re: Mortgage Amount 2-2.5x Annual Income

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Holy shite. The principal of my mortgage is 1x our combined household income. It's plenty of house for us, in a great area.

Ok… congrats on making like $300-$500k/year?

This is just not the norm for 95%+ of homeowners.

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Just for fun I looked up a mid size city in St. Cloud, MN. A mix of blue collar and professional workforce, fairly low crime, good school system and close enough to a major metro without being truly a part of it. Median household salary of 55k with an average of 67k. Average home price sold in 2020 (not 2021, mind you) was a hair under 200k. So if we only went with average HH income to home market average, the average family is spending 3X. But, looking at the census breakout for HH income by income levels, if we took the standard notion of maxing at 2.5X for mortgage, only 17% of folks living in St. Cloud would be at the HH income to buy just the standard house. As you can figure, metros are going to at the very least be similar but likely even worse. It's an untenable situation for buyers, and is probably a result of investors buying up lands, changes in behavior due to COVID, but also banks offering up way too much money and people willing to use it, bloating competition which then bloats the comps. Nice if you are a downsizing seller, horrific if you are a first-time homebuyer, and will likely result in longitudinal problems affecting both individuals and communities alike. If our money is tied to the houses (so in reality, the banks), the circulation effect is not explicit in our communities themselves, which the small businesses will feel as new homeowner will be forced to purchase items as cheap as can they can get (Walmart, McDonalds, etc). Home maintenance will be deferred or never done leading to deterioration faster and neighborhoods turning to shite much quicker. The banks need to limit the amount given out, regulations for zoning and permitting need to be reduced, and I do believe we need to think about who can buy residentials (ie Americans/Green Card/Visas only) and if we give tax write offs for non primary residential properties. At least in the interim. Also, mortgage rates being higher is probably not a bad idea, as it disincentives investors, which at this time with such a housing crunch, needs to be factored.

Regardless, housing market is unrealistic for many if they want to continue their climb of growth of wealth and self-reliance.