When you build your society around making sure that housing will appreciate ("be a good investment") and point a firehose of cheap money at corporations, can you really be surprised that they use it to buy up the federally assured good investment?
I think you've hit the nail on the head. If housing is both a safe and high-returning investment, why wouldn't corporations literally buy up as much as possible? Nobody expects retail stock investors to beat professional stock investment corporations at their own game, why is housing different?
- Median individual income: £31,000 (£598/week[0]) - $40K USD
- Average house asking price £360,000 [1] - $450K USD
- For a couple both on a dual median income that means the national average house price is 5.8x typical household income.
- Banks aren't allowed to offer mortgages of more than 4.5x income to more than 85% of their clients, which means such a couple are tasked at finding 1.3x their joint income (£80K or $100K USD) to get started
- Affordability isn't bad if you can cobble together the equity/deposit. An 85% LTV mortgage on a 5 year fix is around ~2.4% right now, so a £360K average home will have a mortgage of ~£1,200/mo ($1,500/mo USD, which is around 30% of such a couples take home pay).
- The bad news is interest rates are currently rising, at the same time as house prices, and the cost of living
- Worse news is if this fictional couple want kids they're likely going down to a single income, which puts it out of reach completely.
Here's something that I perceive the UK has going for it that the US doesn't - health care and child care. In the US, you could easily be spending > $1000/mo on child care, and for those families of child rearing age, a health insurance bill > $500/mo is pretty normal. So there's basically a mortgage into just those costs. Plus, with the design of US cities a car or two are practically a necessity, so there goes another > $500/mo too where in much of the UK you might get away with only one car or no car in a household depending on your location.
-- It paints the entire country as one real estate market, but real estate is local.
-- Interest rates are still super low by historic standards. If we have a small recession this spring it will likely benefit buyers. If interest rates go up, suddenly seller carry contracts and private lending becomes attractive again (IE: buyers have even more options to attain capital)
-- Cities aren't the entire country. If you want to buy a house and you can work remotely, there are a whole lot of very nice small towns and cities around the US where the quality of life is surprisingly high, they are great places to raise a family, and real estate is still very affordable.
-- Inventory - again, totally depends on your market. Locally everybody says there aren't any houses, but what they really mean is that there aren't any turn key houses that have all the amenities they want. Builders are building a lot of crap that isn't what buyers want - that is a problem. But there are a lot of older homes that someone could put in some sweat equity and have a great home at a reasonable price - but nobody wants to be first into those neighborhoods or to do the work.
-- First time buyers have more support than they realize. Not only are there FHA and USDA programs to help them, but states also have down payment assistance and various first time buyer programs.
Low interest rates seem to have made housing more unaffordable. Instead of enabling low capital intensive personal loans, they have enabled high capital intensive investment banking. This is because the marginal cost of investment was budged a few tens of thousands of dollars for households, but millions or even billions of dollars for investment banks and private equity firms. Less capital was available for personal mortgages as a share of the total capital market.
The amount of money you need to get an first time FHA loan is relatively low. You can easily get a 250k loan for about 11k down, and your mortgage payment is gonna be about the same as your rent payment. (except you at least have something building equity now). Yeah the PMI sucks, but current interest rates are so low that even with PMI your rate is probably pretty favorable.
My nephew did exactly what I talked about 2 years ago and is already sitting on 50k of equity. Rent for a 2 bedroom in his area is more than his mortgage......
> Interest rates are still super low by historic standards.
This is disingenuous when interest rates are literally only a portion of the problem. The cost of houses are way up, which means those interest rates are now __far more painful__.
The other part of this is, we were in infinite growth/consume mindset when interest rates were that high. We now know that is not sustainable, and interest rates may in fact out run how fast the economy is growing compared to "when the interest rates were high". So, no, historical lenses don't really put anything into perspective here except make you realize the situation is far far worse.
> -- Cities aren't the entire country. If you want to buy a house and you can work remotely, there are a whole lot of very nice small towns and cities around the US where the quality of life is surprisingly high, they are great places to raise a family, and real estate is still very affordable.
Except cost of houses are up nearly everywhere. Not everyone can work remotely. And what you end up doing with this is just increase the price of housing in that one area. For example, the entirety of the north east rural areas. Also, people live within a community, and these "cheap affordable areas" have no diversity and most of the time no tolerance for "others".
> -- First time buyers have more support than they realize. Not only are there FHA and USDA programs to help them, but states also have down payment assistance and various first time buyer programs.
You use this and your offer is going to be rejected. These programs HAVE to be disclosed when buying a house, and the second a seller sees it they're going to take a lower offer that doesn't have these. It's far more likely to close with a normal loan.
Anything built in the last 10 years is going to be skyhigh, even when considering the different markets. The strategy for a first time buyer is the same as the last 50 years. Buy a mobile home or an older starter home.
I’m in what most on HN would consider to be a very rural area, with the closest town having a population of 1,000 and a bigger town of 20,000 30 minutes away.
Home prices are completely out of whack here too - I would guess they’ve gone up 50% in the past few years. Good luck getting anything like what you want either. I bought my home back in 2011 and my one big thing was that I wanted at least 5 acres, but preferably more. I ended up getting a home in desperate need of updates on 15 acres for 180,000. At the time places fitting that criteria in my budget popped up pretty often.
I just did a search in Zillow for anything with more than 5 acres, and all I could find is some farmland, a 40 acre lot that’s mostly swamp for 800,000, and a 12 acre lot that’s somehow split in to 3 pieces for 140,000.
Relatively crappy homes in town that were 100k back when I was looking are now north of 250k.
Just to compare, my parents bought an amazingly beautiful 60 acre lot back in the late 80s on a truck driver and school bus driver’s salary. They then built a huge brick house on it, though to be fair my dad did a lot of the work himself.
My wife and I both have degrees with good paying jobs and there’s no way we’d ever be able to afford anything approaching what they have.
More accurately, houses are expensive in places where many people want to live. The recommendation would be to buy a house where people dont want to live, which is kinda lame.
You can thank all the billionaires that's sucked up all the wealth for this. Nice going, Bezos, Gates, Musk and all the rest of them. The trickle down economy is a myth.
Do people actually want to maintain a home or is it an idealism of financial security. Homes and handy work are getting very expensive. Are there unfair externalities for people to try and maintain homes far from cities? Especially the ones that sit unused most of the year.
So blaming boomers is partly a lie from this generation.
Yes, there are corporations buying houses en masse, but the video mentions how millennials and gen Z are owning homes short term and treating them as investment products (quick money), a behavior which concords with current trends: meme stocks, crypto, FIRE, influencers, etc.
[+] [-] tbihl|3 years ago|reply
[+] [-] claudiulodro|3 years ago|reply
[+] [-] aaomidi|3 years ago|reply
We need heavy taxation on investment/vacation property. Exception being if you've built it yourself on unimproved land.
[+] [-] nly|3 years ago|reply
- Median individual income: £31,000 (£598/week[0]) - $40K USD
- Average house asking price £360,000 [1] - $450K USD
- For a couple both on a dual median income that means the national average house price is 5.8x typical household income.
- Banks aren't allowed to offer mortgages of more than 4.5x income to more than 85% of their clients, which means such a couple are tasked at finding 1.3x their joint income (£80K or $100K USD) to get started
- Affordability isn't bad if you can cobble together the equity/deposit. An 85% LTV mortgage on a 5 year fix is around ~2.4% right now, so a £360K average home will have a mortgage of ~£1,200/mo ($1,500/mo USD, which is around 30% of such a couples take home pay).
- The bad news is interest rates are currently rising, at the same time as house prices, and the cost of living
- Worse news is if this fictional couple want kids they're likely going down to a single income, which puts it out of reach completely.
[0] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor... [1] https://www.rightmove.co.uk/news/house-price-index/
[+] [-] coward123|3 years ago|reply
[+] [-] coward123|3 years ago|reply
-- It paints the entire country as one real estate market, but real estate is local.
-- Interest rates are still super low by historic standards. If we have a small recession this spring it will likely benefit buyers. If interest rates go up, suddenly seller carry contracts and private lending becomes attractive again (IE: buyers have even more options to attain capital)
-- Cities aren't the entire country. If you want to buy a house and you can work remotely, there are a whole lot of very nice small towns and cities around the US where the quality of life is surprisingly high, they are great places to raise a family, and real estate is still very affordable.
-- Inventory - again, totally depends on your market. Locally everybody says there aren't any houses, but what they really mean is that there aren't any turn key houses that have all the amenities they want. Builders are building a lot of crap that isn't what buyers want - that is a problem. But there are a lot of older homes that someone could put in some sweat equity and have a great home at a reasonable price - but nobody wants to be first into those neighborhoods or to do the work.
-- First time buyers have more support than they realize. Not only are there FHA and USDA programs to help them, but states also have down payment assistance and various first time buyer programs.
[+] [-] ipnon|3 years ago|reply
[+] [-] namelessoracle|3 years ago|reply
My nephew did exactly what I talked about 2 years ago and is already sitting on 50k of equity. Rent for a 2 bedroom in his area is more than his mortgage......
[+] [-] aaomidi|3 years ago|reply
This is disingenuous when interest rates are literally only a portion of the problem. The cost of houses are way up, which means those interest rates are now __far more painful__.
The other part of this is, we were in infinite growth/consume mindset when interest rates were that high. We now know that is not sustainable, and interest rates may in fact out run how fast the economy is growing compared to "when the interest rates were high". So, no, historical lenses don't really put anything into perspective here except make you realize the situation is far far worse.
> -- Cities aren't the entire country. If you want to buy a house and you can work remotely, there are a whole lot of very nice small towns and cities around the US where the quality of life is surprisingly high, they are great places to raise a family, and real estate is still very affordable.
Except cost of houses are up nearly everywhere. Not everyone can work remotely. And what you end up doing with this is just increase the price of housing in that one area. For example, the entirety of the north east rural areas. Also, people live within a community, and these "cheap affordable areas" have no diversity and most of the time no tolerance for "others".
> -- First time buyers have more support than they realize. Not only are there FHA and USDA programs to help them, but states also have down payment assistance and various first time buyer programs.
You use this and your offer is going to be rejected. These programs HAVE to be disclosed when buying a house, and the second a seller sees it they're going to take a lower offer that doesn't have these. It's far more likely to close with a normal loan.
[+] [-] Supermancho|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] vwoolf|3 years ago|reply
The outcome is sad but also consistent with limiting the supply of any good or service.
https://www.slowboring.com/p/homeowner-nimby
[+] [-] cookingrobot|3 years ago|reply
https://policyadvice.net/insurance/insights/home-ownership-s...
The title would be more accurate as “For most Americans who don’t yet own, owning a home is a distant dream”.
[+] [-] throw8383833jj|3 years ago|reply
[+] [-] floxy|3 years ago|reply
https://fred.stlouisfed.org/series/RHORUSQ156N
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] onecommentman|3 years ago|reply
[+] [-] dimensionc132|3 years ago|reply
[+] [-] JoeAltmaier|3 years ago|reply
So, live outside the city. Or in a smaller city.
[+] [-] AuryGlenz|3 years ago|reply
Home prices are completely out of whack here too - I would guess they’ve gone up 50% in the past few years. Good luck getting anything like what you want either. I bought my home back in 2011 and my one big thing was that I wanted at least 5 acres, but preferably more. I ended up getting a home in desperate need of updates on 15 acres for 180,000. At the time places fitting that criteria in my budget popped up pretty often.
I just did a search in Zillow for anything with more than 5 acres, and all I could find is some farmland, a 40 acre lot that’s mostly swamp for 800,000, and a 12 acre lot that’s somehow split in to 3 pieces for 140,000.
Relatively crappy homes in town that were 100k back when I was looking are now north of 250k.
Just to compare, my parents bought an amazingly beautiful 60 acre lot back in the late 80s on a truck driver and school bus driver’s salary. They then built a huge brick house on it, though to be fair my dad did a lot of the work himself.
My wife and I both have degrees with good paying jobs and there’s no way we’d ever be able to afford anything approaching what they have.
[+] [-] defterGoose|3 years ago|reply
[+] [-] bobro|3 years ago|reply
[+] [-] stonogo|3 years ago|reply
[+] [-] anecd0te|3 years ago|reply
[+] [-] rasterdog|3 years ago|reply
[+] [-] mrlonglong|3 years ago|reply
[+] [-] MichaelRazum|3 years ago|reply
[+] [-] polski-g|3 years ago|reply
[+] [-] scsilver|3 years ago|reply
[+] [-] mgh2|3 years ago|reply
Yes, there are corporations buying houses en masse, but the video mentions how millennials and gen Z are owning homes short term and treating them as investment products (quick money), a behavior which concords with current trends: meme stocks, crypto, FIRE, influencers, etc.
[+] [-] gbear605|3 years ago|reply
Your explanation for why millennials can’t afford homes is that… other millennials are buying all of them up?
[+] [-] mgh2|3 years ago|reply
Please provide proof to refute the argument and create constructive discourse & criticism to discover the truth.
[+] [-] vinyl7|3 years ago|reply