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The country is made up mainly of affordable housing. It’s certain areas that are so expensive because you’re competing with many high earning professionals. In

The country is made up mainly of affordable housing. It’s certain areas that are so expensive because you’re competing with many high earning professionals. In many cases a pair of them. Not everyone can live in NYC or SF. Saying that, people need to consider the low interest world we live in. When their parents bought their home years ago, the interest rate was very likely 10% or higher. Today it’s 3.5% and even lower. This drives prices up. The biggest issue is getting a down payment. I believe a combination of lower standard down payments and new mortgage terms of 40-50 years would make housing more attainable for a lot of people. I also agree, more development is needed.

jdhn 7y ago
I'll agree with almost everything you say, but I can't agree with the lower standard down payments. That is one of the reasons that we got into such a mess in the mid 2000's, along with lower underwriting standards.
- nemo44x 7y ago
  I hear you. The issue is, to me, that because interest are so low (and appear to continue to get lower) this has caused the list prices of homes to increase in proportion. Because of this, a 20% downpayment has become even more difficult to achieve for more people. To be sure, the down payment doesn't protect the buyer at all. It simply exists to protect the lender in the case of an early default. They can still sell the foreclosed home, possibly under market or in a depressed market, and be made whole since they only lent 80% of the original price. In fact, the average Joe would be better off in today's climate by putting 0 down and using what they would have put down into different financial instruments that will likely out perform the 3.x% interest rate they are likely receiving, considering they wouldn't have other penalties like PMI. The financial crisis had a lot of inputs and bad banking was a part. That is, banks giving loans to those who were not financially able. However, a big part of this was due to government interference in the free market pushing President Bush's "ownership economy" policy which forced banks to give loans to people they probably wouldn't have otherwise. And then the whole thing went to hell. A 0% down loan to a vetted individual with sufficient net worth wouldn't be a bad thing. I do believe there is a calculus we are missing between interest rates, inflation rates, and what a viable down payment should be.
danabrams 7y ago
Competing with high earning professionals AND using the levers of local government to slow the construction of new housing far below demand. The first part would not be an issue except in the short term without the second.
pharke 7y ago
> not everyone can live in NYC or SF Reads more like "naturally the poor should be displaced from wherever the rich choose to live" considering that both cities have been heavily gentrified. There's a lot more than just higher income couples putting pressure on the market, there is a lot of distortion coming from developers seeking to squeeze every penny of margin from the jump in prices
- skohan 7y ago
  Exactly. Vienna, for example, has tons of public housing which is affordable and is also a nice place to live. You can achieve that, even in a capital, if you have the political will to make it a reality.

jdhn 7y ago

I'll agree with almost everything you say, but I can't agree with the lower standard down payments. That is one of the reasons that we got into such a mess in the mid 2000's, along with lower underwriting standards.

nemo44x 7y ago
I hear you. The issue is, to me, that because interest are so low (and appear to continue to get lower) this has caused the list prices of homes to increase in proportion. Because of this, a 20% downpayment has become even more difficult to achieve for more people. To be sure, the down payment doesn't protect the buyer at all. It simply exists to protect the lender in the case of an early default. They can still sell the foreclosed home, possibly under market or in a depressed market, and be made whole since they only lent 80% of the original price. In fact, the average Joe would be better off in today's climate by putting 0 down and using what they would have put down into different financial instruments that will likely out perform the 3.x% interest rate they are likely receiving, considering they wouldn't have other penalties like PMI. The financial crisis had a lot of inputs and bad banking was a part. That is, banks giving loans to those who were not financially able. However, a big part of this was due to government interference in the free market pushing President Bush's "ownership economy" policy which forced banks to give loans to people they probably wouldn't have otherwise. And then the whole thing went to hell. A 0% down loan to a vetted individual with sufficient net worth wouldn't be a bad thing. I do believe there is a calculus we are missing between interest rates, inflation rates, and what a viable down payment should be.

danabrams 7y ago

Competing with high earning professionals AND using the levers of local government to slow the construction of new housing far below demand. The first part would not be an issue except in the short term without the second.

pharke 7y ago

> not everyone can live in NYC or SF Reads more like "naturally the poor should be displaced from wherever the rich choose to live" considering that both cities have been heavily gentrified. There's a lot more than just higher income couples putting pressure on the market, there is a lot of distortion coming from developers seeking to squeeze every penny of margin from the jump in prices

skohan 7y ago
Exactly. Vienna, for example, has tons of public housing which is affordable and is also a nice place to live. You can achieve that, even in a capital, if you have the political will to make it a reality.