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re: The math for buying a home no longer works, per WSJ
Posted on 12/20/23 at 11:59 am to 904
Posted on 12/20/23 at 11:59 am to 904
quote:
Hope you don't work in a city.. where the majority of everyone else works
There has been a significant out migration from areas with a high cost of living in the past few years. That is a good trend and it should continue until those structural problems that keeps housing supply artificially low are resolved. Those places are no longer as competitive as they once were when it comes to attracting and retaining skilled residents. They are either over populated or they are not investing enough in themselves to expand or add significant new housing for new residents.
So...leave the expensive cities and take jobs in places that are more affordable. Or take a risk in a cheaper neighborhood within those expensive cities. Depends on your needs and your appetite for risk. It's long past time for some declining neighborhoods to be gentrified too IMO. Unskilled and unproductive people shouldn't occupy such vast portions of American cities when skilled workers need a place to live.
The math for buying a home still works in much of the country. Like everything in real estate....it depends on the location and the people involved.
This post was edited on 12/20/23 at 12:03 pm
2
Posted on 12/20/23 at 12:00 pm to meansonny
quote:
What is the correlation to a first time homebuyer at the median income level from Nebraska to the median price of homes across the entire country?
Re-read my post, you dolt. I have no opinion on the original article. I am saying that you can make observations about the state of the market by comparing the median house/median income information to historical trends.
The ratio for median home to median income first time homebuyer in Nebraska was DIFFERENT 5, 10, 20 years ago than it is now.
Posted on 12/20/23 at 12:01 pm to JohnnyKilroy
quote:
It’s a largely irrelevant and unreasonable suggestion.
For the majority of Americans, pick 2:
- career opportunities
- short commute to work
- affordable home in a safe neighborhood
This post was edited on 12/20/23 at 12:07 pm
Posted on 12/20/23 at 12:07 pm to Palomitz
quote:Maybe 45% for their TOTAL debt to income ratio, not for the mortgage payment alone.
Banks qualified borrowers on a standard of 33% income to house monthly payment. Nowadays, they should raise that standard to at least 45% to help borrowers qualify.
If 45% of your gross pay is going just to pay your mortgage payment, you're going to be pinching pennies by the time you pay for utilities, groceries, car note/gas, and other basic necessities. The first time your AC goes out, car has to go in the shop, or some other unexpected expense comes up...you're having to go into debt without the means to pay it off because you were already stretched too thin before any unexpected expenses came up.
If banks give loans to people where the mortgage alone eats up 45% of their monthly income, a high percentage of those houses will end up in foreclosure within a few years.
Posted on 12/20/23 at 12:07 pm to frequent flyer
quote:
There has been a significant out migration from areas with a high cost of living in the past few years.
People may be leaving cities but they aren’t going far. The migration you’re talking about is moving to suburbs, not rural, which is where you’re going to find the 5+ acres suggested in that post.
Posted on 12/20/23 at 12:08 pm to JohnnyKilroy
quote:
It’s a largely irrelevant and unreasonable suggestion.
No, it's not. People have had to make decisions on where they live based on affordability for generations. Our grandparents even had to balance commute times with affordability and safety.
The neighborhoods change, but the problem isn't new to Gen Z.
quote:
Or is this the classic OT suggestion where people should be spending 10-15 hours a week on their commute to work?
That's very specific, and I haven't seen anyone suggest that.
If you can't afford to live in that city, your options are to pick another city or to find an affordable place outside of that city and commute in. Balancing commute with affordability of neighborhood is not a new challenge. It's been something adults have had to do for decades.
Posted on 12/20/23 at 12:11 pm to PhiTiger1764
quote:
The ratio for median home to median income first time homebuyer in Nebraska was DIFFERENT 5, 10, 20 years ago than it is now.
You can post this argument a third time without answering the question.
It still doesn't change the fact that the comparison is 100% irrelevant. Lol
The median household income for a homebuyer in the US was $107,000. 1/2 of those homebuyers were first time homebuyers.
Do you think their income skews above or below the $107k mark?
Do you think their homes skew above or below the median home price across the country?
If both the income and price are below the median when addressing the problem (becoming a homeowner in this economy), why are we even discussing medians?
Wouldn't it be more relevant to discuss the median income of first time homebuyers?
Wouldn't it be more relevant to discuss the median price of first time homebuyer homes?
And with the scale of the country... Wouldn't it be more relevant to scale down the sample size by territory?
The challenges around a city of 20M people are going to be different than the challenges around a city of 7M people are going to be different than the challenges around a city of 1M people than are going to be the challenges in rural America.
Posted on 12/20/23 at 12:12 pm to 904
quote:
For the majority of Americans, pick 2:
- career opportunities
- short commute to work
- affordable home in a safe neighborhood
It's very hard get all three, especially earlier in your career.
Most American cities have a major lack of affordable starter homes/condos. So people move to the outskirts of those towns. In some cases their employers even start moving operations to the periphery of those cities.
Posted on 12/20/23 at 12:13 pm to frequent flyer
quote:
So...leave the expensive cities and take jobs in places that are more affordable. Or take a risk in a cheaper neighborhood within those expensive cities. Depends on your needs and your appetite for risk. It's long past time for some declining neighborhoods to be gentrified too IMO. Unskilled and unproductive people shouldn't occupy such vast portions of American cities when skilled workers need a place to live.
I live BR which is much more affordable that the expensive cities, but the salaries usually match your location.
What he's suggesting is something like buying land somewhere outside of Livingston and throwing a trailer on it, which is hilarious.
Posted on 12/20/23 at 12:14 pm to 904
People pay the prices, theyre stupid.
Folks are going to have to simplify like its the 70s again.
Folks are going to have to simplify like its the 70s again.
Posted on 12/20/23 at 12:16 pm to Palomitz
quote:
Banks qualified borrowers on a standard of 33% income to house monthly payment. Nowadays, they should raise that standard to at least 45% to help borrowers qualify.
We’re you alive in 2008?
Posted on 12/20/23 at 12:21 pm to dewster
quote:
It's very hard get all three, especially earlier in your career.
Anecdotally, I agree.
My first 2 jobs were an hour away from my home.
Once I became a homeowner, my commute dropped to 30-45 minutes (good traffic).
quote:
Most American cities have a major lack of affordable starter homes/condos
I haven't seen that to be the case around Atlanta. But greater Altanta is a pretty huge territory.
I'm seeing townhouses and condos between $170k and. $240k just outside the perimeter.
quote:
So people move to the outskirts of those towns.
This was the growth strategy for Atlanta.
50 years ago, the suburbs were just outside the perimeter.
30 years ago, the suburbs pushed out another 20 miles.
Today, the "suburbs" are another 20-30 miles outside of that.
What once was a sleeper community for Atlanta is now its own business district. It once had a sleeper community 30 minutes away which has now turned into another business district.
People complaining about the affordable housing their parents got (or even folks 20 years ago) disregard the amount of growth and economic development in those same communities.
Posted on 12/20/23 at 12:22 pm to 904
quote:
What he's suggesting is something like buying land somewhere outside of Livingston and throwing a trailer on it, which is hilarious.
Okay what's hilarious about that suggestion for people who are priced out of more expensive neighborhoods?
They are choosing a longer commute so they can realize more value for the limited cash they can allocate towards housing. There's nothing wrong with that option at all, and it's quite common in mid sized metro areas. And it's entirely logical to have a preference for properties with revenue generating potential regardless of the location.
In Baton Rouge's case - perhaps those people would have selected one of the smaller, affordable homes in north Baton Rouge if that area was safer. But the safety concerns are not worth the benefit of a very short commute for most new homebuyers in the area.
Posted on 12/20/23 at 12:23 pm to RogerTheShrubber
quote:
RogerTheShrubber
We need to build our houses with our bare hands after our shift at the plant while watching some YouTube videos like you allegedly did, right?
Posted on 12/20/23 at 12:24 pm to RogerTheShrubber
quote:
People pay the prices, theyre stupid.
The prices are what they are because of supply issues brought on by outside investors buying up affordable homes and poor city planning / undesirable neighborhoods near the city center.
People will pay the price if their only other options are to move an hour from their work or just continue with apartment life (which isn't ideal for families/pets). Gentrification is happening, but it's a slow process.
Posted on 12/20/23 at 12:28 pm to GreatLakesTiger24
Yep...I did the math back in 2022 and realized I didn't have the capital to buy a house. I wanted to but it just wasn't meant to be.
Posted on 12/20/23 at 12:28 pm to Bullfrog
quote:
Yes because just like health care, home ownership is a right
Damn, Jeremiah. Your facetiousness went so far over a couple of these fellers' heads, the landing gear didn't even hit them in the foreheads.
Posted on 12/20/23 at 12:29 pm to 904
quote:
because of supply issues brought on by outside investors buying up affordable homes
That by definition is a demand issue.
The supply issue is somewhat simple.
Large cities don't have "more land".
You can complain about development. But you are growing economically in a single territory where the supply of land never changed.
What are you expecting the cost of land to do when the supply is stagnant and you have commercial, government, and residential interest fighting for their scraps.
So you are forced outward geographically.
What was once a sleeper community for that city has the same challenge (stagnat supply of land with competing commercial, public, and residential uses fighting for their scraps). The commercial and public use make that sleeper community its own business district. And you have to push outward for lower pricing.
Posted on 12/20/23 at 12:33 pm to frequent flyer
quote:
No, it's not.
Link me some 5 acre plots for 100k or less that are within 45 minutes of a large city.
Posted on 12/20/23 at 12:35 pm to meansonny
quote:
This was the growth strategy for Atlanta.
50 years ago, the suburbs were just outside the perimeter.
30 years ago, the suburbs pushed out another 20 miles.
Today, the "suburbs" are another 20-30 miles outside of that.
Atlanta is a good case study. I used to live in the northern suburbs, but it's been a while since I've been back.
The preferred housing style in most of Atlanta's recent history was single family suburban style house. It didn't really explode in growth until after the car was invented. So they just keep extending and extending that auto-centric format. It's almost always cheaper to do that than to redevelop the older parts of town.
It's hard to change the format of older single family neighborhoods that were developed in the 1930s-1980s, and frequently there are zoning laws and historic preservation requirements that limit what can be done to those older neighborhoods. There's always the NIMBY types that fight that tooth and nail as well.
Large scale redevelopment is what's happening in parts of Houston though. Places like Rice Military and the areas around Washington/I-10 were mostly single family homes in the mid 20th century. A lot of neighborhoods like that been redeveloped into condos and higher density housing in a format that is more fitting to the needs of the time. I'm not sure if that's because of Houston's lax zoning, but it's an impressive level of gentrification and redevelopment that Atlanta should replicate on a larger scale than it is.
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