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Is the norm really that home loans are unaffordable even to first-time-buyer DINKs with good-to-decent six figure jobs who just want a place to live? (not an in

Is the norm really that home loans are unaffordable even to first-time-buyer DINKs with good-to-decent six figure jobs who just want a place to live? (not an investment property) Currently the mortgage rates are the highest ever since 1989. Have you personally already purchased your first home? Without family assistance, it would be absolutely brutal and untenable for my children to enter into in this domain at present. The people at the bottom are getting a remarkably harsh and bad deal these days, even in instances where they have been exceedingly fiscally responsible their entire life. Is this the future the youngsters deserve? My kids are still solidly upper middle class, imagine what this translates to for the lower end of socio economic status. This seems severely suboptimal. At what point is a serious systemic correction warranted? What is the current generation supposed to tell their children? At some point people's motivation to participate in the system and play by the rules will be negatively impacted. What happens then? https://en.wikipedia.org/wiki/DINK https://en.wikipedia.org/wiki/DINK

davidw 4y ago
There's a serious housing shortage. https://www.npr.org/2022/07/14/1109345201/theres-a-massive-housing-shortage-across-the-u-s-heres-how-bad-it-is-where-you-l https://www.npr.org/2022/07/14/1109345201/theres-a-massive-h... Worryingly, the higher interest rates are making it more difficult to construct the housing we so desperately need in so many places.
- red-iron-pine 4y ago
  There is a housing shortage because large, often foreign, organizations are buying up all of the housing stock. Mom & Pop trying to get a couple of AirBnB's ain't helping either.
  - davidw 4y ago
    I'm involved in housing politics where I live. I go to hearings, pay attention to what's coming through the planning department. I see what causes housing to not be built. It's NIMBYs. My neighbors. Not some far-off bad guys. The reason big companies got into the housing market is because there are good returns, because it's difficult to build housing. Why? NIMBYs. The best way to stick it to the big companies is to build enough housing. https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/ https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...
  - HDThoreaun 4y ago
    Institutional investors represent less than 10% of home sales. Even still, they're buying houses because they realize there aren't enough of them. If we had enough houses it wouldn't be profitable for them to buy them.
refurb 4y ago
Yes, it's normal when housing prices have massively inflated due to ultra-low interest rates, then rates returned to normal. If DINKs can't afford it, what does that tell you about the direction housing prices will go?
- metadat 4y ago
  > If DINKs can't afford it, what does that tell you about the direction housing prices will go? Elites and wealthy boomers will keep soaking up resources, then prices may become volatile in a southward direction. In the meantime, the current generation is frozen in place, unable to progress in a rigged game.
- selcuka 4y ago
  > If DINKs can't afford it, what does that tell you about the direction housing prices will go? The ones with capital will buy them, and you will be renting.
  - swexbe 4y ago
    Seems like a pretty risky investment. Especially as fewer and fewer people will have anything to gain from the NIMBY policies artificially increasing prices.
    - humanrebar 4y ago
      The market (and NIMBY regs) can stay irrational longer than you can stay housed.
    - selcuka 4y ago
      Historically speaking, investing in property/land has never turned out risky. Initial cost has little significance in total profit calculation as long as you can seek rent indefinitely.
  - refurb 4y ago
    Clearly not since housing prices are falling due to affordability. And if you look at the capital buying up houses, it's a tiny fraction of all available housing out there. The correct answer is - just like when housing prices went up with low interest rates, they'll go down with high interest rates.
rayiner 4y ago
Can your kids afford an $851/month mortgage? https://www.redfin.com/IA/Cedar-Rapids/6835-Preston-Terrace-Ct-SW-52404/unit-1/home/184600750 https://www.redfin.com/IA/Cedar-Rapids/6835-Preston-Terrace-... Or $1600/month? This has a nursery so they can fix the dink: https://www.redfin.com/MD/Pasadena/3500K-Lochearn-Ct-21122/unit-K/home/143360311 https://www.redfin.com/MD/Pasadena/3500K-Lochearn-Ct-21122/u...
- tomcam 4y ago
  “Fix the dink” just hit my funny bone for some reason. Now I can’t stop giggling and saying it to myself
selcuka 4y ago
> Is the norm really that home loans are unaffordable even to first-time-buyer DINKs with good-to-decent six figure jobs who just want a place to live? The home loans are unaffordable because the house prices are too high. The median house price in 1989 was around $95K ($230K adjusted for inflation). Today it's about $400K.
- nightski 4y ago
  Are houses today the same as houses in 1989? Seems like you'd need a much more detailed analysis than median price to compare apples to apples.
  - Joeri 4y ago
    That doesn’t matter to buyers. If the housing stock is too expensive for the population there can be many causes, and higher quality or larger size housing is just another cause. The causes of the high prices don’t matter to buyers, all they know is they can’t afford to buy. What use is it to them that the homes they can’t afford are better quality?
    - nightski 4y ago
      With the amount of housing turnover in the past few years, to me it seems that plenty of people can afford to buy. Actually an unfortunate amount.
  - davemp 4y ago
    The improvements in home construction have diminishing returns. For example my county now requires residential fire sprinkler systems. Such systems aren’t cheap but also don’t provide any real payoff to homeowner on average. Improved insulation and air sealing is nice, but you’re not going to see anything close to $200k in energy savings over the building’s life vs just blasting your furnace to a comfortable temperature. Houses certainly have increased in size though.
  - dublinben 4y ago
    Given that the median age of a home in 2019 was 39, that puts half of today's housing stock as being built in 1980 or before. So most of "today's houses" are literally the same houses that were present in 1989, just with three decades of additional depreciation. This is even worse in older, populous parts of the country like California and the Northeast that haven't built as many new homes as in the Southeast. In California and New York, for instance, people are squabbling to pay $1m+ for 43-60 year-old homes. People today are paying more, and getting less for their money. https://eyeonhousing.org/2021/03/age-of-housing-stock-by-state-3/ https://eyeonhousing.org/2021/03/age-of-housing-stock-by-sta...
anonymouskimmer 4y ago
> Have you personally already purchased your first home? Without family assistance, it would be absolutely brutal and untenable for my children to enter into in this domain at present. I haven't, but I'm not a DINK, and have never broken six figures. The right credit union will make a home loan with no money down, which might help your kids and their spouses. I'm currently paying $3k/month for rent. Zillow says that this could afford a $350,965 home with a 30-year 6.833% fixed rate, including 1.2% taxes at $351/month and $800/year in homeowner's insurance at $67/month, and mortgage insurance at $287/month. Not possible in this area, but possible elsewhere.
- roflyear 4y ago
  Hardly possible in my state! $350k gets you a fixer upper 2br 1bath
  - anonymouskimmer 4y ago
    That's basically what I'm paying $3k rent for here. Sounds nice. Buying a house like that outright is probably in the $500k+ range here.
    - roflyear 4y ago
      Yeah it sucks.
cwp 4y ago
I mentioned to my Dad that I was lucky to be able to buy a house for the first time just before rates went up. He told me the story of how he bought his first house in 1977 - the house I grew up in. The rate was 19%, and he was only able to get a loan because he knew a guy who knew a guy at the bank. He had masters degree and a good job, but all the banks turned him down until he found the right strings to pull.
- lowercased 4y ago
  Our long term family home, bought in 1981, was done as a land contract at 16%. Apparently was tough to refinance down to 10% - original owner moved across the country, and was dragging their feet on signing papers, pushing back, etc. They were about to lose a 16% return and delayed for close to a year.
IAmGraydon 4y ago
Upper middle class starts at $156,000. They can’t afford a home at that income level?
- mym1990 4y ago
  Source for this?

davidw 4y ago

There's a serious housing shortage. https://www.npr.org/2022/07/14/1109345201/theres-a-massive-housing-shortage-across-the-u-s-heres-how-bad-it-is-where-you-l https://www.npr.org/2022/07/14/1109345201/theres-a-massive-h... Worryingly, the higher interest rates are making it more difficult to construct the housing we so desperately need in so many places.

red-iron-pine 4y ago
There is a housing shortage because large, often foreign, organizations are buying up all of the housing stock. Mom & Pop trying to get a couple of AirBnB's ain't helping either.
- davidw 4y ago
  I'm involved in housing politics where I live. I go to hearings, pay attention to what's coming through the planning department. I see what causes housing to not be built. It's NIMBYs. My neighbors. Not some far-off bad guys. The reason big companies got into the housing market is because there are good returns, because it's difficult to build housing. Why? NIMBYs. The best way to stick it to the big companies is to build enough housing. https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/ https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...
- HDThoreaun 4y ago
  Institutional investors represent less than 10% of home sales. Even still, they're buying houses because they realize there aren't enough of them. If we had enough houses it wouldn't be profitable for them to buy them.

refurb 4y ago

Yes, it's normal when housing prices have massively inflated due to ultra-low interest rates, then rates returned to normal. If DINKs can't afford it, what does that tell you about the direction housing prices will go?

metadat 4y ago
> If DINKs can't afford it, what does that tell you about the direction housing prices will go? Elites and wealthy boomers will keep soaking up resources, then prices may become volatile in a southward direction. In the meantime, the current generation is frozen in place, unable to progress in a rigged game.
selcuka 4y ago
> If DINKs can't afford it, what does that tell you about the direction housing prices will go? The ones with capital will buy them, and you will be renting.
- swexbe 4y ago
  Seems like a pretty risky investment. Especially as fewer and fewer people will have anything to gain from the NIMBY policies artificially increasing prices.
  - humanrebar 4y ago
    The market (and NIMBY regs) can stay irrational longer than you can stay housed.
  - selcuka 4y ago
    Historically speaking, investing in property/land has never turned out risky. Initial cost has little significance in total profit calculation as long as you can seek rent indefinitely.
- refurb 4y ago
  Clearly not since housing prices are falling due to affordability. And if you look at the capital buying up houses, it's a tiny fraction of all available housing out there. The correct answer is - just like when housing prices went up with low interest rates, they'll go down with high interest rates.

rayiner 4y ago

Can your kids afford an $851/month mortgage? https://www.redfin.com/IA/Cedar-Rapids/6835-Preston-Terrace-Ct-SW-52404/unit-1/home/184600750 https://www.redfin.com/IA/Cedar-Rapids/6835-Preston-Terrace-... Or $1600/month? This has a nursery so they can fix the dink: https://www.redfin.com/MD/Pasadena/3500K-Lochearn-Ct-21122/unit-K/home/143360311 https://www.redfin.com/MD/Pasadena/3500K-Lochearn-Ct-21122/u...

tomcam 4y ago
“Fix the dink” just hit my funny bone for some reason. Now I can’t stop giggling and saying it to myself

selcuka 4y ago

> Is the norm really that home loans are unaffordable even to first-time-buyer DINKs with good-to-decent six figure jobs who just want a place to live? The home loans are unaffordable because the house prices are too high. The median house price in 1989 was around $95K ($230K adjusted for inflation). Today it's about $400K.

nightski 4y ago
Are houses today the same as houses in 1989? Seems like you'd need a much more detailed analysis than median price to compare apples to apples.
- Joeri 4y ago
  That doesn’t matter to buyers. If the housing stock is too expensive for the population there can be many causes, and higher quality or larger size housing is just another cause. The causes of the high prices don’t matter to buyers, all they know is they can’t afford to buy. What use is it to them that the homes they can’t afford are better quality?
  - nightski 4y ago
    With the amount of housing turnover in the past few years, to me it seems that plenty of people can afford to buy. Actually an unfortunate amount.
- davemp 4y ago
  The improvements in home construction have diminishing returns. For example my county now requires residential fire sprinkler systems. Such systems aren’t cheap but also don’t provide any real payoff to homeowner on average. Improved insulation and air sealing is nice, but you’re not going to see anything close to $200k in energy savings over the building’s life vs just blasting your furnace to a comfortable temperature. Houses certainly have increased in size though.
- dublinben 4y ago
  Given that the median age of a home in 2019 was 39, that puts half of today's housing stock as being built in 1980 or before. So most of "today's houses" are literally the same houses that were present in 1989, just with three decades of additional depreciation. This is even worse in older, populous parts of the country like California and the Northeast that haven't built as many new homes as in the Southeast. In California and New York, for instance, people are squabbling to pay $1m+ for 43-60 year-old homes. People today are paying more, and getting less for their money. https://eyeonhousing.org/2021/03/age-of-housing-stock-by-state-3/ https://eyeonhousing.org/2021/03/age-of-housing-stock-by-sta...

anonymouskimmer 4y ago

> Have you personally already purchased your first home? Without family assistance, it would be absolutely brutal and untenable for my children to enter into in this domain at present. I haven't, but I'm not a DINK, and have never broken six figures. The right credit union will make a home loan with no money down, which might help your kids and their spouses. I'm currently paying $3k/month for rent. Zillow says that this could afford a $350,965 home with a 30-year 6.833% fixed rate, including 1.2% taxes at $351/month and $800/year in homeowner's insurance at $67/month, and mortgage insurance at $287/month. Not possible in this area, but possible elsewhere.

roflyear 4y ago
Hardly possible in my state! $350k gets you a fixer upper 2br 1bath
- anonymouskimmer 4y ago
  That's basically what I'm paying $3k rent for here. Sounds nice. Buying a house like that outright is probably in the $500k+ range here.
  - roflyear 4y ago
    Yeah it sucks.

cwp 4y ago

I mentioned to my Dad that I was lucky to be able to buy a house for the first time just before rates went up. He told me the story of how he bought his first house in 1977 - the house I grew up in. The rate was 19%, and he was only able to get a loan because he knew a guy who knew a guy at the bank. He had masters degree and a good job, but all the banks turned him down until he found the right strings to pull.

lowercased 4y ago
Our long term family home, bought in 1981, was done as a land contract at 16%. Apparently was tough to refinance down to 10% - original owner moved across the country, and was dragging their feet on signing papers, pushing back, etc. They were about to lose a 16% return and delayed for close to a year.

IAmGraydon 4y ago

Upper middle class starts at $156,000. They can’t afford a home at that income level?

mym1990 4y ago
Source for this?