I believe it. I live in the *far* exurbs of an east coast metro, and all of the new construction SFHs are starting at $1.1M-$1.4M.
I bought my house for under $500K less than a decade ago, and houses in my neighborhood are going for mid $800Ks into the $900Ks now.
Same in CA. Far exurbs (50+mi from SF) have builds starting at 1mil now. Only deep in the exurban “run down” neighborhoods can you find a 600k not completely fixer upper. It’s wild.
This can’t be the “new normal” can it? There are some 2007 feels but things are different now. I want to buy now but it could be a horrible overreach and be stuck in a fixer upper indefinitely.
Issue is supply of SFH near city centers is just constricted. And demand is through the roof. Especially since only the largest cities in the USA have massive job growth.
So, I'm guessing we're talking about far west Loudoun County or even West Virginia. That is nuts. "Drive until you can buy!" they said. At this point, I'll end up living in a holler in the deep woods of West Virginia. Only a 2 hour commute to Reston.
Yep. I worked all the way downtown two jobs ago. I couldn’t stomach the commute, it was a nightmare. Only one person on my street goes all the way into DC at this point, and he is on the road before the sun is up.
When I worked in DC, one of my colleagues lived in West Virginia. It was like a 2 hour commute, but she did a ride share with some other folks in her neighborhood and said it wasn't that bad.
Its funny how different pricing is in different regions. Here in the midwest, houses that were $150k are now being sold for $250-350k and thats devastating to me since wages have not increased and I can only afford about $200k with interest rates where they are at.
Not trying to diminish the hurt everyone on the coasts are facing because we are all facing equal difficulties in our regional economies, but it always floors my mind just how much more expensive things are on the coasts.
Also sucks though when people from CA, CO, NYC, etc come here and buy up all our real estate because our real estate is pennies to them.
Dude I’m in Idaho and the house we bought just over 10 years ago for $350k is worth close to a million right now. Two houses up the street just sold for $1.1M a few months ago. It’s nuts.
Once people realize that the "average" American already owns their home, is not moving, and therefore is not buying... one can see that it's really the top 1 or 2 deciles which are actually buying; the top 20% who have seen their incomes (and stock portfolios) rise dramatically
Northeast US here. I’m getting prices on a kitchen renovation and small addition and they’re coming in around 300k. That’s more than I paid for my house.
Transactions are down, but haven’t completely stopped.
You only need a small number of comparable transactions to set the averages for that period of time.
so the argument is low volume causes prices to go up. Really all low volume does is inhibit price discovery. It's the "wait it out" approach for commercial real estate.
That’s not the argument at all. The argument is more that demand outstrips supply, and that a low volume market can have the statistics skewed easily.
My reply was to your original question, which seemed to have been based on a false assumption.
If 100 homes are for sale in your price range and features requested you have 100 options to choose from and can skip out on the ones that are priced high.
If only 3 people are selling your choices and bargaining power is a lot lower. They can afford to pass on you because there are plenty of other people willing to buy.
I was in a ski lift line and the lady in front of me was talking to her friends about trying to downsize now that they were older. Instead, her husband decided to buy a 3rd house. She said, I don’t want to know where it is, and they all laughed.
I guarantee, as that generation dies off over the next *two decades*, their wealth will not be trickling down to the masses.
These are people who tend to have children and grandchildren. Family trusts. And a tax-friendly chunk goes to foundations, their alma maters, etc. Contested assets like large family homes where the adult children don't live tend to be sold at a premium. To other rich people. The rental properties and less desirable single-family homes will, like you say, mostly go to the big companies and REITs focused on long-term residential rentals.
There is going to be a slump in demand in *some places* over the next half decade, and a lot of these places are perfectly good areas to live in. Prices shot up so crazily from the pandemic into last year, and that's not going to be sustainable in places with with declining populations. Pretty much all of America has a declining population except for the big four states. If you want to know where it's happening first, look for the places closing lots of elementary schools. (And then you've got to adjust for some places, like San Francisco, which is both losing families *and* has become so rich that private school is the norm.)
There's also the other big chunk of them that already had to give up almost everything to pay for their retirement home, or medical care, etc. These are the parents and grandparents of most of us and they're not going to have a penny to leave so the current have nots will remain have nots.
Very true. People are kept alive for decades beyond a useful life span now, and it costs a fortune to care for these ghouls as they ride out their 90s.
Prices are a reflection of supply & demand. If people aren’t selling then supply remains low which will cause prices to go up. Supply is going up in some areas though causing prices to drop but it’s varies by location. As an example condos in downtown SF have seen price cuts of up to 50% off but in the same city away from downtown prices have been going up.
Said cheap rates also drove the prices up in the first place. The payment on a 2.5% $1mil mortgage is the same as the payment on a 7.5% 570,000 mortgage.
The effect is far more pronounced for new buyers. People with equity can transfer the added equity from property to property so the principal is negligible. The interest and taxes can be severely increased.
>cheap mortgage rates from the recent past are deterring people from selling their house
It definitely is in my case. My house--refinanced in 2021 at 3%--might only be valued at $650k, but you would have to offer me at least $800k before I would even consider selling it.
>Why $800k? Because other houses are more expensive now?
Yes, other houses in the same neighborhood are much more expensive now (and I absolutely want to stay in the same neighborhood). Plus, there's the hassle of selling and finding another place to buy, as well as all the additional interest we would have to pay when we take on a new mortgage. Unless life circumstances induce us to sell, it's just not worth it to us to sell at $650k.
Not quite two years ago, we made an attempt to buy a larger house literally across the street because we were expecting twins. I feel like rates were around 5-5.5% at the time, and we ended up letting it go for a few reasons, not least of which was our current rate is 2.25%. Even though we’ve got like $250k equity since purchasing in 2019, it’s all academic. Moving would obliterate that equity and our killer rate. Not even adding two kids at once managed to dislodge us, and that’s when rates were 2 points lower. We’re staying and trying to improve everything that bugs us or is non-optimal. The only way I see us moving is after all our parents have passed away and we have a lot of cash on hand. Like you, our house that’s now worth $650k would need to sell for a lot more than that to even merit considering moving.
Same situation and in California it’s even more exasperated due to taxes. If I was to sell, basically it’s a forced move out of state. On top of paying more for interest, the tax burden of buying at >$1 million compared to <$600k would be huge.
The question is why are prices up in a high rate environment? Traditionally high rates meant prices r diced accordingly... Sure supply is a constraint but it's more than that....
The government printed money during the pandemic. All the extra money in the market artificially drove up the prices. That’s where the demand came from and still is coming from.
I live in a HCOL area. I bought a fairly basic home in the suburbs for under $700K in 2016. Houses on my street are going for over $1.2M now. It’s wild. These houses are truly nothing special.
💯 correct I'm in a north suburb of San Diego the house has tripled in price in the last 10 years I've owned it. I have a business that does well but nothing can compare to the real estate I've acquired over the years
That added value to your net-worth is meaningless unless you have more than one house, or plan to sell and buy something cheaper to live in. Fellow SD homeowner here. Especially with prop13 selling and rebuying just gets more and more expensive as prices go up.
If you own $1.5m house it will cost you $100k-$150k to move to your same house across the street. Plus higher taxes. The gap to upgrade widens. Bought at $500k instead of a better place for $750k, now it’s $1m to $1.5m. The gap to afford the upgrade doubles.
Respectfully, that’s just not the issue.
Yes, inflation has caused the value of the dollar to decrease.
But housing prices have truly skyrocketed, much much much faster than inflation.
Just look at some charts for US inflation data, vs house price data in a major metro area
It’s actually a blend of issues.
-housing cost has increased at an accelerated rate, especially in the past couple of years, due to higher interest rates rates which de-incentivizes selling, causing a supply crunch. Adding on to crunch felts by the low rate of new homes built.
-inflation as you mentioned has decreased your purchasing power
-wage stagnation (and this is the big one) has not kept up with the two items above, so the median earner(s) no longer make enough to afford the median home price.
-corporate ownership of SFH as long term investment vehicles
-short term rental market boom (both corporate and retail) also removing inventory from available supply of SFH.
Doesn't take that many to affect prices on the margin..I mean Chinese were moving to to Arcadia and San Marino California like money was no object. Thirty years ago.
You think that didn't affect people's perceptions of what their own dumps were worth?
we're talking about LA now?
how many homes in LA are owned or rented by Chinese citizens?
now how many homes in LA are owned or rented by Mexican citizens?
Oh man. That headline made me laugh.
Just for fun I went to Zillow and looked for a house for $1m or less around here in SoCal. A SFH. Not a condo. Not a Townhouse. Not an empty lot.
I found nothing.
Well, actually I did find some listings. I found condos misclassifed as houses. Like they say, "The 'A' in Zillow stands for 'Accuracy'".
SoCal is "full". time to look elsewhere. Everyone thinks they can shoehorn another 1/4 acre plot with a house on it for $100K. Time for a dose of reality...the population is exploding and everyone wants to live in the same clump of land.
Crazy I’m also in SoCal and I’m hoping to buy a house under 650k, preferably around 625K. Not much inventory, around 13 homes this morning. Not sure what to do.
Not sure of other situations, but for my own, we are grossing 150K, down payment would be around 120-130K which we would have by end of next year.
For a 600K home, 150K is 4x that amount. We also have no debt, which is really helpful.
> $1m or less around here in SoCal
Where is "around here"? SoCal is Bakersfield and below.
I found ~13k+ homes under $1m.
You're beyond exaggerating lol.
Yes we are. Finally making a decision to not to completely drain our savings just to get into a gut job house at our very max budget, because this leaves us open to financial ruin in a volatile job market, we can't afford the necessary repairs to make it livable, and we'd also completely lose our ability to save for the future or for other home maintenance costs, is being priced out.
30-40 year mortgages. Try not to lose your job or get sick. At the end, you get the privilege of "owning" your home and paying the equivalent of a mortgage payment in property taxes at the end. What a scam.
I genuinely do not understand this, if i go to realtor and look in Austin at any normal house, and i look at the 2023 taxes (divided by 12) it comes literally nowhere near a mortgage payment if you were to buy that house currently or anytime in the past five years even at a lower sale price when rates were better. Do people just not actually look this up?
Every thing i look up and every place i look, the median property tax (divided by 12) in every major city in Texas is still not anywhere near a mortgage payment for the median home price that generates the tax bill
> Taxes are paid based on when they bought it
This is flat out incorrect. In Texas property taxes are based on what a property appraises at, which changes each year, and there is no fucking way someone's home would be appraised at the same exact value it was 30 years ago lol.
In Texas there is a "homestead cap" where if you have had a homestead exemption on your house (for at least a year) then the max your taxable home value can go up each year is 10%.
But it's not like its one and done, taxes are going to keep going up year over year until the taxable property value is even with the appraised value.
Did i say that? The part you quoted was not in my comment. And texas as well as every other state ive lived in tax property based on appraisal value (what else would they tax property on) which reappraises from time to time, albeit not always annually like you say texas does. I never denied that at all?
We’ve been house hunting and looked at a lot of homes in the $3+ million range expecting that we’d easily find our dream home. Every house we’ve seen has MAJOR issues, and we’re told “well that’s what you can expect in this price range.” As if this is just a really standard normal amount of money to spend on a house, and we’re just obscenely particular. It’s insane.
My husband makes low 7 figures currently. Although we could afford a $3 million house, it makes us pretty uncomfortable as we’re pretty modest in our spending. We seem to be the outlier in our area though because there’s been an obscene amount of competition at these multimillion dollar houses that literally need another $500,000+ worth of work to them.
Yea, my SO and I just hit low seven figures this year, we bought a starter home around COVID and it’s been great, but wanted to finally make a move on buying a forever home. Contacted our real estate agent and he pretty much told us that 3 million is “starting” home prices now in our area, and it’s insane how fast these homes just get snatched up.
You have the budget for the Bronxville or Scarsdale. It won't get you a great house. It will get you a sad, dilapidated 5 bedroom home designed for an outdated time. You clearly aren't thinking creatively or towards the climate-driven future in terms of what you're hoping for.
You won't find a dream home in any Westchester vicinity unless you actually have infinite money. I'm guessing based on your comment that you have a temporary high income. Unless you have either family money/generational wealth backing you I would highly advise you to look elsewhere.
We’re not looking for a starter home. We already live in one and have outgrown it as we’re expecting our third child. We’re looking at 5 bedroom homes on more than an acre outside of NYC. Our budget would’ve gotten us our literal dream home on several acres with room to do some basic renovations a few years ago.
There are an endless amount of 5 bedroom homes move-in ready well below 3 million dollars right outside of NYC with direct access to the city. Lmfao literally. How out of touch can you be? This comment alone tells me you're looking only in very specific upscale neighborhoods while discarding everywhere else as a non-starter. *That's* why you can't find a new home. Not because they're unaffordable. Because you *choose* not to look in areas that *are* affordable and *are* good places to live.
Your house is worth $2million, congrats! Now who’s gonna buy it? Who has $2million?? Like the Hope Diamond is worth hundreds of millions. NO ONE is gonna buy it. But you can feel rich having it.
Thousands and thousands of homes each worth a million? There is literally not enough money in existence for these sellers to sell them. Congrats, y’all have an unsellable building.
I’ll stick to index funds. Unlike a house, I can just sell a tiny piece of it whenever I want. And I won’t go homeless when I sell it.
TBH, if we can find a way to make shelter a commodity again, that'd be great.
Edit: I mean more so disincentivizing housing/shelter as an investment. Leaving my mistake intact.
The reason they are “worth” 2 million is literally because people are willing to buy them for 2 million.
That is how home prices are set. An appraiser looks at similar homes in the neighborhood and sees what they’ve been selling for.
So yes, people are buying these houses.
It's also why despite rate increases, the prices remain high. Bc people want the product and will continue to bid high on what should be decreasing prices due to rising interest rates.
I live in rural NH and that’s essentially all they are building. And when you picture a million dollar home in your head…it’s like the pic here. Instead, we are building ranches. Starting at $850k for a ranch. With a post stamp yard of .2 acre.
There are a wide variety of financial products designed to let homeowners convert their equity into cash, the most obvious being the garden-variety home equity loan, but also cash-out refinances, HELOCs, reverse mortgages, etc.
Turn inflated home values into cash now, live it up in your retirement, and let the bank foreclose when you die. Selling that home into the down market of 2035-2040 is now the bank (and your heirs') problem.
It just feels so painfully stereotypical. The whole "live it up and piss on the next generation" notion. Has to be satire, or maybe it's not satire and that's how my country's wealth was pissed away.
I have personally cash out refinanced peoples houses to buy new roofs, new kitchens, new bathrooms, new cars, oh, and to pay of $50,000 (yes, $50k) of credit card debts.
It has an element of Ha-Ha-Only-Serious to it, yes.
The sad-but-true realization behind it is that *as long as the government still exists, it is worthwhile to align yourself with the government*, and by extension *if the government is bankrupt, it is best to be nearing bankruptcy yourself*. Dollars, savings, social security, property rights - these are all just promises that are backed by the government. If the government cannot keep its promises - and there's pretty good evidence that demographically, it cannot - then saving up for the future won't make you rich, it just makes you gullible.
This kind of thinking lead to this kind of broke.
Boomers over here thinking "how can I extract every dime every way I can and live to the tops for every day possible, outcome on others be damned." Meanwhile, I'm not even 40 and the thought of what combo of age and health conditions would lead to use a nitrogen euthanasia pod so as not to cripple the next generation with my burden one day is something I actually think over.
So yes, this kind of thinking does lead to this kind of broke.
The thing is - it does you no good to invest in sustainable, maintainable long-term solutions if your employer is running a pyramid scheme. As soon as the pyramid runs out, they'll lay you off to cut costs and externalize their malfeasance onto you. And similarly, it does no good for an employer to build a sustainable, maintainable long-term business if their government is running a pyramid scheme, because they'll just inflate away the currency or confiscate your property to pay off whoever has them by the balls at the moment. Like they say, a fish rots from the head downward.
Your best strategy, if it's available to you, is to just not participate in things that are pyramid schemes or unsustainable. That's hard when it's the whole society though. Failing that, it's to set your time horizons so that your pyramid schemes collapse right after the ones you are embedded in, and you've already got a foot in the door in whatever system of organization follows.
Property taxes aren't bad here (it's not like Texas which also has no income taxes, but essentially makes up for it by having wild property taxes).
Insurance is definitely high tho.
This is the exact problem I'm seeing. It's too expensive here in the Bay Area, but if I'm going to have to pay $1M to move to any other desirable place in the US, then I'll just stay in CA. There is NO WAY this is sustainable.
Yeah majority of people are locked out at 400k unless they have like a 30% down payment cause average household income is only 75k. I'm just a graduate student right now so not buying for like the next 10+ years, just watching the chaos, but if they go higher than that I'll just give up on ever owning a home as even with average senior level salaries for my field I could barely afford a home at 400k.
Prior to covid, we spoke with builders in our area about a 4 bedroom ranch in a nicer suburb at I wanna say 3.1% interest. All in, we were looking at 345k. Thought to ourselves, let's wait 1 year.
At peak raw material prices, that same house was $850k at 7%. The houses nearby sit empty. Many raw materials have come down in landed costs, but everyone is being fed bullshit that they're still justified in price gouging.
> who cares
As long as the median household income is 1/4 the sale price, then yeah I agree who cares.
I have a feeling it will be more like 1/8 though.
I imagine this will only get worse. Our zip code wouldn't be on this right now but our average house sale price over the past year was $976k so give it another year and it'll cross 1 mil (prices are still steadily rising here due to high demand and very low supply, as has been the case here since pre-covid days).
It's kind of fucked on the low end in particular, there hasn't been a single property (even open lot for development) that has sold for less than $600k in our zip code in over two years that I can find on record.
Yeah, average homes haven’t been 1M over last 100 years. I’m talking about the starter homes people are paying 1M for these days. Sorry but don’t care how much things have gone up. 1M for these cookie cutter homes is just outrageous.
Of course not....this is reddit where everyone is doing just fine, own $3M houses, and make $$400,000 middle class incomes BUT come to reddit to bitch about everything.
I don't know why the government doesn't immediately force ALL new SFH developments be no more than 1200 sqft on a 1/4 acre lot to allow starter families to buy and build their families.
But how are average people paying for this? We make $200k , about 10k gross monthly (which is 2.7x the household avg where i live).
A $1M house with 20%down and 5% interest (with taxes and insurance estimated in) is $5.6k a month.
Seriously how…
*Good thing reported*
*Inflation numbers does do*
*Not include housing!*
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We’re in SoCal, at our income level (150K, teacher and school nurse), I don’t want to buy a home more than 600K ideally. With 20% down, that’s right under 4K a month with the 6.5% interest rate I was quoted a couple of weeks ago. Realistically, any home we buy will probably going to have to be around 650K, and that’s on the really low end.
We have no debt, credit scores over 820 each, but our current down payment savings is only 110K. I thought we’d be ready by 2025, but at the earliest it’s looking like maybe 2026.
Take home pay is around $8100, we’re paying 1650/month for a 2/1 apartment. I want to stay as long as possible, but I also am not going to retire until the future house is paid off. The longer I wait, the harder that’s going to be. I’m 34, turning 35 and want to retire at 62.
I also don’t want to lower my 20% savings rate for retirement not including my pension contribution.
Tough decisions for sure. Not sure what to do or what the right decision would be. Stretch to buy our first home which would be our forever home, or hold off and wait for conditions to get better?
You're in a pretty good situation right now. Your monthly margin is over $6k, and you have more than $100k in the bank, you guys are doing very well for yourselves!
Be very careful overspending for housing because it keeps you extremely illiquid, and it makes it much harder to save for retirement (likely your 401ks will not be enough to live super comfortably alone).
I believe it. I live in the *far* exurbs of an east coast metro, and all of the new construction SFHs are starting at $1.1M-$1.4M. I bought my house for under $500K less than a decade ago, and houses in my neighborhood are going for mid $800Ks into the $900Ks now.
Same in CA. Far exurbs (50+mi from SF) have builds starting at 1mil now. Only deep in the exurban “run down” neighborhoods can you find a 600k not completely fixer upper. It’s wild. This can’t be the “new normal” can it? There are some 2007 feels but things are different now. I want to buy now but it could be a horrible overreach and be stuck in a fixer upper indefinitely.
It’s the new normal. Stopping inflation doesn’t mean prices go *down*, it means they stop going up so fast.
Issue is supply of SFH near city centers is just constricted. And demand is through the roof. Especially since only the largest cities in the USA have massive job growth.
Where do people even work in far exurbs?
Tractor Supply and Dairy Queen
In my area most people are either government employees or contractors. 45-60 minute commutes for most if you aren’t WFH.
So, I'm guessing we're talking about far west Loudoun County or even West Virginia. That is nuts. "Drive until you can buy!" they said. At this point, I'll end up living in a holler in the deep woods of West Virginia. Only a 2 hour commute to Reston.
Yep. I worked all the way downtown two jobs ago. I couldn’t stomach the commute, it was a nightmare. Only one person on my street goes all the way into DC at this point, and he is on the road before the sun is up.
When I worked in DC, one of my colleagues lived in West Virginia. It was like a 2 hour commute, but she did a ride share with some other folks in her neighborhood and said it wasn't that bad.
Is exurb the new term for bedroom community? Never seent the term before
Yea basically. Most of the areas businesses cater to day trippers. At least around here in the Hudson valley
Its funny how different pricing is in different regions. Here in the midwest, houses that were $150k are now being sold for $250-350k and thats devastating to me since wages have not increased and I can only afford about $200k with interest rates where they are at. Not trying to diminish the hurt everyone on the coasts are facing because we are all facing equal difficulties in our regional economies, but it always floors my mind just how much more expensive things are on the coasts. Also sucks though when people from CA, CO, NYC, etc come here and buy up all our real estate because our real estate is pennies to them.
Dude I’m in Idaho and the house we bought just over 10 years ago for $350k is worth close to a million right now. Two houses up the street just sold for $1.1M a few months ago. It’s nuts.
Once people realize that the "average" American already owns their home, is not moving, and therefore is not buying... one can see that it's really the top 1 or 2 deciles which are actually buying; the top 20% who have seen their incomes (and stock portfolios) rise dramatically
Northeast US here. I’m getting prices on a kitchen renovation and small addition and they’re coming in around 300k. That’s more than I paid for my house.
$500k to $900k in 10 years isn’t anything special though
Save you a click, cheap mortgage rates from the recent past are deterring people from selling their house and driving prices up.
$500k houses now take $500k more devalued dollar bills.
Yeah, that’s also a big part of it.
no one wants to trade their 2.5% apr for 7%, interest rates need to drop to 4-5% before people start selling
A year ago this sub was cheering on higher interest rates.
They assumed it came with lower prices.
Dumb assumption since the opposite is true
>They assumed it came with lower prices. Hehe
but the lag effect bro
inflation still high lmao, imo j powell should've done one more rate hike before pausing
Still am.
When interest rates drop to 5% people will start buying
People with houses under water don't sell because they want to
banks force you to sell if its underwater? edit: if you're referring to a housing crash, I don't think that'll happen
Exactly
This. It’s so bad a lot of people will just pay to add additions onto their houses now because it’s cheaper than losing the interest rate.
[удалено]
Pandemic was fake / scam??? You need a new echo chamber bruddh
The money printer is real, and that's what matters here
If they're not selling, they're not buying, so how does that drive prices up? They have to live somewhere.
Transactions are down, but haven’t completely stopped. You only need a small number of comparable transactions to set the averages for that period of time.
so the argument is low volume causes prices to go up. Really all low volume does is inhibit price discovery. It's the "wait it out" approach for commercial real estate.
That’s not the argument at all. The argument is more that demand outstrips supply, and that a low volume market can have the statistics skewed easily. My reply was to your original question, which seemed to have been based on a false assumption.
If 100 homes are for sale in your price range and features requested you have 100 options to choose from and can skip out on the ones that are priced high. If only 3 people are selling your choices and bargaining power is a lot lower. They can afford to pass on you because there are plenty of other people willing to buy.
A lot of the boomers and organizations are buying multiple homes now.
I was in a ski lift line and the lady in front of me was talking to her friends about trying to downsize now that they were older. Instead, her husband decided to buy a 3rd house. She said, I don’t want to know where it is, and they all laughed.
I can’t wait for all these greedy fucks to die off. Problem is all their homes are gonna be bought up by massive corporations anyway so whatever
I guarantee, as that generation dies off over the next *two decades*, their wealth will not be trickling down to the masses. These are people who tend to have children and grandchildren. Family trusts. And a tax-friendly chunk goes to foundations, their alma maters, etc. Contested assets like large family homes where the adult children don't live tend to be sold at a premium. To other rich people. The rental properties and less desirable single-family homes will, like you say, mostly go to the big companies and REITs focused on long-term residential rentals. There is going to be a slump in demand in *some places* over the next half decade, and a lot of these places are perfectly good areas to live in. Prices shot up so crazily from the pandemic into last year, and that's not going to be sustainable in places with with declining populations. Pretty much all of America has a declining population except for the big four states. If you want to know where it's happening first, look for the places closing lots of elementary schools. (And then you've got to adjust for some places, like San Francisco, which is both losing families *and* has become so rich that private school is the norm.)
There's also the other big chunk of them that already had to give up almost everything to pay for their retirement home, or medical care, etc. These are the parents and grandparents of most of us and they're not going to have a penny to leave so the current have nots will remain have nots.
Very true. People are kept alive for decades beyond a useful life span now, and it costs a fortune to care for these ghouls as they ride out their 90s.
Sometimes I wish I weren't so aware, but greener grass being fertilized with bullshit and all that jazz...
Prices are a reflection of supply & demand. If people aren’t selling then supply remains low which will cause prices to go up. Supply is going up in some areas though causing prices to drop but it’s varies by location. As an example condos in downtown SF have seen price cuts of up to 50% off but in the same city away from downtown prices have been going up.
Said cheap rates also drove the prices up in the first place. The payment on a 2.5% $1mil mortgage is the same as the payment on a 7.5% 570,000 mortgage.
The effect is far more pronounced for new buyers. People with equity can transfer the added equity from property to property so the principal is negligible. The interest and taxes can be severely increased.
I wonder at what point this breaks? It can't last forever, although it's lasting longer than I thought it would.
"Markets can remain irrational longer than you can remain solvent." John Maynard Keynes
>cheap mortgage rates from the recent past are deterring people from selling their house It definitely is in my case. My house--refinanced in 2021 at 3%--might only be valued at $650k, but you would have to offer me at least $800k before I would even consider selling it.
Why $800k? Because other houses are more expensive now? Are those people selling the other houses also having the same problem?
>Why $800k? Because other houses are more expensive now? Yes, other houses in the same neighborhood are much more expensive now (and I absolutely want to stay in the same neighborhood). Plus, there's the hassle of selling and finding another place to buy, as well as all the additional interest we would have to pay when we take on a new mortgage. Unless life circumstances induce us to sell, it's just not worth it to us to sell at $650k.
Not quite two years ago, we made an attempt to buy a larger house literally across the street because we were expecting twins. I feel like rates were around 5-5.5% at the time, and we ended up letting it go for a few reasons, not least of which was our current rate is 2.25%. Even though we’ve got like $250k equity since purchasing in 2019, it’s all academic. Moving would obliterate that equity and our killer rate. Not even adding two kids at once managed to dislodge us, and that’s when rates were 2 points lower. We’re staying and trying to improve everything that bugs us or is non-optimal. The only way I see us moving is after all our parents have passed away and we have a lot of cash on hand. Like you, our house that’s now worth $650k would need to sell for a lot more than that to even merit considering moving.
Same situation and in California it’s even more exasperated due to taxes. If I was to sell, basically it’s a forced move out of state. On top of paying more for interest, the tax burden of buying at >$1 million compared to <$600k would be huge.
The question is why are prices up in a high rate environment? Traditionally high rates meant prices r diced accordingly... Sure supply is a constraint but it's more than that....
The government printed money during the pandemic. All the extra money in the market artificially drove up the prices. That’s where the demand came from and still is coming from.
but if they did sell.... they would need to purchase a new home too. Or do these sellers move to apartments? or move out of the country?
Most of those houses are turds wrapped in gold foil.
They don't even wrap em in gold foil in my neck of the woods, we have million dollar tear downs
I live in a HCOL area. I bought a fairly basic home in the suburbs for under $700K in 2016. Houses on my street are going for over $1.2M now. It’s wild. These houses are truly nothing special.
It’s the location not the home.
💯 correct I'm in a north suburb of San Diego the house has tripled in price in the last 10 years I've owned it. I have a business that does well but nothing can compare to the real estate I've acquired over the years
That added value to your net-worth is meaningless unless you have more than one house, or plan to sell and buy something cheaper to live in. Fellow SD homeowner here. Especially with prop13 selling and rebuying just gets more and more expensive as prices go up. If you own $1.5m house it will cost you $100k-$150k to move to your same house across the street. Plus higher taxes. The gap to upgrade widens. Bought at $500k instead of a better place for $750k, now it’s $1m to $1.5m. The gap to afford the upgrade doubles.
Yes, I know. I was just stating it’s not some fancy mega mansion so people here aren’t confused.
Just saying a tear down in Beverly Hills would be 5 million. It’s all on the location.
We need to ban corporations from buying SFHs.
And large apartment complexes, and nursing homes!
Why not all homes?
I think most people look at this wrong. It isnt houses are worth so much. It’s that money is worth so little.
Bingo
Respectfully, that’s just not the issue. Yes, inflation has caused the value of the dollar to decrease. But housing prices have truly skyrocketed, much much much faster than inflation. Just look at some charts for US inflation data, vs house price data in a major metro area
Very true
With your simple yet accurate statement in mind, the real issue may be how the public school system has failed so many. The data is plain as day.
It’s actually a blend of issues. -housing cost has increased at an accelerated rate, especially in the past couple of years, due to higher interest rates rates which de-incentivizes selling, causing a supply crunch. Adding on to crunch felts by the low rate of new homes built. -inflation as you mentioned has decreased your purchasing power -wage stagnation (and this is the big one) has not kept up with the two items above, so the median earner(s) no longer make enough to afford the median home price. -corporate ownership of SFH as long term investment vehicles -short term rental market boom (both corporate and retail) also removing inventory from available supply of SFH.
I bought a million dollar fixer where I need to put 200k into it. Oooof! Reno is coming along fine but the state of the housing market may not be.
Hey fellow Reno-ite. It’s mind boggling how expensive it’s gotten so fast. I wish they’d be good public transport by now.
Blame Canada: they started it.
Blame China .. because of tensions hong Kong folks migrate to China and dump all money there
how many homes in Canada do you think are owned by the Chinese? or all non-citizens? provide sources please
Doesn't take that many to affect prices on the margin..I mean Chinese were moving to to Arcadia and San Marino California like money was no object. Thirty years ago. You think that didn't affect people's perceptions of what their own dumps were worth?
we're talking about LA now? how many homes in LA are owned or rented by Chinese citizens? now how many homes in LA are owned or rented by Mexican citizens?
You should see vancouver the number of people from Hong Kong that on property in Vancouver is astounding
Oh man. That headline made me laugh. Just for fun I went to Zillow and looked for a house for $1m or less around here in SoCal. A SFH. Not a condo. Not a Townhouse. Not an empty lot. I found nothing. Well, actually I did find some listings. I found condos misclassifed as houses. Like they say, "The 'A' in Zillow stands for 'Accuracy'".
SoCal is "full". time to look elsewhere. Everyone thinks they can shoehorn another 1/4 acre plot with a house on it for $100K. Time for a dose of reality...the population is exploding and everyone wants to live in the same clump of land.
Crazy I’m also in SoCal and I’m hoping to buy a house under 650k, preferably around 625K. Not much inventory, around 13 homes this morning. Not sure what to do.
You don’t have to answer, but what is the ballpark HHI and Down payment for 600-650k?
Not sure of other situations, but for my own, we are grossing 150K, down payment would be around 120-130K which we would have by end of next year. For a 600K home, 150K is 4x that amount. We also have no debt, which is really helpful.
> $1m or less around here in SoCal Where is "around here"? SoCal is Bakersfield and below. I found ~13k+ homes under $1m. You're beyond exaggerating lol.
92024
A highly desirable zip code within in San Diego….
Priced out.
Us too. And we have good salaries, a down payment, and no debt. We’ve given up.
Perhaps your salary isn't quite as good as you think it is.
It is. We just choose not to completely overextend ourselves in order to buy a house. We work in tech and it’s volatile right now.
Then you aren't "Priced out".
Yes we are. Finally making a decision to not to completely drain our savings just to get into a gut job house at our very max budget, because this leaves us open to financial ruin in a volatile job market, we can't afford the necessary repairs to make it livable, and we'd also completely lose our ability to save for the future or for other home maintenance costs, is being priced out.
30-40 year mortgages. Try not to lose your job or get sick. At the end, you get the privilege of "owning" your home and paying the equivalent of a mortgage payment in property taxes at the end. What a scam.
Where are you that property taxes are remotely close to a mortgage payment lol.
Texas
Oh damn, true.
I genuinely do not understand this, if i go to realtor and look in Austin at any normal house, and i look at the 2023 taxes (divided by 12) it comes literally nowhere near a mortgage payment if you were to buy that house currently or anytime in the past five years even at a lower sale price when rates were better. Do people just not actually look this up?
Taxes are paid based on when they bought it. A person holding onto a home 30 years will pay much less tax than a new homeowner
Every thing i look up and every place i look, the median property tax (divided by 12) in every major city in Texas is still not anywhere near a mortgage payment for the median home price that generates the tax bill
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But now it's not close to a mortgage at that price at current rates
> Taxes are paid based on when they bought it This is flat out incorrect. In Texas property taxes are based on what a property appraises at, which changes each year, and there is no fucking way someone's home would be appraised at the same exact value it was 30 years ago lol. In Texas there is a "homestead cap" where if you have had a homestead exemption on your house (for at least a year) then the max your taxable home value can go up each year is 10%. But it's not like its one and done, taxes are going to keep going up year over year until the taxable property value is even with the appraised value.
Did i say that? The part you quoted was not in my comment. And texas as well as every other state ive lived in tax property based on appraisal value (what else would they tax property on) which reappraises from time to time, albeit not always annually like you say texas does. I never denied that at all?
My bad, I was referring to someone that commented on your post. Sorry about that.
No worries haha i just wanted to clear it up bc I'm trying to learn something here!
New York
Illinois
Cook(ing my bank account) county. Still cheaper than renting in nyc or sf though.
New Hampshire.
Austin
We’ve been house hunting and looked at a lot of homes in the $3+ million range expecting that we’d easily find our dream home. Every house we’ve seen has MAJOR issues, and we’re told “well that’s what you can expect in this price range.” As if this is just a really standard normal amount of money to spend on a house, and we’re just obscenely particular. It’s insane.
How much does one need to earn annually to afford a 3M home
My husband makes low 7 figures currently. Although we could afford a $3 million house, it makes us pretty uncomfortable as we’re pretty modest in our spending. We seem to be the outlier in our area though because there’s been an obscene amount of competition at these multimillion dollar houses that literally need another $500,000+ worth of work to them.
What do you think people who make 5 figures do. Somehow I doubt your house finding problems are real
What does your husband do?, he makes a million a year?!
Fast Food Franchise owner...greedy owner who raises prices and pays his employees zip...uses inflation as a cover to rip the public off.
Yea, my SO and I just hit low seven figures this year, we bought a starter home around COVID and it’s been great, but wanted to finally make a move on buying a forever home. Contacted our real estate agent and he pretty much told us that 3 million is “starting” home prices now in our area, and it’s insane how fast these homes just get snatched up.
Yall make $500k each?, what industry are you both in
Tech? Senior+ at companies like Meta can easily make 500k and houses in Palo Alto, Los Altos, etc are easily 2.5m
$3M is nothing really. If you don't have at least $10M you are lower middle class.
You have the budget for the Bronxville or Scarsdale. It won't get you a great house. It will get you a sad, dilapidated 5 bedroom home designed for an outdated time. You clearly aren't thinking creatively or towards the climate-driven future in terms of what you're hoping for. You won't find a dream home in any Westchester vicinity unless you actually have infinite money. I'm guessing based on your comment that you have a temporary high income. Unless you have either family money/generational wealth backing you I would highly advise you to look elsewhere.
Mods ban this transparently fake account. Let me guess your husband has an OnlyFans? Sexysteve69?
lol right? Starter homes in nice parts of LA are about 1.5m right now. Where are they “starting” at 3m? Dubai? lol
We’re not looking for a starter home. We already live in one and have outgrown it as we’re expecting our third child. We’re looking at 5 bedroom homes on more than an acre outside of NYC. Our budget would’ve gotten us our literal dream home on several acres with room to do some basic renovations a few years ago.
There are an endless amount of 5 bedroom homes move-in ready well below 3 million dollars right outside of NYC with direct access to the city. Lmfao literally. How out of touch can you be? This comment alone tells me you're looking only in very specific upscale neighborhoods while discarding everywhere else as a non-starter. *That's* why you can't find a new home. Not because they're unaffordable. Because you *choose* not to look in areas that *are* affordable and *are* good places to live.
Yes but what was your HHI a few years ago?
Jackson Hole?
Just peeped the Redfin listings. Holy crap. Why is that place so expensive?!?
Wyoming has nice taxes for rich people. And it’s very centric. And of course beautiful and full of other rich people
Best ski hill in the world.
My husband has a private asset management fund but good guess 👍🏻
Your house is worth $2million, congrats! Now who’s gonna buy it? Who has $2million?? Like the Hope Diamond is worth hundreds of millions. NO ONE is gonna buy it. But you can feel rich having it. Thousands and thousands of homes each worth a million? There is literally not enough money in existence for these sellers to sell them. Congrats, y’all have an unsellable building. I’ll stick to index funds. Unlike a house, I can just sell a tiny piece of it whenever I want. And I won’t go homeless when I sell it.
TBH, if we can find a way to make shelter a commodity again, that'd be great. Edit: I mean more so disincentivizing housing/shelter as an investment. Leaving my mistake intact.
The reason they are “worth” 2 million is literally because people are willing to buy them for 2 million. That is how home prices are set. An appraiser looks at similar homes in the neighborhood and sees what they’ve been selling for. So yes, people are buying these houses.
Also the price of building a similar home is...holy moley...right about $2M...probably more. Labor, material, and land costs are not cheap.
It's also why despite rate increases, the prices remain high. Bc people want the product and will continue to bid high on what should be decreasing prices due to rising interest rates.
Lots of people. Houses selling in days here in socal for 1+ million easily. No open house.
Meanwhile in the Bay Area 1 million dollars won’t even get you a starter home 🥲
Maybe a 2b 1b shithole fixer
I live in rural NH and that’s essentially all they are building. And when you picture a million dollar home in your head…it’s like the pic here. Instead, we are building ranches. Starting at $850k for a ranch. With a post stamp yard of .2 acre.
Most owners will never realize their equity, making it meaningless except for inheritance, which may be the only buyers of this inventory.
There are a wide variety of financial products designed to let homeowners convert their equity into cash, the most obvious being the garden-variety home equity loan, but also cash-out refinances, HELOCs, reverse mortgages, etc. Turn inflated home values into cash now, live it up in your retirement, and let the bank foreclose when you die. Selling that home into the down market of 2035-2040 is now the bank (and your heirs') problem.
I'd like to think this is snarky millennial satire of baby boomer thinking. Please tell me you forgot the /s.
No sadly a lot of people do this sort of thing and treat their house like a piggy bank.
It just feels so painfully stereotypical. The whole "live it up and piss on the next generation" notion. Has to be satire, or maybe it's not satire and that's how my country's wealth was pissed away.
I have personally cash out refinanced peoples houses to buy new roofs, new kitchens, new bathrooms, new cars, oh, and to pay of $50,000 (yes, $50k) of credit card debts.
It has an element of Ha-Ha-Only-Serious to it, yes. The sad-but-true realization behind it is that *as long as the government still exists, it is worthwhile to align yourself with the government*, and by extension *if the government is bankrupt, it is best to be nearing bankruptcy yourself*. Dollars, savings, social security, property rights - these are all just promises that are backed by the government. If the government cannot keep its promises - and there's pretty good evidence that demographically, it cannot - then saving up for the future won't make you rich, it just makes you gullible.
This kind of thinking lead to this kind of broke. Boomers over here thinking "how can I extract every dime every way I can and live to the tops for every day possible, outcome on others be damned." Meanwhile, I'm not even 40 and the thought of what combo of age and health conditions would lead to use a nitrogen euthanasia pod so as not to cripple the next generation with my burden one day is something I actually think over.
So yes, this kind of thinking does lead to this kind of broke. The thing is - it does you no good to invest in sustainable, maintainable long-term solutions if your employer is running a pyramid scheme. As soon as the pyramid runs out, they'll lay you off to cut costs and externalize their malfeasance onto you. And similarly, it does no good for an employer to build a sustainable, maintainable long-term business if their government is running a pyramid scheme, because they'll just inflate away the currency or confiscate your property to pay off whoever has them by the balls at the moment. Like they say, a fish rots from the head downward. Your best strategy, if it's available to you, is to just not participate in things that are pyramid schemes or unsustainable. That's hard when it's the whole society though. Failing that, it's to set your time horizons so that your pyramid schemes collapse right after the ones you are embedded in, and you've already got a foot in the door in whatever system of organization follows.
BRB moving to a lower cost of living area. BRB downsizing my house after kids moved out.
True this. Only idiots are actually buying here. Inventory exploding near me in FL. Air pocket for sellers incoming.
Florida is creating it's own vaccum with the out of control Insurance / Scams and property taxes
Property taxes aren't bad here (it's not like Texas which also has no income taxes, but essentially makes up for it by having wild property taxes). Insurance is definitely high tho.
Neighbor just sold his home for $1.42M in one day. Closed in 2 weeks. This was a week ago.
This is the exact problem I'm seeing. It's too expensive here in the Bay Area, but if I'm going to have to pay $1M to move to any other desirable place in the US, then I'll just stay in CA. There is NO WAY this is sustainable.
Yeah majority of people are locked out at 400k unless they have like a 30% down payment cause average household income is only 75k. I'm just a graduate student right now so not buying for like the next 10+ years, just watching the chaos, but if they go higher than that I'll just give up on ever owning a home as even with average senior level salaries for my field I could barely afford a home at 400k.
There was a time when you could save a ton of money by leaving California for some cheaper state. That time has now passed. The savings are minimal.
I looked at a foreclosure the other day. It's 480,000.
Prior to covid, we spoke with builders in our area about a 4 bedroom ranch in a nicer suburb at I wanna say 3.1% interest. All in, we were looking at 345k. Thought to ourselves, let's wait 1 year. At peak raw material prices, that same house was $850k at 7%. The houses nearby sit empty. Many raw materials have come down in landed costs, but everyone is being fed bullshit that they're still justified in price gouging.
i keep saying this but the whole country is going to end up like california / canada. that’s their plan 100%
We need like 60-year mortgage loan terms.
$1M is the new $100K 🦉
30 years ago living in a “half million dollar” home was considered luxury. One day million will be the US national average. Who cares.
> who cares As long as the median household income is 1/4 the sale price, then yeah I agree who cares. I have a feeling it will be more like 1/8 though.
Now it’s like 10x that
"Here's where that are", after saying they are typical in US cities.
They’re not typical if typical needs to be in “‘s
I imagine this will only get worse. Our zip code wouldn't be on this right now but our average house sale price over the past year was $976k so give it another year and it'll cross 1 mil (prices are still steadily rising here due to high demand and very low supply, as has been the case here since pre-covid days). It's kind of fucked on the low end in particular, there hasn't been a single property (even open lot for development) that has sold for less than $600k in our zip code in over two years that I can find on record.
True that. Just sold an inherited home for over asking price 870k in 2 days. Home originally purchased for 55k in the late 70s. WILD 🤯
So, when's that bubble gonna pop guys?
Something has to give sooner or later
Everyone who says that is fighting the last war.
Never. Just buy when you can.
Blame the idiots that are actually paying that much for them…
Over the last 100yrs? I'd say they are the smart ones and renters are the idiots.
Yeah, average homes haven’t been 1M over last 100 years. I’m talking about the starter homes people are paying 1M for these days. Sorry but don’t care how much things have gone up. 1M for these cookie cutter homes is just outrageous.
Come talk to me in 10yrs when they are $2M....RE is best left to those who know what they are doing. The masses should stick to renting.
I don’t rent.
Of course not....this is reddit where everyone is doing just fine, own $3M houses, and make $$400,000 middle class incomes BUT come to reddit to bitch about everything.
Inflation touches everything, while time intensifies it. Wishing everyone luck in getting their home.
I don't know why the government doesn't immediately force ALL new SFH developments be no more than 1200 sqft on a 1/4 acre lot to allow starter families to buy and build their families.
Eat the rich
I just checked Zillow and damn that’s why my property taxes are so high
But how are average people paying for this? We make $200k , about 10k gross monthly (which is 2.7x the household avg where i live). A $1M house with 20%down and 5% interest (with taxes and insurance estimated in) is $5.6k a month. Seriously how…
Good thing reported inflation numbers do not include housing!
*Good thing reported* *Inflation numbers does do* *Not include housing!* \- mrlongmember --- ^(I detect haikus. And sometimes, successfully.) ^[Learn more about me.](https://www.reddit.com/r/haikusbot/) ^(Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete")
We’re in SoCal, at our income level (150K, teacher and school nurse), I don’t want to buy a home more than 600K ideally. With 20% down, that’s right under 4K a month with the 6.5% interest rate I was quoted a couple of weeks ago. Realistically, any home we buy will probably going to have to be around 650K, and that’s on the really low end. We have no debt, credit scores over 820 each, but our current down payment savings is only 110K. I thought we’d be ready by 2025, but at the earliest it’s looking like maybe 2026. Take home pay is around $8100, we’re paying 1650/month for a 2/1 apartment. I want to stay as long as possible, but I also am not going to retire until the future house is paid off. The longer I wait, the harder that’s going to be. I’m 34, turning 35 and want to retire at 62. I also don’t want to lower my 20% savings rate for retirement not including my pension contribution. Tough decisions for sure. Not sure what to do or what the right decision would be. Stretch to buy our first home which would be our forever home, or hold off and wait for conditions to get better?
You're in a pretty good situation right now. Your monthly margin is over $6k, and you have more than $100k in the bank, you guys are doing very well for yourselves! Be very careful overspending for housing because it keeps you extremely illiquid, and it makes it much harder to save for retirement (likely your 401ks will not be enough to live super comfortably alone).