Ethics of Real Estate Investment, NIMYism and the Housing Crisis

In reply to SV reX :

That $24,000 was in 1982 dollars, here's a graph of inflation-adjusted median income. It's household income vs. individual which is much harder to find data for, but this may be a better fit in the context of home purchases. From what I can find it appears to have a bit more growth than individual wages:

This graph in 2022 dollars shows 1982 at around $56k and 2022 was at $74.6k. Next, if we get some median home sale prices from here, we can see that a median house in 1982 would've been about $196k in today's dollars vs. a 2022 median house at $385k (and it's climbed a bit higher since). Next let's assume a downpayment equal to 1 year of income and run the calculations. The 1982 mortgage comes up to $718k (almost 13 years' income) and the 2022 mortgage at last year's 5.8% comes up to $655k (under 9 years).

But 1982 in particular was a major historical peak in 30-year mortgage rates:

So let's try something else and move just off the 1982 peak. Up to 1979 and after 1985, the mortgage rate was under 10.25%. Our 1979 income value is about $58k from the graph, and the median home price was about $219k. The 1979 mortgage works out to about $519k which is just under 9 years' income, similar to the 2022 mortgage.

Now let's look a little further out and pick 1972. About 8% mortgage rate, $58k income, $199k home price. That mortgage works out to about $372k or 6.4 years' income. Eyeballing the two graphs above plus inflation-adjusted home prices, we can probably expect homes to be at least this affordable anywhere from the '60s to the end of the millennium outside of the mortgage rate spike. So even though you were paying way more money to the banks back then, it looks like homes were generally in the ballpark of 30% more affordable overall from the '60s to late '90s excluding the early-mid '80s mortgage spike.

z31maniac said:

GameboyRMH said:

In reply to z31maniac :

I've done full-stack front and backend PHP, C++, shellscripts, some Python and Java.

You've done it, or you have significant experience doing it? 

For example, this company runs our software.

Www.williams-sonoma.com

Significant experience with the full-stack web dev and shellscripts, not as much with the C++, Python and Java.

Has anyone looked at the impact of the increase in two income house holds and the lack of new home construction.

More money chasing a limited supply is Econ 101.

jr02518 said:

Has anyone looked at the impact of the increase in two income house holds and the lack of new home construction.

More money chasing a limited supply is Econ 101.

Agreed-from my reading the core of the housing shortage is lack of supply. The data for number of units built vs. demographics seems pretty convincing to me. 

I'm not sure how the formation of dual income households impacts prices. If there wasn't a housing shortage I suspect dual incomes wouldn't impact prices any more than the rate of inflation-so more or less similar to prices other household goods like cars, fridges, bicycles, paint, etc. over the past 30 years.

Interestingly, Tokyo is the largest city in the world, generally pleasant to live in, and housing is affordable.

jr02518 said:

Has anyone looked at the impact of the increase in two income house holds and the lack of new home construction.

More money chasing a limited supply is Econ 101.

 

Ive seen some interesting information on new home construction and how much it tanked during the last recession and we have been dealing with a shortage ever since. Much of my family are builders and with what ive heard anecdotally in the last 4 years seems eerily similar to the recession. I cant speak to the veracity of the claims because I never bothered to look into it.

Im firmly in the camp of the largest problem here is that our money has been inflated into oblivion. 

In reply to CrustyRedXpress :

40 years ago, they had multi generational mortgages there...

Stuff comes and goes.

In reply to GameboyRMH :

The average size house in 1982 was much smaller so I'd expect it to be cheaper. 
 

I'll ask the important question though. Assume all you say is true. It's not fair, and the game is stacked against you. What are you going to do to change that for yourself? 

In reply to Steve_Jones :

Why would he just want to change the situation for himself if it's stacked against large numbers of people who can't afford to buy a home?

IOW, if it is a systemic problem why would we not seek systemic solutions?

In reply to CrustyRedXpress :

Because he is responsible for himself, no one else is. I'll listen to solutions from someone that has done it vs someone that expects someone else to do it. If you have done nothing to fix it for yourself, why would I listen to you? It'd be like hiring a money manager that went bankrupt, no thanks. 

Steve_Jones said:

In reply to CrustyRedXpress :

Because he is responsible for himself, no one else is. I'll listen to solutions from someone that has done it vs someone that expects someone else to do it. If you have done nothing to fix it for yourself, why would I listen to you? It'd be like hiring a money manager that went bankrupt, no thanks. 

So even if the issue is systemic (be it not building enough houses, inflating the money supply, etc.) you wouldn't seek systemic solutions (i.e. loosening zoning, tightening the money supply)?

CrustyRedXpress said:

Steve_Jones said:

In reply to CrustyRedXpress :

Because he is responsible for himself, no one else is. I'll listen to solutions from someone that has done it vs someone that expects someone else to do it. If you have done nothing to fix it for yourself, why would I listen to you? It'd be like hiring a money manager that went bankrupt, no thanks. 

So even if the issue is systemic (be it not building enough houses, inflating the money supply, etc.) you wouldn't seek systemic solutions (i.e. loosening zoning, tightening the money supply)?

He has not shown it's systemic. Plenty of people settled on houses Yesterday, all over the country. He has also not proposed any solutions, individual or systemic. 

Steve_Jones said:

CrustyRedXpress said:

Steve_Jones said:

In reply to CrustyRedXpress :

Because he is responsible for himself, no one else is. I'll listen to solutions from someone that has done it vs someone that expects someone else to do it. If you have done nothing to fix it for yourself, why would I listen to you? It'd be like hiring a money manager that went bankrupt, no thanks. 

So even if the issue is systemic (be it not building enough houses, inflating the money supply, etc.) you wouldn't seek systemic solutions (i.e. loosening zoning, tightening the money supply)?

He has not shown it's systemic. Plenty of people settled on houses Yesterday, all over the country. He has also not proposed any solutions, individual or systemic. 

If the issue was shown to be systemic, would you seek systemic solutions?

In reply to CrustyRedXpress :

Sure. 

Evidence it's a systemic issue

Home values up almost 125% over 50 years, incomes up less than 20% over the same period:

Resulting in home ownership rates decreasing steadily over 4 generations (and it's even worse in the UK and Canada):

Rents are affected similarly, so renting is no escape:
 

Notice the sharp increase in cost-burdened renters around the turn of the millennium:

Matching the period of inflation-adjusted housing prices climbing into and remaining in largely unprecedented territory:

Causing home sales to remain stuck near historic lows since 2008:

In reply to GameboyRMH :

Yet plenty of people bought houses last month. They figured it out. What are YOU doing to change YOUR situation? Blaming others is not a solution. 

In reply to Steve_Jones :

I don't think employing survivorship bias by only looking at people who bought houses last month is a solution either. Neither does it argue against the issue being systemic.

In reply to GameboyRMH :

What are YOU doing to solve YOUR issue? You can't solve the neighborhoods problems if you can't fix your house. All I hear are excuses on why you can't because others can't. Fine, other people can't do x, so I guess you can't do x either. 
 

What about all of the people that are doing x though? If they can, maybe you can. See the difference? 

In reply to Steve_Jones :

Agreed Steve. I mean with those skills could easily have an 80-90K salary here in Omaha in a town where 200-300K homes are common. My company can't get enough developers right now. 

I mean I have 3 of them here now and it's not like I'm loaded.

Oh wait I'm the boogie man driving up the cost of property because I make income from them. 

In reply to Steve_Jones :

One way to fix the problem for myself would be to fix the system. A lot of the people who are buying houses simply got into the housing market before the issue began. Many make more money than I do or would likely ever be able to (well into the 6-digits per year).

You can solve the neighborhood's problem without fixing your house, and it's especially helpful if the neighborhood's problem is actively fighting against you fixing your house.

I should also consider that it may be impossible to fix the problem for myself, but by fixing the system we can prevent it from afflicting entire future generations in the same way. So let's not focus too much on me, I'm just one person affected by a systemic problem, it's vastly more important to solve that than for me to find a personal workaround.

So you're not going to do anything at all then?  Just continue to post graphs and rail against the "system"?  Sounds like a plan for success!

In reply to GameboyRMH :

You keep posting graphs and offering your own interpretations, but only those that suit your predetermined biases.

Is it possible there are other explanations?

For example...

An aging population means there are more home buyers at an older age.  A graph showing the median age of home buyers being higher in 2019 than in 1980 MAY be showing that it's harder for young people to buy, or it MAY be showing the aging demographics of the population.

You are assuming you know the REASONS for the shift in median age, but you don't.  
 

It's very likely the answer doesn't fit your biased narrative, and you would dismiss it.

That same aging population WOULD push prices up, because they have a greater capacity to afford more. 
 

Which would make a greater gap, but the cause of that gap would not be the evil greedy capitalists, but rather simple normal demographic shifts. 
 

I don't disagree that some things have changed, and some things are more difficult.  I disagree that it is hopeless and out of our individual control. And I disagree about the source of the problem. 
 

And I also disagree that you personally are a victim. You are not.  You are a smart person with great opportunities you have not taken advantage of.  You are the product of the choices you have made. 

The solution isn't to make everyone else change the way they are living.  The solution is to change the way YOU are living.

SV reX said:

In reply to GameboyRMH :

You keep posting graphs and offering your own interpretations, but only those that suit your predetermined biases.

Is it possible there are other explanations?

For example...

An aging population means there are more home buyers at an older age.  A graph showing the median age of home buyers being higher in 2019 than in 1980 MAY be showing that it's harder for young people to buy, or it MAY be showing the aging demographics of the population.

You are assuming you know the REASONS for the shift in median age, but you don't.  
 

It's very likely the answer doesn't fit your biased narrative, and you would dismiss it.

 

The graph I posted immediately before it answers that question. The median buyer age is not just increasing due to more older buyers. It's because it's harder for young people to buy:

In reply to GameboyRMH :

While I am sympathetic to your issues, this does sound like you have given up.  If you don't believe that you can do it, you definitely won't. I've been in IT long enough to be in a position managing a portion of the business that returns significant revenue. My advice to you would be to stop with the negativity. Enhance your skills, look at the job openings with the salary you would like to make, and figure out where your skills are lacking.  Interviewing is a skill; pay a coach to help you and get resume help while you are at it. If you want to earn more, move to the OEM side and get near the sales team. Pre-sales engineers make significantly more than 100,000 in my experience. 
 

I've worked on the customer side and the OEM side, and I only want to entertain jobs from Silicon Valley companies moving forward, unless Tesla calls. I don't live in the Bay Area, but I work for Bay Area companies. I've hired 3 people this year alone and 4 in the last 12 months. All of those positions would make you a home owner quickly. 
 

This may sound cheesy to you, but trust me when I say that if you don't believe in yourself, nobody else will. You have the worlds combined knowledge at your fingertips.  Spend time figuring it out, it's not that hard, and stop expecting someone to give it to you. It never happens that way. 
 

I'm happy to take this offline and offer my help.  I run a large team for a Bay Area  tech company and am happy to lend you some customized advice for your situation.  In the end, if you don't believe you can succeed, you wont.