5 ms·

For most Americans, owning a home is now a distant dream

45 points by gamechangr 4y ago

coldtea 4y ago
"You will own nothing and be happy - or else"
timcavel 4y ago
jvanderbot 4y ago
Is it because we want to live in nice homes in nice cities? Or is it because literally no matter where you look, it is impossible to buy a home there. I suspect a lot of column A, a little of column B. You can still get $80k homes in nice little towns in the midwest. But can you work there?
- gamechangr 4y ago
  No question desired locations have more pressure on housing, but all the large cities are having lower inventory.
- clircle 4y ago
  I was really hoping that the pandemic would basically "solve" US housing by normalizing work from home. But no.
  - Sohcahtoa82 4y ago
    WFH has certainly increased. But it hasn't solved housing because the simple fact is, setting aside cost, most people want to live in big cities. You have more options for everything from food to entertainment. Then there's the politics...small towns tend to lean right. My brother got a job that lets him WFH, and he thought about moving to some podunk town in Iowa since he saw tons of houses on Zillow for under $75K, then he took a closer look in Google Street View and saw more Confederate flags than he felt comfortable with.
    - otoburb 4y ago
      >>[...] then he took a closer look in Google Street View and saw more Confederate flags than he felt comfortable with. In a way, your brother is probably grateful that the flag bearers flew their colours in the first place, instead of purchasing a house, moving, and then finding out much later.
      - rayiner 4y ago
        I’m sure the Iowans are also grateful his brother didn’t move in.
        jvanderbot 4y ago
        I'm much more left than most people in my wife's very small hometown. But I'll tell you one thing: Jokes about Tesla's aside, they are welcoming folk and a joy to be around. Big family focus, lots of community, and plenty of time at the lake fishing.
    - thedougd 4y ago
      Confederate flags in Iowa?
      - idontwantthis 4y ago
        There are confederate flags in rural areas all over America. Really gives the lie to “heritage not hate”. Especially in WV, which seceded from VA after VA seceded.
    - gamechangr 4y ago
      People warning of Confederate Flags in Iowa are like people warning of Maga hats in LA. Something doesn't add up.
      - Sohcahtoa82 4y ago
        As someone else said, go to any rural area in the USA and you'll find Confederate flags. Less common than southern states for sure, but you'll still find them in the eastern half of Oregon, even.
  - smackeyacky 4y ago
    I thought it might have the opposite effect. If you are working from home, you need a work space. Trying to crowd two people around a kitchen table or working at a lounge isn't as nice as a desk in a dedicated space, so I thought there would be some pressure to upsize your living space to accommodate that.
- polski-g 4y ago
  As a programmer? Yes. As a plumber? Only if competition is low enough.
- codefreeordie 4y ago
  All of the above. There are tons of houses available all over the country [except within a 2 hour driving commute of the few major financial hub cities] for prices that the median household income would readily qualify. There's tons of new house construction going on, primarily in areas that are just barely outside of easy affordability (places like all of Texas that isn't Austin, for example). What there is not is much house construction in the super top most desired cities, in commute-range of the big financial and tech hubs. The combination of high demand and anti-housing policy have made housing in those locations utterly unobtainable. It's not even really that all the property is going to big investors -- most of the big investors prefer markets like Texas where the ratio of rents to prices is more workable. Much better to pay $500,000 per unit and rent out for $2,400/month than to pay $2,000,000 per unit and rent out for $5,500/month.
gamechangr 4y ago
"The U.S. now has almost 500 cities where the average cost of a home has hit $1 million, according to Zillow." Does that sound right? That sounds kind of high to me...
- jonas21 4y ago
  They're counting every city, town, and village in the census data, regardless of how small. For example, the most expensive city in the country has a population of 88: > Indian Creek, Florida, an exclusive 300-acre island in Biscayne Bay in Miami, is the most expensive city in the country, with a typical home value of around $28.3 million. The city has a total population of 88 residents, including a handful of high-profile celebrity tenants, such as Tom Brady and Enrique Iglesias. [1] There are over 30,000 places in the dataset, so it's not too surprising that ~500 of them (<2%) are very expensive. Looking at the median city would be much more useful. [1] https://www.zillow.com/research/million-dollar-cities-2021-30655/ https://www.zillow.com/research/million-dollar-cities-2021-3...
  - thedougd 4y ago
    Sounds like neighborhoods and gated communities that self incorporated.
bxparks 4y ago
I'll be an armchair economist and throw out my ideas for why this is happening: * Dramatic increase of inequality in the last 40 years means that wealthiest buyers are determining the price of the entire housing inventory. I know too many people with multiple houses. Related to this, the global slosh of foreign capital looking to launder their money, or park their money in tangible assets. * Perverse incentives in the US tax code. Stepped-up Cost Basis means that aging Baby Boomers are highly incentivized to never sell their homes. After their death, their beneficiaries receive a huge tax benefit. * Many of the economically productive areas of the country have zoning laws which restrict new housing development, which cause scarcity, which drive up the value of existing houses for the benefit of existing homeowners. * There has been almost no productivity increase in the construction industry in the last several decades. Due to their inefficiency, the industry is incentivized towards expensive, higher-profit houses, instead of producing higher volume, lower-cost houses.
- Sohcahtoa82 4y ago
  > Stepped-up Cost Basis means that aging Baby Boomers are highly incentivized to never sell their homes. After their death, their beneficiaries receive a huge tax benefit. How does that work? If I buy a house for $100K, then sell it 30 years later for $1M, am I really going to get taxed on the $900K gain? And what tax benefit if it's inherited? Does inheriting reset the cost basis so there will never be taxes due on that $900K gain or something?
  - HWR_14 4y ago
    > How does that work? If I buy a house for $100K, then sell it 30 years later for $1M, am I really going to get taxed on the $900K gain? You get taxed on a $400k gain. The first $500k of gain (in your primary residence for 3 years) is ignored. In fact, I know (casually) someone who moved in 2021 just to lock in their appreciation at the 500k level. > And what tax benefit if it's inherited? Does inheriting reset the cost basis so there will never be taxes due on that $900K gain or something? Yes. When you inherit property (real estate, stocks, art, etc.) the basis resets to the present fair market value (easy to determine in case of a publicly traded stock, probably requires an appraiser for real estate if you don't sell it quickly.)
deleted 4y ago
[deleted]
la6472 4y ago
If this https://tab.gladly.io/cats/ https://tab.gladly.io/cats/ can raise 1 million then everything is possible
rufus_foreman 4y ago
The headline is correct. The current homeownership rate in the United States is 65.5%. For most Americans, owning a home is a reality, not a dream. That rate hasn't varied much over the years. Between 1965 and today, it has never been below around 63% or above around 69%. -- https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N
- tmnvix 4y ago
  I'm always curious about the reported 'homeownership rate'. As far as I'm aware, this is actually the 'living in an owner-occupied home rate'. It includes adults living with parents while saving for a deposit, housemates of a homeowner, etc. Is there a truer measure of home ownership?
  - thfuran 4y ago
    I'd say number of privately owned residences / (number of unmarried adults + number of married couples) would be a better figure. What you really want is the number of unique owners among all owned residences, not just the number of owned residences but that's probably harder to get and I suspect that the mean number of homes owned per homeowner is pretty close to one anyways.
  - HWR_14 4y ago
    You have it a little off. This is based on census data where they literally just ask "does the owner of this residence live here?" and "does anyone live here?". The "homeownership rate" is just the yes's to the first question divided by the yes's to the second question. So, by definition, this excludes homeless people, people living in illegal dwellings and counts 7 roommates sharing a single apartment as one "non-owner-occupied household". Also, this is based on randomized legally required self-reporting. I'd imagine there is a skew towards people who are stable enough to own a home among the people who respond. People assume it's "percentage of people who own a house", but it's only about the houses themselves. As to a better measure, a simple better measure is to look at the ages involved. In 1982, 70% of household based around 35-45 were owner-occupied household. By 2021 that number was 60%. It was pretty much a straight line down. Meanwhile, older people saw that rate continue to level off or even grow. Hence, even the flawed data shows that the trend is worsening. So the post you are responding to, once you look at the affected generations, doesn't even say what the original poster was claiming.
guntars 4y ago
> Some parts of the U.S. have more homes for middle-income buyers than the national average, according to the National Association of Realtors’ recent analysis. Color me surprised!
- thfuran 4y ago
  Wouldn't it be interesting if that weren't the case?

45 points by gamechangr 4y ago

coldtea 4y ago

"You will own nothing and be happy - or else"

timcavel 4y ago

jvanderbot 4y ago

Is it because we want to live in nice homes in nice cities? Or is it because literally no matter where you look, it is impossible to buy a home there. I suspect a lot of column A, a little of column B. You can still get $80k homes in nice little towns in the midwest. But can you work there?

gamechangr 4y ago
No question desired locations have more pressure on housing, but all the large cities are having lower inventory.
clircle 4y ago
I was really hoping that the pandemic would basically "solve" US housing by normalizing work from home. But no.
- Sohcahtoa82 4y ago
  WFH has certainly increased. But it hasn't solved housing because the simple fact is, setting aside cost, most people want to live in big cities. You have more options for everything from food to entertainment. Then there's the politics...small towns tend to lean right. My brother got a job that lets him WFH, and he thought about moving to some podunk town in Iowa since he saw tons of houses on Zillow for under $75K, then he took a closer look in Google Street View and saw more Confederate flags than he felt comfortable with.
  - otoburb 4y ago
    >>[...] then he took a closer look in Google Street View and saw more Confederate flags than he felt comfortable with. In a way, your brother is probably grateful that the flag bearers flew their colours in the first place, instead of purchasing a house, moving, and then finding out much later.
    - rayiner 4y ago
      I’m sure the Iowans are also grateful his brother didn’t move in.
      - jvanderbot 4y ago
        I'm much more left than most people in my wife's very small hometown. But I'll tell you one thing: Jokes about Tesla's aside, they are welcoming folk and a joy to be around. Big family focus, lots of community, and plenty of time at the lake fishing.
  - thedougd 4y ago
    Confederate flags in Iowa?
    - idontwantthis 4y ago
      There are confederate flags in rural areas all over America. Really gives the lie to “heritage not hate”. Especially in WV, which seceded from VA after VA seceded.
  - gamechangr 4y ago
    People warning of Confederate Flags in Iowa are like people warning of Maga hats in LA. Something doesn't add up.
    - Sohcahtoa82 4y ago
      As someone else said, go to any rural area in the USA and you'll find Confederate flags. Less common than southern states for sure, but you'll still find them in the eastern half of Oregon, even.
- smackeyacky 4y ago
  I thought it might have the opposite effect. If you are working from home, you need a work space. Trying to crowd two people around a kitchen table or working at a lounge isn't as nice as a desk in a dedicated space, so I thought there would be some pressure to upsize your living space to accommodate that.
polski-g 4y ago
As a programmer? Yes. As a plumber? Only if competition is low enough.
codefreeordie 4y ago
All of the above. There are tons of houses available all over the country [except within a 2 hour driving commute of the few major financial hub cities] for prices that the median household income would readily qualify. There's tons of new house construction going on, primarily in areas that are just barely outside of easy affordability (places like all of Texas that isn't Austin, for example). What there is not is much house construction in the super top most desired cities, in commute-range of the big financial and tech hubs. The combination of high demand and anti-housing policy have made housing in those locations utterly unobtainable. It's not even really that all the property is going to big investors -- most of the big investors prefer markets like Texas where the ratio of rents to prices is more workable. Much better to pay $500,000 per unit and rent out for $2,400/month than to pay $2,000,000 per unit and rent out for $5,500/month.

gamechangr 4y ago

"The U.S. now has almost 500 cities where the average cost of a home has hit $1 million, according to Zillow." Does that sound right? That sounds kind of high to me...

jonas21 4y ago
They're counting every city, town, and village in the census data, regardless of how small. For example, the most expensive city in the country has a population of 88: > Indian Creek, Florida, an exclusive 300-acre island in Biscayne Bay in Miami, is the most expensive city in the country, with a typical home value of around $28.3 million. The city has a total population of 88 residents, including a handful of high-profile celebrity tenants, such as Tom Brady and Enrique Iglesias. [1] There are over 30,000 places in the dataset, so it's not too surprising that ~500 of them (<2%) are very expensive. Looking at the median city would be much more useful. [1] https://www.zillow.com/research/million-dollar-cities-2021-30655/ https://www.zillow.com/research/million-dollar-cities-2021-3...
- thedougd 4y ago
  Sounds like neighborhoods and gated communities that self incorporated.

bxparks 4y ago

I'll be an armchair economist and throw out my ideas for why this is happening: * Dramatic increase of inequality in the last 40 years means that wealthiest buyers are determining the price of the entire housing inventory. I know too many people with multiple houses. Related to this, the global slosh of foreign capital looking to launder their money, or park their money in tangible assets. * Perverse incentives in the US tax code. Stepped-up Cost Basis means that aging Baby Boomers are highly incentivized to never sell their homes. After their death, their beneficiaries receive a huge tax benefit. * Many of the economically productive areas of the country have zoning laws which restrict new housing development, which cause scarcity, which drive up the value of existing houses for the benefit of existing homeowners. * There has been almost no productivity increase in the construction industry in the last several decades. Due to their inefficiency, the industry is incentivized towards expensive, higher-profit houses, instead of producing higher volume, lower-cost houses.

Sohcahtoa82 4y ago
> Stepped-up Cost Basis means that aging Baby Boomers are highly incentivized to never sell their homes. After their death, their beneficiaries receive a huge tax benefit. How does that work? If I buy a house for $100K, then sell it 30 years later for $1M, am I really going to get taxed on the $900K gain? And what tax benefit if it's inherited? Does inheriting reset the cost basis so there will never be taxes due on that $900K gain or something?
- HWR_14 4y ago
  > How does that work? If I buy a house for $100K, then sell it 30 years later for $1M, am I really going to get taxed on the $900K gain? You get taxed on a $400k gain. The first $500k of gain (in your primary residence for 3 years) is ignored. In fact, I know (casually) someone who moved in 2021 just to lock in their appreciation at the 500k level. > And what tax benefit if it's inherited? Does inheriting reset the cost basis so there will never be taxes due on that $900K gain or something? Yes. When you inherit property (real estate, stocks, art, etc.) the basis resets to the present fair market value (easy to determine in case of a publicly traded stock, probably requires an appraiser for real estate if you don't sell it quickly.)

deleted 4y ago

[deleted]

la6472 4y ago

If this https://tab.gladly.io/cats/ https://tab.gladly.io/cats/ can raise 1 million then everything is possible

rufus_foreman 4y ago

The headline is correct. The current homeownership rate in the United States is 65.5%. For most Americans, owning a home is a reality, not a dream. That rate hasn't varied much over the years. Between 1965 and today, it has never been below around 63% or above around 69%. -- https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N

tmnvix 4y ago
I'm always curious about the reported 'homeownership rate'. As far as I'm aware, this is actually the 'living in an owner-occupied home rate'. It includes adults living with parents while saving for a deposit, housemates of a homeowner, etc. Is there a truer measure of home ownership?
- thfuran 4y ago
  I'd say number of privately owned residences / (number of unmarried adults + number of married couples) would be a better figure. What you really want is the number of unique owners among all owned residences, not just the number of owned residences but that's probably harder to get and I suspect that the mean number of homes owned per homeowner is pretty close to one anyways.
- HWR_14 4y ago
  You have it a little off. This is based on census data where they literally just ask "does the owner of this residence live here?" and "does anyone live here?". The "homeownership rate" is just the yes's to the first question divided by the yes's to the second question. So, by definition, this excludes homeless people, people living in illegal dwellings and counts 7 roommates sharing a single apartment as one "non-owner-occupied household". Also, this is based on randomized legally required self-reporting. I'd imagine there is a skew towards people who are stable enough to own a home among the people who respond. People assume it's "percentage of people who own a house", but it's only about the houses themselves. As to a better measure, a simple better measure is to look at the ages involved. In 1982, 70% of household based around 35-45 were owner-occupied household. By 2021 that number was 60%. It was pretty much a straight line down. Meanwhile, older people saw that rate continue to level off or even grow. Hence, even the flawed data shows that the trend is worsening. So the post you are responding to, once you look at the affected generations, doesn't even say what the original poster was claiming.

guntars 4y ago

> Some parts of the U.S. have more homes for middle-income buyers than the national average, according to the National Association of Realtors’ recent analysis. Color me surprised!

thfuran 4y ago
Wouldn't it be interesting if that weren't the case?