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But also salaries have risen and additionally so has the value proposition of owning a home compared to living in an apartment. Why? Because they've stopped bui

by fridif 5y ago

But also salaries have risen and additionally so has the value proposition of owning a home compared to living in an apartment. Why? Because they've stopped building homes for the most part in desirable areas close to big tech companies.

wonnage 5y ago
Salaries have not risen outside of certain industries like tech
- adventured 5y ago
  Salaries have climbed. Particularly for the home buying demographics. The real (inflation adjusted) median household income hit an all-time high in 2019. At $68,700 it was approximately $12,000 higher than 2012, and roughly 10-11% higher than the peak of the housing bubble. Incomes shot up rapidly from 2014 to 2019. For the people at the median or above, things have continued to be great in terms of income position (Covid didn't roll back those gains), as labor supply remains tight for most median pay and above jobs. So if mortgage rates have declined considerably (cut in half), and we're just now back to home prices being inflation adjusted where they were during the housing bubble peak, and real median household incomes are also 10% higher, and the US household disposable income to debt service payment ratio is near decades lows, that leaves a lot more room for higher mortgage payments - which fully explains the upward trajectory in housing prices.
- IkmoIkmo 5y ago
  That's simply not true, in nominal terms income has increased quite substantially. In real terms they haven't climbed much, but then you're comparing a home price increase to an income that's already been adjusted for prices, that makes no sense. To understand if housing became more affordable you'd have to look at nominal income levels versus nominal housing costs. Look at median income for example here: https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N That's a 50% increase since 2008. It's not the top 1%, it's not an average where the high-earners jack up the average. It's a median, the middle-earning person in the US, now earning 50% more yearly than 2008. Combined with much lower interest rates and consistently bigger homes, housing is much more affordable compared to then.

by fridif 5y ago

wonnage 5y ago

Salaries have not risen outside of certain industries like tech

adventured 5y ago
Salaries have climbed. Particularly for the home buying demographics. The real (inflation adjusted) median household income hit an all-time high in 2019. At $68,700 it was approximately $12,000 higher than 2012, and roughly 10-11% higher than the peak of the housing bubble. Incomes shot up rapidly from 2014 to 2019. For the people at the median or above, things have continued to be great in terms of income position (Covid didn't roll back those gains), as labor supply remains tight for most median pay and above jobs. So if mortgage rates have declined considerably (cut in half), and we're just now back to home prices being inflation adjusted where they were during the housing bubble peak, and real median household incomes are also 10% higher, and the US household disposable income to debt service payment ratio is near decades lows, that leaves a lot more room for higher mortgage payments - which fully explains the upward trajectory in housing prices.
IkmoIkmo 5y ago
That's simply not true, in nominal terms income has increased quite substantially. In real terms they haven't climbed much, but then you're comparing a home price increase to an income that's already been adjusted for prices, that makes no sense. To understand if housing became more affordable you'd have to look at nominal income levels versus nominal housing costs. Look at median income for example here: https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N That's a 50% increase since 2008. It's not the top 1%, it's not an average where the high-earners jack up the average. It's a median, the middle-earning person in the US, now earning 50% more yearly than 2008. Combined with much lower interest rates and consistently bigger homes, housing is much more affordable compared to then.