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1. This report only looks at the 100 most populous metropolitan areas. A list that wouldn't include Reno NV or Montgomery AL. I understand that these 100 area

by htag 4y ago

1. This report only looks at the 100 most populous metropolitan areas. A list that wouldn't include Reno NV or Montgomery AL. I understand that these 100 areas represent over half the population, but they also represent more expensive homes than the places not studied. This skews the percentage, and the title is over generalizing. 2. They assume a 5% down payment and a PMI in their affordability calculation, when it's common for households to make a larger downpayment. Even though they looked at single individuals when making their income calculations they did not factor in single bedroom condos/townhouses/houses as part of the housing supply. Anything with an estimated cost over 30% income is calculated as unaffordable, which is a bit low. All of these factors conspire to push the percentage high. 3. I'm actually much more interested in different numbers when looking at affordable housing. Numbers such as what percentage of household budgets are spent on housing. What is the size and quality of the average house. What is the median age of a first time home buyer. What is the rate of home ownership. The numbers aren't great there either, but they are more relevant numbers. 4. I suspect Redfin is trying to stir up a bit of FOMO. Redfin makes commission on house sales. If they can make someone feel like their opportunity window to own a home is closing they might be able to generate more sales. Maybe this is actually the case for some folk, but the economic incentive should be acknowledged.

2020aj 4y ago
FOMO for buyers or sellers? Showing how unaffordable housing is right now doesn't make me more likely to rush to buy. It makes me more likely to wait. Sellers on the other hand may be more likely to come off their asking price some, which may increase overall sales.
- htag 4y ago
  Both? I can imagine someone looking at the graph showing a decrease of affordable homes sold over time and wondering if they will soon be on the other side of the line.
  - swatcoder 4y ago
    It’s a big leap from “I can imagine someone” to “this demonstrates a meaningful financial incentive that colors the content”
    - htag 4y ago
      It's a very small leap from "Redfin posted something on the internet" to "There is a financial incentive to this activity"
      - swatcoder 4y ago
        Of course that’s true. The question is whether its actual incentive is anything like the one you’ve surmised and used in your critique. I think that your take seems strained and that the actual incentive is likely more sophisticated in general and intuitively biases in the opposite direction if in any relation to your point at all.
- nerdponx 4y ago
  Redfin/Trulia/Zillow I would assume make more money on sellers than buyers (listing fees). Right now inventory is extremely low even though prices are high, because everyone was told that prices would crash as interest rates rose, so prices basically didn't go down at all or even continued to increase. I suppose Redfin is financially interested in reminding sellers that prices are actually just as high this year as they were last year.
  - Kye 4y ago
    Do they take direct listings? I assumed they got all their data from public information aggregators and MLSes. You can even see MLS watermarks in some photos.
    - nerdponx 4y ago
      They do, although most listings are from an MLS. I think they might also offer some kind of paid/pro tools for individual owner-sellers and agents who might want to use them. They also do business on the buyer side too, where they connect you with local buying agents (in a kind of misleading way, making you think you're booking an offer) and presumably impose some kind of commission for that. And who knows who they're selling aggregated user data to.
nl 4y ago
> 1. This report only looks at the 100 most populous metropolitan areas. A list that wouldn't include Reno NV or Montgomery AL. I understand that these 100 areas represent over half the population, but they also represent more expensive homes than the places not studied. This skews the percentage, and the title is over generalizing. In addition to this excellent point, you'd also expect a larger number of homes to be unaffordable to the typical household given some realistic assumptions (eg, housing is a major expense in the modern West) - and it doesn't appear they are correcting income for regions in the same way they are only selecting real estate. So they are taking the more expensive regions comparing to the country-wide income and not pointing out that we;d expect maybe up to 50% of homes to be unaffordable anyway.
flimsypremise 4y ago
You do realize that the bulk of the US population lives in the top 100 metropolitan areas? That's probably why it was chosen as a metric.
- htag 4y ago
  You do realize that over 1/3 of the population lives outside of top 100 metropolitan areas? Wouldn't you say that's sizable?
californical 4y ago
For 3, I’m surprised that you think that 30% is pushing low. Personally, the idea of spending over 30% of my income on housing seems incredibly precarious and dangerous. If one person loses their job in a 2-income household, you’re barely getting by, and you’re also spending so much on housing that you can’t save/invest enough to hedge that risk either. I know many people do it, but it seems like a pretty fair place to cut off if you’re being somewhat careful financially
- htag 4y ago
  1. You can usually hit a 43% DTI ratio before the banks will start cutting you off of financing. I trust that they know what is affordable and what isn't. 2. It feels acceptable to spend a larger percentage of your income on a new mortgage. That mortgage will stay constant as rents rise around you. That mortgage will stay constant as your household income hopefully increases as you advance in your career. 3. Personally I've never spent more than 22% of my income on housing.
  - mulmen 4y ago
    > I trust that they know what is affordable and what isn't. After 2008 how can you possibly believe this?

by htag 4y ago

2020aj 4y ago

FOMO for buyers or sellers? Showing how unaffordable housing is right now doesn't make me more likely to rush to buy. It makes me more likely to wait. Sellers on the other hand may be more likely to come off their asking price some, which may increase overall sales.

htag 4y ago
Both? I can imagine someone looking at the graph showing a decrease of affordable homes sold over time and wondering if they will soon be on the other side of the line.
- swatcoder 4y ago
  It’s a big leap from “I can imagine someone” to “this demonstrates a meaningful financial incentive that colors the content”
  - htag 4y ago
    It's a very small leap from "Redfin posted something on the internet" to "There is a financial incentive to this activity"
    - swatcoder 4y ago
      Of course that’s true. The question is whether its actual incentive is anything like the one you’ve surmised and used in your critique. I think that your take seems strained and that the actual incentive is likely more sophisticated in general and intuitively biases in the opposite direction if in any relation to your point at all.
nerdponx 4y ago
Redfin/Trulia/Zillow I would assume make more money on sellers than buyers (listing fees). Right now inventory is extremely low even though prices are high, because everyone was told that prices would crash as interest rates rose, so prices basically didn't go down at all or even continued to increase. I suppose Redfin is financially interested in reminding sellers that prices are actually just as high this year as they were last year.
- Kye 4y ago
  Do they take direct listings? I assumed they got all their data from public information aggregators and MLSes. You can even see MLS watermarks in some photos.
  - nerdponx 4y ago
    They do, although most listings are from an MLS. I think they might also offer some kind of paid/pro tools for individual owner-sellers and agents who might want to use them. They also do business on the buyer side too, where they connect you with local buying agents (in a kind of misleading way, making you think you're booking an offer) and presumably impose some kind of commission for that. And who knows who they're selling aggregated user data to.

nl 4y ago

> 1. This report only looks at the 100 most populous metropolitan areas. A list that wouldn't include Reno NV or Montgomery AL. I understand that these 100 areas represent over half the population, but they also represent more expensive homes than the places not studied. This skews the percentage, and the title is over generalizing. In addition to this excellent point, you'd also expect a larger number of homes to be unaffordable to the typical household given some realistic assumptions (eg, housing is a major expense in the modern West) - and it doesn't appear they are correcting income for regions in the same way they are only selecting real estate. So they are taking the more expensive regions comparing to the country-wide income and not pointing out that we;d expect maybe up to 50% of homes to be unaffordable anyway.

flimsypremise 4y ago

You do realize that the bulk of the US population lives in the top 100 metropolitan areas? That's probably why it was chosen as a metric.

htag 4y ago
You do realize that over 1/3 of the population lives outside of top 100 metropolitan areas? Wouldn't you say that's sizable?

californical 4y ago

For 3, I’m surprised that you think that 30% is pushing low. Personally, the idea of spending over 30% of my income on housing seems incredibly precarious and dangerous. If one person loses their job in a 2-income household, you’re barely getting by, and you’re also spending so much on housing that you can’t save/invest enough to hedge that risk either. I know many people do it, but it seems like a pretty fair place to cut off if you’re being somewhat careful financially

htag 4y ago
1. You can usually hit a 43% DTI ratio before the banks will start cutting you off of financing. I trust that they know what is affordable and what isn't. 2. It feels acceptable to spend a larger percentage of your income on a new mortgage. That mortgage will stay constant as rents rise around you. That mortgage will stay constant as your household income hopefully increases as you advance in your career. 3. Personally I've never spent more than 22% of my income on housing.
- mulmen 4y ago
  > I trust that they know what is affordable and what isn't. After 2008 how can you possibly believe this?