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One thing this ignores is interest rates and availability of credit. The biggest determinant of homes people buy is not the total price, but rather how much ca
by RcouF1uZ4gsC 5y ago
One thing this ignores is interest rates and availability of credit.
The biggest determinant of homes people buy is not the total price, but rather how much cash do they need for down payment, and what will the monthly payment be.
With low interest rates and increased credit availability ( you don’t need 20% down payment in many cases now), people on the same income are actually able to buy a more expensive home.
I think looking at monthly mortgage payments to income ratio over the long term might actually be more informative.
- rektide 5y agoAgreed. As much as any other factor, that anyone with a bit of money can now buy an expensive house feels like the thing making the housing prices go up. (As well as our general inability to build.)
- leetcrew 5y ago> The biggest determinant of homes people buy is not the total price, but rather how much cash do they need for down payment, and what will the monthly payment be. I agree this is mostly how people decide, but it's not necessarily a good idea. buying a very expensive home at historically low interest rates is a significant risk. there's a good chance you get upside-down on that loan over a 15-30 year period. better hope you don't get divorced, lose your job, or need to relocate during that period.