Author Topic: Where was housing "affordable" in 2023?  (Read 2934 times)

halfling

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Where was housing "affordable" in 2023?
« on: January 16, 2024, 09:09:38 PM »
TLDR: Detroit, Akron, and Not California.

Free article link.

Quote
The year ended disappointingly for many American home buyers — fewer than 16 percent of homes for sale in 2023 were affordable to local median earners, according to a study by Redfin. That’s the lowest rate since at least 2013, the year Redfin began tracking prices, when 50 percent of homes were affordable to local median earners. In 2019, before the pandemic, 40 percent of listed homes were affordable. In 2022, only 21 percent were.

For the study, researchers defined “affordability” as housing that costs no more than 30 percent of income. They assumed a relatively low down payment of 5 percent, a 30-year-fixed-rate mortgage with the interest rate current to the month the home entered the market, plus homeowners insurance and private mortgage insurance. Prices and incomes in the 97 most populous U.S. metro areas were examined for the study.

I don't really have a "so what?" for you all, just wanted to share. In some ways it is comforting to know that there is a severe trend and not just "hysteria" among would-be first time homebuyers like me, as I have seen some online deride. My own city had about a 45% decline in "affordable" listings from 2022 to 2023 per Redfin. I am just grateful that I can even still be realistically thinking about trying to buy on my own local income, and pretty ambivalent at this point as to how things will shake out, after three years of worrying.

From the Redfin source article:


For some levity, here's the one nice NYT comment I found:
Quote
The takeaway from frustrated potential homebuyers should be this:

Consider moving to Pittsburgh, where you can purchase an affordable home.

Once  a Yinzer, you can then root for the Black & Gold sports teams (Steelers, Pirates, Penguins), enjoy a burgeoning food scene, attend touring Broadway shows & big-name concerts (yes, Taylor came to the 'burgh), enjoy a world-class symphony orchestra, regularly visit the many museums (such as The Warhol), and be just an hour or so drive from the some of the country's most scenic locales (e.g., Fallingwater in the Laurel Highlands, Ohiopyle, Deepcreek, Allegheny National Forest)

The only downside is you'll have to acquire a taste for fries in your sandwiches!

FINate

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Re: Where was housing "affordable" in 2023?
« Reply #1 on: January 16, 2024, 09:48:29 PM »
Thanks for sharing.

I find it interesting that multiple commenters latched on to it being climate related. As in, move to a place with cold winters for affordable housing. Yet my city (Boise), along with Salt Lake City and Colorado Springs, are on the naughty list despite having cold winters.

What really stands out to me: All the unaffordable cities, except Miami, are in the west. Whereas all the affordable cities are in the east.

My sense is that eastern cities are better about urban planning, multi-family housing, public transit, stuff like that. And they have less of a NIMBY problem. But I don't have data to back this up, so just wild speculation on my part.

Log

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Re: Where was housing "affordable" in 2023?
« Reply #2 on: January 16, 2024, 11:10:51 PM »
Thanks for sharing.

I find it interesting that multiple commenters latched on to it being climate related. As in, move to a place with cold winters for affordable housing. Yet my city (Boise), along with Salt Lake City and Colorado Springs, are on the naughty list despite having cold winters.

What really stands out to me: All the unaffordable cities, except Miami, are in the west. Whereas all the affordable cities are in the east.

My sense is that eastern cities are better about urban planning, multi-family housing, public transit, stuff like that. And they have less of a NIMBY problem. But I don't have data to back this up, so just wild speculation on my part.

After wages, weather is the second strongest correlate with housing costs. That alone explains the bias towards western states - the west has a nicer climate, and their metric for affordability is already taking area wages into account. Many of the western cities you mention still have nicer-than-average climates for the US, even if they're not California-nice. A shorter snowy season is nicer than a longer one, and dry summers are way better than muggy summers.

Housing production definitely matters, but it's hard to make any categorical statements about east vs west. There's plenty of NIMBYism on the east coast too, and there's a huge difference between rural New England, the old northeast metros, and the southern sprawl cities. Housing prices can be kept down, to an extent, with endless exurban greenfield development. That's pretty terrible urban planning, but it does help keep housing affordable for as long as you still have land to develop.

GilesMM

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Re: Where was housing "affordable" in 2023?
« Reply #3 on: January 17, 2024, 04:43:56 AM »

After wages, weather is the second strongest correlate with housing costs. That alone explains the bias towards western states - the west has a nicer climate, and their metric for affordability is already taking area wages into account. Many of the western cities you mention still have nicer-than-average climates for the US, even if they're not California-nice. A shorter snowy season is nicer than a longer one, and dry summers are way better than muggy summers.

....


I'm not sure several dry months of PNW increasing fire danger followed 8 months of near freezing drizzle, rain, ice/snow and storms is preferable to four lovely Midwest seasons including a proper snowy winter.  California is better, south of Point Arena at least, but about twice the price.

FINate

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Re: Where was housing "affordable" in 2023?
« Reply #4 on: January 17, 2024, 08:22:38 AM »
Heat and humidity is bad... unless you're near a beach, then it's good.

Lots of cold and snow is bad... unless you're in a mountain resort town, then it's good.

The continental climate of the Midwest is regarded by many American as terrible, reason enough to relocate. And yet it's essentially the same climate as much of Europe, which Americans love to visit and (rightly or wrongly) romanticize.

The sunbelt was sparsely populated and viewed as undesirable until AC became widely available AND getting lots of sun exposure became popular.

So the climate thing fascinates me. Humans are crazy adaptable, I don't think there's an ideal climate. It's all personal preference, which is culturally conditioned and can therefore change.

I grew up in California back when it seemed like everyone was moving there. The climate was a big part of it, but also the whole California Dream which was very much a part of popular culture. This pattern has reversed in recent years, time will tell if this becomes a long term trend. It's plausible that climate change, wildfires, changing attitudes on sun exposure, and other shifts in what's considered desirable are contributing to current migration patterns.

Log

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Re: Where was housing "affordable" in 2023?
« Reply #5 on: January 17, 2024, 09:44:21 AM »
To be clear, I’m just citing the stats - I believe the exact measure of “weather” that most correlated with prices is something like having fewer days below a certain low temperature. Americans with the money and the freedom to choose are really willing to pay a lot more for less winter.

It’s obviously irrational, given that people who live in places with nicer weather just adapt quickly to the new normal and are not any happier after they’ve settled in for a couple months. Might as well live somewhere cheaper and take warm winter vacations.

I live in San Francisco now in large part because I value the walkability above most other factors. I would just as gladly live in Boston, Minneapolis, Pittsburgh, Chicago, Philly, Montreal, etc., if that’s where my career takes me in the future. But I would definitely pay a lot to escape snowy winters if I lived in a city where I had to drive to access everyday needs. I just wouldn’t be escaping to some shitty sunbelt sprawl.

Tass

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Re: Where was housing "affordable" in 2023?
« Reply #6 on: January 17, 2024, 09:52:28 AM »
To be clear, I’m just citing the stats - I believe the exact measure of “weather” that most correlated with prices is something like having fewer days below a certain low temperature. Americans with the money and the freedom to choose are really willing to pay a lot more for less winter.

I've lived in Ohio and Colorado at about the same latitude, and the temperature ranges are pretty similar--a bit colder and snowier in Colorado, but only if you're not within the lake effect in the Midwest--but Colorado continues to get a lot of sun throughout the winter, even when it's freezing out. Ohio tends to have 3 months of gloom. Even if you don't care about winter sports, that alone makes winter feel more bearable for many people. As you mentioned already, low-humidity summers in Colorado are also much nicer. There's just the pesky matter of the wildfires, which I don't think most people are thoroughly accounting for yet.

It was interesting to see that my home state has FOUR cities in the most affordable 15. And the dynamics of our dual-state house hunt were nicely illustrated by these alphabetical neighbors.

roomtempmayo

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Re: Where was housing "affordable" in 2023?
« Reply #7 on: January 17, 2024, 12:00:23 PM »
Thanks for sharing.

I find it interesting that multiple commenters latched on to it being climate related. As in, move to a place with cold winters for affordable housing. Yet my city (Boise), along with Salt Lake City and Colorado Springs, are on the naughty list despite having cold winters.

What really stands out to me: All the unaffordable cities, except Miami, are in the west. Whereas all the affordable cities are in the east.

My sense is that eastern cities are better about urban planning, multi-family housing, public transit, stuff like that. And they have less of a NIMBY problem. But I don't have data to back this up, so just wild speculation on my part.

I'd say Boise, SLC, and the entire front range are all pretty moderate in the winter.  We aren't talking about months on end without getting above freezing or no sunshine.  They're not Minot (endless cold) or Ann Arbor (no sun).

There are still lots of affordable places in the west, they just tend not to be near ski resort destination mountains or the coast.  Billings, Casper, Laramie, Pocatello, Spokane, El Paso, Albuquerque, and Kingman jump to mind, even if they're not places I'm going to line up to move.

If snow stays on the ground in the winter and it's not within two hours of the ocean or a ski area, it seems like this analysis indicates it's very likely to be affordable.
« Last Edit: January 17, 2024, 12:03:06 PM by roomtempmayo »

halfling

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Re: Where was housing "affordable" in 2023?
« Reply #8 on: January 17, 2024, 02:27:28 PM »
Thanks for sharing.

I find it interesting that multiple commenters latched on to it being climate related. As in, move to a place with cold winters for affordable housing. Yet my city (Boise), along with Salt Lake City and Colorado Springs, are on the naughty list despite having cold winters.

What really stands out to me: All the unaffordable cities, except Miami, are in the west. Whereas all the affordable cities are in the east.

My sense is that eastern cities are better about urban planning, multi-family housing, public transit, stuff like that. And they have less of a NIMBY problem. But I don't have data to back this up, so just wild speculation on my part.

I'd say Boise, SLC, and the entire front range are all pretty moderate in the winter.  We aren't talking about months on end without getting above freezing or no sunshine.  They're not Minot (endless cold) or Ann Arbor (no sun).

There are still lots of affordable places in the west, they just tend not to be near ski resort destination mountains or the coast.  Billings, Casper, Laramie, Pocatello, Spokane, El Paso, Albuquerque, and Kingman jump to mind, even if they're not places I'm going to line up to move.

If snow stays on the ground in the winter and it's not within two hours of the ocean or a ski area, it seems like this analysis indicates it's very likely to be affordable.

El Paso and Albuquerque were the only two cities you mentioned that were populous enough to make Redfin's list; you will be surprised to see that both now have some of the lowest levels of affordability (only 5-6% of listings last year). Poor, lonely Wyoming doesn't have a single city on the list.

Villanelle

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Re: Where was housing "affordable" in 2023?
« Reply #9 on: January 21, 2024, 05:01:46 PM »
Heat and humidity is bad... unless you're near a beach, then it's good.

Lots of cold and snow is bad... unless you're in a mountain resort town, then it's good.

The continental climate of the Midwest is regarded by many American as terrible, reason enough to relocate. And yet it's essentially the same climate as much of Europe, which Americans love to visit and (rightly or wrongly) romanticize.

The sunbelt was sparsely populated and viewed as undesirable until AC became widely available AND getting lots of sun exposure became popular.

So the climate thing fascinates me. Humans are crazy adaptable, I don't think there's an ideal climate. It's all personal preference, which is culturally conditioned and can therefore change.

I grew up in California back when it seemed like everyone was moving there. The climate was a big part of it, but also the whole California Dream which was very much a part of popular culture. This pattern has reversed in recent years, time will tell if this becomes a long term trend. It's plausible that climate change, wildfires, changing attitudes on sun exposure, and other shifts in what's considered desirable are contributing to current migration patterns.


Until recently at least, CA beach towns and moderate heat and low humidity, and were near the beach.  Probably why they are among the most expensive beach towns. 

Cranky

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Re: Where was housing "affordable" in 2023?
« Reply #10 on: January 21, 2024, 06:42:20 PM »
Thanks for sharing.

I find it interesting that multiple commenters latched on to it being climate related. As in, move to a place with cold winters for affordable housing. Yet my city (Boise), along with Salt Lake City and Colorado Springs, are on the naughty list despite having cold winters.

What really stands out to me: All the unaffordable cities, except Miami, are in the west. Whereas all the affordable cities are in the east.

My sense is that eastern cities are better about urban planning, multi-family housing, public transit, stuff like that. And they have less of a NIMBY problem. But I don't have data to back this up, so just wild speculation on my part.

The affordable cities aren’t in the east, they’re in the Midwest. I don’t think they’ve had great urban planning and they are car centered. What they have in common is gloomy winters and Rust Belt economies which left them with surplus housing stock not always in great shape.

I will say that housing prices really jumped even in Youngstown Ohio. The house next to ours sat vacant for 10 years, was bought at tax auction by flippers who sold it for $200k last year, to the astonishment of the neighborhood.

ChpBstrd

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Re: Where was housing "affordable" in 2023?
« Reply #11 on: January 21, 2024, 07:32:49 PM »
Take a Zillow walk through Fort Smith, Arkansas sometime. It's like prices froze 10 or 20 years ago.

Average house price: $155k
https://www.bestplaces.net/housing/city/arkansas/fort_smith

Median income: $50,800. So a house only costs 3 years of income.
https://www.census.gov/quickfacts/fact/table/fortsmithcityarkansas/PST045222

Unemployment rate: 3.6% in November.
https://www.bls.gov/eag/eag.ar_fortsmith_msa.htm

FINate

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Re: Where was housing "affordable" in 2023?
« Reply #12 on: January 21, 2024, 09:36:48 PM »
The affordable cities aren’t in the east, they’re in the Midwest. I don’t think they’ve had great urban planning and they are car centered. What they have in common is gloomy winters and Rust Belt economies which left them with surplus housing stock not always in great shape.

I will say that housing prices really jumped even in Youngstown Ohio. The house next to ours sat vacant for 10 years, was bought at tax auction by flippers who sold it for $200k last year, to the astonishment of the neighborhood.

By "east" I mean in the most general sense, as in eastern half of the country.

Urban planning may not be the right term. I have a soft spot for cities (neighborhoods really) that were laid out prior to the automobile. Small streets in a grid, safe for biking and walking, with sensible routes from A to B. Small lots with a mix of residential and commercial. And diverse housing density, with an abundance of middle housing.

Some western cities have this in areas (SF, Oakland, Portland, Seattle). Even here in Boise we have pockets.

But most western cities grew up with the automobile and are dominated by urban sprawl, stroads, long commutes, subdivisions with roads twisting in all directions and lots that are way too large. The Bay Area makes me sad, though it's improving. Cities like Phoenix and Fresno make me sadder.

I realize the east isn't an urban utopia. It has sprawl and stroads, and many of the same problems.  But many urban cores in the east were blessed with being planned/laid out prior to the automobile and freeways, and they grew reasonably large before the sprawl was added.
« Last Edit: January 21, 2024, 09:40:07 PM by FINate »

Dicey

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Re: Where was housing "affordable" in 2023?
« Reply #13 on: January 21, 2024, 09:51:39 PM »
I have always lived in HCOLAs and I've never earned a high income. Somehow, I managed to buy my first house all by myself. It took a lot of
determination, sacrifice, and intensity to pull it off, but "somehow" I did. I really dislike articles telling people all the reasons it can't be done.

ETA - This just popped up in my feed: https://fortune.com/2024/01/21/housing-market-hacks-cabins-basements-sheds-property-ladder/

I did something like the second example to buy my first house.
« Last Edit: January 22, 2024, 08:20:47 AM by Dicey »

halfling

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Re: Where was housing "affordable" in 2023?
« Reply #14 on: January 22, 2024, 08:48:28 AM »
@Dicey paywall on that article :( but assuming you're referring to sleeping in the shed until you can afford the house, that's pretty badass.

I don't think this is saying it can't be done, just pointing out higher than usual competition at the low end of the market and the historically extreme rate of change in the last two years. It helped me see the forest for the trees, with respect to my own housing expectations. I mean, when I sat down to plan out my FI roadmap a few years ago, I was planning on like a $1600 housing payment in perpetuity; still possible, but will require A LOT more creativity and/or cash than it would have in 2017. I also like that they reported on places where many listings are still affordable, although moving won't be viable or desirable for everyone, it could really help some (I moved from a HCOL city to MCOL to better my life).

Dicey

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Re: Where was housing "affordable" in 2023?
« Reply #15 on: January 22, 2024, 12:29:36 PM »
@Dicey paywall on that article :( but assuming you're referring to sleeping in the shed until you can afford the house, that's pretty badass.

I don't think this is saying it can't be done, just pointing out higher than usual competition at the low end of the market and the historically extreme rate of change in the last two years. It helped me see the forest for the trees, with respect to my own housing expectations. I mean, when I sat down to plan out my FI roadmap a few years ago, I was planning on like a $1600 housing payment in perpetuity; still possible, but will require A LOT more creativity and/or cash than it would have in 2017. I also like that they reported on places where many listings are still affordable, although moving won't be viable or desirable for everyone, it could really help some (I moved from a HCOL city to MCOL to better my life).
Hmmm...try opening it in Incognito Mode.

Midwest_Handlebar

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Re: Where was housing "affordable" in 2023?
« Reply #16 on: January 22, 2024, 01:30:39 PM »
Or this: https://archive.ph/l1Wf1

You can get around paywalls in the future by archiving the website.

Jon Bon

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Re: Where was housing "affordable" in 2023?
« Reply #17 on: January 22, 2024, 02:40:00 PM »
I have always lived in HCOLAs and I've never earned a high income. Somehow, I managed to buy my first house all by myself. It took a lot of
determination, sacrifice, and intensity to pull it off, but "somehow" I did. I really dislike articles telling people all the reasons it can't be done.

ETA - This just popped up in my feed: https://fortune.com/2024/01/21/housing-market-hacks-cabins-basements-sheds-property-ladder/

I did something like the second example to buy my first house.

You know how your grandpa always used to get angry about that a candy bar now costs $2 because back in his day it was a nickel? I think that is how we sound talking about houses! I mean yeah I did the same? I worked hard, saved hard, and bought an ugly house on a nice street. But my "starter home" is now worth *checks Zillow* $500,000

I bought it in 2010 for 150k, its now worth 500k. Sure I put in a new kitchen and roof and sweat equity, but I don't think you can find anything in my neighborhood for <400,000

So in that single example in 13 years later increased by more than 300%. That is a huge increase. Shit even me now on my income with a 20% down payment I would be uncomfortable signing up for a 400k loan at 7% for a starter home.

Now if I am 27 again, and the smart young industrious person I was then? Now I could probably afford a house in a really shitty area in my city. Could I buy? Likely yes, but I would not get nearly the value that existed 13 years ago. I would be in a worse area, with a terrible interest rate and likely not see much appreciation.

Don't get me wrong there are a LOT of whiney entitled 20 -somethings complaining about their housing situation who I think could use a nice quality facepunch for the things they spend their money on. I also think their are a lot of frugal young people who have been plain priced out. I guess my point is the price of home is going up faster than these kids abilities to save a 20% down payment, and that's completely ignoring the terrible mortgage rates.

ChpBstrd

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Re: Where was housing "affordable" in 2023?
« Reply #18 on: January 22, 2024, 02:58:47 PM »
People need to adjust their expectations a bit:

-will not consider living with roommates in initial years to make a house purchase work.
-will not consider living too far from a beach, ski resort, or large metro area.
-will not consider a manufactured home.
-will not consider living in the midwest or southern U.S.
-will not consider anything smaller than a 3BR with a front and back yard.
-will not consider building.
-will not consider a working class neighborhood. It's a neighborhood like their boomer parents or nothing!

And after all this is adjusted, if it still doesn't make sense to buy a house THEN DON'T BUY A HOUSE. There are plenty of people on this forum who became millionaires and achieved FI while renting, and that was in less favorable times than today!

Maybe while the herd is rushing headlong into mortgages they'll have trouble paying, tying themselves down geographically, buying negative-cash-flowing rent houses and reducing their cashflows, the wise thing to do is the exact opposite. Rent cheaply and plow money into stocks, move frequently to pursue career advancement, spend money on certifications instead of HOA fees or lawn care, and apply the savings to more investments.

swashbucklinstache

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Re: Where was housing "affordable" in 2023?
« Reply #19 on: January 22, 2024, 05:06:46 PM »
And after all this is adjusted, if it still doesn't make sense to buy a house THEN DON'T BUY A HOUSE. There are plenty of people on this forum who became millionaires and achieved FI while renting, and that was in less favorable times than today!
I agree with this. Looking at sales you can see individual homes on the street I grew up on that shot up in value the 90s, lost a little nominal value between 1998 and 2014, and since have doubled in price. The towns, employers, and homes themselves have been fairly constant. I'm sure at times the calculators said rent and at other times buy. One should listen to them at least to some degree because the right choice changed a lot over time.

A tangent about houses...
  • A friend bought a cheap house in a clear cut rent situation for lifestyle reasons. He would have made the exact same housing choices if he was born 1 year later. Just the 1 year age difference alone ended up worth +400k across a decade after unexpected gentrification, covid interest rates, and the 2022 stock drop.
  • A friend bought an expensive house in a clear cut buy situation. Their employer suddenly implemented mandatory relocation and values in the area have dropped. If they bought 12 months earlier they'd likely have walk away with near six figures.
  • My gf's parent and uncle graduate and jobs take each of them to different capital cities. They work similar jobs and buy similar houses they purchased when they moved. 45 years later one house is 3 times as valuable.

Obviously calculators are high level and you only buy one house but the range
of outcomes is a lot wider than people think. This troubles me some. It feels like at a societal level it is unfortunate that we haven't found a better system than one where people can gain or lose that much equity on something with a ton of randomness. I have no ideas.

Villanelle

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Re: Where was housing "affordable" in 2023?
« Reply #20 on: January 22, 2024, 05:13:04 PM »
And after all this is adjusted, if it still doesn't make sense to buy a house THEN DON'T BUY A HOUSE. There are plenty of people on this forum who became millionaires and achieved FI while renting, and that was in less favorable times than today!
I agree with this. Looking at sales you can see individual homes on the street I grew up on that shot up in value the 90s, lost a little nominal value between 1998 and 2014, and since have doubled in price. The towns, employers, and homes themselves have been fairly constant. I'm sure at times the calculators said rent and at other times buy. One should listen to them at least to some degree because the right choice changed a lot over time.

A tangent about houses...
  • A friend bought a cheap house in a clear cut rent situation for lifestyle reasons. He would have made the exact same housing choices if he was born 1 year later. Just the 1 year age difference alone ended up worth +400k across a decade after unexpected gentrification, covid interest rates, and the 2022 stock drop.
  • A friend bought an expensive house in a clear cut buy situation. Their employer suddenly implemented mandatory relocation and values in the area have dropped. If they bought 12 months earlier they'd likely have walk away with near six figures.
  • My gf's parent and uncle graduate and jobs take each of them to different capital cities. They work similar jobs and buy similar houses they purchased when they moved. 45 years later one house is 3 times as valuable.

Obviously calculators are high level and you only buy one house but the range
of outcomes is a lot wider than people think. This troubles me some. It feels like at a societal level it is unfortunate that we haven't found a better system than one where people can gain or lose that much equity on something with a ton of randomness. I have no ideas.

But we have found that, haven't we?  It's called renting. 

swashbucklinstache

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Re: Where was housing "affordable" in 2023?
« Reply #21 on: January 22, 2024, 05:46:57 PM »
And after all this is adjusted, if it still doesn't make sense to buy a house THEN DON'T BUY A HOUSE. There are plenty of people on this forum who became millionaires and achieved FI while renting, and that was in less favorable times than today!
I agree with this. Looking at sales you can see individual homes on the street I grew up on that shot up in value the 90s, lost a little nominal value between 1998 and 2014, and since have doubled in price. The towns, employers, and homes themselves have been fairly constant. I'm sure at times the calculators said rent and at other times buy. One should listen to them at least to some degree because the right choice changed a lot over time.

A tangent about houses...
  • A friend bought a cheap house in a clear cut rent situation for lifestyle reasons. He would have made the exact same housing choices if he was born 1 year later. Just the 1 year age difference alone ended up worth +400k across a decade after unexpected gentrification, covid interest rates, and the 2022 stock drop.
  • A friend bought an expensive house in a clear cut buy situation. Their employer suddenly implemented mandatory relocation and values in the area have dropped. If they bought 12 months earlier they'd likely have walk away with near six figures.
  • My gf's parent and uncle graduate and jobs take each of them to different capital cities. They work similar jobs and buy similar houses they purchased when they moved. 45 years later one house is 3 times as valuable.

Obviously calculators are high level and you only buy one house but the range
of outcomes is a lot wider than people think. This troubles me some. It feels like at a societal level it is unfortunate that we haven't found a better system than one where people can gain or lose that much equity on something with a ton of randomness. I have no ideas.

But we have found that, haven't we?  It's called renting.
A fair point! Hmm.

Jon Bon

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Re: Where was housing "affordable" in 2023?
« Reply #22 on: January 23, 2024, 06:25:29 AM »
People need to adjust their expectations a bit:

-will not consider living with roommates in initial years to make a house purchase work.
-will not consider living too far from a beach, ski resort, or large metro area.
-will not consider a manufactured home.
-will not consider living in the midwest or southern U.S.
-will not consider anything smaller than a 3BR with a front and back yard.
-will not consider building.
-will not consider a working class neighborhood. It's a neighborhood like their boomer parents or nothing!


I did most of these for my first house. It was 1040 sqft. Nothing fancy at all, just in an area with good schools. I can compare my salary now versus then because it was a federal job.

Lets do numbers.

GS-11 Salary
2009 - 63,000
2023 - 75,000

House Price
2009 - 152,000 (price paid)
2023 - 479,000 (zillow)

Years to Pay off house
63,000/152,000 = 2.4 years
75,000/479,000 = 6.4 years


Honestly I don't think the first time home buyers are being babies about this. In my home market starter homes don't really exist anymore. Its just not feasible to buy right now for most folks. So yes they are renting which is fine and all.

Its just been a while since most of us purchased our first home, so we have ridden the appreciation wave and trading up a home is not a huge deal because of that. Our prospective is quite a few years old of date. If you missed the wave you can't really own right now.

getsorted

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Re: Where was housing "affordable" in 2023?
« Reply #23 on: January 23, 2024, 07:31:07 AM »
People need to adjust their expectations a bit:

-will not consider living with roommates in initial years to make a house purchase work.
-will not consider living too far from a beach, ski resort, or large metro area.
-will not consider a manufactured home.
-will not consider living in the midwest or southern U.S.
-will not consider anything smaller than a 3BR with a front and back yard.
-will not consider building.
-will not consider a working class neighborhood. It's a neighborhood like their boomer parents or nothing!


I did most of these for my first house. It was 1040 sqft. Nothing fancy at all, just in an area with good schools. I can compare my salary now versus then because it was a federal job.

Lets do numbers.

GS-11 Salary
2009 - 63,000
2023 - 75,000

House Price
2009 - 152,000 (price paid)
2023 - 479,000 (zillow)

Years to Pay off house
63,000/152,000 = 2.4 years
75,000/479,000 = 6.4 years


Honestly I don't think the first time home buyers are being babies about this. In my home market starter homes don't really exist anymore. Its just not feasible to buy right now for most folks. So yes they are renting which is fine and all.

Its just been a while since most of us purchased our first home, so we have ridden the appreciation wave and trading up a home is not a huge deal because of that. Our prospective is quite a few years old of date. If you missed the wave you can't really own right now.

Agreed. It's important not to confuse "yes, you can still get onto the property ladder" with "but you're going to start a lot lower now than your parents did."

You can get priced out pretty quickly even in areas like @ChpBstrd describes. I bought in 2020 after living with relatives long enough to save up a down payment. Bought a 2 bedroom house in a neighborhood we'd be generous to call working class, in the Midwest, in a decidedly un-hip city. (It's not Fort Smith, Arkansas, but damn, it's close!). Paid $70,000, which was 20% under listed price. My neighbor's house, which is almost identical to mine, is being listed this year for $136,000. It may not seem like a huge difference, but that's only three years. It would have taken me a lot longer to save a down payment for this house if I were trying to buy it today, and I'm earning almost exactly the median income where I live.

"Move from California to the Midwest, it's affordable" sounds brilliant if you're making California money. But if you start in the Midwest and stay in the Midwest, you're still going to have to work longer and more creatively to afford real estate than your parents did.

FINate

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Re: Where was housing "affordable" in 2023?
« Reply #24 on: January 23, 2024, 08:41:00 AM »
Some more numbers.

We bought our first house in 2003 for $580k in HCOL California. This was considered a "starter" home in the area, low quality track home. My salary at the time was $90k, so our house was 6.6x income. We struggled to make ends meet, made it by being very frugal.

That house is now worth $1.4M, yet pay for my title/level at that time is now around $120k, so 11.6x income.

The cost of housing has gone up a lot faster than income, which is also reflected in rents and makes it even that much more difficult to save for a down payment.

If I were starting out today our first home would, without a doubt, be completely out of reach.

The US simply needs to build a lot more housing. We need to add so much supply that there's a glut of inventory leading to price declines.

Cranky

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Re: Where was housing "affordable" in 2023?
« Reply #25 on: January 23, 2024, 01:00:31 PM »
The affordable cities aren’t in the east, they’re in the Midwest. I don’t think they’ve had great urban planning and they are car centered. What they have in common is gloomy winters and Rust Belt economies which left them with surplus housing stock not always in great shape.

I will say that housing prices really jumped even in Youngstown Ohio. The house next to ours sat vacant for 10 years, was bought at tax auction by flippers who sold it for $200k last year, to the astonishment of the neighborhood.

By "east" I mean in the most general sense, as in eastern half of the country.

Urban planning may not be the right term. I have a soft spot for cities (neighborhoods really) that were laid out prior to the automobile. Small streets in a grid, safe for biking and walking, with sensible routes from A to B. Small lots with a mix of residential and commercial. And diverse housing density, with an abundance of middle housing.

Some western cities have this in areas (SF, Oakland, Portland, Seattle). Even here in Boise we have pockets.

But most western cities grew up with the automobile and are dominated by urban sprawl, stroads, long commutes, subdivisions with roads twisting in all directions and lots that are way too large. The Bay Area makes me sad, though it's improving. Cities like Phoenix and Fresno make me sadder.

I realize the east isn't an urban utopia. It has sprawl and stroads, and many of the same problems.  But many urban cores in the east were blessed with being planned/laid out prior to the automobile and freeways, and they grew reasonably large before the sprawl was added.

When we moved to Michigan, my Denver-native dh kept saying things like “Now that we live in the East” to the great confusion of everyone else. East of the Mississippi is not “the East”.

And while those Midwestern cities were once laid out to be less car dependent, those days are gone. Walking around NE Ohio areas, you can see where there used to be neighborhood stores, but they are long gone. Now they’re cheap real estate. First everyone went to the mall and then everyone shopped online, like everyone else.

Akron is a death trap for biking. I walk a lot and this was so unusual in my neighborhood that people often described me as “that lady who walks”.

There are some great things about the Midwest, and even the Rust Belt, but don’t kid yourself that it typically has the kinds of amenities that a lot of people want.
« Last Edit: February 06, 2024, 08:19:41 AM by Cranky »

Log

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Re: Where was housing "affordable" in 2023?
« Reply #26 on: January 23, 2024, 02:54:27 PM »
Part of the dilemma is the increased demand for walkability is in direct conflict with the persistent demand for detached single family homes. I agree with the general directionality of the comparison of “this exact home was affordable X years ago and now it’s not,” focusing on the price of a specific single family home is missing the forest for the trees when it comes to this issue. Affordability in the kinds of places that people want to live will only come with the construction of a lot more multi-family housing, and the normalization that a condo is an acceptable and desirable option.

FINate

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Re: Where was housing "affordable" in 2023?
« Reply #27 on: January 23, 2024, 07:56:15 PM »
The specific SFH comparisons are just a way to make an apples-to-apples comparison. But also, it's really the only comparison I can reasonably make because smaller homes/condos/multi-family wasn't really an option in our former location, and what little does exist is priced around the same as SFH.

halfling

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Re: Where was housing "affordable" in 2023?
« Reply #28 on: January 29, 2024, 07:39:14 AM »
Part of the dilemma is the increased demand for walkability is in direct conflict with the persistent demand for detached single family homes. I agree with the general directionality of the comparison of “this exact home was affordable X years ago and now it’s not,” focusing on the price of a specific single family home is missing the forest for the trees when it comes to this issue. Affordability in the kinds of places that people want to live will only come with the construction of a lot more multi-family housing, and the normalization that a condo is an acceptable and desirable option.

I’m not wholly against condos but here, the market is odd. Anecdata, but the builders here have only put up these weird $500k+ condo developments in the last few years in the city, on horrible cheap lots right up against freeways and train tracks, but with super luxe finishes. Really the worst of both worlds for a frugal minded person who wants walkability. There are four such complexes here that have been trying to sell for two years. And older condos exist, but often come out to the same monthly cost as nearby SFH due to high fees. At high interest rates, I’m not convinced a condo here would be a prudent financial decision.

FINate

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Re: Where was housing "affordable" in 2023?
« Reply #29 on: January 29, 2024, 07:55:19 AM »
Part of the dilemma is the increased demand for walkability is in direct conflict with the persistent demand for detached single family homes. I agree with the general directionality of the comparison of “this exact home was affordable X years ago and now it’s not,” focusing on the price of a specific single family home is missing the forest for the trees when it comes to this issue. Affordability in the kinds of places that people want to live will only come with the construction of a lot more multi-family housing, and the normalization that a condo is an acceptable and desirable option.

I’m not wholly against condos but here, the market is odd. Anecdata, but the builders here have only put up these weird $500k+ condo developments in the last few years in the city, on horrible cheap lots right up against freeways and train tracks, but with super luxe finishes. Really the worst of both worlds for a frugal minded person who wants walkability. There are four such complexes here that have been trying to sell for two years. And older condos exist, but often come out to the same monthly cost as nearby SFH due to high fees. At high interest rates, I’m not convinced a condo here would be a prudent financial decision.

This^^ Same problem in my city. The main anti-pattern out here is building condos in distant suburbs, off busy arterial roads, behind newly constructed strip malls with lots of surface parking. No walkability. Horrible traffic. Really the worst of both worlds.

Once our kids are out of the house I'd love to downsize to a condo downtown (or anywhere walkable), but the options right now are pretty slim. Some condos are starting to be built downtown, so hopefully this will be more of an option in 10-ish years.

Log

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Re: Where was housing "affordable" in 2023?
« Reply #30 on: January 29, 2024, 08:46:55 AM »
Part of the dilemma is the increased demand for walkability is in direct conflict with the persistent demand for detached single family homes. I agree with the general directionality of the comparison of “this exact home was affordable X years ago and now it’s not,” focusing on the price of a specific single family home is missing the forest for the trees when it comes to this issue. Affordability in the kinds of places that people want to live will only come with the construction of a lot more multi-family housing, and the normalization that a condo is an acceptable and desirable option.

I’m not wholly against condos but here, the market is odd. Anecdata, but the builders here have only put up these weird $500k+ condo developments in the last few years in the city, on horrible cheap lots right up against freeways and train tracks, but with super luxe finishes. Really the worst of both worlds for a frugal minded person who wants walkability. There are four such complexes here that have been trying to sell for two years. And older condos exist, but often come out to the same monthly cost as nearby SFH due to high fees. At high interest rates, I’m not convinced a condo here would be a prudent financial decision.

Not sure where your "here" is but yes, it absolutely varies from region to region. This kind of reinforces my underlying point about the cultural that "owning a home" means a detached SFH, and condos are some weird deviant thing. The condos in your area are being shunted up by the freeways because they're seen as undesirable, so the "noxious" land-use is put on undesirable land near the (truly noxious) land use of the freeway, so as to be out of the way of the Good Virtuous Proper Americans who live in single family homes.

This is absolutely backwards from the notion that condos should be put on the most desirable land, ideally with transportation infrastructure more oriented around active transportation, buses, and trains. In a situation where land is cheap, detached SFHs make a lot of sense, because wood-framed construction is (relatively) cheap. But where land values make even modest single family homes unaffordable, that's a screaming signal from the market that the expense of steel and concrete construction is justified. The land value signifies that lots and lots of people want to live there, so we should build lots and lots of residences on top of each other in the place that people want to live.

I'm thinking about this largely from an environmental perspective - systemically pricing people out of a scarce set of walkable, transit-oriented cities is catastrophic for carbon emissions. People are choosing Dallas and Phoenix and Vegas and Charlotte OVER places where they would have to pay a premium to live a more sustainable lifestyle. But it's not that density is expensive, it's that it's regulated into scarcity. A very eye opening perspective about dense development is realizing that elevators are transportation infrastructure. Paying for elevators might add to your rent or condo fees, but if that frees up your tax dollars to pay for trains instead of lane miles, you probably don't need (or even want!) to own a car.

This will be a long and gradual shift, but I'd say cities like Portland and Seattle are modeling well what the development from 20th century car-centrism towards a more sustainable future looks like. Getting rid of parking minimums, building more "missing middle" in the lower density neighborhoods, gradually expanding true high densities outward from downtown, and gradually improving bike and transit infrastructure along the way. The places doing dense multifamily development along the highway, surrounded by parking, are just making the problem worse.

roomtempmayo

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Re: Where was housing "affordable" in 2023?
« Reply #31 on: January 29, 2024, 07:26:18 PM »
Part of the dilemma is the increased demand for walkability is in direct conflict with the persistent demand for detached single family homes.

Sort of, but I don't think entirely.  And I think people get really turned off by a framing that walkability means Manhattan-level density, or we may as well all live on three acre exurban lots in McMansions.

Pre-WWII urban SFH neighborhoods with 50x75-100ft lots with some 4-8 plexes on most blocks are often pretty walkable since they were built around households having, at most, one car.  Yes, some of that walkability has been hallowed out by the closure of neighborhood retail, but not entirely.

SFHs aren't necessary incompatible with walkability, and especially bike-ability.  It's a matter of lot size, and mixed zoning to allow for local retail.

Tass

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Re: Where was housing "affordable" in 2023?
« Reply #32 on: January 30, 2024, 09:57:47 AM »
SFHs aren't necessary incompatible with walkability, and especially bike-ability.  It's a matter of lot size, and mixed zoning to allow for local retail.

Also infrastructure--I'm thinking specifically of sidewalks. Where I grew up, nice neighborhoods had sidewalks through the subdivision but they often didn't actually lead anywhere outside it. You can use them to walk your dog around the block, but who actually walks to the grocery store??? /s

Villanelle

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Re: Where was housing "affordable" in 2023?
« Reply #33 on: January 30, 2024, 12:21:57 PM »
Part of the dilemma is the increased demand for walkability is in direct conflict with the persistent demand for detached single family homes.

Sort of, but I don't think entirely.  And I think people get really turned off by a framing that walkability means Manhattan-level density, or we may as well all live on three acre exurban lots in McMansions.

Pre-WWII urban SFH neighborhoods with 50x75-100ft lots with some 4-8 plexes on most blocks are often pretty walkable since they were built around households having, at most, one car.  Yes, some of that walkability has been hallowed out by the closure of neighborhood retail, but not entirely.

SFHs aren't necessary incompatible with walkability, and especially bike-ability.  It's a matter of lot size, and mixed zoning to allow for local retail.

My previous home, before DH's job and therefore our household moved to the 'burbs, was in an old (pre-American-Revolution) town.  No high rises.  (A few mid-rises have gone up where there were no historic buildings, but not many.)  Everything is 2-3 story, plus basement, row homes.  So it's dense, but not super dense.  And yet there's a main street that is super walkable, along with shops and restaurants sprinkled in.  It was perfect for me.  Paradise. 

halfling

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Re: Where was housing "affordable" in 2023?
« Reply #34 on: January 30, 2024, 05:47:46 PM »
I don't follow Twitter, but noticed in the blog sidebar today that the Mustache himself recently happened to post a rent vs. buy assessment for his own house. https://twitter.com/mrmoneymustache/status/1750271101291425911

Calculator: https://www.ultimatehomecalculator.com/

I actually have similar #s to plug in to this calculator. I copied most of his assumptions. But since our starting rent is a little lower and our property taxes would be a good bit higher, renting looks better for us, for now, at every timescale from 5 to 20 years as long as we keep investing the difference. All we have to trade off is feeling a little cramped while working, and not having a yard for gardening, and that's all fine for now. Plus, our rent only went up $5 this year. LOL.

Renting looks even better knowing what I know about the inventory that's available locally right now. I feel happier with renting these days than I have in a while. If I were dead set on buying something that broke even with renting, I would have to trade a nice apartment for a crappy house in a worse location, and almost certainly after a stressful bidding war. The math doesn't get much easier than that.

iris lily

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Re: Where was housing "affordable" in 2023?
« Reply #35 on: February 07, 2024, 11:48:22 AM »
My post doesn’t directly  address the topic in the title but still, you all may find this interesting

 Last year I did  a real estate cost comparison between the years 1980 and  2022 looking at salaries and real estate cost.

When I was young, single, and working in the public sector, I wanted to buy a house, and I made an offer on one, details below. If in the same job today the property I would buy is here:

https://www.realtor.com/realestateandhomes-detail/1401-Alamo-St_Las-Cruces_NM_88001_M91892-51466?from=srp-list-card

I regularly  check the real estate market in Las Cruces and there are cute properties at reasonable prices. Over the past couple of years there have been far more condos available than there are on the market today. I’m not sure if that reflects a seasonal issue or what, but it’s not hard to find simple condos with a bit of yard Between $100,000 and $120,000.

Anyway here’s my cost comparison:

1980 facts
Salary: $14,000

Cost of two bedroom older house I made offer on: $35,000
Mortgage: $31,500

Interest rate 12%

15 year fixed mortgage payments: $378 monthly or annually $4536

Percentage of gross annual salary: 26%

———————————————————————
2022 facts

Salary at the same job $55,000

Nice two bedroom condo $130,000

Mortgage $128,700

15 year fixed rate mortgage payments at 5%: $1018 monthly or $12,216 annually

Percentage of gross income: 22%


TLDR: housing is not more expensive as percentage of income, in this market anyway.  This assumes my math is correct and that’s not always the case!

You could say that a standalone house in 1980 is not the same thing as a condo with common walls and that would be true. I couldn’t find any exact comps to my 1980s house and the closest I found was a one for $155,000 on a posh Street, more upscale location than my 1980’s hpuse although amusingly, it was in “original” 1980’s condition.









« Last Edit: February 07, 2024, 11:51:38 AM by iris lily »

halfling

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Re: Where was housing "affordable" in 2023?
« Reply #36 on: February 07, 2024, 07:55:07 PM »
@iris lily Wow, Las Cruces looks very beautiful and affordable! It seems a bit remote, if you are moving far from family, but I imagine the El Paso airport has a lot of flights. With Albuquerque somehow now on the "not affordable" list, I wonder if Las Cruces will become more popular in the next few years.

Paper Chaser

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Re: Where was housing "affordable" in 2023?
« Reply #37 on: February 08, 2024, 06:34:05 AM »
My post doesn’t directly  address the topic in the title but still, you all may find this interesting

 Last year I did  a real estate cost comparison between the years 1980 and  2022 looking at salaries and real estate cost.

When I was young, single, and working in the public sector, I wanted to buy a house, and I made an offer on one, details below. If in the same job today the property I would buy is here:

https://www.realtor.com/realestateandhomes-detail/1401-Alamo-St_Las-Cruces_NM_88001_M91892-51466?from=srp-list-card

I regularly  check the real estate market in Las Cruces and there are cute properties at reasonable prices. Over the past couple of years there have been far more condos available than there are on the market today. I’m not sure if that reflects a seasonal issue or what, but it’s not hard to find simple condos with a bit of yard Between $100,000 and $120,000.

Anyway here’s my cost comparison:

1980 facts
Salary: $14,000

Cost of two bedroom older house I made offer on: $35,000
Mortgage: $31,500

Interest rate 12%

15 year fixed mortgage payments: $378 monthly or annually $4536

Percentage of gross annual salary: 26%

———————————————————————
2022 facts

Salary at the same job $55,000

Nice two bedroom condo $130,000

Mortgage $128,700

15 year fixed rate mortgage payments at 5%: $1018 monthly or $12,216 annually

Percentage of gross income: 22%


TLDR: housing is not more expensive as percentage of income, in this market anyway.  This assumes my math is correct and that’s not always the case!

You could say that a standalone house in 1980 is not the same thing as a condo with common walls and that would be true. I couldn’t find any exact comps to my 1980s house and the closest I found was a one for $155,000 on a posh Street, more upscale location than my 1980’s hpuse although amusingly, it was in “original” 1980’s condition.

1980 was basically the last time that housing "affordability" was similar to now because of the high interest rates. If you plug in the income and home prices you gave in your example, they've both perfectly tracked CPI over that time. That's not common.

If we look at median values for income, selling price, and mortgage rates for any other years it makes things look pretty bleak at the moment.




1980:
Median income- $21k ($1750 monthly pre-tax)
Median selling price- $64k
Mortgage rate- Varied between 12-16% through the year, so lets say 14%
20% downpayment- $12,800 (61% annual income)
Monthly P/I on a 30 year loan of $51,200-  $607 (35% of monthly pre-tax income)

1990:
Median income- $35k ($2916/mo)
Median selling price- $124k
Mortgage rate- 10%
20% downpayment- 24,800 (71% annual income)
Monthly P/I on 30 year loan of $99,200- $871 (30% monthly pre-tax income)

2000:
Median income- $51k ($4250/mo)
Median selling price- $168k
Mortgage rate- 7.75%
20% downpayment- $33,600 (66% annual income)
Montly P/I on 30 year loan of $134,400- $963 (23% of monthly pre-tax income)

2010:
Median income- $60k ($5,000/mo)
Median selling price- $225k
Mortgage rate- 4.75%
20% downpayment- $45,000 (75% annual income)
Monthly P/I on 30 year loan of $180,000- $939 (19% of monthly pre-tax income)

2020:
Median income- $84k ($7000/mo)
Median selling price- $340k
Mortgage rate- 3%
20% downpayment- $68k (81% annual income)
Monthly P/I on 30 year loan of $272k- $1147 (16% of monthly pre-tax income)

2023:
Median income- $93k ($7750/mo)
Median selling price- $430k
Mortgage rate- 7%
20% downpayment- $86k (92% annual income)
Monthly P/I on 30 year loan of $344k- $2289 (30% monthly pre-tax income)

***We are not including income tax, property tax, or insurance costs in these calculations
It looks like homeowner's insurance has outpaced CPI by roughly 25% since the data set began ($100/mo in Jul 98 to $234/mo in Dec 2023) :






iris lily

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Re: Where was housing "affordable" in 2023?
« Reply #38 on: February 08, 2024, 09:41:04 AM »
@iris lily Wow, Las Cruces looks very beautiful and affordable! It seems a bit remote, if you are moving far from family, but I imagine the El Paso airport has a lot of flights. With Albuquerque somehow now on the "not affordable" list, I wonder if Las Cruces will become more popular in the next few years.

I visited there in 2022 and saw the place I rented had not changed one bit, it and surrounding blocks. I never bought a house, just made an offer on one. Dipped my toe it.

 I reallt REALLY like the historic district and those pretty old houses. I really REALLY hate the desert surrounding the town.

If I could  live within the city’s boundaries and never have to venture out into desert country, I might have stayed there. But basically I am a Midwesterner and I must have green: green trees, greenery.

iris lily

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Re: Where was housing "affordable" in 2023?
« Reply #39 on: February 08, 2024, 09:44:56 AM »
@iris lily Wow, Las Cruces looks very beautiful and affordable! It seems a bit remote, if you are moving far from family, but I imagine the El Paso airport has a lot of flights. With Albuquerque somehow now on the "not affordable" list, I wonder if Las Cruces will become more popular in the next few years.

I  flew out of the El Paso airport and was impressed  with how  how easy it was to get there, drop off a rental car, walk to the hotel, and the next day walk over to my flight.

That is my new normal for air travel: stay at an airport hotel within mere feet of the air terminal.

SilentC

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Re: Where was housing "affordable" in 2023?
« Reply #40 on: February 08, 2024, 11:49:46 AM »
My post doesn’t directly  address the topic in the title but still, you all may find this interesting

 Last year I did  a real estate cost comparison between the years 1980 and  2022 looking at salaries and real estate cost.

When I was young, single, and working in the public sector, I wanted to buy a house, and I made an offer on one, details below. If in the same job today the property I would buy is here:

https://www.realtor.com/realestateandhomes-detail/1401-Alamo-St_Las-Cruces_NM_88001_M91892-51466?from=srp-list-card

I regularly  check the real estate market in Las Cruces and there are cute properties at reasonable prices. Over the past couple of years there have been far more condos available than there are on the market today. I’m not sure if that reflects a seasonal issue or what, but it’s not hard to find simple condos with a bit of yard Between $100,000 and $120,000.

Anyway here’s my cost comparison:

1980 facts
Salary: $14,000

Cost of two bedroom older house I made offer on: $35,000
Mortgage: $31,500

Interest rate 12%

15 year fixed mortgage payments: $378 monthly or annually $4536

Percentage of gross annual salary: 26%

———————————————————————
2022 facts

Salary at the same job $55,000

Nice two bedroom condo $130,000

Mortgage $128,700

15 year fixed rate mortgage payments at 5%: $1018 monthly or $12,216 annually

Percentage of gross income: 22%


TLDR: housing is not more expensive as percentage of income, in this market anyway.  This assumes my math is correct and that’s not always the case!

You could say that a standalone house in 1980 is not the same thing as a condo with common walls and that would be true. I couldn’t find any exact comps to my 1980s house and the closest I found was a one for $155,000 on a posh Street, more upscale location than my 1980’s hpuse although amusingly, it was in “original” 1980’s condition.

1980 was basically the last time that housing "affordability" was similar to now because of the high interest rates. If you plug in the income and home prices you gave in your example, they've both perfectly tracked CPI over that time. That's not common.

If we look at median values for income, selling price, and mortgage rates for any other years it makes things look pretty bleak at the moment.




1980:
Median income- $21k ($1750 monthly pre-tax)
Median selling price- $64k
Mortgage rate- Varied between 12-16% through the year, so lets say 14%
20% downpayment- $12,800 (61% annual income)
Monthly P/I on a 30 year loan of $51,200-  $607 (35% of monthly pre-tax income)

1990:
Median income- $35k ($2916/mo)
Median selling price- $124k
Mortgage rate- 10%
20% downpayment- 24,800 (71% annual income)
Monthly P/I on 30 year loan of $99,200- $871 (30% monthly pre-tax income)

2000:
Median income- $51k ($4250/mo)
Median selling price- $168k
Mortgage rate- 7.75%
20% downpayment- $33,600 (66% annual income)
Montly P/I on 30 year loan of $134,400- $963 (23% of monthly pre-tax income)

2010:
Median income- $60k ($5,000/mo)
Median selling price- $225k
Mortgage rate- 4.75%
20% downpayment- $45,000 (75% annual income)
Monthly P/I on 30 year loan of $180,000- $939 (19% of monthly pre-tax income)

2020:
Median income- $84k ($7000/mo)
Median selling price- $340k
Mortgage rate- 3%
20% downpayment- $68k (81% annual income)
Monthly P/I on 30 year loan of $272k- $1147 (16% of monthly pre-tax income)

2023:
Median income- $93k ($7750/mo)
Median selling price- $430k
Mortgage rate- 7%
20% downpayment- $86k (92% annual income)
Monthly P/I on 30 year loan of $344k- $2289 (30% monthly pre-tax income)

***We are not including income tax, property tax, or insurance costs in these calculations
It looks like homeowner's insurance has outpaced CPI by roughly 25% since the data set began ($100/mo in Jul 98 to $234/mo in Dec 2023) :



Thanks for this summation Paper Chaser.

iris lily

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Re: Where was housing "affordable" in 2023?
« Reply #41 on: February 09, 2024, 12:29:36 PM »
Paper chaser, that is interesting that you pair 1980 and 2022.I didn’t choose those dates  on purpose,  1980 was when I first started thinking about buying a house as a single person.

I’ve been married for decades, but, I’m thinking about my salary of $85,000 before I retired, there are many cute houses I could buy in St. Louis using the old rule of 2 1/2 times your annual income. I don’t know what those guidelines are currently and  All I can find are monthly guidelines&94 biying real estate;  I just don’t think in terms of monthly income.

If I were single at my last job buying a house, buying a house on one income, this is one I would seriously consider. Cute as  a bug. I will say that everything in this price range listed on realtor.com already has pending sale so I would imagine the starter houses go fast.

https://www.realtor.com/realestateandhomes-detail/9416-Lavern-Pl_Saint-Louis_MO_63123_M86353-49950?from=srp-list-card

ChpBstrd

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Re: Where was housing "affordable" in 2023?
« Reply #42 on: February 09, 2024, 01:51:42 PM »
I will say that everything in this price range listed on realtor.com already has pending sale so I would imagine the starter houses go fast.
Sometimes I think the future looks like a stereotype of suburban/exurban McMansions in gated communities being occupied by mentally ill people over 65 and the more vital, youthful places being the towns that dropped their zoning bullshit and allowed houses like the one you linked to be built again. I bet the people in that neighborhood know each other, have backyard BBQs, have kids, plan camping trips, etc.  The people who commute 30 miles from a snout house development just watch TV and mow grass, and someday that becomes an undesirable lifestyle or the definition of missing out.

BTW, the way they remodeled that kitchen was masterful, and I wish people around me preserved their original stained woodwork instead of painting over it. The modern style bathroom breaks up the theme though.

swashbucklinstache

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Re: Where was housing "affordable" in 2023?
« Reply #43 on: February 09, 2024, 05:08:19 PM »
There's no point to my post except to further highlight how complicated housing is. For example, what's an ideal percentage of income spent on housing? Does that depend on the cost of other necessities? Ownership rates? How much variation by location is okay? What if we divide by square footage? Even further it might just be fair to say that buyers in the last X years got a good deal and buyers today didn't, and so be it. To ChpBstrd's point, we see the results are suburban mcmansions that are at least bad for the environment and I hope we course correct. I'm optimistic we can because this stuff changes more than one might think.

BLS data 1901-2002 (pdf)
https://www.bls.gov/opub/100-years-of-u-s-consumer-spending.pdf

Fun points
  • Income left after necessities went from 20% up to 50%. My opinion is this is a huge contributor from the demand side though we all know supply is a problem. I could believe a story (citation needed) where developers want that extra income and any increased NIMBYism friction makes it an even easier choice to build big suburban homes.
  • Housing expenses didn't eclipse food expenses until the 1960s(!)
  • In 1901 Americans spent 23% of their income on housing. In the 1960s families spent 62.5%(!) of their income on housing. That dropped to 20% in 2002
  • In 1901, 81%(!) of households were renters compared to 33% in 2002. As someone who pokes fun at landlords I'm also constantly making fun of people whining incessantly about their being too many landlords as a huge contributor. It is also worth a spin down memory lane to learn that pre-1930s mortgages were a lot different (50% down, 5 year balloon payment or 12 year B&L) and modern credit scores weren't even used until the mid-1990s. Only rich white people could buy homes for a long time.
  • Real income increased 2.4x. People like to talk about real incomes not increasing since the 1970s but it is pretty clear here there was a drop during a high inflation era that returned to increasing and continued to increase for the following 20 years. This definitely contributed to home ownership increase (https://www.nber.org/system/files/chapters/c12801/c12801.pdf)
  • Family size went from 4.9 to 2.5. This plus a growing population shows strong dependence on supply getting it right.
It's amazing to think how far we've come. Massively more people can afford to own homes, the percentage they spend on housing has stayed in a similar range, and houses are much bigger. I'm optimistic we can make huge changes through innovation even if real income increases stop:
Quote
He estimated that changes in home financing might explain about 40 percent of the overall increase in homeownership during this period

iris lily

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Re: Where was housing "affordable" in 2023?
« Reply #44 on: February 09, 2024, 05:41:24 PM »
I will say that everything in this price range listed on realtor.com already has pending sale so I would imagine the starter houses go fast.
Sometimes I think the future looks like a stereotype of suburban/exurban McMansions in gated communities being occupied by mentally ill people over 65 and the more vital, youthful places being the towns that dropped their zoning bullshit and allowed houses like the one you linked to be built again. I bet the people in that neighborhood know each other, have backyard BBQs, have kids, plan camping trips, etc.  The people who commute 30 miles from a snout house development just watch TV and mow grass, and someday that becomes an undesirable lifestyle or the definition of missing out.

BTW, the way they remodeled that kitchen was masterful, and I wish people around me preserved their original stained woodwork instead of painting over it. The modern style bathroom breaks up the theme though.

 There are many new houses being built in my hometown in Iowa that range between 1200 and 1400 ft.²
In my opinion they are builder schlock  and I would not want one, but as far as addressing your point that only McMansions are being built, you are wrong about that. And many people just want new houses. But they are not cheap, they are all over $300,000.

I would much rather have the 1930s cute house in my post above. You’re right, they did a lovely job with that kitchen and retaining the original cabinets. Very cute. This is in a close in suburb to St. Louis that has lots of working class houses built 1930-1960  that are just like that, and it is not a bad neighborhood at all. But for some people living anywhere close to the. Big Bad City s a non-no.

« Last Edit: February 09, 2024, 11:49:12 PM by iris lily »

Tass

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Re: Where was housing "affordable" in 2023?
« Reply #45 on: February 09, 2024, 05:59:10 PM »
I would much rather have the 1930s cute house in my post above. You’re right, they did a lovely job with that kitchen and retaining the original cabinets. Very cute. This is in a close in suburb to St. Louis that has lots of working class houses. Uilt 1930-1960  that are just like that, and it is not a bad neighborhood at all. But for some people living anywhere close to the. Big Bad City s a non-no.

I've been looking (casually) at old houses in the area I want to live, but I'm intimidated by the commitment. How crazy of an idea is it for first-time homeowners with only small-scale DIY experience to sign up to maintain a 100-year old building??

iris lily

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Re: Where was housing "affordable" in 2023?
« Reply #46 on: February 09, 2024, 09:02:07 PM »
I would much rather have the 1930s cute house in my post above. You’re right, they did a lovely job with that kitchen and retaining the original cabinets. Very cute. This is in a close in suburb to St. Louis that has lots of working class houses. Uilt 1930-1960  that are just like that, and it is not a bad neighborhood at all. But for some people living anywhere close to the. Big Bad City s a non-no.

I've been looking (casually) at old houses in the area I want to live, but I'm intimidated by the commitment. How crazy of an idea is it for first-time homeowners with only small-scale DIY experience to sign up to maintain a 100-year old building??

You have to have a sizable house fund to address the big problems that will occur that you cannot DIY. Plumbing, electrical, roof, exterior maintenance— the big stuff.

As for DIY, if you mean cosmetic upgrades well you don’t have to do that. That’s up to you what you do.

Log

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Re: Where was housing "affordable" in 2023?
« Reply #47 on: February 10, 2024, 12:07:54 AM »
In 1901, 81%(!) of households were renters compared to 33% in 2002. As someone who pokes fun at landlords I'm also constantly making fun of people whining incessantly about their being too many landlords as a huge contributor. It is also worth a spin down memory lane to learn that pre-1930s mortgages were a lot different (50% down, 5 year balloon payment or 12 year B&L) and modern credit scores weren't even used until the mid-1990s. Only rich white people could buy homes for a long time.

This is one of the most important trends to explain the whole thing. On one hand, it’s good for more people to be able to own if they want. On the other hand, barely over 50% of people owning, and those people generally having a higher propensity to vote than renters, means owners have control over policy. So we get, for example, federal tax subsidies for mortgages, but no comparable subsidy for renters. And big picture, we get policy that prioritizes the appreciation of homes an asset class over  the affordability of homes as a consumer good.

Dicey

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Re: Where was housing "affordable" in 2023?
« Reply #48 on: February 10, 2024, 12:11:55 PM »
Paper chaser, that is interesting that you pair 1980 and 2022.I didn’t choose those dates  on purpose,  1980 was when I first started thinking about buying a house as a single person.

I’ve been married for decades, but, I’m thinking about my salary of $85,000 before I retired, there are many cute houses I could buy in St. Louis using the old rule of 2 1/2 times your annual income. I don’t know what those guidelines are currently and  All I can find are monthly guidelines&94 biying real estate;  I just don’t think in terms of monthly income.

If I were single at my last job buying a house, buying a house on one income, this is one I would seriously consider. Cute as  a bug. I will say that everything in this price range listed on realtor.com already has pending sale so I would imagine the starter houses go fast.

https://www.realtor.com/realestateandhomes-detail/9416-Lavern-Pl_Saint-Louis_MO_63123_M86353-49950?from=srp-list-card
I could live in that. Oh, wait. It snows there, doesn't it?

ChpBstrd

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Re: Where was housing "affordable" in 2023?
« Reply #49 on: February 10, 2024, 06:58:39 PM »
I will say that everything in this price range listed on realtor.com already has pending sale so I would imagine the starter houses go fast.
Sometimes I think the future looks like a stereotype of suburban/exurban McMansions in gated communities being occupied by mentally ill people over 65 and the more vital, youthful places being the towns that dropped their zoning bullshit and allowed houses like the one you linked to be built again. I bet the people in that neighborhood know each other, have backyard BBQs, have kids, plan camping trips, etc.  The people who commute 30 miles from a snout house development just watch TV and mow grass, and someday that becomes an undesirable lifestyle or the definition of missing out.

BTW, the way they remodeled that kitchen was masterful, and I wish people around me preserved their original stained woodwork instead of painting over it. The modern style bathroom breaks up the theme though.

 There are many new houses being built in my hometown in Iowa that range between 1200 and 1400 ft.²
In my opinion they are builder schlock  and I would not want one, but as far as addressing your point that only McMansions are being built, you are wrong about that. And many people just want new houses. But they are not cheap, they are all over $300,000.

I would much rather have the 1930s cute house in my post above. You’re right, they did a lovely job with that kitchen and retaining the original cabinets. Very cute. This is in a close in suburb to St. Louis that has lots of working class houses built 1930-1960  that are just like that, and it is not a bad neighborhood at all. But for some people living anywhere close to the. Big Bad City s a non-no.
Yea I think even if it's small, nothing around $300k is a "starter home". A true starter home, affordable to typical person with a salary one could earn in their 20s, if not early 20s, would be about $150k at these mortgage rates. The ~$1200 payment after insurance and taxes would be $14,400/year, which would allow people earning $48k per year to afford a home at the recommended upper limit of 30% of their gross salary.

Going back to the design of that house, notice how it is a simple rectangle with mostly-uniform windows, with just enough extra room on the lot (50' wide?) for a one-car driveway. The closets are tiny, and when it was originally built I doubt the basement room was finished, so maybe it was a 900-1000sf house. I would be interested to learn whether the 1200-1400sft houses built in your area are a similarly economical design, or if the walls zig zag, the lot is big, the roofline has all sorts of angles, and a $50,000 2-car garage is tacked onto the front.

A builder would tell us both there's no demand for a house like this 1930s cottage. Millions of people complaining on the internet would say they'd jump on a $150k cottage. Somebody is incorrect.

Perhaps to hit the $150 number I suggest, we'd have to go back to building something like Philadelphia row houses.

 

Wow, a phone plan for fifteen bucks!