re: Americans need to earn 70% more than 6 years ago to comfortably afford a median price home

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Could anyone who knows more about the economy explain to me why we wouldn't lower interest rates at this point?

I'm not saying sub 2. But why not go into the high 3's.

At some point I don't understand why we wouldn't? Prices aren't going to go down but our dollar has devalued. You can't get as much for your money as you could. Wasn't that the goal?

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It is to counter inflation. It works, it's just painful and not a quick fix. I think they'll keep them "elevated" for years, albeit begin a slow step down. These aren't historically insane rates, people forget that. The historically insane rates were 3%, etc.

We're on a very painful course correction.

This is why the “you just need to tighten up and cut out expenses” messaging doesn’t work with the younger generation

You would have to cut out every modern convenience you have and still not make up that gap just to be able to “afford” a home … or you can just give up on owning a home and eat out travel and go to concerts. The dream is so out of reach they give up trying to reach it, which is kind of scary

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I don’t think home prices have gone up by 70%….so there appears to funny math going on.

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My guess is interest rates on 30-year fixed rate mortgage loans is a factor. Six years ago rates on those loans were around 4% and today their rate is near 7%.

Because the Fed can’t lower rates when it created the mess we are in, lowering and raising rates is all it has left. Rates could remain high low permanently if we didn’t print money to pay off and didn’t owe 30 trillion dollars but sadly we are stuck with the consequences of out of control spending

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Well, I don’t think home prices have gone up by 70%….so there appears to funny math going on.

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Loans were a lot cheaper 6 years ago.

You have both higher rates and much much higher home prices.

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don’t think home prices have gone up by 70%….so there appears to funny math going on.

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Interest rates have doubled, insurance has gone up a lot and property taxes are higher in most places. That means the average monthly mortgage payment has essentially doubled. Plus a lot of first time owners face remediation and repair costs to bring a starter home (as opposed to turnkey) up to standard and those expenses have also skyrocketed.

Combine that with tighter lending standards and high inflation on other essential expenses like groceries, gas, transportation and healthcare and it starts to make sense that people need to earn a lot more income now to save a down payment, qualify for the loan and make the monthly mortgage and upkeep payments. You have to look at the "big picture" context.

We essentially slammed the door on an entire generation of new young homeowners and it's going to be tough for them to get back in the game. And this will have other social ramifications too. When people see basic homeownership as a bridge too far, they stop caring about things like marriage, family, kids and responsible adult behavior. That's not good.

Maybe a new political administration and Baby Boomers dying off or heading to nursing homes will help things settle back. Because the trends can't continue.

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Too much Avocado toast

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Millennials better stop eating half a vegetable on a single slice of bread

I'm a teacher and my wife is a pharmacist, and if I wanted to buy my childhood home in Delaware, we probably wouldn't be able to afford it today.

I like to check in on realtor.com from time to time to see if my childhood house comes up for sale. I'm not interested in moving back and buying it, but I would love to see what it looks like on the inside after all of these years, my parents built it in 1977 (2099 sq ft on a two acre lot) and they sold it in 1992 for $125,000. I see houses that come up for sale on that road from time and time and I doubt we could buy any of them. My best friend's parents just sold their home on that road for $725,000, they bought it in 1990 when they were both high school teachers, no way two teachers are buying that today.

Edit: I should note, we do have a house and have been in it for 10 years this month.

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Baby Boomers dying off or heading to nursing homes will help things settle back

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They’ll continue burning down the house on the way out.

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What are the methods that an administration can employ to lift the wages of workers?

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Nothing, and we shouldn't want them to do anything. We have too much government interventionism as it is.