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Americans Need to Be Richer Than Ever to Buy Their First Home (2023)
- slipperybeluga 1y ago[dead]
- asdff 1y agoDepends where of course. All over the south and the rust belt midwest home prices have been more or less stabilized over the past 35 years or so. Even if they "went up 30% in covid" that could mean they only went up another 30k or so realistically. The land of 70k jobs and 150k 3-4br houses where all is well. Then you go to the hot markets and salaries for comparable positions are only like 20% more but the exact same home (actually on west coast, subtract the full basement and lot large enough for a detached two car garage) is 10x in price or more.
- DaveZale 1y agomy single family home went up 40% in market value during Covid. More property tax should be great for local govt coffers, right? Wrong! Now local govt is cash strapped again. So we have new ballot measures for providing kids with meals, but only from taxes on those making $300k+ annually. Where is the money going? Meanwhile, the number of vehicles that need mufflers is increasing. It's audible. That is a reliable sign of economic distress. Nobody can buy a house without a down payment and reasonable job security. The economic gulf widens.
- jschveibinz 1y agoBenefits are the cause of increased cost in school systems: https://reason.org/commentary/administrative-bloat-isnt-the-biggest-problem-facing-school-district-budgets/ https://reason.org/commentary/administrative-bloat-isnt-the-... Benefits are likely affecting municipal government in the same way.
- thatfrenchguy 1y agoReally a market shaping failure by the federal government here.
- RandomBacon 1y ago> More property tax should be great for local govt coffers, right? Wrong! Their costs probably went up too.
- jerlam 1y agoYou don't really want inelastic goods such as homes (land value), food, electricity, or gas to go up in value. Those things factor into the cost of everything else, so the net result is that everything just costs more for the exact same experience.
- BosStartup 1y agoIt's not correct that an increase in home value increases your property tax. The town has a budget which then it divides by the sum of all property values, this gives a ratio that is the tax rate per property value. In theory, your property went up 40%, if everyone else's did too then your taxes remain the same. You can see this by viewing the tax rate over time and seeing that it has declined (but again, that didn't lower the dollar amount you must pay, just the ratio of tax to property value.)
- jerlam 1y agoCalculation of property taxes are different across jurisdictions, you are talking like your rules apply to every system in the world. I believe in the poster's jurisdiction, property taxes are based on a percentage of the property value and are independent of the city's actual budget.
- Mars008 1y agoThat value is usually calculated from last sale plus no more than some small percentage each year. I.e. if home 'went up in value' but didn't sell tax doesn't change much.
- walls 1y ago> The land of 70k jobs What are these 70k jobs in the south?
- alephnerd 1y agoRaleigh-Durham Metro, Metro Houston, Metro DFW (imo not the South), Charlotte Metro, and Metro Atlanta off the top of my head and based on median household incomes. That said, assuming you could afford a 2k square ft house with a backyard in a highly desirable neighborhood similar to what Palo Alto is today on an average person's salary 50 years ago doesn't seem realistic. Also, 50 years ago, redlining and race as well as gender based discrimination in most jobs was the norm, so unless you were a white (which itself was a narrower term than today) man, there was a glass ceiling, and most jobs that were supposedly high paying in reality largely limited hiring to a subset of Americans. Additionally, the rural-urban divide then was more severe than it was today. People from those households like Marc Andressen literally didn't have piped water growing up back then in the 70s (he's recounted the story a lot). Long story short, I don't buy a lot of the nostalgia for the 70s and 80s I'm seeing in this thread - it's very boomer urban white man coded.
- asdff 1y agoAll over in the right professions. Accountant, probably basically everywhere for example. I imagine it wouldn't be hard to pull 70k doing b2b sales. Plenty other white collar work probably gets you there too. Skilled trades also very well compensated today and in demand as well.
- uxp100 1y agoMy home price doubled over the last decade in my rust belt town (the desirable neighborhood in a less than desirable town). Houses similar to mine going 300k+ and average individual income here is still under 40k I believe. City and county services were in much better shape 25 years ago (when they were underfunding their pension programs). My bus service was cut and will be cut again soon and I went almost two months without garbage pickup at one point last year. It’s not all doom and gloom, I do have positive things to say too (parks and library programs are still quite nice), but things ain’t looking up in the rust belt.
- gabrielsroka 1y ago2023
- codingrightnow 1y agoThe American dream is dead and none of our politicians on the right and not enough on the left are talking about it. The American dream isn't to get filthy rich by providing an innovative product or solution and gobbling up an astronomical percentage of monetary resources. The dream is to come out of college with easy to repay debt or work a trade with a good union, be able to buy a home after a few years of saving, start a family, not go deep into credit card debt just to survive, and retire on time. None of that is feasible anymore and will not without major changes. Trump may think he's bringing that back with his tariffs but it's not a one fix problem. Many things need to be addressed that we are not willing to talk about.
- tug2024 1y ago[dead]
- BosStartup 1y agoOne of the major problems is the income inequality between the lower half and the upper 10%. Tariffs in theory will bring manufacturing back to the US, but only by increasing the cost of those goods. As such the average person can consume less goods. Hopefully well paying jobs balances that out a bit. One measure is the ratio of CEO compensation to the average employee in the same firm. That ratio was 21 in 1965, today it is 290. Imagine the average worker making 13x what they make today. The late stage capitalism of capital accumulating at the top is accelerating.
- parineum 1y agoThen again, those same people have much more purchasing power and better lives thanks to, checks notes, capitalism.
- estimator7292 1y agoAre you sure about that?
- 1y ago
- tug2024 1y ago[dead]
- tamimio 1y agoShort answer: banks infinite money creation glitch (credit creation) inflated the prices of everything, but especially houses because it’s seen as a safe investment. Solving the housing market is pretty simply: make it a depreciated asset, never an investment one, or better, end banks credit creation aka money creation out of thin air. Any other solution will never fix the issue.
- bhickey 1y agoNail on the head. Housing can be affordable or it can be a good investment. The two functions are incompatible.
- sema4hacker 1y agoIn 1960 my parents bought a brand-new 3 bedroom 1.5 bath in Seaside California for just under $16,000, with no significant savings. He was an Army sergeant and she was a housewife and I had one sister. I doubt anyone in their situation could find a similar deal and location and pull that off today.
- mc32 1y agoPeople can build houses with the same characteristics of the 1970s and would likely be able to afford them. But people want modern sizes with all the appliances and nice kitchens, two car garages and whatnot.
- cultofmetatron 1y agolot of regulations nowadays prevent you from building anything else
- betaby 1y ago> People can build houses with the same characteristics of the 1970s and would likely be able to afford them No? Bungalows built in 1970s are selling $500k CAD in Montreal's suburbs today. > But people want modern sizes with all the appliances and nice kitchens, two car garages and whatnot. Probably they 'want' but very few percentage wise live in such houses, at least in Canada.
- mc32 1y agoSure. But that's due to low unit build + immigration creating demand combined with builders mainly building 2500 sq ft houses. Back in the 70s it would have been 1,500 sq ft. But also people want amenities like central air, game rooms, big kitchens, etc. It's like making sedans vs SUVs. MFGs make money on S/CUVs and larger houses. Small units don't have the same unit profit.
- alephnerd 1y agoConversely, someone with my skin color would not have been allowed to buy that house in much of Monterrey County back in 1960. Heck, most older houses across CA still have redlined contracts from that era included in the buying history. "A Raisin in the Sun" was the reality barely 4-5 decades ago.
- yieldcrv 1y ago40% of homebuyers under the age of 30 had help from their parents for their downpayment
- 0cf8612b2e1e 1y agoI am surprised it is that low.
- NoPicklez 1y agoThe down payment is one thing, but the price of house is becoming so much that the monthly repayments are putting people at risk.
- nirav72 1y agoIs this even reversible without crashing the housing market? Considering that most Americans that already own homes treat it as part of their retirement nest egg. Also the cost of building new homes has gone up due to increases in material cost and land.
- susiecambria 1y agoNo answer to the question, but you raise a good point: Americans consider homes an investment. Years ago when I was doing public policy analysis and advocacy full time, I spent some time thinking about home ownership, being financially and otherwise prepared, understanding the realities of home ownership, and acknowledging ownership is not the only game in town. Either Fannie or Freddie published a paper about "appropriate" housing options for a person's stage in life. Nothing set in stone, but patterns and priorities. The paper made the point that not everyone wants the responsibility of owning. These folks have other priorities and don't consider themselves failures by renting. Similarly, families may choose to live with other generations. Some older folks move to rentals, smaller owned homes, or assisted living. The bee in my bonnet has always been the "I want I should have" mindset. When it comes to housing, it goes like "I want to die in my house." Great if you can afford it - meaning affording maintenance, modifications (ramps, lefts, etc.), skilled and unskilled help, taxes, etc. The rub comes when people can't afford it. Some jurisdictions offer interest-free loans to add ramps, etc.; loans are paid back upon death. I'm not indifferent to the struggles of aging. But ignoring it does not make it go away. I feel like with the time and energy we put into trying to address affordable housing, for example, we should also pay attention to our individual (and community?) plans for getting older. Back to the point: In my policy days, hearing stories about how old folks died in their homes and their kids expected a windfall only to find out that the property had to be sold to pay for X, Y, and Z. The house was great collateral but was not a wealth transfer as may have been expected. Not sure how to balance, accommodate all the competing interests, but what we are doing now is certainly not working.
- dwd 1y agoThe thing is if you don't crash the market, you're looking at the Japanese experience of a long slide where prices slowly drop relative to inflation over 20+ years which means some generation is going to miss out and not own a home and potentially forgo raising a family. If we can remove all the factors that force up prices on new builds (and don't care if the market for existing homes crashes) then it may be reversed. Material cost should be reversible if you don't expect the house to look like you live at a resort. And we have to ensure supply like incentivising new plantations to eliminate timber shortages. Fixing zoning restrictions will take political will. Stripped local councils of their zoning powers should mean any nimby-isms around building higher density housing, allowing smaller blocks could be ignored. Land release is also fixable by taxing undeveloped land that is zoned residential. More land available should lower prices. Stop doing Government incentives to buy houses. Giving first-home buyers grants simply drives up prices everywhere. Eliminate tax write-offs for "investment" properties: Owning a house should have never been like owning a business. This had the effect of reducing available rentals (and increasing prices) as many were happy to take the growth and the write-off and avoid the maintenance and depreciation that comes with renting the property out. For the renters the price hike made saving for buying a home much more difficult.
- dwd 1y agoThis has been the reality in Australian for the last 2 decades ever since Demographia first started publishing their annual report. The Australian average right now is 9.7. Maybe 30 years ago, it was closer to 3 (the 150k house on a 50k wage). Demographia unfortunately stopped covering my locality which consistently ranked in bottom 10 internationally. Given the local median house price is 1.3m and median household income is 90k it would be 14.4. Makes a mortgage literally a "death pledge" with no chance of paying it off in your working lifetime.
- NoPicklez 1y agoCouldn't agree more, its been horrible here.
- cal_dent 1y agoWhile I agree housing situation keeps getting worse year by year, I do wonder if we need to consider that historical comparison like these have become increasingly meaningless? It's certainly not a good thing but part of the second order effects of the broad economic change is that household income alone has long stopped being a useful driver/source of house prices - interest rates, second order effect of boomer wealth through bank of mum & dad, more 2 person full time working households, global migratory movement have all changed the dynamic so much that it feels very apple and pears now. There's also a point around averages being meaningless from a relativity perspective too. Australia is expensive but as someone who moved from London to non-sydney australia, I do sometimes find it amusing that what is deemed expensive here would get you a shoebox in London v 500+ m2 land house here.
- tanseydavid 1y ago>> need to consider that historical comparison like these have become increasingly meaningless? How so?
- Mars008 1y agoThis article is from 2023, in 2 years something likely changed.
- ChrisArchitect 1y ago(2023) what the heck OP. Some discussion then: https://news.ycombinator.com/item?id=35022207 https://news.ycombinator.com/item?id=35022207
- add-sub-mul-div 1y agoOh fuck off
- ChrisArchitect 1y agoHow about some stuff since then: The average age of U.S. homebuyers jumps to 56 (2024) https://news.ycombinator.com/item?id=42048640 https://news.ycombinator.com/item?id=42048640 Priced out of traditional housing, more Americans are living in RVs https://news.ycombinator.com/item?id=45340442 https://news.ycombinator.com/item?id=45340442 Investors bought 27% of US homes in Q1, as traditional buyers struggle to afford https://news.ycombinator.com/item?id=44554713 https://news.ycombinator.com/item?id=44554713
- deleted 1y ago[deleted]