4 ms·

One important data point is that houses have become much more expensive compared to income in the last decades. When I lived in CA, my plumber neighbor told me

One important data point is that houses have become much more expensive compared to income in the last decades. When I lived in CA, my plumber neighbor told me he bought his house in the 70s for 80000 on a salary of 40000. Today he would probably pay 800000 for the same house but make maybe 100000 or a little more. It's definitely harder to buy a house these days.

selectodude 1y ago
$40,000 in 1975 is over a quarter million 2025 dollars.
- Telemakhos 1y ago
  You can't buy on the west coast for a quarter million. A house big enough to start a family will likely start at a half million, and in some communities will come with hefty tax burdens.
  - red-iron-pine 1y ago
    in 2025 anything vaguely desirable in a coastal-ish city is starting at more like 600-700k. actual decent houses will be 1MM or more. the folks in those areas, if you owned a house for the last 20 years, are now richer than ever due to that property appreciating. but the younger generation is absolutely screwed
    - jen20 1y ago
      > if you owned a house for the last 20 years, are now richer than ever due to that property appreciating. Only if you sell it, and move somewhere with a much lower cost of housing.
      - fragmede 1y ago
        If there is a spare bedroom in your HCOL location, renting that out lets you get some incoming cash flow without having to move away to a LCOL location.
        jen20 1y ago
        You don't get "rich" from renting out a spare bedroom.
      - aianus 1y ago
        HELOC and never pay it off until you die
    - kevin_thibedeau 1y ago
      The north coast has cheap housing.
  - selectodude 1y ago
    Sure, but you can certainly afford a house on the West Coast with an income of $250k.
technotony 1y ago
Interest rates have fallen dramatically over this period, which increases the ratio that is affordable.
- vjvjvjvjghv 1y ago
  High interest with low price has the advantage that you can decide to pay more into the principal, reduce the interest you are paying and so reduce the total amount you are paying. You can’t do that with high price and low interest.
  - sokoloff 1y ago
    Yes and: You can also refinance later if rates fall.
bluGill 1y ago
At 18% interest which happened in the 70s your yearly payments would have been 14468.02 or 36% of your income. A couple years ago you could get 3% rates and so your payment on that house would be 40473.98 or 40% of your income, not much difference (and likely the house is larger). At todays 6% interest the payment is 57556.85 or 57% of your income and so not affordable, but this is a very recent thing.
- typewithrhythm 1y ago
  This is both ignoring inflation, and the potential to shorten the duration of the loan.
  - bluGill 1y ago
    Inflation is a factor in a few years but never today. Now inithe 1970s high inflation meant that a house you can barely afford becomes a small part of the budget in a couple years while the small inflation of today means a house you can barely afford today is still a big part of the budget in 5 years - but that is not a consideration of today.
    - typewithrhythm 1y ago
      It absolutely is a massive factor; because people plan a few years ahead. Consider how much it changes what you can afford if you save one year worth of payments in each case. There is also less need to get the maximum possible loan if house prices are lower as a ratio to income.
dylan604 1y ago
the higher prices are affected by the corporate buying of single family homes. for every home a corp buys, that's one less for individuals to buy. if the number of buyers remains the same but fewer homes are available, prices go up--seller's market. yes, prices go up adjusted for..., but inventory more competitively sought. the other issue is that the average buyer is looking to buy with financing while corps are paying cash. that makes for such a smoother transition for the seller that it is hard for them to turn down cash offers. after corps, we have foreign buyers also coming in with cash offers. i know of one specific house that is empty for the majority of the year purchased by foreign owners specifically for their kid to live while attending college. the kid chose to not go to that school, so the house sits empty except for when some property manager comes by to "check in" on the place. so while this thread is discussing still showing decent ownership percentages, those numbers are glossing over some of the "trends" in modern real estate.
- shlant 1y ago
  > affected by the corporate buying of single family homes > after corps, we have foreign buyers also coming in with cash offers As someone mentioned earlier in the thread, these are memes that are not actually backed by data - commonly perpetuated by groups that blame most issues on billionaires/corporations/investment firms.
  - dylan604 1y ago
    So you're insinuating that the specific example of a house sitting empty owned by a foreign buyer is made up? In my neighborhood specifically, there are homes being bought not by single families but specifically buy management companies so they can then rent the property. To deny this happens is just as much of a stick your head in the sand meme as what you are accusing me of.
    - aerostable_slug 1y ago
      They're saying it's overemphasized, which is why we don't rely on anecdata.
    - 1y ago
dr-smooth 1y ago
Sorry, there's no way a plumber in the 70s made 40K.
parineum 1y ago
A good, experienced plumber would make a lot more than that in CA.
- vjvjvjvjghv 1y ago
  These are the numbers my neighbor gave me. No idea how accurate they are. I think it’s well known that the average house price to income ratio has gone up a lot in the last decades.
SideQuark 1y ago
Houses today are vastly larger. Cost/sq ft in all but the few most expensive places has been nearly constant under inflation adjusted price for an incredibly long time. A huge majority of the population lives in such places. Here's a size list that is commonly shared https://www.newser.com/story/225645/average-size-of-us-homes-decade-by-decade.html https://www.newser.com/story/225645/average-size-of-us-homes... When you figure in # of people in such houses, the avg person has vastly more space https://www.reddit.com/r/REBubble/comments/14hayqq/average_house_size_and_residents_over_time_chart/ https://www.reddit.com/r/REBubble/comments/14hayqq/average_h...
- bluefirebrand 1y ago
  New builds may be larger today but the vast majority of real estate on the market are not new builds I bought my house in 2018. It was built in 1997 It is not vastly larger than it was in 1997, but I still paid 2018 prices for it Most people aren't buying new builds
  - SideQuark 1y ago
    Prices change due to inflation among other things, which is over 50 % from that time period. And given that the median house age (not median age of sold house!) is 40 years, you did buy a much newer house than the majority of people have. A few years back, median age of sold house was 27 years. So by that metric you bought even a newer house than the majority of house sales. Your 1997 house is almost certainly much larger than the median 1950 house. And, your single data point in no way invalidates aggregate statistics.

selectodude 1y ago

$40,000 in 1975 is over a quarter million 2025 dollars.

Telemakhos 1y ago
You can't buy on the west coast for a quarter million. A house big enough to start a family will likely start at a half million, and in some communities will come with hefty tax burdens.
- red-iron-pine 1y ago
  in 2025 anything vaguely desirable in a coastal-ish city is starting at more like 600-700k. actual decent houses will be 1MM or more. the folks in those areas, if you owned a house for the last 20 years, are now richer than ever due to that property appreciating. but the younger generation is absolutely screwed
  - jen20 1y ago
    > if you owned a house for the last 20 years, are now richer than ever due to that property appreciating. Only if you sell it, and move somewhere with a much lower cost of housing.
    - fragmede 1y ago
      If there is a spare bedroom in your HCOL location, renting that out lets you get some incoming cash flow without having to move away to a LCOL location.
      - jen20 1y ago
        You don't get "rich" from renting out a spare bedroom.
    - aianus 1y ago
      HELOC and never pay it off until you die
  - kevin_thibedeau 1y ago
    The north coast has cheap housing.
- selectodude 1y ago
  Sure, but you can certainly afford a house on the West Coast with an income of $250k.

technotony 1y ago

Interest rates have fallen dramatically over this period, which increases the ratio that is affordable.

vjvjvjvjghv 1y ago
High interest with low price has the advantage that you can decide to pay more into the principal, reduce the interest you are paying and so reduce the total amount you are paying. You can’t do that with high price and low interest.
- sokoloff 1y ago
  Yes and: You can also refinance later if rates fall.

bluGill 1y ago

At 18% interest which happened in the 70s your yearly payments would have been 14468.02 or 36% of your income. A couple years ago you could get 3% rates and so your payment on that house would be 40473.98 or 40% of your income, not much difference (and likely the house is larger). At todays 6% interest the payment is 57556.85 or 57% of your income and so not affordable, but this is a very recent thing.

typewithrhythm 1y ago
This is both ignoring inflation, and the potential to shorten the duration of the loan.
- bluGill 1y ago
  Inflation is a factor in a few years but never today. Now inithe 1970s high inflation meant that a house you can barely afford becomes a small part of the budget in a couple years while the small inflation of today means a house you can barely afford today is still a big part of the budget in 5 years - but that is not a consideration of today.
  - typewithrhythm 1y ago
    It absolutely is a massive factor; because people plan a few years ahead. Consider how much it changes what you can afford if you save one year worth of payments in each case. There is also less need to get the maximum possible loan if house prices are lower as a ratio to income.

dylan604 1y ago

the higher prices are affected by the corporate buying of single family homes. for every home a corp buys, that's one less for individuals to buy. if the number of buyers remains the same but fewer homes are available, prices go up--seller's market. yes, prices go up adjusted for..., but inventory more competitively sought. the other issue is that the average buyer is looking to buy with financing while corps are paying cash. that makes for such a smoother transition for the seller that it is hard for them to turn down cash offers. after corps, we have foreign buyers also coming in with cash offers. i know of one specific house that is empty for the majority of the year purchased by foreign owners specifically for their kid to live while attending college. the kid chose to not go to that school, so the house sits empty except for when some property manager comes by to "check in" on the place. so while this thread is discussing still showing decent ownership percentages, those numbers are glossing over some of the "trends" in modern real estate.

shlant 1y ago
> affected by the corporate buying of single family homes > after corps, we have foreign buyers also coming in with cash offers As someone mentioned earlier in the thread, these are memes that are not actually backed by data - commonly perpetuated by groups that blame most issues on billionaires/corporations/investment firms.
- dylan604 1y ago
  So you're insinuating that the specific example of a house sitting empty owned by a foreign buyer is made up? In my neighborhood specifically, there are homes being bought not by single families but specifically buy management companies so they can then rent the property. To deny this happens is just as much of a stick your head in the sand meme as what you are accusing me of.
  - aerostable_slug 1y ago
    They're saying it's overemphasized, which is why we don't rely on anecdata.
  - 1y ago

dr-smooth 1y ago

Sorry, there's no way a plumber in the 70s made 40K.

parineum 1y ago

A good, experienced plumber would make a lot more than that in CA.

vjvjvjvjghv 1y ago
These are the numbers my neighbor gave me. No idea how accurate they are. I think it’s well known that the average house price to income ratio has gone up a lot in the last decades.

SideQuark 1y ago

Houses today are vastly larger. Cost/sq ft in all but the few most expensive places has been nearly constant under inflation adjusted price for an incredibly long time. A huge majority of the population lives in such places. Here's a size list that is commonly shared https://www.newser.com/story/225645/average-size-of-us-homes-decade-by-decade.html https://www.newser.com/story/225645/average-size-of-us-homes... When you figure in # of people in such houses, the avg person has vastly more space https://www.reddit.com/r/REBubble/comments/14hayqq/average_house_size_and_residents_over_time_chart/ https://www.reddit.com/r/REBubble/comments/14hayqq/average_h...

bluefirebrand 1y ago
New builds may be larger today but the vast majority of real estate on the market are not new builds I bought my house in 2018. It was built in 1997 It is not vastly larger than it was in 1997, but I still paid 2018 prices for it Most people aren't buying new builds
- SideQuark 1y ago
  Prices change due to inflation among other things, which is over 50 % from that time period. And given that the median house age (not median age of sold house!) is 40 years, you did buy a much newer house than the majority of people have. A few years back, median age of sold house was 27 years. So by that metric you bought even a newer house than the majority of house sales. Your 1997 house is almost certainly much larger than the median 1950 house. And, your single data point in no way invalidates aggregate statistics.