7 ms·

What decade do you live in where housing costs are proportional to the average population's income? Asking for a friend.

HPsquared 4y ago
Monthly rents and mortgage payments are proportional to disposable incomes, pretty much by definition. People competitively bid up the prices in terms of what they can each afford.
- brailsafe 4y ago
  I think it's more closely related to scarcity and how much someone's mortgage can be subsidized by monthly rents, and a lack of choice for renters to have other options. I don't think a lot of mortgage holders would be able to realistically pay their mortages if they weren't renting their basement out, and I know a lot of people who have houses now wouldn't be able to buy them because their salaries are wildly inadequate for servicing what they'd list for. But generally you're right if that dynamic weren't so insane. A 1 bdr condo in my city would cost an overall ~$4000 for a really old condo in a shitty building, and there's <9% of people on record in the country who'd be able to afford that without a ton of pressure, and the only people I know that own anything more than that absolutely couldn't pay for it without renting our all of their rooms. I guess it's still proportional in the sense that eventually renters will literally just have no money left
- srveale 4y ago
  House price to income ratio is increasing, meaning price is not proportional to income, pretty much by definition.
  - HPsquared 4y ago
    It depends on the definition of "housing costs". Monthly payments determine whether something is possible on a given income. Total cost is more a question of whether it's a good deal or not.
- yamazakiwi 4y ago
  Defining increasing housing cost by increases to disposable income is an inaccurate representation. You are right that prices are raised by what people can afford but we need to be specific and say, which people?
  - HPsquared 4y ago
    I suppose I'm implicitly filtering out all the people who don't participate in the market.

HPsquared 4y ago

Monthly rents and mortgage payments are proportional to disposable incomes, pretty much by definition. People competitively bid up the prices in terms of what they can each afford.

brailsafe 4y ago
I think it's more closely related to scarcity and how much someone's mortgage can be subsidized by monthly rents, and a lack of choice for renters to have other options. I don't think a lot of mortgage holders would be able to realistically pay their mortages if they weren't renting their basement out, and I know a lot of people who have houses now wouldn't be able to buy them because their salaries are wildly inadequate for servicing what they'd list for. But generally you're right if that dynamic weren't so insane. A 1 bdr condo in my city would cost an overall ~$4000 for a really old condo in a shitty building, and there's <9% of people on record in the country who'd be able to afford that without a ton of pressure, and the only people I know that own anything more than that absolutely couldn't pay for it without renting our all of their rooms. I guess it's still proportional in the sense that eventually renters will literally just have no money left
srveale 4y ago
House price to income ratio is increasing, meaning price is not proportional to income, pretty much by definition.
- HPsquared 4y ago
  It depends on the definition of "housing costs". Monthly payments determine whether something is possible on a given income. Total cost is more a question of whether it's a good deal or not.
yamazakiwi 4y ago
Defining increasing housing cost by increases to disposable income is an inaccurate representation. You are right that prices are raised by what people can afford but we need to be specific and say, which people?
- HPsquared 4y ago
  I suppose I'm implicitly filtering out all the people who don't participate in the market.