17 ms·

U.S. home prices are the most unaffordable they've been in nearly 100 years

233 points by mennaali 4y ago

chiefalchemist 4y ago
This is to be expected. Sellers are always reluctant to be reasonable when they are on the wrong side of a peak. The raising of interest rates means prices have to adjust. But after so many years of increasing prices sellers are not yet rational. And yes, some more inventory would help. That said, as the population ages, who is going to buy all the McMansions? Price not only need to adjust to interest rate but demographics.
- whitemary 4y ago
  > as the population ages, who is going to buy all the McMansions? The McMansions will be unlivable by that point. They weren't built to last.
  - RDaneel0livaw 4y ago
    ENTIRE vinyl villages of McMansions will be unlivable. They aren't even built to last the standard 30y mortgage because the builders know the initial buyers will sell and move on. Cheapest possible 2x4's with worst insulation ever known, all covered up in plastic siding. But hey, it's 10k sq ft right?
    - operatingthetan 4y ago
      > with worst insulation ever known, What are you talking about?
      - deleted 4y ago
        [deleted]
      - kevin_thibedeau 4y ago
        Lots of "luxury" housing is made with crap materials by unskilled freelancers. There is a ton of skimping on hidden details like missing flashing around doors and windows. You can't trust any home built within the last 25 years.
        operatingthetan 4y ago
        I'm asking specifically what insulation product they are referring to because I'm unaware of any product that fits that description.
        tstrimple 4y ago
        In my case, the insulation was mostly just air. There is zero insulation at all in my garage in a place with harsh winters and there is no insulation between my garage and the house. My attic also did not have insulation, but that one was cheaper and easier to resolve than all the wall cavities.
        operatingthetan 4y ago
        Have you checked what the building code in the area requires? If the builder was negligent and you're they first owner they may be liable.
        tstrimple 4y ago
        Unfortunately we aren’t the first owners. I know some of the issues we are seeing is from shitty diy or contracting from the previous owner, but most of them are from the original construction. One example of shitty DIY is the hardwood floor on the main level that we are currently replacing. The newly installed floors were a bit lower than the original floors so they just covered all the gaps with corner round all around the baseboards. Looks super tacky. But is a fairly minor issue all things considered. We are replacing that with another layer of sub flooring and engineered wood floors to try to reduce the amount of movement you can feel in the floors.
    - rootusrootus 4y ago
      That's a bit hyperbolic. Inspections are a thing, and modern houses are generally built just fine. And nobody uses plastic siding on a brand new house (well, almost nobody, you can probably find rare examples). A modern house uses hardieplank fibercement siding probably 99% of the time. These days vinyl siding is mostly a retrofit choice, not new construction.
      - whitemary 4y ago
        The cheap 2x4s are the most significant point of failure. The houses will twist and warp to many extremes during their lifetimes. The first symptom of doors that won't open/shut properly usually shows in the first 10 years of these houses. In a 1920s home built with domestic timber, that process would take a lifetime. After 30 years, this contributes to all sorts of creaks and leaks. Repairs are questionable and don't last as long because the frame of the structure is unstable.
    - fifticon 4y ago
      I had a suspicion you would be downvoted for telling the truth here :-). It's an unfortunate choice between being truthful and being popular.. As I understand it, part of the difference between US and Europe is that US has massive access to cheap lumber, which makes it very cost-effective to build with balloon framing, which is not much used in Europe. US saves a lot on construction this way, but it has consequences for durability.
  - deleted 4y ago
    [deleted]
  - dangus 4y ago
    This is a bit dramatic. All buildings are depreciating assets. This was true before the idea of the McMansion existed. It’s the land that is scarce and is the appreciating asset. The truth of the matter is that any house that is around long enough gets repaired over time.
    - ghaff 4y ago
      >It’s the land that is scarce and is the appreciating asset May be appreciating. Depends on where it is. A lot of land in metro Detroit hasn't appreciated in certain timeframes. Nor on some barrier islands.
  - havblue 4y ago
    If it's an expensive neighborhood in a region with a growing economy then I would think the McMansions would be fine.
    - tstrimple 4y ago
      Not based on the one I’m living in. It’s the definition of lipstick on a pig. Serious fundamental problems with a nice looking exterior. It’s been nothing but problems for the last 8 years.
      - havblue 4y ago
        Could you elaborate on what problems occur on those houses versus normally sized ones? Framing? The foundation?
        tstrimple 4y ago
        Every bathroom was finished with normal drywall instead of the water resistant stuff. The vents in the upstairs bathrooms just vented into the attic space leading to moisture issues in up there. There must also be an issue with either the framing or the foundation because we have the ceiling separating from the drywall in almost every room in the house in addition to cracks developing in the drywall. I know some amount of settling over time and cracks are sometimes normal, but I’ve never seen them this frequently. Our floors are also uneven and you can feel them moving as you walk across them. In the bathrooms they also picked the cheapest bathroom fixtures imaginable. They looked decent at first, but it was also quickly corroded and the lights literally fell apart. We have one of those fancy three head shower setups and we discovered that the main shower head corroded and broke off inside the wall when our youngest innocently asked us why it was raining in the dining room. We also have water hammering issues when running the washing machine because they didn’t bother to put in a flow arrester. On the exterior, our driveway and sidewalks were all laid with insufficiently packed base material. These gaps and buckles are reaching the point where we have to fix them or risk liability when the mailman trips over them. Our gutters were incorrectly installed and they have been slowly leaking down one corner of our house and we’ve found water damage in the basement due to this. The foundation in the garage also has done some settling because the stone work at the base has large cracks developed in it. In addition, our windows and doors are really just polite suggestions for the wind to stay outside because they picked such cheap options. You can literally feel a breeze through most of our windows. I’m sure there were other minor things which I’m not thinking of, but the quality between our first house which cost 1/3rd of this house is night and day. The only thing the inspector found was the the cracks in the garage brick walls but those are a facade and the inspector told us it was cosmetic damage and the sidewalk was easily fixable via mud jacking. Those were issues we were willing to take on. There’s no way we would have bought the house if we’d known that there were so many issues. As we’ve been trying to address the issues we’ve been finding, we always seem to uncover another problem that needs to be fixed. Feels like a race we are losing.
  - KerrAvon 4y ago
    This is what people said about Levittown (https://en.wikipedia.org/wiki/Levittown https://en.wikipedia.org/wiki/Levittown), the archetype for postwar suburban housing developments in the USA. They did wear out, but the owners fixed them. If the housing is still needed, it will be maintained and repaired and improved.
    - whitemary 4y ago
      Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain. Also, Levittown construction and materials are not comparable in any meaningful way to McMansions.
      - icelancer 4y ago
        > Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain. Sure. No one wants to live in those areas where the houses are being abandoned, or government regulation makes bringing them up to code financially non-viable.
- dangus 4y ago
  Prices actually have adjusted and have fallen somewhat. What life event would cause someone who currently owns a home at a <3% rate to sell? It’s a once in a generation type of rate. You’d have to be a complete fool or have some kind of crazy life circumstance to sell. Over 30% of employers in the US exclusively hire remote employees. Post-pandemic it’s hard for me to imagine someone in the home ownership socioeconomic class giving up that kind of leverage advantage to move for a job.
  - throwaway1777 4y ago
    There are lots of reasons people move besides jobs.
  - deleted 4y ago
    [deleted]
  - post-it 4y ago
    > Over 30% of employers in the US exclusively hire remote employees. [X] Doubt
    - dangus 4y ago
      Here's my source: https://www.smallbizgenius.net/by-the-numbers/remote-work-statistics/ https://www.smallbizgenius.net/by-the-numbers/remote-work-st...
  - Rury 4y ago
    Unemployment is going to go up somewhat, foreclosures are a thing.
    - KerrAvon 4y ago
      Funny thing about that, COVID has removed a lot of people from the workforce and will continue to do so for the next few years. The billionaires at the top of all the tech companies will live to regret allowing the activist investors to spur them into laying off people.
  - 4y ago
- vkou 4y ago
  > That said, as the population ages The US population is projected to continue growing throughout most of the 21st century. If you're waiting for people to die so you can afford real estate, you'll be waiting a long time.
  - fifticon 4y ago
    Also, with the american quality level of construction for houses, by then those houses will require major investments and renovations to continue to stand.
_ea1k 4y ago
With high interest rates, payment to income would likely be even worse. I have a hard time seeing how this can be anything but a major problem in a few years, if not before.
- shaburn 4y ago
  Prices will reset to accommodate.
  - zxexz 4y ago
    You sound very confident. Not that I disagree, necessarily, but do you care to elaborate?
    - xupybd 4y ago
      The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.
      - rootusrootus 4y ago
        > As interest rates rise people will no be able to afford their mortgages I really wonder how many people in the last 10 years actually felt like buying a variable rate mortgage was a good idea? People on fixed rate mortgages are staying put, and watching inflation deflate the value of their debt.
        xupybd 4y ago
        It amazes me that in the US you can fix for the life of your mortgage. Here in NZ 5 years is close to the max.
        almost_usual 4y ago
        It’s an insanely great deal. In California you pretty much lock your property taxes as well with Prop 13. Not to mention you can write off mortgage interest up to $750,000 mortgage debt come tax season. Saved me 20k+ in income tax.
32mb 4y ago
Articles like this usually start showing up when we’re at the top of a bubble.
- shaburn 4y ago
  There bubble has popped. There are virtually no transactions.
  - meghan_rain 4y ago
    What do you mean by transactions? House sales?
    - rootusrootus 4y ago
      Lots of people sitting on 2-3% fixed rate 30 year mortgages are suddenly deciding maybe staying in their current home isn't a bad idea after all. If you need a mortgage to buy a house, what you can afford just got a lot more modest. Sales will pick up a little; some people will need to move for reasons they cannot avoid. Some people who don't have fixed rate mortgages will have to sell because they can no longer afford the payment. But right now, sales are pretty low.
      - usaar333 4y ago
        Regulation blocking mortgage porting is unfortunate.
        notch898a 4y ago
        Personally I don't give a shit if people can sit on their house forever at -5% real interest rates or whatever. Just let me build a shack out of chicken wire, 2x4s, and tin roof. If you get to rig the game to get a house the least you can do is let me build something with whatever scraps are left in the financial system.
        4y ago
shaburn 4y ago
Statistically insignificant sample size reflected in near zero transactions due to bid ask spread.
superkuh 4y ago
From 1950 to 2008 the USA built ~25 million homes per (edit, not year) decade. From 2008 to 2018 it was about 7 million. In recent years building rates have mostly recovered but there's still that gap in production combined with everything else the last handful of years. This isn't to discount the shift of ownership from human persons to corporate persons, that's a factor too. But just numbers of available houses versus population plays a role.
- cma 4y ago
  ChatGPT numbers? That would be 1.45 billion homes from 1950-2008.
  - superkuh 4y ago
    *edit*: I see what I did, the plot I give numbers from is houses per decade. Not per year. Sorry about that. You can confirm the values are still real by comparing the simple plot (via: statista.com, http://a.superkuh.com/USA-number-of-homes-built-between-1900-and-2019.jpg http://a.superkuh.com/USA-number-of-homes-built-between-1900...) to the https://www.census.gov/construction/nrc/historical_data/index.html https://www.census.gov/construction/nrc/historical_data/inde... numbers. Thanks for pointing out what should have been an obvious error. Yikes.
    - deleted 4y ago
      [deleted]
- danielmarkbruce 4y ago
  This is important and few seem to look at the simple supply/demand. It explains the housing crises in 06/07/08 and the subsequent situation too.
  - paul7986 4y ago
    Yes and with supply not meeting demand at least here in York county pa and Baltimore county md.. bidding wars just started to be the norm again and prices are increasing. I bid on a 200k home (a real fixer upper to flip in two years after living in it & remodeling it) last weekend it had 20 bids and I lost out to an all cash offer(supposedly per my real estate agent). That same weekend a 40 year old log cabin ($430k) had an open house where 30 showed up and it was sold within 8 hours. Up until this month prices in this market were declining and homes sitting on the market for weeks to a month or more with lots of price drops. It's weird spring comes around with interest rates just as high and we are back to bidding war frenzy that was 2021/half of 2022.
stuven 4y ago
https://tradingeconomics.com/united-states/existing-home-sales https://tradingeconomics.com/united-states/existing-home-sal...
Beaver117 4y ago
It's all just a game looking at the charts until the real estate "investment" companies are invaded by thousands of homeless people and the CEOs executed. Are people just supposed to not live anywhere? How long will this last? Just learn from history.
- CydeWeys 4y ago
  That wouldn't do anything, as there's still a shortage of houses. They'd need to collectively invade and stop all the people involved in preventing housing construction, which is a LOT of people!
- ActorNightly 4y ago
  Don't fall for the socialism anti-landlord brainrot. People have plenty of places to live. This is more about the fact that people want to have the same financial opportunity to own a house. It sucks that the older generation had an opportunity to buy a house that has risen in value, with an area that got gentrified with more stuff around them, and were able to refinance during Covid at like 2-3%, while the younger generation is SOL. This is a very valid reason to address, but has nothing to do with homelessness.
  - crooked-v 4y ago
    > People have plenty of places to live. Actually, there is a 6.5 million home shortage in the places that people actually live (https://www.cnn.com/2023/03/08/homes/housing-shortage/index.html https://www.cnn.com/2023/03/08/homes/housing-shortage/index....). That shortage has nothing to do with landlords, though, and everything to do with shitty zoning and with constructing new homes being incredibly slow and burdensome in most big US cities.
    - ActorNightly 4y ago
      Oh right my bad. People MUST live in a house, I completely forgot thats a law in US.
hn_throwaway_99 4y ago
This article is missing perhaps the most important graph, which is median income to some common monthly payment metric (e.g. average monthly payment for a 30 year mortgage with 20% down). Reason being that the article mentions interest rates, but then just shows graphs comparing to sales price. Ironically, showing a metric that took interest rates into consideration would probably highlight why the current situation is even worse, because rates have skyrocketed but prices have only come down a little bit. Of course, as others have mentioned, that is because overall sales numbers have collapsed. Owners won't sell at a loss if they don't have to, and overall employment numbers are still high. But over time people are forced to sell for various reasons, so in 5 years prices will either go way down or stay flat as wage inflation catches up.
- echelon 4y ago
  > Owners won't sell at a loss if they don't have to Supply and demand. If supply drops and demand doesn't... That's what /r/REBubble refuses to acknowledge. Nobody's giving up their 2% if they don't have to.
  - xuki 4y ago
    There won’t be a meaningful drop unless unemployment starts to tick up.
  - testrtt3222 4y ago
    People do eventually sell due to life events, even at a loss, in fact I'd say that is probably the primary cause of sales rather than anything financial in nature. At least anecdotally, I've sold twice and both times I would have had to do it even if it was at a loss. However, you are correct that the price is pretty sticky at the moment.
  - bagels 4y ago
    Yes, I will keep the house and rent it if I need to live somewhere else. Also saves on capital gains.
- anovikov 4y ago
Overtonwindow 4y ago
We are so fortunate to have bought our home in 2019 before the pandemic. We locked in 2.85% on a 30 year fixed and never look back.
- yawnr 4y ago
  Congrats, genuinely. In my mid 30s with what I thought was a lot of money saved and can’t afford a 2 bedroom apartment. Feels hopeless.
  - Overtonwindow 4y ago
    Do not despair! The best thing we did was to find a good realtor, who knew a good lender, and they gave us the truth about exactly what we needed to do to qualify for an FHA loan. A down payment is no longer necessary; for US citizens.
jmartrican 4y ago
Averages are misleading. Maybe one end of the market is driving the average up or down, but the other parts are a lot more in line with more recent historical norms.
deleted 4y ago
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bigcat12345678 4y ago
Beijing, Tokyo, HK stands in the line and waiting to holding the beer mug ...
UberFly 4y ago
In my area, friend groups are organizing into LLPs and buying up houses for investments. Individual people home shopping have to deal with this kind of competition. Houses are bid out of their price range and become airbnbs.
- yawnr 4y ago
  Yep. Why live in a house when you can charge someone $1200/nt to stay there and a $600 cleaning fee? (Basically every house that can sleep more than 6 people in the northeast)
  - cloverich 4y ago
    Yet I've seen many reports[1] of occupancy rates dropping precipitously, despite increasing users, because of increased competition. [1]: https://time.com/6223185/airbnbs-empty-short-term-rentals/ https://time.com/6223185/airbnbs-empty-short-term-rentals/
pphysch 4y ago
There's a lot of noise about supply, demand, investment cycles, AirBnB, but the elephant in the room is that USA housing is a casino and the banks are the "house", which always wins. The banks only care that housing prices remain astronomical--the mechanics are not important--so that mortgages must be taken out. And, as recent history shows, the mortgage casino is "too big to fail" because of the globally-systemic role of mortgage-backed securities.
- junofan 4y ago
  It’s pretty unusual that we have people approach residential real estate in this hyper-financialized way. It’s a weird 1930s way to inject liquidity, and we have better tools now. An individual is fucked if something happens to crater the price of their house. Nobody hedges, really. It’s a toxic system.
  - Joeri 4y ago
    It’s weird that the insurance industry hasn’t capitalized on this. Make people pay for covering the risk that their house will drop in value, and make money on the fact that the vast majority of houses will rise in value.
    - grensley 4y ago
      Will the vast majority of houses rise in value?
      - brabel 4y ago
        Almost everywhere in the world, yes. There may be some localized falls, but those are temporary and as long as there's people having to live in a place, prices will keep going up, the whole system is built for making that happen.
        loandbehold 4y ago
        Not really. If new suppy growth outpaces demand then prices will drop. Recent advances in robotics may make construction much less labor intensive, crashing prices in many areas.
switch007 4y ago
Interest rates jumping from 1.2% to 4.5% had zero cooling effect on house prices in my area. Probably quite a few people are still on existing fixed mortgages. Prices have jumped, as a double whammy. It’s all about supply: there is very very little and it’s a desirable area. Even if rates stay at around 4-5% in a few years when all of the low-rate fixed mortgages have ended, prices will have risen, and I would guess all that would happen is a slight abatement of rises, not a reduction.
- s1k3 4y ago
  When the interest rate goes up that fast existing homeowners are less inclined to sell because their monthly payments will go way up buying a comparable house elsewhere. So you end up reducing supply when it happens so fast and so much.
hayst4ck 4y ago
When I first looked at this graph, I did not have much emotional reaction. When you look closer, each unit on the axis represents 1 year of a person's income. Each line on that graph represents 2000 hours of life toiling for a basic living necessity. Outrageous.
dukeofdoom 4y ago
Part of the problem is that governments erode savings through inflation. They can't raise taxes much more, but insist on printing more money. The only way things balance is through inflation. Houses have been a safe place for people to put their life savings into. So think of it as a house + plus a savings account in one.
guestbest 4y ago
Home prices are going up because there are few 2 bedroom starter homes being built. Everything in this area is 4-5 bedrooms with 3-4 bathrooms. They really are quiet massive
amir734jj 4y ago
We the HN community are engineers, how can we find a solution to fix this? My thinking is we need a portal to advertise affordable housing or starter homes. Housing is the basis of the family.
- bagels 4y ago
  Government projects. Legalize low cost extreme density housing.
deninho 4y ago
that's a global phenomenon, unfortunately.
dakial1 4y ago
Isn't this a business opportunity for construction companies? Or is the price of building homes increasing at the same pace? Maybe that's a graph that is missing there? Quick Google search took me here: https://reventureconsulting.com/the-myth-of-surging-construction-costs-home-prices/# https://reventureconsulting.com/the-myth-of-surging-construc... Graph shows a spread opening in 2021(don't know if his analysis is sound) Why wouldn't construction companies build more homes? Maybe because they know it will adjust again?

233 points by mennaali 4y ago

This is to be expected. Sellers are always reluctant to be reasonable when they are on the wrong side of a peak. The raising of interest rates means prices have to adjust. But after so many years of increasing prices sellers are not yet rational. And yes, some more inventory would help. That said, as the population ages, who is going to buy all the McMansions? Price not only need to adjust to interest rate but demographics.

whitemary 4y ago
> as the population ages, who is going to buy all the McMansions? The McMansions will be unlivable by that point. They weren't built to last.
- RDaneel0livaw 4y ago
  ENTIRE vinyl villages of McMansions will be unlivable. They aren't even built to last the standard 30y mortgage because the builders know the initial buyers will sell and move on. Cheapest possible 2x4's with worst insulation ever known, all covered up in plastic siding. But hey, it's 10k sq ft right?
  - operatingthetan 4y ago
    > with worst insulation ever known, What are you talking about?
    - deleted 4y ago
      [deleted]
    - kevin_thibedeau 4y ago
      Lots of "luxury" housing is made with crap materials by unskilled freelancers. There is a ton of skimping on hidden details like missing flashing around doors and windows. You can't trust any home built within the last 25 years.
      - operatingthetan 4y ago
        I'm asking specifically what insulation product they are referring to because I'm unaware of any product that fits that description.
        tstrimple 4y ago
        In my case, the insulation was mostly just air. There is zero insulation at all in my garage in a place with harsh winters and there is no insulation between my garage and the house. My attic also did not have insulation, but that one was cheaper and easier to resolve than all the wall cavities.
        operatingthetan 4y ago
        Have you checked what the building code in the area requires? If the builder was negligent and you're they first owner they may be liable.
        tstrimple 4y ago
        Unfortunately we aren’t the first owners. I know some of the issues we are seeing is from shitty diy or contracting from the previous owner, but most of them are from the original construction. One example of shitty DIY is the hardwood floor on the main level that we are currently replacing. The newly installed floors were a bit lower than the original floors so they just covered all the gaps with corner round all around the baseboards. Looks super tacky. But is a fairly minor issue all things considered. We are replacing that with another layer of sub flooring and engineered wood floors to try to reduce the amount of movement you can feel in the floors.
  - rootusrootus 4y ago
    That's a bit hyperbolic. Inspections are a thing, and modern houses are generally built just fine. And nobody uses plastic siding on a brand new house (well, almost nobody, you can probably find rare examples). A modern house uses hardieplank fibercement siding probably 99% of the time. These days vinyl siding is mostly a retrofit choice, not new construction.
    - whitemary 4y ago
      The cheap 2x4s are the most significant point of failure. The houses will twist and warp to many extremes during their lifetimes. The first symptom of doors that won't open/shut properly usually shows in the first 10 years of these houses. In a 1920s home built with domestic timber, that process would take a lifetime. After 30 years, this contributes to all sorts of creaks and leaks. Repairs are questionable and don't last as long because the frame of the structure is unstable.
  - fifticon 4y ago
    I had a suspicion you would be downvoted for telling the truth here :-). It's an unfortunate choice between being truthful and being popular.. As I understand it, part of the difference between US and Europe is that US has massive access to cheap lumber, which makes it very cost-effective to build with balloon framing, which is not much used in Europe. US saves a lot on construction this way, but it has consequences for durability.
- deleted 4y ago
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- dangus 4y ago
  This is a bit dramatic. All buildings are depreciating assets. This was true before the idea of the McMansion existed. It’s the land that is scarce and is the appreciating asset. The truth of the matter is that any house that is around long enough gets repaired over time.
  - ghaff 4y ago
    >It’s the land that is scarce and is the appreciating asset May be appreciating. Depends on where it is. A lot of land in metro Detroit hasn't appreciated in certain timeframes. Nor on some barrier islands.
- havblue 4y ago
  If it's an expensive neighborhood in a region with a growing economy then I would think the McMansions would be fine.
  - tstrimple 4y ago
    Not based on the one I’m living in. It’s the definition of lipstick on a pig. Serious fundamental problems with a nice looking exterior. It’s been nothing but problems for the last 8 years.
    - havblue 4y ago
      Could you elaborate on what problems occur on those houses versus normally sized ones? Framing? The foundation?
      - tstrimple 4y ago
        Every bathroom was finished with normal drywall instead of the water resistant stuff. The vents in the upstairs bathrooms just vented into the attic space leading to moisture issues in up there. There must also be an issue with either the framing or the foundation because we have the ceiling separating from the drywall in almost every room in the house in addition to cracks developing in the drywall. I know some amount of settling over time and cracks are sometimes normal, but I’ve never seen them this frequently. Our floors are also uneven and you can feel them moving as you walk across them. In the bathrooms they also picked the cheapest bathroom fixtures imaginable. They looked decent at first, but it was also quickly corroded and the lights literally fell apart. We have one of those fancy three head shower setups and we discovered that the main shower head corroded and broke off inside the wall when our youngest innocently asked us why it was raining in the dining room. We also have water hammering issues when running the washing machine because they didn’t bother to put in a flow arrester. On the exterior, our driveway and sidewalks were all laid with insufficiently packed base material. These gaps and buckles are reaching the point where we have to fix them or risk liability when the mailman trips over them. Our gutters were incorrectly installed and they have been slowly leaking down one corner of our house and we’ve found water damage in the basement due to this. The foundation in the garage also has done some settling because the stone work at the base has large cracks developed in it. In addition, our windows and doors are really just polite suggestions for the wind to stay outside because they picked such cheap options. You can literally feel a breeze through most of our windows. I’m sure there were other minor things which I’m not thinking of, but the quality between our first house which cost 1/3rd of this house is night and day. The only thing the inspector found was the the cracks in the garage brick walls but those are a facade and the inspector told us it was cosmetic damage and the sidewalk was easily fixable via mud jacking. Those were issues we were willing to take on. There’s no way we would have bought the house if we’d known that there were so many issues. As we’ve been trying to address the issues we’ve been finding, we always seem to uncover another problem that needs to be fixed. Feels like a race we are losing.
- KerrAvon 4y ago
  This is what people said about Levittown (https://en.wikipedia.org/wiki/Levittown https://en.wikipedia.org/wiki/Levittown), the archetype for postwar suburban housing developments in the USA. They did wear out, but the owners fixed them. If the housing is still needed, it will be maintained and repaired and improved.
  - whitemary 4y ago
    Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain. Also, Levittown construction and materials are not comparable in any meaningful way to McMansions.
    - icelancer 4y ago
      > Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain. Sure. No one wants to live in those areas where the houses are being abandoned, or government regulation makes bringing them up to code financially non-viable.
dangus 4y ago
Prices actually have adjusted and have fallen somewhat. What life event would cause someone who currently owns a home at a <3% rate to sell? It’s a once in a generation type of rate. You’d have to be a complete fool or have some kind of crazy life circumstance to sell. Over 30% of employers in the US exclusively hire remote employees. Post-pandemic it’s hard for me to imagine someone in the home ownership socioeconomic class giving up that kind of leverage advantage to move for a job.
- throwaway1777 4y ago
  There are lots of reasons people move besides jobs.
- deleted 4y ago
  [deleted]
- post-it 4y ago
  > Over 30% of employers in the US exclusively hire remote employees. [X] Doubt
  - dangus 4y ago
    Here's my source: https://www.smallbizgenius.net/by-the-numbers/remote-work-statistics/ https://www.smallbizgenius.net/by-the-numbers/remote-work-st...
- Rury 4y ago
  Unemployment is going to go up somewhat, foreclosures are a thing.
  - KerrAvon 4y ago
    Funny thing about that, COVID has removed a lot of people from the workforce and will continue to do so for the next few years. The billionaires at the top of all the tech companies will live to regret allowing the activist investors to spur them into laying off people.
- 4y ago
vkou 4y ago
> That said, as the population ages The US population is projected to continue growing throughout most of the 21st century. If you're waiting for people to die so you can afford real estate, you'll be waiting a long time.
- fifticon 4y ago
  Also, with the american quality level of construction for houses, by then those houses will require major investments and renovations to continue to stand.

_ea1k 4y ago

With high interest rates, payment to income would likely be even worse. I have a hard time seeing how this can be anything but a major problem in a few years, if not before.

shaburn 4y ago
Prices will reset to accommodate.
- zxexz 4y ago
  You sound very confident. Not that I disagree, necessarily, but do you care to elaborate?
  - xupybd 4y ago
    The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.
    - rootusrootus 4y ago
      > As interest rates rise people will no be able to afford their mortgages I really wonder how many people in the last 10 years actually felt like buying a variable rate mortgage was a good idea? People on fixed rate mortgages are staying put, and watching inflation deflate the value of their debt.
      - xupybd 4y ago
        It amazes me that in the US you can fix for the life of your mortgage. Here in NZ 5 years is close to the max.
        almost_usual 4y ago
        It’s an insanely great deal. In California you pretty much lock your property taxes as well with Prop 13. Not to mention you can write off mortgage interest up to $750,000 mortgage debt come tax season. Saved me 20k+ in income tax.

32mb 4y ago

Articles like this usually start showing up when we’re at the top of a bubble.

shaburn 4y ago
There bubble has popped. There are virtually no transactions.
- meghan_rain 4y ago
  What do you mean by transactions? House sales?
  - rootusrootus 4y ago
    Lots of people sitting on 2-3% fixed rate 30 year mortgages are suddenly deciding maybe staying in their current home isn't a bad idea after all. If you need a mortgage to buy a house, what you can afford just got a lot more modest. Sales will pick up a little; some people will need to move for reasons they cannot avoid. Some people who don't have fixed rate mortgages will have to sell because they can no longer afford the payment. But right now, sales are pretty low.
    - usaar333 4y ago
      Regulation blocking mortgage porting is unfortunate.
      - notch898a 4y ago
        Personally I don't give a shit if people can sit on their house forever at -5% real interest rates or whatever. Just let me build a shack out of chicken wire, 2x4s, and tin roof. If you get to rig the game to get a house the least you can do is let me build something with whatever scraps are left in the financial system.
        4y ago

shaburn 4y ago

Statistically insignificant sample size reflected in near zero transactions due to bid ask spread.

superkuh 4y ago

From 1950 to 2008 the USA built ~25 million homes per (edit, not year) decade. From 2008 to 2018 it was about 7 million. In recent years building rates have mostly recovered but there's still that gap in production combined with everything else the last handful of years. This isn't to discount the shift of ownership from human persons to corporate persons, that's a factor too. But just numbers of available houses versus population plays a role.

cma 4y ago
ChatGPT numbers? That would be 1.45 billion homes from 1950-2008.
- superkuh 4y ago
  *edit*: I see what I did, the plot I give numbers from is houses per decade. Not per year. Sorry about that. You can confirm the values are still real by comparing the simple plot (via: statista.com, http://a.superkuh.com/USA-number-of-homes-built-between-1900-and-2019.jpg http://a.superkuh.com/USA-number-of-homes-built-between-1900...) to the https://www.census.gov/construction/nrc/historical_data/index.html https://www.census.gov/construction/nrc/historical_data/inde... numbers. Thanks for pointing out what should have been an obvious error. Yikes.
  - deleted 4y ago
    [deleted]
danielmarkbruce 4y ago
This is important and few seem to look at the simple supply/demand. It explains the housing crises in 06/07/08 and the subsequent situation too.
- paul7986 4y ago
  Yes and with supply not meeting demand at least here in York county pa and Baltimore county md.. bidding wars just started to be the norm again and prices are increasing. I bid on a 200k home (a real fixer upper to flip in two years after living in it & remodeling it) last weekend it had 20 bids and I lost out to an all cash offer(supposedly per my real estate agent). That same weekend a 40 year old log cabin ($430k) had an open house where 30 showed up and it was sold within 8 hours. Up until this month prices in this market were declining and homes sitting on the market for weeks to a month or more with lots of price drops. It's weird spring comes around with interest rates just as high and we are back to bidding war frenzy that was 2021/half of 2022.

stuven 4y ago

https://tradingeconomics.com/united-states/existing-home-sales https://tradingeconomics.com/united-states/existing-home-sal...

Beaver117 4y ago

It's all just a game looking at the charts until the real estate "investment" companies are invaded by thousands of homeless people and the CEOs executed. Are people just supposed to not live anywhere? How long will this last? Just learn from history.

CydeWeys 4y ago
That wouldn't do anything, as there's still a shortage of houses. They'd need to collectively invade and stop all the people involved in preventing housing construction, which is a LOT of people!
ActorNightly 4y ago
Don't fall for the socialism anti-landlord brainrot. People have plenty of places to live. This is more about the fact that people want to have the same financial opportunity to own a house. It sucks that the older generation had an opportunity to buy a house that has risen in value, with an area that got gentrified with more stuff around them, and were able to refinance during Covid at like 2-3%, while the younger generation is SOL. This is a very valid reason to address, but has nothing to do with homelessness.
- crooked-v 4y ago
  > People have plenty of places to live. Actually, there is a 6.5 million home shortage in the places that people actually live (https://www.cnn.com/2023/03/08/homes/housing-shortage/index.html https://www.cnn.com/2023/03/08/homes/housing-shortage/index....). That shortage has nothing to do with landlords, though, and everything to do with shitty zoning and with constructing new homes being incredibly slow and burdensome in most big US cities.
  - ActorNightly 4y ago
    Oh right my bad. People MUST live in a house, I completely forgot thats a law in US.

hn_throwaway_99 4y ago

This article is missing perhaps the most important graph, which is median income to some common monthly payment metric (e.g. average monthly payment for a 30 year mortgage with 20% down). Reason being that the article mentions interest rates, but then just shows graphs comparing to sales price. Ironically, showing a metric that took interest rates into consideration would probably highlight why the current situation is even worse, because rates have skyrocketed but prices have only come down a little bit. Of course, as others have mentioned, that is because overall sales numbers have collapsed. Owners won't sell at a loss if they don't have to, and overall employment numbers are still high. But over time people are forced to sell for various reasons, so in 5 years prices will either go way down or stay flat as wage inflation catches up.

echelon 4y ago
> Owners won't sell at a loss if they don't have to Supply and demand. If supply drops and demand doesn't... That's what /r/REBubble refuses to acknowledge. Nobody's giving up their 2% if they don't have to.
- xuki 4y ago
  There won’t be a meaningful drop unless unemployment starts to tick up.
- testrtt3222 4y ago
  People do eventually sell due to life events, even at a loss, in fact I'd say that is probably the primary cause of sales rather than anything financial in nature. At least anecdotally, I've sold twice and both times I would have had to do it even if it was at a loss. However, you are correct that the price is pretty sticky at the moment.
- bagels 4y ago
  Yes, I will keep the house and rent it if I need to live somewhere else. Also saves on capital gains.
anovikov 4y ago

Overtonwindow 4y ago

We are so fortunate to have bought our home in 2019 before the pandemic. We locked in 2.85% on a 30 year fixed and never look back.

yawnr 4y ago
Congrats, genuinely. In my mid 30s with what I thought was a lot of money saved and can’t afford a 2 bedroom apartment. Feels hopeless.
- Overtonwindow 4y ago
  Do not despair! The best thing we did was to find a good realtor, who knew a good lender, and they gave us the truth about exactly what we needed to do to qualify for an FHA loan. A down payment is no longer necessary; for US citizens.

jmartrican 4y ago

Averages are misleading. Maybe one end of the market is driving the average up or down, but the other parts are a lot more in line with more recent historical norms.

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bigcat12345678 4y ago

Beijing, Tokyo, HK stands in the line and waiting to holding the beer mug ...

UberFly 4y ago

In my area, friend groups are organizing into LLPs and buying up houses for investments. Individual people home shopping have to deal with this kind of competition. Houses are bid out of their price range and become airbnbs.

yawnr 4y ago
Yep. Why live in a house when you can charge someone $1200/nt to stay there and a $600 cleaning fee? (Basically every house that can sleep more than 6 people in the northeast)
- cloverich 4y ago
  Yet I've seen many reports[1] of occupancy rates dropping precipitously, despite increasing users, because of increased competition. [1]: https://time.com/6223185/airbnbs-empty-short-term-rentals/ https://time.com/6223185/airbnbs-empty-short-term-rentals/

pphysch 4y ago

There's a lot of noise about supply, demand, investment cycles, AirBnB, but the elephant in the room is that USA housing is a casino and the banks are the "house", which always wins. The banks only care that housing prices remain astronomical--the mechanics are not important--so that mortgages must be taken out. And, as recent history shows, the mortgage casino is "too big to fail" because of the globally-systemic role of mortgage-backed securities.

junofan 4y ago
It’s pretty unusual that we have people approach residential real estate in this hyper-financialized way. It’s a weird 1930s way to inject liquidity, and we have better tools now. An individual is fucked if something happens to crater the price of their house. Nobody hedges, really. It’s a toxic system.
- Joeri 4y ago
  It’s weird that the insurance industry hasn’t capitalized on this. Make people pay for covering the risk that their house will drop in value, and make money on the fact that the vast majority of houses will rise in value.
  - grensley 4y ago
    Will the vast majority of houses rise in value?
    - brabel 4y ago
      Almost everywhere in the world, yes. There may be some localized falls, but those are temporary and as long as there's people having to live in a place, prices will keep going up, the whole system is built for making that happen.
      - loandbehold 4y ago
        Not really. If new suppy growth outpaces demand then prices will drop. Recent advances in robotics may make construction much less labor intensive, crashing prices in many areas.

switch007 4y ago

Interest rates jumping from 1.2% to 4.5% had zero cooling effect on house prices in my area. Probably quite a few people are still on existing fixed mortgages. Prices have jumped, as a double whammy. It’s all about supply: there is very very little and it’s a desirable area. Even if rates stay at around 4-5% in a few years when all of the low-rate fixed mortgages have ended, prices will have risen, and I would guess all that would happen is a slight abatement of rises, not a reduction.

s1k3 4y ago
When the interest rate goes up that fast existing homeowners are less inclined to sell because their monthly payments will go way up buying a comparable house elsewhere. So you end up reducing supply when it happens so fast and so much.

hayst4ck 4y ago

When I first looked at this graph, I did not have much emotional reaction. When you look closer, each unit on the axis represents 1 year of a person's income. Each line on that graph represents 2000 hours of life toiling for a basic living necessity. Outrageous.

dukeofdoom 4y ago

Part of the problem is that governments erode savings through inflation. They can't raise taxes much more, but insist on printing more money. The only way things balance is through inflation. Houses have been a safe place for people to put their life savings into. So think of it as a house + plus a savings account in one.

guestbest 4y ago

Home prices are going up because there are few 2 bedroom starter homes being built. Everything in this area is 4-5 bedrooms with 3-4 bathrooms. They really are quiet massive

amir734jj 4y ago

We the HN community are engineers, how can we find a solution to fix this? My thinking is we need a portal to advertise affordable housing or starter homes. Housing is the basis of the family.

bagels 4y ago
Government projects. Legalize low cost extreme density housing.

deninho 4y ago

that's a global phenomenon, unfortunately.

dakial1 4y ago

Isn't this a business opportunity for construction companies? Or is the price of building homes increasing at the same pace? Maybe that's a graph that is missing there? Quick Google search took me here: https://reventureconsulting.com/the-myth-of-surging-construction-costs-home-prices/# https://reventureconsulting.com/the-myth-of-surging-construc... Graph shows a spread opening in 2021(don't know if his analysis is sound) Why wouldn't construction companies build more homes? Maybe because they know it will adjust again?