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Homes are more affordable now


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2011 Oct 5, 12:51am   30,465 views  84 comments

by FuckTheMainstreamMedia   ➕follow (3)   💰tip   ignore  

At least thats what I'm being told. That homes are cheaper now than in the 90's. Or at least more affordable on an inflation adjusted basis.

Please prove or disprove. Keep things to large city California please(Bay Area, LA County & OC) .

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1   zzyzzx   2011 Oct 5, 1:03am  

No. They are simply less unaffordable at the moment.

2   StoutFiles   2011 Oct 5, 4:42am  

If homes were affordable the vast majority of the country would not be taking out 30 year loans to buy them.

3   joshuatrio   2011 Oct 5, 4:52am  

StoutFiles says

If homes were affordable the vast majority of the country would not be taking out 30 year loans to buy them.

Ding Ding ! Right answer.

4   Hysteresis   2011 Oct 5, 5:40am  

could be buying a home is more affordable on an inflation adjusted, monthly payment basis (mostly due to low rates).
but affordability is a bullshit number that realtors use to get you to buy an overpriced home.

it's still way more expensive than rent in prime bay area cities.

5   FortWayne   2011 Oct 5, 5:55am  

zzyzzx says

No. They are simply less unaffordable at the moment.

Good way to put it zzyzzx.

We bought our condo back in early 90's. Today it is supposedly more expensive, yet we have squads of unemployed/underemployed roaming the streets.

This is pretty neat (300 grand for a 600 sq/ft house)
http://www.doctorhousingbubble.com/surge-of-distressed-properties-burbank-california-bank-of-america-starts-shadow-inventory-machine-foreclosures-surge-california-real-estate/

6   FortWayne   2011 Oct 5, 5:55am  

joshuatrio says

StoutFiles says

If homes were affordable the vast majority of the country would not be taking out 30 year loans to buy them.

Ding Ding ! Right answer.

Double that.

7   bubblesitter   2011 Oct 5, 9:29am  

StoutFiles says

If homes were affordable the vast majority of the country would not be taking out 30 year loans to buy them.

+ banks would be easily handing out mortgages and sales shouldn't fall apart during the escrow process due to refusal from the banks.

8   tts   2011 Oct 5, 10:00am  

dodgerfanjohn says

Please prove or disprove. Keep things to large city California please(Bay Area, LA County & OC)

OK.

Median household income in CA is $55K*.
Median home price in CA is $297K**.

Home prices should be around 3-4x income, even in CA which tends to have higher home prices than elsewhere. Home prices are currently pushing around 6x income statewide which is thoroughly still in boom/bubble territory.

But wait it gets better!!

You see even if homes weren't boomed out/bubbled vs wages the economy is crap. We're effectively in a recession for the non rich and housing prices don't go up or stagnate in a recessionary economic environment, they go down. On top of that there is still tons of inventory, shadow or otherwise out there, and foreclosures are still very high.

Without massive government support prices will likely start to drop significantly again over the next few years at a minimum. Likely the government will step in and try to prop up home prices as a back door bail out for banks and to keep state tax income up so they don't have to bailout the states as fast or for as much. These are regressive economic practices (effectively its austerity) to support broken and corrupt institutions which will have far reaching economic effects for a very long time.

We're certainly looking at a American Lost Decade, maybe even decade(s).

*http://en.wikipedia.org/wiki/Household_income_in_the_United_States
**http://www.dsnews.com/articles/californias-median-home-price-hits-2011-high-2011-09-20

9   corntrollio   2011 Oct 5, 10:26am  

dodgerfanjohn says

At least thats what I'm being told. That homes are cheaper now than in the 90's. Or at least more affordable on an inflation adjusted basis.

In the 90s, somewhere like Noe Valley had houses that were in the 400s. It's hard to find good stats from those days, but whenever I've looked at a house that previously sold in the 90s and recently, the inflation-adjusted 90s sale price is usually nowhere near the current price. The 2000 price adjusted for inflation sometimes is close, however, but depends on the city and house.

10   thomas.wong1986   2011 Oct 5, 10:35am  

dodgerfanjohn says

At least thats what I'm being told. That homes are cheaper now than in the 90's. Or at least more affordable on an inflation adjusted basis.

If your in LA... its true for Riverside and San Bernardino, but not yet for others. Simple test is to look up historical prices on homes in the area your interested.. find Sales Prices back in mid 90s and factor in inflation.

11   thomas.wong1986   2011 Oct 5, 10:38am  

corntrollio says

In the 90s, somewhere like Noe Valley had houses that were in the 400s.

The most expensive county in SFBA back in the 90s was Marin, with prices mid 300s. Pretty large even by todays standards. Thats where all the rich money was.. and still is.

http://archive.dqnews.com/AA1997BAY07.shtm

12   thomas.wong1986   2011 Oct 5, 10:41am  

dodgerfanjohn says

Please prove or disprove. Keep things to large city California please(Bay Area, LA County & OC) .

SF Bay Area.. slowly correcting back to the long term norm.

13   corntrollio   2011 Oct 5, 10:56am  

thomas.wong1986 says

The most expensive county in SFBA back in the 90s was Marin, with prices mid 300s. Pretty large even by todays standards. Thats where all the rich money was.. and still is.

http://archive.dqnews.com/AA1997BAY07.shtm

Let's use that, although I'm not sure that median prices are the best measure of the market. Also note that 1996-1997 is the bottom of the previous cycle, whereas 1990 or 1991 would be the top. That means we are comparing the absolute bottom of 90s prices to today.

The median price in Marin was $350K in 1996, which is $505K today inflation-adjusted by CPI.
The median price in Marin was $357K in 1997, which is $504K today.

For June 2010, the median price in Marin was $649K. For June 2011, the median price in Marin was $619.5K.
http://www.dqnews.com/Articles/2011/News/California/Bay-Area/RRBay110916.aspx

So even if you compare the absolute bottom of 90s prices to today, for Marin County, today's price is still over 20% higher adjusted for inflation.

14   edvard2   2011 Oct 5, 12:21pm  

If confined to the Bay Area then no- they're barely less than they were during the bubble. Simple analogy: The east bay neighborhood I live in had homes in the 250-300k range when I moved in 8 years ago. They shot up to 500-600k in 3 short years. Today those same homes are now around 475-500k. Pay hasn't gone up and there are actually more people laid off. So no- its not more affordable and if you throw in the unemployed and the aforementioned lagging salaries I'd say its MORE expensive.

15   Hysteresis   2011 Oct 5, 12:30pm  

corntrollio says

So even if you compare the absolute bottom of 90s prices to today, for Marin County, today's price is still over 20% higher adjusted for inflation.

you need to factor in the mortgage rates if we're both talking affordability

16   tatupu70   2011 Oct 5, 1:04pm  

corntrollio says

So even if you compare the absolute bottom of 90s prices to today, for Marin County, today's price is still over 20% higher adjusted for inflation.

That's not really a good comparison though--you're taking a price point below historical average and inflation adjusting to now. Unless we are below historical averages now, then the current price will always be higher.

17   Buster   2011 Oct 5, 1:34pm  

For many cities the S & P case-shiller-home-price-index has returned to near baseline levels. I cannot find the spreadsheet I am looking for but the index for San Francisco MSA sits right at where home prices were in early 2003. I believe a more interesting graph that should be used if you are in a rent vs. buy quandary is the case shiller rent to price ratio. It basically indicates relative to current rents, home prices may be considered fair and are a break even price point. Of course, everyone can and will pick apart this graph and there are city by city and neighborhood by neighborhood variations. It is important when dealing with statistics to compare apples to apples. In other words, it is a waste of time to compare NYC or SF prices as compared to Las Vegas or Nashville. Yes, it is much more expensive to buy (and rent I should add) in the former vs the later.

18   Robber Baron Elite Scum   2011 Oct 5, 3:20pm  

tts says

Home prices should be around 3-4x income

More like .5X to 2x absolute maximum. I don't even think 2x annual income is very financially conservative. Even 1X annual income is beginning to push it.

.5X annual income is more financially conservative and better for the economy. People have other expenses and they need to save money.

19   Dan8267   2011 Oct 5, 4:05pm  

It all depends on where you live. In general, in places least hit by the housing bubble, homes are affordable. In places like south Florida, they are still largely a rip-off and only knife catchers are buying.

20   tts   2011 Oct 5, 7:26pm  

MCMSinger says

More like .5X to 2x absolute maximum.

I was trying to be nice. ;) Ideally I'd agree with you though. CA does tend to be pricier than elsewhere though, so maybe 2.5x or so to fit his area of choice?

21   StoutFiles   2011 Oct 5, 10:04pm  

MCMSinger says

More like .5X to 2x absolute maximum. I don't even think 2x annual income is very financially conservative. Even 1X annual income is beginning to push it.

Prices would need to drop another 50% for that to be possible. Not for me personally, but the majority of people. I don't think the country could take a blow that big.

22   tatupu70   2011 Oct 5, 10:08pm  

MCMSinger says

tts says



Home prices should be around 3-4x income


More like .5X to 2x absolute maximum. I don't even think 2x annual income is very financially conservative. Even 1X annual income is beginning to push it.


.5X annual income is more financially conservative and better for the economy. People have other expenses and they need to save money.

So rents would fall by 1/2 to 3/4 too then, right?

I'd like for it to rain gum drops and for money to come out of my kitchen sink.

23   ArtimusMaxtor   2011 Oct 5, 10:21pm  

Gee well free I guess. One has to wonder. You look at old movies westerns they call them. People took wagons to different places. When they got there they built something. On land where no one was. Now supposedly. You just can't go somewhere and get land where no one is and build there. What changed? Nothing really. People got dumber it seems. Taken in by land hustlers.

A land hustler might do something like this. Says he buys up a entire blockett of land near a city. He has his goons to back him up of course. You come in and buy a house on his land. Which really is a throw back to a tenant farmer.

(Buy the way this should really piss some people off. If you have a mortgage on your house your listed legally as a tenant. Thats the only way they can dispossess a holdover in a house. Go to your mortgage deed and note your listed as JTWROS. Which means Joint tenant with rights of surviorship. So your a tenant. Not a homeowner than they can disposses you just like you lived in an apt.) They call it forclouser sneaky term. They consider the Home which you bought and the disposses as two different things. I could get more into that however I won't don't look for a way out by the way. You signed that 300 pages of paper at your closing without reading it all. Not me.

Land still is free. Notice they don't consider land in the purchase of a home. Any farmer can tell you its impossible almost to get a loan for a farm with a lot of acreage. There is good reason for that.

The rules of the game go like this you have to live on the land in order to have use of it. Makes no sense to pitch a tent in a city just to get a sandwich. Thats why the big shot assholes donate to all the shelters and the city also to keep the game going. Been going on for a while.

If you moved out to say oh California and there is no one living on the land you have a right to live there plain and simple. You can build there. Grow there. Dig a well there and no one has the right to tax you. (Taxation or tribute is only to a King.) Which is stealing from His Majesty and they know it thats why they have to juke things out of Maryland in some kind of trust or another. You can throw a tax collector off of your land with no problem.

See land is only occupied if someone lives there. If ABC land development and houses claims that land for building they are very, very much in error. Why because they don't live there. You have to live there in order to have use of the land and as far as I know the president of that cor. probably dosen't.

So your living in the biggest era of LAND FLIM FLAMMING that has ever been known to mankind. Several countries don't do that like much of South America. A lot of Africa. Also much of the United States. YOU just don't know about it. You pack into these cities so you can get jobbies with the interest sucking land swindlers. You want to be a slave be my guest owe and owe. Pack into their stores buy their stuff. Take their credit. Work in jobbies they created so you can. Watch your masters stuff. Work at a check out for master. Stock shelves for master. Sell worthless paper as a broker for master stealing from your fellow slaves. Work writting mortgages for master so you can put your fellow slaves into even more slavery. It goes on and on the interest swilling theives own much in and around most cities

Your mistake in all of this you were taken in. Like a lot of other people. Guess what there is a shitload of people living on land all over America that never paid a dime for it built dug wells and planted.

Screw this Chinese finger trap of a game they keep playing with you.

The good news - land is free. Move where you want. After you get over your fear of master his credit - your debt - and his jobbie and declare yourself free. You'll have the best life you can imagine owing not a damn soul and in charge.

Bet you have never seen nor will see this in the news that is obviously owned by the interest pigs.

24   ArtimusMaxtor   2011 Oct 5, 10:23pm  

By the way don't bother staking out 300 acres for yourself its the land you USE not the land you want to hog.

25   SanGabrielValley   2011 Oct 6, 12:01am  

Asking prices are still WAY too high. The reason for this is because the fed and govt decided to try and prop up asset prices instead of letting the market do it.

Don't be fooled by low interest rates. You still have prop taxes and maintenance costs to deal with.

Most houses I see for sale around me are 50% overpriced IMO. But amazingly enough, many are selling. These people are future foreclosures in the making.

26   Robber Baron Elite Scum   2011 Oct 6, 12:14am  

tatupu70 says

So rents would fall by 1/2 to 3/4 too then, right?

Correct. Much of the rents are high due to inflated property taxes beyond reasonable amounts. Landlords need to cover their expenses to offer an apartment.

Property tax is a rent in itself. And the property tax in America has risen due to the real estate bubble.

Pop the bubble fully and remove the greedy school unions along with the reckless spending of many municipalities, cities and villages - you will end the rent imposed by the government on private property they don't even own.

Forget about even owning a home paid with cash. You still have to pay rent like a slave to the government and the public communist school system.

So why not rent? Buying with cash is pointless since your money is locked into a depreciating asset unless you take out equity which is never a good idea.

Better to invest that money and rent a place for living. (Of course; this is not always possible. Some people need stability and have kids. And some people are well-off and don't care; so buying is fine with them. Depends. But for most people it's best if they rented and continue to rent till the following happens as I explained.)

Than you have utilities which have gone beyond sanity.

Trust me when I say this: The government and corrupt private industries are practicing crony capitalism to turn the vast majority of Americans into work-slaves that can hardly save any of their paycheck. And because of that - they have to continue to work indefinitely as slaves because they have no money to start their own business or make investments. Making them needy; in turn lowering the wages unfairly. The best way to strip every penny from the sheeple is through make everything expensive in health care, living costs, grocery, education, income taxes, social security ponzi, property taxes, inflated real estate prices, overpriced gas, unconstitutionally forced enrollment into expensive car insurance plans and a nanny state of taking money from hard workers in order to give to the bums.

It's sad what America and the rest of the world has come too.

27   ArtimusMaxtor   2011 Oct 6, 12:18am  

Yep y2k. Thing is land is free. Food is good, grow it. Houses are good build it. Thing is people are confused by carpentry. How to start. Stone works really well until you can add to it or build something else. Coal for fire. Works really well its everywhere. Game mostly free. All over California. If you get tried of being conned and stolen from. Could be a place to start. You stick around your going right back into the same old mess. Or go back to credit. Sit in traffic in terror of your boss who dosen't want you to be late. Go to the grocery store buy HIS goods. After all your to stupid to throw some seed into the ground. Or shoot a turkey. Buy his furniture on credit. Live in his house ON Credit. Go to his schools on credit. Pay the thieving govt. The taxes they imply that really don't belong to them. While they dance and sing for you 24 hrs a day on a 24hr a day news channel and tell you what they are doing for you. Which I don't even find hysterical anymore. Really it's insulting to my intelligence. They know, don't ever think for a minute they don't know they are hustling you.

28   Robber Baron Elite Scum   2011 Oct 6, 12:23am  

StoutFiles says

Prices would need to drop another 50% for that to be possible. Not for me personally, but the majority of people. I don't think the country could take a blow that big.

Yes, this country will be destroyed if it dropped 50%. The problem is this country's monetary & economic system is based upon self-destructive fundamentals to begin with it.

All types of chaos will ensue for sure. (Social, political, economical & cultural)

But for everything to go back to normal, there first needs to be chaos to run it's full course.

This chaos will simply be the consequences of a faulty system that has been allowed to exist for such a long time. Every action has a reaction, I'm afraid.

29   Robber Baron Elite Scum   2011 Oct 6, 12:40am  

APOCALYPSEFUCK is Tony Manero says

It's never been a better time to squat in an abandoned McMansion and prepare for the impending cannibal anarchy.

If you want to squat a place; why not squat a mansion that's already occupied?

Some rich people own homes so big, they won't even know a stranger is in there squatting.

50 cent once had someone squat his 25 bedroom mansion for 3 fucking days.

30   NDizzle   2011 Oct 6, 12:45am  

I'm too worried about job security at the moment. I haven't even considered if things are affordable or not.

I don't think I'm alone.

31   Robber Baron Elite Scum   2011 Oct 6, 12:46am  

tts says

Ideally I'd agree with you though.

I agree. It is unfortunate that this financially sound and economical concept seems unlikely to ever occur soon.

tts says

CA does tend to be pricier than elsewhere though, so maybe 2.5x or so to fit his area of choice?

I guess. I mean sometimes, what can you do? Life is short & sometimes you got to play along to get along in life.

32   Zakrajshek   2011 Oct 6, 1:19am  

Today's comments reveal that everyone knows the housing game is rigged for banks and the government. They obviously benefit from high house prices. If government wanted low house prices they could immediately create thousands of low cost building lots, or they could limit real estate speculation in high cost areas. Never going to happen.
Consider birds. No one charges them for food or housing, taxes them, or leaches off their work. Try charging them rent. Only humans can be enslaved and exploited to the maximum (and we think we're the smartest). Have you ever lived even one single day where you didn't have to pay somebody (rent, etc) for just being there? For just being born on this Earth. What an insidious system they've created. Please read Henry Thoreau's Walden, especially part 1, Economy. It it as close to the absolute truth as is humanly possible.

33   zzyzzx   2011 Oct 6, 1:36am  

MCMSinger says

tts says

Home prices should be around 3-4x income
More like .5X to 2x absolute maximum. I don't even think 2x annual income is very financially conservative. Even 1X annual income is beginning to push it.
.5X annual income is more financially conservative and better for the economy. People have other expenses and they need to save money.

I agree with the above qouted lower multiplier for the price of a house. I always figured 1X yearly income was about right.

34   FortWayne   2011 Oct 6, 2:14am  

tatupu70 says

MCMSinger says

tts says

Home prices should be around 3-4x income

More like .5X to 2x absolute maximum. I don't even think 2x annual income is very financially conservative. Even 1X annual income is beginning to push it.

.5X annual income is more financially conservative and better for the economy. People have other expenses and they need to save money.

So rents would fall by 1/2 to 3/4 too then, right?

I'd like for it to rain gum drops and for money to come out of my kitchen sink.

Don't upset taputu, he goes ape sh** every time someone tells him the house he bought isn't worth what he paid for it.

35   dublin hillz   2011 Oct 6, 2:16am  

Apartments are definitely becoming less affordable. My wife and I lived in a "luxury apartment" in Fremont and the unit that was going for $1575 in june of 2010 is going for a little over $2000 a month now. That's about a 28% increase roughly. We saw it coming and in part due to this bought earlier this year. What apartment complexes are doing is unconscionable - taking advantage of people who got foreclosed on and jacking up rents due to "supply and demand." 28% jack move is way bigger than "inflation."

36   ArtimusMaxtor   2011 Oct 6, 2:24am  

So I see too there are some people that like to give away their labor for credit. Hey thats ok. Either that or your stupid. Paper was nothing but credit. Thats all it ever was. Just credit for the labor or work you did. It can be adjusted up and down at their whim just like the bullshit interest rate game. Hey no inflation here folks. Oil at 4 bucks a gallon and no inflation. Your pliability and gullibility never cease to amaze me.

So take your little labor paper to Wal-mart and buy your masters goods. That were grown in Masters fields by masters little labor paper loving, field hands. Shipped by masters packing houses. By masters paper loving truck drivers and trucking companies. To the masters Wal-mart built by masters credit paper loving construction workers. Go in and be greeted by masters paper wanting greeter (oh he's just so low on the food chain Doris. I can't bear it.) Get it. Load up your auto that was obtained with masters credit. Paid for monthly with masters (your so happy with it.) labor paper that you and the other slaves so happily suck in. Because well you can't figure any way out of masters system. Hey like any field hand you were born into it.

37   DaveM_Renter   2011 Oct 6, 2:49am  

0.5x of yearly income for a home is just plain crazy. That would correspond to a monthly rent of 4% of your pre-tax monthly income, or 8% or less of your take-home income. That sounds like trailer park or a dorm room to me. Or maybe Detroit?

Anyway, until we reach 0.5x prices I will look for the 2-3x homes and rent them out to fools like you at a nice profit...

Let's get real here. I have no problem paying 3x for a decent home, since I'd still pay about the same as my current rent (including taxes and maintenance!) but after 20 years (not 30!) I'd own my home free and clear.

At 0.5x I'd add a new house to my portfolio every 5 years. Now wouldn't that be nice? Well, maybe not since the rental market would probably also collapse at those home prices :-)

38   zzyzzx   2011 Oct 6, 2:52am  

dublin hillz says

Apartments are definitely becoming less affordable. My wife and I lived in a "luxury apartment" in Fremont and the unit that was going for $1575 in june of 2010 is going for a little over $2000 a month now. That's about a 28% increase roughly. We saw it coming and in part due to this bought earlier this year. What apartment complexes are doing is unconscionable - taking advantage of people who got foreclosed on and jacking up rents due to "supply and demand." 28% jack move is way bigger than "inflation."

Are you sure that food inflation hasn't been higher???

39   zzyzzx   2011 Oct 6, 2:53am  

DaveM_Renter says

0.5x of yearly income for a home is just plain crazy. That would correspond to a monthly rent of 4% of your pre-tax monthly income, or 8% or less of your take-home income. That sounds like trailer park or a dorm room to me. Or maybe Detroit?

No. That's what you should be paying for a house if you want enough money left over to save for retirement. It's not like I'm going to be getting a pension.

40   DaveM_Renter   2011 Oct 6, 2:55am  

SFace:

Sure, quote the NAHB for affordability. Does that take into account that
a) a much larger percentage of households is now a 2-earner household?
b) a lot more of one's take-home pay is now needed to cover other basic costs, like food and health care so effectively one has less money left over for housing?
c) due to low interest rates you need a lot higher savings rate to be a ble to retire at a reasonable age?
d) the impact of property tax on affordability?
e) the fact that you have to pay 20% down (a lot more money now than in 1990) or PMI?

I'd love to see a true unbiased study on home affordability throughout recent history.

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