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[TransTrender]

Out of curiosity I looked up the Redfin/Zillow listings of my parent's old home in California as well as some other properties of friends of family from the past.
Some were recently sold, and others weren't but houses on the same street or even next door were on sale.

Looking at these prices, I don't understand who is buying these homes, and who can actually afford them?
Here's an article that simplifies things a bit:

https://www.sacbee.com/news/california/article286536025.html

Another article about income breakdowns:

Home Buyers Need to Earn $47,000 More Than in 2020

The income needed to comfortably afford a home is up 80% since 2020, while median income has risen 23% in that time.

www.zillow.com

Where I was looking every house on the block is now between $1.1M to $1.5M for some pretty regular single family homes, built in the late 1970's, and very suburban neighborhoods.
First you consider the down-payment which should be about 20%, so $220K to $300K, then you have the mortgage itself, homeowners insurance, and property taxes. These estimated mortgages, even with 20% down, were in the $9K to $11K range per month.
If your target is 30% take home goes toward the mortgage, then your gross pay really needs to be more than $400K per year for the household to afford it.
Next I looked at the income demographics and clearly the data showed most people cannot afford these homes. Best case median, constrained as much as I could, put some households in the $200K to $220K range, and even the distributions couldn't support getting to a large enough slice of the local population to hit that $400K+ annual household income.

This article from January 2024 had the median single family home price as $1.3M in Orange County CA.

January home sales and price report

<span style="line-height: 107%;">Tempering mortgage rates propel California <span style="color: #212121;">home sales in January.</span></span>

www.car.org

Sure there's plenty of money in Orange County, but I don't see the data on the jobs or the people that actually make enough money to afford these.

Was this huge jump in housing prices all from investor types? Have they priced out all the regular humans from the housing market? Are these people holding on to ticking time bombs and will hopefully be wiped out by their speculative purchase so regular people can own homes again?
Is it the case people are getting these loans anyway and then living paycheck to paycheck with tons of credit card debt just to make ends meet?

This seems like madness and I can't wrap my head around it.

 

[jshackles]

If your target is 30% take home goes toward the mortgage, then your gross pay really needs to be more than $400K per year for the household to afford it.
Next I looked at the income demographics and clearly the data showed most people cannot afford these homes. Best case median, constrained as much as I could, put some households in the $200K to $220K range, and even the distributions couldn't support getting to a large enough slice of the local population to hit that $400K+ annual household income.

Mortgage companies now will often lend you up to 60% of your take home pay as monthly payments, which is double what they would have 20 years ago (30% as you stated). So instead of needing $400K per year, you only need $200K to "afford" that house. So the real answer to your question is, people can't really afford it - but they don't have an alternative. And a lot of times, yes this means these people are living paycheck to paycheck with no savings.

Was this huge jump in housing prices all from investor types? Have they priced out all the regular humans from the housing market?

Where I live, this is a huge problem. More than half of the real estate transactions that take place in my local municipality are done by all cash buyers, both companies and individuals. The overwhelming majority of them are not these people's "primary residence", they're just purchasing it as an investment to either sit on or to turn into a short term rental / AirBNB thing. Whether they'll be wiped out by their speculative purchases has yet to be seen - housing prices in my area continue to climb year over year.

 

[Tams]

Here in the UK, and especially where I live, many people buy them as second homes or rent them out as holiday homes.

It's absolutely killed communities. Schools with almost no pupils. The single shop in villages closing down because most of the year there are next to no people to be customers.

 

[Rentahamster]

When the rich get richer a lot faster than the poor and middle class can accumulate wealth, it becomes more and more feasible for them to buy multiple houses and skew the market in their favor.

 

[NecrosaroIII]

My parents bought their house in North Long Beach / Compton in 2009 for 180k. They sold it in 2017 for 420k. It's now valued at $700k. It's a very shitty 1910 house in the ghetto. 2 bedroom. Bars on the window type house.

My wife and I make over 200k. The most we can afford is a 1 bedroom condo here in OC. And even then that will be tight. 1 bedroom condos are going between 500-700k here in South OC.

 

[WhiteWaterM00se]

This topic is one of the top topics for the next election imo. Need to start converting these office buildings and empty commercial buildings into residential ASAP

 

[ThatStupidLion]

Agreed. Fcking insane here in atlanta. All basic with AWFUL build quality.

Wife and i are stuck with our 2018 starter home now with 3 kids and a dog. Best option at this point is to just suck it up and reno whenever we can afford to.

To answer whos buying? Boomers. Only people who have the reserves to pay a downpayment and keep mortgage down for kids to be able to afford it.

I also think many people are house poor. Spent too much and are now stuck being a slave to too high prices for themselves.

 

[West Texas CEO]

Looking at homes that I could never possibly afford is a fetish of mine.

 

[Northeastmonk]

I’m in the Midwest. The housing market isn’t terrible. The house I’m in now was built in 2003. It was purchased for about 180K. A house was sold on my street, same exact floor plan for 310K just recently. We added a sprinkler system, new AC, new kitchen appliances, and etc.

I am actually in the process of building a home. It’s super expensive but I am getting a lot of what I need for the years to come. My wife and I paid off the house we are currently in years ago. I’d say the worst part about the Midwest are the high property tax. We keep paying more and more and the house is already paid off. Homes aren’t bad. The home we are building would probably cost 1.4 million if it was in California.

 

[WhiteWaterM00se]

I’m in metro Philly. And it is terrible. Cash offers everywhere, people moving out of Jersey and nyc. My house has doubled in value which would normally be great, except the next size home up has also.

My true concern, this inflation has allegedly ended my neighbors marriage. As they could not afford their lifestyle with children. And his neighbor has already lost his small business.

Whatever is going on here is not accurately being reported in the media.

The pain normal Americans and worldwide are feeling with food cost, energy cost, and childcare and healthcare is outrageous.

Obviously, not even mentioning housing cost and supplies.

If it is corporate greed or gross governmental mismanagement. Something is not being reported as it should be. While the rest of us are working harder than previous to make ends meet, we don’t have time to watch and look for ourselves.

This was not happening worldwide pre covid. The pandemic alone did not cause this. So what is truly going on?

 

[jshackles]

My house has doubled in value which would normally be great, except the next home up has also.

I feel this in my soul, while living in a mobile home that was built in 1991 that's apparently worth half a million dollars now.

 

[Aesius]

I’m in metro Philly. And it is terrible. Cash offers everywhere, people moving out of Jersey and nyc. My house has doubled in value which would normally be great, except the next home up has also.

My true concern, this inflation has allegedly ended my neighbors marriage. As they could not afford their lifestyle with children. And his neighbor has already lost his small business.

Whatever is going on here is not accurately being reported in the media.

The pain normal Americans and worldwide are feeling with food cost, energy cost, and childcare and healthcare is outrageous.

Obviously, not even mentioning housing cost and supplies.

If it is corporate greed or gross governmental mismanagement. Something is not being reported as it should be. While the rest of us are working harder than previous to mages ends meet, we don’t have time to watch and look for ourselves.

This was not happening worldwide pre covid. The pandemic alone did not cause this. So what is truly going on?

The fundamentals of the economy don’t make sense and we are headed for a crash IMO.

My brother is a sales manager at a car dealership. People in the car biz were all living it up through 2021-2022. Low interest rates, an inflated used car market, COVID savings/stimulus checks, and scarcity of in-demand vehicles meant people were gladly paying $20k over MSRP on trucks and SUVs. And the salesmen and managers were pocketing the pure profits.

Well, the manufacturers caught on and raised their prices to the dealers. So the dealers raised their prices again. Now that everyone is broke and prices are sky high (along with high interest rates), they aren’t selling shit. My brother said it’s the worst it has been since 2008.

Companies got greedy as hell during COVID when everyone was flush with cash. They are all going to keep pushing the limit on prices and eventually the bubble is going to burst because people are broke now, but no CEO wants to be the one responsible for decreasing profit or revenue.

 

[JaseMath]

I feel so grateful I was able to purchase in 2020. The 2024 struggle is absolutely real and not being reported accurately imo

 

[Cyberpunkd]

Mortgage companies now will often lend you up to 60% of your take home pay as monthly payments, which is double what they would have 20 years ago (30% as you stated).

And this is one of the reasons why houses are so expensive. People can borrow more, people selling houses take advantage of this. All government programs in Poland e.g. 0% credit backed by the government immediately result in prices going up.

In France it’s approx 30-35% take home, no exceptions. No bank will lend you more.

 

[TransTrender]

This was not happening worldwide pre covid. The pandemic alone did not cause this. So what is truly going on?

This.
It's all insanity.
If this Zillow article can be believed then we have some numbers but not the whole story. It does seem like inflation is a part of this but definitely not all of it.

Home Buyers Need to Earn $47,000 More Than in 2020

The income needed to comfortably afford a home is up 80% since 2020, while median income has risen 23% in that time.

www.zillow.com

 

[eddie4]

This.
It's all insanity.
If this Zillow article can be believed then we have some numbers but not the whole story. It does seem like inflation is a part of this but definitely not all of it.

Home Buyers Need to Earn $47,000 More Than in 2020

The income needed to comfortably afford a home is up 80% since 2020, while median income has risen 23% in that time.

www.zillow.com

Some people don't even make $47k, never mind $47k more. This is ridiculous. Why is a 1bd1ba 700 sq ft home $400k?

 

[Haint]

People been promising a great depression and credit bust for literally half a decade at this point. It ain't happening cause while you personally, or the 2 guys you know may not have seen big raises, a large enough majority of people have and are doing great. Someone in podunk nowhere with no experience doing anything could get a job by the end of the day paying $15 - $20 an hour, the secretaries at your local municipality are making $100K+, and most of your degree'ed neighbors are pretending to work from home for several hundred K a year. Reality is a lot of people are flush with cash.

 

[analog_future]

I’m in the Midwest. The housing market isn’t terrible. The house I’m in now was built in 2003. It was purchased for about 180K. A house was sold on my street, same exact floor plan for 310K just recently. We added a sprinkler system, new AC, new kitchen appliances, and etc.

I am actually in the process of building a home. It’s super expensive but I am getting a lot of what I need for the years to come. My wife and I paid off the house we are currently in years ago. I’d say the worst part about the Midwest are the high property tax. We keep paying more and more and the house is already paid off. Homes aren’t bad. The home we are building would probably cost 1.4 million if it was in California.

The housing market is absolutely terrible in the Midwest. The house I bought 4 years ago has doubled in value and I've done nothing to it. And that's the norm across the country.

 

[SF Kosmo]

I grew up in a small 2 bedroom townhome in the hood that my dad purchased for $11,000 in the mid-80s.

That identical home was sold a few years back for almost $700,000.

This is the millennial struggle. Work hard in school, go to college, focus on my career, make six figures, still can't afford the things I had as a kid when I was literally living in poverty.

 

[LimanimaPT]

The prices of houses in here, Portugal, are just crazy too. Who the fuck is buying this houses? We are poor, so this puzzles me.

 

[IDKFA]

Here in the UK, and especially where I live, many people buy them as second homes or rent them out as holiday homes.

It's absolutely killed communities. Schools with almost no pupils. The single shop in villages closing down because most of the year there are next to no people to be customers.

It also bumps up the price of homes, meaning any young local people looking to buy in their hometown are priced out of the market.

Having people form London coming in and buying up properties in costal areas like Llanelli and St Ives etc should be a banned practice.

Affordable local homes for local people.

 

[Pegasus Actual]

The prices of houses in here, Portugal, are just crazy too. Who the fuck is buying this houses? We are poor, so this puzzles me.

It was Ronaldo. He bought them all. Just because he could.

 

[JayK47]

It is all part of the plan. Empty houses everywhere while you live in a shanty town. We will need to go oldschool and have multiple generations living in a house. Boomers and gen X handing over home to kids and keeping it in the family.

 

[Represent.]

Its not any cheaper here in Canada, more expensive in fact. Its fucked.

 

[Dural]

Here in the UK, and especially where I live, many people buy them as second homes or rent them out as holiday homes.

It's absolutely killed communities. Schools with almost no pupils. The single shop in villages closing down because most of the year there are next to no people to be customers.

Yep, short term rentals have ruined the housing market and a lot of communities.

I remember when my grandpa bought his house in 1990 saying he'll never get the money out of it that he spent. He paid $589k then and Redfin estimates it's worth $1.9million today. This is in Huntington Beach, CA.

 

[WhiteWaterM00se]

So, in America…anyway, this started after 2008. US allowed other countries and companies to buy American homes and hold them for rentals. This was taboo previously, in fact. I believe Canada outlawed this during the pandemic. China and others bough up some of american homes and apartment buildings For the sole reason as holding them as assets in the future For financial gain.

But it still doesn’t solve why this is world wide. birth rates are allegedly on the decline. So, there are less growing up coming for existing housing. You would think that as Baby Boomers expire, there would be more homes available.

 

[ForAcademicPurposes]

Not me.

 

[Northeastmonk]

The housing market is absolutely terrible in the Midwest. The house I bought 4 years ago has doubled in value and I've done nothing to it. And that's the norm across the country.

For the amount of money we are spending to build a home, we could buy a very nice house. We are building a ranch for my son. We can’t get a multi story house. We expect the house we are in to sell pretty quick since it’s a starter home in a family friendly neighborhood. Lots are being sold all the time it seems. We put a deposit on the land already. I see a lot of homes in my area sell in a short amount of time. I heard the average time a house is on the market is 14 days. The property tax sucks. The total building cost is going to run us around 500k. We are also saving like mad, so we don’t have to take a huge loan out once the house sells. I make a decent living. Nothing special. We will be able to live in this new house, but it’s going to take some discipline. Things must be easier when you build because they’re always expanding in my state.

Edit/Update:
The house down the street sold in 1 day. I just learned this. Now I’m getting told the average is 5 days on the market. People are buying.

 

[Unknown Soldier]

I’m in metro Philly. And it is terrible. Cash offers everywhere, people moving out of Jersey and nyc. My house has doubled in value which would normally be great, except the next home up has also.

My true concern, this inflation has allegedly ended my neighbors marriage. As they could not afford their lifestyle with children. And his neighbor has already lost his small business.

Whatever is going on here is not accurately being reported in the media.

The pain normal Americans and worldwide are feeling with food cost, energy cost, and childcare and healthcare is outrageous.

Obviously, not even mentioning housing cost and supplies.

If it is corporate greed or gross governmental mismanagement. Something is not being reported as it should be. While the rest of us are working harder than previous to mages ends meet, we don’t have time to watch and look for ourselves.

This was not happening worldwide pre covid. The pandemic alone did not cause this. So what is truly going on?

I feel so grateful I was able to purchase in 2020. The 2024 struggle is absolutely real and not being reported accurately imo

The media is desperate to make sure Joe Biden is re-elected in November and have been suppressing true news about the economy for his entire Presidency

 

[JaseMath]

The media is desperate to make sure Joe Biden is re-elected in November and have been suppressing true news about the economy for his entire Presidency

Eh... I'n not here to talk politics, but it's a whole hell of a lot better under Biden's care than Trump's.

 

[Unknown Soldier]

Eh... I'n not here to talk politics, but it's a whole hell of a lot better under Biden's care than Trump's.

I'm not here to talk politics either and in fact it's banned from GAF but I was simply giving the honest answer to your question

What you do with this knowledge is up to you

 

[West Texas CEO]

Housing is so expensive, in order to keep "undesirables" out of certain neighborhoods.

It's all been planned by the elite bourgeoise for decades.

 

[dorkimoe]

my starter home has increased like 30k the last few years. But its all meaningless because i would just have to overpay for the upgraded house

 

[Maiden Voyage]

Within the past few years my home value rose ~65%. I live in the middle of nowhere. Moving may never be an option if the current market stays the same. Thank goodness we paid the mortgage off. Insurance and property taxes have skyrocketed because of it.

 

[Krappadizzle]

My house has risen ~$130K in value since I bought it back in 2018. I'm shocked at how much I could almost assuredly sell it for if I wanted to. Not gonna, the market is insane and I doubt it'll get better any time soon. Anyone who's looking to buy a home now is in for a tough go at it.

 

[jason10mm]

I feel so grateful I was able to purchase in 2020. The 2024 struggle is absolutely real and not being reported accurately imo

No kidding. I bought my sports car in March 2020 and got 1% apr and 3 years maintenance. They were BEGGING folks to buy the typical suv or minivan.

 

[jason10mm]

Housing is so expensive, in order to keep "undesirables" out of certain neighborhoods.

It's all been planned by the elite bourgeoise for decades.

Do YOU want to live around a buncha socialist Reeee types?

 

[Grildon Tundy]

Bought a house in 2016. It's doubled in value since, per what my neighbors very similar home sold for in 2022 and not even using the max estimate from those Zillow-type sites.

Good for me because I got in right before it got crazy, and sucks for people who can't save for a down payment because of the mark-up they're paying to rent and all the other basics getting hit hard with inflation. It sucks, and it's all by design to get the money-movers the best returns.

 

[Woggleman]

I have a house about s block from the ocean and while we have no intentions of selling if we did it would be for as almost twice what we paid.

 

[Blade2.0]

The American empire is in its death throes. At least as it stands. There is no way this can continue for much longer. Cost of living outstripping wages 3 to 1 can only hold out until enough people are fucking tired of it to storm the gates. And America will have deserved it.

 

[INC]

Don't worry the rich can afford it, and rent it to you

 

[Unknown Soldier]

The American empire is in its death throes. At least as it stands. There is no way this can continue for much longer. Cost of living outstripping wages 3 to 1 can only hold out until enough people are fucking tired of it to storm the gates. And America will have deserved it.

Bro housing prices have gone insane everywhere in the developed world. It's not uniquely an American problem

 

[StreetsofBeige]

You guys got to remember that home prices arent set by government or businesses. They are set by the home owner. And if they dont want to sell for cheap, you cant force them.

Your biggest problems arent the homeowner who doesn't want to sell, it's economics:

1. Most cities have amped by prices because there's too many people moving into the city creating demand. Easy peasy immigration. And many immigrants have money to either buy a house to live in or invest as a landlord

2. Most cities prefer zoning for condos than allowing zoning for big detached home and townhouse complexes. This makes buying a house harder if you dont want condo/apartment life because everyone is fighting for them. Zoning for condos makes cities more property tax so they prefer it. Just imagine how much property tax they get from a plot of land with a 40 floor tower (400 units at 10 units per floor), compared to using that corner block to build what? Only 12 houses?

3. Detached houses and apartments are on the extremes for home living. Semis and townhouses in the middle. Think of it like sports. When one shoots up in price (detached homes), what happens is everything starts shooting up to compensate, since home buyers who cant afford a house drop down a rung or two so they fight for those driving up prices. Everything always gets pigeon holed compared to a detached house. If there's a crash and houses drop in price, every other kind of home drops too because it doesn't make sense a decent house would be cheaper than a decent condo in the same neigbourhood/location. Sports salaries are the same. They all shoot up together as new benchmarks are set

Add up the above and thats why your city has tons of high priced homes that all seem to go up together. A homeowner will ride the wave selling at market prices based on supply and demand.

 

[Macattk15]

Connecticut is a wasteland. Wife and I have been looking for a home since October. Barely anything comes on the market and what does is sky high and STILL disappears within a week.

 

[StreetsofBeige]

Some people don't even make $47k, never mind $47k more. This is ridiculous. Why is a 1bd1ba 700 sq ft home $400k?

Supply and demand.

My 1 bed + 1 den + 1 bath condo investment property's market value is around $700,000. It's about 650 sq ft.

 

[TheGreatMusashi]

This made me curious so I talked to my mom and looked on Zillow.

The one story, three bedroom home I grew up in cost my parents, in 1989, $64,000.

It’s $485,000 on Zillow.

My wife and I work. We each make pretty decent money but when you rent and have kids, it’s hard to save.

We’re squirreling money here and there and in 6 years the youngest will be 18. We’re buying a mansion, across the country, in one of the most secluded parts of the US. Will hopefully have some left over to keep a couple rent houses for fun money/vacation.

 

[StreetsofBeige]

This made me curious so I talked to my mom and looked on Zillow.

The one story, three bedroom home I grew up in cost my parents, in 1989, $64,000.

It’s $485,000 on Zillow.

My wife and I work. We each make pretty decent money but when you rent and have kids, it’s hard to save.

We’re squirreling money here and there and in 6 years the youngest will be 18. We’re buying a mansion, across the country, in one of the most secluded parts of the US. Will hopefully have some left over to keep a couple rent houses for fun money/vacation.

The house I grew up in as a kid (excluding the house I lived in as a toddler I dont remember) was I think around $100,000 or so when my parents bought it around 1980. Its now worth about $1.5M when I check sites to see for curiousity sake what houses in my old neighbourhood go for which was built I thin in the 60s or early 70s. We moved in 1990 and my parents sold it for around $270-280k I think. We moved to a house worth $350-ish. My parents still have it and it's over $2M. Crazy. But that's what supply and demand does over decades and everyone is fighting for houses.

 

[StreetsofBeige]

Here in the UK, and especially where I live, many people buy them as second homes or rent them out as holiday homes.

It's absolutely killed communities. Schools with almost no pupils. The single shop in villages closing down because most of the year there are next to no people to be customers.

What also doesn't help is Air BNB. I know some houses on my street that do them. And they can make more money per month renting them out for $400/day than renting it out to a tenant for $3000/month. You dont even need to rent it out everyday on Air BNB to make more money. You can have it filled just for Fri-Sun and be better off. For those of you who dont have experience using or renting out Air BNB, it might sound crazy why someone would pay $400/night over a hotel. But you got to remember it's not a person or couple renting them out. It's like 4-8 people, or a wedding party or group who want a house so everyone can stay together, cook, have a driveway and backyard and if you split $400 across 6 people that's only $70/person. I use Air BNB myself when I do road trips with friends.

With Air BNB it's better too since you avoid tenant laws and deadbeats not paying or ruining your place. And you can adjust the price to what you want. Depending where you live, tenant laws cap rent increases to maybe 2% or whatever.

So that makes buying a home harder. Landlords got a good thing going with Air BNB, so no need to dump the property anytime soon.

So add it up with my post above, and it's really government allowing home prices to fester. They are in charge of immigration, city planning and Air BNB enforcement. If they dont want to control things then you get high home prices. Their only recourse is raising rates hoping that tanks home prices, but raising rates hurts home buying anyway because the high the mortgage rate, the less money you get approve for to buy a home and your monthly payments are higher.

 

[DetectiveBananas]

This is why I’m thankful that my close family members all own our homes with no plans to move. The elderly ones say just sell their home after they die and keep the money. Best of luck to those still trying to get their first home without going broke!

 

[Pakoe]

Its the same here in the netherlands. My brother bought a house around the 2015s for about 200k, nowadays its worth 550k.
I can't buy a normal house on my own, unless it's in a shitty place and built in WW2 because I can't get a loan that's enough to buy something normal.
On the other hand I'm renting now and paying more than I would if i would get a mortgage for a decent house.
I try not to think about it often because it can ruin my day sometimes.