Homebuying Difficult for Americans in Three-Fourths of Markets

[entremet]

Purchasing a median-priced home in the U.S. is a financial stretch for Americans in the majority of markets despite slowing growth in real estate prices, low mortgage rates and rising wages.

The U.S. Home Affordability Report, released Wednesday by ATTOM Data Solutions, found that median selling prices were too high for average wage earners in three-fourths of the nation's real estate markets during the second quarter of 2019.

At the same time, affordability in four of five markets is starting to improve compared with last year. But the gap between home-price appreciation and wage growth remains wide, as it has for years.

https://www.bloomberg.com/news/arti...ult-for-americans-in-three-fourths-of-markets

This is rather big since middle-class Americans have depended on homes to build their wealth.

On the flip side, maybe there will be a bigger focus on diversifying and purchasing more performing assets, angel investing, micro-investing, creating businesses, and so on. I've always felt the traditional American Dream a bit too narrow. And it puts way too much of your money in one asset.

 

[Failburger]

Eh, single in the moms basement life for me.

 

[CopperPuppy]

Slow wage growth, student loan debt, general reticence post-2008?

This certainly dovetails with my own anecdotal experiences.

On the flip side, maybe there will be a bigger focus on diversifying and purchasing more performing assets, angel investing, micro-investing, creating businesses, and so on. I've always felt the traditional American Dream a bit too narrow. And it puts way too much of your money in one asset.

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That's certainly an idea but seems very far-fetched. The article is primarily addressing individuals buying homes to own a home, not buying homes as an investment property. The motivations for purchasing a home vs. micro-investing or even starting a small business are worlds apart.

 

[Deleted member 1248]

Whatever they decide, I hope they don't lower prices and increase wages because that would just be stupid and not solve anything.

 

[_swee_]

Thank god my partner and I already have a house

 

[BringBackSonics]

I see this, but then in my neighborhood (which isn't even glamorous), homes get multiple bids and sell in 24 hours.

 

[entremet]

Slow wage growth, student loan debt, general reticence post-2008?

This certainly dovetails with my own anecdotal experiences.

That's certainly an idea but seems very far-fetched. The article is primarily addressing individuals buying homes to own a home, not buying homes as an investment property. The motivations for purchasing a home vs. micro-investing or even starting a small business are worlds apart.

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I agree.

But I'm talking about the intense focus to save for a DP. Maybe we could start focusing on other things?

Almost everyone I know that bought a home drained a substantial amount of their savings for the DP.

Then there is business consideration. People generally want their homes to accrue in value. It's what fuels a lot NIMBYism, HOAs, and other behavior. So while a primary residence is not a traditional investment per se, homebuyers act like it is.

 

[ProstatePuncher]

I see this, but then in my neighborhood (which isn't even glamorous), homes get multiple bids and sell in 24 hours.

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Who is buying though? Probably rich bastards soaking up the market, not intending to live there.

 

[FaceHugger]

It just doesn't seem like a good investment in my area. The only homes worth owning are $300k+, so I'd have to take a sizeable chunk out of savings / investments, pay a bunch of taxes and insurance and interest annually, and maybe see a return in five or six years. Meanwhile I could let that $40k - $50k sit in retirement / investments and earn thousands a year, and have it as part of a rainy day fund at that. And in the meantime move whenever I want, and have someone else fix things when they break, all while spending less a month to merely have a roof over my head.

I really have no interest in buying a home unless something is done to return them to the sane, pre-bubble prices.

 

[BringBackSonics]

Who is buying though? Probably rich bastards soaking up the market, not intending to live there.

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Nah they are families or young couples starting families. These are big, older style neighborhood/homes (thin Brady Bunch house)

 

[Brass Body Dave]

Whole country is supply constrained. And builders are building homes above the median. Not many folks are building starter homes. Yep, it is tough as the median climbs.

 

[XMonkey]

Who could possibly have known that when you saddle younger people with tons of student loans and shit wages that they won't be lighting the housing market on fire.

It's not the only factor, to be sure, but I'd say it's the largest.

 

[Bulk_Rate]

If you want to double down on this topic, check this one out, especially the dramatic shift in the key metric referenced in this article ("how long it would take to save up a 20 percent down payment on the median home in a given city by squirreling away 5 percent of the city's gross median income per year.") since the 1970s.

https://www.theatlantic.com/technology/archive/2019/06/why-millennials-cant-afford-buy-house/591532/

 

[Futureman]

My wife and I just saw our dream house listed today and went and bought lotto tickets after work HA!

We already live in a great house but this new house would be amazing.

 

[Deleted member 23850]

Some people are just going to realize that trying to live and buy a house in places like Seattle, San Francisco, LA, NYC, Boston, Denver, and Austin are just not doable. There's a bunch of great cities in the Midwest that need new people with low housing costs, there should be more migration there. Detroit, Cleveland, and St. Louis are cool, plus there's great cities like Omaha, The Twin Cities, Columbus, and Cincinnati.

 

[xxracerxx]

I am very lucky to have purchased a home 6 years ago.

 

[Deleted member 23850]

I am very lucky to have purchased a home 6 years ago.

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Oregon is getting pretty crazy, especially Portland.

 

[_swee_]

Oregon is getting pretty crazy, especially Portland.

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SW Portland here.........raleigh hills

 

[xxracerxx]

Oregon is getting pretty crazy, especially Portland.

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Yup. We could easily get $175,000 over what we paid for our house these days (and most likely even more).

 

[ChrisR]

I see this, but then in my neighborhood (which isn't even glamorous), homes get multiple bids and sell in 24 hours.

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That is investment money for the most part (not saying all of them, but a solid majority of them are)

 

[Deleted member 23850]

SW Portland here.........raleigh hills

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Yup. We could easily get $175,000 over what we paid for our house these days (and most likely even more).

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Yeah, I just Zillowed Portland again...jesus christ the median is almost half a million. I always thought it was at around 300K. Insane.

I guess more Californians are moving to Portland than Austin, thank god.

 

[Astronut325]

I had to work/save for over a decade to buy a relatively small house below the median price in Los Angeles. When I tell that to my senior co-workers, they're shocked. They had to work a couple years at best.

Edit:
Just checked... The median home price in Los Angeles is now $615K USD!

 

[xxracerxx]

Yeah, I just Zillowed Portland again...jesus christ the median is almost half a million. I always thought it was at around 300K. Insane.

I guess more Californians are moving to Portland than Austin, thank god.

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Well, just looked at my place on Zillow and their crazy estimate system has my house at $300K more. Jesus.

 

[loveshuffle]

Who is buying though? Probably rich bastards soaking up the market, not intending to live there.

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I like how we say homebuying is becoming more difficult, but then when someone says it's actually booming in their market, we blame it on some imaginary evil, rich homebuyers.

 

[Astronut325]

Da F***... A smaller, older home near my house sold for almost a $100K more than my home! WTF

 

[Brass Body Dave]

I like how we say homebuying is becoming more difficult, but then when someone says it's actually booming in their market, we blame it on some imaginary evil, rich homebuyers.

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It's difficult for first time homebuyers. Other than that, the market is on fire right now. No bubble.

 

[ProstatePuncher]

I like how we say homebuying is becoming more difficult, but then when someone says it's actually booming in their market, we blame it on some imaginary evil, rich homebuyers.

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Have you looked at the eye-watering amounts it takes to put down deposits? Also, as a young person, you have to deal with exorbitant interest rates because you're a risky sale. You likely don't have a strong credit history or any other assets to put up in bargaining against your mortgage. Its a fucked system if you aren't already situated and comfy. There's no "imaginary evil, rich homebuyer" here. Just rich people scooping up multiple homes while banks turn their noses up at first time buyers.

 

[loveshuffle]

Have you looked at the eye-watering amounts it takes to put down deposits? Also, as a young person, you have to deal with exorbitant interest rates because you're a risky sale. You likely don't have a strong credit history or any other assets to put up in bargaining against your mortgage. Its a fucked system if you aren't already situated and comfy. There's no "imaginary evil, rich homebuyer" here. Just rich people scooping up multiple homes while banks turn their noses up at first time buyers.

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I own two homes so I'm quite aware of the initial capital and process. My point was there is no way for anyone to confirm that the purchasers of homes are some rich evil villain unless you knock on every closed home's door and inquire. Or see a white cat sitting in the window. Banks don't their noses up at people with money. Why young people don't have money is quite a different subject.

 

[TaySan]

Going to live at my parents for life. :/

 

[Massicot]

I make what I consider to be a decent salary in a lower cost of living area and I still don't know how I'll ever be able to afford a house.

 

[Deleted member 23850]

Going to live at my parents for life. :/

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Yeah, Phoenix is getting expensive too.

Fucking San Diegans go back home.

 

[Phonzo]

Have you looked at the eye-watering amounts it takes to put down deposits? Also, as a young person, you have to deal with exorbitant interest rates because you're a risky sale. You likely don't have a strong credit history or any other assets to put up in bargaining against your mortgage. Its a fucked system if you aren't already situated and comfy. There's no "imaginary evil, rich homebuyer" here. Just rich people scooping up multiple homes while banks turn their noses up at first time buyers.

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But u don't need a down deposit though? There are other options to finance.

 

[thegreyfox]

I own two homes so I'm quite aware of the initial capital and process. My point was there is no way for anyone to confirm that the purchasers of homes are some rich evil villain unless you knock on every closed home's door and inquire. Or see a white cat sitting in the window. Banks don't their noses up at people with money. Why young people don't have money is quite a different subject.

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There is a lot of investor money in this market right now.
Opportunity Zone funds are driving up prices in low income areas.
https://www.ncsha.org/resource/opportunity-zone-fund-directory/

Buy to rent are driving up prices in the middle.
https://www.cnbc.com/2019/06/26/sud...ingle-family-housing-market-is-exploding.html

The high end of the market is the only place that is get hit hard because all the money is being driven into the low and middle.
https://www.cnbc.com/2019/04/01/manhattan-real-estate-sales-fall-for-sixth-straight-quarter.html

 

[krazen]

I own two homes so I'm quite aware of the initial capital and process. My point was there is no way for anyone to confirm that the purchasers of homes are some rich evil villain unless you knock on every closed home's door and inquire. Or see a white cat sitting in the window. Banks don't their noses up at people with money. Why young people don't have money is quite a different subject.

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I agree it's not always a villain. But nytimes covered the rise of investors strictly as well invesments.

https://www.nytimes.com/interactive/2019/06/20/business/economy/starter-homes-investors.html

And the bigger trend is those more monied young kids buying a house now two decades ago could have gotten twice the house for the cash they are spending now, forcing the less monied into staying in rentals or outright leaving.

Im just more intrigued at the way everything is going, the entire real estate market is due for another 2008 correction because as home ownership becomes the domain of the upper middle class, that group shrinks because of inflation/wage stagnation/college debt. A 800k two bedroom house in LA ain't worth 800k if there are no buyers for it the economy doesnt improve

 

[Doober]

Even after the 2008 "correction" homes are still insanely overpriced. Combine that with student debt and anemic wage growth and there you go.

 

[leder]

But u don't need a down deposit though? There are other options to finance.

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Depends where you live. In my city it's common for houses to go for 50k+ over list with all cash offers. If you don't have at least 20% there's little reason to even try.

 

[cecilpaladin32]

Depends where you live. In my city it's common for houses to go for 50k+ over list with all cash offers. If you don't have at least 20% there's little reason to even try.

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God...that's so hard to compete with. Fortunately I live with a friend right now, but I'm already ruing the day I'll have to switch to apartment living - buying a house\condo for the next decade is almost entirely out of the question unless I can at least double my salary in the next few years.

 

[BringBackSonics]

Have you looked at the eye-watering amounts it takes to put down deposits? Also, as a young person, you have to deal with exorbitant interest rates because you're a risky sale.

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When there was a thread about savings or debt etc, many mentioned they had a large savings amount they were using for a home deposit.

I'm guessing many got down payments by either saving up for it, or getting a large gift either at their wedding or from a relative.

 

[XMonkey]

At the rate home prices are increasing in some markets a lot of people saving for that deposit can't even keep up. It feels like being a dog who just can't catch the car.

 

[Culex]

When there was a thread about savings or debt etc, many mentioned they had a large savings amount they were using for a home deposit.

I'm guessing many got down payments by either saving up for it, or getting a large gift either at their wedding or from a relative.

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This is usually the case. I bought my first property at 24, but had saved up 56k from multiple army deployments. If it wasn't for that, I'd probably still be renting 12 years later

 

[Spinluck]

I still plan on buying a home 🤷🏿‍♂️

Might buy a multifamily and rent out the other floors 👍🏿

 

[Deleted member 23850]

One city that I have on my list, for some reason, is Lansing, Michigan. Seems quaint as hell.