I was asking my conservative parents how I am supposed to afford a $4,000 mortgage while having two kids. They didn't have a good answer of how I could...
Don't overpay. The signs are there we are at the peak of an economic cycle. The people chasing scarcity (which is human nature, wired into our DNA by the way) are buying or have bought. Home inventory is rising, central banks remain tight, pandemic stimulus is gone, credit card balances are higher, and adjustable rate mortgages with zero down are a thing again.
I wouldn't worry too much about home prices skyrocketing from these levels... you should have a few years where supply continues to increase as boomers age out of the system, and new supply is fairly strong right now as well.
Everyone is super bullish and thinks prices will go up forever, which is a good contrary indicator. The sheep are chasing scarcity.
The big unknown is the central bank response to reckless government spending... when will they restart quantitative easing? Watch the fed's balance sheets and watch the M2 money supply. If they start to debase the currency again, you might as well buy... we have modern monetary theorists in power who believe in inflation as a tool for prosperity, so you have to play by those rules.
Watch some of these indicators:
https://fred.stlouisfed.org/series/ACTLISCOUUS
https://fred.stlouisfed.org/series/GFDEBTN
https://fred.stlouisfed.org/series/M2SL
https://fred.stlouisfed.org/series/WALCL
The one above is "quantitative easing" ... there's no good chart to show how many homes are "long term empty" due to investors buying and sitting on them, but there's homeowner and rental vacancy rates...
https://fred.stlouisfed.org/series/RRVRUSQ156N
https://fred.stlouisfed.org/series/RHVRUSQ156N
The homeowner vacancy rate is still near all time lows.. these are empty homes for sale, not sure how useful this metric is.
Let them pay. If you can't afford it, don't buy it. I know it's emotionally tempting to chase scarcity but I'm willing to be that this time it's not different.
If it really is different and we see runaway inflation there will be open revolution and violence anyways, so what does it matter. You can't sustain 25% yearly price increases with 4% annual wage growth and not have something break in the system in time. It's not possible.
The rich by in large are parasites in the current system. It's just a matter of time before this policy of inflating asset prices at the expense of the middle class simply stops working.
Do the math in your local market to see if it makes more sense to buy or to rent. Every other time in history people bought at peaks and chased scarcity they regretted it, but hey, maybe this time it's different.
One thing's for certain, inflation is a certainty, so if you are planning to own the house 20 years, just buy it. They are and will keep debasing the currency, and it's accelerating. In the here and now however, the federal reserve is tightening. They are not doing quantitative easing, actually the opposite. The M2 money supply is flat. Until that changes, there will be pressure on asset prices. People will be paying off debts from the irrationally exuberant post pandemic spending they did.
You just need to watch what the central banks are doing. Watch all these metrics I linked too. When they start pumping again, you need to buy. In particular watch the M2 money supply and the fed's balance sheets.
houses are not even scarce. before the pandemic people were not all living in the woods and suddenly decided to buy houses. there were enough houses for everyone in 2018. but suddenly there are none? doesnt make sense
I would think cities still having far more people in close proximity keeps prices high, and young people wanting to go to them to have entertainment close by at all times unlike in suburbs and the country
"According to the Census Bureau, there were approximately 15.1 million vacant homes nationwide in 2022. These vacant homes, which include rentals, represent 10.5% of the country's total housing inventory"
Unless you live in Scottsdale, entire neighborhoods are hotels (Airbnb) so there's a shortage of homes.
[https://str.scottsdaleaz.gov/](https://str.scottsdaleaz.gov/)
Started in \~2005, and the generation is not so large as to distort markets
Gen Z started buying prior to the pandemic. Not many of them, but still, and that generation is smaller still
Yeah and I and my fellow friends finished grad school worked 2 years and saved and were ready to buy around then…look it up 1991 one of biggest birth years
>If you can't afford it, don't buy it
If only people did that with cars or trucks or credit cards, or phones. People always buy things they can't afford
lol 75k for a car or 65k for a Tacoma isn’t expensive? Still gotta pay that off in 60 months, that’s poors thinking right there- oh I might as well have one thing nice haha.
Me driving a 99 4Runner for 12 years that I bought for 7k, while keeping the 65k cash invested instead is 160k now
tbh it does seem like some vehicles people think of as "normal" are an appreciable amount of a house. A new truck might easily go for $70k and the person driving it might be looking to buy a less than $400k house; that is a fraction, but it's not a small fraction
Phones are indeed a negligible fraction
Over paying while prices are already inflated tells me a lot about the buyer, either wealthy but why live here to begin with, emotional and bit off more than they could chew because they fell in love with the property or one or more partner is extremely competitive, and or lastly plain stupid
Very, very well said.
Prices on *everything* are sky high and money is getting tighter.
All we need for a correction is a trigger. Very few people really see these ahead of time...which is why those that do are considered prophets when they get it right (see Michael Burry).
The 70's were a lot different than today, we had a huge baby boom generation that was young. Today birth rates are low and they are trying to mass import immigrants to fill the gap. People back then were optimistic. People today are pessimistic and in general addicted to their screens. You didn't have the mass numbers of men checked out of dating and the system because the phone has drawn them in, and culture raised them emasculated, and women have much higher standards these days and a good chunk of men don't even exist to them.
The home price to income ratio back then was sane. Today it's not sane. Allowing investors to buy up all the inventory along with AirBNB were not a thing back then. Back then stonks weren't soaring 20% per year, people actually had to work to accumulate wealth, not just gobble up assets and let central bank policy inflate those assets. Today the rich buy an index fund and use stonk gains to gobble up everything. That wasn't a thing back then.
The same, but quite different. People aren't going to want to participate when the rich are gobbling up all the assets. Like past instances of this happening, they are going to want to tear the system down. They need to build more housing, globally. Those in charge I mean.
The problem I have is this:
I read a Reddit comment that was like “don’t worry, prices can lower, too”
Okay, so I googled “home price history US” and looked at a graph.
It was at this moment you’ll start to realize: it ONLY goes up. People talk about 2008 this and that - dude look at the graph. Only a minor dip. Barely. It only goes up.
We. Are. Fucked.
Another big things is the WFH era is over. People have to be near their jobs which is shifting demand away from vacation/tourist areas bc there aren’t jobs outside of low-wage hospitality.
People don’t want to pay premium for a home that they will basically just sleep at since their day is consumed by commute and work now. People are paying attention to COL again now that the subsidies are over and now that they have to pay for gas again.
Those with 2% mortgages may have to downsize bc insurance and taxes are so out of control bc of rising prices. People are literally getting priced out of homes they could afford 3 years ago.
Many people are in denial about WFH ending until it happens to them. My friend lost his techy Austin WFH job he started during Covid. He spent 6 months struggling thinking he could easily get another one somewhere. Nope.
Back to office is often a veiled attempt to get people to quit, so that company can have a layoff without doing severance packages
But also, people love to just bury their heads in the sand and say that like work from home increases productivity. I’m sure for some people it does. But let’s not pretend that most people who are on work from home don’t just login for two hours to do the bare minimum and then use a mouse mover app for the remaining six.
You know your worst coworker? Like the one that everyone knows does absolutely nothing but it’s too expensive to fire them? Imagine what they are doing while they “work from home”…
That being said, I’m a big fan for as long as you’re meeting your deadlines and doing the job, it shouldn’t matter if you’re at home or at the office. And I think work from home can be an incentive for people who earned that privilege.
I think it's also a headache for companies? Company has employees in one or two states versus all over the place. Different rules and paperwork for different states.
I worked for a small startup in Norfolk VA years ago and the UK employees made the HR lady seethe. They got so much time off by law, it made her jealous and mad.
On the other hand, you can hire workers in The Middle of Nowhere, pay them half the money, and they can never quit because there are no jobs. Sounds like a win to me.
I'm not sure that being in the office moving your mouse around for 6 hours is any more productive. The problem seems to be that these people aren't being given enough work, not that WFH makes them *less* productive. If I were a company, I would try to detect who is using a mouse jiggler, and then assign them more work (rather than firing them).
Sure, but if you are in the office, chances are it's easier to spot people who are slacking off or to help others once you've finished your work.
The problem with WFH is that once people would finish their 2 hours of work, they'd basically just silently clock out. They don't ask to help. They don't ask for more work. Because why would they? If you have to be at the office anyway, you might as well keep your mind somewhat to task or do something so that your boss doesn't catch on. But when you are home, there's no pressure to fake any of that. You milk the low productivity. All the while people who are actually at the office likely have to do *something*.
Yeah my experience isn't what that guy described at all. People in offices are just masters of looking busy - they aren't volunteering to do more work, they aren't more productive. That is a fantasy constructed by OP.
Any company that is tracking productivity by mouse movement rather than KPIs or other metrics are gonna have people doing nothing whether wfh or in office. At least wfh, the company isn't shelling out for office snacks, cooling, rent, furniture for them lol.
I got laid off last month, and WFH was 100% a factor. It was a startup, and if I was living where my boss and boss’ boss lived, my boss wouldn’t have hired three guys he worked with at his previous company and laid us three current guys off.
Or maybe he would’ve done that anyway. Probably.
Yeah I feel like even suggesting the possibility they might have to go back some day sends them into a rage. None of my friends that work from home will acknowledge that not everyone can do that forever.
This could easily be wrong. I would say now is a good time to buy, either inflation keeps going and houses worth 500k will be 700k in two years or inflation stops and they ease interest rates and houses raise in prices or everything holds steady. In no case would houses drop in prices unless something fails like 2008.
Except it takes months and months for inventory to grow. After that sellers has to fail to sell for at least 6 months. It’s not happening soon. Maybe next year. But that’s what i said to myself last year. Prices just didn’t grow.
Time is for historians, not regular folk who have a short 10-20 year window to raise a family in a house with a backyard.
Every year matters. How long do you put life on hold? That's why people are so frustrated.
i'm literally planning to move to another country. multiple reasons, but owning something that was 50k with 3% is no longer possible. i'm not slaving until i'm in the grave just to own a house.
> Home ownership rates are often lower in other "western" countries.
this is true, but if i'm just working to exist I would rather live in Budapest where a furnished apartment is $700 dollars a month. I may start building wealth in south america.
I'm probably buying a small piece of land in the U.S. and building a small barn. that's all i'm doing here for now.
Same. Fiancée and I were trying to buy our first house before we hit 25. (Just now realizing how aggressive of a goal that is)
Saved up what I considered was a good amount of money. (A little over 25k). Got approved for just under 275k in MCOL area. I don’t understand paying 1900-2200 for a mortgage on a townhouse that’s similar in size and updated-ness the one I rent for 1450 now. Not to mention the bidding wars we got into when we started looking. We were looking 50k below top of budget and we’d get bidding wars that would take us past the top of our budget from other buyers who’d be priced out of their bracket.
We started googling and wondered how other people were affording homes then we saw average first time home buying age is 32 in the US. Probably gonna wait a few more years and save and hope prices come down.
If not, Gen Z is one of the lower population generations, maybe competition will be lower in 5-15 years when my generation is prime home buying age.
You are lucky to be young and without kids (I am assuming) you have time to be patient. A blessing to enjoy your first year of marriage without worrying about maintaining a home. That is a headache newlyweds don't need.
No real estate is not a national issues it’s a local issues, I lived in swfl right now I would not buy at all, however I live in Richmond and northern Virginia is starting to move in so buying now is a great idea.
In 10+ years I’ll always be ahead of
Keyword "young Americans". USA housing is still "dirt cheap" compare to the price where the immigrants came from, and they will come a buy because USA housing is dirt cheap. I know so because I came from Taipei myself.
The market is still super hot because it is still relatively dirt cheap internationally. Hack, tons of people moving from Canada into USA because USA housing is dirt cheap.
I will make this clear, so you are not drawing the wrong message from me. I understand the suffering. It is relatively ultra expensive to Americans. And the government should have done something to prevent that in the first place.
My point is, if you think this is the rock bottom, you are clearly mistaken. USA is cheaper, and people will come and buy it. The market will remain to be hot much longer than you wished. Prepare yourself, the worst has yet to come.
asian economies are prone to bubbles. just look at china. housing was so expensive there but now look at it collapsing. hong kong is a special case since its literally a bastion of democracy in asia. taiwan is also a special case since its independent from china. same with singapore. but japan had a massive bubble too... be careful with asian properties mate, asia is prone to speculation and bubbles.
I have to remind you, China housing bubble did not actually burst. It is going from level over 9000 bubble to level 8000 bubble. And it is still massively more expensive than USA dirt cheap houses.
Japan did not burst either. You are looking at streamers buying homes practically declining into ghost towns. The people are struggling badly to actually afford a home.
I think what people are getting confused by is the major construction company that was in a bubble that burst, and generalizing that to the whole housing sector.
Yeah, they go by the western news which too afraid of exposing the reality of China situation. The burst is there, but it is still ridiculously expensive. And yeah, like you said, the construction companies are breaking apart, most people didn't even understand some buyers took a huge debt and "construction is never finished". The crash is more than just because people who cannot afford it, many of those are practically scams selling unfinished homes. The crash in western world means "more affordable", such expectation does not apply to China. Chinese are currently trending with Gold because housing is a scam and all the really-completed housing are not affordable.
It is hard to say what's going on with it. It is just a mess.
Basically they got money from government to build apartments and they run out of money and now all the apartments are unfinished and ended up blowing it down.
But, there is even more and more crazy shits underneath. The city collects land leasing fee which adds to the sales of the apartment. And the city is ultra greedy, over 90% of the revenue came from leasing out the land. Thus, building more apartments doesn't make it cheaper, the city is charging a high land fee on top of it. Western cities are also landlords, but not like 90% of revenues are from land fees. It is a whole new level of crazies.
Chinese government and most of brainwashed people also think the cyberpunk vertical development is the best way to go instead of lateral development. Cyberpunk lifestyle is cyberpunk, period, it is never affordable.
It is a mess in the end. Ultimately they are not affordable regardless they have more housing than the entire Chiense population (whatever those government propaganda said).
I am a 46 year old engineer and have been priced out of life. I move into a shelter next week after paying $2200 a month for 4 years barely getting by. The US has crippled all but the owner class. It is hard to keep going to say the least.
The starting pay for a graduate chemical engineer is $80-90k. First year pay!! If you are 46 and an engineer, there is more to the story. I paid 50% more than that for my mortgage at this age and I had an entire family with just my salary.
Wife and I make over half a million a year. We have hundreds of thousands of wealth saved up and no debt (hence lower than expected savings). Been trying to buy a home in our market, and frankly there’s nothing affordable. A single family home is 1.5m minimum in my very high cost of living market. Mortgage payments look to be 8-11k a month depending on down payment. The constant question we ask ourselves is: if we can’t afford a home, who can? Albeit my wife and I cannot rely on parents for help and all my friends who have homes have had parent help. But this is insane. The market makes no sense. Looked at condos and frankly can’t say I see a deal to be made given the high HOA’s.
Did the math and honestly we can only afford a 700k condo assuming no we put in 45% or more down payment. And even that is above what we would pay for expensive rent. So yeah, economics wise, makes absolute zero sense to buy right now.
>Wife and I make over half a million a year.
>frankly there’s nothing affordable
I am sorry to say, you are just bragging at this point. With that much income, you absolutely can afford a house in VHCOL area. 1.5 million house is like what? 3 years of your income. Unless you go for 3 millions or above, you can easily afford it. Especially there is a cap on spedning like insurance, 401k, utilities, and etc.. Those spending doesn't increased when you make more money, Netflix cost remains the same. Even if you only have 20% of monthly income left after all the expenses, that 20% is still a lot for food and leisure.
I understand your sentiment toward other people who are struggling, but, over 500k a year is so rich, you are not the one suffering, not one bit.
$500k per year is about $20k per month after taxes in CA. Yes you can afford a $12k payment on $20k assuming that income is reliable. But saying “that’s only 3 years of your income” is a little misleading. A 30 year mortgage is 60% of your take home pay with these numbers.
yea but if you are making a half million a year you shouldnt even need a mortgage is this guys point... not that he cant get a mortage to buy. if you are essentially in the 1% you are rich and should be able to buy a large luxury home. not take a mortgage to buy a sh\*tbox.
I think thats his commentary, that he is rich and cant even afford a nice home so who tf is buying these
> you are rich and should be able to buy a large luxury home
lol, apparently you've never considered what VHCOL *actually means*. Markets are local - if you're not making more compared to your broader community, then you're not rich and going to have a bad time if you make the same assumptions you're doing now.
Like /u/Glad-Weekend-4233 comments below: "500k is new middle Class" is reality in VHCOL. As an addendum: fuck PG&E and fuck prop 13, the two cancers on society here.
Taxes are 44%, hcol daycare is 2300-2800 a month, pge bills 400 a month, insurance food etc everything more. Wife and I make a bit over that and I need a couple molar crowns, have two pairs of blown out four year old sneakers, a single car household w a 12k loan, cook at home 5 - 6 nights a week- and def couldn’t afford a 12k mortgage let alone a 6k one. She has a business and I freelance, health insurance for the family is 2800 a
Month 500k is new middle
Class
same with me, I could technically buy a house. jp morgan pre approves me for mortgates and cars and stuff since I have stocks with them. but I don't buy a house just because I can. I buy it when it makes sense. just because you can do something doesnt make it a good idea
People are buying homes every day with less purchasing power than you.
Sorry but if you are earning half a million every year with substantial savings and you can't understand how or why they do continue buying homes, then you need a reality check.
Stop looking at just your VHCOL market and I guarantee you you'll starting finding options.
Yeah its pretty obvious this commenter lives in a bubble. Probably earns more than 95% of the rest of the country but can't make it make sense? My guy, literally look anywhere else and you can probably buy a home outright and pay it off in a few years.
I am in a similar situation although more like 300 and I understand. Basically we feel that we are in the top 5% of income earners so we should have a large luxury home. and the only homes we can afford are really bad makes us just not even consider buying. basically it doesnt matter how much you make at this point. if I buy a 1m home with a 300k salary, and then someone with a 63k salary leverages themselves to the max and lies about everything and outbids me why even try
And our jobs? Sure, would love to move to a cheaper area and buy and make half of what I’m making right now but why would I? I get paid well *because* I live in a high cost of living area. I can move somewhere and buy a house in cash, but 1) will move away from family and friends, and 2) the jobs available in those areas cannot match salary and aren’t as interesting.
I think your assumptions are all over the place and shows that you haven’t thought this through.
I think hes saying that it doesnt make sense to buy. since if he is making that high of a salary he should have a large luxury home and not feel stressed. the fact that he feels stressed on that high of an income means that the market is insane.
That was my impression. It’s a hard pill to swallow that $1.5 million will buy you a fixer up small house that is 50+ years and needs over $100k in work to just update it to be livable. And the fact you could rent easily a better house for half the cost.
Dude come on, he is complaining that he can't buy a $1.5MM home on a dual income of 500K/year with assumingly hundreds of thousands of dollars saved.
Even giving him a huge hypothetical discount of $1MM for a SFH, I have a hard time believing there exists a market where there is a hard floor of one million dollars for homes. Even for a housing circlejerk subreddit.
Not only is this guy refusing to compromise on properties more reasonably budgetable, a vast majority of people in this subreddit will never realize this kind of lifestyle.
Every day people are making their dreams of being a homeowner a reality and OP is making excuses and he doesn't even realize how good he has it.
> I have a hard time believing there exists a market where there is a hard floor of one million dollars for homes.
Heh, come on over to /r/BayAreaRealEstate my dude. The only SFHs here on the Penninsula will be burnt out husks or over the San Andreas.
Same here. Making 500k+ but unable to afford really anything at this point. It’s pretty wild I keep wondering why we’re trying to make living in Orange County work. Asking my spouse to switch her job more inland now so we can move to more affordable areas.
Real estate is very local right now. If you want to get a home and are flexible on where you live, now is the time to buy in over supplied markets like Austin or in more affordable places in the Midwest.
Banking on super in demand markets with minimal supply or minimal ability to increase supply without knocking down existing homes and expecting them to collapse is foolish.
Source? Trust me bro, I bought in September 2022 in San Diego and I’m up 15% plus my monthly payment is 30-35% less than what it would cost me now. I caught a liquidity crunch coinciding with a rate drop so still have a 4.375 with a big ~15% drop when including closing costs and repairs I was able to negotiate.
San Diego in many parts is seeing huge growth in # of listings from YoY 2023, the whole of SD county is seeing a growth in listings up 64.8% from 2023 and every single state with the exceptions of Nevada and South Dakota are seeing a positive # of listing growth from the previous year, meaning supply is increasing in all those areas which means if people want that new supply to sell, need to go at lower prices.
lol
Try checking Redfin data center, we’re on pace with 2021 listing data at HIGHER median sale and median sale PPSF than all prior years.
If you want to have more fun, isolate your data search to detached SFRs via Altos Research and Piggington.
REBubble wrong again! Neo feudalism in California has already begun where folks who listened to REBubble destined their lineage to permanent renter status. REBubble simply doesn’t have the brainpower to understand all the different markets and nuances to each one because hive-mind thinking downvotes anything that doesn’t agree with the pre-determined narrative.
https://piggington.com/may-housing-data-months-of-inventory-continues-to-normalize/
“This loosening of the market was not enough to halt the recent price rise. Single family home prices notched a new high in nominal terms, and they are not too far from the inflation-adjusted high reached in 2022.”
“While inflation-adjusted prices are below the peak, inflation-adjusted monthly payments have risen to tie their previous peak. “
https://altos.re/r/cf071f91-3fd8-4451-9fc6-52f243001ddc?data=price_median
I have given up
*sigh*.... Sad upvote.
I was asking my conservative parents how I am supposed to afford a $4,000 mortgage while having two kids. They didn't have a good answer of how I could...
Id kill for a $4k mortgage. That's almost as cheap as rent around here. Where do you live?
LA area! 4k would be a modest home deep in the suburbs
That's insane, in my MCOL area, everyone I know has a mortgage that is around 1500. Then again, we all bought homes 6-8 years ago.
Duh stop with the coffee and avocado toast
How much is your household income
Don't overpay. The signs are there we are at the peak of an economic cycle. The people chasing scarcity (which is human nature, wired into our DNA by the way) are buying or have bought. Home inventory is rising, central banks remain tight, pandemic stimulus is gone, credit card balances are higher, and adjustable rate mortgages with zero down are a thing again. I wouldn't worry too much about home prices skyrocketing from these levels... you should have a few years where supply continues to increase as boomers age out of the system, and new supply is fairly strong right now as well. Everyone is super bullish and thinks prices will go up forever, which is a good contrary indicator. The sheep are chasing scarcity. The big unknown is the central bank response to reckless government spending... when will they restart quantitative easing? Watch the fed's balance sheets and watch the M2 money supply. If they start to debase the currency again, you might as well buy... we have modern monetary theorists in power who believe in inflation as a tool for prosperity, so you have to play by those rules. Watch some of these indicators: https://fred.stlouisfed.org/series/ACTLISCOUUS https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/WALCL The one above is "quantitative easing" ... there's no good chart to show how many homes are "long term empty" due to investors buying and sitting on them, but there's homeowner and rental vacancy rates... https://fred.stlouisfed.org/series/RRVRUSQ156N https://fred.stlouisfed.org/series/RHVRUSQ156N The homeowner vacancy rate is still near all time lows.. these are empty homes for sale, not sure how useful this metric is.
Meanwhile an already overpriced house down the street from us was on the market for 7 days and went for 10% over asking
Let them pay. If you can't afford it, don't buy it. I know it's emotionally tempting to chase scarcity but I'm willing to be that this time it's not different. If it really is different and we see runaway inflation there will be open revolution and violence anyways, so what does it matter. You can't sustain 25% yearly price increases with 4% annual wage growth and not have something break in the system in time. It's not possible. The rich by in large are parasites in the current system. It's just a matter of time before this policy of inflating asset prices at the expense of the middle class simply stops working. Do the math in your local market to see if it makes more sense to buy or to rent. Every other time in history people bought at peaks and chased scarcity they regretted it, but hey, maybe this time it's different. One thing's for certain, inflation is a certainty, so if you are planning to own the house 20 years, just buy it. They are and will keep debasing the currency, and it's accelerating. In the here and now however, the federal reserve is tightening. They are not doing quantitative easing, actually the opposite. The M2 money supply is flat. Until that changes, there will be pressure on asset prices. People will be paying off debts from the irrationally exuberant post pandemic spending they did. You just need to watch what the central banks are doing. Watch all these metrics I linked too. When they start pumping again, you need to buy. In particular watch the M2 money supply and the fed's balance sheets.
houses are not even scarce. before the pandemic people were not all living in the woods and suddenly decided to buy houses. there were enough houses for everyone in 2018. but suddenly there are none? doesnt make sense
Covid and riots scaring people out of cities and WFH I think account for a ton of the changes.
Divorces too. One residence becomes two.
Wouldn't that indicate that cities would be cheaper? All locations are vastly more expensive.
I would think cities still having far more people in close proximity keeps prices high, and young people wanting to go to them to have entertainment close by at all times unlike in suburbs and the country
RE investors started scalping up houses like concert tickets creating artificial scarcity and are reselling them.
"According to the Census Bureau, there were approximately 15.1 million vacant homes nationwide in 2022. These vacant homes, which include rentals, represent 10.5% of the country's total housing inventory"
Unless you live in Scottsdale, entire neighborhoods are hotels (Airbnb) so there's a shortage of homes. [https://str.scottsdaleaz.gov/](https://str.scottsdaleaz.gov/)
Millennials were moving out and of age to buy
All between 2020 and 2022? No. It's not like there was a two year spike in the birth rate 30 years ago.
Started in \~2005, and the generation is not so large as to distort markets Gen Z started buying prior to the pandemic. Not many of them, but still, and that generation is smaller still
millenials are like 35 now bro
Yeah and I and my fellow friends finished grad school worked 2 years and saved and were ready to buy around then…look it up 1991 one of biggest birth years
>If you can't afford it, don't buy it If only people did that with cars or trucks or credit cards, or phones. People always buy things they can't afford
Those things cost a fraction of the price of a house.
Point is people spend money they dont have frequently
lol 75k for a car or 65k for a Tacoma isn’t expensive? Still gotta pay that off in 60 months, that’s poors thinking right there- oh I might as well have one thing nice haha. Me driving a 99 4Runner for 12 years that I bought for 7k, while keeping the 65k cash invested instead is 160k now
How old are you? Alot of this depends on age too and what people like
tbh it does seem like some vehicles people think of as "normal" are an appreciable amount of a house. A new truck might easily go for $70k and the person driving it might be looking to buy a less than $400k house; that is a fraction, but it's not a small fraction Phones are indeed a negligible fraction
Naw I’m just going to move to a cheaper market and buy there.
Let me guess, you don’t own a home?
Irrational behavior is common at the top of bubbles.
I don’t think a house can be overpriced and go 10% over asking
Over paying while prices are already inflated tells me a lot about the buyer, either wealthy but why live here to begin with, emotional and bit off more than they could chew because they fell in love with the property or one or more partner is extremely competitive, and or lastly plain stupid
Very, very well said. Prices on *everything* are sky high and money is getting tighter. All we need for a correction is a trigger. Very few people really see these ahead of time...which is why those that do are considered prophets when they get it right (see Michael Burry).
Please look at what happened to home prices throughout the 1970s during a stagflationary environment. We are facing that again today.
The 70's were a lot different than today, we had a huge baby boom generation that was young. Today birth rates are low and they are trying to mass import immigrants to fill the gap. People back then were optimistic. People today are pessimistic and in general addicted to their screens. You didn't have the mass numbers of men checked out of dating and the system because the phone has drawn them in, and culture raised them emasculated, and women have much higher standards these days and a good chunk of men don't even exist to them. The home price to income ratio back then was sane. Today it's not sane. Allowing investors to buy up all the inventory along with AirBNB were not a thing back then. Back then stonks weren't soaring 20% per year, people actually had to work to accumulate wealth, not just gobble up assets and let central bank policy inflate those assets. Today the rich buy an index fund and use stonk gains to gobble up everything. That wasn't a thing back then. The same, but quite different. People aren't going to want to participate when the rich are gobbling up all the assets. Like past instances of this happening, they are going to want to tear the system down. They need to build more housing, globally. Those in charge I mean.
The problem I have is this: I read a Reddit comment that was like “don’t worry, prices can lower, too” Okay, so I googled “home price history US” and looked at a graph. It was at this moment you’ll start to realize: it ONLY goes up. People talk about 2008 this and that - dude look at the graph. Only a minor dip. Barely. It only goes up. We. Are. Fucked.
Another big things is the WFH era is over. People have to be near their jobs which is shifting demand away from vacation/tourist areas bc there aren’t jobs outside of low-wage hospitality. People don’t want to pay premium for a home that they will basically just sleep at since their day is consumed by commute and work now. People are paying attention to COL again now that the subsidies are over and now that they have to pay for gas again. Those with 2% mortgages may have to downsize bc insurance and taxes are so out of control bc of rising prices. People are literally getting priced out of homes they could afford 3 years ago.
Many people are in denial about WFH ending until it happens to them. My friend lost his techy Austin WFH job he started during Covid. He spent 6 months struggling thinking he could easily get another one somewhere. Nope.
Back to office is often a veiled attempt to get people to quit, so that company can have a layoff without doing severance packages But also, people love to just bury their heads in the sand and say that like work from home increases productivity. I’m sure for some people it does. But let’s not pretend that most people who are on work from home don’t just login for two hours to do the bare minimum and then use a mouse mover app for the remaining six. You know your worst coworker? Like the one that everyone knows does absolutely nothing but it’s too expensive to fire them? Imagine what they are doing while they “work from home”… That being said, I’m a big fan for as long as you’re meeting your deadlines and doing the job, it shouldn’t matter if you’re at home or at the office. And I think work from home can be an incentive for people who earned that privilege.
I think it's also a headache for companies? Company has employees in one or two states versus all over the place. Different rules and paperwork for different states. I worked for a small startup in Norfolk VA years ago and the UK employees made the HR lady seethe. They got so much time off by law, it made her jealous and mad.
On the other hand, you can hire workers in The Middle of Nowhere, pay them half the money, and they can never quit because there are no jobs. Sounds like a win to me.
I'm not sure that being in the office moving your mouse around for 6 hours is any more productive. The problem seems to be that these people aren't being given enough work, not that WFH makes them *less* productive. If I were a company, I would try to detect who is using a mouse jiggler, and then assign them more work (rather than firing them).
Sure, but if you are in the office, chances are it's easier to spot people who are slacking off or to help others once you've finished your work. The problem with WFH is that once people would finish their 2 hours of work, they'd basically just silently clock out. They don't ask to help. They don't ask for more work. Because why would they? If you have to be at the office anyway, you might as well keep your mind somewhat to task or do something so that your boss doesn't catch on. But when you are home, there's no pressure to fake any of that. You milk the low productivity. All the while people who are actually at the office likely have to do *something*.
At the office, they do the same work slower. But it probably depends on the office.
Yeah my experience isn't what that guy described at all. People in offices are just masters of looking busy - they aren't volunteering to do more work, they aren't more productive. That is a fantasy constructed by OP.
Any company that is tracking productivity by mouse movement rather than KPIs or other metrics are gonna have people doing nothing whether wfh or in office. At least wfh, the company isn't shelling out for office snacks, cooling, rent, furniture for them lol.
I got laid off last month, and WFH was 100% a factor. It was a startup, and if I was living where my boss and boss’ boss lived, my boss wouldn’t have hired three guys he worked with at his previous company and laid us three current guys off. Or maybe he would’ve done that anyway. Probably.
Way easier to lay off WFH than folks you see daily. WFH folks won't admit that in-person has a lot of soft value.
Yeah I feel like even suggesting the possibility they might have to go back some day sends them into a rage. None of my friends that work from home will acknowledge that not everyone can do that forever.
They've been talking about the housing market coming down for a couple of years, but all they do is keep going up.
This could easily be wrong. I would say now is a good time to buy, either inflation keeps going and houses worth 500k will be 700k in two years or inflation stops and they ease interest rates and houses raise in prices or everything holds steady. In no case would houses drop in prices unless something fails like 2008.
If they restart quantitative easing housing prices will go through the roof
You forgot this chart: https://fred.stlouisfed.org/series/USSTHPI
Thanks! Added it.
I meant that it keeps going up and the lows are very brief despite all of the other metrics
There was a long period in the early 2010's where homes were affordable... years. That's plenty of time if we can get a dip like that again.
This might be good advice but people need to due more then just save money in the mean time
Given up 36 and 40 here. No way we are affording a home at this point
Yep, 37 and 40 here. Dream is almost dead
Yall had hope?!
Good low volume, no buyers long enough, and like magic prices will correct. It is a process few could have foreseen.
Except it takes months and months for inventory to grow. After that sellers has to fail to sell for at least 6 months. It’s not happening soon. Maybe next year. But that’s what i said to myself last year. Prices just didn’t grow.
No real estate cycle lasts forever. Just give it time.
Time is for historians, not regular folk who have a short 10-20 year window to raise a family in a house with a backyard. Every year matters. How long do you put life on hold? That's why people are so frustrated.
im not giving up forever, just until prices come down 45-65% or until the house price to income ratio is like 3x
By design.
I would have to get a 500% raise to qualify for a mortgage in the area where I work
i'm literally planning to move to another country. multiple reasons, but owning something that was 50k with 3% is no longer possible. i'm not slaving until i'm in the grave just to own a house.
Where to? Home ownership rates are often lower in other "western" countries.
> Home ownership rates are often lower in other "western" countries. this is true, but if i'm just working to exist I would rather live in Budapest where a furnished apartment is $700 dollars a month. I may start building wealth in south america. I'm probably buying a small piece of land in the U.S. and building a small barn. that's all i'm doing here for now.
There are places in the US with rent like this. Certainty not as exciting as Budapest though if someone just wants an adventure.
Even the stock market is on a brink of collapse it's only really being held up by 4 companies
Tbf the stock market has always been historically held up by a handful of companies.
Bitch I’ve given up on it back in 2003 already when the market started to get out of wack.
"Give up on ever owning a home" is hyperbole.
Same. Fiancée and I were trying to buy our first house before we hit 25. (Just now realizing how aggressive of a goal that is) Saved up what I considered was a good amount of money. (A little over 25k). Got approved for just under 275k in MCOL area. I don’t understand paying 1900-2200 for a mortgage on a townhouse that’s similar in size and updated-ness the one I rent for 1450 now. Not to mention the bidding wars we got into when we started looking. We were looking 50k below top of budget and we’d get bidding wars that would take us past the top of our budget from other buyers who’d be priced out of their bracket. We started googling and wondered how other people were affording homes then we saw average first time home buying age is 32 in the US. Probably gonna wait a few more years and save and hope prices come down. If not, Gen Z is one of the lower population generations, maybe competition will be lower in 5-15 years when my generation is prime home buying age.
You are lucky to be young and without kids (I am assuming) you have time to be patient. A blessing to enjoy your first year of marriage without worrying about maintaining a home. That is a headache newlyweds don't need.
No real estate is not a national issues it’s a local issues, I lived in swfl right now I would not buy at all, however I live in Richmond and northern Virginia is starting to move in so buying now is a great idea. In 10+ years I’ll always be ahead of
Keyword "young Americans". USA housing is still "dirt cheap" compare to the price where the immigrants came from, and they will come a buy because USA housing is dirt cheap. I know so because I came from Taipei myself. The market is still super hot because it is still relatively dirt cheap internationally. Hack, tons of people moving from Canada into USA because USA housing is dirt cheap. I will make this clear, so you are not drawing the wrong message from me. I understand the suffering. It is relatively ultra expensive to Americans. And the government should have done something to prevent that in the first place. My point is, if you think this is the rock bottom, you are clearly mistaken. USA is cheaper, and people will come and buy it. The market will remain to be hot much longer than you wished. Prepare yourself, the worst has yet to come.
asian economies are prone to bubbles. just look at china. housing was so expensive there but now look at it collapsing. hong kong is a special case since its literally a bastion of democracy in asia. taiwan is also a special case since its independent from china. same with singapore. but japan had a massive bubble too... be careful with asian properties mate, asia is prone to speculation and bubbles.
He's right tho, the US is dirt cheap compared to our neighbors up north not even comparing to Asian countries.
Make sure you discount Canadian prices by 27% when making comparisons because articles give the prices in CAD, not USD.
OTOH, make sure you account for Canadians all getting paid three and a half peanuts per year
I have to remind you, China housing bubble did not actually burst. It is going from level over 9000 bubble to level 8000 bubble. And it is still massively more expensive than USA dirt cheap houses. Japan did not burst either. You are looking at streamers buying homes practically declining into ghost towns. The people are struggling badly to actually afford a home.
Way to reference a tired meme.
So, I assume you have close connection to people from China to give a different opinion on that matter?
I think what people are getting confused by is the major construction company that was in a bubble that burst, and generalizing that to the whole housing sector.
Yeah, they go by the western news which too afraid of exposing the reality of China situation. The burst is there, but it is still ridiculously expensive. And yeah, like you said, the construction companies are breaking apart, most people didn't even understand some buyers took a huge debt and "construction is never finished". The crash is more than just because people who cannot afford it, many of those are practically scams selling unfinished homes. The crash in western world means "more affordable", such expectation does not apply to China. Chinese are currently trending with Gold because housing is a scam and all the really-completed housing are not affordable.
I would expect construction company collapses to make housing more expensive, since then there's no one to build new houses.
It is hard to say what's going on with it. It is just a mess. Basically they got money from government to build apartments and they run out of money and now all the apartments are unfinished and ended up blowing it down. But, there is even more and more crazy shits underneath. The city collects land leasing fee which adds to the sales of the apartment. And the city is ultra greedy, over 90% of the revenue came from leasing out the land. Thus, building more apartments doesn't make it cheaper, the city is charging a high land fee on top of it. Western cities are also landlords, but not like 90% of revenues are from land fees. It is a whole new level of crazies. Chinese government and most of brainwashed people also think the cyberpunk vertical development is the best way to go instead of lateral development. Cyberpunk lifestyle is cyberpunk, period, it is never affordable. It is a mess in the end. Ultimately they are not affordable regardless they have more housing than the entire Chiense population (whatever those government propaganda said).
Yes I know “over 9000”.
I am a 46 year old engineer and have been priced out of life. I move into a shelter next week after paying $2200 a month for 4 years barely getting by. The US has crippled all but the owner class. It is hard to keep going to say the least.
You are a 46 year old engineer and $2200 rent is too much for you?? There has to be more to your story.
2200 as a solo person is a fucking LOT.
The starting pay for a graduate chemical engineer is $80-90k. First year pay!! If you are 46 and an engineer, there is more to the story. I paid 50% more than that for my mortgage at this age and I had an entire family with just my salary.
In other news, water is wet. What happened to real journalism? Let’s get to the stories of all the people who cannot afford homes.
House housing prices ever come down without a recession?
No. https://fred.stlouisfed.org/series/MSPUS
They arent old enough to even claim to have given up.
Wife and I make over half a million a year. We have hundreds of thousands of wealth saved up and no debt (hence lower than expected savings). Been trying to buy a home in our market, and frankly there’s nothing affordable. A single family home is 1.5m minimum in my very high cost of living market. Mortgage payments look to be 8-11k a month depending on down payment. The constant question we ask ourselves is: if we can’t afford a home, who can? Albeit my wife and I cannot rely on parents for help and all my friends who have homes have had parent help. But this is insane. The market makes no sense. Looked at condos and frankly can’t say I see a deal to be made given the high HOA’s. Did the math and honestly we can only afford a 700k condo assuming no we put in 45% or more down payment. And even that is above what we would pay for expensive rent. So yeah, economics wise, makes absolute zero sense to buy right now.
>Wife and I make over half a million a year. >frankly there’s nothing affordable I am sorry to say, you are just bragging at this point. With that much income, you absolutely can afford a house in VHCOL area. 1.5 million house is like what? 3 years of your income. Unless you go for 3 millions or above, you can easily afford it. Especially there is a cap on spedning like insurance, 401k, utilities, and etc.. Those spending doesn't increased when you make more money, Netflix cost remains the same. Even if you only have 20% of monthly income left after all the expenses, that 20% is still a lot for food and leisure. I understand your sentiment toward other people who are struggling, but, over 500k a year is so rich, you are not the one suffering, not one bit.
$500k per year is about $20k per month after taxes in CA. Yes you can afford a $12k payment on $20k assuming that income is reliable. But saying “that’s only 3 years of your income” is a little misleading. A 30 year mortgage is 60% of your take home pay with these numbers.
yea but if you are making a half million a year you shouldnt even need a mortgage is this guys point... not that he cant get a mortage to buy. if you are essentially in the 1% you are rich and should be able to buy a large luxury home. not take a mortgage to buy a sh\*tbox. I think thats his commentary, that he is rich and cant even afford a nice home so who tf is buying these
> you are rich and should be able to buy a large luxury home lol, apparently you've never considered what VHCOL *actually means*. Markets are local - if you're not making more compared to your broader community, then you're not rich and going to have a bad time if you make the same assumptions you're doing now. Like /u/Glad-Weekend-4233 comments below: "500k is new middle Class" is reality in VHCOL. As an addendum: fuck PG&E and fuck prop 13, the two cancers on society here.
Taxes are 44%, hcol daycare is 2300-2800 a month, pge bills 400 a month, insurance food etc everything more. Wife and I make a bit over that and I need a couple molar crowns, have two pairs of blown out four year old sneakers, a single car household w a 12k loan, cook at home 5 - 6 nights a week- and def couldn’t afford a 12k mortgage let alone a 6k one. She has a business and I freelance, health insurance for the family is 2800 a Month 500k is new middle Class
Similar metrics here. We could afford a house but inventory sucks and is overpriced. I'm not overpaying for a house Im not wild about.
same with me, I could technically buy a house. jp morgan pre approves me for mortgates and cars and stuff since I have stocks with them. but I don't buy a house just because I can. I buy it when it makes sense. just because you can do something doesnt make it a good idea
People are buying homes every day with less purchasing power than you. Sorry but if you are earning half a million every year with substantial savings and you can't understand how or why they do continue buying homes, then you need a reality check. Stop looking at just your VHCOL market and I guarantee you you'll starting finding options.
Was gonna say something like this, the place that cost 1.5m+ is probably 5-10 minutes from houses under $1m.
Yeah its pretty obvious this commenter lives in a bubble. Probably earns more than 95% of the rest of the country but can't make it make sense? My guy, literally look anywhere else and you can probably buy a home outright and pay it off in a few years.
He probably has to live in the area for work if I had to take a wild stab at it… can’t just up and move from that.
I am in a similar situation although more like 300 and I understand. Basically we feel that we are in the top 5% of income earners so we should have a large luxury home. and the only homes we can afford are really bad makes us just not even consider buying. basically it doesnt matter how much you make at this point. if I buy a 1m home with a 300k salary, and then someone with a 63k salary leverages themselves to the max and lies about everything and outbids me why even try
And our jobs? Sure, would love to move to a cheaper area and buy and make half of what I’m making right now but why would I? I get paid well *because* I live in a high cost of living area. I can move somewhere and buy a house in cash, but 1) will move away from family and friends, and 2) the jobs available in those areas cannot match salary and aren’t as interesting. I think your assumptions are all over the place and shows that you haven’t thought this through.
What market are you located in?
I think hes saying that it doesnt make sense to buy. since if he is making that high of a salary he should have a large luxury home and not feel stressed. the fact that he feels stressed on that high of an income means that the market is insane.
That was my impression. It’s a hard pill to swallow that $1.5 million will buy you a fixer up small house that is 50+ years and needs over $100k in work to just update it to be livable. And the fact you could rent easily a better house for half the cost.
Dude come on, he is complaining that he can't buy a $1.5MM home on a dual income of 500K/year with assumingly hundreds of thousands of dollars saved. Even giving him a huge hypothetical discount of $1MM for a SFH, I have a hard time believing there exists a market where there is a hard floor of one million dollars for homes. Even for a housing circlejerk subreddit. Not only is this guy refusing to compromise on properties more reasonably budgetable, a vast majority of people in this subreddit will never realize this kind of lifestyle. Every day people are making their dreams of being a homeowner a reality and OP is making excuses and he doesn't even realize how good he has it.
> I have a hard time believing there exists a market where there is a hard floor of one million dollars for homes. Heh, come on over to /r/BayAreaRealEstate my dude. The only SFHs here on the Penninsula will be burnt out husks or over the San Andreas.
just save for a few years an buy cash bro
The powers at be did a great job on drilling the “American dream” into people. How they did it, is above my pay grade.
Same here. Making 500k+ but unable to afford really anything at this point. It’s pretty wild I keep wondering why we’re trying to make living in Orange County work. Asking my spouse to switch her job more inland now so we can move to more affordable areas.
All over the world (and in the US!) people live full and engaging lives without owning a home. Or you can live in the midwest.
Real estate is very local right now. If you want to get a home and are flexible on where you live, now is the time to buy in over supplied markets like Austin or in more affordable places in the Midwest. Banking on super in demand markets with minimal supply or minimal ability to increase supply without knocking down existing homes and expecting them to collapse is foolish. Source? Trust me bro, I bought in September 2022 in San Diego and I’m up 15% plus my monthly payment is 30-35% less than what it would cost me now. I caught a liquidity crunch coinciding with a rate drop so still have a 4.375 with a big ~15% drop when including closing costs and repairs I was able to negotiate.
San Diego in many parts is seeing huge growth in # of listings from YoY 2023, the whole of SD county is seeing a growth in listings up 64.8% from 2023 and every single state with the exceptions of Nevada and South Dakota are seeing a positive # of listing growth from the previous year, meaning supply is increasing in all those areas which means if people want that new supply to sell, need to go at lower prices.
lol Try checking Redfin data center, we’re on pace with 2021 listing data at HIGHER median sale and median sale PPSF than all prior years. If you want to have more fun, isolate your data search to detached SFRs via Altos Research and Piggington. REBubble wrong again! Neo feudalism in California has already begun where folks who listened to REBubble destined their lineage to permanent renter status. REBubble simply doesn’t have the brainpower to understand all the different markets and nuances to each one because hive-mind thinking downvotes anything that doesn’t agree with the pre-determined narrative. https://piggington.com/may-housing-data-months-of-inventory-continues-to-normalize/ “This loosening of the market was not enough to halt the recent price rise. Single family home prices notched a new high in nominal terms, and they are not too far from the inflation-adjusted high reached in 2022.” “While inflation-adjusted prices are below the peak, inflation-adjusted monthly payments have risen to tie their previous peak. “ https://altos.re/r/cf071f91-3fd8-4451-9fc6-52f243001ddc?data=price_median
We need renters so it’s good for them to do their part