The Home Ownership Thread

[Omega Male]

That's good, but a slightly higher percentage increase off an exponentially lower base doesn't do much to redress the gap in absolute terms.

 

[Fueco]

That's good, but a slightly higher percentage increase off an exponentially lower base doesn't do much to redress the gap in absolute terms.

View attachment 1740617

And if you compare that with median house prices, the problem becomes obvious…

 

[brokencycle]

And if you compare that with median house prices, the problem becomes obvious…

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Again, no. That chart doesn't show what you think it does because the cost of buying a house is going down.

That $170k house in 2000 bought with 5% down? A 30 year mortgage at 8.15% costs $434k in principal and interest over 30 years.

A $320k house bought in 2020 with an interest of 3.5% costs $504k over 30 years.

Let's also not forget that the median house is getting bigger and better over time. In 2020 the median house size in the US was 2301 sq ft vs 2057 in 2000 (this is all houses not just new construction).

 

[Fueco]

Again, no. That chart doesn't show what you think it does because the cost of buying a house is going down.

That $170k house in 2000 bought with 5% down? A 30 year mortgage at 8.15% costs $434k in principal and interest over 30 years.

A $320k house bought in 2020 with an interest of 3.5% costs $504k over 30 years.

Let's also not forget that the median house is getting bigger and better over time. In 2020 the median house size in the US was 2301 sq ft vs 2057 in 2000 (this is all houses not just new construction).

How much house could someone making $30k in 1970 afford versus someone making $30k now?

 

[brokencycle]

How much house could someone making $30k in 1970 afford versus someone making $30k now?

I know that you're JAQing off, but I'll bite. Median prevailing rate today is 3.92% which per google's "purchase budget" calculator you can afford a $131k house with 0 down. At 8%, that goes down to $95k.

That ignores the fact that the median household income in 1970 was $9,870, so $30k is >3x the median income in 1970 vs 2019 was $65,712 or half the median income.

 

[Fueco]

The problem is that we’re all swayed by our own experiences. I’ve only lived in expensive markets (San Jose and Boulder), so I have no experience in what it would be like to live in a place like where my grandparents lived (Auburn, NY), where house prices and incomes tanked when the factory closed. That house my grandparents bout for $2800 in the late 30s could’ve been yours for $15k in 2007. It sold in 2016 for $47k after the previous owners sold it at a loss.

Of course now, with remote work, my family can live wherever we want in at least three different countries. That clearly wasn’t even being dreamed about in 1940.

 

[ValidusLA]

Okay boomer. Stop bragging.

When I bought my house back in 2013, it was over 4x. With my current income, the price would be like just over 2x.

Yup. When we bought in 2017, we purchased for about 6.5x our income (but we put 50% down). The house would now be about 4x our current income at the old price, but it is now valued at 7x income (and we would not have been able to put 50% down on the new value).

 

[Piobaire]

The problem is that we’re all swayed by our own experiences.

That's why aggregated data, such as BC and OM are presenting, is how to approach the conversation.

 

[Omega Male]

In summary, it depends. ?

 

[Fueco]

That's why aggregated data, such as BC and OM are presenting, is how to approach the conversation.

So the question I have then, is it just the upper quintiles that are driving the median houses up in price and size? Clearly the lower income quintiles are not moving into better homes since their income is not increasing.

We’re just widening the gap between the haves and have nots and saying it’s all good because the median is doing just fine.

 

[Piobaire]

Clearly the lower income quintiles are not moving into better homes since their income is not increasing.

So this is the sort of assertion one usually presents data to support. Just a quick skim of the aggregated data presented so far would seem to indicate your conclusion might not be true.

 

[brokencycle]

So the question I have then, is it just the upper quintiles that are driving the median houses up in price and size? Clearly the lower income quintiles are not moving into better homes since their income is not increasing.

We’re just widening the gap between the haves and have nots and saying it’s all good because the median is doing just fine.

I've tried playing nice and answering with facts and data, but do your own research. Ask javyn for some podcasts: I'm sure he can give you some that will make you feel right.

 

[HRoi]

4-6x income?? Given that everyone on SF makes at least $250,000, what do y’all need 3 million dollar homes for?!

 

[ValidusLA]

4-6x income?? Given that everyone on SF makes at least $250,000, what do y’all need 3 million dollar homes for?!

4*250,000 = $1,000,000
$3,000,000/6 = $500,000

 

[Piobaire]

No one told me math was going to be involved.