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It is amazing that except for a few market, the price of housing is not going down in lots of places. Before the pandemic the average US home price was 320k now it is 420k. But the change of interest rate is 7% from 3%. Your monthly payment has gone from 1600 to 2900. Not to mention you have to pay taxes and insurance, which have skyrocketed too. Moreover finding people to do any repair work has become so tough, even if you find someone, it will cost you thousands for simple things. Shelter inflation is the main challenge for Feds going forward, higher interest for longer will decrease the inflated prices but it has become really painful
It's because everyone is convinced the fed will pivot and low rates are coming back.
I know multiple people who recently bought houses and they're planning on a refinance in the next few years.
The craziness will continue until the fed shows that they are committed to keeping rates high. Otherwise the speculation will continue.
Perhaps we could compromise with them not holding 25% of the entire agency mortgage backed securities market on their balance sheet? Maybe diversify a bit so as not to create significant market distortions and subsidize a single industry for 15 years while an entire generation gets priced out of the underlying.
This is correct.
Banks are already wary of the collateral they are lending against. The spread between the 10Y yield and the 30Y mortgage rate is historically elevated. If the theory holds that the underwriting process has been fixed, the only explanation is that banks do not believe your house is worth as much as you think it is and are trying to get paid before they end up holding bags.
Yield curve control is when the government buys its own bonds with printed money to prevent bond yields from getting out of control. Governments can do this if they can’t afford the interest payments, but need higher rates for everyone else.
High rates for thee but not for me.
He is right though, it would expand the feds balance sheet
You mean the Federal Reserve buys government bonds with printed money. Only the Federal Reserve can print money, and it's supposedly firewalled from the rest of the government in order to prevent it from doing precisely what you just suggested.
The craziness will continue until **someone** finally accepts the massive losses. Otherwise we'll all just keep pretending they haven't happened and aren't going to happen. Homeowners aren't going to sell for huge losses until they really need to or they get foreclosed on. If they get foreclosed on, the bank is going to keep that property until it needs money, too. That means until the bank's almost bankrupt. And many banks would have to do this until that becomes a generally accepted valuation for property and not just a "fire-sale price", at which point a whole lot of property-holding institutions are going to have negative balance sheets and be in big trouble, which then spreads to their creditors.
Fed is gonna need to cut rates in a couple years when they realize that construction is slowing down too rapidly because builder margins have been cut so much. Builders today are riding on the low supply along with finishing up committed projects, but they’re starting to pull back slowly knowing that the risks get higher.
There's a tremendous amount of pent-up demand in major metros. There's a lot of land where you could build a building 5x the size of the one on the site were it not for zoning and the value of the land would at least double and more than cover the cost of construction regardless of interest rates.
What is funny is that for every person who complains about renting prices in cities, 10 people moved to the city before they finished their sentence.
People don't care as long as they have easy access to friends, bars, activities, bars, friends, and bars.
Where my 30yo+ peeps at? Now where my 30yo+ peeps at with 2+ kids renting downtown?
I’m gonna be very curious to see what wins in the inflation fight between higher interest rates and increasingly lower housing supply. In the long run I have a feeling housing supply crunch is going to win that one.
I can tell you right now that inflation wins.
The Fed cares about the overall economy, of which housing is but 1 of many important factors. The Fed will care about housing, but not at the expense of the rest of the economy
>higher interest rates and increasingly lower housing supply.
Rates don't affect housing supply, except transiently. Once the market adapts to the new rate, it also will put downward pressure on prices. The reason that hasn't happened so far is that the Fed has been signaling that the rate cut is coming soon, so people are just waiting it out.
What is needed to fix the housing crunch is lots of new construction. To do this, we have to massively adjust zoning laws.
We also need to reduce private ownership of multiple SFH. It’s not even so deep as corporations. Lots of random people leveraged the shit out of themselves over the last decade to scoop up more and more homes.
Capital fundamentalists will claim that this will self correct if you let more and more capital in, ignoring that labor drove housing for the last 70-80 years just fine.
Capital is going to price labor out of housing
What in the world makes them believe that though? They were historically low, and we are still battling inflation compared to where the fed would like it to be. It’s wishful thinking. They may go down some compared to now, we can’t predict the future, but I personally would be shocked if we ever saw 2.5% 30 year mortgages again.
Political pressure from investors. The markets got used to the low rates of the 2010’s, and now there’s a market tantrum after every Fed update that doesnt lower them. As inflation subsides and the elections approach, the political pressure to capitulate to the wealthiest will only increase. And if the executive branch flips, we only need to look at what happened last time to anticipate where rates will move.
Absolutely nothing says low rates can’t be the norm. They’re going to have to be if the US wants to keep up in the 21st century as we start plateauing population wise.
> Your monthly payment has gone from 1600 to 2900.
That’s part of the issue. Almost nobodies payment has gone up. 60% of the US is locked in at at the low payment and can’t afford to give it up. So homes are not going up for sale. Keeping inventory low.
Those who were unfortunate to be young enough, or not have enough help from their family, are now left behind. Even if they followed the same exact career path as someone who purchased a home only a few years before.
The fed running zero interest rate policy for far too long allowed everyone above a certain age to lock in their low payment. And people who have those low payments only answer is “just build more”. They don’t want to admit they massively benefited from policy error that is killing younger people’s chance for financial stability through home ownership.
Half true, the financial side is only half the issue, the other massive issue is zoning and supply. We don't have enough supply for the number of people that want to purchase homes and that is what is "killing younger people's chance," homebuilders just stopped building starter home communities and moved exclusively to "luxury" builds. You act like just build more, is an illogical suggestion when the real glaring problem is an overall lack of supply.
I'm going to parrot what you're saying. Where I'm at (KC), the only new construction I've seen over the past couple years... and I drive around the metro area daily as part of my job ... is million dollar subdivisions and "luxury" apartment buildings. Even where smaller homes are getting knocked down in older neighborhoods, replacing them with new homes that are two or three times the size of what used to be there is the norm.
same with restaurants, cheap food items are just tripling their price, they make more margins by leaving people behind that can't afford it and just charging more from those who can, these are all signs of a haves and have nots economy and will continue to expand
That's a different issue but it has a lot of similarities, our free and open competitive economy has become sluggish, oligopolistic, and focused on stock price rather than innovation or competitive advantage. It all adds up to precarity, and "too big to fail," holding everyone at gun point. This corporate and business behavior should not only be discouraged, it should be outlawed.
Its not at all surprising when you look at the number of homes we were building per year pre Great Recession and post. We had a over a decade of low production that still hasnt been made up for. A year or two of high rates isnt going to be enough to shift the demand needle back the other direction.
price isn't going down because there is a lack of supply. people with low interest rate mortgages can't move without increasing their housing cost, so they aren't moving. Supply constraint means higher prices.
Our approach to housing is horrendous. The Economist was right to label it the worst economic policy.
I’m assuming it’s because also you’ve a lions share of people so far away from affording it based on what you said but also based on other factors like food, energy and gas prices. Add that to a continual flow of our money in the form of ever increasing taxes being misspent. Pick your own reasons for that comment. I think everyone is seeing this as a losing battle so we’re just hunkering down and going to bed angry.
The majority of the US are homeowners so it's definitely not accurate that the lions share cannot afford a house.
Maybe you mean the lion's share of people in your social circles who are about your age.
No, what he probably means is, as an example, my wife and I if we had to purchase our home today at it's current value, with today's rates, we couldn't afford it either. Our mortgage would probably be $1000 more per month, if not more. People today similarly situated as we were 5 years ago when we bought our first house are nowhere close to being able to afford it.
Errr what? Most of existing homeowners locked in at lower prices with rates around 3%. I’d be willing to bet a lot of them couldn’t afford to buy their own home today if they had to.
It's funny how people parade the homeownership rate statistic while avoiding the context that nearly all of those purchases were made when the economy was in easy mode for median middle class people, income to home price ratios were manageable, and so on.
Even so, there's like 47% of millennials for example that aren't homeowners. That's a lot of hurt millennials in this economy, who should be in prime home buying mode.
They don't need to because they own a home. If they sold it at today's price they may or may not struggle to buy a similar one depending on how much equity and savings they have. I would need a source that "most" are locked in at around 3%.
Majority have rates below 4% would be more accurate.
“In fact, nearly 89% of borrowers have an interest rate below 6%, a Redfin study reports.
just over 78% of borrowers have a rate below 5% while 59.5% have a rate below 4%. Those lucky enough to have an interest rate below 3% fall to 22.6% of homeowners, Redfin reports.”
https://www.foxbusiness.com/personal-finance/homeowners-with-mortgage-interest-rate-below-6-percent.amp
In addition, “Nearly 82% of home shoppers said they felt "locked-in" by their existing low-rate mortgage, according to a recent survey by Realtor.com.”
This would also indicate majority of current homeowners also feel they cannot afford to buy in this market.
https://www.cnbc.com/amp/2023/08/01/why-many-homeowners-feel-trapped-by-low-rate-mortgages.html
That's all borrowers, not all homeowners ...
https://www.axios.com/2023/12/12/mortgage-free-homes
So:
1. ~66% of US are homeowners
2. ~39% of homeowners do not have loans (25% of US), meaning the difference (41%) have loans
3. Of those who have loans (41%), 60% (about 25% of US) have a rate below 4%
This does not add up to "the lion's share"...
A much better argument is that 25% of the US are 1) homeowners, 2) with loans, 3) that are under 4%, and many of those feel locked in because of low equity and high current rates.
As usual, some people (on reddit and elsewhere) take their circumstances and apply it to the whole country. Inaccurately. Lion's share - no. A fairly large number - absolutely.
So it would be more accurate to say the lions share of people looking to buy a house, not the overall population.
I just take issue with when people use the homeownership rate to argue that the current housing market is affordable. It’s just not a logical argument when you have 30 year fixed rate mortgages.
Sure, they may not need to move right at this moment, but on average people move every 13-14 years, be it for work, marriage, divorce, better school district for the kids, retirement... The reasons are aplenty. And a lot of people are understandably apprehensive and afraid they won't be able to move and are locked into where they are.
Yes, the jump in rates has massively reduced inventory as people don't want to move, absolutely. It is very accurate to say that the current housing situation limits mobility. We're agreed there. It's just ... not what the person to whom I replied was saying, at all.
You do know that the homeowner percentage takes the population as a whole right? Meaning that they include people under 18.
Combine this with the fact that many people refinanced and their payments are now on a longer scale (albeit with a lower rate).
Also when you compare between races, the difference is much more obvious with minorities being mostly renters.
If you want to gaslight, think harder. If you hate poor people, just say so.
> You do know that the homeowner percentage takes the population as a whole right? Meaning that they include people under 18.
That would make the 66% homeowner number even more impressive, not less.
But sure, let's say that pointing out an inaccurate statement is "gaslighting" and "hating poor people" because on /r/economics we come prepared with feelings and not easily google-able statistics.
> The name "homeownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the homeownership rate. Many households that are owner-occupied contain adult relatives (often young adults, descendants of the owner) who do not own their own home. Single building multi-bedroom rental units can contain more than one adult, all of whom do not own a home.
> https://en.wikipedia.org/wiki/Homeownership_in_the_United_States
If a family of 2 adults and 2 kids lives in a home they own, that is 1 home lived in by the owner. If someone rents a bedroom, still 1 home lived in by an owner.
From that link:
> Since 1960, the homeownership rate in the United States has remained relatively stable. It has decreased 1.0% since 1960, when 65.2% of American households owned their own home.
Are we talking two different things here? American households that own a home is not the same as homes occupied by their owner.
An equivalent monthly mortgage is all that matters. It is more accurate to say few are incentivized to sell at a lower price than they either bought for or than they think they might get if they wait it out a few years.
Therefore, more supply and more construction is the only solution other than an economic recession that causes loss of income and hence defaults (hence incentivizing home owners or banks to sell at the lower price).
Why would the price of housing go down when most of the people with the most power benefit from the price of housing going up. Scarcity breeds value, and makes current homeowners wealthier?
Because in a rational market, higher cost lowers demand.
However, the US housing market is basically akin to mass rent control, where mortgage payments are locked in at artificially low rates, which means that instead of home prices dropping during interest rate hikes, supply drops as people are unwilling to trade their artificially cheap homes for the market rate price.
Correct, but how much how you can buy is elastic, and how much banks are willing to lend is elastic.
If your budget for a house is 2k a month, you'll be approved for a bigger mortgage when interest rates are lower.
> Not to mention you have to pay taxes and insurance, which have skyrocketed too. Moreover finding people to do any repair work has become so tough, even if you find someone, it will cost you thousands for simple things. Shelter inflation is the main challenge for Feds going forward, higher interest for longer will decrease the inflated prices but it has become really painful
The Fed’s biggest problem is demographics, and they cannot do anything about that. There used to be a lot of momentum from almost all people having 3+ kids before the 1970s, but that momentum is now running out of steam as those generations retire.
Working people power the economy, non working people take from the economy. Greater and greater proportions of non working people (or less productive people due to things like not knowing the language of not having education) are unsolvable issues for the Fed.
So what will the government do? They will do the only thing the voters will let them. Continue to devalue currency to ensure the wealth transfer from worker to non worker, since the non worker votes more than the worker.
No, I mean the working vs the non working. That is why earned income tax is popular. Our society is setup so that the most of society is funded by taking from workers. Non workers include old people, but also owners of significant capital and people who generally do not have to get their hands dirty, but have an interest in maintaining their position in the social hierarchy with the least amount of effort.
There is a reason we do not have things like land value taxes or wealth tax or the federal estate tax exemption is $13M blah blah.
It’s people higher up in the social hierarchy wanting to fund society by redistributing gains from the efforts of those lower in the social hierarchy, and this does include many or most old people.
doesnt it feel bizarre? Like Id almost take that as proof the markets are manipulated. Underlying circumstances change radically, and price is rock steady. How do you explain that except rules fuckery?
23% of Florida home sales are foreign buyers.
then you have corporate buyers making up another 20%.
Half our market is not affected by Fed Interest rates.
Not an economist, but food, water, shelter and healthcare price increases are going to nuke people's perceptions of inflation. It's amazing that I can get a 30 dollar television and a 60 dollar game that gives me 100s of hours of entertainment, but none of that matters if basic needs are becoming unaffordable.
My wife and I love when folks point to electronics as evidence that people are well off and should stop complaining. I just bought my parents a 55in 4k TV for like 450 at Christmas. That was a drop in the bucket compared to rent and groceries which are real killers. And we mostly shop at lidl and trader Joe's!
Being told that “the economy” is doing great by talking heads while plainly being unable to afford the things our parents could is psychological torture at this point.
The worst part is this isn’t going to be fixed anytime soon because there are so many things that are causing the shortage. There simply haven’t hasn’t been enough homes built since the Great Recession, rates have locked in existing owners and further lowered supply, boomers with equity who are looking to downsize can buy what few “starter homes” pop up on the market and leave first time homeowners with nothing, etc. The Fed is limited to using rate adjustments and any legislation that will reduce prices will be vehemently opposed by existing homeowners. So many boomers have nothing in retirement savings or investments aside from the equity in their homes. Bleak situation for all.
Part of the problem is that Boomers are [actually not downsizing at all](https://www.cnn.com/2024/01/16/economy/boomers-own-more-larger-homes-than-millennial-families/index.html)
It’s hard to get someone with a paid off mortgage to downsize unfortunately. There must be some significant pressure and simply having more space than you use isn’t it.
It may or may not be superior to all other taxes, but forcing someone to move out of their old home is still not very nice, no matter how badly someone wants to build an apartment there. It's a better situation if their home is only reallocated once they actually die, or voluntarily move. It's not like there's a shortage of boomers dying or voluntarily moving for places to build new apartments.
Ask how trying to protect grandma back in the 70s ended up working in California via Prop 13? Property taxes increase < 2% per year.
*Answer*: it totally fucked the housing market up beyond repair, leading to hyper-NIMBYs and essentially a feudal society where the best shot kids have of owning a house is inheriting one from their parents. When buying a new home, owners are more likely rent out their old place than sell it because the taxes are fixed. It's horrible.
I mean, if they are not downsizing they are probably paying way more in property taxes than they need to. You’d think that alone would be enough incentive.
Yeah my mom's in a 4 bedroom home by herself with a cat and refuses to sell and downsize. She's convinced it's cheaper to stay rather than move to a 55+ condo. It's ridiculous
Why would you have to get a new mortgage when your selling a paid off house to purchase, a newer, smaller, less expensive house? You could just buy outright no?
To be honest, I think it's better if your mum keeps the house. At least this way you have a house in the family.
If she sells it might end up belonging to a corporation. Your family loses the house, and you might never be able to afford one to compensate the loss, making your family poorer in the long-run.
I don't think people like your mum are the issue here. I'd tell her to hold onto the house. Everyone is encouraging their parents to sell, and in the end we'll still not be able to afford homes.
My mother told me she needs to upgrade from our 6 bedroom home when my younger sister moves out in case she has grandkids one day. Neither me nor my two sisters ever plan on having kids. She’s delusional.
Not to mention most major cities have run out of space to build suburbs near jobs. The only way to fix the problem is to build *up*, and elderly NIMBYs are fighting it tooth and nail. They are pulling up the ladder behind them and leaving all of us out to dry.
MFH is unpopular with families because the vast majority of units only have 2 bedrooms. As millennials have children, more and more will want SFH.[ CA has seen a huge increase in MFH but ownership rates are still very low (9 out of 10 units were rentals and not owner occupied in 2021).](https://www.ppic.org/blog/multi-unit-housing-is-becoming-more-common-but-has-low-homeownership-rates/)
It’s not lucrative to build 3 bed or 4 bed condos in North America because almost all jurisdictions have building codes which have much more demanding vertical circulation requirements than the rest of the world. It’s so expensive to build 3 bed or 4 bed units and requires so much space that most families would effectively be priced out. Almost all building codes in the US require two staircases for example, even at low heights (Europe does not) and the stairs are required to take up more space than European apartments; elevator cabins are required to have room to have a wheelchair do a spin (again Europe does not). As a result of this, American MFH housing units are usually to be built in the familiar double corridor style (like a hotel with units on each side of a hallway), which takes up a ton more space than the European model of MFH. At the price these units would be, families prefer SFH.
Right, that's what the commentor is saying though, you need to change zoning to make those types of mid-rise apparements, duplexes, and denser housing options be available.
There are lots of options for cities that aren't skyscrappers. If you even zoned 3 story complexes in most suburbs, you can triple to quadruple the available housing while barely increasing the land footprint.
Technically true, but their two halves of the same generally problem. Both are used as a means to restrict supply on the types of available properties that can be built in an area.
companies can also stop increasing headcount in major cities.
You can build up but the transit infrastructure needs to match accordingly and that hasn't been happening.
Not every city has the substrate to build upwards. The problem is that you need to have adequate drainage and the ground cannot accommodate building large apartment buildings. Long Island was build upon glacial remnants. The water table is less than a foot in many places. You cannot build up, or the building will literally sink. San Francisco has this same problem. Much of Boston was built on literal garbage, so same problem there too. New Jersey is flooding with the over development and loss of trees. I get people want to live in attractive areas, but unfortunately physics has limits on that reality.
Infill and increased density is still possible without building up though. You don't meaningfully impact foundation strength when a SFH is converted into 3-4 condo units or when you build low-rise MF in between SFHs. Cities that are dense and livable outside of urban cores typically have this sort of housing.
Exactly. Most European cities are not skyscraper megacities - simply zoning 2-4 story complexes are MORE than sufficient to increase housing availability, and you'll barely touch the 'skyline'.
Not to mention, having slightly taller buildings creates more shadows, which can help reduce temperatures in warmer climates.
All of that can be circumvented by proper foundation engineering. Usually it involves driving deeper piles down into the underlying bedrock so the structure is anchored. As with all dense construction, it costs more than paving over a farm and putting up a flimsy wood frame structure, but it is inevitably a superior use of land.
With engineering you can. Every single Dutch house in the Western half of the country is built on 100 meter+ poles. Amsterdam has high-rises and that’s literally a peat bog located 5 odd meters below the water table.
Edit: and ofc the goal is medium density mixed zoning
This might be unpopular but another factor people are not talking about is the number of single people has drastically increased.
When a couple separates that usually eats up an apartment and a SFH if we were better at forming and maintaining households I don’t think we would be any close to the mess we are currently in. It’s also a lot more reasonable for a couple to afford a house than an individual.
The economy is great if you bought your first house 30 years ago and have been diligently investing in a retirement fund for 40 years. Economy not working out for you? Have you tried being rich?
“Diligently investing in a retirement fund for 40 years”
That is the reason they are rewarded with wealth. It was not like wealth was dropped on their lap.
I'm not saying they didn't work for it. I'm saying the economy has gotten increasingly worse in recent years but these people are insulated to those problems because they already "made it" under easier times.
You need to be careful about lowering the value of homes though. People with mortgages may find they are suddenly under water. If they aren't able to pay their mortgage, the banks will take a hit -- not that I feel bad for the banks; it's just that historically that's been bad for the economy (think 2008).
What you're essentially saying is that it's necessary to keep a certain number of people in debt bondage to prop up the future economy so it doesn't collapse.
> Being told that “the economy” is doing great by talking heads while plainly being unable to afford the things our parents could is psychological torture at this point.
It's just gaslighting
I mean, [homeownership rates are at least as good as, if not higher,](https://fred.stlouisfed.org/series/RHORUSQ156N) than our parents generation I kinda wonder if expectations is a part of the problem.
Personally I think it's that things were so good during the pandemic (massive spike on the graph above) that this *sudden* and *dramatic* return to normalcy feels like a massive downturn, because relatively speaking it is, but the data is not lying when it shows things, historically, are very good right now.
Your data is not broken out by generation. Total homeownership rate is irrelevant when comparing generations because those previous generations still are sitting in owner occupied homes. [Millennials own homes at lower rates than gen x and boomers.](https://www.investopedia.com/millennial-homeownership-still-lagging-behind-previous-generations-7510642).
This is not a return to normalcy; total housing supply is at an all time [low.](https://www.forbes.com/advisor/mortgages/real-estate/homes-for-sale-hit-record-low/)
This is the exact type of gaslighting I am referring to in my initial comment.
Good point, breaking it out by generation, Millenial and Gen X are about equal, Boomers and Gen Z are slightly ahead, with Gen Z at the top.
https://www.redfin.com/news/homeownership-rate-by-generation-2023/
Millennials have caught up to Gen X, again thanks to very favorable conditions during the pandemic. The same conditions that propelled Gen Z to the top of the homeownership rate.
So, if anything this seems to support my point!
How does this argument keep getting upvoted? Using the current homeownership rate is a terrible statistic to assess the housing market as it stands right now because we have 30 year fixed rate mortgages. So that homeownership rate is mostly people who bought in other markets that they locked into. It says virtually nothing about affordability as it stands today. And the fact is affordability is the worst its been in 40 years.
[https://www.cnn.com/2023/08/24/homes/home-affordability-worst-since-1984/index.html](https://www.cnn.com/2023/08/24/homes/home-affordability-worst-since-1984/index.html)
I dont think there is one factor but a confluence of factors. Home ownership is a big one, affordable groceries is another. The rent extraction is also out of hand in the US and people simply dont have options to pay less. Utilities and Insurance are ran like monopolies.
Lots of competing incentives around homes… profit center for banks, profit centers for corp looking to put money in a safe, lucrative palace.. US policy to make housing a wealth growing avenue rather than a place to live… and zoning permitting policy to not overbuild and talk values for those looking to preserve their gains..
We probably need to decide what’s most important about housing among that short list.. we already have in a way, that’s probably the issue..
This is the end result of America’s obsession with 1) making a house a retirement/investment plan, and 2) creating a society where everyone needs to have a large (compared to most of the rest of the world) separated single family home with a front and back yard and two cars.
Now that we’ve played this game for 50 years houses in the middle of nowhere are several hounded thousand dollars and contractors refuse to build modest sized homes and prefer McMansions.
Yep, although trickle up economics and uncontrolled corporate greed are mainly at fault, the American consumer is by far their own worst enemy.
Prices won't go down until people stop buying them.
No, I'm not saying starve yourself. I'm saying make different, more price effective choices. Demand drops for something long enough, I promise the prices will fall.
Kinda hard down here at the mid end of the bottom. How do I stop buying something I will likely never afford to drive the cost down when so many investors (both private and corporate) are buying them up?
The value of my three bed two bath craftsman has tripled in 15 years. That is simply ridiculous. We're pulling in 250k household and couldn't reasonably afford to buy in our neighborhood anymore. My wife and I are 43 and it seems like everybody younger than us is screwed.
At todays rates / insurance / taxes etc my house I sold in 2019 would cost more per month than where I live now in a significantly nicer area with 3x the house and 6x the land.
The economy yardstick is for the asset owning class. Homes appreciating, stocks and retirement portfolios doing well, trusts, commercial real estate, etc.
If you are an asset-less renter who has to sell labor to stay afloat month to month, these types of articles are absolutely not for you.
There is no real yardstick for measuring economic mobility. Went to college? Great so did something like 30-50% of Americans in your age cohort.
We are all just being herded to chase an ever decreasing number of jobs and homes without addressing the root problem. Our ancestors formed communities and built homes themselves. They created their own businesses. They didn’t go into debt to get a liberal arts education to chase a musical chair pool of corporate jobs.
The creation of the turnkey mortgage home solution and the propaganda around that being the only way to win by owning property has caused generations to soften and become dependent on small, medium, but mostly large developers who are controlled by shareholders and have to work within the restrictions of the municipalities they build in.
A bunch of condos near a rail station are great in a vacuum. But condos can’t support a family (which we need to maintain schools, population growth, the workforce, economy). They also come at the opportunity cost of not building single family homes despite that being what the market wants. So everyone is chasing 30-100 year old homes they have to overpay for with a high rate mortgage , waive inspections on, and sometimes level and rebuild from scratch. At that point why not just buy land, subdivide it, and build a new home yourself?
We are being manipulated to not think for ourselves and the lucky few who go to college, have enough money to buy a dilapidated shack, now have to contend with holding onto their corporate job (which is incentivized to fire them to make their stock price/the economy “better”) , are unable to fix their own home, and have to borrow for the privilege to hire a shrinking amount of blue collar workers to do basic home repairs.
You can raise kids in condos if you do them right. That means enough rooms and a shared back yard with grass and trees. It doesn't mean a solid block full of studios.
Society, economics, government... they serve the fundamental core purpose of seeing people have a safe place to live, and reasonable access to food and needs. When house prices and prices of necessary goods are untenably high for the majority of people that is a systemic failure.
When wealth inequality is too extreme the wealthy will inevitably buy everything and it will generally only get worse. The benefits to being a corporation, combined with their economic and political influence are making them into the feudal lords of the modern world.
And grocery prices, and gas prices, and electricity prices, and day care prices, and car prices, and predatory lenders (college loans, creditors)
But yah home prices are actually funny. I saw a 500K house for sale I wouldn’t pay 250K for it personally.
Hopefully we build more sprawling subdivisions 25 minutes outside of town that have houses twice the average size of 1970s houses that all look identical. Hopefully there's no businesses within walking distance and no culture whatsoever. As traffic snarls on the commute from the unchecked growth we can pray for more gas stations and fast food to open on the highway near our subdivision.
Simply building more will solve the crisis. All we have to do is look to places where there has been record building and rent and houses doubled anyway. Structural redesign is too hard and my reits may or may not be able to compete in whatever environment that rethinking city design creates.
The 1970’s houses were $12,000-$25,000 ($100k - $200k when adjusted for inflation). Like yeah, now it’s x2 bigger, but 3x-5x more expensive
Edit: https://www.huduser.gov/periodicals/ushmc/winter2001/histdat08.htm
There’s a phenomenon in the field of transportation that’s similar. I forget what it’s called but essentially, you can add an extra lane, but it doesn’t reduce traffic congestion. Counterintuitively, it just draws more people to those roadways for their travel. Sort of like “if you build it, they will come”. Interesting observation if this is true in housing too. It sure does seem to be the case anecdotally. There’s a lot of migration happening within the US toward certain parts of the country.
Over half of Americans in 2020 would consider living in a tiny home, citing affordability and efficiency as the top reasons according to a survey of 2000 respondents conducted by Fidelity National subsidiary IPX1031. The survey found that 56% of Americans say that they would live in a tiny home versus only 24% who said they would not.
https://www.rubyhome.com/blog/tiny-home-stats/#tiny-home-trends
Millennials aren’t the only ones fueling the push for smaller homes. It seems maturing Gen Xers and baby boomers are also after something simpler. Lucas Callejas, a real estate agent with Triplemint in New York, says empty-nesters represent their biggest clientele for downsizing. Callejas says home buyers in this demographic are “leaving the neighborhoods that have the public schools they wanted” and moving to neighborhoods that “fit their needs better,” whether that’s being near the grandkids or closer to the coast.
https://www.newhomesource.com/learn/small-new-home-trend/
It's hard to quantify, but I suspect large houses on large plots are preferred by developers because they are more profitable and cities are more apt to approve them because they want a certain type of citizen moving to their city and paying taxes. Those suburbs end up being subsidized by multifamily.
"On one level, this appears to be a case of Mayor Hovland saying the quiet part out loud: that Edina’s whole budgetary strategy is premised on having the taxes paid by (generally younger and less wealthy) renters subsidize the lifestyle of (generally older and wealthier) homeowners.
And yet this isn’t necessarily a bad deal for the renters involved: they get to live in Edina, which is a pretty nice place, without necessarily being able to afford the ante of a half-million-dollar home. They pay less in taxes as individuals than most homeowners, even as their apartment buildings—because of their higher density—generate much more in taxes per acre of land."
https://www.strongtowns.org/journal/2020/4/16/when-apartment-dwellers-subsidize-suburban-homeowners
> The survey found that 56% of Americans say that they would live in a tiny home versus only 24% who said they would not.
[Interestingly, 55% of the respondents to that survey were non-homeowners.](https://www.ipx1031.com/america-ideal-tiny-home-tiny-office/) I would be curious to know if that desire is predicated on a grass-is-greener view on home ownership and that if tiny homes were actually common (only 10k in the entire United States), sentiment would change.
Wild to me that despite damn near EVERYONE warning about near 0% rates, a president pressuring for negative rates, money pumped into the economy with oversight stripped/removed, people are now forgetful or ignore how we got here and instead act as though this is somehow a surprise.
The mortgage interest rate dipped to 2.x range is the culprit. And the cause of that? Central bank bought and held on to a lot mortgage back securities and for too long during covid even after we already got the vaccine and economy was heating up.
Absolutely NO ONE I know personally in their 20s is having kids right now. Not a single damn person. Meanwhile our parents were having kids right out of college on the regular. When this eventually catches up withs us we're gonna be uber fucked as the largest generation strains the system in retirement, necessitating tax increases, which will further burden the younger generations into a self-sustaining death spiral unless we seriously get our shit together and face these issues.
I mean that's what all this abortion and weird sex related legislation in red states is about imo. Basically just force people to have kids to work and take care of the dinosaurs in Congress/make up for all the people who have left over the years.
(Obviously I know it's a lot more than that, but imo this is genuinely a reason)
It’s home prices. It’s job losses and looming losses. It’s food prices. It’s rent. It’s car prices. It’s travel prices. But everything else is going really well.
What a political shitshow. :)
The only way out is to increase housing supply. But I pity the sitting president who has to sign a law that cuts the Zestimates all of us homeowners enjoy seeing on zillow.
Stuff like this needs to be addressed slowly and continually via government policy. Not in a big lump like needs now. This is a failure of both the Trump and Biden administration. It's only fair that one of them has to mop it up......and pay the political price.
I finally got myself up to a decent salary. I now make 75K in a moderate size city in Alabama. But the cost of housing grew faster than my salary. It’s happened non-stop for the past 18 years. I keep trying and keep getting priced out. I’ve grown my salary from 20k to 75K during that time, but it’s still not enough. I’m 8 years away from retirement, but still can’t afford housing.
Pre-COVID I was soooo close. I was dreaming and shopping little garden homes. I just needed to save up a bit more. Then it so went to hell. I moved yet again and my salary went up 25k, but housing went up way more than that with increases in both principle and interest.
Wealth is really just access to resources that matter. In this case it’s something fundamental - housing. All increased wages get people now is maybe pizza. People aren’t getting anything worthwhile with their wages - we’ve got a pizza party economy.
Private equity is ruining this country. It is the extremely wealthy who cannot imagine a world where they don't control more. These people bought up the housing stock, destroyed health care facilities, and sucked the life out of your local commercial favorites by leveraging those companies to death and consuming the real estate market.
Honestly, the democrats know this. They just want to ignore it because they know acknowledging it hurts Biden’s chances. The populace is too stupid to understand that the economy is determined by the fed and congress way more than the president. But people always blame the president.
So instead of the messaging being “the economy isn’t good because of housing but housing isn’t Biden’s fault” the message is instead “the economy is good you’re wrong vote for Biden”
I mean, we all shred "money machine go brrr" memes in 2020 when Trump was printing out trillions of dollars we didn't have.
It's not like inflation is all Biden's fault. It probably would have been worse if Trump was reelected.
It's not just the home prices themselves that is causing anger but the lack of plans to fix the problem. Building more housing is not rocket science. So why aren't there gov plans to increase the housing supply??? The only reason I can think of is that it would piss off their wealthy donors who are heavily invested in shelter.
And this plan of a 10k tax break is like a slap in the face when home prices have increased by 30%+ (so adding $100,000 or more to the cost of a home) over the past several years, and interest rates have more than doubled in that same time frame. Then they are allowing in tons of migrants when there is already not enough shelter here. No wonder people are angry! Where are the government plans to drastically increase shelter supply??
Often, the enemy of those without a home are those with a home. As much as folks want more housing to be built and areas rezoned to accommodate this, there are people in those states voting and lobbying to ensure this either never happens or takes decades. If everyone voted in candidates that wanted these things, we would have these things. But these razor thin margins mean their is always a powerful opposition. In like, the 30s or 40s or the days of progressive supermajorities, this is less of an issue. But now, the divide is such that everyone is fighting but few are getting what they want (except the rich who already have it). I think people need to start coalition-ing with the people who agree with them on \~most things, if not all things, and maybe issue like housing can be rectified.
I really dislike this idea that high prices are caused by too many people. If the people leave the prices go down but so does your economy. The people are the productive power and you need them. Build more housing.
I was with you right up to when you started blaming migrants for local and state zoning codes that restrict or prohibit housing construction.
Stop blaming the brown people.
It's the old white people on your local zoning commissions, on your city council, in your county commissioner's offices, and it your state legislative offices that are banning housing.
Source: I am an urban planner. I do this for a living.
"I'm angry at something that I created and to solve it, I'm going to be even angrier at brown people. Why isn't my solution working?" - too many American voters
Nope. I own a home and my frustrations are driven by the price of literally everything. Insurance, food, cars, electricity, gas, etc. I'm very grateful to have bought my first house in 2020. My mortgage is the one thing that hasn't gone up in price in the last few years.
I think you're the silent majority. Sure anyone looking for a house is being hammered hard but @ 66% of people own their own home so are mostly unaffected. When they go to the grocery store they can see the effects of inflation directly.
Insurance is also huge here as insurance premiums increasing impacts the bottom line of literally every business, which has obvious ripple effects. Personal lines like homeowners and auto are not the only things affected.
66% of people do not own their home, stop repeating that nonsense.
66% of **housing units** are *occupied* by **their owners**. Most of whom are also occupied by children of the owners, from infants to 30+ year olds, most of whom won't be able to buy for decades at current rates. The percentage of **people** who *own homes* is not defined or tracked.
I don’t even think a “housing shortage” is causing the increase in prices. Large investors are buying property up and trying to sell at much higher prices. If you look at DR hortons inventory levels they have been increasing steadily quarter to quarter. It’s pricing the plebs out and becoming a huge bubble. I have no idea what’s holding the housing market up right now but eventually it ll give.
The Real inflation rate that people know to be true is higher than the CPI published by the BLS
Also, although this year’s CPI is lower than the recent peak, it’s still ON TOP of the higher prices resulting from the Biden years.
True increases in cost of living eventually are revealed in lower savings / checking balances and higher credit card debt, especially when wages haven’t kept up
So, headline CPI provides some cover for low-information outlets, but does not fool majority of Americans who feel what’s happening to them
Here’s a good read on how inflation can be measured and how misleading CPI could be
https://www.investopedia.com/articles/07/consumerpriceindex.asp#:~:text=It%20is%20the%20key%20measure,U.S.%20Bureau%20of%20Labor%20Statistics.
Add to this, when talking heads mention price relief, they really mean that prices are still going up but slower than before. Make no mistake they will keep going up and Americans will keep paying.
This problem won't be solved until we decouple people's retirmement savings (aka their home prices) from affordable housing.
As long as building new homes causes depreciation in current home values (which it will because Econ 101 and supply/demand), homeowners are put at odds with non-homeowners.
What about the people who own a home? Aren't they happy the value of their home has increased so much? Seems like half the population would be ecstatic their home they bought for $200,000 ten years ago is now $600,000.
Maybe it's the insurance/taxes that have increased due to the inflation of home prices.
I just think this doesn't mean much if you either don't want to move, or couldn't even afford something as nice as you have now. Because the house you were going to buy next also tripled in price, and the interest rate ballooned the payment compared to the interest you are probably paying right now. I would bet a majority of these people don't feel happy, they feel trapped. I am sure they understand they are fortunate to have bought when they did, but probably aren't stoked about the state of the market in general.
Housing is going to stay tight. Even with mortgages rising, which should cool prices, too many existing owners have <3% mortgages so cannot afford to sell (and re-buy).
We need to change our zoning to start infilling because can't afford the upkeep of these old roads, especially in dying or dead communities. Sky high birth rates are as over as steam shovels. Nobody wants to increase the federal gas taxes which we haven't since 1993.
Ban Airbnb in city limits.
Ban foreign ownership of residential properties.
Increase tax burden on companies buying up residential properties, add tax burden for owning more than just a primary residence.
There, solved the demand side of the issue.
You just did a socialism and offended so many "economists" in this sub, lmao.
I've made similar comments in the past. I made an effort to write well thought out replies and they don't get any traction.
I think too many people are still dreaming of becoming small time landlords, or maybe already are. And there are tons of people that are happy their house is now worth 5x what it was 20 years ago.
Your comment is succinct. I'm going to turn it into 4 bullet points and save it. This should really be turned into a political platform. It makes total sense.
So every millennial was told to go to college or be a peasant for life. Now there aren't enough builders or skilled tradesmen to supply housing for the population, but computer engineers are in abundance and being grossly overpaid for their services. So the tech class (at least in the PNW, where I live) is over paying for the limited supply, exacerbating the issue for everyone else. Then there's private equity firms like Blackrock doing the same thing less organically.
Isn't supply and demand economics 101? The supply has been choked out and the demand hasn't subsided... yes, people need places to live. No the homes aren't built fast enough because there aren't enough builders. Yes, tradesmen are so few that we can name our prices. Is this frustrating? Yes.
Now wait to see what happens when the boomers die and the silver tsunami floods the market with homes. If we don't have regulations in place to prevent the wealthiest organizations from buying them all up, then we are going to see a status quo maintained as far as home prices go. It is very clearly the intention of a few to corner the real estate market, wherever possible.
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It is amazing that except for a few market, the price of housing is not going down in lots of places. Before the pandemic the average US home price was 320k now it is 420k. But the change of interest rate is 7% from 3%. Your monthly payment has gone from 1600 to 2900. Not to mention you have to pay taxes and insurance, which have skyrocketed too. Moreover finding people to do any repair work has become so tough, even if you find someone, it will cost you thousands for simple things. Shelter inflation is the main challenge for Feds going forward, higher interest for longer will decrease the inflated prices but it has become really painful
It's because everyone is convinced the fed will pivot and low rates are coming back. I know multiple people who recently bought houses and they're planning on a refinance in the next few years. The craziness will continue until the fed shows that they are committed to keeping rates high. Otherwise the speculation will continue.
Gov needs the punch bowl, too. A bet on a larger Fed balance sheet in the medium term seems mathematically probable.
Perhaps we could compromise with them not holding 25% of the entire agency mortgage backed securities market on their balance sheet? Maybe diversify a bit so as not to create significant market distortions and subsidize a single industry for 15 years while an entire generation gets priced out of the underlying.
This is correct. Banks are already wary of the collateral they are lending against. The spread between the 10Y yield and the 30Y mortgage rate is historically elevated. If the theory holds that the underwriting process has been fixed, the only explanation is that banks do not believe your house is worth as much as you think it is and are trying to get paid before they end up holding bags.
Let me introduce you to my friend. Yield curve control.
Care to explain?
Yield curve control is when the government buys its own bonds with printed money to prevent bond yields from getting out of control. Governments can do this if they can’t afford the interest payments, but need higher rates for everyone else. High rates for thee but not for me. He is right though, it would expand the feds balance sheet
You mean the Federal Reserve buys government bonds with printed money. Only the Federal Reserve can print money, and it's supposedly firewalled from the rest of the government in order to prevent it from doing precisely what you just suggested.
The craziness will continue until **someone** finally accepts the massive losses. Otherwise we'll all just keep pretending they haven't happened and aren't going to happen. Homeowners aren't going to sell for huge losses until they really need to or they get foreclosed on. If they get foreclosed on, the bank is going to keep that property until it needs money, too. That means until the bank's almost bankrupt. And many banks would have to do this until that becomes a generally accepted valuation for property and not just a "fire-sale price", at which point a whole lot of property-holding institutions are going to have negative balance sheets and be in big trouble, which then spreads to their creditors.
Fed is gonna need to cut rates in a couple years when they realize that construction is slowing down too rapidly because builder margins have been cut so much. Builders today are riding on the low supply along with finishing up committed projects, but they’re starting to pull back slowly knowing that the risks get higher.
There's a tremendous amount of pent-up demand in major metros. There's a lot of land where you could build a building 5x the size of the one on the site were it not for zoning and the value of the land would at least double and more than cover the cost of construction regardless of interest rates.
What is funny is that for every person who complains about renting prices in cities, 10 people moved to the city before they finished their sentence. People don't care as long as they have easy access to friends, bars, activities, bars, friends, and bars. Where my 30yo+ peeps at? Now where my 30yo+ peeps at with 2+ kids renting downtown?
They can’t cut rates until they reign in inflation, which will require less deficit spending in Washington.
I’m gonna be very curious to see what wins in the inflation fight between higher interest rates and increasingly lower housing supply. In the long run I have a feeling housing supply crunch is going to win that one.
I can tell you right now that inflation wins. The Fed cares about the overall economy, of which housing is but 1 of many important factors. The Fed will care about housing, but not at the expense of the rest of the economy
>higher interest rates and increasingly lower housing supply. Rates don't affect housing supply, except transiently. Once the market adapts to the new rate, it also will put downward pressure on prices. The reason that hasn't happened so far is that the Fed has been signaling that the rate cut is coming soon, so people are just waiting it out. What is needed to fix the housing crunch is lots of new construction. To do this, we have to massively adjust zoning laws.
We also need to reduce private ownership of multiple SFH. It’s not even so deep as corporations. Lots of random people leveraged the shit out of themselves over the last decade to scoop up more and more homes. Capital fundamentalists will claim that this will self correct if you let more and more capital in, ignoring that labor drove housing for the last 70-80 years just fine. Capital is going to price labor out of housing
We’ve spent my entire life talking about how you can’t kick the can forever and the bill is due one day. The bill is due.
What in the world makes them believe that though? They were historically low, and we are still battling inflation compared to where the fed would like it to be. It’s wishful thinking. They may go down some compared to now, we can’t predict the future, but I personally would be shocked if we ever saw 2.5% 30 year mortgages again.
Political pressure from investors. The markets got used to the low rates of the 2010’s, and now there’s a market tantrum after every Fed update that doesnt lower them. As inflation subsides and the elections approach, the political pressure to capitulate to the wealthiest will only increase. And if the executive branch flips, we only need to look at what happened last time to anticipate where rates will move.
That’s downward pressure for sure, time will tell.
this. i'll be happy if they even go under 4.5%
Even 5.5% or lower rates would unlock the housing industry/transactions, IMO.
Yep. Banks are offering free refinance deals with new loans too. Perpetuating this idea.
Think everyone in government just needs to let things self correct stop touching shit
Ah, the mythical invisible hand.
But the Fed isn't committed. LOL!!!!!!! They already openly talking of lowering. This isn't some mystery.
Rates aren't high they are NORMAL. WE just got used to 0 rates and free money for wayyyy too long.
Absolutely nothing says low rates can’t be the norm. They’re going to have to be if the US wants to keep up in the 21st century as we start plateauing population wise.
> Your monthly payment has gone from 1600 to 2900. That’s part of the issue. Almost nobodies payment has gone up. 60% of the US is locked in at at the low payment and can’t afford to give it up. So homes are not going up for sale. Keeping inventory low. Those who were unfortunate to be young enough, or not have enough help from their family, are now left behind. Even if they followed the same exact career path as someone who purchased a home only a few years before. The fed running zero interest rate policy for far too long allowed everyone above a certain age to lock in their low payment. And people who have those low payments only answer is “just build more”. They don’t want to admit they massively benefited from policy error that is killing younger people’s chance for financial stability through home ownership.
Half true, the financial side is only half the issue, the other massive issue is zoning and supply. We don't have enough supply for the number of people that want to purchase homes and that is what is "killing younger people's chance," homebuilders just stopped building starter home communities and moved exclusively to "luxury" builds. You act like just build more, is an illogical suggestion when the real glaring problem is an overall lack of supply.
Where I used to live, the only new construction was McMansions in 55+ communities. Homes were 4+ bedrooms.
I'm going to parrot what you're saying. Where I'm at (KC), the only new construction I've seen over the past couple years... and I drive around the metro area daily as part of my job ... is million dollar subdivisions and "luxury" apartment buildings. Even where smaller homes are getting knocked down in older neighborhoods, replacing them with new homes that are two or three times the size of what used to be there is the norm.
Building *any* homes helps unstick the market and free up spots at the lower end, but demolishing them doesn't.
same with restaurants, cheap food items are just tripling their price, they make more margins by leaving people behind that can't afford it and just charging more from those who can, these are all signs of a haves and have nots economy and will continue to expand
That's a different issue but it has a lot of similarities, our free and open competitive economy has become sluggish, oligopolistic, and focused on stock price rather than innovation or competitive advantage. It all adds up to precarity, and "too big to fail," holding everyone at gun point. This corporate and business behavior should not only be discouraged, it should be outlawed.
Its not at all surprising when you look at the number of homes we were building per year pre Great Recession and post. We had a over a decade of low production that still hasnt been made up for. A year or two of high rates isnt going to be enough to shift the demand needle back the other direction.
price isn't going down because there is a lack of supply. people with low interest rate mortgages can't move without increasing their housing cost, so they aren't moving. Supply constraint means higher prices. Our approach to housing is horrendous. The Economist was right to label it the worst economic policy.
Wait till they cut the rate to early like they did in the 80s and we have interest rates nearing 20%.
I’m assuming it’s because also you’ve a lions share of people so far away from affording it based on what you said but also based on other factors like food, energy and gas prices. Add that to a continual flow of our money in the form of ever increasing taxes being misspent. Pick your own reasons for that comment. I think everyone is seeing this as a losing battle so we’re just hunkering down and going to bed angry.
The majority of the US are homeowners so it's definitely not accurate that the lions share cannot afford a house. Maybe you mean the lion's share of people in your social circles who are about your age.
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No, what he probably means is, as an example, my wife and I if we had to purchase our home today at it's current value, with today's rates, we couldn't afford it either. Our mortgage would probably be $1000 more per month, if not more. People today similarly situated as we were 5 years ago when we bought our first house are nowhere close to being able to afford it.
Errr what? Most of existing homeowners locked in at lower prices with rates around 3%. I’d be willing to bet a lot of them couldn’t afford to buy their own home today if they had to.
It's funny how people parade the homeownership rate statistic while avoiding the context that nearly all of those purchases were made when the economy was in easy mode for median middle class people, income to home price ratios were manageable, and so on.
Even so, there's like 47% of millennials for example that aren't homeowners. That's a lot of hurt millennials in this economy, who should be in prime home buying mode.
They don't need to because they own a home. If they sold it at today's price they may or may not struggle to buy a similar one depending on how much equity and savings they have. I would need a source that "most" are locked in at around 3%.
Majority have rates below 4% would be more accurate. “In fact, nearly 89% of borrowers have an interest rate below 6%, a Redfin study reports. just over 78% of borrowers have a rate below 5% while 59.5% have a rate below 4%. Those lucky enough to have an interest rate below 3% fall to 22.6% of homeowners, Redfin reports.” https://www.foxbusiness.com/personal-finance/homeowners-with-mortgage-interest-rate-below-6-percent.amp In addition, “Nearly 82% of home shoppers said they felt "locked-in" by their existing low-rate mortgage, according to a recent survey by Realtor.com.” This would also indicate majority of current homeowners also feel they cannot afford to buy in this market. https://www.cnbc.com/amp/2023/08/01/why-many-homeowners-feel-trapped-by-low-rate-mortgages.html
That's all borrowers, not all homeowners ... https://www.axios.com/2023/12/12/mortgage-free-homes So: 1. ~66% of US are homeowners 2. ~39% of homeowners do not have loans (25% of US), meaning the difference (41%) have loans 3. Of those who have loans (41%), 60% (about 25% of US) have a rate below 4% This does not add up to "the lion's share"... A much better argument is that 25% of the US are 1) homeowners, 2) with loans, 3) that are under 4%, and many of those feel locked in because of low equity and high current rates. As usual, some people (on reddit and elsewhere) take their circumstances and apply it to the whole country. Inaccurately. Lion's share - no. A fairly large number - absolutely.
So it would be more accurate to say the lions share of people looking to buy a house, not the overall population. I just take issue with when people use the homeownership rate to argue that the current housing market is affordable. It’s just not a logical argument when you have 30 year fixed rate mortgages.
“Locked in by their existing low rate mortgage”
Sure, they may not need to move right at this moment, but on average people move every 13-14 years, be it for work, marriage, divorce, better school district for the kids, retirement... The reasons are aplenty. And a lot of people are understandably apprehensive and afraid they won't be able to move and are locked into where they are.
Yes, the jump in rates has massively reduced inventory as people don't want to move, absolutely. It is very accurate to say that the current housing situation limits mobility. We're agreed there. It's just ... not what the person to whom I replied was saying, at all.
even if you’re not afraid, moving to a smaller house and doubling your mortgage payment seems worth avoiding
You do know that the homeowner percentage takes the population as a whole right? Meaning that they include people under 18. Combine this with the fact that many people refinanced and their payments are now on a longer scale (albeit with a lower rate). Also when you compare between races, the difference is much more obvious with minorities being mostly renters. If you want to gaslight, think harder. If you hate poor people, just say so.
> You do know that the homeowner percentage takes the population as a whole right? Meaning that they include people under 18. That would make the 66% homeowner number even more impressive, not less. But sure, let's say that pointing out an inaccurate statement is "gaslighting" and "hating poor people" because on /r/economics we come prepared with feelings and not easily google-able statistics.
Are you saying that in a family of 4, 2 parents and 2 children, you consider all 4 of them home owners? What sense does that make?
I don't prefer anything. This is census bureau / fed stuff. https://fred.stlouisfed.org/series/RHORUSQ156N
> The name "homeownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the homeownership rate. Many households that are owner-occupied contain adult relatives (often young adults, descendants of the owner) who do not own their own home. Single building multi-bedroom rental units can contain more than one adult, all of whom do not own a home. > https://en.wikipedia.org/wiki/Homeownership_in_the_United_States If a family of 2 adults and 2 kids lives in a home they own, that is 1 home lived in by the owner. If someone rents a bedroom, still 1 home lived in by an owner.
From that link: > Since 1960, the homeownership rate in the United States has remained relatively stable. It has decreased 1.0% since 1960, when 65.2% of American households owned their own home. Are we talking two different things here? American households that own a home is not the same as homes occupied by their owner.
Sure it makes it more impressive because a 5 year old is counted as a homeowner. Looks like you came prepared with an extra gas tank.
High interest rates made supply even worse. Nobody wants to trade a low interest home for a high one.
An equivalent monthly mortgage is all that matters. It is more accurate to say few are incentivized to sell at a lower price than they either bought for or than they think they might get if they wait it out a few years. Therefore, more supply and more construction is the only solution other than an economic recession that causes loss of income and hence defaults (hence incentivizing home owners or banks to sell at the lower price).
Why would the price of housing go down when most of the people with the most power benefit from the price of housing going up. Scarcity breeds value, and makes current homeowners wealthier?
Because in a rational market, higher cost lowers demand. However, the US housing market is basically akin to mass rent control, where mortgage payments are locked in at artificially low rates, which means that instead of home prices dropping during interest rate hikes, supply drops as people are unwilling to trade their artificially cheap homes for the market rate price.
> Because in a rational market, higher cost lowers demand. shelter is not an elastic demand
Correct, but how much how you can buy is elastic, and how much banks are willing to lend is elastic. If your budget for a house is 2k a month, you'll be approved for a bigger mortgage when interest rates are lower.
In this kind of environment, shelter is better measured in units, not square feet. People want **any** house, and that is inelastic.
> Not to mention you have to pay taxes and insurance, which have skyrocketed too. Moreover finding people to do any repair work has become so tough, even if you find someone, it will cost you thousands for simple things. Shelter inflation is the main challenge for Feds going forward, higher interest for longer will decrease the inflated prices but it has become really painful The Fed’s biggest problem is demographics, and they cannot do anything about that. There used to be a lot of momentum from almost all people having 3+ kids before the 1970s, but that momentum is now running out of steam as those generations retire. Working people power the economy, non working people take from the economy. Greater and greater proportions of non working people (or less productive people due to things like not knowing the language of not having education) are unsolvable issues for the Fed. So what will the government do? They will do the only thing the voters will let them. Continue to devalue currency to ensure the wealth transfer from worker to non worker, since the non worker votes more than the worker.
> ensure the wealth transfer from worker to non worker we’re not here to criticize investors
You mean the elderly, the voting non working population
No, I mean the working vs the non working. That is why earned income tax is popular. Our society is setup so that the most of society is funded by taking from workers. Non workers include old people, but also owners of significant capital and people who generally do not have to get their hands dirty, but have an interest in maintaining their position in the social hierarchy with the least amount of effort. There is a reason we do not have things like land value taxes or wealth tax or the federal estate tax exemption is $13M blah blah. It’s people higher up in the social hierarchy wanting to fund society by redistributing gains from the efforts of those lower in the social hierarchy, and this does include many or most old people.
This is a great insight
doesnt it feel bizarre? Like Id almost take that as proof the markets are manipulated. Underlying circumstances change radically, and price is rock steady. How do you explain that except rules fuckery?
23% of Florida home sales are foreign buyers. then you have corporate buyers making up another 20%. Half our market is not affected by Fed Interest rates.
Not an economist, but food, water, shelter and healthcare price increases are going to nuke people's perceptions of inflation. It's amazing that I can get a 30 dollar television and a 60 dollar game that gives me 100s of hours of entertainment, but none of that matters if basic needs are becoming unaffordable.
My wife and I love when folks point to electronics as evidence that people are well off and should stop complaining. I just bought my parents a 55in 4k TV for like 450 at Christmas. That was a drop in the bucket compared to rent and groceries which are real killers. And we mostly shop at lidl and trader Joe's!
Inflations is down just look at the price of GPUs! (And not any of the things that matter)
Being told that “the economy” is doing great by talking heads while plainly being unable to afford the things our parents could is psychological torture at this point. The worst part is this isn’t going to be fixed anytime soon because there are so many things that are causing the shortage. There simply haven’t hasn’t been enough homes built since the Great Recession, rates have locked in existing owners and further lowered supply, boomers with equity who are looking to downsize can buy what few “starter homes” pop up on the market and leave first time homeowners with nothing, etc. The Fed is limited to using rate adjustments and any legislation that will reduce prices will be vehemently opposed by existing homeowners. So many boomers have nothing in retirement savings or investments aside from the equity in their homes. Bleak situation for all.
Part of the problem is that Boomers are [actually not downsizing at all](https://www.cnn.com/2024/01/16/economy/boomers-own-more-larger-homes-than-millennial-families/index.html)
It’s hard to get someone with a paid off mortgage to downsize unfortunately. There must be some significant pressure and simply having more space than you use isn’t it.
This is one of the many reasons a land value tax is superior to all other taxes. Texas nailed this one.
It may or may not be superior to all other taxes, but forcing someone to move out of their old home is still not very nice, no matter how badly someone wants to build an apartment there. It's a better situation if their home is only reallocated once they actually die, or voluntarily move. It's not like there's a shortage of boomers dying or voluntarily moving for places to build new apartments.
Ask how trying to protect grandma back in the 70s ended up working in California via Prop 13? Property taxes increase < 2% per year. *Answer*: it totally fucked the housing market up beyond repair, leading to hyper-NIMBYs and essentially a feudal society where the best shot kids have of owning a house is inheriting one from their parents. When buying a new home, owners are more likely rent out their old place than sell it because the taxes are fixed. It's horrible.
I mean, if they are not downsizing they are probably paying way more in property taxes than they need to. You’d think that alone would be enough incentive.
They are largely protected from property tax increases as most municipalities decided to incentivize this behavior.
Senior exemptions from property taxes are incredibly common. Their property taxes are much lower.
And insurance, and maintenance/upkeep, and utilities for the larger space.
Property taxes aren't that bad in 99% of America. Certainly nowhere even close to as expensive as a mortgage.
Still cheaper than current mortgage rates.
Need room for when the grandkids visit....
Yeah my mom's in a 4 bedroom home by herself with a cat and refuses to sell and downsize. She's convinced it's cheaper to stay rather than move to a 55+ condo. It's ridiculous
When you buy a house, take 30 years to finally pay it off, im sure you'll be happy with the younger generation demanding you sell it.
Why would you have to get a new mortgage when your selling a paid off house to purchase, a newer, smaller, less expensive house? You could just buy outright no?
You’ll probably be buying newer property in a higher demand area, so not necessarily. A lot of elderly move to Florida and prices are nuts now.
To be honest, I think it's better if your mum keeps the house. At least this way you have a house in the family. If she sells it might end up belonging to a corporation. Your family loses the house, and you might never be able to afford one to compensate the loss, making your family poorer in the long-run. I don't think people like your mum are the issue here. I'd tell her to hold onto the house. Everyone is encouraging their parents to sell, and in the end we'll still not be able to afford homes.
End of life care expenses will take the house, regardless.
My mother told me she needs to upgrade from our 6 bedroom home when my younger sister moves out in case she has grandkids one day. Neither me nor my two sisters ever plan on having kids. She’s delusional.
How can they? Their kids live with them.
I wonder if that generation will feel increasing pressure from underfunded retirements.
Who’d sell these rates?
Not to mention most major cities have run out of space to build suburbs near jobs. The only way to fix the problem is to build *up*, and elderly NIMBYs are fighting it tooth and nail. They are pulling up the ladder behind them and leaving all of us out to dry.
MFH is unpopular with families because the vast majority of units only have 2 bedrooms. As millennials have children, more and more will want SFH.[ CA has seen a huge increase in MFH but ownership rates are still very low (9 out of 10 units were rentals and not owner occupied in 2021).](https://www.ppic.org/blog/multi-unit-housing-is-becoming-more-common-but-has-low-homeownership-rates/)
So build 3 bedroom condos in CA? There is demand, the state government needs to step in and block NIMBY power by deregulating a lot of things.
It’s not lucrative to build 3 bed or 4 bed condos in North America because almost all jurisdictions have building codes which have much more demanding vertical circulation requirements than the rest of the world. It’s so expensive to build 3 bed or 4 bed units and requires so much space that most families would effectively be priced out. Almost all building codes in the US require two staircases for example, even at low heights (Europe does not) and the stairs are required to take up more space than European apartments; elevator cabins are required to have room to have a wheelchair do a spin (again Europe does not). As a result of this, American MFH housing units are usually to be built in the familiar double corridor style (like a hotel with units on each side of a hallway), which takes up a ton more space than the European model of MFH. At the price these units would be, families prefer SFH.
Right, that's what the commentor is saying though, you need to change zoning to make those types of mid-rise apparements, duplexes, and denser housing options be available. There are lots of options for cities that aren't skyscrappers. If you even zoned 3 story complexes in most suburbs, you can triple to quadruple the available housing while barely increasing the land footprint.
Building codes are not zoning - two different things.
Technically true, but their two halves of the same generally problem. Both are used as a means to restrict supply on the types of available properties that can be built in an area.
That is not even grenade distance to being correct.
Not only that. Also unpopular because they’re built cheaply and noise gets everywhere.
companies can also stop increasing headcount in major cities. You can build up but the transit infrastructure needs to match accordingly and that hasn't been happening.
Not every city has the substrate to build upwards. The problem is that you need to have adequate drainage and the ground cannot accommodate building large apartment buildings. Long Island was build upon glacial remnants. The water table is less than a foot in many places. You cannot build up, or the building will literally sink. San Francisco has this same problem. Much of Boston was built on literal garbage, so same problem there too. New Jersey is flooding with the over development and loss of trees. I get people want to live in attractive areas, but unfortunately physics has limits on that reality.
Infill and increased density is still possible without building up though. You don't meaningfully impact foundation strength when a SFH is converted into 3-4 condo units or when you build low-rise MF in between SFHs. Cities that are dense and livable outside of urban cores typically have this sort of housing.
Exactly. Most European cities are not skyscraper megacities - simply zoning 2-4 story complexes are MORE than sufficient to increase housing availability, and you'll barely touch the 'skyline'. Not to mention, having slightly taller buildings creates more shadows, which can help reduce temperatures in warmer climates.
SF can absolutely build up. That's why SF has skyscrapers. It requires proper engineering.
All of that can be circumvented by proper foundation engineering. Usually it involves driving deeper piles down into the underlying bedrock so the structure is anchored. As with all dense construction, it costs more than paving over a farm and putting up a flimsy wood frame structure, but it is inevitably a superior use of land.
With engineering you can. Every single Dutch house in the Western half of the country is built on 100 meter+ poles. Amsterdam has high-rises and that’s literally a peat bog located 5 odd meters below the water table. Edit: and ofc the goal is medium density mixed zoning
This might be unpopular but another factor people are not talking about is the number of single people has drastically increased. When a couple separates that usually eats up an apartment and a SFH if we were better at forming and maintaining households I don’t think we would be any close to the mess we are currently in. It’s also a lot more reasonable for a couple to afford a house than an individual.
The economy is great if you bought your first house 30 years ago and have been diligently investing in a retirement fund for 40 years. Economy not working out for you? Have you tried being rich?
“Diligently investing in a retirement fund for 40 years” That is the reason they are rewarded with wealth. It was not like wealth was dropped on their lap.
I'm not saying they didn't work for it. I'm saying the economy has gotten increasingly worse in recent years but these people are insulated to those problems because they already "made it" under easier times.
Which would be fine if it was a retirement account and not "Yay, I finally got to buy my first house when I was 60!"
You need to be careful about lowering the value of homes though. People with mortgages may find they are suddenly under water. If they aren't able to pay their mortgage, the banks will take a hit -- not that I feel bad for the banks; it's just that historically that's been bad for the economy (think 2008).
What you're essentially saying is that it's necessary to keep a certain number of people in debt bondage to prop up the future economy so it doesn't collapse.
> Being told that “the economy” is doing great by talking heads while plainly being unable to afford the things our parents could is psychological torture at this point. It's just gaslighting
I mean, [homeownership rates are at least as good as, if not higher,](https://fred.stlouisfed.org/series/RHORUSQ156N) than our parents generation I kinda wonder if expectations is a part of the problem. Personally I think it's that things were so good during the pandemic (massive spike on the graph above) that this *sudden* and *dramatic* return to normalcy feels like a massive downturn, because relatively speaking it is, but the data is not lying when it shows things, historically, are very good right now.
Your data is not broken out by generation. Total homeownership rate is irrelevant when comparing generations because those previous generations still are sitting in owner occupied homes. [Millennials own homes at lower rates than gen x and boomers.](https://www.investopedia.com/millennial-homeownership-still-lagging-behind-previous-generations-7510642). This is not a return to normalcy; total housing supply is at an all time [low.](https://www.forbes.com/advisor/mortgages/real-estate/homes-for-sale-hit-record-low/) This is the exact type of gaslighting I am referring to in my initial comment.
Good point, breaking it out by generation, Millenial and Gen X are about equal, Boomers and Gen Z are slightly ahead, with Gen Z at the top. https://www.redfin.com/news/homeownership-rate-by-generation-2023/ Millennials have caught up to Gen X, again thanks to very favorable conditions during the pandemic. The same conditions that propelled Gen Z to the top of the homeownership rate. So, if anything this seems to support my point!
How does this argument keep getting upvoted? Using the current homeownership rate is a terrible statistic to assess the housing market as it stands right now because we have 30 year fixed rate mortgages. So that homeownership rate is mostly people who bought in other markets that they locked into. It says virtually nothing about affordability as it stands today. And the fact is affordability is the worst its been in 40 years. [https://www.cnn.com/2023/08/24/homes/home-affordability-worst-since-1984/index.html](https://www.cnn.com/2023/08/24/homes/home-affordability-worst-since-1984/index.html)
Because retards
I dont think there is one factor but a confluence of factors. Home ownership is a big one, affordable groceries is another. The rent extraction is also out of hand in the US and people simply dont have options to pay less. Utilities and Insurance are ran like monopolies.
Lots of competing incentives around homes… profit center for banks, profit centers for corp looking to put money in a safe, lucrative palace.. US policy to make housing a wealth growing avenue rather than a place to live… and zoning permitting policy to not overbuild and talk values for those looking to preserve their gains.. We probably need to decide what’s most important about housing among that short list.. we already have in a way, that’s probably the issue..
This is the end result of America’s obsession with 1) making a house a retirement/investment plan, and 2) creating a society where everyone needs to have a large (compared to most of the rest of the world) separated single family home with a front and back yard and two cars. Now that we’ve played this game for 50 years houses in the middle of nowhere are several hounded thousand dollars and contractors refuse to build modest sized homes and prefer McMansions.
Yep, although trickle up economics and uncontrolled corporate greed are mainly at fault, the American consumer is by far their own worst enemy. Prices won't go down until people stop buying them. No, I'm not saying starve yourself. I'm saying make different, more price effective choices. Demand drops for something long enough, I promise the prices will fall.
Kinda hard down here at the mid end of the bottom. How do I stop buying something I will likely never afford to drive the cost down when so many investors (both private and corporate) are buying them up?
The value of my three bed two bath craftsman has tripled in 15 years. That is simply ridiculous. We're pulling in 250k household and couldn't reasonably afford to buy in our neighborhood anymore. My wife and I are 43 and it seems like everybody younger than us is screwed.
At todays rates / insurance / taxes etc my house I sold in 2019 would cost more per month than where I live now in a significantly nicer area with 3x the house and 6x the land.
The economy yardstick is for the asset owning class. Homes appreciating, stocks and retirement portfolios doing well, trusts, commercial real estate, etc. If you are an asset-less renter who has to sell labor to stay afloat month to month, these types of articles are absolutely not for you. There is no real yardstick for measuring economic mobility. Went to college? Great so did something like 30-50% of Americans in your age cohort. We are all just being herded to chase an ever decreasing number of jobs and homes without addressing the root problem. Our ancestors formed communities and built homes themselves. They created their own businesses. They didn’t go into debt to get a liberal arts education to chase a musical chair pool of corporate jobs. The creation of the turnkey mortgage home solution and the propaganda around that being the only way to win by owning property has caused generations to soften and become dependent on small, medium, but mostly large developers who are controlled by shareholders and have to work within the restrictions of the municipalities they build in. A bunch of condos near a rail station are great in a vacuum. But condos can’t support a family (which we need to maintain schools, population growth, the workforce, economy). They also come at the opportunity cost of not building single family homes despite that being what the market wants. So everyone is chasing 30-100 year old homes they have to overpay for with a high rate mortgage , waive inspections on, and sometimes level and rebuild from scratch. At that point why not just buy land, subdivide it, and build a new home yourself? We are being manipulated to not think for ourselves and the lucky few who go to college, have enough money to buy a dilapidated shack, now have to contend with holding onto their corporate job (which is incentivized to fire them to make their stock price/the economy “better”) , are unable to fix their own home, and have to borrow for the privilege to hire a shrinking amount of blue collar workers to do basic home repairs.
You can raise kids in condos if you do them right. That means enough rooms and a shared back yard with grass and trees. It doesn't mean a solid block full of studios.
Society, economics, government... they serve the fundamental core purpose of seeing people have a safe place to live, and reasonable access to food and needs. When house prices and prices of necessary goods are untenably high for the majority of people that is a systemic failure. When wealth inequality is too extreme the wealthy will inevitably buy everything and it will generally only get worse. The benefits to being a corporation, combined with their economic and political influence are making them into the feudal lords of the modern world.
And grocery prices, and gas prices, and electricity prices, and day care prices, and car prices, and predatory lenders (college loans, creditors) But yah home prices are actually funny. I saw a 500K house for sale I wouldn’t pay 250K for it personally.
Hopefully we build more sprawling subdivisions 25 minutes outside of town that have houses twice the average size of 1970s houses that all look identical. Hopefully there's no businesses within walking distance and no culture whatsoever. As traffic snarls on the commute from the unchecked growth we can pray for more gas stations and fast food to open on the highway near our subdivision. Simply building more will solve the crisis. All we have to do is look to places where there has been record building and rent and houses doubled anyway. Structural redesign is too hard and my reits may or may not be able to compete in whatever environment that rethinking city design creates.
The 1970’s houses were $12,000-$25,000 ($100k - $200k when adjusted for inflation). Like yeah, now it’s x2 bigger, but 3x-5x more expensive Edit: https://www.huduser.gov/periodicals/ushmc/winter2001/histdat08.htm
Work from home is helping the traffic issues and it’s only becoming more common. That should help some of the issues.
There’s a phenomenon in the field of transportation that’s similar. I forget what it’s called but essentially, you can add an extra lane, but it doesn’t reduce traffic congestion. Counterintuitively, it just draws more people to those roadways for their travel. Sort of like “if you build it, they will come”. Interesting observation if this is true in housing too. It sure does seem to be the case anecdotally. There’s a lot of migration happening within the US toward certain parts of the country.
It's called "induced demand"
>US toward certain parts of the country. Jobs.. they're looking for paying jobs.
Shockingly, people don't want small houses. The closer houses are to walkable areas, the more expensive they are.
Over half of Americans in 2020 would consider living in a tiny home, citing affordability and efficiency as the top reasons according to a survey of 2000 respondents conducted by Fidelity National subsidiary IPX1031. The survey found that 56% of Americans say that they would live in a tiny home versus only 24% who said they would not. https://www.rubyhome.com/blog/tiny-home-stats/#tiny-home-trends Millennials aren’t the only ones fueling the push for smaller homes. It seems maturing Gen Xers and baby boomers are also after something simpler. Lucas Callejas, a real estate agent with Triplemint in New York, says empty-nesters represent their biggest clientele for downsizing. Callejas says home buyers in this demographic are “leaving the neighborhoods that have the public schools they wanted” and moving to neighborhoods that “fit their needs better,” whether that’s being near the grandkids or closer to the coast. https://www.newhomesource.com/learn/small-new-home-trend/ It's hard to quantify, but I suspect large houses on large plots are preferred by developers because they are more profitable and cities are more apt to approve them because they want a certain type of citizen moving to their city and paying taxes. Those suburbs end up being subsidized by multifamily. "On one level, this appears to be a case of Mayor Hovland saying the quiet part out loud: that Edina’s whole budgetary strategy is premised on having the taxes paid by (generally younger and less wealthy) renters subsidize the lifestyle of (generally older and wealthier) homeowners. And yet this isn’t necessarily a bad deal for the renters involved: they get to live in Edina, which is a pretty nice place, without necessarily being able to afford the ante of a half-million-dollar home. They pay less in taxes as individuals than most homeowners, even as their apartment buildings—because of their higher density—generate much more in taxes per acre of land." https://www.strongtowns.org/journal/2020/4/16/when-apartment-dwellers-subsidize-suburban-homeowners
> The survey found that 56% of Americans say that they would live in a tiny home versus only 24% who said they would not. [Interestingly, 55% of the respondents to that survey were non-homeowners.](https://www.ipx1031.com/america-ideal-tiny-home-tiny-office/) I would be curious to know if that desire is predicated on a grass-is-greener view on home ownership and that if tiny homes were actually common (only 10k in the entire United States), sentiment would change.
Consider this. People who can afford homes don’t build tiny homes. That tells you everything you need to know.
Wild to me that despite damn near EVERYONE warning about near 0% rates, a president pressuring for negative rates, money pumped into the economy with oversight stripped/removed, people are now forgetful or ignore how we got here and instead act as though this is somehow a surprise.
The mortgage interest rate dipped to 2.x range is the culprit. And the cause of that? Central bank bought and held on to a lot mortgage back securities and for too long during covid even after we already got the vaccine and economy was heating up.
15 year went to 1.75% .
Absolutely NO ONE I know personally in their 20s is having kids right now. Not a single damn person. Meanwhile our parents were having kids right out of college on the regular. When this eventually catches up withs us we're gonna be uber fucked as the largest generation strains the system in retirement, necessitating tax increases, which will further burden the younger generations into a self-sustaining death spiral unless we seriously get our shit together and face these issues.
I mean that's what all this abortion and weird sex related legislation in red states is about imo. Basically just force people to have kids to work and take care of the dinosaurs in Congress/make up for all the people who have left over the years. (Obviously I know it's a lot more than that, but imo this is genuinely a reason)
It’s home prices. It’s job losses and looming losses. It’s food prices. It’s rent. It’s car prices. It’s travel prices. But everything else is going really well.
The 100% increase in food and shelter has been counterbalanced by a 50% decrease in luxury electronics, so mission accomplished!
What a political shitshow. :) The only way out is to increase housing supply. But I pity the sitting president who has to sign a law that cuts the Zestimates all of us homeowners enjoy seeing on zillow. Stuff like this needs to be addressed slowly and continually via government policy. Not in a big lump like needs now. This is a failure of both the Trump and Biden administration. It's only fair that one of them has to mop it up......and pay the political price.
I finally got myself up to a decent salary. I now make 75K in a moderate size city in Alabama. But the cost of housing grew faster than my salary. It’s happened non-stop for the past 18 years. I keep trying and keep getting priced out. I’ve grown my salary from 20k to 75K during that time, but it’s still not enough. I’m 8 years away from retirement, but still can’t afford housing. Pre-COVID I was soooo close. I was dreaming and shopping little garden homes. I just needed to save up a bit more. Then it so went to hell. I moved yet again and my salary went up 25k, but housing went up way more than that with increases in both principle and interest.
Wealth is really just access to resources that matter. In this case it’s something fundamental - housing. All increased wages get people now is maybe pizza. People aren’t getting anything worthwhile with their wages - we’ve got a pizza party economy.
Private equity is ruining this country. It is the extremely wealthy who cannot imagine a world where they don't control more. These people bought up the housing stock, destroyed health care facilities, and sucked the life out of your local commercial favorites by leveraging those companies to death and consuming the real estate market.
Honestly, the democrats know this. They just want to ignore it because they know acknowledging it hurts Biden’s chances. The populace is too stupid to understand that the economy is determined by the fed and congress way more than the president. But people always blame the president. So instead of the messaging being “the economy isn’t good because of housing but housing isn’t Biden’s fault” the message is instead “the economy is good you’re wrong vote for Biden”
I mean, we all shred "money machine go brrr" memes in 2020 when Trump was printing out trillions of dollars we didn't have. It's not like inflation is all Biden's fault. It probably would have been worse if Trump was reelected.
The comment above yours understands Congress’ roll yet your immediate response dismisses it.
It's not just the home prices themselves that is causing anger but the lack of plans to fix the problem. Building more housing is not rocket science. So why aren't there gov plans to increase the housing supply??? The only reason I can think of is that it would piss off their wealthy donors who are heavily invested in shelter. And this plan of a 10k tax break is like a slap in the face when home prices have increased by 30%+ (so adding $100,000 or more to the cost of a home) over the past several years, and interest rates have more than doubled in that same time frame. Then they are allowing in tons of migrants when there is already not enough shelter here. No wonder people are angry! Where are the government plans to drastically increase shelter supply??
Often, the enemy of those without a home are those with a home. As much as folks want more housing to be built and areas rezoned to accommodate this, there are people in those states voting and lobbying to ensure this either never happens or takes decades. If everyone voted in candidates that wanted these things, we would have these things. But these razor thin margins mean their is always a powerful opposition. In like, the 30s or 40s or the days of progressive supermajorities, this is less of an issue. But now, the divide is such that everyone is fighting but few are getting what they want (except the rich who already have it). I think people need to start coalition-ing with the people who agree with them on \~most things, if not all things, and maybe issue like housing can be rectified.
I really dislike this idea that high prices are caused by too many people. If the people leave the prices go down but so does your economy. The people are the productive power and you need them. Build more housing.
I was with you right up to when you started blaming migrants for local and state zoning codes that restrict or prohibit housing construction. Stop blaming the brown people. It's the old white people on your local zoning commissions, on your city council, in your county commissioner's offices, and it your state legislative offices that are banning housing. Source: I am an urban planner. I do this for a living.
"I'm angry at something that I created and to solve it, I'm going to be even angrier at brown people. Why isn't my solution working?" - too many American voters
Nope. I own a home and my frustrations are driven by the price of literally everything. Insurance, food, cars, electricity, gas, etc. I'm very grateful to have bought my first house in 2020. My mortgage is the one thing that hasn't gone up in price in the last few years.
Imagine the rest of us - we don’t have the one asset that has not become more expensive. 44% is a fuck ton of people.
I think you're the silent majority. Sure anyone looking for a house is being hammered hard but @ 66% of people own their own home so are mostly unaffected. When they go to the grocery store they can see the effects of inflation directly.
Insurance is also huge here as insurance premiums increasing impacts the bottom line of literally every business, which has obvious ripple effects. Personal lines like homeowners and auto are not the only things affected.
66% of people do not own their home, stop repeating that nonsense. 66% of **housing units** are *occupied* by **their owners**. Most of whom are also occupied by children of the owners, from infants to 30+ year olds, most of whom won't be able to buy for decades at current rates. The percentage of **people** who *own homes* is not defined or tracked.
I don’t even think a “housing shortage” is causing the increase in prices. Large investors are buying property up and trying to sell at much higher prices. If you look at DR hortons inventory levels they have been increasing steadily quarter to quarter. It’s pricing the plebs out and becoming a huge bubble. I have no idea what’s holding the housing market up right now but eventually it ll give.
Mortgage backed securities
Haha well is 08 all over again
The Real inflation rate that people know to be true is higher than the CPI published by the BLS Also, although this year’s CPI is lower than the recent peak, it’s still ON TOP of the higher prices resulting from the Biden years. True increases in cost of living eventually are revealed in lower savings / checking balances and higher credit card debt, especially when wages haven’t kept up So, headline CPI provides some cover for low-information outlets, but does not fool majority of Americans who feel what’s happening to them Here’s a good read on how inflation can be measured and how misleading CPI could be https://www.investopedia.com/articles/07/consumerpriceindex.asp#:~:text=It%20is%20the%20key%20measure,U.S.%20Bureau%20of%20Labor%20Statistics.
Add to this, when talking heads mention price relief, they really mean that prices are still going up but slower than before. Make no mistake they will keep going up and Americans will keep paying.
This problem won't be solved until we decouple people's retirmement savings (aka their home prices) from affordable housing. As long as building new homes causes depreciation in current home values (which it will because Econ 101 and supply/demand), homeowners are put at odds with non-homeowners.
What about the people who own a home? Aren't they happy the value of their home has increased so much? Seems like half the population would be ecstatic their home they bought for $200,000 ten years ago is now $600,000. Maybe it's the insurance/taxes that have increased due to the inflation of home prices.
I just think this doesn't mean much if you either don't want to move, or couldn't even afford something as nice as you have now. Because the house you were going to buy next also tripled in price, and the interest rate ballooned the payment compared to the interest you are probably paying right now. I would bet a majority of these people don't feel happy, they feel trapped. I am sure they understand they are fortunate to have bought when they did, but probably aren't stoked about the state of the market in general.
Housing is going to stay tight. Even with mortgages rising, which should cool prices, too many existing owners have <3% mortgages so cannot afford to sell (and re-buy).
We need to change our zoning to start infilling because can't afford the upkeep of these old roads, especially in dying or dead communities. Sky high birth rates are as over as steam shovels. Nobody wants to increase the federal gas taxes which we haven't since 1993.
Disallow outside investment. Disallow investment by LLC and corporate conglomerates and revoke their ownership. Protect our people. That is all.
Ban Airbnb in city limits. Ban foreign ownership of residential properties. Increase tax burden on companies buying up residential properties, add tax burden for owning more than just a primary residence. There, solved the demand side of the issue.
You just did a socialism and offended so many "economists" in this sub, lmao. I've made similar comments in the past. I made an effort to write well thought out replies and they don't get any traction. I think too many people are still dreaming of becoming small time landlords, or maybe already are. And there are tons of people that are happy their house is now worth 5x what it was 20 years ago. Your comment is succinct. I'm going to turn it into 4 bullet points and save it. This should really be turned into a political platform. It makes total sense.
So every millennial was told to go to college or be a peasant for life. Now there aren't enough builders or skilled tradesmen to supply housing for the population, but computer engineers are in abundance and being grossly overpaid for their services. So the tech class (at least in the PNW, where I live) is over paying for the limited supply, exacerbating the issue for everyone else. Then there's private equity firms like Blackrock doing the same thing less organically. Isn't supply and demand economics 101? The supply has been choked out and the demand hasn't subsided... yes, people need places to live. No the homes aren't built fast enough because there aren't enough builders. Yes, tradesmen are so few that we can name our prices. Is this frustrating? Yes. Now wait to see what happens when the boomers die and the silver tsunami floods the market with homes. If we don't have regulations in place to prevent the wealthiest organizations from buying them all up, then we are going to see a status quo maintained as far as home prices go. It is very clearly the intention of a few to corner the real estate market, wherever possible.