The 'old American Dream died,' Realtor details salary needed to buy a home, afford a middle class life in 2024
finance.yahoo.com
TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
Where we failed is that $120k was supposed to be a middle-class income when living costs this much. The fact the median is 63k is a sign that all the excess value has been sucked out of the masses and funneled into the coffers of the billionaire class.
100% this. It's not that costs rose as much as it's that salaries didn't increase.
In the late 70s around 23% of US corporate revenues went to pay salaries. By 2012 that had fallen to 7% - in other words, just before neoliberalism really took off almost 1/4 of the money workers spent buying goods from US companies was almost directly back in workers' pockets, whilst by 2012 less that 1/14 of what workers spent buying goods from US companies ended back in workers' pockets.
All that excess money that doesn't get recycled back to workers anymore has got to be pooling somewhere.
Wow, now that's a hell of a statistic! Got a nice reference for it so I can read more?
I read it ages ago when I was still frequenting a certain finance discussion forum (whose name totally evades me now, and I did just try looking up such forums but failed to find it) back in the post 2008 Crash years, hence why the end date in that statistic is 2012.
This is the best I found on the subject. Note that the numbers are quite different from the statistic I quoted since they're not the same thing (it's about labour share of income in the whole Economy, rather than the corporate labour to revenue ratio) but you can see the very same trend I mentioned in this report and what's used there is almost certainly a better statistic to get an overall view of what's going on.
I used to frequent a few finance forums too; maybe I can help. Was it a personal finance/FIRE forum (e.g. bogleheads.org, forum.mrmoneymustache.com, etc.), or some other kind?
Nah, it started as a forum made by an ex-edge fund guy which in the beginning had quite a lot of people over there with a background in Investment Banking like me, but it kept getting more and more american goldbugs and preppers and was eventually swamped by simpleton Libertarian politics.
It's both. If the price of homes aren't reflecting an affordable price, you have to ask, who's buying them? It's not the average family - it's corps sucking up homes as investment assets, driving up prices to sell to each other and the "lucky" family or two that get to empty out their retirement fund just to have a place to live. That's not reflective of a natural, reasonable increase. That's the result of hedge funds destroying the housing market for the rest of us, just to pad their bank accounts.
That may be true in some of the lower priced Midwestern markets, but I sell real estate in Boston and I don't see big corporate interests in the single family or owner occupied 2-3 family market. as much as big corporations have ruined a lot of things in this country, I don't think we Dan just wave our hands and say "corporate buyers" and explain away our housing market problems.
We have a confluence of decades of exclusionary zoning and restrictions on building that make meaningfully adding to the supply of housing almost impossible. We have a huge deficit of qualified workers in the building trades, in part because all the work dried up after the great recession and people left the field and in part because we've pushed more and more kids to go to college. We have a mortgage system that's nearly unique worldwide that allows homeowners tremendous advantages in keeping their housing costs low, but inversely provides tremendous disadvantages to having them move around more often and free up housing stock (so lots of aging singles and couples in big houses better suited for young people with kids). We have a society that's bizarrely fixated on single family living even though we desperately need more density in most markets. And we have the problem of wage stagnation. None of those things are directly attributable to corporate ownership of large numbers of houses.
I'd love for there to be some silver bullet where we could just say "disincentivize corporations from owning small housing stock" and solve the problem, but it's nowhere near that simple.
You're right, it's more complicated than just blaming corps, and I don't want to imply an issue this complicated could be completely solved with one change. They're definitely exacerbating the issues we already have, though, and dealing with them could only help.
The link gives great context to the article. Thank you.
The problem is you need to be a couple to have a house.
In the 80s and even 90s the mother of the house probably didn't work. I know mine didn't. Now they have to. The prices have gone up to match this "new normal" because there simply aren't enough houses. Or at least not enough houses in the places people want to live.
The free markets have settled on the idea that a house should cost two incomes. The government needs to step in to build affordable homes and get them into the right hands. No landlords scoffing them all up.
I honestly don't even know why this upsets me so much. I am 50 and all set. I don't have children and barely any debt. I never considered myself particularly patriotic but somehow this whole thing gets under my skin. I guess it sours my achievements and fruits of decades of struggle (it took three generations of planning and hustle to get us out of poverty). It's like being a kid having a birthday party at Chuck E Cheese by yourself while all your friends are locked outside and you can see them through the glass windows.
Because you have empathy for others, it's a good thing.
I agree. Something I wish we saw more of.
Something foreign to MAGAts
It gets under my skin because the west was on the right trajectory; improving wealth equality, quality of life, work life balance, etc — Then Capitalists killed all those gains using Conservatism, Neoliberalism, and a bastardised version of Libertarianism — just to enrich a tiny percentage the human population and return the rest of humanity to feudalism.
Why should they own all the gains from humanities collective efforts, when all of us have a rightful claim to a share of those gains?
In the early 1900s we had huge fights for labor. Strikes yes, but also some literal armed fights.
We won a lot. They conceded a lot.
But they've eroded those wins, little by little, for a century or so.
This is what will ALWAYS happen when you live in a system explicitly designed to extract profit from workers and reward greed. It cannot be reformed. It cannot be controlled. It will always slide backwards into this. We need a different system altogether.
Yup, we could be creating an amazing life for more people - and damaging the environment less while we are at it; but instead "we" keep doubling down in the other direction
A lot of the west is still on the right trajectory. It's the US that is not.
There are a lot of developed countries, especially in Europe, where the "American Dream" is much easier to attain than in America. But, more often than not, they don't even want that dream. For good reason.
Because you're not an awful person trying to pull the ladder up while saying "fuck you I got mine"
I'm in a similar boat, except in my early 40's.
My parents are in their 80's and working for DoorDash. They are lucky they at least paid off their home, because they didn't save enough and this country is sucking every penny it can get from them.
I bought a condo that I love, have almost all my debt paid off, and am saving for what I hope will be an early retirement. It breaks my heart to see people struggling everywhere, and if I had Elon Musk money, I wouldn't be blowing it on a vanity space program.
I'm so glad my Dad, also in his 80s, programs COBOL. My parents have owned their home since 86, but I'm sure that without the random COBOL job they'd have to do door dash or something as well.
Here's what happened in a nutshell.
Lyndon Johnson had great plans for the US, but wanted to win the Vietnam War with one huge push. That quickly turned into a giant quagmire. LBJ and later Nixon, ordered bombing of the North. That meant the US factories were working 24/7. Nice for factory owners and union workers, but LBJ was paying for it with paper money because he didn't want to raise taxes. Ironically, Nixon ran for President as an anti inflation and pro peace candidate.
Nixon and Kissinger doubled down on the bombing and inflation started to spiral. Also, those factories were getting a bit worn down. Unable to met the deamnd for the bombing and supply foreign markets the US ceded local steel making to Germany and Japan. This is going to bite the US in the ass when the Arab Oil boycott hits. US steel is much more oil dependant than the newer factories, so suddenly Toyotas and VWs are the hot cars, and US manufacturing takes a huge hit.
Carter tried to control inflation and cut oil use, but got kicked out over the Iran hostage mess. Reagan came in and cut taxes for the rich. This increased the debt, but gave the economy an unrealistic jolt.
tl dr. In 1960, minimum wage was $1.00/hour. The average house was $11,000.00 and $1 million was considered a vast fortune.* Middle class meant a High School graduate with a Union job supporting a family of four.
By the time Nixon, Reagan and Bush Sr were done, 'middle class' was two college degrees supporting the house and $1 million was what a rich guy paid for a party.
The massive difference in the purchasing power of what the Official Inflation Figures tell us - when we used them to adjust an amount of money at a past date for inflation over the years and get a supposedly equivalent present day amount - is the same salary now as in 1960, shows just how fake Official Inflation Figures are.
The reason for Official Inflation Figures being so much bullshit and always on the understating inflation side, is because the lower the Inflation used in calculating the Official GDP figures, the higher that latter figure gets.
All that talk of GDP Growth in the last few decades is the product of some very consistent (and hence likely purposeful) understating of the Inflation so that the Maths used to produce the Real (i.e. Official) GDP output a higher number hence politician can proudly declare GDP is growing strongly.
As Mark Twain once said,
There are lies and there are big damned lies, and then there are statistics!
I recently learned that Johnson's "Great Society" plan was partially a continuation of Kennedy's "New Frontiers" plan (which he wasn't very successful in pushing through Congress before he was assassinated).
LBJ is probably the most WTF President of the 20th Century. He pushed the Civil Rights Act, and created the Vietnam fiasco.
I like this story. Someone who worked for Kennedy and Johnson put it this way; if JFK came into your office and saw you reading he'd assume you were working. If LBJ saw you reading a book he'd think you were goofing off.
If we hadn't had Wilson we wouldn't have had Hitler, or Stalin. We may not have had Nixon and Reagan.....
$1 million today is still a vast fortune to most people tbh
I think most people would see the gulf between owning one moderately nice house and a small business [$1 million in 2024] and owning an estate with several acres and some horses, a half dozen cars, and enough in the savings account to keep a few families going. [$1 million in 1960]
https://www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_SFH502Direct.pdf
the federal government will loan you the money for the house at below market rates, and if their rate is still too expensive, they can give you a deferment.
my effective interest rate today is 1%.
please take money from the federal government.
fuck the banks.
Lots of sellers will prefer cash or regular loans so your application is very likely to be last in line. Plus the applications are much, much more complicated and mortgage applications are already a bitch. But then it's usually a once in a lifetime experience and may be the only option for a lot of people do this is more of a heads up than an attempt to discourage anyone from applying.
we lost 4 bids and saw almost 2 dozen houses before finding a winner
Cash I understand, but what's the reasoning behind sellers preferring regular loans instead?
USDA isn't gonna buy a fixer upper. they want people to have safe housing. this might mean the seller is going to need to fix the problems
for us, we liked that, but it did mean we lost our on a couple bids. which was good: we found a real jewel.
In a hot market/location this will never happen. Even with a regular loan there's a bidding war on houses with obvious issues.
i live in a hot market. i got one. it was a slog, but it happened.
edit: we were approved in november. we put in multiple offers and had to periodically get re-approved by the usda, but we had an offer accepted mid march and closed in april.
for a brief period, we kept the "apartment in the city" for a month and moved one sub-compact car worth of belongings across town every night. not really relevant, but i'm going to remember fondly the brief time that we kept an apartment in the city, because that shit is never gonna happen again for poor schlubs like us.
Yeah, sellers (flippers really) are asking 70-80k over the value of the house, and they want no-inspection, as is, and you need to bring cash to the closing to cover appraisal gap, which is usually in the 60-100k range.
We need to start taxing unoccupied single-family home at their list price. There is no incentive to sell at a reasonable price.
I haven't been in the market for nearly a decade. This seems pants-on-head crazy to me.
All I can hope for is that when the market inevitably collapses again (let's face it, this is not sustainable) all these assholes hit rock bottom and the government FINES them instead of bailing them out.
Isn't what's been happening that corporations buy them for cash they have on hand and now they're all rentals? It'd have to crash pretty hard to push those guys out I think. [pure speculation by me]
Oh ok makes sense.
This. The inspection and repair criteria are higher than for private lending. We sold our house to someone using this program and had to fix stuff that we didn't need fixed when we bought the house. It wasn't a huge deal but it did add a week to the process to get it fixed and reinspected.
"applicants must be without decent, safe, and sanitary housing" is that a hard stop or is there some flexibility on that condition? im not trying to pry into your previous situation, but that makes it sound a bit more dire than the average renter.
i had a lease on an apartment when the process started.
edit: honestly if the requirement were that you were homeless or next to it,i don't think anyone would ever apply for this program. the first application is daunting, and then there is the matter of actually shopping for a house.
ah, good to know. thanks for the tip!
Saved bro i need to marry a real welfare qween
Humans can't marry corporations.
fair warning: my application packet was around 100 pages
Why tho, republicans are fucking horrible people.
Yeah, no. It was more than a few years ago.
I think that this has been trouble since 2007. Financial institutions went from giving lots of home loans to only giving corporations and the elite loans.
2007 was 4 years ago.
I don't have a full Orlando market research report but pre-pandemic (2018) you could get a house in my neighborhood (Davenport) for $265k-325k. In 2024 the starting price is ~$650k. In 2018 I bought a house (Orlando) for my aunt to live in for $150k. After buying the little bungalow, I saw the rest of that neighbohood get gobbled up by investment funds and now it is almost completely rentals. The current comps have it at $325k.
Homes were dirt cheap from 2009 until about 2013, but everyone was broke. Prices were reasonable from 2014 to maybe 2018 (maybe). The post lockdown boom and investment fund buying spree has been insane.
This happened because people were lulled into voting for the very people who gave their fair share of corporate profits to the rich. Looking at you, Republicans, especially Ronald Reagan.
You can argue that Democrats inability to support the working class and unions helped to kill the American dream. “Both sides” are capitalists.
Hell, Clinton essentially adapted Reaganism for the Democratic Party.
I didn’t expect upvotes. It’s an election year for christ sakes.
At least on lemmy, more people understand dems v repubs isn't left v right, it's mid right v far right.
Don't blame me I voted for Kodos
Lemmy is a leftist haven
And they'll do it again.
dude ronald regan gave my family papers my cousins are named ronald and ronny
i am a communist too. sometimes bad people do good things
Poor tax laws on the richest 1% killed the American Dream.
Sufficient application of guillotines will restore it.
wow thats archaic we use the Puyi method now dude
death by kidney disease?
Capitalism did that too. Capitalism is in a constant state of decline with short upward bursts of innovation that too will decline. Enshittification infects all.
My wife and I manage it because we both work.
I didn’t intend on marriage as a way to own a home but I couldn’t do it without my partner.
A friend was looking at getting a home lately and I offered to look into co-signing with them, so we gave our information to see what they would qualify for. With both of our details, they offered them a home loan of something like $100k, really not even enough to get anything that's on the market now except for the worst crack houses possible. I then looked at what would be possible if I just applied by myself and if I applied for a home loan for a place that I would rent out. Not sure if it was considered a business loan, but I wouldn't be the occupant, it would be an investment property for me. Suddenly, by myself, I qualified for a $300k loan, same loan agency, just different terms. I do have great credit, so maybe that helped, it's just weird how they come up with the numbers sometimes. Like you would think two people together would qualify for more than what a single person would qualify for.
What happened is that the other person apparently has absolutely terrible credit, so holy hell don't cosign with him!
I mean, operated as an investment property they have near certainty you will have a stable income source (the tenant) so it makes sense that the loan value is higher. You're guaranteed to have the income of the rent checks and just as likely all your other potential income on top of that. You actually can afford higher mortgage payments in that situation -- and substantially so.
Which is a strong, strong, strong argument why all cities which have housing shortages (basically all cities) should be exercising policies that discourage non-owner-occupied properties.
It's a risk assessment. A low score as a primary borrower is more risky, even with a secondary borrower, the hassle to get paid if the first defaults isn't worth it. Investment vs primary residence is also a different risk profile, you can assume some level of income from an investment property.
Don't cosign anything for a friend, ever. It will screw up your friendship.
What's to prevent someone from buying a house this way and then just "renting it" from themselves? lol
You're not renting it from yourself. You happen to be renting from a corporation that you happen to be sole director of. Gotta emulate what the rich do.
If you buy a house declared as investment, but you really intended to live there, it's mortgage fraud.
Generally, mortgages for your primary residence offer more favorable terms then ones for investment properties. The issue in the above story is likely related to the friend. If they had tried the same thing, their offer would likely have been even worse than what they got for a primary residence with a cosigner. Assuming they got an offer at all.
Maybe in the middle of nowhere America. Meanwhile my wife and I make well above that in Los Angeles and we can't afford the monthly on a two bedroom house in a sketchy neighborhood.
SF Bay Area, $125k a year, I gave up on buying a house. I'll just inherit my parents' when they die, thanks.
Most people's parents will end up selling their home to pay for cruise ships, and or palliative care.
Shhh, don't take this away from me
Which will be bought in cash above asking by capital funds exclusively for rental purposes.
So why do people live there?
All I ever heard is how absurd the cost of living is in Cali, is the weather really that good?
Being born there, living your entire life there, your whole family and all your friends are there, you went to high school and college there so it's easier to transfer to a CSU for grad school, and cheaper because you won't have to pay non-resident fees, etc etc. The same reason people don't move from other places. Besides, it takes a lot of savings to move, especially out of state, especially when you have to keep going back and forth to look at places. There's also just not wanting to move. I am really not ok with being forced out of my home and away from my family because of bullshit like this.
And yes the weather really is that good - in Southern California.
It never rains in Southern California.
Makes sense. I certainly wouldn't want to move because of greedy BS either.
I guess the trade off is higher costs for everything.
I'm sorry, you think people that can't afford a basic living situation in California are able to up and move their entire lives that easily? Do you have any idea how much that costs?
People making 120k a year can... I also live in socal area and make less than that
Well, it sounds like basic living there is way higher than anywhere else, so maybe?
If you already live in a place that is difficult for you to afford, how are you supposed to be able to afford moving to a different state? You're having trouble paying rent/mortgage, but you're still able to save a few grand to move your whole life across state lines? What about changes in your income due to the change of state?
There are so many more factors than "you make x, this place costs y, so move dipshit."
Yeah, I get it..I know it doesn't come through a simple text question, but I wasn't born yesterday 😉
I wasn't really asking from the standpoint of every single person's circumstances from the well off to the impoverished. It was more of what would you do if there was choice.
I know people who were behind on rent, scraped enough gas money to just drive ina direction and found themselves somewhere they could make under the table money to get started in another place.
That's a hard and scary thing to do. If you have a family, almost impossible unless you're on the edge.
Good thing investment "firms" are buying up all the rental properties, right, guys? Neofeudalism for the win!
But you can buy a microshare of the fund through Robinhood, so it all works out. Right?
Just a reminder that high prices are a markets signal to build more.
Let people build housing, is it too much to ask for?
All the housing in the world won't matter if the same 10 people are buying everything up. Supply isn't our problem.
Op is saying it's a problem of supply not meeting demand
You're saying that supply can't meet demand if the rich have infinite demand
These aren't exactly incompatible. I haven't seen good evidence that demand from the wealthy explains the massive increase in housing cost, but you can both build more housing to increase supply and try to limit the wealthy buying too much housing. They're not incompatible
That makes no senes. We can literally build as much as we want.
It's literally illegal to build more in most places. Go read the zoning code.
I know... let us build!!!!
Or maybe part of the reason the prices are so high is that the price of building is also high with labor and materials cost increases?
Or maybe there is also a shortage of affordable, well placed, viable, empty lots to build on?
In San Francisco, probably the most economically productive city in the US, the government adds over $200k to the cost of each house with just permitting process.
Yikes, yeah that's another barrier to building that I didn't even think of. I can see what you meant by "let us" build more.
Just another example of how building isn't viable or affordable for everyone. My parents made the decision to build, but they also got the land long ago when the lot was cheap, and they did a large chunk of the work themselves including framing, wood floors, trim, doors, etc.
its a land problem. if you gave every homeless man half an acre yes they would literally just do that. however land has property tax and bums never open letters
so a simple micro acre tax free law would probably solve homelessness. it would have to be someplace like alaska or arklaska. of course these would be called concentratation camps by the far right but its a two bird solution. alaska could easily fit 50 million people
would you sign up for the free half acre in north alaska?
Arklaska?
Texas and california could easily fit an extra 50 million people. They're both massive.
This is what happens when most people think the disparity in wealth should grow.
It does.
Mr Realtor can blame his own industry for a good portion of the problem.
Blame SFR
What is SFR?
Single Family Real Estate. It is buying single family homes as an investment.
If you want the results of the American dream the only way to do so is crime. Probably always been true, but boy is it truer than ever now.
I achieved the American dream by leaving America.
dont glamorize it man criminals get gulag /supermax
That or they get elected/promoted.
I can technically afford my house and acre on my wife and mys income
Doesn't mean I'm not currently planning and setting up my network of legit customers of shitake and no other mushrooms to help make sure I can survive, no sir
inflation has hit ALL industries
Yeah, back in my day. A simple theft only got you a few days in jail. With inflation, we're looking months now for the same crime.
Shakes head
transportation costs, suppliers, loss prevention is not 100%, insurances, food, lower customer base due to inflation/ cheaper lower quality alternatives (goes hand in hand), office supplies/ services, etcetera
inflation has hit everyone even in the shady areas
No, it really was true for a long time (as long as you weren't a minority). Wealth disparity has skyrocketed in the last few decades. It's why boomers can't grasp that people just can't afford to live--in their day, anyone who couldn't afford to live was just plain lazy*.
*Wasn't true, but that's a whole other thing.
It wasn't perfect but there was dignity to being an American 24 years ago. Inequality is not helping anything at all
It’s scary how everything seemed to change so fast, yet the ingredients for this very situation have been simmering for some time. It’s no coincidence that since student loans ballooned it didn’t take much for the dominoes to really begin to fall and have drastic effects on everything else downstream.
At least part of the equation is that Trump pressuring the Fed to lower rates (that were already historically low in the first place) to add even more fuel to what already was an overheated market prior to COVID completely wrecked the housing market for the foreseeable future.
I bought in 2020 and I'm glad I did because if I hadn't I would've likely been permanently priced out.
Yeah, I bought a couple years before and I’m glad I did, but it’s really sad to think of everyone who couldn’t or didn’t for whatever reason.
Everything is so messed up now and the uncertainty will probably continue for awhile.
Yet disability pays $11k a YEAR that'sthe same as $5.42/hour.
The US government would rather disabled people just not exist. From their perspective, nobody on disability creates shareholder value, therefore you are subhuman. And non-disabled humans to them are cattle.
If we have more than $2k in assets, a number that hasn't changed since 1974, we lose our food and Medical on SSI, too.. it's ridiculous
Note that the source of this opinion piece is TikTok. The salary needed for a middle class existence varies wildly from city to city.
The source is an Orlando area Realtor who happens to have a TikTok.
A local realtor doesn't have the qualifications to make broad claims about income or affordability for the entire nation.
I'm in Salt Lake City, for example, and a recent article has the necessary salary to afford a home around $140,000/year. I moved here in part because it was a much cheaper alternative to D.C. and the minimum salary to own a home is still $140,000.
This is one of the problems caused by zoning laws in the United States, rather than move to a more productive city full of opportunities, you were forced to move to a less productive city because DC has artificially caused housing to be expensive.
People are moving for affordability rather than economic opportunities.
I also have a (likely unpopular) opinion that this is not something that you should do. I read the CNN money articles, and I did one of these moves. What I found is that while the price of living may be less (a difference that is increasingly becoming marginal as more move to "cheap" areas), lost earnings can sometimes eat up more than the difference in the cost of living.
In simpler words, yes, it's the case that you can live a bit better in a "cheap area" on the same dollar amount, however, high COL regions often also offer higher salaries. So you might be able to get a steak for the price of a burger in a big city, but in some cases you're going to miss out on 30-50k of salary per year....so...maybe not the best move.
I also share this view, but unfortunately a lot of people are still moving bc of "affordability"
I'd rather live in a LCOL city than ever have a shoebox in NYC again
I'd rather NYC remove their famously restrictive building code, and live in a nice affordable apartment in NYC and the economic opportunities it provides.
The DC mess is entirely on the mayor and city council allowing developers to run rampant and price the average homebuyer (who have fucking high five to mid six figure salaries) out of the market. It's unreal and while people try to claim the recent crime wave is bad parenting, the fact that no one can afford a house is a major part of it. Doesn't help that property taxes can jump by 17-40% per year whenever some developer sells a house in your neighborhood for 2.5x what they bought it.
This is where I like owning property in California. Prop 13 goes a little too far, but it prevents you from being yuppyed out of your house and having your taxes jacked up because a hipster decided to start flipping houses in your neighborhood.
For those that don't know, this is what prop 13 does (https://en.wikipedia.org/wiki/1978_California_Proposition_13):
EDIT: Until the last sentence I'm pretty with them. Why push grandma out of her house? But it shouldn't necessarily apply to commercial real estate and corporate owned crap.
Ironically Prop 13 is one of the reasons California housing market is such a mess right now.
Yeah it's a double edged sword. It also perpetuates suburban sprawl because schools are usually funded through property taxes (which, why? But ok) older areas of cities tend to have crappier schools because the taxes remain low. In order to get around this they build new municipalities that will allow additional taxes, and then you've got another suburb in a fire risk area with a better school that'll attract families.
LOL, no. The mess -- in DC and every other major American city -- is entirely on the zoning code not allowing developers to run rampant enough, and instead enshrining single-family houses even when demand warrants multifamily.
DC is rapidly converting affordable homes into multifamily luxury units. Developers running rampant jacked up costs citywide.
Also, the city is less than 10 square miles and built on a swamp. Just based on infrastructure it can only handle so many people before it runs into serious issues.
No, you just fail to realize that prices would've been jacked up even higher if developers weren't increasing the housing supply.
How? Most individuals wouldn't sell their house for double unless the demand is there because they can't really afford to let the property sit while they're trying to buy a new place. The developers buy the properties before they hit the market for more than asking, split the property, make minor improvements, sometimes make things worse, then crank up the price. Meanwhile, there was definitely someone who was willing to buy at the seller's original price, they just never got the chance.
Okay, it sounds like there's a misunderstanding. You're talking about house flippers, while I'm talking about razing single-family houses to build apartment buildings in their place.
Yeah we're likely talking past each other a bit. Also, unlike most cities where multiunit buildings will include 3 br or more units, DC just doesn't. It's entirely possible to have kids and live in a condo or commie block style housing, a lot of the world does it. But all those places also account for the fact that needs change and sometimes people need more space. Removing 3 br units from the market decreases housing supply and increases the rental supply. Basically the city is turning into a renter's market because, unsurprisingly, no one wants to buy half a house for double the price. So rental companies will come in and buy those two unit buildings to convert into rental properties and in the process remove supply. It's a very fucked up system.
Fun fact: in a lot of places, 3+ bedroom apartments are rare mostly because of excessive minimum parking requirements (e.g. "1 space per bedroom") that will never get used, but makes them uneconomical to build.
Ironically DC needs more developers. It's one of the most economically productive areas of our country. The opportunities to improve your life are endless there. People shouldn't be blocked from pursuing a better life because someone person doesn't want to live next to a duplex on someone else's property
Okay but the developers exclusively flip affordable properties into luxury properties. Middle income housing is rapidly disappearing, the average 3 br costs like $800k to $1MM. The big new thing is buying a single family rowhome that would fit a family of 4-6 (or more) and turning it into a 2-unit condo with an HOA where each unit is only a 2 br and charging double or more what they bought the house for (buy the house for $850k, now trying to sell each unit at $890k). It's absurd, unsustainable, displaces the local population, and ironically decreases the number of people that could have lived on the property.
This only exists because local government has made it so hard to build housing. This is the outcome when you limit supply.
Think about what would happen if there were artificial government limits on the amount of shoes that could be made. Only luxury shoes would be produced.
Maybe elsewhere but not in DC, the city government has courted developers hard since before the pandemic. There are legal building restrictions because of the large number of historic properties but that doesn't explain why costs are skyrocketing as supply increases. The answer is the supply that's increasing is not the 3-5 br that people need when they hit their 30s and 40s. You can have a ton of studios but that doesn't really help a 3 person family. Likewise you can have 3 br condos for $1.2MM and still not help the average buyer.
They're still not building enough, unfortunately. The largest generation of Americans has entered the housing market. Building 13,000 houses a year just isn't very mcuh after decades of restriction and shortages.
There are some pockets of affordability out there.
The map in this article is nice (though you have to scroll through some annoying stuff to get there):
https://www.cnn.com/interactive/2023/06/homes/housing-market-prices-affordability-dg/
I would guess those would be the areas of next major population influx as people continue to flee high cost of living in other areas. Climate change making much of the west and southeast more unattractive in the long run too. While the more affordable areas are still relatively cheap compared to the rest of the country, most of them have already been seeing large spikes in housing prices too. We need some major policy changes to encourage cheap and higher density housing, better use of land in general, can't just keep building only single family homes in low density areas sprawling out forever.
Doesn't help that corporations own 27% of single family homes.
This is ludicrously false.
The statistic you're trying to say is that about 25% of homes sold in recent months have been bought by investors, which is a very different thing from saying that nearly one-fourth of all single family homes are owned by investors, which falls apart the moment you actually go outside and talk to people, since, for starters, about 65% of Americans own their home.
https://www.census.gov/housing/hvs/current/index.html
65% + 25% = 90%. Doesn't seem "ludicrously false" by that assertion; I wouldn't be surprised if the remaining 10% accounted for all individual landlords.
Not all homes are for sale every year. The vast majority are not.
If Wall Street buys 30% of all homes for sale this year, that does not mean that they now own 30% of all homes that exist, only 30% of those that happened to go on sale this year.
To answer the proximate question, about 70% of rental properties are owned by individuals.
https://www.pewresearch.org/short-reads/2021/08/02/as-national-eviction-ban-expires-a-look-at-who-rents-and-who-owns-in-the-u-s/
Okay, so we'd expect about 10% of single family homes to be owned by corporations.
Your source is a bit outdated. Here
Corporations have their families to think of
Is that 120k for each, or total household?
That 120k a year is still assuming you buy a house on a long term mortgage.
It even says 120k to qualify, not actually comfortably buy.
also out in the Boonies
Lol I was making nearly twice that before a layoff and still couldn't afford a condo that amounts to half or one third of a house in the neighborhood I live in.
You were making 240k and couldn't afford a condo?
210k.
Condos in my area, part of Greater Boston, are going for $1.1mil at least, usually more in the $1.4mil range.
Even if I could somehow scrounge together 20% down that's monthly payments of over $7k at today's interest rates. After taxes 210 is more like 126, which is monthly a little over $10k. If I'm not saving anything for retirement and basically barely holding together the rest of my expenses and hoping to God nothing happens to my car, my body, my dog, my cat, or the condo, then I could afford the monthly payments.
Now imagine if I had jumped into that situation and then gotten laid off, like I was.
EDIT: it's worth clarifying that in big cities, the points talked about in this article are still true, just scaled up. Adults in their late 20s/early 30s working in tech are easily making 150k+. College grads in Computer Science are getting 6 figures easily. Making $200k was the high end of average but nothing unheard of.
And the prices here adjust to that, happily.
I will repeat this here:
While there are a lot of factors, you really cannot understate the size of the homes being built in the US. We are building homes nearly 3x the size (despite cost per square foot only going up slightly), and pretending it has no effect on housing costs. It's actually pretty insane.
You guys really do build giant soulless houses in empty suburbs and think that living in an apartment is a crime against humanity
I would love to live in apartment if every one I ever lived in didn't have neighbors blasting their music at 3am.
Because living surrounded by lifeless cement is crime against humanity. People need home, not voluntary prisons.
Average suburbanite before he goes on a 6 hour trip to the grocery store
You can have houses without sprawl.
Both apartments and houses have their merit, both can exist as a viable shelter that fulfills people’s needs. We don’t need to argue over which things corporations and greed took from us is better.
Kill zoning and get lower prices.
It died along time ago with the dreamer.
I bought a house while making $40k/yr.
Grats
Gingerbread doesn't count
What year though?
In Detroit?
Every fucking time with this shit.
The average price isn't the price of a starter home, why do people fall for this clickbait.
That's like trying to use the average price if a car as your starting point for how much you need to make to buy your first car.
Which means about the halfway point between a 1k beater and a fucking 200k rolls royces is what you are pretending a starter car is.
"Oh man the average price if a car is like 80k no one can afford to buy a car"
People are so stupid about this. You can get homes for like 200k to 250k in most major cities, that aren't prime locations but 100% liveable and not a total dump, just need some work. That's not even bottom of the barrel, you can go way cheaper if you want a total dump.
Everytime you see click bait like this, step one is Ctrl+F for the word "average" and you'll find it everytime.
I shared this article because I have first hand knowledge of the Orlando market. Can you find homes in the 200-250k range? Yes. Should you live there? I wouldn't recommend it. The minimum for a starter home in a relatively safe neighborhood is about ~300k and it probably needs work. Also, if you read the article, home prices aren't the only pressure pushing the salary requirements up. That said, you have the right to believe what you want but as someone who recently purchased a home in the area, I think the author was fairly dead on.
He's catching downvotes like crazy, but he's 100% correct that average is a poor statistic for comparing things like home price and salaries. More specifically, average is typically used as a shorthand for "mean", when what's really useful is the median.
Median home price (or median salary) for that matter, will much more closely reflect what the typical person is paying for a house, while mean is going to be skewed by the long tail of expensive prices.
And also to back up Pixxelkick, that single number still doesn't accurately reflect the situation for first-time home buyers, which is the demographic these articles tend to focus on when bemoaning high home prices.
So it's not like anyone's saying home prices aren't going up, and there aren't problems with that, but it does get really annoying to see these articles CONSTANTLY peppered with misleading or irrelevant statistics by authors who either don't know what they mean, or worse are exaggerating to drive clicks.
I think he is catching flack for dismissing the article and making statements without a split second worth of research just because he doesn't like the use of the word "average". Below are all the "homes" in Orlando for $200k or less. Going up to $250k doesn't make it much better.
The 2 "houses" in the second image being listed for 200k are fucking insane.
Those two "houses" are almost $50k more than what I paid for a fully remodeled home for my aunt right before the pandemic. They are also in a significantly worse neighborhood.
Yes but why on earth would you want to live in a crap house in Orlando for that price? There are way more affordable locations and Orlando is pure swamp ass.
Way to try and skew the results, took me 5s to find these on page 1 by just clicking to filter off foreclosures.
SMH, all these look just fine to live in, they are a bit old but the inside pics look quite well maintained and cozy.
I am not skewing the results. You have just decided that you are right even though you don't have enough information to back up your claims. Remember when I typed this?
Of the four houses you listed, I recognize three of the street names and the third is in Ocala. Unless things have drastically changed since 2019, and they might have, you might want to be extra vigilant about your safety. Investment funds have been buying and flipping houses in some of the most crime riddled neighborhoods. So basically, you are spending $250k and betting that they neighborhood will turn around. It might, but it might not.
For context, those houses were well under $100k in 2015. Let us use one of the homes you listed (739 Eldridge St, Orlando, FL 32803) as an example. If you had just scrolled down you would have seen the valuation history.
It is OK to admit to be wrong and accept points of view from people that have more information and context than you. It is a great way to learn and expand your world view.
That's nearly ten years ago mate, lol
You are being purposefully daft and you're just embarrassing at this point. Look at 2020, or just wrap yourself in your warm blanket of ignorance. It's your life.
Do you think starter homes didn't go up? Talk about having your head in the sand. Open a real estate website, the average person can't afford what they used too, it's that simple.
Yup, leave it to Fox Business to convey skewed information in a manner that elicits engagement through enragement
This isn't just fox, this is every single media outlet and tik tok influencer and YouTube preacher everywhere, it's a constant falsehood.