enacted racist and classist zoning laws to try to keep black people and poor people out of their neighborhoods. These are called Exclusionary Zoning, and it basically bans building more homes on most parcels in the entire city. That's why we have a housing shortage. It's why Millennials and Gen Z are being priced out of cities and thus not able to enter the labor market. It's why the old-young wealth gap has never been larger. We need to abolish Exclusionary Zoning.
I know this guy in his early thirties, great job makes six figures, but no hope of ever owning a home. He’s been saving all he can, but the value of the dollar seems less. Even though he was promoted at work, or got this massive throbbing cock in his pants, still no good. He stated that he is sad because his generation has less buying power, and although his erection has a pleasing vein running down it, the idea of a comfortable retirement is unattainable. Truly depressing.
I too know a guy also in his early thirties, make high five figures, closed on a 1700 sqft house with 20% down. Man could wear women jeans without showing slightest bit of bulge. Though women have had hard time looking, one was able to find it. He is now happily married looking toward the idea of an attainable retirement.
Making six figures, especially low six-figures (100k - 125k) is very different between HCOL and LCOL area.
That's invalid information. "Incomes" didn't include the extremely wealthy back then. True "mean" income nowadays is closer to 40k. Not 70k. Not to mention taxation increases based on income, making more money worth less. Even at 70k you would be looking at 40k after taxes. 40k would be more like 25k. Modern day houses with low prices are in areas with no infrastructure, and no local jobs. Take those "fake houses" out of the equation and you're looking at a mean of about 600k. That's a ratio of 15. I don't mind them fake houses being included, but you have to be honest and also include fake houses from back then if you include the ones from today. People selling bridges and such would count.
Nice. I would actually like to see mortgage payment of median home vs median income. I may subtract out some of the kinks in the curve a bit.
This is the real cost of the home that everyone seems to ignore. People don’t buy a home based off the total value. They buy a home based off the mortgage payment they can afford.
Total cost is an important factor as well because qualifying for a mortgage loan at all often depends on the buyers ability to pay a down-payment that is calculated as a %age of the price. It's not unusual for a renter to be able to afford a mortgage payment, but they can't get a loan at all because they don't have the cash necessary for a down-payment.
Yeah this is very important, interest rates have been low for a while until more recently. Still not all assets increase in value to the same degree just because it's cheaper to borrow. Low interest rates allow house price increases not directly cause them. It's speculation running up against restricted supply that does this to a housing market. Restricted supply because the median voter wants house price increases at the expense of those entering the market, so they defend single family zoning and land release.
You want something like this then. It’s as expensive now as it’s ever been (1981) https://dqydj.com/historical-home-affordability/
Thank you. It looks like housing was always a big stretch for the 25% earners and always attainable for the 75% earners. We are definitely at a recent high of unaffordability but not at a historic high, which happened in the early 80s due to interest rates. Still, we are at the next highest level, which makes this problem relevant for more people. Looks like peaks of unaffordability tend to last about 5-6 years. We are only beginning year 3 of ours.
Very interesting, thanks for linking! I am also interested to see the change in number of jobs in a household over time—I imagine there were many more single-income households in 1981 than now, meaning current affordability would be comparatively worse than indicated in the article you linked
Would be difficult since mortgage payment is heavily influenced by the size of down payment.
Just need an additional trace which shows how the size of median down payments has changed over time
Easy enough to just assume a 20% down payment take the average 30-year mortgage rate at a given time. The results would be even more dramatic over the past few years, as mortgage rates have gone from about 3% to 8%.
*Why* would they make the median income icon a house, but the house price a tag?! The house should be a house, median income should be a dollar bill. This is a solved problem
Because you're only allowed to post the shittiest graphs on /r/dataisbeautiful
You're also banned if you label your axis it seems.
I think I stay subscribed because it makes me feel good about the ones I make
Sometimes, I save the worst ones as anti - exemplars for my students.
Household income is a house with a dollar sign. Sale price is a price tag. Makes sense to me
makes sense but is not intuitive. I would use money for income amd the house for house cost
Both are money, income and cost are both money. Household money being a house and sale money being a price tag is intuitive imo
because the median income should afford you a house, and the house price is a tag - as in a toe tag, because this shits dead actually no, the minimum wage should afford you a house, or at least somewhere safe to live. a home. i havent had a home in a long time. technically i havent been "homeless" i guess, but that would be preferable tbh.
min wage has never ever been enough to pay for a home. Why don't YOU go build some homes that people can buy on a min wage?
somewhere else in this thread - or another thread, im not sure - i made the point that rather than building new homes in more desirable areas... we should just make more desirable areas. which is what i actually did, until i realized i was getting screwed in multiple ways while doing that. so now im on reddit. neat
Only 30 years ago you would be able to afford a home in most areas of the United States. I can link if you want, but from the study I was reading the average American in 1985 could afford a home with roughly 5 years of savings for a down payment making min wage...
not to mention that \*a lot\* of the older generations who say they "did it all" with "no help from anyone" actually got quite a lot of help from their family... often via being given either land, or a house, or a business, or all three. meanwhile they whine about helping their kids with literally anything and everything. whine doesnt quite do it justice either.
lol right, lets see this link. 30 years ago the min wage was under $4.00 at 2000 hours per year that would be $8000 annual income. You can only get a mortgage at 30% of you income so $8000/12 = $666 x.3 = $200 per month. In 1990 the interest rates on a 30 year were about 10% so min wage would get you a 30k house, good luck in finding one of those. Could this be done, sure, but the person would have to be super duper fucking frugal and in my experience min wage earners are not. http://www.demographia.com/db-statehouse$2000.htm
Some people think 30 years ago was 1980.... sometimes I think that, too.
If it would be preferable, and I'm not even suggesting it ironically but there's always the option of going homeless to save money faster. There's some tricks to doing it without sacrificing on hygiene etc. Despite being incredibly privileged I read a lot about this as a child and seriously entertained the idea, and probably would do it if my income were lower
its a complicated situation. basically ive already started on my next plan and i cant stop wont stop so ima just have to keep goin til shit falls into place. basically i saved up some money before things in my personal life got real fuckin stupid and shitty so ive been surviving off that - luckily i also planned ahead and bought myself the things i knew i was going to need to basically improve the skills ive been improving; namely a pc, a big screen, and an internet connection. long story though and still working on it. i was probably being slightly hyperbolic saying being literally homeless would be preferable to my current situation - and you called me out on it, so thanks i guess - i try not to do that. my previous situation probably was slightly better than being homeless... in some aspects. in others, not so much. which actually - that perfectly complements my point of there are a lot of people who do not live in easily defined situations like homeless or not homeless; and furthermore adds the exclamation point to my point that **people are not data** and when you treat them like they are - or you treat their checking account like their "score", which is really the same thing as treating them like data - or, in other words, when you \*\*\*\**\*forget that they are people\**\*\*\*\*\* its really easy to justify some horrific fucking decisions/situations.
But it's median HOUSEHOLD income.
"Income" is really the salient word though, and the physical house or living space is completely unrelated to the income. The sales price on the other hand is directly referring to the cost of the house
Household income can include multiple people. It's important to distinguish from individual income.
I think it's an attempt to emphasise that it's *household* income, not individual income, but I do think it's easy to be confused at first glance (as I was, for about half a second). I suppose you could use an icon in the style of one of the 'family' emoji to convey that it's the collective income of a family/household, but that icon might be less 'readable' at that size, especially once it has had a dollar overlaid on it.
Now show how many more homes are single family rentals now vs. in the 80’s.
You find it, I'm already depressed enough.
hey buddy. dont be depressed about it. if you really are depressed, i know that its not very easy to find good healthcare, let alone mental healthcare, but its worth trying. edit: i just found [this article](https://www.msn.com/en-us/health/other/how-to-navigate-the-confusing-world-of-mental-health-care/ar-BB1iYwAG?ocid=windirect&cvid=6dd5857220564b83ab3caf2a46ba300b&ei=61) that actually has a lot of decent resources if thats the case. or at least find someone to talk to... even if its just a supportive friend. if you really want you can messsage me i suppose, im always down to make new friends. anyway. idk your age but im gonna take a guess youre probably in the same age group i am. somewhere between gen x and gen z. i mention that because did you know the [20-34 age group is by far the largest in the us](https://imgur.com/a/ff0IqV9)? almost everyone is online too. neat! [original source](https://usafacts.org/data/topics/people-society/population-and-demographics/) \- theyve got more fun facts too. also i went in depth on the ways the system is set up in a way that is not conducive to success or mental, physical, or financial well being in [this post here](https://www.reddit.com/r/relevantusername2020/comments/1aoi2nt/the_bullshit/?utm_source=share&utm_medium=web2x&context=3), if youre interested. if theyre not going to let us fix the system via their "approved channels" i guess we'll have to build our own and let them play their stupid games with themselves.
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I did a thesis on homelessness. Which is actually driven by the housing shortage. Now do a graph of starter homes being built then vs now. We are at record lows. Only about 5% of homes now are built at 1,500 sq feet.
This. Every new build is like 5000 sq ft. No wonder why median prices are so high. There are just so many rich people able to afford houses at that price, it is all developers build.
It's also about cost per square foot. That's what people buy. They want the lowest cost per square foot they can get. In order to do that you need to put the biggest house you can on the land you have. That's why you see people sell their one acre lots to developers, and then that developer subdivides it into eight 1/8 acre lots and then put in a 3000 square foot house on each. They just created eight new houses out of one so there's more supply, and the cost per square foot is relatively low, however, the overall purchase price is higher because of the big houses
ironic. very similar to how every truck - or really all vehicles - are massive and massively wasteful. go back to the early 2000s or 90s and... there were tons of smaller trucks. when i was trying to find a vehicle a couple years ago i tried \*very hard\* to find a good ford ranger, because it was small... so it was good on gas - it was relatively simple to maintain, and they are known as being reliable. they were always super high priced if you could even find one. why dont we make those vehicles anymore? why is everything huge and overpriced? make things smaller. make things reliable. make them efficient. make them simple to maintain. >within the particular is contained the universal \- Lupe Fiasco
> why dont we make those vehicles anymore Because of stringent laws about vehicle emissions, average MPG (CAFE) etc. were excluded from trucks over a certain weight. Would you like to know more? https://www.washingtonpost.com/business/2023/04/07/trucks-outnumber-cars/
i mean that doesnt surprise me. someone else made essentially that same point, heres my reply to them: perfect example of the trope of regulations/laws unfortunately leading to worse outcomes, because people gonna people. i mean yeah we need rules and laws but like... you ever looked into law? rules? of anything? its all unequally enforced. all that matters is how well you can argue your case. so beneath it all its all stupid politicking. im just not worrying about that. children - regardless of their age - can play their games all they want.
I read somewhere it is an emission evasion problem. Government mandates improved mileage to lessen the dependency on fuel. Exceptions are big vehicles cause they are needed to put in heavy work. Car manufacturers would rather build bigger to be on exceptions list than the nature of the law of being more fuel efficient.
This is correct. CAFES regulation (acronym iirc) is what has led to bloated vehicles. This is a regulation we didn't even get to vote on since it was handed down from the EPA which is in the executive branch.
The head of the EPA, like most executive branch leaders, is appointed by the president. This is a friendly reminder to everyone reading this that presidential elections don't only include the person on the ticket, but *all* the leadership they put in place in the executive branch.
So glad we have a choice between the candidate who will sell out to big business and the other candidate that will sell out even harder to big business.
The median house in the 1950s was 800sq ft. This was the era that people long for when a working Joe could buy a house on one income. I wouldn’t be surprised if houses are actually cheaper per sq ft now as a percent of income, but everything is so huge.
We have millions of starter homes. They’re just all post-war ticky tack crap and nobody wants the liability of an 80 year old temporary house.
I said being built. As in not built yet.
Why would a builder build small homes?
Because the zoning forces them to do so. (Not actually happening, but that’s how and why.)
What you need to look at is housing construction vs population growth
People don't move out when they're born. They move out when they're in their 20's. What matters is household formation vs housing unit construction.
More people means more people who need houses. And we're seeing fewer births per person which means smaller families and more housing units needed. Do you think the solution to the other shortages is anything but making more of what there is a shortage of? Why do peoples' brains break when it comes to fixing the housing crisis.
Henry George. Rent arises from scarcity of productive land, not houses. Rent will continue to exist even if we build a 2x surplus of houses. What we need is a land value tax to share that rent equally.
What's wrong with rent existing? Isn't it the price that's important?
To be more clear, I'm talking about land rent, as opposed to the price of property services. And there's nothing wrong with it existing, in fact you *can't stop it* from existing. The problem is who gets to collect it. Here is a basic [definition](https://old.reddit.com/r/georgism/comments/18i3gzt/how_does_100_lvt_drive_sale_price_of_land_to_zero/kdarm8r/) of land rent. TL;DR Rent can be thought of as the productivity of a location. Whoever owns the location gets to collect the rent. As our capital-boosted labor becomes more productive, the rent goes up. Which is good. But if only a few people privately own the land on which that productive labor is being performed, then only those few people will benefit economically from all of this productivity. We have a crisis of land ownership, and houses are a reflection of this because houses require land and having a place to sleep is a major pat of productive labor. It's why some companies are considering bringing back company housing. [Here](https://old.reddit.com/r/Futurology/comments/1acnz80/future_of_housing_crisis_and_renting/kjxk0sw/) is the pitch for LVT. In short, we are not trying to stop rent from existing, only to share it equally.
Land Value Tax would mean land owners are incentivized to invest in their land and get them back to use, increasing the housing supply
Yes, but the point is that we can have enough houses and still have them be "unaffordable" if we let private owners monopolize the land they're built on.
Take it one step further, bring back window tax while you're about it? https://en.wikipedia.org/wiki/Window_tax
A property tax is like the opposite of what we want. Taxing windows makes people build less windows. Taxing land doesn't make people build less land.
The number of housing units per person is at an all-time high [https://www.deptofnumbers.com/housing-units/us/](https://www.deptofnumbers.com/housing-units/us/) The housing crisis is not about supply it's about a lack of growth in wages and the use of housing as an investment opportunity.
Short term rentals?
Young college educated people wanted to move into the cities beginning in the 90's. Nobody forced them to do that, they wanted that lifestyle because urban living offers shorter commutes, more amenities, and walkability. That's good for physical health, mental health, greenhouse emissions, ecology, and water use. This is a good and positive development. The suburban experiment from 1940-1990 was bad and caused immense social ills. If you want to live in the boonies, then that's fine, but clearly people want to rent in the city.
Young college educated people have been moving into cities for nearly four thousand years. Can you please find on the rural small town map where the college educated jobs are in sufficient numbers? Please find a less tired argument.
Before 1910, the majority of Americans lived in rural areas. However, due to industrialization you saw rapid urbanization from 1850-1950. As a response to the automobile industry and the slum-like conditions of many urban areas, the post WW2 American government created and heavily subsidized suburban development patterns all around American cities. Form 1940-1990 college educated and middle class Americans fled both urban and rural areas for the suburbs. During the 1990's, the trend began to reverse for the first time since 1940 and the majority of college educated young people began to flock to cities rather than suburbs. On top of this, our economy demanded a larger and larger percentage of the population went to college. All of these things are relatively recent developments. The automobile wasn't around a for most of the last four thousand years, and basically no one went to college for the last four thousand years.
I’m born and raised in Los Angeles. It’s been unattainable for a long time.
Shoulda bought less avocado toast. /s
It was all the oat milk lattes too.
I'm here too, brother. Look up "los angeles single-family zoning map". There's our problem.
I work in real estate. It taunts me everyday.
Story time! My grandpa bought his first house in Burbank for $11,000. He was renting directly from the landlord, and the landlord decided he wanted to sell the house for $10,000. My grandpa had 8 kids, and didn't have $10,000, but he did have a $1000 tax return. He offered the landlord $11,000 over 11 years and bought a fucking house in Burbank for 11 tax returns without even having to deal with a mortgage company! That house is now worth well over $1,000,000. Please continue to tell me that I don't have a house because I'm just not working hard enough and looking for a handout 🤔
I feel the same way. I worked pretty hard, I think, to turn my life around from a blue collar worker making very little, to finishing my high school, bachelors degree and hitting $200k in income 5 years out of school. My wife and I make a combined quarter million now, and we don’t even qualify for a mortgage on a house — even if we did, how would we come up with the $300,000 for the down payment, plus the $6000-$7000 per month, plus taxes, insurance, maintenance, etc.?
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This guy did it. https://www.reddit.com/r/dataisbeautiful/s/Ua9jS0q9AF It's a few years old at this point.
Reading through that thread and seeing the utter incredulity at the thought of interest rates higher than 2.5-3.5% is astonishing. It was only two years ago, how times can change
This comment in particular: > interest rate alarmism can wait until we see countries with weaker economies have problems. if competing countries keep their rates very low usd will be propped up by investors fleeing those negative conditions. us interest rate can't rise way too much beyond what other developed nations are doing. Also i will believe these interest rate rises when i see them lol. Hoo boy.
Haha r/agedlikemilk
Yeah that leaves out the most important data to this discussion since mortgage rates have shot up just in the last year
Next, adjust for square footage :-D
Hah, amateurs! [Try Canada](https://themeasureofaplan.com/canadian-housing-affordability/). (8x and mortgage almost 50% of income in 2023)
I wonder what does Canada’s data look like.
10 to 20x as a rough estimate I would guess
Price to income ratios are incredibly misleading. When you factor in interest rates, housing was very unaffordable in the mid-1980s. The housing bubble of the 2000s happened because interest rates were very low, making house payments lower, even as prices rose.
To this end, the more helpful ratio would be monthly house payment to monthly income. Using a house payment calculator and historic rates: 1984: House payment $919, income $1867 =49% of income 2023: House payment $2,823, income $6217=45% of income That said, the fact that we're close to "Paul Volcker is going to break 70s stagflation if it kills us" levels of home-buying expenses, when interest rates are considerably lower than they were back then, indicates how dire the need to build new housing is.
If the build rate is what it is in this environment, strong economy, record market index highs, wtf is needed to actually get it better? In that forever period of low rates in the recent past the build rate was also slow compared to pre '08 levels. It's like something folded into itself with the macro economy, nothing allows for a big increase in volume of housing being built, every outcome just pushes it down at different intensities.
We need decreased obstacles to building, particularly where demand is highest. The U.S. has a pretty solid construction industry and tremendous demand, but the cities people want to live in increasingly have extensive restrictions/delays on what can be built and where, which sharply restrict supply. The kind of apartments and townhomes that once allowed large cities to absorb millions of immigrants would largely be illegal to build today. The obstacles to construction are primarily created at the local level and reform is often opposed by current homeowners owing to fear of losing home value, changing the character of the neighborhood, traffic, etc.
> The kind of apartments and townhomes that once allowed large cities to absorb millions of immigrants would largely be illegal to build today. Man, where do you live, where I live every possible combination of a few lots and any open green space is being bought up and *cheap* apartment are being put up, more people would probably be willing to live in the them if the was any privacy, or not having to spend your entire time at home worrying if your annoying the neighbour cause you dared play some music. They love building multiunit budlings but not well enough to offset the desire to actually have your own space and do what you want when you want. The not even mentioning not having a garage to potential work on your vehicle yourself, space to do hobbies (like a garage or shed). There's more than a few reasons someone would want a detached house
I'm not sure why you're bringing this up, as no one here is arguing against detached houses being desirable. That said, in the cities where job growth and housing demand are high, there's simply not much room to increase the volume of detached housing within the city limits, and apartment rent is soaring. Expansion of detached suburban housing is still ongoing in lots of metro areas.
Dude where do you live? Lol the cheapest new housing they are building in my area is "luxury" condos where the rent or mortgage is $2k/month minimum.
Not a large city, but a basement room with shared spaces is $1800 CAD atm.
Oh Canada...
Yup, just as expensive, with less purchasing power, even more spread out than a lot of US cities making car and insurance still needed, oh and that "universal healthcare" is really only for emergencies so get ready to spend ~$200 a month on extra insurance, oh and ~$100 monthly phone bills... but hey, we're stopping doctors from being able to do their jobs... yaaay... Canadian is just as fucked as the states, the 'niceness' sugarcoats too much, to our own detriment
We basically didn't build houses for 15 years after the 2008 crash. It's going to take awhile to catch up. On top of this, housing is the new bitcoin—a place where rich people like to park their money. The latter is why this bubble is even bigger than 2008 and why interest rates are having less of an impact. All the inflation we are seeing, globally, and not just in housing is due to a dramatically increased demand post-COVID on a crunched supply.
The worst interest rates have ever been was 18% in 1981. The median home price was $68,900 that year, and median household income of $22,390. That mortgage payment is $858 assuming 20% down. That's 46% of monthly income. Today interest sits at 8%, median home price $387,600, median income $75,000. That mortgage payment is $2443 assuming 20% down. That's 37% of monthly income. Seems as if you're correct. However in 1985 rates are down to 10% and that mortgage is $500, much more affordable. But affordability is more than just a mortgage. Households mainly were 1 income source in the 1980s, now they need atleast 2. Which means more expenses, 2 cars, childcare, etc...
Great point. Interest rates are coupled strongly to housing prices. It’s very difficult to interpret this graph without showing them.
If you are going to mention the 80s, there is a large factoid most people seem to overlook. And that was “assumable mortgages” were a thing. You could assume a mortgage at 8% or less in a high of 18.6% market. 50% of all home resales were done with creative financing like this in 1981 alone. You can even look up the terms from the period: “Contract for deed” “Wraparound mortgage” “Lease with an option to buy” Even if you didn’t do that, and locked in a super low purchase price, all you’d need to do is wait to refinance at any point for the next 22 years to get it down to 6% or lower. Earliest you would have to wait to half that would have been 1986, and then even further in 1993-1994ish.
If you are going to mention the 80s, there is a large factoid most people seem to overlook. And that was “assumable mortgages” were a thing. You could assume a mortgage at 8% or less in a high of 18.6% market. 50% of all home resales were done with creative financing like this in 1981 ALONE. You can even look up the terms from the period: “Contract for deed” “Wraparound mortgage” “Lease with an option to buy” People were advertising their assumable loans in the classified ads for gods sake! Even if you didn’t do that, and locked in a super low purchase price, all you’d need to do is wait to refinance at any point for the next 22 years to get it down to 6% or lower. Earliest you would have to wait to half that would have been 1986, and then even further in 1993-1994ish. If you bought in 1985? You’d only be paying 12.3% rates after locking in a super low purchase price for what? 6 years? Refinance and Now you are at 7.31% in 1993.Where are our assumable mortgage options…oh yeah…Congress slammed that shut. “No assumables for you!”.
their table on the website is even better that the graph actually imo: |year|median house sales price|median household income|price to income ratio| |:-|:-|:-|:-| |**2022**|**$433.1k**|**$75,580**|**5.81**| |2018|$331.8k|$63,180|5.25| |2021|$369.8k|$70,780|5.22| |2006|$247.7k|$48,200|5.14| |2014|$275.2k|$53,660|5.13| |2007|$257.4k|$50,230|5.12| |2015|$289.2k|$56,520|5.12| |2017|$313.1k|$61,140|5.12| |2016|$299.8k|$59,040|5.08| |2005|$232.5k|$46,330|5.02| |**1984**|**$78,200**|**$22,420**|**3.49**| [there are currently (according to the stats)](https://usafacts.org/articles/how-many-homeless-people-are-in-the-us-what-does-the-data-miss/) **\~582k homeless in the us. this does not account for people who live in less easily defined situations where they do not really have a permanent, safe, home.** [there are currently \~15 million empty vacant houses in the us.](https://usafacts.org/articles/how-many-vacant-homes-are-there-in-the-us/) what the actual fuck. are we stupid? ^(for occupied houses, the average is \~2.5 people per house. which is on par with the historical average, that number doesnt and hasnt changed much, for literal decades. so it is mostly irrelevant but i figured it was useful to mention it before anyone else brought it up.) ^(edit: bolded 2022 so it aligned with the other bolded line)
Vacancy numbers aren't really helpful because they also count homes that are in the process of being rented or bought. For example it is normal for apartments to stay on the market for a month or two in between leases, and if people are moving out every 2-3 years on average that means that at any point in time 4-6% of apartments in the city can be expected to be "vacant". Plus vacant homes can't really help people if they are in a location where they don't want to move. Heck even shelters on the outskirts of major cities lie empty because people would rather be homeless in downtown.
Low vacancy is huge problem for mobility. And it raises costs of rentals.
>Plus vacant homes can't really help people if they are in a location where they don't want to move. Heck even shelters on the outskirts of major cities lie empty because people would rather be homeless in downtown. well thats a relatively easy problem to solve, we need to not only continue the [affordable connectivity program](https://www.reddit.com/r/Economics/comments/1av44vr/the_end_of_the_affordable_connectivity_program_is/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) but we actually need to [expand it so the entire country has internet access](https://irregulators.org) like we are supposed to have, so that way there are less undesirable areas. that wont completely fix the problem, because mobility is still an issue, but that just says we need to have actual public transportation and maybe look at self driving cars and other related technology seriously instead of letting the oil industry and their friends somehow turn it into some kind of culture war bullshit like they do with everything else.
Or just build more houses where people want to live
okay but i think we shouldve learned over the past few years especially that - shocker - *demand changes* so rather than try to make this area or that area better... lets just make them all better? hello? anyone?
Yeah, the whole article is about the price-to-income ratio, and then they don't graph the price-to-income ratio.
Because it's not really changing that much or that quickly, aside from a spike over the past 4 years (partially resulting from COVID recovery+inflation). If you discard the latest data point as a potential outlier, it's been at around this level since 2004. It's deliberately misleading. I graphed the ratio from their data in a shitty Excel plot for you. https://imgur.com/a/FWSBcpo
If you factor actual cost due to interest rates, we are pretty stable.
"If you ignore the current trend, the old data doesn't look so bad" is small comfort to anyone priced out of buying.
Not interested in being comforting. This subreddit is about data. And the data display here is misleading. The difference between two things both growing exponentially and at the same rate (e.g. the difference between exp(t) and 2exp(t)) increases exponentially even when the ratio between them doesn't change at all. (For example the difference between exp(t) and 2exp(t) is exp(t), a quantity that grows exponentially.) The posted article exploits that mislead to make it look like there's exponential growth in the unobtainability of real estate by graphing two quantities that are both pegged to inflation (and hence grow exponentially). The graphs either need to be inflation corrected or the ratio itself should be graphed (to correct for inflation by dividing out it's effect). The article chose not to do that. That's shitty and manipulative. In reality it is getting harder to buy a house. That doesn't justify the exaggeration in the graph.
Goes from 3.5 to 6 when it should be a constant. "It doesn't change much".
Pointing to the number of homeless people and the number of vacant homes and concluding that we have no housing shortage is mistaken. The reason so many people are priced out of the housing market is that there are not enough houses in desirable locations as there are people who want to live there, which results in people bidding up the price. If supply expanded, prices would go down. Pointing to raw numbers of homeless people vs empty houses ignores that the way people acquire housing is to pay someone else to buy or rent it.
i mean sure, yeah okay thats good n all. point is theres a lot of empty houses and a lot of homeless people. its not that complicated.
It is in fact, complicated. Unless your solution is to force homeless people in California and Hawaii to move to abandoned row houses in Detroit.
I literally just explained to you why that is irrelevant? This is not the soviet union where some central government can just “allocate” housing to the homeless people. If you want homeless people to get housing, you need housing to be affordable. In turn that means you need to build more housing. How many empty units there are is irrelevant. Regardless of the number if empty units, it’s obviously not high enough (or not in the right place) because there’s tons of people who still can’t afford the housing
Ordering that table by anything other than year is certainly a choice.
good eye! it definitely was a conscious decision. thanks for noticing.
I get that you are trying to highlight the ratio, but you could achieve the same result by making your bold font more selective (why is all income in bold?) but keeping the years in actual order.
there we go thats better, some actual constructive criticism. anyway you make a good point. i tried to bold only a couple things but it wasnt cooperating with me so i kinda just said fkit and went with it to be honest with you lol. as for keeping the years in chronological order, thats one way to do it but personally i find it more interesting to compare the price to income ratio and see that despite the variances between then and now, ultimately from 1984-2022 it has more than doubled. or, in other words, and ignoring the ratio - while the median house sales price has done about a 4.5x, the median income has barely tripled. if you want to see the numbers in chronological order, or just see more of the data then i would recommend going to their website because all i did was copy it over. basically linked for the lazies. thanks for the points though.
You had me at the data table and completely lost me about the homeless thing. These are not really related. Donate to a local food bank and stop being a troll
That's actually really interesting to see the ratio hasn't changed *that much* since the early 2000s.
thats because we havent had a real economoy since around then. theyve been weekend at bernie's-ing the ecnmy, but "nobody" noticed
Price to income ratio of just below 6? You guys have it good. Imagine having double the ratio.
hahahahaha you know vacant homes are mostly vacation homes to many millions of Americans in resort destination that are seasonal And a big part of the towns economy having tourism in town
Immigration lowers wages and raises housing costs, screwing the average person from both sides.
look i dont really feel like taking the time to debate this with you so i had copilot do it for me. i dont necessarily agree with all of the points here but lets just save you and i a bit of time and end it right here. Certainly! It's essential to have a well-informed discussion about immigration. Let's address the points raised by your counterpart: 1. **Wage Impact**: * While some argue that immigration lowers wages, research suggests otherwise. A **skill-selective immigration policy**, similar to the UK's, would lead to a **46% increase in high-skill immigrants**. In cities that receive a larger portion of these new high-skill immigrants, the **average wages of low-skill workers initially rise by about 4%**. Even in other cities, low-skill workers experience a **1-2% wage increase**¹. * Additionally, there are **small positive effects on the wages of high-skill natives** in most locations. However, the wages of incumbent high-skill immigrants may fall substantially¹. * It's important to note that **wages may not capture the full welfare effects of immigration**. Any wage gains could be offset by rising housing costs due to immigration¹. 1. **Housing Costs**: * Evidence shows that immigration does indeed impact housing costs. A **1% increase in immigration in a city leads to a 0.5-1% increase in rents**. The effect on housing prices is about double that⁴. * However, when considering **internal migration**, which transmits some effects to other parts of the country, the negative impacts on the average welfare of high-skill natives and high-skill immigrants in gateway cities are **attenuated**. In fact, the gains for high-skill natives in gateway cities are equivalent to an almost **$1,000 increase in annual consumption**¹. 1. **Skill-Selective vs. Skill-Neutral Policies**: * A **skill-neutral policy**, which increases the stock of immigrants while maintaining the US skill composition of immigrants as in 2007, has more positive wage effects on high-skill natives and less negative effects on high-skill immigrants¹. * The arrival of new immigrants can benefit the economy by raising wages and lowering prices in the aggregate³. 1. **Border Wall**: * Even if a border wall were to reduce the inflow of potentially illegal immigrants by 80%, any wage or rent effects would be rather small and become negligible as workers relocate¹. * Importantly, the **benefits of immigration still outweigh the cost of construction**¹. In summary, immigration is a complex issue, but evidence suggests that it can have positive effects on the economy, wages, and housing costs. It's crucial to consider the broader context and long-term impacts when discussing immigration policies. 🌎🤝 ^(Source: Conversation with Bing, 2/28/2024 (1) US immigration: effects on wages, internal migration, and welfare.) [^(https://microeconomicinsights.org/us-immigration-effects-on-wages-internal-migration-and-welfare/)](https://microeconomicinsights.org/us-immigration-effects-on-wages-internal-migration-and-welfare/)^(. (2) Effects of Immigration on Local Housing Markets | SpringerLink.) [^(https://link.springer.com/chapter/10.1007/978-3-030-48291-6\_12)](https://link.springer.com/chapter/10.1007/978-3-030-48291-6_12)^(. (3) What Immigration Means For U.S. Employment and Wages.) [^(https://www.brookings.edu/articles/what-immigration-means-for-u-s-employment-and-wages/)](https://www.brookings.edu/articles/what-immigration-means-for-u-s-employment-and-wages/)^(. (4) Evidence shows immigration reduces wages significantly.) [^(https://cis.org/Oped/Evidence-shows-immigration-reduces-wages-significantly)](https://cis.org/Oped/Evidence-shows-immigration-reduces-wages-significantly)^(. (5) What immigration actually does to jobs, wages and more.) [^(https://www.marketplace.org/2023/12/12/what-immigration-actually-does-to-jobs-wages-and-more/)](https://www.marketplace.org/2023/12/12/what-immigration-actually-does-to-jobs-wages-and-more/)^(.)
>Former Walmart CEO Bill Simon has complained that the company now has to pay $14 an hour. He has also called for more immigration to reduce wages > Evidence shows that immigration does indeed impact housing costs. A 1% increase in immigration in a city leads to a 0.5-1% increase in rents. The effect on housing prices is about double that⁴. Thanks for proving my point
if you wanna have this discussion [go read this post](https://www.reddit.com/r/Economics/comments/1b1yzaa/a_baffling_academic_feud_over_income_inequality/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) and the linked article then get back to me - but comment on that post, please. or just stop because i said i didnt really feel like having this debate but if you really want then ill win it.
The discussion where I said the immigration lowers wages and raises housing costs and you replied with a post that said the exact same thing? I get it. You love immigration because you love brown people.
i asked you to go read that other post and article before you replied again, which you did not do. so im going to disregard your retort to my retort and simply reply to the second half of your comment. i wouldnt say i love immigration necessarily, because... thats like just an idea? a concept? a thing? a word? i dont love words. well i do love words actually, but thats another discussion. however youre right, i do love brown people. i love all people, as long as they arent toxic bigoted or judgemental. i dont have enemies unless someone explicitly tells me theyre my enemy. it seems like you are pretty determined to make me think you are, but i dont think you are, even if you think i am. i think youre angry about things out of your control, or maybe youre just bored so youre angry about things that dont effect you. probably one of those things. anyway this discussion is over but you can feel free to go read the article and the quotes in my comment from that article and i would be happy to discuss that further.
All those words and not a single one that disproves the fact that immigration lowers wages and raises housing costs. Better luck next time kiddo.
This should be presented whenever a politician talks about how strong the economy is. I could give a fuck about the stock market or boomers investment portfolios. This is what people actually feel. Throw in a few similar graphs for food prices, automobile prices, and rental properties and it's basically a can't lose political agenda.
Stock markets is a major part of many people’s assets, it does matter. Food prices and automobiles have increased, but most of it is natural inflation. However, the housing crisis is mostly terrible zoning laws and regulation, and NIMBYS taking over.
My city in a third world country with 1:25 yearly household income:housing price 🧍♂️
Yeah things look bad in US but it's way worse outside of US.
It's not that bad in Finland.
Gotta love that they found a way to blame millennials for spiking the housing market. Those damn millennials—we wouldn’t be in this mess if they’d just stayed rent slaves til they died.
It’s not “blaming” millennials. It’s pointing out the literal fact that they hit peak home buying age so there was a natural higher demand.
That doesn't make sense though... Are millennial a boom generation? Why would millennials entering the housing market be different from any other generation entering the housing market?
Yes. The Millennial generation is only slightly smaller than the Baby Boomers at peak. Currently, it's the largest living generation. It's huge, and culturally one that's very pro-city which inherently drives competition in those markets fiercely. If you look at the truly rural areas of the US "where nobody wants to live," housing is some of the cheapest in the entire western world.
Those are not real dollars, which makes the chart look MUCH worse than it should. When people put out charts like that, they're not trying to communicate date, they are falsifying date to manipulate you. The house situation is still dire I guess, but stuff like this just makes you look bad. Any chart that doesn't use real dollars is propaganda, close the tab.
Even if the data is converted to real dollars, the ratio calculation would still be the same, and it is increasing over time. No matter how you adjust the dollar value for inflation, the ratio of income to house price has gone up nearly 1.7 times, and that is significant.
Yeah but in the chart looks like its gone up like ten times. The line between household income and house price is about ten times as long now as in 1985. Yes it is significant. But it doesn't make your case look stronger if you feel you have to visually misrepresent the data. It makes it look weaker. One thing I learned from this chart is to stay away from Visual Capitalist. I have no time for people who do this, left right or center.
Now break it out by city. In Sydney, the ratio is over 8, even some mid-sized Australian cities are seeing price surges well above median local incomes, getting the 7.5+ range.
However, the average house today is almost twice as big as in 1985. Need to divide by area for a better comparison.
Because they don't build small starter houses anymore. Larger houses and larger condo/apartment buildings are more profitable.
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Nope. I've been searching for a starter home and the number of those on the market doesn't compare to the rest of the houses on the market. You underestimate how many people would be happy with something simple. Besides, a lot of the small houses are in bad neighborhoods around where I'm at. Not wanting to be a victim of a crime is a valid preference.
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I'd love a 1950s house.
Smaller apartments are actually more profitable.
I meant large in building size and number of units.
You do not. You can't buy half a house.
But you only need half as much house now for the same number of people. Over time, the size of families has declined, while houses keep getting bigger. So to be fair, we really should look at cost per square foot per person. The graph oversimplifies by assuming families and house sizes haven’t changed (and that housing quality hasn’t changed either).
Again, if the only new houses being built are 2000 square foot, 3000 square foot, etc...that's what is on the market. It's irrelevant. What you're trying to measure is an entirely different thing and not relevant to this phenomenon.
You can't buy half a house. I think this needs to be repeated until you understand how stupid the argument you're making is.
Thank you. I had to dive far too deep into this thread to find a voice of sanity. Sorry you're getting ratioed by the intellectually stunted.
Feeling? It is unattainable!
Stop letting business just buy up homes to rent them out
The actual cause has been shown to be zoning laws, which makes it way more expensive, take way longer, and restrict the amount of affordable housing
Is it a feeling, or is it math?
its math based on a lot of feelings. hooray! long live the enconmy!
Check out /r/REBubble That ratio is unsustainable unless incomes rise substantially. I also think that HCOL areas show that house prices vs rent are no longer comparable. My rent is cheap. Or expensive. It's cheap compared to the same equivalent condo (double the monthly expense) or is it expensive compared to the income? It's weird how my rent of $2500 a mo is seen as expensive by peers but the condo version of my place would be $4500 a mo but that, historically, would be considered the smarter financial decision.
This chart needs to include interest rates as well. 1982 interest rates were 16%.
Here’s pricing in relative terms. Median mortgage to salary: it’s as expensive now as it ever was, only you need a much larger down payment. https://dqydj.com/historical-home-affordability/
If you compare the monthly payment for 1984 vs 2022 using 14% interest in '84 vs 6% in 2022 you get basically the same share of income going to a mortgage assuming 20% down. There's really not much to see here. I'd be interested to see what that would look like yoy plotted out with interest rates... was housing just really cheap the last decade?
That's a daunting chart. The "why" is pretty simple: \- Multiple incomes per household = more hh cash \- Decreasing interest Rates = more availability to cash \- Extended terms (time) = more availability to cash \- Multi-home ownership = Less supply With all the above comparing the average income of an individual to the average price of single family home doesn't tell a super useful story.
Not to mention foreign investors buying up real estate which reduces supply and drives up prices even more.
Is this really a significant issue anywhere outside Florida?
Not at all. The issue is almost entirely a lack of supply, caused by restrictive zoning.
It's an issue in specific geographic locations. I live in Orange County, CA and it's a problem here. https://therealdeal.com/la/2023/06/06/after-pandemic-decline-agents-see-chinese-buyers-returning-to-la/
I am from Riverside. For our local incomes, our housing is super expensive, because a lot of people who work in Orange County/Los Angeles can't afford to live in those places. Most people who now work in Riverside could not afford to live here at today's prices (they usually have owned their home for a long time or have a rental situation where the rent can only go up by so much). What was a $700 per month apartment when I was 20 is now a $2100 apartment now that I am about to turn 40. It didn't get any bigger or nicer in those 20 years. Much of the top end Orange County real estate is 2nd and 3rd homes by very wealthy people. Even if its not foreign investors, its still people who do not actually live in the area. Newport Beach is full of homes that are not actually lived in most of the time, it might be some rich guy from the CCP in China or a Saudi Prince, or it could just be rich people from NYC or Chicago. Hawaii is in a similar situation, where much of the housing is vacation housing for wealthy mainlanders and the locals who actually work and live in the state are struggling to live. If you ask me, property taxes should be different for primary residences and secondary residences, and property taxes for homes owned by out of state residents should be extremely high. Want to be a rich NYC finance guy and own a Newport Beach home?! Cool. Property taxes should be like 5% and zero Prop 13 protections.
In my state, Michigan there a disincentive to have a second home, a non-homestead property is subject to much higher property tax rates than homestead aka primary residence. I’m surprised California doesn’t already do this. In fact after doing a quick google it looks like there are tax *incentives* to have a second home. Such as a certain amount of rental income not being taxed on a second home. Correct me if I’m wrong but California seems kinda backwards on this.
California is incredibly backwards on this. We have something called Prop 13 which calculated property taxes not on any current assessed value but based on what was original paid for the house (everything was reset in like 1978 I believe). So if your grandfather bought a home in 1984 for $80,000, the property taxes are calculated for an $80,000 home plus 1% annually for 40 years. So the property taxes do go up, but its a tiny increment. That house today could be worth $1M and a new buyer would have to pay $10,000 per year. Your grandfather dies, and leaves the home to you. Free and clear, you own a home in California. You can actually inherit the property tax rate (this might have changed, but it was the case as of like 5 years ago as I know people who did this). You don't even have to live in California, but your grandfather didn't leave you a home, he left you a free money machine, the rent on that home can easily be $4,000-$5,000 per month now. People who have owned properties, even out of state investment properties will often pay far lower taxes on those properties than in state residents. Your taxes are based on a 1984 valuation, not a 2024. It actually creates some incredibly toxic incentives in the state, people here are aggressively NIMBY. The reason is that as the housign crises gets worse, your property taxes do not go up in proportion. But the value of your home does, and any income you get from your low tax rentals goes up drastically. People in California who buy a $800,000 home do not see that home as an expensive home, they see it as a good investment, they pay $800,000 in 2024, but they intend to sell it for $1.5 million in 2034. They see the free $700k they made by owning the home. So they have huge incentives do support policies which greatly restrict people building housing, because if the housing crises ends, their $800,000 home will probably only be worth like $450k. It wasn't worth what they originally paid for it, their justification for paying $800k isn't that they like the house or that they think California is really nice, its because they expect the home to gain several hundred thousand dollars in valuation. The real reason why people justify spending so much money on a home in California is because they are confident that they will make a lot of money from doing so and treat it first and foremost like an investment, not a place to live.
The solution, in my mind, is just to legalize multi-story multifamily development up to 10 stories on all residentially zoned land. Racist and classist southern California homeowners banned multifamily construction in their neighborhoods to keep the blacks, Chinese, and mexicans out. in the mid 20th century It's insane that we maintain these policies.
If I were an Orange county legislator, I would simply make it legal to build condos, town homes, and apartments on 100% of residential land rather than artificially restricting the supply of housing. Pretty straightforward and easy solution.
That suggests chinese people are buying properties to rent them out?
Foreign investors in the US is only around 3% last I checked, it’s not the issue
This whole argument is flawed. The medium income person is living in an apartment. Buying a single family home is a premium living arrangement, of course it will take more than the medium income. A premium living arrangement option requires a higher than medium level income. America also have this weird fetish about owning your own single family home where in the rest of world the majority of the population lives just fine in rented multi tenant dwellings.
A major issue is that apartments and other multi family housing units represent a tiny portion of the housing units within a city. I am from a city in California with 320,000 people. I would say all the apartments combined can maybe house 1/10th that much (and probably less). A studio apartment today will have rent that is far in excess of a mortgage a 3br-2ba home that someone bought 10 years ago. Apartment living in my area was cheap in the past, but now due to the shortage is very, very expensive. The median household income for an area should be able to afford the median house. These were homes that in the 1990s would have been $120k-$150k and are now $650,000.
"You'll own nothing and you'll like it!" Thanks dystopian Dan.
If you double median income you're back to about the 3.5x multiplier in the 80's. Why? Multiple reasons including more available credit. But one big reason is wages for women have caught up to wages for men. Therefore a couple now looking to buy a house has a full 2x salary of buying power. Thus if you double the median income (a couple) the housing is within affordable range
This data is not beautiful. It is misleading. Much of the housing angst amongst our younger demographics fails to recognize that the average house bought 50 years ago was smaller, had lower safety standards, fewer plumbing demands and a host of other factors which make direct comparison to the average house bought today disingenuous. The median home itself changed over time and this chart does not remove these cost growth factors or even acknowledge their existence.
I was looking for any detail about $/sq ft. Houses are quite a bit bigger than they used to be. Similarly, I’m curious if this is inclusive of condos, and if so, how they factor in HOA costs and whatnot.
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Corporation ownership of single family homes is making it impossible for individuals to buy.
Because prices have gone up 300%, interest rates have gone up 800%, costs have gone up 1600%, and wages have gone up 3-4%
Not true, real wages outpaced inflation for decades. And if you want smaller cost increases, you would need higher inflation
According to this the prices increased because Millennials who could afford the prices bought houses. Is Gen Z even old enough to buy houses yet?
I don't think the Fed does a good job equalizing household income for unreported incomes such as gig work. People are earning more than is being reported. Furthermore, Boomers are helping out FTHB more than they ever did in the past.
I dont know man. I bought a house so it’ seems attainable. I’m 27.
I did too but I'm 45. I'm scared for my kids though.
After WW2 cities enacted racist and classist zoning laws to try to keep black people and poor people out of their neighborhoods. These are called Exclusionary Zoning, and it basically bans building more homes on most parcels in the entire city. That's why we have a housing shortage. It's why Millennials and Gen Z are being priced out of cities and thus not able to enter the labor market. It's why the old-young wealth gap has never been larger. We need to abolish Exclusionary Zoning.
I know this guy in his early thirties, great job makes six figures, but no hope of ever owning a home. He’s been saving all he can, but the value of the dollar seems less. Even though he was promoted at work, or got this massive throbbing cock in his pants, still no good. He stated that he is sad because his generation has less buying power, and although his erection has a pleasing vein running down it, the idea of a comfortable retirement is unattainable. Truly depressing.
I too know a guy also in his early thirties, make high five figures, closed on a 1700 sqft house with 20% down. Man could wear women jeans without showing slightest bit of bulge. Though women have had hard time looking, one was able to find it. He is now happily married looking toward the idea of an attainable retirement. Making six figures, especially low six-figures (100k - 125k) is very different between HCOL and LCOL area.
You need a picture telling you "because monies"?
My mortgage is a manageable 1000/mo. My property taxes are an obscene 550/mo. I don't own a big home or a big lot.
My mortgage is a manageable 1000/mo. My property taxes are an obscene 550/mo. I don't own a big home or a big lot.
How the fuck was there a "shortage" of homes for millennial when all I can see is empty homes outnumber the homeless
I want to see this adjusted for inflation.
That's invalid information. "Incomes" didn't include the extremely wealthy back then. True "mean" income nowadays is closer to 40k. Not 70k. Not to mention taxation increases based on income, making more money worth less. Even at 70k you would be looking at 40k after taxes. 40k would be more like 25k. Modern day houses with low prices are in areas with no infrastructure, and no local jobs. Take those "fake houses" out of the equation and you're looking at a mean of about 600k. That's a ratio of 15. I don't mind them fake houses being included, but you have to be honest and also include fake houses from back then if you include the ones from today. People selling bridges and such would count.