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Housing is relatively affordable now compared to the past. Yes, house prices are high, but interest rates are low and household incomes are high. There is a pos

Housing is relatively affordable now compared to the past. Yes, house prices are high, but interest rates are low and household incomes are high. There is a post about it at Calculated Risk at https://calculatedrisk.substack.com/p/real-house-prices-price-to-rent-ratio-ade https://calculatedrisk.substack.com/p/real-house-prices-pric... that has an affordability index. The only time housing has been more affordable was after the financial crisis. If housing affordability affected happiness, unhappiness should have been off the charts in the early 1980's. But it wasn't, according to the linked article. People were as happy as ever while taking out mortgages at 18% interest.

xg15 5y ago
> and household incomes are high I've got no data, but I wonder if rising inequality might be warping the statistics here. At least, if incomes were really high across all population segments affected by the housing crisis, we shouldn't see so much talk about unaffordable cost of living, student debt, healthcare costs, etc. Something doesn't add up here. Household incomes might be extremely high for certain groups (e.g. tech workers) while too low to afford decent housing in other groups. > If housing affordability affected happiness, unhappiness should have been off the charts in the early 1980's. But it wasn't, according to the linked article. People were as happy as ever while taking out mortgages at 18% interest This might as well indicate that this way to calculate housing availability is wrong, not that housing availability doesn't affect happiness.
gremlinsinc 5y ago
Average income is 68k, average home price is 408k... According to a google search on how much can a person afford for a home at 60k... you get this: > The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a $120,000 to $150,000 mortgage at $60,000. Can you please tell me how one gets homes at these rates? Because I don't see any available, not here in Utah which isn't even a huge COL state... or anywhere else.. Edit..so to afford the AVERAGE home in America you'd need at least 163k per year annual salary.
- rufus_foreman 5y ago
  >> so to afford the AVERAGE home in America You're assuming they have no equity. Close to 40% of homeowners have their houses paid off. If they want to move up to a more expensive house, the 68K income needs to finance the difference in price between their current house and the new one, not the entire amount. If you're buying your first home on 68K income, you are not going to be buying a 400K house. You're going to be buying a "starter home" with a 5% down payment. Or even 3%.
- silisili 5y ago
  Loan places are giving out loans for over 4x gross income. Yet people keep saying this is nothing like 2008 because the loans aren't 'knowingly bad'.

xg15 5y ago

> and household incomes are high I've got no data, but I wonder if rising inequality might be warping the statistics here. At least, if incomes were really high across all population segments affected by the housing crisis, we shouldn't see so much talk about unaffordable cost of living, student debt, healthcare costs, etc. Something doesn't add up here. Household incomes might be extremely high for certain groups (e.g. tech workers) while too low to afford decent housing in other groups. > If housing affordability affected happiness, unhappiness should have been off the charts in the early 1980's. But it wasn't, according to the linked article. People were as happy as ever while taking out mortgages at 18% interest This might as well indicate that this way to calculate housing availability is wrong, not that housing availability doesn't affect happiness.

gremlinsinc 5y ago

Average income is 68k, average home price is 408k... According to a google search on how much can a person afford for a home at 60k... you get this: > The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a $120,000 to $150,000 mortgage at $60,000. Can you please tell me how one gets homes at these rates? Because I don't see any available, not here in Utah which isn't even a huge COL state... or anywhere else.. Edit..so to afford the AVERAGE home in America you'd need at least 163k per year annual salary.

rufus_foreman 5y ago
>> so to afford the AVERAGE home in America You're assuming they have no equity. Close to 40% of homeowners have their houses paid off. If they want to move up to a more expensive house, the 68K income needs to finance the difference in price between their current house and the new one, not the entire amount. If you're buying your first home on 68K income, you are not going to be buying a 400K house. You're going to be buying a "starter home" with a 5% down payment. Or even 3%.
silisili 5y ago
Loan places are giving out loans for over 4x gross income. Yet people keep saying this is nothing like 2008 because the loans aren't 'knowingly bad'.