The current housing costs (price + interest rate) just seem so out of line with the average household income it boggles my mind it hasn't cooled alot more already.
At $84k average household income, assuming 1/3 going to a mortgage would give you $2.3k a month to work with. At 6% interest rate, assuming 20% down payment of $70k, you can just manage a $350k home and that is ignoring taxes, not adding other closing costs, not considering utilities, assuming an interest rate on the lower side and assuming a 20% deposit.
Add tax and that gives you around $1.7k to work with. Assume only putting down 10% and adding in $400 a month to cover utilities then you can manage around $175k home. That rules out buying a house in alot of the US.
And yes, households in more expensive areas make more but if you are buying the average house, that costs $410k you need to be making like double the national average income to stick to the 1/3 rule. How many households are earning $170k where houses are $410k?
Are people just devoting 50%+ of their income to housing? Everyone buying a house with the help of mom and dad? I just really don't get it.
> assuming 1/3 going to a mortgage would give you $2.3k a month to work with
That’s the problem right there. Even if you’re locked in on the historically low sub 3% mortgages, there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing.
I know finance influencers and older generations keep talking about 1/3 income on housing, but that hasn’t been a thing for a while now. Even before the pandemic surge in housing costs, 1/3 on housing was dream in most cities across the country.
> there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing.
We live in San Francisco and pay rent at about 15% of combined gross income. I think people really underestimate the value of renting.
While I appreciate the anecdotal data point, it’s easy to conflate personal situations to “this is what everyone else can do”. I say this because for a good 5 years I lived with my spouse in a $2k single bedroom apartment in San Francisco that was under rent control when both of us were raking in tech money. It’s doable, but not something that you can extend to everyone in the country.
Good question. We make tech money and rent a 3bed. No more rent control than SF defaults, we’ve only been here 2 years.
The shocking part is that we pay 5k in rent, but mortgage on the same place would be closer to 9k. Plus the commitment part (annual lease vs 30 year debt)
Very important to do your own math on these things and not just follow common wisdom.
If $60k/year represents 15% of your income, you are well within the top decile of income for the US. The comment thread you are responding to is talking about households earning the average income.
> you are well within the top decile of income for the US
Yes and still can’t [responsibly] afford to buy in my locale :)
The situation is truly fucked and it’s about time Americans admit that housing cannot be both an expectation and an investment. Either everyone gets to own a house or it can be an investment. You can’t have both.
IMO housing is a consumption expense but people hate it when I bring that up at dinner.
Your point about being both an investment and an expectation is important. It's a kind of perverse system. I have no idea how to solve it and I haven't heard any answer besides build more housing. I'll take that as the best answer until I hear more ideas. But even that is untenable because everyone who already owns a home blocks new builds. I don't understand why either in most cases given new development typically raises value of proximal real estate.
The land is not consumed when you live there. It only appreciates due to the developments around that land, making it more desirable and thus, more valuable.
And if the land is more valuable, then it makes sense for it to cost more - either as rent, or as capital appreciation.
> everyone gets to own a house
which is not a truth, but a want/desire. So housing is an investment first and foremost, and will always remain so.
The idea of rent suggests that you're paying a use fee to an owner. But if you live in a house that you own, and therefore lose the potential rental income, who are you paying that use fee to? Is the loss of potential income really the same as rent? Because in that case almost every choice/action in life involves a potential loss of income. There's probably always something more profitable one could have done with time/money.
> Is the loss of potential income really the same as rent?
yes it is. The term is called cost of capital, and sometimes imputed rent. But it's not an "expense" per se like it is when you pay liquid cash to somebody for use of a capital good.
Yeah I think $5k/month at 15% of your income means you’re making more than $400k/year as household. (Even more if you’re counting it on net income)
The strong household income is the only reason why you’re able to limit how much you spend on housing, which unfortunately is not something most people are able to do, even if they’re renting. I get that renting is cheaper than buying at the moment with the interest rates, but it’s not cheap overall.
From a livestyle perspective renting sometimes makes sense. Financially almost never does. There are of course edge cases like very expensive urban areas where there’s no possibility to buy because there are no units on the market and commuting is not possible. But if you work remotely, or suburbs are nearby then owning a place is likely a much better choice than renting particularly if you take advantage of subsidies like state/federal assistance for first time buyers and tax abatements in opportunity zones.
The abstract math can work out well but the practical reality is that every landlord exists on the slightly-shitty-to-living-slime end of the human continuum. Even if your municipality has "strong" renter protections it is so draining and stressful dealing with them and their weird invasive bullshit and petty malfeasance for decade after decade.
Sure but also I believe that the upper limit for most mortgage servicers is around 41, maybe 43% (one of those two, cannot remember which, or at least it was 4y ago).
There’s no limits per se. 43% is what they “prefer”. More recently with the low demand for mortgages, that number is more flexible. And all of this is on Gross Income and not net. So you could in theory be spending more than 50% of your net income on mortgage alone. If you want to consider “housing” costs, the number would be lot higher.
[1] tells me a $350k mortgage with a 10% deposit, paid off over 15 years, costs $2,585 per month. That's $31k a year.
That kind of income with that kind of house price should be pretty comfortable, given you don't mention supporting a family. If your non-housing bills are costing $109k a year, there's a good chance you could reign in your lifestyle choices.
But that's not $140->$70 after tax, that's $140k->$70k after tossing $24k into retirement investment savings, another $5k into healthcare savings, possibly another $1,500 towards healthcare premiums (huge amount of variability there), and then finally taxes.
Don't forget real estate tax and sales tax. In some places, real estate tax is about 20-30% of the rental cost. Sales tax is as high as 10% in some places.
Until it isn't because enough people realize it is inherently flawed and will never result in stability and they would rather die than relegate themselves, their children, and all their later generations, to indefinite servitude of an outdated economic system. Provided we don't kill our world first in our pursuit of endless profit growth.
> I'd much rather deal with some less stability and have a lot more resources
This strategy works so long as you're in the group of people who do indeed have "more resources," but breaks down if you're marginalized in any way, or if you don't want to support the exploitative system.
That is what people always says about their current culture or economy or political system, even as they are on the very edge of systemic change. And quite frankly to me that just reads like an excuse to not do or try anything so people can kick the can down the road, benefiting themselves at the expense of many others both currently and in the future as things deteriorate further.
it is if that's all people do, but I think it is a necessary step to realize that we do live under a system that encourages an amoral allocation of resources. If people only ever shrug that off or treat it as intractable it will never change. Some would argue that it cannot be changed, but I think that just means they haven't read history.
Brother lately I’ve only been putting groceries on credit cards and you’re right, they’re not a fixed cost. They’re a variable cost that just keeps going up.
You are getting down voted, but it's true. They (WEF-types during their meetings you can watch on youtube) telegraphed it during/soon after the entire Covid lock downs that they intended to make large structural changes to society and the concept of ownership. They didn't make this secret or anything. Heck some sold books on the subject.
Most of what the WEF discusses is how to gain more technocratic control over democracy. You know, for the benefit of everyone...
I guess people think that there is the need for an centralised evil being responsible to coordinate an attack on society and they feel that the comment is a paranoia attack.
It is nothing like that. We can see how equity firms risen again buying certain types of businesses and change the structure of prices. The incentives to do it wrong are all out.
People still think that Microsoft layouts were an unfortunate unpredictable movement given market circumstances when every regulatory organisation pointed that it would be exactly what they would do.
People also think that putting their money in such companies because they have money back is an endless loop of free money and that money is an infinite resource.
Not one or two only have discussed how they should start licensing their products as a new business model. What people thought that would mean? How selling the product does not give the buyer the ownership? How is that not taxed differently?
The essay was a thought experiment based around the popularity of the so-called "sharing economy" at the time, not a WEF strategy document and certainly no government's policy.
Even the author of the piece said it was not a description of her vision of the future, but intended to start a discussion about technology.
But it's been picked up by wackaloons around the world as part of some overarching conspiracy theory.
it's because it's so easy to simply blame the ills of society on some illusory few pulling the strings behind the scenes. It used to be the migrants, or blacks, or the chinese (still is apparently) or the japanese...and now, it's the rich/shadowy figures etc.
The actual truth is that the collective actions of everybody leads to certain outcomes - today's outcomes. It can't really have happened any other way.
Please don't dilute the argument by comparing racial groups with the ultra-rich.
The (ultra-)rich form a class in the classical Marxist sense - a group whose interests naturally align, and they work together to further their interests.
There is deliberate government policy behind what's going on with housing - free money for the rich, which they can in turn invest into speculative assets to make yet even more free money.
Then they ensure that their money has weight by putting said money into housing, pricing out common folk, and building new units to serve as price control to preserve the value of their assets.
Then it's a good thing that the World Economic Forum are not government and do not have lawmaking powers. It's essentially a lobbying firm. I wouldn't worry too much about random slop they publish.
But you see that everywhere.
You buy the hardware but the company may block your property totally or partially.
You buy a car but pays to use heated seat? Who eats this thing that you haven't paid extra for the seats. The costs are just sunk in other parts.
You buy a movie but it can be revoked.
You buy an smart tv that can have features revoked.
You barely can pay your rent because now everyone needs to rent because no one has money to buy except equity firms.
There is no need for "they" to be a centralised being. It is just happening. Doesn't matter who or if there are a "they".
We live in a world where people think that the homeless man is the enemy because people are to simple minded to not understand why there are incentives to keep make it worse and worse.
They are the proponents of The Great Reset. Here’s an excerpt from a book I read:
‘As Hitler declared in 1934, “The German revolution will be concluded only when the entire German Volk has been totally created anew, reorganized and reconstructed” (cited in Koonz, 2003, p. 87). The “Great Reset,” announced by World Economic Forum (WEF) director Klaus Schwab, son of Nazi industrialist Eugen Schwab, attempts the same thing on a global scale, promising to “revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country [ . . . ] must participate, and every industry [ . . . ] must be transformed” (Schwab, 2020).’
The book is:
Wall Street, the Nazis, and the Crimes of the Deep State
A lot of people get help from mom and dad, but if you're already a homeowner, the home youre sitting on has appreciated too, so you can role equity into your next purchase. Not everyone is starting from zero. There are so many homeowners who would not be able to afford the home they're currently in, but are sitting on $500k of equity they can role into their next place.
While $84k is the average household income in the US, the average among home owners is a bit higher, around $100k-$120k. Also, very high prices really skew averages. Many "starter homes" are closer to $200k. I bought new 3 years ago, and the rent home I lived in prior, which was in an older middle class neighborhood in a Houston suburb, sold for $224k (and this included some basic renovations like new flooring)
Just want to comment, I think if you were to overlay where people work vs live, most people probably do not have reasonable access to housing @ 225k.
Also I think much of this problem is zoning, which coincidentally Houston has none and has some of the lowest housing costs in the nation, especially for a city of its size.
I suspect much of the housing crisis on the west coast is because of poor zoning laws and could be fixed with a stroke of a pen, at the expense of the local housing market value.
On the location vs price front, I think that's a bit of a red herring.
Because people generally want to live close to their jobs.
If cities have a lot of demand, it's partly because they have a lot of jobs, which means that the price of housing in cities relative to income is still an important metric.
Viewed by holding more of those things constant, the urban medianHousePrice : medianIncome is how much of people's lives we're requiring they dedicate in order to have a roof over their heads.
Usually you don’t buy a whole house when you are 25. You start with a small unit. My first condo was 700 sf which I sold for a good profit and use the money to pay for a bigger condo, about double the size. I then combined the profit of the second home with my wife’s profit from her house which was also small and together we got our first nice house just outside the city, about 15 min commute. We paid around 220 $/sf compared to 600 $/sf for a similar home in the city. Our house is 3X the size of the house I grew up in with my parents and 3 siblings, which was standard size for a middle income American family in the 80s. Not to mention the quality and amenities of our house is so much better than a house from the 80s. Yes houses are a lot more expensive today but only if you are buying in busy urban areas. If you dare to look in the suburbs you’ll find great homes which by square footage have not increased that much in the past 30-40 years after adjusting for inflation. In the city you are competing with everyone else wanting to be able to walk to their favorite brunch place. Cities also have crazy regulations that prevent building affordable homes.
If you think of it as a homeowner debt subsidy, that forces a higher percentage of the country into recurring-revenue rentals, that provides an adverse incentive against correcting home prices for income. Right now the consumer debt that’s substituting for wage increases hinges on the middle class being able to access lines of credit; one very popular LOC is home mortgages. If home values are allowed to fall to the level predicted by median wages, that could trigger a massive wave of defaults and bankruptcies as existing loans go underwater, homeowners have their lines of credit shorn, and then start missing mortgage payments and file for bankruptcy. U.S. mortgage loans for 1-4 bedroom properties are currently $14.5 trillion USD; for comparison, U.S. GDP is around $31 trillion USD. So if 10% of homeowners default or discharge their mortgage debts due to home prices collapsing to realistic levels, U.S. GDP drops 5% that year (not accounting for the loss of interest the banks would’ve recorded to GDP as production output for up to decades). Median household wages for homeowners is $86k, well below the $120-140k threshold recently discussed, supporting the government estimates that 30% of homeowners have difficulty making payments on their homes. So, if those 30% went bankrupt over a home prices crash, there’s a plausible threat of a 15% collapse in GDP (compared to Covid, which was around 10%).
Relative to that, I don’t think economic policy is likely to prioritize new home ownership, not when a catastrophic reversal of years of GDP gain is a material risk. It would be a different story in a first world country, I expect, but here trying to reset home prices would just result in a massive rent costs spike (the U.S. free market tends not to build median-wages housing if it can avoid it) and a notable fraction of those households becoming homeless, while they watch as other families benefit from the price correction’s devastation by buying up their home at auction. The best that policy can do with the restrictions the U.S. government places on itself is to issue federal funding to regional governments to build median-price housing — and since much of that funding would go to regions explicitly hostile to current U.S. leadership, that is extremely unlikely to be passed by Congress.
In 2009 the same chart shows that the median age was 39.
In the early 80s it was early 30s.
Look at congress, we live in a boomer gerontocracy. Not every boomer is wealthy and powerful, but the majority of people who are wealthy and powerful are either descendants of elites/wealthy, boomers, or a very small fraction of younger tech/finance/business owners.
The good news is - assuming there's not a big change in immigration rates - if you can rent cheaply enough for 10-20 years the boomers will start dying in sufficient numbers that if there is somehow no reversion on home prices in the mean time there should be insufficient buyers at that point and prices will eventually fall.
>"if you can rent cheaply enough for 10-20 years the boomers will start dying in sufficient numbers that if there is somehow no reversion on home prices in the mean time there should be insufficient buyers at that point and prices will eventually fall"
But that "10-20 years" is your life, and there's no getting it back. Millennials (the largest generation in US history) have entered into our prime family starting age, and the fact that most are priced out of the housing market right now and stuck renting apartments is a complete tragedy. At a 90th percentile income, I can just barely be able to afford a home and provide for a family of 3-4 like our parents and grandparents did on a highschool education with no higher skills.
I doubt your parents instantly bought a house as unskilled workers at age 18. Maybe in a very few ultra cheap housing markets that would have been possible.
For example in 1980 in SF the median home was $130k and the median household income was $16k. Today it’s $1240k and $141k. So yes it’s less affordable but it’s hardly a massive difference as you imply.
I have figured out my father working an unskilled factory job in 1970 made about $40k adjusted for inflation in order to buy a $40k starter home in early 20s.
Union job with a pension that he is still collecting right now after retiring at 55.
No college. Not even sure he has ever read a book in his life. I would say all you had to do was not be an alcoholic and you would be fine but even that is not true. Even the boomer alcoholic fuck ups I know did pretty well and retired early.
This might be a bit of talking past one another. The rent vs buy argument should be comparing similar housing, but your comment bakes in the assumption that renting=apartment. That may be true for your area, just wanted to point out the dissonance.
> most are priced out of the housing market right now and stuck renting apartments is a complete tragedy
It absolutely is, but as one of those myself, I just refuse to even attempt to pay their prices and will make the best of life while renting and doing other things, not having kids, not owning property unless the ratio changes dramatically. Owning at most a tiny condo for half a million where I live, or moving to the boonies to own marginally more for less is simply not appealing to me, it doesn't unlock anything but a vague sense of security and a shit ton of liability. I hope more people choose the same until the working age tranch of purchasing power isn't as available as they'd like and prices have to drop. It's a major issue, but maybe I should be thankful I never adopted the boomer/genx dreams of owning a place and having a family or whatever. It's something I'm morbidly watching from the sidelines for now (in my early-mid thirties), but there are no circumstances except a miracle side hustle that could create the circumstances for me to actually pursue a mortgage on a place in my city.
>"I hope more people choose the same until the working age tranch of purchasing power isn't as available as they'd like and prices have to drop."
You just have to remember and keep in mind that the game is rigged. Housing is far from being a completely free market in this country. The structural political forces entrenched in maintaining home prices is second to none, from the top federal level all the way down to city councils, in a completely bipartisan way. The crisis of '08 was a generational event that we're not likely to see again in our lifetimes. Flattening and dips for sure, but a crash will not be allowed to happen; they'll just print enough to fix it, and leave the burden of inflation to anyone not owning assets.
Agreed on every point, except I'm actually in Canada, so it's partly because housing didn't crash here that we're arguably even more turbofucked, afaik anyway. Although our current administration would like every working age person to believe that it's solely because of your president that we're screwed economically, the writing has been on the wall for a while; too much of our GDP is made up of residential real estate sales and the rental income generated by the scarcity of them and going into the pockets of people who borrowed endlessly against them.
Well, if we want to be technical about it, the 2008 crash did happen because some structural forces (banks) were perfectly happy to originate highly risky mortgages in exchange for higher face value rates.
Which had the side effect of allowing a lot of people who couldn't otherwise afford homes to purchase them by allowing them access to more leverage than they likely should have had.
If they print enough money your other assets will go up (maybe enough to buy a house that has stayed flat in nominal terms)
This is basically the situation with housing in Canada actually, it's been down/flat in nominal terms since 2021 but if you owned US stocks during that time while waiting to buy then Canadian real estate is now much more affordable to you.
This is all home buyers not first time home buyers. So it’s not clear what we can conclude. It could be that more retirees are buying a house to retire to rather than renting.
I imagine age of first time home buyers has also gone up but there’s no way it’s that high.
I'm sure Ol' John is no player when we compare how much investment funds have being pushing to buy homes. Around here, you can't even bid for a small apartment. They get sold to the folks before they start. Paying flat taxes on hundreds of properties doesnt make sense. They don't contribute to generate more jobs. They just replace the buyer and charge extra money that could have be reverted to other expenses that would create a healthier economy by diversity.
I wonder if the distribution of ages for home buyers is not a normal distribution and maybe the median and standard deviations might tell us something more here. Regardless it's concerning that the average and likely median age has shot up that much.
Well, since 1980, the median age in the population has also increased by about a decade, which is a significant (but not a majority) contributor to this.
>if you can rent cheaply enough for 10-20 years the boomers will start dying in sufficient numbers that if there is somehow no reversion on home prices in the mean time there should be insufficient buyers at that point and prices will eventually fall.
You may be missing something - there's so much money flowing upwards in society that the rich/ultra-rich will simply be able to buy ALL of that real estate as it becomes available. If not ALL, then everything that's desirable.
If there are N houses available in the bay area and FAANG hires a total of more than N people from outside the bay area at a median $X/year, then the median cost of a house will be more than the most house that someone making $X/year can afford.
We’re paying Cal FAIR about 10% the value of our house per year, despite having best possible fire safety for come construction and the area surrounding the house.
So, in your example, thats 175/10/12 = 1.5K per month, leaving $200 for the mortgage. So, $175K is unrealistic.
In related news, Cal FAIR is lobbying for a 60% increase in rates this year, because, apparently 16% of rural houses in California burn down each year (it’s either that, or they’re unbelievably corrupt/incompetent, since they’re somehow losing money).
Note that people in flood planes (much of the cities) have similar issues.
The taxes are important though. You'll "pay" for that monthly through your escrow account (or you'll save up for it in a HYSA or something, though personally I'd rather have my lender deal with the city and estimating next year's increases).
With taxes included, that $1800 mortgage can easily become $2600-$2800/month --- $33,600/year --- in a high-property tax state (like many of the states that don't have income tax, which are where many of the cheap homes are). For that to be 30% of your _net_ income, you'll need to clear $112k/year _post-tax_, which is $373k/yr HHI pre-tax assuming 35% of those go to federal, state and FICA.
You'll "only" need $112k/yr HHI if, like lenders, you're assuming that this will be 30% of your gross income. However, if we assume net is 65% of gross, then this mortgage is 46% of your net income. I know that a lot of people carry that risk, but that's a little high for my comfort level.
As for:
> Are people just devoting 50%+ of their income to housing? Everyone buying a house with the help of mom and dad? I just really don't get it.
Like almost everyone else that didn't have Mom and Dad angel investors, we got insanely lucky. I had two really good years financially during which time I was able to save enough to hit our 20% down and then some. We were also lucky with our current situation, as our landlord was willing to extend our lease without increasing the rent and the place we were renting was pretty sweet.
In the UK it seems more about the super wealthy buying up houses to rent them out. Incomes don't appear to be the biggest factor at all, more about concentration of wealth
Housing costs in the US can be out of line with average income because there isn't enough housing. Sellers only have to compete for the top X% of incomes.
When did that become the rule? Why, back in my day, 25% was the max amount recommended to spend on housing. Though that was also back when no one would even think of taking out a 72 month car loan. Maybe one of those new 60 month loans, if you just don't have the money, otherwise stick to 36 months.
And like you, I just don't get it. 1/3 on the house, whatever percentage comes out for the $40K car @ 72 months (granted, one doesn't need to buy new), where's this money coming from? We live in Redmond (WA), and I'm at a loss as to how there are so many newer Teslas parked in >$1MM houses. C'mon, there's only so many of those $500K total comp jobs to go around.
Ultrasonics, eye monitors, electronic locks, self-contained infotainment systems (just a screen and the interfaces for a phone would be fine), lane keeping, auto-braking
Before my time but HUD upped the rent cap on affordable/public housing to 30% of income in 1980. Even 1/3rd's a stretch for most folks in most places in the US. A 25% rule of thumb isn't much use if folks can't find housing that meets the bar.
Meanwhile in areas where housing is absurdly expensive, other things aren't as expensive, so 1/2 is totally doable. E.g. if a studio is $2000/mo you have $24k/year for all other expenses, which is probably fine?
What places are those? When I think of cities with expensive housing (NYC, LA, SF, Boston, London, etc) they typically also have higher taxes, fuel prices, food, etc. Maybe you can swap a costly car for public transit?
I've never lived in those, but my sister lived in Boston and didn't own a car.
Income tax is progressive, so a higher income tax is probably less relevant to you if you are housing-insecure. Sales tax is regressive, but is maybe 700bp higher in places with high sales tax, so much less than the 50% bump between 1/3 and 1/2 your income. As far as food goes, if you eat out, that's way more expensive, but groceries are a much smaller difference.
$1700 per month pays off a $350k loan in 17 years, does it not? That's assuming that the household income stays static over that time.
That is very reasonable. In Australia, 35 year mortgages are normal, and 25-30 year mortgages were normal 20 years ago. Why would your household income need to be 1/4 of the cost of the house to make it work?
> $1700 per month pays off a $350k loan in 17 years, does it not?
No, it does not. You forgot the interest. Let's call it 6%, close to the current US average.
The interest by itself comes to more than $1700 a month!
Paying $1700 per month, you'll never pay off $350k, even with a 1000 year mortgage.
To pay in 17 years, you'd need to pay $2741 (plus fees) per month. Most of that will be interest at first, but it tapers down. If you want to start out not paying mostly interest, you'll need to pay at least $3500 (plus fees) per month.
The parent I was replying to stated a $70k deposit on this, meaning it would take about 25 years, so my early morning maths was a bit off. Even so, that doesn't seem unachievable?
Yes and no. A lot of people have gaps in their financial education.
That said, mortgages aren't rocket science.
1. Assume at the end of the day you want the homeowner to be paying a stable monthly amount*.
2. In order to get there, you have {loan term}, {interest rate}, and {loan amount} as primary variables.
3. Assuming {loan term} and {interest rate} are constant (in a given mortgage market, at a given time), that leaves {loan amount} as the only variable.
So how do you get a constant monthly payment for a variety of {loan amounts}?
4. You add up all the interest that would be owed over the entire {loan term}, using {interest rate}, then divide each monthly payment into some proportion of {interest payment} and {principle payment}.
5. You also front-weight the interest payments, because at that time there's more outstanding total loan (versus at the end of the loan term, when only a little principle remains to be paid back).* *
Not super complicated. Yes, there's compound math, but conceptually simple.
* For some definition of stable, even if it readjusts on some schedule
* * Point in time interest pricing like this also makes future recalculation for over/underpayments easier, as you're essentially trued-up on interest payments at all times
The example rate on the calculator is 5.35, about right when the base rate is 3.6 percent (though you can get lower), using that your $350k mortgage will take 40 years to pay off at $1700 per month. A $300k mortgage would take about 30 years. Or a $230k mortgage could be paid in your 17 years.
None of these loan amounts will get you anywhere close to a house in Australia today. You're looking around $1 million for the average house in most of the capital cities, with very few available under about the $650k mark.
The payment is set up such that the interest is amortized over the life of the loan, so your earliest payments are almost all going to interest and the latest payments are mostly the principle.
This looks like a standard 30 year loan. If 100% of the 1700 went to principle and the was no interest then yeah, your 17 years works out, but then the bank makes no money.
I did find it quite tough for a lot of years to treat myself, as I would try to save as much as I can to have a safety net. But even now with a safety net in the bank, I still have in the back of my head if I purchase something that is x mortgage payments, and I could save that instead to have in the bank in case I lose my job.
The average homeowner household makes more than the average. Many people are not homeowners.
For example if you are 22 and just started your first job you are included in the statistics but I think we wouldn’t really expect it to be affordable to become a homeowner (nor would it be desirable from a labor mobility standpoint).
And many people prefer renting somewhere like Manhattan to buying in Topeka. So it doesn’t make sense to assume everyone wants to buy a house. I know several millionaires that rent.
It would be better to compare overall cost of housing to income.
Probably a lot of private equity buying up homes to generate rental income? Usually, I am more pro market, but I think there needs to be some regulations on this. Although if you are an existing homeowner with low interest rate locked in, you probably want more private equity investments to drive up your property value...
This myth needs to die. PE does not own that many homes. There was a small period in early COVID where interest rates were lower than cap rates. During this time PE, along with the investment market in general, invested in real estate including SFRs. That is no longer the case. It's a great boogeyman but trust me, having worked in the industry, institutional investors own less than 5% of SFRs.
Real estate investing in general went bananas during COVID (plenty of non-PE buyers as well) because it's one of the only ways the average citizen can access that amount of leverage.
"Private equity generating rental income" is a lie fed you by the rich lobby. The real reason (everywhere in US and Europe) is zoning, which is a subsidy to the owners of existing buildings at the cost of everyone else.
Zoning change would spike land value in more populated area much more closely located to metro center, but it will depress demand on locations further away from the urban center.
1/3 of the houses bought in the US are bought by these kinds of organizations. Zoning might matter, but large capital owners are buying up a large fraction of the houses that are for sale and this is obviously driving up prices.
Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025.
Institutional investors are selling more homes than they buy and have been for six consecutive quarters.
While large institutional investors continue to get most of the headlines in the single-family rental space, small investors account for more than 90% of the market. These are individuals owning 10 properties or less. The largest investors, those with 1,000 or more properties, make up just 2% of all investor-owned homes.
>Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025.
is, as I view things, what I said. You may say that individual real estate investors are not typically large capital owners, but that's a definitional thing, or a matter of assessment that isn't interesting to debate.
No matter how you choose to define it, investors buying homes are buying a substantial fraction of the homes on the market (1/3) and presumably have a substantial effect on prices.
"Definitional things" are often pretty important to productive discourse, and both of the recent comments you responded to with your assertion that "these kinds of organizations" are buying up 1/3rd of homes were clearly talking about large institutional investors, not some guy who owns a few rental homes.
It's entities bigger than them driving up prices. The adversarial situation might even be even more apparent with the guy buying up 'a few' rental homes.
You’re commenting on a story about how housing demand is cooling, so why are you talking about how investors are driving prices up? Especially when the institutional investors are selling more than they’re buying…
Calling it a "subsidy for existing owners" is a slighty of hand that avoids blaming the literal hordes of useful idiots who are happy to see all manner of asinine provisions written into the zoning code to cater to their interest, whatever that may be. If it were just property owners it wouldn't have gotten done. It's busybodies, environmentalists, moralizing jerks, etc, etc that provide the necessary political will.
There's something fundamentally strange about how prices have spiked and inventory has tightened since Covid. Where I live in rural New England, prices are up 50–100% in five years. And this is on pretty poor quality homes. Yes, low interest rates led to a surge in buying and bidding wars that spiked the baseline, but when people say "the real problem is there isn't enough housing" that feels incomplete to me. Of course supply has been an issue for a while, but home prices nearly doubling in five years doesn't look like a normal supply story -- it's not as if we suddenly created 20-50% more qualified buyers in that time. I guess the lack of churn, with people hanging onto those sweet 3% mortgages much longer than usual, is probably part of it. But I really don't have an answer for the current state of home buying. I make great money but if I was to buy a house the quality of the house I got in 2018 with the same % down payment I would be looking at over 40% of my take home going to a mortgage, PMI and taxes.
> it's not as if we suddenly created 20-50% more qualified buyers in that time.
We don't create buyers quickly, but mobility means that a large number of buyers can show up in one concentrated area much more quickly than housing can adapt.
One piece of the US real estate puzzle is that automation and outsourced killed agriculture and manufacturing jobs. Those are the kinds of jobs that have some natural incentive to be spread across the US. Ag, because farms literally take up a lot of space and are spread out, and manufacturing because factories tend to be close to raw materials, ports, or other local resources.
When you get rid of those jobs and replace them with information work, you create a feedback loop with no dampening in it. People want to go where the most jobs are, so they move to the cities. Businesses want to open where the most workers are, so they start companies in cities.
The next thing you know, all the small towns are filled with dirt cheap empty houses because there are no jobs. Meanwhile, every metro area is bursting at the seams.
This makes some sense to me. The solution to housing often put forth is to build more affordable housing. In the context of people wanting to move toward cities where jobs are this makes sense.
But it seems like there is a larger problem of just having tons of housing inventory that is out of reach or untenable to most people. What are the more basic numbers of how many units exist in the country vs. how many people there are? How many second, third, investment, vacation units are there, how many sit empty most of the time? (I'm mostly not talking about true "country"/vanity houses far away from economic centers that will always only be accessible to the rich)
It seems to me that rather than just "build build build" we could do a lot to reconfigure the existing supply to make it fit the people better? Why is there so much "unaffordable" stock out there and continuing to be built? It kinda feels like the affordable housing issue is just a red herring for the larger wealth inequality issue.
> we could do a lot to reconfigure the existing supply to make it fit the people better?
The problem is that housing and infrastructure is, you know, actual giant physical objects. It takes a year of planning and millions of dollars to move a road. You can't tear down a block of single family homes and put a denser apartment building in there until everyone living in them sells. You need to run sewer, power, and roads to make a new neighborhood, and even then you will still have to deal with the impact to nearby schools, traffic, hospitals, etc.
Making places for people to live is, like, many orders of magnitude more effortful than anything we do in the software world.
> It kinda feels like the affordable housing issue is just a red herring for the larger wealth inequality issue.
Yes, this is certainly another piece of the puzzle. For every 100 people who can't afford a thing, there's still 1 rich person who can, and increasingly, rich people are the primary source of profit for businesses. So businesses target them more and more and we end up in today's world where it seems like "no one can afford what's being sold".
It's because unless you're one of the wealthy minority, you're simply not a market participant at all.
Sorry, by reconfigure I meant something akin to artificially lowering prices, legislation to push more homes to be filled by people that need them, allowing remote work, anything leveraging existing infra as much as possible.
My point is that we have the physical problem of housing units per capita beyond solved already, it's just socially/economically out of whack.
Unless there is not something I am seeing, people aren't racing to move to rural New England. Maybe it's retirees, red to blue state migrations, or remote workers. But I haven't seen a ton of evidence of that. People didn't really migrate out here before covid and I don't think enough people have to justify the rise in prices.
Personally I think people that otherwise would be selling are sitting on their homes because of the interest rates and this is causing a strange feedback loop of low turnover causing low supply which in turn causes new buyers to accept the prices (probably with a hope that interest rates will come down and they can re-fi in the years to come). I also think a non-trivial number of houses that on the market due to the owners passing or going into retirement homes are sitting there on the market because prices are so high but the only money the family is out is taxes. Or they are being turned into rental units, since rental prices are out of whack in these areas too.
My point I guess is where I live we haven't seen a big influx of population (probably the opposite) or significant job or wage growth to make sense of the increase in housing prices. I guess at the end of the day people are just stretching themselves further and sending more money to the banks in the form of interest to get into homes that were literally half the price in 2019. Strange times.
I agree that people sitting on their mortgages is part of the story.
I do also think there's a thing where home prices have risen so steeply in metro areas that even rural areas with fewer jobs are seeing prices go up because the market will allow it. Because the cities are so expensive, a house in a rural area can still be a relative good deal even if it's more expensive than it used to be.
City planning certainly isn't my area of expertise. I think it's a fiendishly hard problem. For a small town to draw people in and thrive, it needs:
1. Jobs.
2. Good K-12 schools.
3. Some amount of things to do and cultural amenities.
Remote work can help a lot with #1. I think people are fairly tolerant of a lack of #3 and it's a thing that can grow organically over time. People will also accept fewer things to do if the area is quieter, they can afford bigger homes, and there's more outdoorsy stuff nearby.
But #2 is really hard. You need a strong tax base to fund it, which small towns don't have. They are sort of trapped in a death spiral where if they had more people coming in, they could have better schools with the increased tax base, but they don't, so they can't, so no one moves there.
House value has gone up along with other assets since Covid because a lot of money have been printed. A trillion here and a trillion there, pretty soon we're talking real inflation. Real estate is the real inflation hedge.
Can confirm via my own experiences. Had a job in a SV firm, and paid just barely enough to try and get on the housing ladder. Four years and a 40-60% price increase later, and I got laid off without managing to successfully buy a home.
Since the layoffs, I’ve taken a sizable paycut (~$75k TC) to make ends meet with whatever I could find, but kept a pulse on the market in case things turned around. Locally, rents have gone down by ~$100-$500 a month (depending on when you renew) with one to two months free rent, while home prices have finally stopped rising. Homes are staying on markets longer, and bidding wars have dried up. I get about one to three price cut messages a day from Redfin, though nothing in my area or price range post salary cut.
Unfortunately, I don’t expect this trend to continue. My landlord just introduced a new RealPage-alike to keep rents high, local developers have put a hold on new housing construction as resources get consumed for AI datacenters, and the same old red tape blocks meaningful progress in addressing availability gaps. The only real bright spot is that renters are pushing for statewide rent caps and controls with better progress than ever before, so there might be some relief in sight next election.
Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix. It ends up making the problem worse. I could see in times of economic downturns, a temporary rent control that automatically expires to help people figure out their situation short term (moving is expensive).
If house prices and rent being this much higher than they were in, say, 2000, relative to wages, wasn’t enough to trigger an enormous housing construction boom, I don’t think further-increasing rent or house prices are likely to do much good. Something about that “signal” is already badly malfunctioning.
The pricing signal malfunctions when homeowners and landowners control land use to such a degree that regulatory constriction stops housing. Usually this is zoning as the primary blocker, but there can be other blockers too.
One of the problems with rent control is that it pushes the class politics so that renters with housing act more like landowners than they do new tenants, and they conspire to also block housing. People are change averse, even if they don't mind the change after they see it; before the change it's a big threat. This hurts any tenant that needs to move due to things such as becoming an adult, finding a new job, starting a family, getting a divorce or ending a relationship, etc.
Rent control is great as a tenant protection to prevent evictions via rent increases, but it is only a short term protection for tenants otherwise, and can hurt tenants greatly if there's not enough building.
There's good evidence it's mostly zoning and permitting. You might be shocked if you look at the SFH zoning in your city when you realize how much the municipal gov has just banned denser housing development.
The lack of construction is mostly to do with most major US cities just not allowing enough construction. You can see the contrast with the handful of places like Austin that do allow construction, where rents have consistently dropped year-to-year even though the population has increased significantly.
Agreed. And local NIMBY can get surprisingly personal and politically vicious fast.
I have a friend who argued in public forums (local newspapers+blogs) for denser housing being more walkable and sustainable (in a wealthy small neighborhood we both lived in.) "Small towns" was/is the nationwide name for the trend.
Unknown opponents dug up and published dirt on him that even his wife, friends and employer didn't know. It was quite sobering.
And so they keep blocking efforts by resorting to smear tactics. Own it and reverse it back on them. Debate class 101, they have nothing if they attack you personally.
It sucks that your friend had his closet ransacked for skeletons. This is why I’m completely honest with mine.
You're gonna go to those meetings and find that it's not "what's allowed" that's fucking people out of the ability to construct things, it's all the capricious requirements that the process saddles them with before being allowed to do what is allowed.
I don't think construction has nearly as much relevance for Austin as you might think. Speaking as a former Austin resident, I left Austin in 2022 because rent highly spiked and I was effectively priced out of where I was staying (my rent spiked in the realm of 40%).
Rent has been cooling off in Austin because the amount of people moving there has heavily gone down and tech companies have either stopped opening new buildings there or have outright started to leave. The huge rise in rents was effectively due to a 'tech speculation' bubble as a result of every major tech company saying they were going to move to Austin and it was going to be the new tech capital of the US.
There are a lot of counties that also use construction permits and inspection requirements as a source of income and charge absurd fees for it, on top of being slow and unpredictable even if you do pay. And a slow inspector or slow permit approval also costs money in the form of builder's and laborer's time that you get charged for as they sit around waiting for someone else to arrive.
Look what happened in Austin, TX, which has much less housing regulation tamping down construction than CA (despite a good deal of local NIMBYism).
Prices spiked during the pandemic, and in response a shit ton of housing was built, much of it multifamily residential. Rents went down significantly and home prices are down 20% since the peak.
This is the economist theoretical consensus justification though in real life tbh I dunno if I've noticed any real difference when looking at housing development patterns across Canada where there are many jurisdictions with rent control, many without, and many with some sort of blend (ie. no rent control on new builds).
If there is some incentive toward development in non-rent control jurisdictions I suspect it's strongly dominated by other factors.
(ie. Montreal probably has the most restrictive rent control in Canada but it's also seeing the strongest apartment development growth)
Canada is a basket case for housing development but the only bright spots for outpacing demand with housing are Albertan cities with no rent control like Calgary and Edmonton.
Edmonton recently outpaced Toronto in housing development on an absolute basis with much lower housing prices and less than 1/5th the population!
The regulatory environment in Alberta is such that it permits housing to be built, and it does.
The same cannot be said of Toronto (or everywhere else in the nation that isn't the Prairies for similar reasons), for landed interests and the bureaucracy and corruption that comes with them are a lot more entrenched in that area.
I think you're neglecting that most of Toronto is restrictively zoned for SFHs while Edmonton is upzoned across the city for 8-plexes at a minimum.
Toronto has a cumbersome permitting process that runs from months to years, while Edmonton's process is mostly automated and grants permits within weeks.
Regardless, the other relevant factor here is the actual price of housing, which is substantially higher in Toronto... and yet Toronto struggles (by design) to build anything.
haha i misread casual as causal, but i guess, here are the "accurate conclusions" you are looking for, that is to say, what does rent control cause, as opposed to the vibes and correlations people are talking about?
it's the "credibility revolution" and someone has won a nobel prize for it.
rent control causes limited mobility (read: displacement out of town) by 20 percent; it causes reduced rental housing supply by 15 percent:
Did you write an entire comment by misreading "casual", the word I used, with "causal"? Otherwise, I have no idea how your reply relates to mine, as I didn't make any claims about the existence of such research.
Casual is a perfectly reasonable descriptor of economic conclusions based on vibes and anecdotes about apartment building in Montreal. I don't think it's reasonable to read it as an insult.
You don't need a study to tell you that if you make things more difficult and worse for landlords, the housing supply will decrease.
Courts actually need to do their jobs here for an optimal solution - e.g. it should be easy to punish shitty landlords AND easy to kick out shitty tenants.
It shouldn't take a 1+ year wait (as during COVID) to get a landlord-tenant court date to resolve issues.
The housing issue is multi-faceted however, so that's only 1 piece of the puzzle. But thanks to NIMBYs and building code overreach, it's literally impossible to build affordable housing that would rent at its own depreciation schedule.
> You don't need a study to tell you that if you make things more difficult and worse for landlords, the housing supply will decrease.
That doesn't need to be true. In post WW2 UK the government built lots of rental property. That increased the housing supply and hurt private landlords at the same time.
"Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law."
People are able to move around, to some degree, so housing prices are a function of supply across most of the nation. Or at least the desirable portions.
Rent control on the other hand has mostly local effects.
Which means, rent control can push prices down and keep them down. There is indeed a supply reduction, and prices on average will go up—but not in the rent controlled area.
It’s still a poor idea, but it requires centralised planning to avoid.
I lived in downtown Montreal and it could just be me but the housing stock was not of the highest quality compared to most other places in Canada. Montreal as a whole feels rundown (I say this as a former Montrealer who’s lived in many places since). Cheap rent though.
> Montreal probably has the most restrictive rent control in Canada but it's also seeing the strongest apartment development growth
A wonderful city like Montreal can drive enough demand for housing to overcome red tape, and still be building far far less than what would satisfy demand. A less attribute city with lower demand for housing may build less due to lower demand, despite having less red tape.
I used to agree with this, but nowadays it seems that the factors constricting housing supply are in many places related to zoning and regulation, not the ability for developers to make a profit, so rent control might have much less downside than economists have conventionally assumed.
EDIT: I am seeing a nephew comment that says rent control could make NIMBY politics even worse because it makes renters' interests more like homeowners'. Hadn't thought of that.
Everything risks aggravating NIMBYism. It's hard to see how housing costs can come down in a lot of cities simply because housing is seen as an investment and people won't idly standby if the value decreases because of policies.
I cringe every time some youngster suggests we go down the socialist/communist path because none of them have any real-life experience with how bad Eastern Europe was! Here's a hint: It's was fucking beyond belief horrible--everyone was poor, there was nothing to buy in the stores, and people spent most of their free time drinking themselves to death.
On the other hand, I live in Norway. Bits like healthcare and a good safety net makes things nicer. I'm from the US originally. This nice stuff could be adapted for the US if folks would put their energy into helping others rather than spite.
Mismanagement of resources is bad no matter what system is used. Just because some under one sort of ideology and corrupt leaders failed doesn't mean that folks can't take the bits that were good, adapt and improve them, and see good results.
Norway is a petro-state that managed to amass a national wealth fund. Cherish what you have. Understand that it doesn't necessarily translate to every community.
Americans pay more for worse outcomes, so this is clearly a political/priorities issue, not an issue with wealth.
Other counterexamples are the other European countries with the same safety net which are not petro states (they do have colonial wealth though).
A lot of this was possible because of high corporate taxes and high marginal taxes on high incomes, so in theory this model could apply in most places.
Not all european countries have colonial wealth. There is universal healthcare in croatia and that nation started from scratch essentially 30 years ago and isn’t really a very strong economy today either.
If this is your take, you've missed the point. I said there is no reason good bits can't be adapted to one's society. it isn't that one system will work for everywhere or that it'll even look the same. Some things are unique to Norway, but other things definitely are pretty widespread.
You see this with healthcare in different places: Details change and sometimes it is lacking, but lots of places offer healthcare to its citizens that is low-cost to free when you need it. There is a lot of variation in what countries can do. Some places are poor but still manage to a point. Some places just refuse, like the US - heck, the US has oil and could have funded things for its citizens and keeps bragging about being rich, but they aren't gonna use it for the immediate welfare of its citizens.
Doesn't it seem ingenuine how everything good is socialism and everything bad is communism? Also if socialism can't compete with capitalism then it's doomed. Socialism must make capitalism illegal in order to succeed and I don't want to be in a place where capitalism is illegal. And "market socialism" is not socialism either.
> [A]ccording to the studies examined here, as a rule, rent control leads to higher rents for uncontrolled dwellings. The imposition of rent ceilings amplifies the shortage of housing. Therefore, the waiting queues become longer and would-be tenants must spend more time looking for a dwelling. If they are impatient or have no place to stay (e.g., in the houses of their friends or relatives) while looking for their own dwelling, they turn to the segment that is not subject to regulations. The demand for unregulated housing increases and so do the rents.
I find that rent control is a good idea in theory, but leads to a lot of deadweight loss. As a former renter, what I really wanted was a predictable cap on rent increases. For folks who are long-term renters, without controls and predictability, their only option would be to move every few years, which is incredibly disruptive.
From my understanding, European countries tend to have restrictions on what lease renewals can look like and with declining home ownership (and ownership being priced out for many), I think we should look at European models for real solutions to our housing crisis.
Rent control is not good in theory, it's the most universally hated policy among economists because it has so many horrible unintended effects on housing development and maintenance.
That’s because it’s not an economic policy but a humanistic one. Stable housing should be a right. If rent control was the default, then obviously no renter would vote for arbitrary rent increases in exchange for maybe, someday in the future, rent going down due to increased housing supply.
You can feel however you want about it, but people will vote for rent control if they start getting squeezed out of their housing. Hate it as an economic policy? Then make sure enough housing gets built before people get squeezed.
It doesn’t really harm people. Housing crisis cities with rent controls are built out to the limits of their zoning. This suggests zoning is the limiting factor and not rent control.
Call it meaningless if you want, but this is a policy that renters getting priced out of their housing markets will eagerly vote for. And prioritizing existing residents over newcomers feels just to me. Focus on making it easier to build new housing instead of getting pissy about the safety net.
"Newcomers" to the rental market include every person who already lives in that city and hasn't moved out of their parents' house yet. Why should they be penalized even more for not being born sooner?
rent control (which realistically for all but the most idealist is some sort of capped rent increase policy) can only work if its done and owned by the state/nation. It can't work for private sector as the ROI will be relatively poorer on doing that vs many other investments so it'll actively disincentivise investment into more rental housing long term & in short/medium term disincentivise all but necessary capital/maintenance investment as it'll quickly erode whatever small return they're making on their rental investment.
State/National government are far more likely to stomach lower ROI than the private sector because they can arguably have a more holistic view of what their investment is. However, to be able tod that you also need robust finances in government which has certainly not been the case in most developed western economies since the 80s
This is an important distinction. Most "rent control" laws are intended to be "rent stabilization" not outright price fixing. Their goal is to prevent insane swings in rent happening too quickly, which disrupts families and local economies (and even infrastructure development).
But the worst/most aggressively laws are always used as the examples, skewing the conversation to edge cases and ignoring the fact that these laws can and do take hundreds of different forms.
RealPage is gaming rents against tenants. It’s artificial rent inflation by algorithms. I agree on rent control. But unless realpage is controlled and regulated rent control is the only option.
> Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix.
In California (and SF in particular) rent control applies to housing older than 15 years and owned by corporate entities.
How does rent control applied as it is in California disincentivize building? I would think that building would be incentivized by rent control because newer housing stock would be exempt from rent control.
> Long term they wouldn't be, and hence lower ROI and therefore disincentivized
While the ROI would be lower compared to allowing rent to increase uncontrolled, in a rent control zone there is more incentive to build (and renovate) to take advantage of market rate leases for (in California's case) 15 years.
Does the argument that rent control (as in California) disincentives building reduce to the argument that uncontrolled rent yields a higher ROI than rent control?
Such an argument is a refusal to allow public good for the benefit of landlords.
So you may mean well but a comment repeating the (debatable) negative impacts of rent control really comes off as silly in a thread about the realpage cartel (price fixing is worse than rent control in every way) and hopes of home ownership (demand for primary i.e. non-investment homes is unaffected or increased by rent control).
Rental income should not be the primary reason for housing to be built in the first place, so I don't buy that argument. The primary reason to build housing should be demand for home ownership. The volume of housing that ends up on the rental market should only be a small fraction of the total volume.
Instead of rent control, I propose a forced buy-out model: if the current tenant can manage to buy the home they're currently living in, the landlord is not allowed to refuse the sale. And banks are not allowed to deny such a mortgage if the monthly installments amount to less than the current rent.
Again, you are just discouraging people from building more homes. People like to create financial Rube Goldberg machines to address high housing prices, but the solution is simple: Add supply.
Now adding more supply is not trivial in many cases, but at least people can work on the correct problem to solve once it's identified.
> should only be a small fraction of the total volume
Which is? Lot's of people are happy to rent, want to rent, will never want to own a home, want mobility, etc. I rented for nearly 20 years and only past few years went into situation where I want to buy a house. Should I be denied renting?
There's obviously premium to be paid while renting too. There should never be a situation where rent is cheaper than mortgage.
Personally, I believe that housing security should be a right, and it’s just not possible to have that when your rent can spike arbitrarily in the future for reasons outside your control. Young people with no local connections and limited belongings might be able to move every few years, but it’s downright traumatic for older people. Based on my lived experience, I will always vote for rent control while simultaneously pushing for more housing. The economic arguments against it are almost irrelevant.
I'm a renter and a parent in NYC, and I totally get where you're coming from. On a personal level, I'd love rent control that would freeze my rent and give me some stability. I'd also love it if NYC would build millions of new housing units, but that doesn't seem to be forthcoming.
That said, I also think that city policymakers have a responsibility that extends beyond just what will make life better for the current residents of their city. I wish rent control had better data supporting it, but everything I've seen suggests that while it might make things better in the short-term for some, it makes things worse in the long-term for everyone.
> Rent control is not a great solution long term since it reduces the incentive to build more
It is exceptionally rare for new construction to be subject to rent control laws, unless they utilize special tax breaks or government subsidies. It does nothing more than slightly inconvenience the investor class, who usually aren't thinking past 15-20 years anyway, when rent control laws might theoretically impact their investment.
People say this but places in a housing crisis under rent control are still generally built out to the limits of zoned capacity, indicating rent control is not the limiting factor but instead zoning.
Populist rent control is an excellent motivator to get counter-parties to the table to discuss productive alternatives in a market where no outside pressure currently exists.
There is no silver bullet solution. Rent control can be a big part of that solution, but what’s ultimately needed are a combination of policies that disincentivize the hoarding of housing as an asset class, promote home ownership itself for stability and community rather than fiscal nest egg, mandate denser housing in areas served by mass transit, tax land properly by removing caps on yearly increases, protect renters from unnecessary evictions (lack of renewals, no-fault evictions, etc), removing zoning laws on residential and commercial space (essentially reducing zoning laws to industrial vs non-industrial) to speed up approvals for construction, and get the government more active in meeting the needs of its populace through public housing programs (like Singapore does).
It’s highly complex and nuanced. I’ve long since stopped entertaining smug clapbacks from armchair economists who aren’t involved in the boots-on-the-ground issues at hand, and you shouldn’t parrot them around for them.
It's not actually that complex, as can be seen in Austin: just actually build enough and prices will go down even as population numbers go up. Most US cities have just spent decades doing absolutely everything except actually allow housing to be built.
All things being equal - commuting times, service access, property availability, environmental impacts, education quality, economic stability - then yes, the solution is “easy” in that we “just need to build more housing”.
Once any of those multitude of variables aren’t equal, however, the market can and will exploit it. This is the reason why the housing crisis is global, but the solutions are variable. In New England for instance, there’s a glut of available property currently being hoarded and vacant as an investment hedge, because we have no more land to expand onto. Combined with vacant towns that were former industrial hubs, and there’s an awful lot of available real estate to be clawed back for better use - except markets have been tailored to specifically promote a hoard-and-hedge strategy that harms the working classes (renters and homeowners both), and keeps depressed communities from rebounding. Remote work had a real shot of revitalizing those towns and shattering the vice grip of Capital on land or housing through the relocation of workers to cheaper markets, but the RTO mandate essentially amplified existing crises that much more and robbed them of the chance to rebound.
So no, it’s not as easy as building more housing, it’s also about ensuring those who need housing get access to it first, rather than those who simply seek to extract rent or hold it as an investment hedge.
I think creating a permanent world peace would be easier than convincing progressives to give up their tired, inaccurate housing market tropes.
It is impossible to have a constructive conversation with people who refuse to accept basic facts, and I don't think they have any idea how counterproductive it is.
If people stopped accepting the claim of 'progressive' from anti-housing anti-poor people just because they self-label that way, that would be a good start.
You think the parent poster is anti-housing and anti-poor, either in practice or in their own mind?
I would say progressives in the US are anti-wealthy first, leading to poorly thought out policies with obvious second or third order effects that harm the people they so passionately advocate for, but I wouldn't call that anti-poor personally.
> Populist rent control is an excellent motivator to get counter-parties to the table to discuss productive alternatives in a market where no outside pressure currently exists.
This makes no sense, the battle is ultimately between renters and owners of low density housing. Those owners don't care about rent control, they only care about zoning disallowing construction of new rentals. If anything, they're probably happy to see rent control if it means the pressure on cities to upzone is removed.
Why do you say rent control reduces the incentive to build more housing?
To me it seems the opposite: Rent control means supply goes down, so available building & land prices go up. These prices going up means an opportunity for builders who are good businessmen because they are going to make a margin on their investment, the bigger the investment the bigger upside.
Another intuition is with rent control it's hard to extract new value from an old building, so that also incentivizes tearing it down and squeezing more units into the land.
In SF, rent control exists on all buildings built before 1979. It appears to me that people who prioritize new builds pay a huge premium for them. I think this particular rule also incentivizes tearing pre 1979 structures down, vs the no rent control newer buildings can continue to have growth in the value extracted from them.
It reduces the incentive to build because it reduces the ROI on a new build and reduces the control the owner has over the property (places with rent control are notoriously tenant-friendly, meaning the risk of taking 12+ months to evict a tenant has to be priced into the project as well).
The cost of building housing is generally labor + materials + land, of which the first 2 are generally don't have runaway costs as they are not an investment category.
Land is something the government can help with if they choose to do so.
The rent is tied to the price of the apt, and since housing has become and investment category, has increased exponentially.
By controlling rent, you control real estate prices as well, as investors will find it a less attractive asset.
In a free market economy, the cost of things should be controlled by a market equilibrium, so building shouldn't cost more to buy than it is profitable to build tem.
But supply is often restricted by artificial means, meaning prices go up, that's where rent control comes in.
Two wrongs don't make a right, but saying not having rent control while clamping down on construction isn't true to the spirit of the free market.
In SF rent control only applies to buildings that are like 40-50+ years old. Yet people still complain as if it stops new housing. If you combine this with the idea that rent control raises prices for everyone else, you'd think people would be knocking down the doors to build: artificially high rents for decades.
Rent control absolutely causes a reduction in supply: there's a reason rent controlled buildings have apartments in poor condition that owners do not renovate (so a reduction in quality supplied) and many are held off market or converted to owner occupancy through condos and TICs (so a reduction in quantity supplied). Not to mention the units underused by long term tenants who maintain them as secondary residences.
Central to the challenge of UBI and housing costs is the law of rent. UBI could work if all its redistribution was not immediately captured by landowners. There are ways to make that possible.
Rent controlled apartments being held by tenants no longer using them as primary residences is pretty common. A famous case of this was Cleve Jones in San Francisco who tried to make it a huge political deal when his landlord raised his rent to market because he was 1. living in Guerneville full time and 2. subletting the apartment. The media environment is one where it's ok for a master tenant to be a de facto landlord and make money on real estate, as long as it's not the landowner themselves!
>> UBI could work if all its redistribution was not immediately captured by landowners.
Doesnt this happen now because we're all so tethered to HCOL cities? With UBI presumably people would be geographically free, and there is a lot of inexpensive land and housing around the country. Doesnt the capture problem only happen due to scarcity in HCOL cities and thus not an issue?
Yes but it builds into my argument - it does not counter it. Reduced supply... increases rent. I'm saying "increased rents + rent control not applying = more people should want to build". And the person I'm replying to said rent control makes people not want to build.
> I'm saying "increased rents + rent control not applying = more people should want to build"
This is false. People will want to build more on the margin, but that doesn't mean they want to build. If the profitability requirement (hurdle rate for getting investment from institutions) is greater than the the market rent, people will not build even if market rent is high. Indeed, that's what's happened in the last 5 years as costs have increased much faster than rents.
Rent control also switches the class politics, as people who are paying far below market rate for housing become like landlords and homeowners: getting free imputed rent.
People have been knocking down doors to build in SF for decades, but do not because regulatory capture by homeowners, landlords, and those with below-market rents are happy to keep out new people.
Where and when housing gets built in the US is not merely a market driven decision: you also need to get local permission to build.
The talking point of "Rent control = bad" has always been disingenuous because it's parroted most often by the people who will be hurt from it the most (landlords). Home supply is already artificially constrained, regardless of rent control. Mostly because wealthy landlords form cartels to prevent new housing in major metro areas.
Rent control is just one tool that can be used to regulate housing, and it works in conjunction with other tools (e.g. rent control exceptions for new construction).
The U.S. already has an excessively de-regulated housing market, and it clearly has not worked for most people. Anyone that says regulation is bad here is almost certainly protecting their self interests.
I don't see how you can claim a home ownership rate above 60% means the market is working for most people.
All that means is that a majority of the population was able to buy a house at some point in time under some conditions. The recent data is clear: people who already have homes, are staying put in them. And a growing portion of people without homes are joining a fairly new class of "forever renters".
The median age of first time home buyers was 33 in 2020. In 2025 it is 40.
That's truly incredible if you think about it. In just 5 years, the median age has increased by 7 years.
Here's another interesting statistic: the percentage of homes bought by first time buyers is down 50% since 2007.
> Rent control is fundamentally unfair and socially undesirable.
I think this is an incredible claim to make. Unfair to who? Undesirable compared to what?
Rent control at it's core is a redistribution mechanism. It favors existing tenants at the expense of property owners.
If you care about low income renters getting displaced by a 40% rent increase, then it is a desirable mechanism.
You say rents are going down... but you want rent control? That's one way to ensure rents will never, ever go down. Every landlord will charge the statutory maximum.
Vancouver has rent control and rents are going down.
Though I think the likely dynamic that you're seeing here is rent growth of new build apartments is stalling and reversing, and on renewal with new tenants rents are being revised downward as there is more competition.
I expect that amongst apartments with long term tenants rents are still creeping upward. But that's fine. The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.
> The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.
Is it? I mostly see rent control maximum increases below the inflation rate, suggesting a different goal (appealing to voters?). If it were just to eliminate extreme volatility I think we'd see more 5/10/20% increases and less 1/2/3% increases.
This monopolistic pricing is a massive part of the issue. Hopefully the case the DOJ brought against them is progressing well. They've essentially created a cartel of landlords trying to squeeze you for every single penny.
I'm not advocating for gutting renter's rights, but anecdotally having lived in 6 states, and adjusting for general costs of living it was easier to rent, and rents were cheaper in states that were less renter friendly than states that were very renter friendly. As a renter in the central time zone, first months rent, a month's rent security deposit and a credit check and i was handed the keys vs. renting in NYC you'd think i was buying the home with level of financial scrutiny.
I suppose this is just a long winded way of saying that there appears to be a ton of friction and cost by renter friendly polices that are ultimately passed on to renters rather than owners.
As an aside I'd also say that renter friendly policies were also highly correlated with higher regulations around zoning/building so this may account for a meaningful portion of the above.
I said this elsewhere, but I would anecdotally agree as a landlord.
Everyone is paying for the costs to evict a non-paying tenant in jurisdictions where it can take 12+ months to regain control of a unit.
More friction = more costs, and more regulation = more friction.
I'm not advocating for gutting renter's rights either, but it's not a coincidence that the places with the highest rents also have the most protections for renters.
No, because rent control isn't portable and most people's housing needs change over time. The person who can hold onto a house for 20 years straight is the outlier.
I've had a high-income job (career?) for two decades... and while I'd love a house, the realized demand is zero. The thumb remains. Case in point, the RTO fad. No certainty. I know at least three executives who were forced to move after building new homes.
Executives forced to move after building a house. That really shows how desperate companies are to keep the lights on. Nobody pisses off the execs... unless the companies have ceased to operate normally as businesses, and are now hollow shells propping up an illusory stock market.
Desperate for lights, petty punishment, hard to tell. Point being... keeping options open has rarely done poorly. Doesn't feel like the time to commit. Not convinced it ever will.
edit: I hear someone now, "If that happens to you, sell the house!"... I'd like to stick with one career, thanks.
I did it the other direction -- I bought a relatively cheap house, and if the winds of change come, I would rather get a different career than location! Two different equally valid perspectives IMO, as long as you're not dependent on having a particular career in order to make your house payments.
Good point, not good to be so dependent on a career. I'm almost there; useless without a computer involved. Eager to change the location one more time to somewhere affordable. The city is wasted on me.
A career change may be earlier than expected with the LLM craze.
This is pretty laughably false. Sure, the CEO has a lot of power and I've certainly seen companies relocate so they are basically within walking distance from the CEO's house.
But "execs" covers a lot of people, and nobody gives a shit where the CIO or VP of engineering lives. If anything, these folks are more career driven and are expected to up and move at the drop of a hat if business conditions warrant.
The bigger concern is that we've steadily been going from a circa 4:1 ratio of worker to non-worker to closer to 2:1 ratio. For an economic system based on workers paying the way for non-workers that is toxic. We've royally screwed up immigration, which could have helped, so all we have left is hoping for a hail mary huge productive boost or might as well shut up shop and figure out a new model
Healthcare employment’s guaranteed to keep rising until they’ve soaked up all the would-be inheritance from the Boomers.
Millennials are a large cohort, too, so it may stay steadily high for a good long while after that, after perhaps a small dip for X. Depends how much money they have for the healthcare sector to scoop up. Savings-at-same-age has been really bad for them relative to boomers, so we’ll see. May see healthcare employment shrink even as need (sans the dollars to back it up) grows, next time a demographic “lump” gets old.
Not sure why they bundled education and healthcare together. As far as higher education is concerned, the job market is terrible. Many state universities have hiring freeze as they are tightening belts due to the lost NSF and NIH fundings.
Boston is seeing some headwind especially from slowdown in biotech, the main driver of growth over the past decade or so. Rents are also down. However, worth noting supply is still constrained especially if you exclude replacement-ready homes.
Can confirm, this is where I’ve spent four years trying to buy a starter (2BR/2BA) home in on a single income. The biggest problem in older markets is that most housing stock is of appalling quality, requiring another five to six figures of work to get into a modern, habitable shape - unless you do the work yourself, which most can’t while they also hold down a FTE gig and deal with the return of urban commuting.
A lot of lower-end housing spends some years in the hands of people who can’t afford to keep up maintenance, and/or are too old to keep up with it well (… or to keep up with cleaning). As a result, it’s all but ruined by the time someone else gets a crack at it.
Yep, and a lifetime spent moving every few years (and my obsession for details and desire to understand how everything works) means that I can see the chasm between what properties are actually worth versus what folks are asking for. I’ve seen some really pricey nightmares these past several years ($650k for a 1400sqft home with knob-and-tube electrical wiring and an honest-to-god fire bucket in the basement next to the oil heater!), and I cannot afford to take such extreme risks on the most expensive purchase I’ll likely ever make in my life.
I wish I could set up a filter in Zillow that automatically excluded homes that have gray engineered flooring, which flippers seem to love for some reason.
A lot of flippers aren't dealing with scary stuff like foundations or structure, that's risky and expensive. It's cheap to throw up some new drywall and vinyl floors to make it look renovated though.
I sympathize and was in the same situation albeit a much easier market in hindsight. I came to Bay Area in 1999 and after finally facing the reality of the market after a couple of years, bit the bullet and bought something. The prices were/are so outrageous compared to my former residence in Austin the sticker shock and hyper competitive real estate market at the low end - every SFH I could comfortably afford was going to require significant amount of work to make palatable to someone who did not want the inside aesthetic of the 1950-1970s and still each had multiple bids, with cash bids above asking with no inspection always winning, I imagine this has only gotten worse at entry level with the elevation in total compensation for certain fields.
Find a run-down structure not surrounded by derelicts on land that's otherwise favorable. 1 wall remodel. A modest structure costs roughly around $250k if built by someone else, vaguely divide that in half if DIY.
Your target price range is set too low for the area if you keep seeing poor quality houses. I've heard plenty of people complain about the quality of the housing stock in my (old) area, but that's because they insist on lowballing in desirable neighborhoods, there's plenty of well-maintained properties as well including at the low end. You just can't expect a miracle for the price of a foreclosure.
yeah for some reason there seems to be a pricing disconnect on many homes, the discount on home that needs a lot of work seems to be less than the current cost to fix it (especially when taking into account labor shortages and tariffs on materials)
Yep. Recently tried to sell my 2BR/2BA in Boston. Exactly 2 people visited over 3 months and several open houses and price cuts. Realtor said it's the same across the board for 2BR/2BA because the pool of entry-level buyers dried up with layoffs.
After I switched it over to a rental listing I was able to rent it out within 3 days at a significant profit. Another unit in my building rented similarly fast at a similar price. I know it's just anecdata, but it doesn't feel like the rental market is cooling down at all.
nobody to buy at your asking price so you take the house off the market rather than match the market expectations, thereby increasing scarcity for potential buyers at a lower price who are instead forced to rent due to market dynamics
There's a floor. If you sell a home for less than your mortgage amount you have to have enough cash to make up the difference.
Also, selling for significantly under the appraised price decreases likelihood of qualified buyers because it may be a red flag.
Renting until spring is a logical option when there's no buyers, since that's when the supply of buyers is much larger. I don't want to be a landlord but I also don't want to pay money to part with my house. One home in my neighborhood finally sold for 60% of what they bought it for after 6 months on the market. I think only rich people or people who've been in their homes 20 years can afford that.
I keep wondering if the powers that be knew that low down payment percentages and low interest rates would have a major side effect: increased purchase prices (back then) and lack of initial equity that would make it really hard to sell. I think a lot of people who bought or refinanced back then are just stuck.
It doesn't feel as dire as the subprime mortgage crisis, but maybe that's because renting out your property for at least breakeven is a lot less damaging than defaulting on a mortgage.
This is a weird take. I get the desire to house people but someone choosing to rent rather than sell a home they own is not the crux of the issue. When there are corporations keeping swaths of housing empty to raise rent rates the real issue is market manipulation not small participants.
I'm teetering on the edge of being able to afford a small condo (a small SFH would be nice but not as much supply) in the Bay Area (SF).
However, I keep thinking about how someone I know was laid off last year only two months after buying their first home.
I'm a SWE making OK money here but not FAANG/unicorn-level, so it's tough to imagine buying and then being on the hook for a mortgage without a job even with some savings.
}}}} I'm teetering on the edge of being able to afford a small condo (a small SFH would be nice but not as much supply) in the Bay Area (SF).
Posting this anon. At our last office, executives purposefully encouraged home ownership because it made people desperate, risk-avoiding, and easier to control.
my last boss said i needed more work-life balance because i would take my dog on a walk once during the workday. as in, i wasn't giving work enough of my time.
I hate to repeat this old adage, but in case it helps to see it here: if you've been wanting to buy something, and you see yourself staying in the area and the place itself for many years, and you have some savings buffer if things go south, then buy. Don't do it because you want to magically have paper equity gains in the next 12 months. Do it because you like the place you're looking at, the neighborhood it's in, and because you have enough funds in place to get through a downturn if a layoff happened.
Of course I say all of that and it's good to know what could happen if a terrible downturn does happen like in 2008 (even the nicest Bay Area hoods prices dropped 25%+).
Last thing, single family houses, especially in the Bay Area, are typically more insulated from price drops (insulated not immune). If you can afford a small single family then it might be worth it, especially if there's expansion potential (either for yourself or the next buyer if you decide to move on). And even better if there are some cosmetic problems that are tractable because let's say you do get laid off there's nothing like building some sweat equity in the downtime.
Just my two cents having gone through similar in the past.
FOMO is a powerful emotion, but like all emotions its a bad idea to make it a primary decision maker for any important matters.
Reading all this from distant Europe, its interesting (and logical) how in US the swings in prices are so extreme in both directions. In fact, most things in any regard are way more extreme in US compared to Europe. May be good for the lucky ones but long term stability or dependability this ain't.
If you're taking what I said as FOMO I didn't intend it that way. The opposite in fact unless your sentiment is that anyone who wants to buy and live in property in the US is solely doing so because of FOMO. If you're saying that then that's a tautology and so how can I argue with it?
But if that's not what you meant then there are few things we as people can do for "stability and dependability" that better accomplish those goals than owning property that you actually want to live in. Most importantly it puts a permanent roof over your head, which we all need in some way, shape or form to survive (no exaggeration there I don't think). And it makes the cost of that necessity predictable, especially in California where property taxes are almost perfectly-predictable. It pretty much de-risks the largest expense most people will have in their lifetimes. That's not to say that you don't lose something in the proposition, but calling that FOMO seems inaccurate.
There are entire nations which mostly spend their whole lives renting. Ie where I live - Switzerland, many nordics. Maybe correlation with highest happiness levels in the world is coincidental, maybe its not. Happiness simply comes from other things in life than 'my castle my kingdom'.
I know its a typical US mindset (and far from US only) to have a house on your own, but its still an emotion in same vein what you describe. Mixed with rationale of course since proper social net in US is nearly non-existing, if you fail out with you on the street.
Also a rationale would be about very high chance of good return on such investment so don't take this as some sort of attack. I also own my place (apartment) but took it as a location & social bonds stability point for kids mostly, whether it will earn something compared to inflation is not that important to me, it probably won't or very little. Good bigger apartment close to nature trumps a crappy house in my view but thats personal opinion. Even when owning, its almost impossible to retire here in Switzerland, the costs are prohibitive even on Swiss pensions. Unless you want to live as relatively poor, same money gets you much further almost everywhere else. So that stability is always temporary.
Yeah, "jd," the sibling reply here pretty much summed up my sentiment so I'll just say "ditto" to what they said and add: I wonder if maybe you're being a bit one-sided based on some assumptions about Americans in general. It isn't, as far as I'm concerned, as one-sided as you make it out to be. That's not to say that housing isn't an emotional purchase, it for sure can be and probably almost always partially is, but to say that's the primary reason doesn't reflect my experience here. Unless we're having a semantic disagreement about what financial prudence and practicality means. I just think those two things are decoupled from FOMO for the most part.
> Happiness simply comes from other things in life than 'my castle my kingdom'.
I know its a typical US mindset (and far from US only) to have a house on your own, but its still an emotion
This is a frustratingly uninformed take. You are comparing apples to oranges by equating your decision-making process with that of someone in the US. The drive to own a house in the US is not just mediated by “emotion” - the calculus is fundamentally different than in many nordic countries. For instance, very few places in the US have rent control, which means that renting represents substantial risk of either experiencing a large increase in cost, or being forced to move at irregular intervals. On the other end of the spectrum, the US is one of the only places that offers 30 year mortgages, which means that (taxes and repairs aside) buying a home on credit still offers a high level of predictable cost over the long term.
Also, at least historically, there are very many places in the US for which housing is very affordable, given that the USs overall population density is so much lower than the average European country.
This is of course not to suggest that buying is always a good call - but it is often a logical and financially sound one.
I know a lot of people in the Bay Area who did exactly the opposite in 2017-19, looking at how prices doubled, they assured me in 5 years their investment would double as well.
Do you mean the opposite as in they purchased because they wanted to make some money? If so, that makes sense since one of the many reasons people buy homes is to invest in them. Here's hoping you didn't follow their lead, though, given https://fred.stlouisfed.org/series/MEDLISPRIPERSQUFEE6075.
But even having said that, people will buy houses or condos in SF today and make a profit in spite of any broader market conditions. But that seems dumb for someone who has a full-time gig that's anything other than identifying underpriced residential investment opportunities given how crazy both housing prices and equity (tech in particular) prices are.
Yes, opposite meaning they purchased to make some money. I'm happy I didn't follow their lead and it made me way more mobile during the pandemic and investments that would be paid as a fat down-payment grew significantly (even if considering leverage housing enables).
So what you’re saying is, if you want a condo, just wait, because a price drop soon means your money will go a lot further. If you want a SFH, buy now, price drop will be small.
Not quite what I was saying, but now that you've put that so succinctly, if it were me, knowing the Bay Area and what's happening in tech/AI at the moment, I would hold off on the condo. The single family with some grit I'd probably say have at it assuming the most important part of what I said holds true: it's not for equity upside, it's because you want to own that place, and in that location because that's where you will be happy living.
If someone reads this thread once there's been another 2008-level reckoning in 2026 I'm not surprised the reckoning occurred.
>it's tough to imagine buying and then being on the hook for a mortgage without a job even with some savings
Key thing to remember here is that you always have to live somewhere, even if you're laid off. Unless you're ready to head out to BFE to save a few hundred bucks on rent, it doesn't get much better than owning in that situation. Plus you could potentially have equity to tap, get a hardship forbearance, or worst case scenario foreclosures take much longer than evictions. This was the lesson COVID era taught me; if you're losing your home it's considered a tragedy, and there are tons of resources to help you. But if you're being evicted from an apartment it's considered a personal moral failure, and you're treated like a criminal.
Owning is only more expensive than renting if depreciation + interest + maintenance exceeds rent. And in most US cities, depreciation is negative in the long run.
Lots of advantages to owning and having a mortgage too: deduct mortgage interest from taxes, use equity as a line of credit, you can actually make substantial changes to your living space, and so on.
I waited till I had the whole sale price in cash then bought, it's reduced my layoff anxiety 1000% and I'm sure it's not the savviest financial choice, but I'm happy with the security of knowing I can stay here for a long time no matter what
It depends on the appreciation and in turn the property taxes. I own my house outright. Completely paid off. But the increases in property taxes is forcing us to sell and move, likely in the next 5 years. Too bad, love the neighborhood and the area.
I don't understand. The increase in property tax is forcing you to sell? How much percent is the property tax? Alternatively won't you make a windfall in the sale (I assume property tax only go up when the value goes up)
In most places in the US (california being a notable exception) taxes are reassessed regularly based on market conditions. In some areas this can result in the property taxes rising to an appreciable fraction of the mortgage rate - or in the GPs case, what the mortgage would have been, if they hadnt paid it off already.
Yeah. Unfortunately the real market value grew so fast that when the assessed value catches up over the next few years the property tax is going to take a nice chunk of my net income.
Honestly, this is not a hardship but a nice problem to have. I grew up chronically poor and I feel fortunate and grateful that we have a comfortable home that is ours with equity while a lot of people have housing insecurity.
I agree on the windfall part but selling to get that money is not that simple in the current real estate market and political climate. ie you got to live somewhere... and everywhere you desire is expensive.
Most people will never be able accomplish this because home prices increase so much. And meanwhile you have to live somewhere, and all the rent money is money you dont get to save or put towards home equity
> The Bay Area continues to lose jobs across high-income sectors (-0.4% YOY), driving modest overall employment declines. These job losses have slowed compared to a year ago but remain negative YOY. Despite generating substantial spending and wealth, the AI-driven tech boom hasn’t added meaningful employment to the region.
That is because there has been an absolute massacre in biotech in the bay area. Between tariffs (higher COGS), chaos at the FDA, cuts to NIH funding for basic and translational research, and competition from China biotech ventures are getting squeezed from both ends.
The post doesn't have housing data to back up the claim, but the job growth by city is interesting. HCOL cities like DC and SF in the red, as you would expect. Government jobs down in DC is expected, but mostly green in other cities? What is Philly and New York doing right?
The article notes that Philly and also NY underperformed in last few years so really they are catching up to baseline. As a resident of the philly suburbs this matches my lived experience - there has been something of a jobs bubble (at least for some demographics, in some industries) since covid ended but for the decade before that the areas was economically stagnant.
Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life)
If my house is worth less than what I owe then moving (selling short) can make sense.
Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.
~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local).
Of course there are always people who need to sell for whatever reason. There are a large number of people not in the market who otherwise would be, but that doesn't mean nobody is in the market.
That is one reason. Others are they got a job in a different city. Their health declined and so they can't live at home. They got married and don't need two houses. If you cannot think of a half a dozen others in the next 10 minutes either you didn't try or your need to practice creative thinking.
The reasons are not important for this discussion though - all we need to know is some people have other pressures such that the one I listed isn't compelling to them.
Do note that, even if the math works out such that the bank doesn't actually lose money, a short sale remains on your credit history for the subsequent seven years, which makes it very difficult to buy another house during that period. It's not something you want to do if you can avoid it.
I said CAN not will be worth it. Details of your particular situation matter, for some they should hang on while for others the credit hit is too small to matter. You need accountants and lawyers to advise you based on your exactly situation not internet commenters.
People moving isn't driving the real estate market. It is people dying or being born. Unfortunately you cannot bring real estate and other investments like your retirement entitlements with you when you pass away from this life, so something will happen to your house.
> If my house is worth less than what I owe then moving (selling short) can make sense.
I believe this varies by state but I thought in some states the lender can come after you for the difference and in others you can just walk away (albeit with a credit ding).
What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long.
And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.
Talking from the Vancouver perspective where we have a similar situation - yes, house prices are going down. People list houses with the same price as 3-4 years ago but most close below the asking price.
> But will lower demand coupled with still high interest rates actually lead to reduced housing prices?
One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".
Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!
For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.
I'm seeing homes in my neighborhood sit on the market for 3-4 months before dropping prices and finally selling, about 20-25% off the original listing.
What's fascinating to see is that around me the wealthy towns are seeing 6-7% annual appreciation whereas the lower middle class towns are in the 2-3% range.
Ish? Look into towns that didn't have a high reliance on tech. In particular, look for ones that didn't ride the rollercoaster of really high wages that a lot of tech drove and is now flattening off.
Looks like shipping is also an industry that you probably don't want to track on this search. Other than that, places that saw modest wage growth saw similarly modest housing cost growth. And haven't seen it fall back, yet.
Moved out of ATX to somewhere around hill country last year. There were just too many boring, uncool, rich bozos moving in, and I couldn't take it anymore.
The academic consensus is that there is a housing shortage, not a surplus. Perhaps there is a local surplus in undesirable areas, but that isn’t true in cities or nationally.
Austin and Texas in general have less housing restrictions than other places wrt zoning and regulation, so they could plausibly have a surplus. You can only really speak locally about any of this because location determines the market
No, you just happened to build appropriately because a certain subfaction of the population weren't able to pass the typical laws that would stop building.
The housing shortage was created by regulation and it's foolish or selfish to pretend otherwise.
Austin is unique in that most of the harmful self-serving conservatism-as-in-block-and-deny-all-development that city people usually to do is constrained by the rest of the state, and as an obvious result arguably has the highest standard of living in the entire world.
regulation /tends/ to be introduced because builders are misbehaving (bad materials, bad workmanship, building in flood zones, etc), but the bigger problem is NIMBY who then use those laws to prevent other people building in "their" neighbourhood
it's the market dynamics that create under building, not regulations. if regulations are the problem, then how were builders able to build record number housing starts leading up the GFC? and after the crash, housing starts dramatically lowered. were there new regulations introduced during that time period?
highest standard of living unless you're a woman or a trans person, or a person of color, you mean. I'm sure living in a repressive dictatorship is awesome if you're a rich member of the in-group.
Recently sold a condo I had in NE California. When I first bought there ~8-9 years ago, a town near by had old railroad cabins for ~100k or less. As the housing / migration boom to Reno took hold, those cabins are now in the 2-250k range. The median income in the county ~40k.
The town I was in saw prices for something that was ~175-200k 7-8 years ago peak at around $425k in 2023/2024 and now "cratering" into the low to mid $300ks. Median income hasn't changed, just people with 2nd/vacation homes and wanting to offload them due to the economy.
There's an interesting housing arbitrage happening right now. Townhomes are still selling for over asking, but single family homes -- ones that older, middle-management types would live in -- aren't receiving competitive bids.
I saw HUGE ramen displays yesterday at Safeway, including some of the less common flavors like blue (Soy Sauce, formerly "Oriental") and yellow (Creamy Chicken).
I can't find the blog post from the last major recession where people were talking about all the crazy flavors you only see when the economy is REAL bad.
I'm a fattie on a D.A.S.H. (low salt) diet, but I do buy a dozen or so Creamy Chicken ramen every year.
At WalMart, they're now 47¢ (and I swear low-30s within the past year)... which actually helped me not purchase any this last visit (too expensive for all it is).
Noodle bowls are usually pretty high in saturated fat (between 8-15 grams on average). I can't imagine eating them daily.
At the very least you should consider steaming some vegetables (also very cheap), slice them up, and mix'em in to get some moderate nutritional value from it.
Saturated fat is not the problem. Fat with carbohydrates in the same meal is.
The problem with ramen is the amount of carbs and little nutrition which only spikes your insulin and makes you hungry 2 hours later if your metabolism is not great, not saturated fat in a vacuum. I wish popular knowledge about food had moved on from the misguided research of Ancel Keys already.
We're talking about budgets here. Not health. I think everyone knows that pre-packaged ramen noodles aren't the healthiest thing for you but they aren't any worse than half the other takeout crap you can eat. At least they are low in calories and cheap.
Wheat in a watery soup flavoured with monosodium glutamate isn't very nutritious compared to rice and fresh fish. There's a reason ramen costs a dollar or two compared to sushi.
Unless you're making them yourself or at least customizing them a good bit, noodle bowls are pretty unhealthy food.
Nothing fresh in them, high sodium, freeze-dried ramen or noodle bowls were originally survival food and should be treated as such.
Not saying don't eat them, and I don't know your socioeconomic background or anything, but if you want to eat them or have to eat them, try to add a little something extra into them.
A cup of shredded cabbage and/or a few cherry tomatoes and/or a half cup of onion slices and/or an egg, things like that should be cheap and easy to add and will help dilute the sodium and add a healthy component to the meal, and your kidneys and heart will thank you for it.
I don't disagree with a lot of what you said (need to really dress up the ramen to make it even close to healthy) but FWIW ramen isn't usually freeze dried it's just fried until fully dried out.
A few years ago when I started WFH full-time I attempted to make "healthy" noodle bowls using Indomie ramen as a base. Indomie packets are smaller than Top Ramen, so they have less carbs / salt. I'd stir fry the noodles with a bunch of veggies like shredded cabbage, onions, and peppers, and toss in some protein (leftover chicken, cubed tofu, etc). Seemed pretty healthy!
Until my blood sugar (A1C) and blood pressure numbers started climbing...
> I don't know your socioeconomic background or anything
It sounds like a habit drawn from poverty, but frankly, you'd have to be really poor to reach for something like this daily (I'm talking extreme survival situations that even the homeless don't typically face). Those with low income can still get much better food at a reasonable price. They don't need to shop at Whole Foods.
I'm not sure you can even eat like this for very long either. The malnutrition is that bad. Expect high medical care costs or an early death down the line.
If they're eating a reasonable breakfast and dinner, having instant ramen for lunch isn't anything close to a death sentence, it's simply not ideal.
But, odds are, the person who eats instant ramen 5 lunches a week isn't going home to a balanced dinner and likely eats fast food or frozen dinners most nights, which is why I suggested adding a few inexpensive extras.
A cup of pre-shredded bagged cabbage would add ~$0.50 to a ramen meal. If they do 30 minutes of meal prep on a sunday they could pre-portion a full portable soup container with all of the extras for the week and be ready to go for maybe an extra dollar a day.
You don't have to spend $25, of course, and you can make lunch. But microwavable noodle bowls, especially at your price point, are terrible for your health.
Why do people cheap out on food, but spend that money on less important things? We're talking about your health here! It's even worse when people with high incomes do it.
It's not nearly as filling, but I saw a character on TV smashing up their noodles and pouring in the powder, shaking the bag, and eating them like popcorn. I've become incredibly addicted.
"Hey, I heard you like eating sushi. Have you ever tried having a bowl of par-cooked microwaved noodles, instead? It's basically the same thing!"
Edit: The last time I worked in an office building, I had a limited time for lunch. I could have brought in ramen, or purchased something from the decently-stocked break room coolers. I could have sat at my desk or gone outside or eaten in the break room.
And sometimes, I did do those things.
But what I quickly discovered was that what I wanted on my lunch break was primarily a break.
I wanted to get the hell away from that place, surround myself with something completely different, and spend time relaxing my brain before getting through the second half of the day.
So I often went out to get lunch.
But because time was limited, it had to be nearby, and my options were thus very limited.
So I ate a lot of bargain-menu Wendys and tacos from Qdoba because I could get there, and eat, and relax a bit, and be back on time.
If there were instead a sushi place right downstairs, I'd have probably hit that once or twice a week, too. It would have had a higher monetary expense, but my brain would have thanked me for the extra time to unwind and I'd have had a better and more-productive rest of my day and come home in a better mood than I might have otherwise.
I feel you man. I had a lot of lunches alone at a McDonalds walking distance from the office having a quarter pounder with a side salad streaming shows on my Windows Phone through a Slingbox back in the day. Just gotta get out and disconnect for a half hour to reset my mind from the problems of the day.
That was the same year where I was homeless while technically having a "tech" job.
Just gotta wait for the economy to get worse... I haven't really paid attention to Top Ramen before, so I don't know if the creamy chicken is new in my store, but these giant displays caught my eye.
We were already in one following the tech correction since Nov 2021. [0]
The problem here is some waited for too long to be told we are now in a recession, then some politicians tried to redefine it.
But that is nothing compared to what will happen in the next 5 - 10 years. Nothing goes up forever. The only hint is that we need to prepare before 2030.
Not for nothing--I'm no optimist either--but, by what measure? I see at most one quarter of negative GDP[0]. The US market is up at least 50% since then.
There's an intermediate option: sell high P/E stocks and buy lower P/E stocks with dividend paying history. There are ETFs designed for this purpose too.
I am indeed short TSLA (or rather, am taking an inverse position), and have greatly reduced my exposure to NVDA, AMZN, META, MSFT, and AAPL. I keep some exposure to GOOGL, NFLX, AMD, because I believe they are going to "win" in their industry in the long run. I plan to keep exposure to them for like 10+ years.
You and me both, but working poors like us should be investing for long-term gains, not short-term returns. I put my money into bonds and international indices because I want to be better protected when the AI CAPEX bubble pops here, but I have no idea when that’ll happen.
We can’t time the market, but we can protect the scraps we’ve accumulated at least.
Objectively, I'm not sure we can reliably say any longer, given how much pressure has been put on formerly objective reporting agencies to conform to this administration's narrative.
My parents and grandparents were decidedly blue-collar and new middle class from the late 60's to mid 90's, and my grandfather, a mechanic, bought a new home on the Los Gatos border using the GI bill. It requires an income of about 600k USD to afford to buy housing where I grew up. I'm basically solid lower class in the southwest corner of the Texas Triangle now.
The main problems, as I see them, are the protectionist limitations on new supply, unfair importation of immense overseas' and out-of-state wealthy individuals' wealth causing gentrification, and the absurd inequality of wages into extreme power law distribution by the cheapening and decline of labor due to under-restrained capitalism.
40 percent of transactions in NYC were done with no finance contingency ("all cash") in the last year.
That's a record and it's vastly more than years past. We live in a world where people with vast assets are beating out people who rely on job income for things like housing.
The stock market exploded the past year, and there's your bifurcation: those with assets and those without - getting worse.
We (me and my spouse) made an offer for a small condo and then next week company started the layoffs. Luckily we were not in that position where we spent all our savings and ended up in a position where paying mortgage would have been a huge challenge. It's been a year, have a job but uncertainity is very high. Loosing a job now means finding the next one is not very easy and no certainity that it can be a matter of month or two. We made a decision that since we have enough to pay for the downpayment and enough to pay a year of mortgage, we would not go and buy a house in Southern California. It is better to live in rented property but not safe to be in a position where you loose the property.
Anecdotally, in my corner of the Silicon Valley, I've been looking to trade up homes from my 7/10 district to a nearby 10/10. Over the last year, I've seen the comparable properties in 10/10's rise about 10%, while my 7/10 has gone down about 5%. Both areas are very short commutes to high tech.
K shaped economy I guess? More and more spending is driven by the top, so maybe housing that aims to capture that still sells fast but more normal housing struggles
Things are visibly cooling up here in Marin, houses are actually sitting on the market (even just at the end of last year houses were generally scheduling offer dates and picking the best one). Some of this is just seasonal cooling, so I'm wary to draw any larger conclusions... but I'm seeing a lot lot more `for sale` signs than I'm used to.
>> If this - "High-income job losses are cooling housing demand" is true, doesn't this mean UBI would never work?
If UBI were national, it would work beautifully, because depending on the UBI amount, it could allow people to finally untether geographically. You could spur a rebalancing of irrational demand in HCOL cities due to jobs away from HCOL to LCOL
A drop in housing prices might be the only silver lining if an actual recession hits (whether the official statistics will actually admit to a recession is debatable of course).
That said, even if housing prices drop materially and eventually bottom it will provide little opportunity for "normal" folks to buy in if they're jobless. Will be interesting to see if Fed interest rate cuts translate to mortgage rate cuts, and whether those rate cuts lessen any price drops.
I've said this before on here, but the historical price-to-income for housing has been something like 4x. Today it's 7x (that is as insane as it sounds). A long way to revert to the mean unless you really think "this time is different."
Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard time buying a few years ago, because investors kept out-bidding me with all-cash offers. I had to raise my price target to move outside of their impulse buy range, which I was not too happy about.
> Housing prices dropping aren’t so good for those who own homes.
As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.
The dynamic here is that investors accept 3% return for housing because there are no good alternatives.
The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made).
Investors will likely not be an issue as long as we don't go into zirp again.
Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.
You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
Yes, the economy of the entire industrialized world runs on this.
People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy?
From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...
In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.
I think with the amount of corporations and existing homeowners buying homes that the demand is strong enough to keep prices high no matter what happens. There are billions of dollars set aside to gobble up homes in the event of a price drop. In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
> In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
This has been so weird to see over the last couple dips.
In the ‘08 crash, banks were sitting on houses that were developing mold issues because they had been sitting vacant so long. These houses were getting more damaged and less desirable by the day, and before long would require hundreds of thousands of dollars to fix (up from the low-tens already evident) but they still preferred to sit on them. They weren’t listed, or were listed but at too-high prices and they were just ignoring offers, not even responding.
Then you look at “depressed” housing prices that are still way over historic norms, so you’d think builders would keep going… but no, they totally halt all work, no new houses until prices are heading up again.
Something’s super messed-up about the housing market in ways that it wasn’t in the last millennium. Recessions don’t even fix it, they just make everything pause.
Already happening around me as the price of construction has been going up, while the value of homes is flat. Empty lots zoned and permitted for apartment and condo complexes lay empty.
Labor costs are unlikely to fall. The cost of living has been on an upward trend that shows no sign of stopping. The federal government waging a campaign of terror against the demographic that most house builders employ is certainly not helping either.
Desirable metros seem to have very sticky prices. San Francisco, where I lived for 15 years, turned into a grotesque caricature of what it once was, but prices barely budged (and for most of that transition, they surged wildly). Sure, it's no longer the single most expensive rental market in the country, but it's still one of the highest despite quality of life degrading massively and even a big decline in population.
People say this a lot, but it makes no sense to me. A recession comes with lower incomes and wealth for everyone, so affordability doesn't change for the average person. It only increases it for those who had a short position in their asset allocation, but that's just investment outperformance which you can have even without a recession.
You're generally right except it's not true for everyone. Every recession that hits a lot of folks just keep their jobs and their salaries. Maybe their stock portfolios (for the few who have those outside of 401k's) take a hit. But the key is that if there's a real estate downturn, almost every single home (house, condo and even land) takes a hit and so you end up with a situation where all the inventory drops in price, but not all the eligible buyers "drop in price" (i.e., not all eligible buyers suffer a downturn and so, net, you actually get more people into homes).
The key of course is that the downturn isn't so massive (hello 2008!), where the blood flows so freely that the layoffs/foreclosures/etc. overwhelm the eligible buyer pool in absolute numbers. That can for sure happen, but is atypical historically.
You've just listed a set of specific circumstances under which some number of people might find housing more affordable, but that's a lot more like "investment outperformance" driven affordability than "broad based housing price decrease" affordability. That can happen even without a recession. A small number of people could've found Bay Area houses more affordable in the last decade if they were HODLing some 10x stock.
FWIW I think I just listed a set of circumstances that happen every time there is a drop in housing prices historically, at least going back to the 90's savings and loan crisis. I'll tell you when people found Bay Area houses more affordable? 2009-2012. And during that time the unemployment rate was at roughly 10 or 12% (had to look it up just now but knew it was around there). Housing prices during that same time? Dropped as low as 40-50% in some parts of the Bay (best case they were down 20%+). 10x stock needed? No. A job? Yes. You can repeat the exercise for the start of Covid, but the timeline for the drop in prices, and the % drop, was muted in comparison to the housing crisis. Same for S&L crisis. Dotcom bust too, though, again, housing prices didn't crater like the housing crisis.
The illustration is misleading because it forces things into three buckets, two of which are colored to indicate "not good". But still, that bottom right corner of the graph is telling.
Also pretty disgusting to me that healthcare is "growing faster than normal" across the board. You'd think it'd be "growing the normal rate" at least somewhere. It's not like population is growing faster than normal across the board. Isn't 20% of the GDP enough for an industry that's fundamentally a cost center of society? Wars have been fought over less.
The elderly are on Medicare, and health care providers know they can treat much more aggressively when the government is picking up the tab. Despite the fact that in a purely economic sense, it is more important that children and young adults get health care.
When I went to the doctor about fatigue, the advice given to me was to stop exercising and take a break.
When my father went to the doctor about fatigue, they gave him a full blood panel and scheduled a cardiologist and respiratory therapist visit.
>The elderly are on Medicare, and health care providers know they can treat much more aggressively when the government is picking up the tab.
People should not make the unqualified statement that Medicare is free, which is what "the government is picking up the tab" sounds like. Medicare isn't free. Some people, not all, can qualify for free Part A but Parts B, C and D have premiums no matter what.
Healthcare is a non-negotiable way to extract money from people. And the industry is swimming in opaque complexities, IP, monopolies, monopsonies, and sweetheart regulation. Why the h*ll should they limit themselves to a mere 20%?
An aging population combined with people generally being a lot less healthy (eg look at obesity or diabetes rates) means we either let people die off, or else spend more and more on healthcare.
The large baby boomer generation is getting old, and thus their costs will go up just by nature of old people needing more. They are also realizing that health is the largest factor in how long they will live (not to mention that they likely started smoking before people realized how harmful it was - most have long quit but with unknown damage done. There are other choices that they often made that are now questionable)
Which is to say I expect spending to go up just for demographic reasons of large numbers of people starting to care. Don't confuse this for thinking all is well with health care costs.
What’s the maximum price you’d pay for a cure to a rare, fatal pediatric disease?
Answer this question, and you’re on the journey to the solution to the problem you are talking about. Tell me some BS why the question doesn’t matter or is wrong or whatever, and discover why “Dunning Kruger” is at least part of the answer.
>Answer this question, and you’re on the journey to the solution to the problem you are talking about. Tell me some BS why the question doesn’t matter or is wrong or whatever, and discover why “Dunning Kruger” is at least part of the answer.
I posit that the people who hold an ideology, moral compass, world view, or whatever else you want to call it, that permits the question to even be framed in this way are a root problem exacerbating many other problems in society, healthcare likely being one.
I don't know what the "solution" is but the fact that ~1:5 dollars in this country is spent on maintenance of the human body is just wild and likely unsustainable or indicative of some gross error in how we measure such things.
I think you're misrepresenting "Dunning Kruger." It only predicts that the subset of your respondents already known to be low ability in the domain of health care economics will end up inflating their assessment of their own ability in the same domain. (Perhaps also inverted for high ability respondents.)
You're claiming to predict that-- for particular branch of response types-- all respondents will be low ability. There are a lot of ways I would characterize that claim, but none of them would be "Dunning Kruger."
In fact, my gut tells me that some significant number of flame wars I've read over the years were due to this confused heuristic.
From experience from my peers getting pregnant it's the cost of a "selective reduction" (which can be 1 to 0). Newly pregnant friends are spending $$$ on tests in utero to weed out children with such things.
You're free to downvote, it won't make it less true. Genetic testing is all the rage in my social circle. No parent want's "dies basically immediately after birth" disease which is a surprising about of genetic conditions and way more people than I expected were silent carriers of at least one.
well, you didn't answer the question, but it sounds like you are saying $40,000? how much do you think Orchid costs? do you think it even works?
$40,000 cap would exclude all the therapeutics targeting rare disease being developed today. not just pediatric. all. it would exclude tirzepatide, which costs $250,000 to $400,000 for most people. if you want to cure obesity. and by the way, congress expressly banned paying for all weight loss treatments from medicare.
> Newly pregnant friends are spending $$$ on tests in utero to weed out children with such things.
do you think pregnancies at age 40 compared to pregnancies at age 20 are more expensive, or less expensive? define expensive, yes? and what price should the government pay? should it pay 40 year old mothers different than 20 year old mothers?
it's too bad that i'm being downvoted, since you're engaging with the question and hopefully it is really illuminating why there are no easy answers to capping healthcare costs. it starts with people, especially people who think of themselves as being very smart, being unable to specify a max price they are willing to pay, which is conceding that a market-based solution can exist but be very deeply flawed.
Because I don't think there is a max price. Like of course there is in practice case by case because individuals don't have infinite money but nobody wants to be told "sorry, we can treat your condition but we're not going to because you're not valuable enough to society to get it." The episode Critical Care in Voyager muses on what such a system looks like formalized and it's awful.
And I think what makes it so that we're resistant to caps is because it's not just rare diseases you could write off as unlikely to ever get that are ruinously expensive and it's likely that in everyone's social sphere they know multiple people personally who've had "blown out their out of pocket max by factors of 5-10x" medical issues. It's a this really can happen to you thing.
So I think if your goal is to reduce healthcare costs on a nation scale your only option is make it so your people develop health problems less and tackle the smaller but much much much more frequent expenses. Things like ending the caps on the number of doctors, giving nurse practitioners full prescribing rights, moving more medications OTC, ending drug patent loopholes or for critical medications or "buying out" the patient so it can be immediately be made generic, adding more restrictions to testing so doctors have to actually think before ordering every test under the sun because it's not their money, massively reducing the regulations on medical devices, I could go on forever.
Stupid unnecessary expense times your population is way more money than the treatment for some rare disease.
Crashing the economy is of course going to have knock on effects. I don't think anybody should be surprised by this?
Housing is essentially a bottomless pit when the economy is good, it can sink any amount of money because it is an absolute necessity. So when people have money they'll use it to bid against each other for a scarce resource. But when the economy pauses or even starts to shrink then that surplus evaporates and one of the first indicators that this is happening is the demand for housing. Usually the result will be some price adjustments and after that it is business as usual. But if the cuts go deeper then there may be more substantial effects.
The only thing that is holding the US economy afloat right now is the fact that there are still a couple of levers of power that Trump hasn't gotten his fingers on. When and if that happens I fully expect things to go into freefall.
That's one way of looking at it. In a crisis when you're on the buying side it can benefit you, but there will always be someone holding the bag on the other side of that deal.
I hate it when Trump or whoever touts all the jobs created because I'm sure most of those jobs are of the low-wage variety and aren't really helping anyone. It doesn't matter if a bunch of part-time, crap jobs get created while high paying roles are headed to India or just disappearing.
The government does nothing but lie to our faces.
As far as housing goes, if we do managed to deport 20 million non-citizens, that should at least help some. Oh yeah, yeah, it's so inhumane to disinvite all those folks whom the NGOs and mega-church charities took advantage of and trafficked here. Every one of those people had dollar signs on their backs for someone else. Now we have an affordability crisis caused by government fiat printing and these never-ending scams moving people around the globe. Good times.
The current housing costs (price + interest rate) just seem so out of line with the average household income it boggles my mind it hasn't cooled alot more already.
At $84k average household income, assuming 1/3 going to a mortgage would give you $2.3k a month to work with. At 6% interest rate, assuming 20% down payment of $70k, you can just manage a $350k home and that is ignoring taxes, not adding other closing costs, not considering utilities, assuming an interest rate on the lower side and assuming a 20% deposit.
Add tax and that gives you around $1.7k to work with. Assume only putting down 10% and adding in $400 a month to cover utilities then you can manage around $175k home. That rules out buying a house in alot of the US.
And yes, households in more expensive areas make more but if you are buying the average house, that costs $410k you need to be making like double the national average income to stick to the 1/3 rule. How many households are earning $170k where houses are $410k?
Are people just devoting 50%+ of their income to housing? Everyone buying a house with the help of mom and dad? I just really don't get it.
> assuming 1/3 going to a mortgage would give you $2.3k a month to work with
That’s the problem right there. Even if you’re locked in on the historically low sub 3% mortgages, there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing.
I know finance influencers and older generations keep talking about 1/3 income on housing, but that hasn’t been a thing for a while now. Even before the pandemic surge in housing costs, 1/3 on housing was dream in most cities across the country.
> there is a chance you’re spending more than 1/3 of your income on housing. People with higher rates and people who are renting, spend a lot more than 1/3 of their income on housing.
We live in San Francisco and pay rent at about 15% of combined gross income. I think people really underestimate the value of renting.
1. Are you under rent control?
2. What is your income and what is your rent?
While I appreciate the anecdotal data point, it’s easy to conflate personal situations to “this is what everyone else can do”. I say this because for a good 5 years I lived with my spouse in a $2k single bedroom apartment in San Francisco that was under rent control when both of us were raking in tech money. It’s doable, but not something that you can extend to everyone in the country.
Good question. We make tech money and rent a 3bed. No more rent control than SF defaults, we’ve only been here 2 years.
The shocking part is that we pay 5k in rent, but mortgage on the same place would be closer to 9k. Plus the commitment part (annual lease vs 30 year debt)
Very important to do your own math on these things and not just follow common wisdom.
If $60k/year represents 15% of your income, you are well within the top decile of income for the US. The comment thread you are responding to is talking about households earning the average income.
> you are well within the top decile of income for the US
Yes and still can’t [responsibly] afford to buy in my locale :)
The situation is truly fucked and it’s about time Americans admit that housing cannot be both an expectation and an investment. Either everyone gets to own a house or it can be an investment. You can’t have both.
IMO housing is a consumption expense but people hate it when I bring that up at dinner.
Your point about being both an investment and an expectation is important. It's a kind of perverse system. I have no idea how to solve it and I haven't heard any answer besides build more housing. I'll take that as the best answer until I hear more ideas. But even that is untenable because everyone who already owns a home blocks new builds. I don't understand why either in most cases given new development typically raises value of proximal real estate.
> housing is a consumption expense
only the building portion.
The land is not consumed when you live there. It only appreciates due to the developments around that land, making it more desirable and thus, more valuable.
And if the land is more valuable, then it makes sense for it to cost more - either as rent, or as capital appreciation.
> everyone gets to own a house
which is not a truth, but a want/desire. So housing is an investment first and foremost, and will always remain so.
if you buy a house, you are entitled to rent it out and collect that rent.
if you then live in that house, you lose that rental income. That is what you are consuming. the rest of the investment remains intact.
as I like to phrase it, when you move from a rental into a house that you own, you still pay rent.
The idea of rent suggests that you're paying a use fee to an owner. But if you live in a house that you own, and therefore lose the potential rental income, who are you paying that use fee to? Is the loss of potential income really the same as rent? Because in that case almost every choice/action in life involves a potential loss of income. There's probably always something more profitable one could have done with time/money.
> Is the loss of potential income really the same as rent?
yes it is. The term is called cost of capital, and sometimes imputed rent. But it's not an "expense" per se like it is when you pay liquid cash to somebody for use of a capital good.
Yeah I think $5k/month at 15% of your income means you’re making more than $400k/year as household. (Even more if you’re counting it on net income)
The strong household income is the only reason why you’re able to limit how much you spend on housing, which unfortunately is not something most people are able to do, even if they’re renting. I get that renting is cheaper than buying at the moment with the interest rates, but it’s not cheap overall.
From a livestyle perspective renting sometimes makes sense. Financially almost never does. There are of course edge cases like very expensive urban areas where there’s no possibility to buy because there are no units on the market and commuting is not possible. But if you work remotely, or suburbs are nearby then owning a place is likely a much better choice than renting particularly if you take advantage of subsidies like state/federal assistance for first time buyers and tax abatements in opportunity zones.
The abstract math can work out well but the practical reality is that every landlord exists on the slightly-shitty-to-living-slime end of the human continuum. Even if your municipality has "strong" renter protections it is so draining and stressful dealing with them and their weird invasive bullshit and petty malfeasance for decade after decade.
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Sure but also I believe that the upper limit for most mortgage servicers is around 41, maybe 43% (one of those two, cannot remember which, or at least it was 4y ago).
There’s no limits per se. 43% is what they “prefer”. More recently with the low demand for mortgages, that number is more flexible. And all of this is on Gross Income and not net. So you could in theory be spending more than 50% of your net income on mortgage alone. If you want to consider “housing” costs, the number would be lot higher.
I bought a year ago and my max lending amounts were around 45-50% of my gross salary.
Internet + Natural Gas + Light + Water + Home Insurance + Auto Insurance + Property Tax + Phone + Home Security + Car Gas + Credit Cards
A $350k mortgage with bills, is expensive. Will eat up a whole check if you don't make more than $140k/year.
[1] tells me a $350k mortgage with a 10% deposit, paid off over 15 years, costs $2,585 per month. That's $31k a year.
That kind of income with that kind of house price should be pretty comfortable, given you don't mention supporting a family. If your non-housing bills are costing $109k a year, there's a good chance you could reign in your lifestyle choices.
[1] https://www.bankofamerica.com/mortgage/mortgage-rates/
When many people talk about a salary of $140k, they're using pre-tax numbers. $140k can easily shrink to $90k, $80k or even $70k after tax.
Where in the US would $140k become $70k after tax? Or do you mean after all other pre-tax adjustments such as insurance, 401ks, in addition to taxes?
According to a friend I know who lives in the tri-state area that is what happens to them, but they max out 401K, have insurance etc.
But that's not $140->$70 after tax, that's $140k->$70k after tossing $24k into retirement investment savings, another $5k into healthcare savings, possibly another $1,500 towards healthcare premiums (huge amount of variability there), and then finally taxes.
> but they max out 401K
So then it’s not what happens to them is it?
"lives in the tri-state area"
Do you know how many of those are in the US?
Well there's 50 states so 504948 is just 117,600.
I bet it's just outside of Springfield.
Which Springfield? :-)
Don't forget real estate tax and sales tax. In some places, real estate tax is about 20-30% of the rental cost. Sales tax is as high as 10% in some places.
Credit cards aren't a fixed cost. Spend less.
What a helpful take in a CoL crisis.
Everything is a crisis if you can't control your impulses.
Some people just can't resist the urge to feed their families.
To feed with burrito paid on four installments.
Some people also can't resist the urge to create large families they can't afford.
That’s becoming a very small part of the population, as birth rates fall across the board.
Is hardly the childrens fault. It is also hard to go back on if your circumstances change
I suppose it's easier to blame ones self than to critique capitalism
Easier or not, it's certainly more productive to focus on what you can control.
Also I'm open to critiques of capitalism, but the post I replied to didn't contain one.
I guess more people died of starvation under socialism than under capitalism.
blaming capitalism is extremely useless
Until it isn't because enough people realize it is inherently flawed and will never result in stability and they would rather die than relegate themselves, their children, and all their later generations, to indefinite servitude of an outdated economic system. Provided we don't kill our world first in our pursuit of endless profit growth.
I'd much rather deal with some less stability and have a lot more resources available to smooth out the bumps.
The US has made the correct choice for the last 250 years, I hope people like you aren't able to derail it.
> I'd much rather deal with some less stability and have a lot more resources
This strategy works so long as you're in the group of people who do indeed have "more resources," but breaks down if you're marginalized in any way, or if you don't want to support the exploitative system.
https://pmc.ncbi.nlm.nih.gov/articles/PMC1646771/ Turns out, scientifically, it hasn't
That is what people always says about their current culture or economy or political system, even as they are on the very edge of systemic change. And quite frankly to me that just reads like an excuse to not do or try anything so people can kick the can down the road, benefiting themselves at the expense of many others both currently and in the future as things deteriorate further.
it is if that's all people do, but I think it is a necessary step to realize that we do live under a system that encourages an amoral allocation of resources. If people only ever shrug that off or treat it as intractable it will never change. Some would argue that it cannot be changed, but I think that just means they haven't read history.
Brother lately I’ve only been putting groceries on credit cards and you’re right, they’re not a fixed cost. They’re a variable cost that just keeps going up.
I wonder if in classic HN fashion somebody will suggest to stop eating...
Anyone remember Soylent?
I prefer Huel.
Ozempic is expensive unless you make your own from overseas imports
The addition of credit cards to that line does little to spoil the point they were making.
You'll own nothing. And you will be happy (using pills and medicines)
They were quite serious about destroying society as-is. Nobody took them serious
You are getting down voted, but it's true. They (WEF-types during their meetings you can watch on youtube) telegraphed it during/soon after the entire Covid lock downs that they intended to make large structural changes to society and the concept of ownership. They didn't make this secret or anything. Heck some sold books on the subject.
Most of what the WEF discusses is how to gain more technocratic control over democracy. You know, for the benefit of everyone...
I guess people think that there is the need for an centralised evil being responsible to coordinate an attack on society and they feel that the comment is a paranoia attack.
It is nothing like that. We can see how equity firms risen again buying certain types of businesses and change the structure of prices. The incentives to do it wrong are all out.
People still think that Microsoft layouts were an unfortunate unpredictable movement given market circumstances when every regulatory organisation pointed that it would be exactly what they would do.
People also think that putting their money in such companies because they have money back is an endless loop of free money and that money is an infinite resource.
Not one or two only have discussed how they should start licensing their products as a new business model. What people thought that would mean? How selling the product does not give the buyer the ownership? How is that not taxed differently?
Who is "they" in this context?
The World Economic Forum is famous for saying people will own nothing by 2030 and be happy. https://en.wikipedia.org/wiki/You%27ll_own_nothing_and_be_ha...
The essay was a thought experiment based around the popularity of the so-called "sharing economy" at the time, not a WEF strategy document and certainly no government's policy.
Even the author of the piece said it was not a description of her vision of the future, but intended to start a discussion about technology.
But it's been picked up by wackaloons around the world as part of some overarching conspiracy theory.
> overarching conspiracy theory.
it's because it's so easy to simply blame the ills of society on some illusory few pulling the strings behind the scenes. It used to be the migrants, or blacks, or the chinese (still is apparently) or the japanese...and now, it's the rich/shadowy figures etc.
The actual truth is that the collective actions of everybody leads to certain outcomes - today's outcomes. It can't really have happened any other way.
But it's literally true?
Please don't dilute the argument by comparing racial groups with the ultra-rich.
The (ultra-)rich form a class in the classical Marxist sense - a group whose interests naturally align, and they work together to further their interests.
There is deliberate government policy behind what's going on with housing - free money for the rich, which they can in turn invest into speculative assets to make yet even more free money.
Then they ensure that their money has weight by putting said money into housing, pricing out common folk, and building new units to serve as price control to preserve the value of their assets.
Then it's a good thing that the World Economic Forum are not government and do not have lawmaking powers. It's essentially a lobbying firm. I wouldn't worry too much about random slop they publish.
That phrase was an essay from a Danish Social Democrat, the exact same party that has been pushing very hard for Chat Control in Europe.
It’s not a lobbying firm, it’s the same people that make our laws and decide our future.
By the way, the full title of that essay is “Welcome to 2030. I own nothing, have no privacy, and life has never been better”
https://www.reddit.com/r/gaming/comments/1981i3j/ubisoft_get...
The strategy is everywhere now. You buy but buy doesnt mean you own. How did that happen?
There is the WEF thing as other have mentioned but company representatives have said that
One recent case https://www.reddit.com/r/gaming/comments/1981i3j/ubisoft_get...
But you see that everywhere. You buy the hardware but the company may block your property totally or partially.
You buy a car but pays to use heated seat? Who eats this thing that you haven't paid extra for the seats. The costs are just sunk in other parts.
You buy a movie but it can be revoked. You buy an smart tv that can have features revoked. You barely can pay your rent because now everyone needs to rent because no one has money to buy except equity firms.
There is no need for "they" to be a centralised being. It is just happening. Doesn't matter who or if there are a "they".
We live in a world where people think that the homeless man is the enemy because people are to simple minded to not understand why there are incentives to keep make it worse and worse.
They are the proponents of The Great Reset. Here’s an excerpt from a book I read:
‘As Hitler declared in 1934, “The German revolution will be concluded only when the entire German Volk has been totally created anew, reorganized and reconstructed” (cited in Koonz, 2003, p. 87). The “Great Reset,” announced by World Economic Forum (WEF) director Klaus Schwab, son of Nazi industrialist Eugen Schwab, attempts the same thing on a global scale, promising to “revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country [ . . . ] must participate, and every industry [ . . . ] must be transformed” (Schwab, 2020).’
The book is: Wall Street, the Nazis, and the Crimes of the Deep State
By David A. Hughes
It's a big club and you ain't in it.
them.
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A lot of people get help from mom and dad, but if you're already a homeowner, the home youre sitting on has appreciated too, so you can role equity into your next purchase. Not everyone is starting from zero. There are so many homeowners who would not be able to afford the home they're currently in, but are sitting on $500k of equity they can role into their next place.
While $84k is the average household income in the US, the average among home owners is a bit higher, around $100k-$120k. Also, very high prices really skew averages. Many "starter homes" are closer to $200k. I bought new 3 years ago, and the rent home I lived in prior, which was in an older middle class neighborhood in a Houston suburb, sold for $224k (and this included some basic renovations like new flooring)
Just want to comment, I think if you were to overlay where people work vs live, most people probably do not have reasonable access to housing @ 225k.
Also I think much of this problem is zoning, which coincidentally Houston has none and has some of the lowest housing costs in the nation, especially for a city of its size.
I suspect much of the housing crisis on the west coast is because of poor zoning laws and could be fixed with a stroke of a pen, at the expense of the local housing market value.
On the location vs price front, I think that's a bit of a red herring.
Because people generally want to live close to their jobs.
If cities have a lot of demand, it's partly because they have a lot of jobs, which means that the price of housing in cities relative to income is still an important metric.
Viewed by holding more of those things constant, the urban medianHousePrice : medianIncome is how much of people's lives we're requiring they dedicate in order to have a roof over their heads.
We should be using medians, not means for bot hate income and house prices.
Usually you don’t buy a whole house when you are 25. You start with a small unit. My first condo was 700 sf which I sold for a good profit and use the money to pay for a bigger condo, about double the size. I then combined the profit of the second home with my wife’s profit from her house which was also small and together we got our first nice house just outside the city, about 15 min commute. We paid around 220 $/sf compared to 600 $/sf for a similar home in the city. Our house is 3X the size of the house I grew up in with my parents and 3 siblings, which was standard size for a middle income American family in the 80s. Not to mention the quality and amenities of our house is so much better than a house from the 80s. Yes houses are a lot more expensive today but only if you are buying in busy urban areas. If you dare to look in the suburbs you’ll find great homes which by square footage have not increased that much in the past 30-40 years after adjusting for inflation. In the city you are competing with everyone else wanting to be able to walk to their favorite brunch place. Cities also have crazy regulations that prevent building affordable homes.
If you think of it as a homeowner debt subsidy, that forces a higher percentage of the country into recurring-revenue rentals, that provides an adverse incentive against correcting home prices for income. Right now the consumer debt that’s substituting for wage increases hinges on the middle class being able to access lines of credit; one very popular LOC is home mortgages. If home values are allowed to fall to the level predicted by median wages, that could trigger a massive wave of defaults and bankruptcies as existing loans go underwater, homeowners have their lines of credit shorn, and then start missing mortgage payments and file for bankruptcy. U.S. mortgage loans for 1-4 bedroom properties are currently $14.5 trillion USD; for comparison, U.S. GDP is around $31 trillion USD. So if 10% of homeowners default or discharge their mortgage debts due to home prices collapsing to realistic levels, U.S. GDP drops 5% that year (not accounting for the loss of interest the banks would’ve recorded to GDP as production output for up to decades). Median household wages for homeowners is $86k, well below the $120-140k threshold recently discussed, supporting the government estimates that 30% of homeowners have difficulty making payments on their homes. So, if those 30% went bankrupt over a home prices crash, there’s a plausible threat of a 15% collapse in GDP (compared to Covid, which was around 10%).
Relative to that, I don’t think economic policy is likely to prioritize new home ownership, not when a catastrophic reversal of years of GDP gain is a material risk. It would be a different story in a first world country, I expect, but here trying to reset home prices would just result in a massive rent costs spike (the U.S. free market tends not to build median-wages housing if it can avoid it) and a notable fraction of those households becoming homeless, while they watch as other families benefit from the price correction’s devastation by buying up their home at auction. The best that policy can do with the restrictions the U.S. government places on itself is to issue federal funding to regional governments to build median-price housing — and since much of that funding would go to regions explicitly hostile to current U.S. leadership, that is extremely unlikely to be passed by Congress.
Look up the median age of a home buyer in 2025:
It's 59 years old lol.
Boomers and institutional money are doing the home buying.
https://www.apolloacademy.com/median-age-of-all-us-homebuyer...
In 2009 the same chart shows that the median age was 39.
In the early 80s it was early 30s.
Look at congress, we live in a boomer gerontocracy. Not every boomer is wealthy and powerful, but the majority of people who are wealthy and powerful are either descendants of elites/wealthy, boomers, or a very small fraction of younger tech/finance/business owners.
The good news is - assuming there's not a big change in immigration rates - if you can rent cheaply enough for 10-20 years the boomers will start dying in sufficient numbers that if there is somehow no reversion on home prices in the mean time there should be insufficient buyers at that point and prices will eventually fall.
> The good news is - assuming there's not a big change in immigration rates
There has been a big change in projected immigration rates: https://www.cbo.gov/publication/61735
That looks great, for everyone who knows how the US is funded.
>"if you can rent cheaply enough for 10-20 years the boomers will start dying in sufficient numbers that if there is somehow no reversion on home prices in the mean time there should be insufficient buyers at that point and prices will eventually fall"
But that "10-20 years" is your life, and there's no getting it back. Millennials (the largest generation in US history) have entered into our prime family starting age, and the fact that most are priced out of the housing market right now and stuck renting apartments is a complete tragedy. At a 90th percentile income, I can just barely be able to afford a home and provide for a family of 3-4 like our parents and grandparents did on a highschool education with no higher skills.
Yeah, it definitely feels like the TFR crisis where the actual problems won't show up until it's too late and we're basically turbofucked.
I doubt your parents instantly bought a house as unskilled workers at age 18. Maybe in a very few ultra cheap housing markets that would have been possible.
For example in 1980 in SF the median home was $130k and the median household income was $16k. Today it’s $1240k and $141k. So yes it’s less affordable but it’s hardly a massive difference as you imply.
In the rust belt this was the norm.
I have figured out my father working an unskilled factory job in 1970 made about $40k adjusted for inflation in order to buy a $40k starter home in early 20s.
Union job with a pension that he is still collecting right now after retiring at 55.
No college. Not even sure he has ever read a book in his life. I would say all you had to do was not be an alcoholic and you would be fine but even that is not true. Even the boomer alcoholic fuck ups I know did pretty well and retired early.
I'm assuming you adjusted his income for inflation, but you didn't adjust the price of the home he bought?
Starting? The Millenials are in their 40s! You'd better be well into raising kids by your 40s.
This might be a bit of talking past one another. The rent vs buy argument should be comparing similar housing, but your comment bakes in the assumption that renting=apartment. That may be true for your area, just wanted to point out the dissonance.
> most are priced out of the housing market right now and stuck renting apartments is a complete tragedy
It absolutely is, but as one of those myself, I just refuse to even attempt to pay their prices and will make the best of life while renting and doing other things, not having kids, not owning property unless the ratio changes dramatically. Owning at most a tiny condo for half a million where I live, or moving to the boonies to own marginally more for less is simply not appealing to me, it doesn't unlock anything but a vague sense of security and a shit ton of liability. I hope more people choose the same until the working age tranch of purchasing power isn't as available as they'd like and prices have to drop. It's a major issue, but maybe I should be thankful I never adopted the boomer/genx dreams of owning a place and having a family or whatever. It's something I'm morbidly watching from the sidelines for now (in my early-mid thirties), but there are no circumstances except a miracle side hustle that could create the circumstances for me to actually pursue a mortgage on a place in my city.
>"I hope more people choose the same until the working age tranch of purchasing power isn't as available as they'd like and prices have to drop."
You just have to remember and keep in mind that the game is rigged. Housing is far from being a completely free market in this country. The structural political forces entrenched in maintaining home prices is second to none, from the top federal level all the way down to city councils, in a completely bipartisan way. The crisis of '08 was a generational event that we're not likely to see again in our lifetimes. Flattening and dips for sure, but a crash will not be allowed to happen; they'll just print enough to fix it, and leave the burden of inflation to anyone not owning assets.
Agreed on every point, except I'm actually in Canada, so it's partly because housing didn't crash here that we're arguably even more turbofucked, afaik anyway. Although our current administration would like every working age person to believe that it's solely because of your president that we're screwed economically, the writing has been on the wall for a while; too much of our GDP is made up of residential real estate sales and the rental income generated by the scarcity of them and going into the pockets of people who borrowed endlessly against them.
Well, if we want to be technical about it, the 2008 crash did happen because some structural forces (banks) were perfectly happy to originate highly risky mortgages in exchange for higher face value rates.
Which had the side effect of allowing a lot of people who couldn't otherwise afford homes to purchase them by allowing them access to more leverage than they likely should have had.
So wealth isn't always aligned.
If they print enough money your other assets will go up (maybe enough to buy a house that has stayed flat in nominal terms)
This is basically the situation with housing in Canada actually, it's been down/flat in nominal terms since 2021 but if you owned US stocks during that time while waiting to buy then Canadian real estate is now much more affordable to you.
This is all home buyers not first time home buyers. So it’s not clear what we can conclude. It could be that more retirees are buying a house to retire to rather than renting.
I imagine age of first time home buyers has also gone up but there’s no way it’s that high.
First time home buyers is up to 40. Not as bad as 59 but not great either.
https://www.nar.realtor/newsroom/first-time-home-buyer-share...
59 year olds were born in 1966, so the average homebuyer is from Gen X, not a Boomer.
I'm sure Ol' John is no player when we compare how much investment funds have being pushing to buy homes. Around here, you can't even bid for a small apartment. They get sold to the folks before they start. Paying flat taxes on hundreds of properties doesnt make sense. They don't contribute to generate more jobs. They just replace the buyer and charge extra money that could have be reverted to other expenses that would create a healthier economy by diversity.
I wonder if the distribution of ages for home buyers is not a normal distribution and maybe the median and standard deviations might tell us something more here. Regardless it's concerning that the average and likely median age has shot up that much.
Well, since 1980, the median age in the population has also increased by about a decade, which is a significant (but not a majority) contributor to this.
>if you can rent cheaply enough for 10-20 years the boomers will start dying in sufficient numbers that if there is somehow no reversion on home prices in the mean time there should be insufficient buyers at that point and prices will eventually fall.
You may be missing something - there's so much money flowing upwards in society that the rich/ultra-rich will simply be able to buy ALL of that real estate as it becomes available. If not ALL, then everything that's desirable.
59 is really early Gen-X. The Boomers are all in their 60s and 70s now. They're downsizing.
They're not downsizing. They're buying smaller houses and renting their current ones.
If there are N houses available in the bay area and FAANG hires a total of more than N people from outside the bay area at a median $X/year, then the median cost of a house will be more than the most house that someone making $X/year can afford.
We’re paying Cal FAIR about 10% the value of our house per year, despite having best possible fire safety for come construction and the area surrounding the house.
So, in your example, thats 175/10/12 = 1.5K per month, leaving $200 for the mortgage. So, $175K is unrealistic.
In related news, Cal FAIR is lobbying for a 60% increase in rates this year, because, apparently 16% of rural houses in California burn down each year (it’s either that, or they’re unbelievably corrupt/incompetent, since they’re somehow losing money).
Note that people in flood planes (much of the cities) have similar issues.
The taxes are important though. You'll "pay" for that monthly through your escrow account (or you'll save up for it in a HYSA or something, though personally I'd rather have my lender deal with the city and estimating next year's increases).
With taxes included, that $1800 mortgage can easily become $2600-$2800/month --- $33,600/year --- in a high-property tax state (like many of the states that don't have income tax, which are where many of the cheap homes are). For that to be 30% of your _net_ income, you'll need to clear $112k/year _post-tax_, which is $373k/yr HHI pre-tax assuming 35% of those go to federal, state and FICA.
You'll "only" need $112k/yr HHI if, like lenders, you're assuming that this will be 30% of your gross income. However, if we assume net is 65% of gross, then this mortgage is 46% of your net income. I know that a lot of people carry that risk, but that's a little high for my comfort level.
As for:
> Are people just devoting 50%+ of their income to housing? Everyone buying a house with the help of mom and dad? I just really don't get it.
Like almost everyone else that didn't have Mom and Dad angel investors, we got insanely lucky. I had two really good years financially during which time I was able to save enough to hit our 20% down and then some. We were also lucky with our current situation, as our landlord was willing to extend our lease without increasing the rent and the place we were renting was pretty sweet.
In the UK it seems more about the super wealthy buying up houses to rent them out. Incomes don't appear to be the biggest factor at all, more about concentration of wealth
Housing costs in the US can be out of line with average income because there isn't enough housing. Sellers only have to compete for the top X% of incomes.
...to stick to the 1/3 rule.
When did that become the rule? Why, back in my day, 25% was the max amount recommended to spend on housing. Though that was also back when no one would even think of taking out a 72 month car loan. Maybe one of those new 60 month loans, if you just don't have the money, otherwise stick to 36 months.
And like you, I just don't get it. 1/3 on the house, whatever percentage comes out for the $40K car @ 72 months (granted, one doesn't need to buy new), where's this money coming from? We live in Redmond (WA), and I'm at a loss as to how there are so many newer Teslas parked in >$1MM houses. C'mon, there's only so many of those $500K total comp jobs to go around.
New car prices are now simply outrageous. Auto makers need to start ditching features and get their unit costs back down.
what features in entry level cars do you suggest they get rid of?
Ultrasonics, eye monitors, electronic locks, self-contained infotainment systems (just a screen and the interfaces for a phone would be fine), lane keeping, auto-braking
All of these are required by law
Only auto-braking among those has been made law, and it won't take effect for atleast 4 more years, provided it stands intact that long.
Source? Considering that not all cars for sale have all of those features, I'm pretty confident in saying that you're wrong.
Back-up cameras are required by law, so that requires a screen, but the law does not require that screen do double-duty as an infotainment screen.
Perhaps.
But there was a time they weren't required by law, and people still managed to drive.
Before my time but HUD upped the rent cap on affordable/public housing to 30% of income in 1980. Even 1/3rd's a stretch for most folks in most places in the US. A 25% rule of thumb isn't much use if folks can't find housing that meets the bar.
Meanwhile in areas where housing is absurdly expensive, other things aren't as expensive, so 1/2 is totally doable. E.g. if a studio is $2000/mo you have $24k/year for all other expenses, which is probably fine?
What places are those? When I think of cities with expensive housing (NYC, LA, SF, Boston, London, etc) they typically also have higher taxes, fuel prices, food, etc. Maybe you can swap a costly car for public transit?
I've never lived in those, but my sister lived in Boston and didn't own a car.
Income tax is progressive, so a higher income tax is probably less relevant to you if you are housing-insecure. Sales tax is regressive, but is maybe 700bp higher in places with high sales tax, so much less than the 50% bump between 1/3 and 1/2 your income. As far as food goes, if you eat out, that's way more expensive, but groceries are a much smaller difference.
> C'mon, there's only so many of those $500K total comp jobs to go around.
That presupposes that people bought the houses with their income. Family wealth might be the missing piece of the jigsaw
$1700 per month pays off a $350k loan in 17 years, does it not? That's assuming that the household income stays static over that time.
That is very reasonable. In Australia, 35 year mortgages are normal, and 25-30 year mortgages were normal 20 years ago. Why would your household income need to be 1/4 of the cost of the house to make it work?
> $1700 per month pays off a $350k loan in 17 years, does it not?
No, it does not. You forgot the interest. Let's call it 6%, close to the current US average.
The interest by itself comes to more than $1700 a month!
Paying $1700 per month, you'll never pay off $350k, even with a 1000 year mortgage.
To pay in 17 years, you'd need to pay $2741 (plus fees) per month. Most of that will be interest at first, but it tapers down. If you want to start out not paying mostly interest, you'll need to pay at least $3500 (plus fees) per month.
The parent I was replying to stated a $70k deposit on this, meaning it would take about 25 years, so my early morning maths was a bit off. Even so, that doesn't seem unachievable?
It's scary that you even have to explain this to another adult.
Yes and no. A lot of people have gaps in their financial education.
That said, mortgages aren't rocket science.
1. Assume at the end of the day you want the homeowner to be paying a stable monthly amount*.
2. In order to get there, you have {loan term}, {interest rate}, and {loan amount} as primary variables.
3. Assuming {loan term} and {interest rate} are constant (in a given mortgage market, at a given time), that leaves {loan amount} as the only variable.
So how do you get a constant monthly payment for a variety of {loan amounts}?
4. You add up all the interest that would be owed over the entire {loan term}, using {interest rate}, then divide each monthly payment into some proportion of {interest payment} and {principle payment}.
5. You also front-weight the interest payments, because at that time there's more outstanding total loan (versus at the end of the loan term, when only a little principle remains to be paid back).* *
Not super complicated. Yes, there's compound math, but conceptually simple.
* For some definition of stable, even if it readjusts on some schedule
* * Point in time interest pricing like this also makes future recalculation for over/underpayments easier, as you're essentially trued-up on interest payments at all times
I think the $70k downpayment mentioned in the original comment is what changes the math from "impossible" to "25 years or so".
Do mortgages in Australia not have interest?
> In Australia, 35 year mortgages are normal,
Are they? I was under the impressions that 25-30 was normal now.
> $1700 per month pays off a $350k loan in 17 years, does it not?
Noooo. Have a play with this Australian mortgage calculator - https://www.commbank.com.au/digital/home-buying/calculator/h...
I think you might be in for a shock.
The example rate on the calculator is 5.35, about right when the base rate is 3.6 percent (though you can get lower), using that your $350k mortgage will take 40 years to pay off at $1700 per month. A $300k mortgage would take about 30 years. Or a $230k mortgage could be paid in your 17 years.
None of these loan amounts will get you anywhere close to a house in Australia today. You're looking around $1 million for the average house in most of the capital cities, with very few available under about the $650k mark.
The payment is set up such that the interest is amortized over the life of the loan, so your earliest payments are almost all going to interest and the latest payments are mostly the principle.
This looks like a standard 30 year loan. If 100% of the 1700 went to principle and the was no interest then yeah, your 17 years works out, but then the bank makes no money.
1/3 to mortgage is crazy to me.
My mortgage is around 6% of my gross, and just under 10% of my net and I feel that's high / stressful to me. I want to get it paid off ASAP.
You’re certainly unusually hyper anxious about this.
Probably.
I did find it quite tough for a lot of years to treat myself, as I would try to save as much as I can to have a safety net. But even now with a safety net in the bank, I still have in the back of my head if I purchase something that is x mortgage payments, and I could save that instead to have in the bank in case I lose my job.
The average homeowner household makes more than the average. Many people are not homeowners.
For example if you are 22 and just started your first job you are included in the statistics but I think we wouldn’t really expect it to be affordable to become a homeowner (nor would it be desirable from a labor mobility standpoint).
And many people prefer renting somewhere like Manhattan to buying in Topeka. So it doesn’t make sense to assume everyone wants to buy a house. I know several millionaires that rent.
It would be better to compare overall cost of housing to income.
Probably a lot of private equity buying up homes to generate rental income? Usually, I am more pro market, but I think there needs to be some regulations on this. Although if you are an existing homeowner with low interest rate locked in, you probably want more private equity investments to drive up your property value...
This myth needs to die. PE does not own that many homes. There was a small period in early COVID where interest rates were lower than cap rates. During this time PE, along with the investment market in general, invested in real estate including SFRs. That is no longer the case. It's a great boogeyman but trust me, having worked in the industry, institutional investors own less than 5% of SFRs.
Real estate investing in general went bananas during COVID (plenty of non-PE buyers as well) because it's one of the only ways the average citizen can access that amount of leverage.
They might not own that many, but in 2025 it was 1/3 of the sold residencies.
You only need a little bit of extra demand to have an enormous effect on prices.
Where did you read that?
"Private equity generating rental income" is a lie fed you by the rich lobby. The real reason (everywhere in US and Europe) is zoning, which is a subsidy to the owners of existing buildings at the cost of everyone else.
Zoning change would spike land value in more populated area much more closely located to metro center, but it will depress demand on locations further away from the urban center.
No, it isn't.
1/3 of the houses bought in the US are bought by these kinds of organizations. Zoning might matter, but large capital owners are buying up a large fraction of the houses that are for sale and this is obviously driving up prices.
That's not true: https://www.cnbc.com/2025/10/07/home-sales-investors-make-up...
Excerpts:
Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025.
Institutional investors are selling more homes than they buy and have been for six consecutive quarters.
While large institutional investors continue to get most of the headlines in the single-family rental space, small investors account for more than 90% of the market. These are individuals owning 10 properties or less. The largest investors, those with 1,000 or more properties, make up just 2% of all investor-owned homes.
That is the same source as I read, but
>Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025.
is, as I view things, what I said. You may say that individual real estate investors are not typically large capital owners, but that's a definitional thing, or a matter of assessment that isn't interesting to debate.
No matter how you choose to define it, investors buying homes are buying a substantial fraction of the homes on the market (1/3) and presumably have a substantial effect on prices.
"Definitional things" are often pretty important to productive discourse, and both of the recent comments you responded to with your assertion that "these kinds of organizations" are buying up 1/3rd of homes were clearly talking about large institutional investors, not some guy who owns a few rental homes.
I see this as making no difference to buyers.
It's entities bigger than them driving up prices. The adversarial situation might even be even more apparent with the guy buying up 'a few' rental homes.
You’re commenting on a story about how housing demand is cooling, so why are you talking about how investors are driving prices up? Especially when the institutional investors are selling more than they’re buying…
Calling it a "subsidy for existing owners" is a slighty of hand that avoids blaming the literal hordes of useful idiots who are happy to see all manner of asinine provisions written into the zoning code to cater to their interest, whatever that may be. If it were just property owners it wouldn't have gotten done. It's busybodies, environmentalists, moralizing jerks, etc, etc that provide the necessary political will.
And who owns those buildings?
Most old NIMBYs of past generations who already got theirs.
Building like cars depreciates over time, while land don't. Economic rent is in the land.
> The real reason (everywhere in US and Europe) is zoning
This is a lie fed to you by the rich lobby. Destroying zoning would launch the value of the land current owners have into the stratosphere.
There's something fundamentally strange about how prices have spiked and inventory has tightened since Covid. Where I live in rural New England, prices are up 50–100% in five years. And this is on pretty poor quality homes. Yes, low interest rates led to a surge in buying and bidding wars that spiked the baseline, but when people say "the real problem is there isn't enough housing" that feels incomplete to me. Of course supply has been an issue for a while, but home prices nearly doubling in five years doesn't look like a normal supply story -- it's not as if we suddenly created 20-50% more qualified buyers in that time. I guess the lack of churn, with people hanging onto those sweet 3% mortgages much longer than usual, is probably part of it. But I really don't have an answer for the current state of home buying. I make great money but if I was to buy a house the quality of the house I got in 2018 with the same % down payment I would be looking at over 40% of my take home going to a mortgage, PMI and taxes.
> it's not as if we suddenly created 20-50% more qualified buyers in that time.
We don't create buyers quickly, but mobility means that a large number of buyers can show up in one concentrated area much more quickly than housing can adapt.
One piece of the US real estate puzzle is that automation and outsourced killed agriculture and manufacturing jobs. Those are the kinds of jobs that have some natural incentive to be spread across the US. Ag, because farms literally take up a lot of space and are spread out, and manufacturing because factories tend to be close to raw materials, ports, or other local resources.
When you get rid of those jobs and replace them with information work, you create a feedback loop with no dampening in it. People want to go where the most jobs are, so they move to the cities. Businesses want to open where the most workers are, so they start companies in cities.
The next thing you know, all the small towns are filled with dirt cheap empty houses because there are no jobs. Meanwhile, every metro area is bursting at the seams.
This makes some sense to me. The solution to housing often put forth is to build more affordable housing. In the context of people wanting to move toward cities where jobs are this makes sense.
But it seems like there is a larger problem of just having tons of housing inventory that is out of reach or untenable to most people. What are the more basic numbers of how many units exist in the country vs. how many people there are? How many second, third, investment, vacation units are there, how many sit empty most of the time? (I'm mostly not talking about true "country"/vanity houses far away from economic centers that will always only be accessible to the rich)
It seems to me that rather than just "build build build" we could do a lot to reconfigure the existing supply to make it fit the people better? Why is there so much "unaffordable" stock out there and continuing to be built? It kinda feels like the affordable housing issue is just a red herring for the larger wealth inequality issue.
> we could do a lot to reconfigure the existing supply to make it fit the people better?
The problem is that housing and infrastructure is, you know, actual giant physical objects. It takes a year of planning and millions of dollars to move a road. You can't tear down a block of single family homes and put a denser apartment building in there until everyone living in them sells. You need to run sewer, power, and roads to make a new neighborhood, and even then you will still have to deal with the impact to nearby schools, traffic, hospitals, etc.
Making places for people to live is, like, many orders of magnitude more effortful than anything we do in the software world.
> It kinda feels like the affordable housing issue is just a red herring for the larger wealth inequality issue.
Yes, this is certainly another piece of the puzzle. For every 100 people who can't afford a thing, there's still 1 rich person who can, and increasingly, rich people are the primary source of profit for businesses. So businesses target them more and more and we end up in today's world where it seems like "no one can afford what's being sold".
It's because unless you're one of the wealthy minority, you're simply not a market participant at all.
Related: https://www.nytimes.com/2025/08/28/opinion/disney-world-econ...
Sorry, by reconfigure I meant something akin to artificially lowering prices, legislation to push more homes to be filled by people that need them, allowing remote work, anything leveraging existing infra as much as possible.
My point is that we have the physical problem of housing units per capita beyond solved already, it's just socially/economically out of whack.
Unless there is not something I am seeing, people aren't racing to move to rural New England. Maybe it's retirees, red to blue state migrations, or remote workers. But I haven't seen a ton of evidence of that. People didn't really migrate out here before covid and I don't think enough people have to justify the rise in prices.
Personally I think people that otherwise would be selling are sitting on their homes because of the interest rates and this is causing a strange feedback loop of low turnover causing low supply which in turn causes new buyers to accept the prices (probably with a hope that interest rates will come down and they can re-fi in the years to come). I also think a non-trivial number of houses that on the market due to the owners passing or going into retirement homes are sitting there on the market because prices are so high but the only money the family is out is taxes. Or they are being turned into rental units, since rental prices are out of whack in these areas too.
My point I guess is where I live we haven't seen a big influx of population (probably the opposite) or significant job or wage growth to make sense of the increase in housing prices. I guess at the end of the day people are just stretching themselves further and sending more money to the banks in the form of interest to get into homes that were literally half the price in 2019. Strange times.
I agree that people sitting on their mortgages is part of the story.
I do also think there's a thing where home prices have risen so steeply in metro areas that even rural areas with fewer jobs are seeing prices go up because the market will allow it. Because the cities are so expensive, a house in a rural area can still be a relative good deal even if it's more expensive than it used to be.
What would be the best way to grow some small towns into new metro areas?
City planning certainly isn't my area of expertise. I think it's a fiendishly hard problem. For a small town to draw people in and thrive, it needs:
1. Jobs.
2. Good K-12 schools.
3. Some amount of things to do and cultural amenities.
Remote work can help a lot with #1. I think people are fairly tolerant of a lack of #3 and it's a thing that can grow organically over time. People will also accept fewer things to do if the area is quieter, they can afford bigger homes, and there's more outdoorsy stuff nearby.
But #2 is really hard. You need a strong tax base to fund it, which small towns don't have. They are sort of trapped in a death spiral where if they had more people coming in, they could have better schools with the increased tax base, but they don't, so they can't, so no one moves there.
Prices spiked in large part because the government printed an enormous number of dollars since 2020, thus triggering asset price inflation.
https://fred.stlouisfed.org/series/M2SL
I'm sure you read the footnote that goes along with the spike in 2020 where the definition changed.
and looking at the numbers, I see declining increaes over previous 5 year periods
39.1% increase from 2010-06 (8628.1) to 2015-06 (12004.6)
30.8% increase from 2015-01 (11787.8) to 2020-01 (15416.3)
21.0% increase from 2020-06 (18140.6) to 2025-06 (21942.4).
Yes, I read it. Even accounting for definition changes there has been a significant expansion of the money supply in recent years (and not just M2).
House value has gone up along with other assets since Covid because a lot of money have been printed. A trillion here and a trillion there, pretty soon we're talking real inflation. Real estate is the real inflation hedge.
Can confirm via my own experiences. Had a job in a SV firm, and paid just barely enough to try and get on the housing ladder. Four years and a 40-60% price increase later, and I got laid off without managing to successfully buy a home.
Since the layoffs, I’ve taken a sizable paycut (~$75k TC) to make ends meet with whatever I could find, but kept a pulse on the market in case things turned around. Locally, rents have gone down by ~$100-$500 a month (depending on when you renew) with one to two months free rent, while home prices have finally stopped rising. Homes are staying on markets longer, and bidding wars have dried up. I get about one to three price cut messages a day from Redfin, though nothing in my area or price range post salary cut.
Unfortunately, I don’t expect this trend to continue. My landlord just introduced a new RealPage-alike to keep rents high, local developers have put a hold on new housing construction as resources get consumed for AI datacenters, and the same old red tape blocks meaningful progress in addressing availability gaps. The only real bright spot is that renters are pushing for statewide rent caps and controls with better progress than ever before, so there might be some relief in sight next election.
It’s bad out there, ya’ll.
Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix. It ends up making the problem worse. I could see in times of economic downturns, a temporary rent control that automatically expires to help people figure out their situation short term (moving is expensive).
If house prices and rent being this much higher than they were in, say, 2000, relative to wages, wasn’t enough to trigger an enormous housing construction boom, I don’t think further-increasing rent or house prices are likely to do much good. Something about that “signal” is already badly malfunctioning.
The pricing signal malfunctions when homeowners and landowners control land use to such a degree that regulatory constriction stops housing. Usually this is zoning as the primary blocker, but there can be other blockers too.
One of the problems with rent control is that it pushes the class politics so that renters with housing act more like landowners than they do new tenants, and they conspire to also block housing. People are change averse, even if they don't mind the change after they see it; before the change it's a big threat. This hurts any tenant that needs to move due to things such as becoming an adult, finding a new job, starting a family, getting a divorce or ending a relationship, etc.
Rent control is great as a tenant protection to prevent evictions via rent increases, but it is only a short term protection for tenants otherwise, and can hurt tenants greatly if there's not enough building.
There's good evidence it's mostly zoning and permitting. You might be shocked if you look at the SFH zoning in your city when you realize how much the municipal gov has just banned denser housing development.
The lack of construction is mostly to do with most major US cities just not allowing enough construction. You can see the contrast with the handful of places like Austin that do allow construction, where rents have consistently dropped year-to-year even though the population has increased significantly.
This. It’s NIMBY politics at the local level. Go to your county/city board meetings and ask for plans.
Agreed. And local NIMBY can get surprisingly personal and politically vicious fast.
I have a friend who argued in public forums (local newspapers+blogs) for denser housing being more walkable and sustainable (in a wealthy small neighborhood we both lived in.) "Small towns" was/is the nationwide name for the trend.
Unknown opponents dug up and published dirt on him that even his wife, friends and employer didn't know. It was quite sobering.
And so they keep blocking efforts by resorting to smear tactics. Own it and reverse it back on them. Debate class 101, they have nothing if they attack you personally.
It sucks that your friend had his closet ransacked for skeletons. This is why I’m completely honest with mine.
You're gonna go to those meetings and find that it's not "what's allowed" that's fucking people out of the ability to construct things, it's all the capricious requirements that the process saddles them with before being allowed to do what is allowed.
I don't think construction has nearly as much relevance for Austin as you might think. Speaking as a former Austin resident, I left Austin in 2022 because rent highly spiked and I was effectively priced out of where I was staying (my rent spiked in the realm of 40%).
Rent has been cooling off in Austin because the amount of people moving there has heavily gone down and tech companies have either stopped opening new buildings there or have outright started to leave. The huge rise in rents was effectively due to a 'tech speculation' bubble as a result of every major tech company saying they were going to move to Austin and it was going to be the new tech capital of the US.
There are a lot of counties that also use construction permits and inspection requirements as a source of income and charge absurd fees for it, on top of being slow and unpredictable even if you do pay. And a slow inspector or slow permit approval also costs money in the form of builder's and laborer's time that you get charged for as they sit around waiting for someone else to arrive.
Look what happened in Austin, TX, which has much less housing regulation tamping down construction than CA (despite a good deal of local NIMBYism).
Prices spiked during the pandemic, and in response a shit ton of housing was built, much of it multifamily residential. Rents went down significantly and home prices are down 20% since the peak.
This is the economist theoretical consensus justification though in real life tbh I dunno if I've noticed any real difference when looking at housing development patterns across Canada where there are many jurisdictions with rent control, many without, and many with some sort of blend (ie. no rent control on new builds).
If there is some incentive toward development in non-rent control jurisdictions I suspect it's strongly dominated by other factors.
(ie. Montreal probably has the most restrictive rent control in Canada but it's also seeing the strongest apartment development growth)
Canada is a basket case for housing development but the only bright spots for outpacing demand with housing are Albertan cities with no rent control like Calgary and Edmonton.
Edmonton recently outpaced Toronto in housing development on an absolute basis with much lower housing prices and less than 1/5th the population!
The regulatory environment in Alberta is such that it permits housing to be built, and it does.
The same cannot be said of Toronto (or everywhere else in the nation that isn't the Prairies for similar reasons), for landed interests and the bureaucracy and corruption that comes with them are a lot more entrenched in that area.
Edmonton housing prices have gone up in 2025, Toronto's have declined. Alberta's population is growing, Ontario's is shrinking.
Those are the two factors explaining the housing starts, not the ineffectual rent control that exists in Ontario.
I think you're neglecting that most of Toronto is restrictively zoned for SFHs while Edmonton is upzoned across the city for 8-plexes at a minimum.
Toronto has a cumbersome permitting process that runs from months to years, while Edmonton's process is mostly automated and grants permits within weeks.
Regardless, the other relevant factor here is the actual price of housing, which is substantially higher in Toronto... and yet Toronto struggles (by design) to build anything.
Toronto has as-by-right fourplex zoning replacing its SFH zoning. As-by-right means automatic permitting, no delay.
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This comment just indicates the difficulty of making accurate conclusions based on casual analysis like you're doing.
haha i misread casual as causal, but i guess, here are the "accurate conclusions" you are looking for, that is to say, what does rent control cause, as opposed to the vibes and correlations people are talking about?
it's the "credibility revolution" and someone has won a nobel prize for it.
rent control causes limited mobility (read: displacement out of town) by 20 percent; it causes reduced rental housing supply by 15 percent:
https://www.aeaweb.org/articles?id=10.1257/aer.20181289
rent control causes reduced property values:
https://economics.mit.edu/sites/default/files/publications/h...
Did you write an entire comment by misreading "casual", the word I used, with "causal"? Otherwise, I have no idea how your reply relates to mine, as I didn't make any claims about the existence of such research.
You called his analysis "casual" so he gave you in-depth research? Otherwise, what was the purpose of calling him casual? Just drive-by insults?
Casual is a perfectly reasonable descriptor of economic conclusions based on vibes and anecdotes about apartment building in Montreal. I don't think it's reasonable to read it as an insult.
You don't need a study to tell you that if you make things more difficult and worse for landlords, the housing supply will decrease.
Courts actually need to do their jobs here for an optimal solution - e.g. it should be easy to punish shitty landlords AND easy to kick out shitty tenants.
It shouldn't take a 1+ year wait (as during COVID) to get a landlord-tenant court date to resolve issues.
The housing issue is multi-faceted however, so that's only 1 piece of the puzzle. But thanks to NIMBYs and building code overreach, it's literally impossible to build affordable housing that would rent at its own depreciation schedule.
> You don't need a study to tell you that if you make things more difficult and worse for landlords, the housing supply will decrease.
That doesn't need to be true. In post WW2 UK the government built lots of rental property. That increased the housing supply and hurt private landlords at the same time.
This is right. More supply is bad for landlords. In particular, housing developers and landlords are different economic actors!
You forgot to include the rest of the abstract:
"Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law."
People are able to move around, to some degree, so housing prices are a function of supply across most of the nation. Or at least the desirable portions.
Rent control on the other hand has mostly local effects.
Which means, rent control can push prices down and keep them down. There is indeed a supply reduction, and prices on average will go up—but not in the rent controlled area.
It’s still a poor idea, but it requires centralised planning to avoid.
I lived in downtown Montreal and it could just be me but the housing stock was not of the highest quality compared to most other places in Canada. Montreal as a whole feels rundown (I say this as a former Montrealer who’s lived in many places since). Cheap rent though.
> Montreal probably has the most restrictive rent control in Canada but it's also seeing the strongest apartment development growth
A wonderful city like Montreal can drive enough demand for housing to overcome red tape, and still be building far far less than what would satisfy demand. A less attribute city with lower demand for housing may build less due to lower demand, despite having less red tape.
Trust the economists on this one.
I've kept hearing for a couple of years that Canada has an outrageous housing shortage, though?
I used to agree with this, but nowadays it seems that the factors constricting housing supply are in many places related to zoning and regulation, not the ability for developers to make a profit, so rent control might have much less downside than economists have conventionally assumed.
EDIT: I am seeing a nephew comment that says rent control could make NIMBY politics even worse because it makes renters' interests more like homeowners'. Hadn't thought of that.
Rent control is just the renter’s version of “got mine! Let’s pull that ladder up.”
Look wha happened to rent prices in Argentina when they removed rent control.
Everything risks aggravating NIMBYism. It's hard to see how housing costs can come down in a lot of cities simply because housing is seen as an investment and people won't idly standby if the value decreases because of policies.
I cringe every time some youngster suggests we go down the socialist/communist path because none of them have any real-life experience with how bad Eastern Europe was! Here's a hint: It's was fucking beyond belief horrible--everyone was poor, there was nothing to buy in the stores, and people spent most of their free time drinking themselves to death.
On the other hand, I live in Norway. Bits like healthcare and a good safety net makes things nicer. I'm from the US originally. This nice stuff could be adapted for the US if folks would put their energy into helping others rather than spite.
Mismanagement of resources is bad no matter what system is used. Just because some under one sort of ideology and corrupt leaders failed doesn't mean that folks can't take the bits that were good, adapt and improve them, and see good results.
Norway is a petro-state that managed to amass a national wealth fund. Cherish what you have. Understand that it doesn't necessarily translate to every community.
Americans pay more for worse outcomes, so this is clearly a political/priorities issue, not an issue with wealth.
Other counterexamples are the other European countries with the same safety net which are not petro states (they do have colonial wealth though).
A lot of this was possible because of high corporate taxes and high marginal taxes on high incomes, so in theory this model could apply in most places.
Not all european countries have colonial wealth. There is universal healthcare in croatia and that nation started from scratch essentially 30 years ago and isn’t really a very strong economy today either.
If this is your take, you've missed the point. I said there is no reason good bits can't be adapted to one's society. it isn't that one system will work for everywhere or that it'll even look the same. Some things are unique to Norway, but other things definitely are pretty widespread.
You see this with healthcare in different places: Details change and sometimes it is lacking, but lots of places offer healthcare to its citizens that is low-cost to free when you need it. There is a lot of variation in what countries can do. Some places are poor but still manage to a point. Some places just refuse, like the US - heck, the US has oil and could have funded things for its citizens and keeps bragging about being rich, but they aren't gonna use it for the immediate welfare of its citizens.
So a state where the means of production are publicly owned and this subsidizes a lot of aspects of life. Funny thats exactly socialism.
I cringe any time someone points to a failure in an unimaginably different circumstance as evidence for why something won't work here.
Some people get bit by a dog and are afraid of dogs their whole lives. It's irrational.
Also, socialism and communism are not synonyms.
Doesn't it seem ingenuine how everything good is socialism and everything bad is communism? Also if socialism can't compete with capitalism then it's doomed. Socialism must make capitalism illegal in order to succeed and I don't want to be in a place where capitalism is illegal. And "market socialism" is not socialism either.
> Doesn't it seem ingenuine how everything good is socialism and everything bad is communism
Who is making that claim here? It seems ingenuine to bring that up when no one's said anything to that effect in this comment chain.
And for some hard data, here's a meta-study on the subject: https://www.sciencedirect.com/science/article/pii/S105113772...
> [A]ccording to the studies examined here, as a rule, rent control leads to higher rents for uncontrolled dwellings. The imposition of rent ceilings amplifies the shortage of housing. Therefore, the waiting queues become longer and would-be tenants must spend more time looking for a dwelling. If they are impatient or have no place to stay (e.g., in the houses of their friends or relatives) while looking for their own dwelling, they turn to the segment that is not subject to regulations. The demand for unregulated housing increases and so do the rents.
I find that rent control is a good idea in theory, but leads to a lot of deadweight loss. As a former renter, what I really wanted was a predictable cap on rent increases. For folks who are long-term renters, without controls and predictability, their only option would be to move every few years, which is incredibly disruptive.
From my understanding, European countries tend to have restrictions on what lease renewals can look like and with declining home ownership (and ownership being priced out for many), I think we should look at European models for real solutions to our housing crisis.
Rent control is not good in theory, it's the most universally hated policy among economists because it has so many horrible unintended effects on housing development and maintenance.
That’s because it’s not an economic policy but a humanistic one. Stable housing should be a right. If rent control was the default, then obviously no renter would vote for arbitrary rent increases in exchange for maybe, someday in the future, rent going down due to increased housing supply.
Good intentions count for nothing. Good intentions that create bad policy that harms people counts for much less than nothing.
You can feel however you want about it, but people will vote for rent control if they start getting squeezed out of their housing. Hate it as an economic policy? Then make sure enough housing gets built before people get squeezed.
It doesn’t really harm people. Housing crisis cities with rent controls are built out to the limits of their zoning. This suggests zoning is the limiting factor and not rent control.
It's not humanistic, it's pandering to current renters at the expense of everyone else.
You can put your right to stable housing next to your right to internet, healthcare, and every other meaningless positive right.
Call it meaningless if you want, but this is a policy that renters getting priced out of their housing markets will eagerly vote for. And prioritizing existing residents over newcomers feels just to me. Focus on making it easier to build new housing instead of getting pissy about the safety net.
"Newcomers" to the rental market include every person who already lives in that city and hasn't moved out of their parents' house yet. Why should they be penalized even more for not being born sooner?
Of course, individuals (renters in this case) will vote for a policy that benefits them at the expense of everyone else.
Increasing regulation does the opposite of making it easier to build new housing.
I do agree that current residents should be able to prioritize their own needs, but that rarely results in additional housing stock being built.
rent control (which realistically for all but the most idealist is some sort of capped rent increase policy) can only work if its done and owned by the state/nation. It can't work for private sector as the ROI will be relatively poorer on doing that vs many other investments so it'll actively disincentivise investment into more rental housing long term & in short/medium term disincentivise all but necessary capital/maintenance investment as it'll quickly erode whatever small return they're making on their rental investment.
State/National government are far more likely to stomach lower ROI than the private sector because they can arguably have a more holistic view of what their investment is. However, to be able tod that you also need robust finances in government which has certainly not been the case in most developed western economies since the 80s
This is an important distinction. Most "rent control" laws are intended to be "rent stabilization" not outright price fixing. Their goal is to prevent insane swings in rent happening too quickly, which disrupts families and local economies (and even infrastructure development).
But the worst/most aggressively laws are always used as the examples, skewing the conversation to edge cases and ignoring the fact that these laws can and do take hundreds of different forms.
Price fixing isn't so bad either - if apt prices stay predictable, you can plane ahead financially without being forced to buy an apartment or house.
Predictable cap on rent increases is rent control as it is termed in the US. It is really rent stabilization not rent control.
RealPage is gaming rents against tenants. It’s artificial rent inflation by algorithms. I agree on rent control. But unless realpage is controlled and regulated rent control is the only option.
> Rent control is not a great solution long term since it reduces the incentive to build more housing which is the only real fix.
In California (and SF in particular) rent control applies to housing older than 15 years and owned by corporate entities.
How does rent control applied as it is in California disincentivize building? I would think that building would be incentivized by rent control because newer housing stock would be exempt from rent control.
Long term they wouldn't be, and hence lower ROI and therefore disincentivized
> Long term they wouldn't be, and hence lower ROI and therefore disincentivized
While the ROI would be lower compared to allowing rent to increase uncontrolled, in a rent control zone there is more incentive to build (and renovate) to take advantage of market rate leases for (in California's case) 15 years.
Does the argument that rent control (as in California) disincentives building reduce to the argument that uncontrolled rent yields a higher ROI than rent control?
Such an argument is a refusal to allow public good for the benefit of landlords.
So you may mean well but a comment repeating the (debatable) negative impacts of rent control really comes off as silly in a thread about the realpage cartel (price fixing is worse than rent control in every way) and hopes of home ownership (demand for primary i.e. non-investment homes is unaffected or increased by rent control).
Just enforce the existing rules against cartels, rather than enacting known bad policies in an attempt to counter them.
Rental income should not be the primary reason for housing to be built in the first place, so I don't buy that argument. The primary reason to build housing should be demand for home ownership. The volume of housing that ends up on the rental market should only be a small fraction of the total volume.
Instead of rent control, I propose a forced buy-out model: if the current tenant can manage to buy the home they're currently living in, the landlord is not allowed to refuse the sale. And banks are not allowed to deny such a mortgage if the monthly installments amount to less than the current rent.
Again, you are just discouraging people from building more homes. People like to create financial Rube Goldberg machines to address high housing prices, but the solution is simple: Add supply.
Now adding more supply is not trivial in many cases, but at least people can work on the correct problem to solve once it's identified.
Idealistic solutions will not gain traction when they fail to address the pain that people are feeling today.
Then people who are unable or unwilling to have foresight will continue to suffer the consequences.
Existing residents will be fine. Newcomers may have problems. Ultimately, not a terribly unjust situation.
Tell that to your kids.
> should only be a small fraction of the total volume
Which is? Lot's of people are happy to rent, want to rent, will never want to own a home, want mobility, etc. I rented for nearly 20 years and only past few years went into situation where I want to buy a house. Should I be denied renting?
There's obviously premium to be paid while renting too. There should never be a situation where rent is cheaper than mortgage.
Personally, I believe that housing security should be a right, and it’s just not possible to have that when your rent can spike arbitrarily in the future for reasons outside your control. Young people with no local connections and limited belongings might be able to move every few years, but it’s downright traumatic for older people. Based on my lived experience, I will always vote for rent control while simultaneously pushing for more housing. The economic arguments against it are almost irrelevant.
I'm a renter and a parent in NYC, and I totally get where you're coming from. On a personal level, I'd love rent control that would freeze my rent and give me some stability. I'd also love it if NYC would build millions of new housing units, but that doesn't seem to be forthcoming.
That said, I also think that city policymakers have a responsibility that extends beyond just what will make life better for the current residents of their city. I wish rent control had better data supporting it, but everything I've seen suggests that while it might make things better in the short-term for some, it makes things worse in the long-term for everyone.
> Rent control is not a great solution long term since it reduces the incentive to build more
It is exceptionally rare for new construction to be subject to rent control laws, unless they utilize special tax breaks or government subsidies. It does nothing more than slightly inconvenience the investor class, who usually aren't thinking past 15-20 years anyway, when rent control laws might theoretically impact their investment.
People say this but places in a housing crisis under rent control are still generally built out to the limits of zoned capacity, indicating rent control is not the limiting factor but instead zoning.
Populist rent control is an excellent motivator to get counter-parties to the table to discuss productive alternatives in a market where no outside pressure currently exists.
There is no silver bullet solution. Rent control can be a big part of that solution, but what’s ultimately needed are a combination of policies that disincentivize the hoarding of housing as an asset class, promote home ownership itself for stability and community rather than fiscal nest egg, mandate denser housing in areas served by mass transit, tax land properly by removing caps on yearly increases, protect renters from unnecessary evictions (lack of renewals, no-fault evictions, etc), removing zoning laws on residential and commercial space (essentially reducing zoning laws to industrial vs non-industrial) to speed up approvals for construction, and get the government more active in meeting the needs of its populace through public housing programs (like Singapore does).
It’s highly complex and nuanced. I’ve long since stopped entertaining smug clapbacks from armchair economists who aren’t involved in the boots-on-the-ground issues at hand, and you shouldn’t parrot them around for them.
It's not actually that complex, as can be seen in Austin: just actually build enough and prices will go down even as population numbers go up. Most US cities have just spent decades doing absolutely everything except actually allow housing to be built.
All things being equal - commuting times, service access, property availability, environmental impacts, education quality, economic stability - then yes, the solution is “easy” in that we “just need to build more housing”.
Once any of those multitude of variables aren’t equal, however, the market can and will exploit it. This is the reason why the housing crisis is global, but the solutions are variable. In New England for instance, there’s a glut of available property currently being hoarded and vacant as an investment hedge, because we have no more land to expand onto. Combined with vacant towns that were former industrial hubs, and there’s an awful lot of available real estate to be clawed back for better use - except markets have been tailored to specifically promote a hoard-and-hedge strategy that harms the working classes (renters and homeowners both), and keeps depressed communities from rebounding. Remote work had a real shot of revitalizing those towns and shattering the vice grip of Capital on land or housing through the relocation of workers to cheaper markets, but the RTO mandate essentially amplified existing crises that much more and robbed them of the chance to rebound.
So no, it’s not as easy as building more housing, it’s also about ensuring those who need housing get access to it first, rather than those who simply seek to extract rent or hold it as an investment hedge.
Again, there’s no silver bullet to this problem.
New England has vacancy rates noticeably under the national average (https://www.huduser.gov/portal/periodicals/USHMC/reg//NewEng...). There's no 'glut' being 'hoarded'.
I think creating a permanent world peace would be easier than convincing progressives to give up their tired, inaccurate housing market tropes.
It is impossible to have a constructive conversation with people who refuse to accept basic facts, and I don't think they have any idea how counterproductive it is.
If people stopped accepting the claim of 'progressive' from anti-housing anti-poor people just because they self-label that way, that would be a good start.
You think the parent poster is anti-housing and anti-poor, either in practice or in their own mind?
I would say progressives in the US are anti-wealthy first, leading to poorly thought out policies with obvious second or third order effects that harm the people they so passionately advocate for, but I wouldn't call that anti-poor personally.
> Populist rent control is an excellent motivator to get counter-parties to the table to discuss productive alternatives in a market where no outside pressure currently exists.
This makes no sense, the battle is ultimately between renters and owners of low density housing. Those owners don't care about rent control, they only care about zoning disallowing construction of new rentals. If anything, they're probably happy to see rent control if it means the pressure on cities to upzone is removed.
Why do you say rent control reduces the incentive to build more housing?
To me it seems the opposite: Rent control means supply goes down, so available building & land prices go up. These prices going up means an opportunity for builders who are good businessmen because they are going to make a margin on their investment, the bigger the investment the bigger upside.
Another intuition is with rent control it's hard to extract new value from an old building, so that also incentivizes tearing it down and squeezing more units into the land.
In SF, rent control exists on all buildings built before 1979. It appears to me that people who prioritize new builds pay a huge premium for them. I think this particular rule also incentivizes tearing pre 1979 structures down, vs the no rent control newer buildings can continue to have growth in the value extracted from them.
It reduces the incentive to build because it reduces the ROI on a new build and reduces the control the owner has over the property (places with rent control are notoriously tenant-friendly, meaning the risk of taking 12+ months to evict a tenant has to be priced into the project as well).
The cost of building housing is generally labor + materials + land, of which the first 2 are generally don't have runaway costs as they are not an investment category.
Land is something the government can help with if they choose to do so.
The rent is tied to the price of the apt, and since housing has become and investment category, has increased exponentially.
By controlling rent, you control real estate prices as well, as investors will find it a less attractive asset.
In a free market economy, the cost of things should be controlled by a market equilibrium, so building shouldn't cost more to buy than it is profitable to build tem.
But supply is often restricted by artificial means, meaning prices go up, that's where rent control comes in.
Two wrongs don't make a right, but saying not having rent control while clamping down on construction isn't true to the spirit of the free market.
Rent control will reduce supply even more. It’s piling on another wrong.
In SF rent control only applies to buildings that are like 40-50+ years old. Yet people still complain as if it stops new housing. If you combine this with the idea that rent control raises prices for everyone else, you'd think people would be knocking down the doors to build: artificially high rents for decades.
Rent control absolutely causes a reduction in supply: there's a reason rent controlled buildings have apartments in poor condition that owners do not renovate (so a reduction in quality supplied) and many are held off market or converted to owner occupancy through condos and TICs (so a reduction in quantity supplied). Not to mention the units underused by long term tenants who maintain them as secondary residences.
>> If this - "High-income job losses are cooling housing demand" is true, doesn't this mean UBI would never work?
I've even see a rent controlled apartment in manhattan being used as a storage unit !!!
Central to the challenge of UBI and housing costs is the law of rent. UBI could work if all its redistribution was not immediately captured by landowners. There are ways to make that possible.
Rent controlled apartments being held by tenants no longer using them as primary residences is pretty common. A famous case of this was Cleve Jones in San Francisco who tried to make it a huge political deal when his landlord raised his rent to market because he was 1. living in Guerneville full time and 2. subletting the apartment. The media environment is one where it's ok for a master tenant to be a de facto landlord and make money on real estate, as long as it's not the landowner themselves!
>> UBI could work if all its redistribution was not immediately captured by landowners.
Doesnt this happen now because we're all so tethered to HCOL cities? With UBI presumably people would be geographically free, and there is a lot of inexpensive land and housing around the country. Doesnt the capture problem only happen due to scarcity in HCOL cities and thus not an issue?
Yes but it builds into my argument - it does not counter it. Reduced supply... increases rent. I'm saying "increased rents + rent control not applying = more people should want to build". And the person I'm replying to said rent control makes people not want to build.
> I'm saying "increased rents + rent control not applying = more people should want to build"
This is false. People will want to build more on the margin, but that doesn't mean they want to build. If the profitability requirement (hurdle rate for getting investment from institutions) is greater than the the market rent, people will not build even if market rent is high. Indeed, that's what's happened in the last 5 years as costs have increased much faster than rents.
Rent control also switches the class politics, as people who are paying far below market rate for housing become like landlords and homeowners: getting free imputed rent.
People have been knocking down doors to build in SF for decades, but do not because regulatory capture by homeowners, landlords, and those with below-market rents are happy to keep out new people.
Where and when housing gets built in the US is not merely a market driven decision: you also need to get local permission to build.
You're making quite a few assumptions
The talking point of "Rent control = bad" has always been disingenuous because it's parroted most often by the people who will be hurt from it the most (landlords). Home supply is already artificially constrained, regardless of rent control. Mostly because wealthy landlords form cartels to prevent new housing in major metro areas.
Rent control is just one tool that can be used to regulate housing, and it works in conjunction with other tools (e.g. rent control exceptions for new construction).
The U.S. already has an excessively de-regulated housing market, and it clearly has not worked for most people. Anyone that says regulation is bad here is almost certainly protecting their self interests.
Rent control is fundamentally unfair and socially undesirable. We should encourage labor mobility, not discourage it.
CA has a similar issue with prop 13 for housing which I also oppose.
Also it’s silly to say the US housings market doesn’t work for “most people” considering the home ownership rate is above 60%
I don't see how you can claim a home ownership rate above 60% means the market is working for most people.
All that means is that a majority of the population was able to buy a house at some point in time under some conditions. The recent data is clear: people who already have homes, are staying put in them. And a growing portion of people without homes are joining a fairly new class of "forever renters".
The median age of first time home buyers was 33 in 2020. In 2025 it is 40.
That's truly incredible if you think about it. In just 5 years, the median age has increased by 7 years.
Here's another interesting statistic: the percentage of homes bought by first time buyers is down 50% since 2007.
> Rent control is fundamentally unfair and socially undesirable.
I think this is an incredible claim to make. Unfair to who? Undesirable compared to what?
Rent control at it's core is a redistribution mechanism. It favors existing tenants at the expense of property owners.
If you care about low income renters getting displaced by a 40% rent increase, then it is a desirable mechanism.
“Labor mobility” sure is a nice way to say “kick people out of their homes and separate them from their communities.”
No, labor mobility means YOU can take a better job across town that pays 20% more without causing your rent to triple.
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We’re already not building housing.
The benefit of rent control would be turning up the pain on the PE people and driving them out of the market.
If the price without collusion is $X and the monopoly pricing behavior raises it to $(X+1), you can cap it at $X without causing any problems.
Housing is obviously not a monopoly.
You say rents are going down... but you want rent control? That's one way to ensure rents will never, ever go down. Every landlord will charge the statutory maximum.
Vancouver has rent control and rents are going down.
Though I think the likely dynamic that you're seeing here is rent growth of new build apartments is stalling and reversing, and on renewal with new tenants rents are being revised downward as there is more competition.
https://www.ctvnews.ca/vancouver/article/rent-prices-falling...
I expect that amongst apartments with long term tenants rents are still creeping upward. But that's fine. The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.
> The point of rent control is to smooth out volatility. Rents can still go up, but the goal is to avoid sudden 150% increases etc.
Is it? I mostly see rent control maximum increases below the inflation rate, suggesting a different goal (appealing to voters?). If it were just to eliminate extreme volatility I think we'd see more 5/10/20% increases and less 1/2/3% increases.
>RealPage
This monopolistic pricing is a massive part of the issue. Hopefully the case the DOJ brought against them is progressing well. They've essentially created a cartel of landlords trying to squeeze you for every single penny.
> Hopefully the case the DOJ brought against them is progressing well
They reached a settlement with the DOJ last week [0].
0: https://www.realpage.com/news/realpage-reaches-settlement-wi...
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The case concluded with a settlement that RealPage would no longer share data between competitive landlords.
https://www.justice.gov/opa/pr/justice-department-requires-r...
In theory that sounds like an undermining of their core value proposition, I think in practice it'll be less effective than so called 'Chinese walls'
I don't doubt it. The actual effects of this are yet to be proven either way.
As opposed to now, where they charge the maximum they can get away with, while also colluding with each other to raise prices? Yes.
As opposed to the status quo where rents never ever go down and landlords charge the literal maximum?
I'm not advocating for gutting renter's rights, but anecdotally having lived in 6 states, and adjusting for general costs of living it was easier to rent, and rents were cheaper in states that were less renter friendly than states that were very renter friendly. As a renter in the central time zone, first months rent, a month's rent security deposit and a credit check and i was handed the keys vs. renting in NYC you'd think i was buying the home with level of financial scrutiny.
I suppose this is just a long winded way of saying that there appears to be a ton of friction and cost by renter friendly polices that are ultimately passed on to renters rather than owners.
As an aside I'd also say that renter friendly policies were also highly correlated with higher regulations around zoning/building so this may account for a meaningful portion of the above.
I said this elsewhere, but I would anecdotally agree as a landlord.
Everyone is paying for the costs to evict a non-paying tenant in jurisdictions where it can take 12+ months to regain control of a unit.
More friction = more costs, and more regulation = more friction.
I'm not advocating for gutting renter's rights either, but it's not a coincidence that the places with the highest rents also have the most protections for renters.
> My landlord just introduced a new RealPage-alike to keep rents high
You should get in touch with your state AG, and point to the precedent for this being considered illegal.
RealPage just settled with the feds, and that settlement only includes data collection to determine if its collusion in the future
So I would say anyone in the present is out of luck here
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You are mistaking your own opinion for a generalized truth.
If you're currently renting, and expect to keep renting for a long time, state-wide control does seem in your interests?
It might ultimately depress new construction and certainly isn't good for landlords, but makes sense to me a renter would want rent control.
Unless you expect to be renting in literally the same physical house, state-wide rent control isn't in your interests.
No, because rent control isn't portable and most people's housing needs change over time. The person who can hold onto a house for 20 years straight is the outlier.
You work in tech and are somehow convinced working on a blockchain app is a good thing? We should make employees pass a basic economics test!
I've had a high-income job (career?) for two decades... and while I'd love a house, the realized demand is zero. The thumb remains. Case in point, the RTO fad. No certainty. I know at least three executives who were forced to move after building new homes.
Executives forced to move after building a house. That really shows how desperate companies are to keep the lights on. Nobody pisses off the execs... unless the companies have ceased to operate normally as businesses, and are now hollow shells propping up an illusory stock market.
Desperate for lights, petty punishment, hard to tell. Point being... keeping options open has rarely done poorly. Doesn't feel like the time to commit. Not convinced it ever will.
edit: I hear someone now, "If that happens to you, sell the house!"... I'd like to stick with one career, thanks.
I did it the other direction -- I bought a relatively cheap house, and if the winds of change come, I would rather get a different career than location! Two different equally valid perspectives IMO, as long as you're not dependent on having a particular career in order to make your house payments.
Good point, not good to be so dependent on a career. I'm almost there; useless without a computer involved. Eager to change the location one more time to somewhere affordable. The city is wasted on me.
A career change may be earlier than expected with the LLM craze.
> Nobody pisses off the execs...
This is pretty laughably false. Sure, the CEO has a lot of power and I've certainly seen companies relocate so they are basically within walking distance from the CEO's house.
But "execs" covers a lot of people, and nobody gives a shit where the CIO or VP of engineering lives. If anything, these folks are more career driven and are expected to up and move at the drop of a hat if business conditions warrant.
Sad to see Healthcare and government employment growth outpace everything else. If we're all nurses or regulators who will build our country?
The bigger concern is that we've steadily been going from a circa 4:1 ratio of worker to non-worker to closer to 2:1 ratio. For an economic system based on workers paying the way for non-workers that is toxic. We've royally screwed up immigration, which could have helped, so all we have left is hoping for a hail mary huge productive boost or might as well shut up shop and figure out a new model
Healthcare employment’s guaranteed to keep rising until they’ve soaked up all the would-be inheritance from the Boomers.
Millennials are a large cohort, too, so it may stay steadily high for a good long while after that, after perhaps a small dip for X. Depends how much money they have for the healthcare sector to scoop up. Savings-at-same-age has been really bad for them relative to boomers, so we’ll see. May see healthcare employment shrink even as need (sans the dollars to back it up) grows, next time a demographic “lump” gets old.
Welcome to Europe. As an example, in Spain, there are 500K more people living off the government than working in the private sector: https://theobjective.com/economia/macroeconomia/2024-09-16/a...
The general trend of government employment hasn't been all that exciting: https://www.pewresearch.org/short-reads/2025/01/07/what-the-...
But, yes, the plan does seem to be that we all go broke attempting to get health care.
Not sure why they bundled education and healthcare together. As far as higher education is concerned, the job market is terrible. Many state universities have hiring freeze as they are tightening belts due to the lost NSF and NIH fundings.
Boston is seeing some headwind especially from slowdown in biotech, the main driver of growth over the past decade or so. Rents are also down. However, worth noting supply is still constrained especially if you exclude replacement-ready homes.
Can confirm, this is where I’ve spent four years trying to buy a starter (2BR/2BA) home in on a single income. The biggest problem in older markets is that most housing stock is of appalling quality, requiring another five to six figures of work to get into a modern, habitable shape - unless you do the work yourself, which most can’t while they also hold down a FTE gig and deal with the return of urban commuting.
It’s bad.
A lot of lower-end housing spends some years in the hands of people who can’t afford to keep up maintenance, and/or are too old to keep up with it well (… or to keep up with cleaning). As a result, it’s all but ruined by the time someone else gets a crack at it.
Yep, and a lifetime spent moving every few years (and my obsession for details and desire to understand how everything works) means that I can see the chasm between what properties are actually worth versus what folks are asking for. I’ve seen some really pricey nightmares these past several years ($650k for a 1400sqft home with knob-and-tube electrical wiring and an honest-to-god fire bucket in the basement next to the oil heater!), and I cannot afford to take such extreme risks on the most expensive purchase I’ll likely ever make in my life.
It sucks.
People get pissy about flippers but there is some scary stuff out there I don't think anyone really wants to deal with
We developed nicknames for bad flip jobs after viewing so many:
“Spray Foam Specials” - gobs of sprayfoam insulation and a fresh coat of paint.
“Gap Properties” - because who needs floorboards to actually meet?
“Skatepark Schemes” - for when the floors are so bowed you can do lip tricks at the room edges
“Flashpoint Fixers” - surface-level flip jobs that kept the knob-and-tube wiring alongside newer Romex
“Oil Derricks” - any home with an oil tank on a foundation of compacted earth or otherwise lacking a groundwater barrier
I wish I could set up a filter in Zillow that automatically excluded homes that have gray engineered flooring, which flippers seem to love for some reason.
A lot of flippers aren't dealing with scary stuff like foundations or structure, that's risky and expensive. It's cheap to throw up some new drywall and vinyl floors to make it look renovated though.
I sympathize and was in the same situation albeit a much easier market in hindsight. I came to Bay Area in 1999 and after finally facing the reality of the market after a couple of years, bit the bullet and bought something. The prices were/are so outrageous compared to my former residence in Austin the sticker shock and hyper competitive real estate market at the low end - every SFH I could comfortably afford was going to require significant amount of work to make palatable to someone who did not want the inside aesthetic of the 1950-1970s and still each had multiple bids, with cash bids above asking with no inspection always winning, I imagine this has only gotten worse at entry level with the elevation in total compensation for certain fields.
Find a run-down structure not surrounded by derelicts on land that's otherwise favorable. 1 wall remodel. A modest structure costs roughly around $250k if built by someone else, vaguely divide that in half if DIY.
Your target price range is set too low for the area if you keep seeing poor quality houses. I've heard plenty of people complain about the quality of the housing stock in my (old) area, but that's because they insist on lowballing in desirable neighborhoods, there's plenty of well-maintained properties as well including at the low end. You just can't expect a miracle for the price of a foreclosure.
yeah for some reason there seems to be a pricing disconnect on many homes, the discount on home that needs a lot of work seems to be less than the current cost to fix it (especially when taking into account labor shortages and tariffs on materials)
Yep. Recently tried to sell my 2BR/2BA in Boston. Exactly 2 people visited over 3 months and several open houses and price cuts. Realtor said it's the same across the board for 2BR/2BA because the pool of entry-level buyers dried up with layoffs.
After I switched it over to a rental listing I was able to rent it out within 3 days at a significant profit. Another unit in my building rented similarly fast at a similar price. I know it's just anecdata, but it doesn't feel like the rental market is cooling down at all.
nobody to buy at your asking price so you take the house off the market rather than match the market expectations, thereby increasing scarcity for potential buyers at a lower price who are instead forced to rent due to market dynamics
There's a floor. If you sell a home for less than your mortgage amount you have to have enough cash to make up the difference.
Also, selling for significantly under the appraised price decreases likelihood of qualified buyers because it may be a red flag.
Renting until spring is a logical option when there's no buyers, since that's when the supply of buyers is much larger. I don't want to be a landlord but I also don't want to pay money to part with my house. One home in my neighborhood finally sold for 60% of what they bought it for after 6 months on the market. I think only rich people or people who've been in their homes 20 years can afford that.
very valid! gotta make the decisions that are right for you, especially with money. it's a shame the system makes us do that.
I keep wondering if the powers that be knew that low down payment percentages and low interest rates would have a major side effect: increased purchase prices (back then) and lack of initial equity that would make it really hard to sell. I think a lot of people who bought or refinanced back then are just stuck.
It doesn't feel as dire as the subprime mortgage crisis, but maybe that's because renting out your property for at least breakeven is a lot less damaging than defaulting on a mortgage.
Yes, I hold, sell and by stock the same way. Either it is a market, or it isn't.
The expectation that housing is an investment that should perform like stock is the entire problem IMO.
stock is not housing. i need housing. i don't need stock.
This is a weird take. I get the desire to house people but someone choosing to rent rather than sell a home they own is not the crux of the issue. When there are corporations keeping swaths of housing empty to raise rent rates the real issue is market manipulation not small participants.
it's def not the crux of the issue, never said that. it's a dynamic of the market though
> When there are corporations keeping swaths of housing empty to raise rent rates the real issue is market manipulation not small participants.
curious where this is happening? would love to learn about that.
I'm teetering on the edge of being able to afford a small condo (a small SFH would be nice but not as much supply) in the Bay Area (SF).
However, I keep thinking about how someone I know was laid off last year only two months after buying their first home.
I'm a SWE making OK money here but not FAANG/unicorn-level, so it's tough to imagine buying and then being on the hook for a mortgage without a job even with some savings.
I was laid off 35 days after closing.
Absolute hell. Now, thankfully we didn't over-extend, and live by the at-least-6-months-of-savings.
We made it through, but just writing this down makes my heart rate spike.
exactly what I'm afraid of! Glad to hear you made it through.
}}}} I'm teetering on the edge of being able to afford a small condo (a small SFH would be nice but not as much supply) in the Bay Area (SF).
Posting this anon. At our last office, executives purposefully encouraged home ownership because it made people desperate, risk-avoiding, and easier to control.
How do executives encourage home ownership? Slip a little zillow ad into the all-hands?
Every boss I've ever had has slipped a little life advice into our one on ones.
my last boss said i needed more work-life balance because i would take my dog on a walk once during the workday. as in, i wasn't giving work enough of my time.
I've gotten everything from unsolicited relationship advice to unsolicited nutrition advice. Some of it was actually pretty good advice.
I hate to repeat this old adage, but in case it helps to see it here: if you've been wanting to buy something, and you see yourself staying in the area and the place itself for many years, and you have some savings buffer if things go south, then buy. Don't do it because you want to magically have paper equity gains in the next 12 months. Do it because you like the place you're looking at, the neighborhood it's in, and because you have enough funds in place to get through a downturn if a layoff happened.
Of course I say all of that and it's good to know what could happen if a terrible downturn does happen like in 2008 (even the nicest Bay Area hoods prices dropped 25%+).
Last thing, single family houses, especially in the Bay Area, are typically more insulated from price drops (insulated not immune). If you can afford a small single family then it might be worth it, especially if there's expansion potential (either for yourself or the next buyer if you decide to move on). And even better if there are some cosmetic problems that are tractable because let's say you do get laid off there's nothing like building some sweat equity in the downtime.
Just my two cents having gone through similar in the past.
FOMO is a powerful emotion, but like all emotions its a bad idea to make it a primary decision maker for any important matters.
Reading all this from distant Europe, its interesting (and logical) how in US the swings in prices are so extreme in both directions. In fact, most things in any regard are way more extreme in US compared to Europe. May be good for the lucky ones but long term stability or dependability this ain't.
If you're taking what I said as FOMO I didn't intend it that way. The opposite in fact unless your sentiment is that anyone who wants to buy and live in property in the US is solely doing so because of FOMO. If you're saying that then that's a tautology and so how can I argue with it?
But if that's not what you meant then there are few things we as people can do for "stability and dependability" that better accomplish those goals than owning property that you actually want to live in. Most importantly it puts a permanent roof over your head, which we all need in some way, shape or form to survive (no exaggeration there I don't think). And it makes the cost of that necessity predictable, especially in California where property taxes are almost perfectly-predictable. It pretty much de-risks the largest expense most people will have in their lifetimes. That's not to say that you don't lose something in the proposition, but calling that FOMO seems inaccurate.
There are entire nations which mostly spend their whole lives renting. Ie where I live - Switzerland, many nordics. Maybe correlation with highest happiness levels in the world is coincidental, maybe its not. Happiness simply comes from other things in life than 'my castle my kingdom'.
I know its a typical US mindset (and far from US only) to have a house on your own, but its still an emotion in same vein what you describe. Mixed with rationale of course since proper social net in US is nearly non-existing, if you fail out with you on the street.
Also a rationale would be about very high chance of good return on such investment so don't take this as some sort of attack. I also own my place (apartment) but took it as a location & social bonds stability point for kids mostly, whether it will earn something compared to inflation is not that important to me, it probably won't or very little. Good bigger apartment close to nature trumps a crappy house in my view but thats personal opinion. Even when owning, its almost impossible to retire here in Switzerland, the costs are prohibitive even on Swiss pensions. Unless you want to live as relatively poor, same money gets you much further almost everywhere else. So that stability is always temporary.
Yeah, "jd," the sibling reply here pretty much summed up my sentiment so I'll just say "ditto" to what they said and add: I wonder if maybe you're being a bit one-sided based on some assumptions about Americans in general. It isn't, as far as I'm concerned, as one-sided as you make it out to be. That's not to say that housing isn't an emotional purchase, it for sure can be and probably almost always partially is, but to say that's the primary reason doesn't reflect my experience here. Unless we're having a semantic disagreement about what financial prudence and practicality means. I just think those two things are decoupled from FOMO for the most part.
> Happiness simply comes from other things in life than 'my castle my kingdom'. I know its a typical US mindset (and far from US only) to have a house on your own, but its still an emotion
This is a frustratingly uninformed take. You are comparing apples to oranges by equating your decision-making process with that of someone in the US. The drive to own a house in the US is not just mediated by “emotion” - the calculus is fundamentally different than in many nordic countries. For instance, very few places in the US have rent control, which means that renting represents substantial risk of either experiencing a large increase in cost, or being forced to move at irregular intervals. On the other end of the spectrum, the US is one of the only places that offers 30 year mortgages, which means that (taxes and repairs aside) buying a home on credit still offers a high level of predictable cost over the long term. Also, at least historically, there are very many places in the US for which housing is very affordable, given that the USs overall population density is so much lower than the average European country.
This is of course not to suggest that buying is always a good call - but it is often a logical and financially sound one.
https://bopoolen.nu/en/laws-regulations/
I know a lot of people in the Bay Area who did exactly the opposite in 2017-19, looking at how prices doubled, they assured me in 5 years their investment would double as well.
Do you mean the opposite as in they purchased because they wanted to make some money? If so, that makes sense since one of the many reasons people buy homes is to invest in them. Here's hoping you didn't follow their lead, though, given https://fred.stlouisfed.org/series/MEDLISPRIPERSQUFEE6075.
But even having said that, people will buy houses or condos in SF today and make a profit in spite of any broader market conditions. But that seems dumb for someone who has a full-time gig that's anything other than identifying underpriced residential investment opportunities given how crazy both housing prices and equity (tech in particular) prices are.
Yes, opposite meaning they purchased to make some money. I'm happy I didn't follow their lead and it made me way more mobile during the pandemic and investments that would be paid as a fat down-payment grew significantly (even if considering leverage housing enables).
So what you’re saying is, if you want a condo, just wait, because a price drop soon means your money will go a lot further. If you want a SFH, buy now, price drop will be small.
Not quite what I was saying, but now that you've put that so succinctly, if it were me, knowing the Bay Area and what's happening in tech/AI at the moment, I would hold off on the condo. The single family with some grit I'd probably say have at it assuming the most important part of what I said holds true: it's not for equity upside, it's because you want to own that place, and in that location because that's where you will be happy living.
If someone reads this thread once there's been another 2008-level reckoning in 2026 I'm not surprised the reckoning occurred.
>it's tough to imagine buying and then being on the hook for a mortgage without a job even with some savings
Key thing to remember here is that you always have to live somewhere, even if you're laid off. Unless you're ready to head out to BFE to save a few hundred bucks on rent, it doesn't get much better than owning in that situation. Plus you could potentially have equity to tap, get a hardship forbearance, or worst case scenario foreclosures take much longer than evictions. This was the lesson COVID era taught me; if you're losing your home it's considered a tragedy, and there are tons of resources to help you. But if you're being evicted from an apartment it's considered a personal moral failure, and you're treated like a criminal.
Not true. Down payment can support rent for years and years in HCOL, while owning is more expensive and lacks that cushion.
Owning is only more expensive than renting if depreciation + interest + maintenance exceeds rent. And in most US cities, depreciation is negative in the long run.
Lots of advantages to owning and having a mortgage too: deduct mortgage interest from taxes, use equity as a line of credit, you can actually make substantial changes to your living space, and so on.
That was in the context of loosing a job - rent vs. mortgage makes a difference in a span of few years when unable to find similar paying job.
I waited till I had the whole sale price in cash then bought, it's reduced my layoff anxiety 1000% and I'm sure it's not the savviest financial choice, but I'm happy with the security of knowing I can stay here for a long time no matter what
It depends on the appreciation and in turn the property taxes. I own my house outright. Completely paid off. But the increases in property taxes is forcing us to sell and move, likely in the next 5 years. Too bad, love the neighborhood and the area.
I don't understand. The increase in property tax is forcing you to sell? How much percent is the property tax? Alternatively won't you make a windfall in the sale (I assume property tax only go up when the value goes up)
In most places in the US (california being a notable exception) taxes are reassessed regularly based on market conditions. In some areas this can result in the property taxes rising to an appreciable fraction of the mortgage rate - or in the GPs case, what the mortgage would have been, if they hadnt paid it off already.
Yeah. Unfortunately the real market value grew so fast that when the assessed value catches up over the next few years the property tax is going to take a nice chunk of my net income.
Honestly, this is not a hardship but a nice problem to have. I grew up chronically poor and I feel fortunate and grateful that we have a comfortable home that is ours with equity while a lot of people have housing insecurity.
I agree on the windfall part but selling to get that money is not that simple in the current real estate market and political climate. ie you got to live somewhere... and everywhere you desire is expensive.
Most people will never be able accomplish this because home prices increase so much. And meanwhile you have to live somewhere, and all the rent money is money you dont get to save or put towards home equity
Maybe so, but I just have always been averse to debt and mortgage for exactly this kind of scenario
You could probably afford some really nice property not in the bay area then.
>> You could probably afford some really nice property not in the bay area then.
Sure, but doesn't really help if the job is in the Bay Area.
My job is no longer remote and I do enjoy my neighborhood.
its not easy to do, but being able to afford a year+ of mortgage payments and living expenses is pretty important to your peace of mind.
I think if I found the right place I could maybe do 6+ months expenses. Still cuts it real close for me.
From the article:
> The Bay Area continues to lose jobs across high-income sectors (-0.4% YOY), driving modest overall employment declines. These job losses have slowed compared to a year ago but remain negative YOY. Despite generating substantial spending and wealth, the AI-driven tech boom hasn’t added meaningful employment to the region.
That is because there has been an absolute massacre in biotech in the bay area. Between tariffs (higher COGS), chaos at the FDA, cuts to NIH funding for basic and translational research, and competition from China biotech ventures are getting squeezed from both ends.
The post doesn't have housing data to back up the claim, but the job growth by city is interesting. HCOL cities like DC and SF in the red, as you would expect. Government jobs down in DC is expected, but mostly green in other cities? What is Philly and New York doing right?
The article notes that Philly and also NY underperformed in last few years so really they are catching up to baseline. As a resident of the philly suburbs this matches my lived experience - there has been something of a jobs bubble (at least for some demographics, in some industries) since covid ended but for the decade before that the areas was economically stagnant.
But will lower demand coupled with still high interest rates actually lead to reduced housing prices?
Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life)
If my house is worth less than what I owe then moving (selling short) can make sense.
Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.
~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local).
Delistings Jump 28% as Sellers Pull Homes Off Market Rather Than Settle For Low Prices - https://www.redfin.com/news/delistings-jump-sellers-pull-hom... - November 25th, 2025
Foreclosures Rise for 8th Straight Month—These States Have the Worst Rates - https://www.realtor.com/news/trends/foreclosure-increase-att... - November 14th, 2025
Pending Home Sales Slip As Would-Be Buyers Wait For Lower Rates and Economic Clarity - https://www.redfin.com/news/housing-market-update-pending-sa... - November 13th, 2025
(real estate market participant)
Of course there are always people who need to sell for whatever reason. There are a large number of people not in the market who otherwise would be, but that doesn't mean nobody is in the market.
> whatever reason
They died. That's why some people aren't in the market: They are deceased. And new people enter the market because they have been born.
That is one reason. Others are they got a job in a different city. Their health declined and so they can't live at home. They got married and don't need two houses. If you cannot think of a half a dozen others in the next 10 minutes either you didn't try or your need to practice creative thinking.
The reasons are not important for this discussion though - all we need to know is some people have other pressures such that the one I listed isn't compelling to them.
Do note that, even if the math works out such that the bank doesn't actually lose money, a short sale remains on your credit history for the subsequent seven years, which makes it very difficult to buy another house during that period. It's not something you want to do if you can avoid it.
I said CAN not will be worth it. Details of your particular situation matter, for some they should hang on while for others the credit hit is too small to matter. You need accountants and lawyers to advise you based on your exactly situation not internet commenters.
People moving isn't driving the real estate market. It is people dying or being born. Unfortunately you cannot bring real estate and other investments like your retirement entitlements with you when you pass away from this life, so something will happen to your house.
> If my house is worth less than what I owe then moving (selling short) can make sense.
I believe this varies by state but I thought in some states the lender can come after you for the difference and in others you can just walk away (albeit with a credit ding).
https://en.wikipedia.org/wiki/Nonrecourse_debt
https://www.financialsamurai.com/non-recourse-states-walk-aw...
(have walked away from underwater fha mortgage from 2008 gfc in a recourse state, ama)
What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long.
And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.
Talking from the Vancouver perspective where we have a similar situation - yes, house prices are going down. People list houses with the same price as 3-4 years ago but most close below the asking price.
> But will lower demand coupled with still high interest rates actually lead to reduced housing prices?
One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".
Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!
For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.
I'm seeing homes in my neighborhood sit on the market for 3-4 months before dropping prices and finally selling, about 20-25% off the original listing.
Houses here are sitting on and off for 6 months at a time without closing. The market has all of the energy of a banana slug.
There is also "Return to Office" polices that may be buoying housing prices near the urban core.
It has in several cities, including Austin, where I live.
Zillow publishes some interesting data:
https://www.zillow.com/home-values/10221/austin-tx/
https://www.zillow.com/home-values/102001/united-states/
What's fascinating to see is that around me the wealthy towns are seeing 6-7% annual appreciation whereas the lower middle class towns are in the 2-3% range.
K-shaped economy and all that I suppose.
Ish? Look into towns that didn't have a high reliance on tech. In particular, look for ones that didn't ride the rollercoaster of really high wages that a lot of tech drove and is now flattening off.
Looks like shipping is also an industry that you probably don't want to track on this search. Other than that, places that saw modest wage growth saw similarly modest housing cost growth. And haven't seen it fall back, yet.
Moved out of ATX to somewhere around hill country last year. There were just too many boring, uncool, rich bozos moving in, and I couldn't take it anymore.
I feel like 50% of that is explained by the luxury housing build out bubble in Austin specifically.
We just overbuilt everything. Condos, houses, etc. There's a lot of inventory no matter what type of housing you're looking for.
The academic consensus is that there is a housing shortage, not a surplus. Perhaps there is a local surplus in undesirable areas, but that isn’t true in cities or nationally.
https://www.brookings.edu/articles/make-it-count-measuring-o...
Austin and Texas in general have less housing restrictions than other places wrt zoning and regulation, so they could plausibly have a surplus. You can only really speak locally about any of this because location determines the market
No, you just happened to build appropriately because a certain subfaction of the population weren't able to pass the typical laws that would stop building.
The housing shortage was created by regulation and it's foolish or selfish to pretend otherwise.
Austin is unique in that most of the harmful self-serving conservatism-as-in-block-and-deny-all-development that city people usually to do is constrained by the rest of the state, and as an obvious result arguably has the highest standard of living in the entire world.
That's fair. "Overbuilt" was probably the wrong term.
But yeah, we built a LOT of housing and that means buyers and renters have a lot of choice.
It's hard to argue that's a bad thing unless you're a property owner who's upset their house didn't appreciate 20% in 5 years.
>It's hard to argue that's a bad thing unless you're a property owner who's upset their house didn't appreciate 20% in 5 years.
I want money for nothin', and chicks for free
kind of.. and kind of not
regulation /tends/ to be introduced because builders are misbehaving (bad materials, bad workmanship, building in flood zones, etc), but the bigger problem is NIMBY who then use those laws to prevent other people building in "their" neighbourhood
it's the market dynamics that create under building, not regulations. if regulations are the problem, then how were builders able to build record number housing starts leading up the GFC? and after the crash, housing starts dramatically lowered. were there new regulations introduced during that time period?
highest standard of living unless you're a woman or a trans person, or a person of color, you mean. I'm sure living in a repressive dictatorship is awesome if you're a rich member of the in-group.
Recently sold a condo I had in NE California. When I first bought there ~8-9 years ago, a town near by had old railroad cabins for ~100k or less. As the housing / migration boom to Reno took hold, those cabins are now in the 2-250k range. The median income in the county ~40k.
The town I was in saw prices for something that was ~175-200k 7-8 years ago peak at around $425k in 2023/2024 and now "cratering" into the low to mid $300ks. Median income hasn't changed, just people with 2nd/vacation homes and wanting to offload them due to the economy.
There's an interesting housing arbitrage happening right now. Townhomes are still selling for over asking, but single family homes -- ones that older, middle-management types would live in -- aren't receiving competitive bids.
what location?
DC
We're in a recession.
I saw HUGE ramen displays yesterday at Safeway, including some of the less common flavors like blue (Soy Sauce, formerly "Oriental") and yellow (Creamy Chicken).
I can't find the blog post from the last major recession where people were talking about all the crazy flavors you only see when the economy is REAL bad.
Are you sure they're not trying to capitalize on the ramen craze from kpop demon hunters?
I'm a fattie on a D.A.S.H. (low salt) diet, but I do buy a dozen or so Creamy Chicken ramen every year.
At WalMart, they're now 47¢ (and I swear low-30s within the past year)... which actually helped me not purchase any this last visit (too expensive for all it is).
I was always taking noodle bowls to work. Fill with water, microwave, enjoy at my desk. A dollar or two.
Couldn't believe how many people would go to the sushi restaurant at the base of the building and spend $25 on lunch a couple days a week. Yikes.
Noodle bowls are usually pretty high in saturated fat (between 8-15 grams on average). I can't imagine eating them daily.
At the very least you should consider steaming some vegetables (also very cheap), slice them up, and mix'em in to get some moderate nutritional value from it.
https://www.health.harvard.edu/heart-health/whats-your-daily...
Saturated fat is not the problem. Fat with carbohydrates in the same meal is.
The problem with ramen is the amount of carbs and little nutrition which only spikes your insulin and makes you hungry 2 hours later if your metabolism is not great, not saturated fat in a vacuum. I wish popular knowledge about food had moved on from the misguided research of Ancel Keys already.
We're talking about budgets here. Not health. I think everyone knows that pre-packaged ramen noodles aren't the healthiest thing for you but they aren't any worse than half the other takeout crap you can eat. At least they are low in calories and cheap.
I've been seeing "air dried" noodles recently, which have way less sat fat -- still tons of salt, but these have been my go to.
Wheat in a watery soup flavoured with monosodium glutamate isn't very nutritious compared to rice and fresh fish. There's a reason ramen costs a dollar or two compared to sushi.
What about fried shrimp, bbq sauce imitation crab, mayonnaise and cream cheese? Because that's what most of the 'sushi' is at that place.
Unless you're making them yourself or at least customizing them a good bit, noodle bowls are pretty unhealthy food.
Nothing fresh in them, high sodium, freeze-dried ramen or noodle bowls were originally survival food and should be treated as such.
Not saying don't eat them, and I don't know your socioeconomic background or anything, but if you want to eat them or have to eat them, try to add a little something extra into them.
A cup of shredded cabbage and/or a few cherry tomatoes and/or a half cup of onion slices and/or an egg, things like that should be cheap and easy to add and will help dilute the sodium and add a healthy component to the meal, and your kidneys and heart will thank you for it.
I don't disagree with a lot of what you said (need to really dress up the ramen to make it even close to healthy) but FWIW ramen isn't usually freeze dried it's just fried until fully dried out.
A few years ago when I started WFH full-time I attempted to make "healthy" noodle bowls using Indomie ramen as a base. Indomie packets are smaller than Top Ramen, so they have less carbs / salt. I'd stir fry the noodles with a bunch of veggies like shredded cabbage, onions, and peppers, and toss in some protein (leftover chicken, cubed tofu, etc). Seemed pretty healthy!
Until my blood sugar (A1C) and blood pressure numbers started climbing...
> I don't know your socioeconomic background or anything
It sounds like a habit drawn from poverty, but frankly, you'd have to be really poor to reach for something like this daily (I'm talking extreme survival situations that even the homeless don't typically face). Those with low income can still get much better food at a reasonable price. They don't need to shop at Whole Foods.
I'm not sure you can even eat like this for very long either. The malnutrition is that bad. Expect high medical care costs or an early death down the line.
Penny wise, pound foolish.
If they're eating a reasonable breakfast and dinner, having instant ramen for lunch isn't anything close to a death sentence, it's simply not ideal.
But, odds are, the person who eats instant ramen 5 lunches a week isn't going home to a balanced dinner and likely eats fast food or frozen dinners most nights, which is why I suggested adding a few inexpensive extras.
A cup of pre-shredded bagged cabbage would add ~$0.50 to a ramen meal. If they do 30 minutes of meal prep on a sunday they could pre-portion a full portable soup container with all of the extras for the week and be ready to go for maybe an extra dollar a day.
You don't have to spend $25, of course, and you can make lunch. But microwavable noodle bowls, especially at your price point, are terrible for your health.
Why do people cheap out on food, but spend that money on less important things? We're talking about your health here! It's even worse when people with high incomes do it.
> Fill with water, microwave, enjoy at my desk
Getting lunch with coworkers once in a while doesn’t hurt
Sure. And there's also shared lunchroom areas you can take your own lunch to.
It's not nearly as filling, but I saw a character on TV smashing up their noodles and pouring in the powder, shaking the bag, and eating them like popcorn. I've become incredibly addicted.
Ramen noodle chips are definitely a thing. Quite tasty too. Very crunchy.
https://www.heb.com/product-detail/15219522?shoppingStore=79...
Prepare it and eat it per the instructions and it's infinitely more filling.
Also there's fairly wide variance in calorie count brand to brand for the same size square, not sure why.
I believe ramen noodles are made by frying noodles to make them crisp and dry for packaging. That and noodle thickness probably matter a lot?
That was originally prison food because prisoners could buy ramen but they didn't have ready access to a microwave or stove to cook it.
Are they doing it on company time? Because it might just be true that both you and your sushi eaters get net result 0 from this meal.
You don't get an hour lunch?
"Hey, I heard you like eating sushi. Have you ever tried having a bowl of par-cooked microwaved noodles, instead? It's basically the same thing!"
Edit: The last time I worked in an office building, I had a limited time for lunch. I could have brought in ramen, or purchased something from the decently-stocked break room coolers. I could have sat at my desk or gone outside or eaten in the break room.
And sometimes, I did do those things.
But what I quickly discovered was that what I wanted on my lunch break was primarily a break.
I wanted to get the hell away from that place, surround myself with something completely different, and spend time relaxing my brain before getting through the second half of the day.
So I often went out to get lunch.
But because time was limited, it had to be nearby, and my options were thus very limited.
So I ate a lot of bargain-menu Wendys and tacos from Qdoba because I could get there, and eat, and relax a bit, and be back on time.
If there were instead a sushi place right downstairs, I'd have probably hit that once or twice a week, too. It would have had a higher monetary expense, but my brain would have thanked me for the extra time to unwind and I'd have had a better and more-productive rest of my day and come home in a better mood than I might have otherwise.
I feel you man. I had a lot of lunches alone at a McDonalds walking distance from the office having a quarter pounder with a side salad streaming shows on my Windows Phone through a Slingbox back in the day. Just gotta get out and disconnect for a half hour to reset my mind from the problems of the day.
That was the same year where I was homeless while technically having a "tech" job.
Creamy Chicken is virtually impossible to find in stores where we live!
Just gotta wait for the economy to get worse... I haven't really paid attention to Top Ramen before, so I don't know if the creamy chicken is new in my store, but these giant displays caught my eye.
We were already in one following the tech correction since Nov 2021. [0]
The problem here is some waited for too long to be told we are now in a recession, then some politicians tried to redefine it.
But that is nothing compared to what will happen in the next 5 - 10 years. Nothing goes up forever. The only hint is that we need to prepare before 2030.
[0] https://news.ycombinator.com/item?id=29508238
Not for nothing--I'm no optimist either--but, by what measure? I see at most one quarter of negative GDP[0]. The US market is up at least 50% since then.
[0] https://fred.stlouisfed.org/graph/?g=1OmuJ
Gemini, ChatGPT, Claude and Grok all said no, we're not in a recession just now when I asked them.
Someone please tell the stock market, I moved my investments to be more risk averse and it hurts to watch the green line go up.
There is generally no point in doing this, keep a constant asset allocation that match your risk appetite, otherwise you're just playing the casino.
Timing the market is bad, but I'm reading "risk averse" as selling equities and buying bonds.
The problem is that this recent equities run has been extra terrible for more conservative 60/40 portfolios [0].
[0] https://www.morningstar.com/economy/6040-portfolio-150-year-...
> selling equities and buying bonds
There's an intermediate option: sell high P/E stocks and buy lower P/E stocks with dividend paying history. There are ETFs designed for this purpose too.
That is also what I read in going risk averse.
In particular bulking up in EM, EU, and small cap. And slimming down in us large cap.
Uhhh...you're describing something like QAI? [0] And you're going to short a portfolio of TSLA, NVDA, AMZN, META, GOOGL, MSFT, AAPL, NFLX, AMD...?
That's crazy.
[0] https://finance.yahoo.com/quote/QAI/
I am indeed short TSLA (or rather, am taking an inverse position), and have greatly reduced my exposure to NVDA, AMZN, META, MSFT, and AAPL. I keep some exposure to GOOGL, NFLX, AMD, because I believe they are going to "win" in their industry in the long run. I plan to keep exposure to them for like 10+ years.
I have a blog post about the inverse TSLA position here: https://bagelpour.wordpress.com/2025/11/30/taking-an-inverse...
Almost all of the gains on SP500 are from 7 stocks - I'll let you guess which 7. The market overall is nowhere near as exuberant.
https://www.washingtonpost.com/business/2025/11/24/sp500-sto...
The market can stay insane longer than you can stay insolvent.
Also, its possible that the market thinks job losses are good (aka that AI is replacing jobs)
The brutal truth…
Stocks go up, wages and income go down, things keep on keeping on because AI has quietly replaced you.
First time?
Except in reality this isn’t happening outside of press releases. God y’all drank the koolaid.
They say time in the market generally beats timing the market
You and me both, but working poors like us should be investing for long-term gains, not short-term returns. I put my money into bonds and international indices because I want to be better protected when the AI CAPEX bubble pops here, but I have no idea when that’ll happen.
We can’t time the market, but we can protect the scraps we’ve accumulated at least.
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objectively we're not yet, but things are certainly weird
Objectively, I'm not sure we can reliably say any longer, given how much pressure has been put on formerly objective reporting agencies to conform to this administration's narrative.
we can, there's a specific definition that hadn't been met yet
bifurcation, and more
Gemini, ChatGPT, Claude and Grok all said no, we're not in a recession just now when I asked them.
My parents and grandparents were decidedly blue-collar and new middle class from the late 60's to mid 90's, and my grandfather, a mechanic, bought a new home on the Los Gatos border using the GI bill. It requires an income of about 600k USD to afford to buy housing where I grew up. I'm basically solid lower class in the southwest corner of the Texas Triangle now.
The main problems, as I see them, are the protectionist limitations on new supply, unfair importation of immense overseas' and out-of-state wealthy individuals' wealth causing gentrification, and the absurd inequality of wages into extreme power law distribution by the cheapening and decline of labor due to under-restrained capitalism.
40 percent of transactions in NYC were done with no finance contingency ("all cash") in the last year.
That's a record and it's vastly more than years past. We live in a world where people with vast assets are beating out people who rely on job income for things like housing.
The stock market exploded the past year, and there's your bifurcation: those with assets and those without - getting worse.
We (me and my spouse) made an offer for a small condo and then next week company started the layoffs. Luckily we were not in that position where we spent all our savings and ended up in a position where paying mortgage would have been a huge challenge. It's been a year, have a job but uncertainity is very high. Loosing a job now means finding the next one is not very easy and no certainity that it can be a matter of month or two. We made a decision that since we have enough to pay for the downpayment and enough to pay a year of mortgage, we would not go and buy a house in Southern California. It is better to live in rented property but not safe to be in a position where you loose the property.
Shame we can't lower prices because people who "buy" things are leveraged out of their minds. Sounds like a pretty stupid way to do things.
Oops! We're really sorry but we accidentally tricked a bunch of you guys into becoming slaves!
Any evidence if this is global trend in developed countries?
All of the examples in the article seem to be the us, so I think they're only looking at local trends.
Are other developed countries firing people in the same way rn?
Stating a 20-year trend like it's a new development :P
Anecdotally, in my corner of the Silicon Valley, I've been looking to trade up homes from my 7/10 district to a nearby 10/10. Over the last year, I've seen the comparable properties in 10/10's rise about 10%, while my 7/10 has gone down about 5%. Both areas are very short commutes to high tech.
Talked to a real estate agent recently and she mentioned a similar trend in the bay area.
"Luxury homes", $3M+, are hot right now with prices risings. Whereas lower cost non-luxury homes are seeing less growth. It's a weird world.
K shaped economy I guess? More and more spending is driven by the top, so maybe housing that aims to capture that still sells fast but more normal housing struggles
Things are visibly cooling up here in Marin, houses are actually sitting on the market (even just at the end of last year houses were generally scheduling offer dates and picking the best one). Some of this is just seasonal cooling, so I'm wary to draw any larger conclusions... but I'm seeing a lot lot more `for sale` signs than I'm used to.
More evidence of the hollowing out of the middle class.
If this - "High-income job losses are cooling housing demand" is true, doesn't this mean UBI would never work?
>> If this - "High-income job losses are cooling housing demand" is true, doesn't this mean UBI would never work?
If UBI were national, it would work beautifully, because depending on the UBI amount, it could allow people to finally untether geographically. You could spur a rebalancing of irrational demand in HCOL cities due to jobs away from HCOL to LCOL
I don't see how one follows the other.
On the one hand, less high earning employees seems to logically indicate that large purchases would also go down.
And on the other hand, a program to give everyone a little eating money would never have been able to pay for a house, anyway.
A drop in housing prices might be the only silver lining if an actual recession hits (whether the official statistics will actually admit to a recession is debatable of course).
That said, even if housing prices drop materially and eventually bottom it will provide little opportunity for "normal" folks to buy in if they're jobless. Will be interesting to see if Fed interest rate cuts translate to mortgage rate cuts, and whether those rate cuts lessen any price drops.
I've said this before on here, but the historical price-to-income for housing has been something like 4x. Today it's 7x (that is as insane as it sounds). A long way to revert to the mean unless you really think "this time is different."
Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard time buying a few years ago, because investors kept out-bidding me with all-cash offers. I had to raise my price target to move outside of their impulse buy range, which I was not too happy about.
> Housing prices dropping aren’t so good for those who own homes.
As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.
The dynamic here is that investors accept 3% return for housing because there are no good alternatives.
The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made).
Investors will likely not be an issue as long as we don't go into zirp again.
> Housing prices dropping aren’t so good for those who own homes.
Isn't it only bad news for people who are selling their homes?
Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.
You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
... people take out loans to buy cars and go on vacation, using their house as collateral?
Yes, the economy of the entire industrialized world runs on this.
People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy?
From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...
I would personally advise against that, but HELCs are a popular financial vehicle in order to do exactly that.
So lower prices mean higher prices?
How do you know they’re investors?
In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.
What I am worried about is won't building new homes slow down to a crawl or stop completely if the r word is confirmed?
I think with the amount of corporations and existing homeowners buying homes that the demand is strong enough to keep prices high no matter what happens. There are billions of dollars set aside to gobble up homes in the event of a price drop. In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
> In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
This has been so weird to see over the last couple dips.
In the ‘08 crash, banks were sitting on houses that were developing mold issues because they had been sitting vacant so long. These houses were getting more damaged and less desirable by the day, and before long would require hundreds of thousands of dollars to fix (up from the low-tens already evident) but they still preferred to sit on them. They weren’t listed, or were listed but at too-high prices and they were just ignoring offers, not even responding.
Then you look at “depressed” housing prices that are still way over historic norms, so you’d think builders would keep going… but no, they totally halt all work, no new houses until prices are heading up again.
Something’s super messed-up about the housing market in ways that it wasn’t in the last millennium. Recessions don’t even fix it, they just make everything pause.
Already happening around me as the price of construction has been going up, while the value of homes is flat. Empty lots zoned and permitted for apartment and condo complexes lay empty.
On the other hand, it'll get cheaper to build new houses as material and labour costs should fall. Might be hard to get finance though.
Labor costs are unlikely to fall. The cost of living has been on an upward trend that shows no sign of stopping. The federal government waging a campaign of terror against the demographic that most house builders employ is certainly not helping either.
Desirable metros seem to have very sticky prices. San Francisco, where I lived for 15 years, turned into a grotesque caricature of what it once was, but prices barely budged (and for most of that transition, they surged wildly). Sure, it's no longer the single most expensive rental market in the country, but it's still one of the highest despite quality of life degrading massively and even a big decline in population.
People say this a lot, but it makes no sense to me. A recession comes with lower incomes and wealth for everyone, so affordability doesn't change for the average person. It only increases it for those who had a short position in their asset allocation, but that's just investment outperformance which you can have even without a recession.
You're generally right except it's not true for everyone. Every recession that hits a lot of folks just keep their jobs and their salaries. Maybe their stock portfolios (for the few who have those outside of 401k's) take a hit. But the key is that if there's a real estate downturn, almost every single home (house, condo and even land) takes a hit and so you end up with a situation where all the inventory drops in price, but not all the eligible buyers "drop in price" (i.e., not all eligible buyers suffer a downturn and so, net, you actually get more people into homes).
The key of course is that the downturn isn't so massive (hello 2008!), where the blood flows so freely that the layoffs/foreclosures/etc. overwhelm the eligible buyer pool in absolute numbers. That can for sure happen, but is atypical historically.
You've just listed a set of specific circumstances under which some number of people might find housing more affordable, but that's a lot more like "investment outperformance" driven affordability than "broad based housing price decrease" affordability. That can happen even without a recession. A small number of people could've found Bay Area houses more affordable in the last decade if they were HODLing some 10x stock.
FWIW I think I just listed a set of circumstances that happen every time there is a drop in housing prices historically, at least going back to the 90's savings and loan crisis. I'll tell you when people found Bay Area houses more affordable? 2009-2012. And during that time the unemployment rate was at roughly 10 or 12% (had to look it up just now but knew it was around there). Housing prices during that same time? Dropped as low as 40-50% in some parts of the Bay (best case they were down 20%+). 10x stock needed? No. A job? Yes. You can repeat the exercise for the start of Covid, but the timeline for the drop in prices, and the % drop, was muted in comparison to the housing crisis. Same for S&L crisis. Dotcom bust too, though, again, housing prices didn't crater like the housing crisis.
It's 7x these days largely due to the 0% interest rate environment we had for so long.
I wonder what it is in "monthly cost as a fraction of monthly income".
Be very careful what you wish for. That's not much of a silver lining.
The illustration is misleading because it forces things into three buckets, two of which are colored to indicate "not good". But still, that bottom right corner of the graph is telling.
Also pretty disgusting to me that healthcare is "growing faster than normal" across the board. You'd think it'd be "growing the normal rate" at least somewhere. It's not like population is growing faster than normal across the board. Isn't 20% of the GDP enough for an industry that's fundamentally a cost center of society? Wars have been fought over less.
The elderly are on Medicare, and health care providers know they can treat much more aggressively when the government is picking up the tab. Despite the fact that in a purely economic sense, it is more important that children and young adults get health care.
When I went to the doctor about fatigue, the advice given to me was to stop exercising and take a break.
When my father went to the doctor about fatigue, they gave him a full blood panel and scheduled a cardiologist and respiratory therapist visit.
>The elderly are on Medicare, and health care providers know they can treat much more aggressively when the government is picking up the tab.
People should not make the unqualified statement that Medicare is free, which is what "the government is picking up the tab" sounds like. Medicare isn't free. Some people, not all, can qualify for free Part A but Parts B, C and D have premiums no matter what.
Healthcare is a non-negotiable way to extract money from people. And the industry is swimming in opaque complexities, IP, monopolies, monopsonies, and sweetheart regulation. Why the h*ll should they limit themselves to a mere 20%?
An aging population combined with people generally being a lot less healthy (eg look at obesity or diabetes rates) means we either let people die off, or else spend more and more on healthcare.
The large baby boomer generation is getting old, and thus their costs will go up just by nature of old people needing more. They are also realizing that health is the largest factor in how long they will live (not to mention that they likely started smoking before people realized how harmful it was - most have long quit but with unknown damage done. There are other choices that they often made that are now questionable)
Which is to say I expect spending to go up just for demographic reasons of large numbers of people starting to care. Don't confuse this for thinking all is well with health care costs.
What’s the maximum price you’d pay for a cure to a rare, fatal pediatric disease?
Answer this question, and you’re on the journey to the solution to the problem you are talking about. Tell me some BS why the question doesn’t matter or is wrong or whatever, and discover why “Dunning Kruger” is at least part of the answer.
>Answer this question, and you’re on the journey to the solution to the problem you are talking about. Tell me some BS why the question doesn’t matter or is wrong or whatever, and discover why “Dunning Kruger” is at least part of the answer.
I posit that the people who hold an ideology, moral compass, world view, or whatever else you want to call it, that permits the question to even be framed in this way are a root problem exacerbating many other problems in society, healthcare likely being one.
I don't know what the "solution" is but the fact that ~1:5 dollars in this country is spent on maintenance of the human body is just wild and likely unsustainable or indicative of some gross error in how we measure such things.
I think you're misrepresenting "Dunning Kruger." It only predicts that the subset of your respondents already known to be low ability in the domain of health care economics will end up inflating their assessment of their own ability in the same domain. (Perhaps also inverted for high ability respondents.)
You're claiming to predict that-- for particular branch of response types-- all respondents will be low ability. There are a lot of ways I would characterize that claim, but none of them would be "Dunning Kruger."
In fact, my gut tells me that some significant number of flame wars I've read over the years were due to this confused heuristic.
From experience from my peers getting pregnant it's the cost of a "selective reduction" (which can be 1 to 0). Newly pregnant friends are spending $$$ on tests in utero to weed out children with such things.
You're free to downvote, it won't make it less true. Genetic testing is all the rage in my social circle. No parent want's "dies basically immediately after birth" disease which is a surprising about of genetic conditions and way more people than I expected were silent carriers of at least one.
well, you didn't answer the question, but it sounds like you are saying $40,000? how much do you think Orchid costs? do you think it even works?
$40,000 cap would exclude all the therapeutics targeting rare disease being developed today. not just pediatric. all. it would exclude tirzepatide, which costs $250,000 to $400,000 for most people. if you want to cure obesity. and by the way, congress expressly banned paying for all weight loss treatments from medicare.
> Newly pregnant friends are spending $$$ on tests in utero to weed out children with such things.
do you think pregnancies at age 40 compared to pregnancies at age 20 are more expensive, or less expensive? define expensive, yes? and what price should the government pay? should it pay 40 year old mothers different than 20 year old mothers?
it's too bad that i'm being downvoted, since you're engaging with the question and hopefully it is really illuminating why there are no easy answers to capping healthcare costs. it starts with people, especially people who think of themselves as being very smart, being unable to specify a max price they are willing to pay, which is conceding that a market-based solution can exist but be very deeply flawed.
Because I don't think there is a max price. Like of course there is in practice case by case because individuals don't have infinite money but nobody wants to be told "sorry, we can treat your condition but we're not going to because you're not valuable enough to society to get it." The episode Critical Care in Voyager muses on what such a system looks like formalized and it's awful.
And I think what makes it so that we're resistant to caps is because it's not just rare diseases you could write off as unlikely to ever get that are ruinously expensive and it's likely that in everyone's social sphere they know multiple people personally who've had "blown out their out of pocket max by factors of 5-10x" medical issues. It's a this really can happen to you thing.
So I think if your goal is to reduce healthcare costs on a nation scale your only option is make it so your people develop health problems less and tackle the smaller but much much much more frequent expenses. Things like ending the caps on the number of doctors, giving nurse practitioners full prescribing rights, moving more medications OTC, ending drug patent loopholes or for critical medications or "buying out" the patient so it can be immediately be made generic, adding more restrictions to testing so doctors have to actually think before ordering every test under the sun because it's not their money, massively reducing the regulations on medical devices, I could go on forever.
Stupid unnecessary expense times your population is way more money than the treatment for some rare disease.
Crashing the economy is of course going to have knock on effects. I don't think anybody should be surprised by this?
Housing is essentially a bottomless pit when the economy is good, it can sink any amount of money because it is an absolute necessity. So when people have money they'll use it to bid against each other for a scarce resource. But when the economy pauses or even starts to shrink then that surplus evaporates and one of the first indicators that this is happening is the demand for housing. Usually the result will be some price adjustments and after that it is business as usual. But if the cuts go deeper then there may be more substantial effects.
The only thing that is holding the US economy afloat right now is the fact that there are still a couple of levers of power that Trump hasn't gotten his fingers on. When and if that happens I fully expect things to go into freefall.
Having been shafted in three housing boom cycles, I'm somewhat eagerly awaiting the crash this time so I can buy something at a discount.
That's one way of looking at it. In a crisis when you're on the buying side it can benefit you, but there will always be someone holding the bag on the other side of that deal.
403 forbidden
why am I getting more "403 forbidden" responses from websites as time goes on? at some point "website protection" stops adblocking users.
I use Mozilla VPN and I've been noticing this trend more and more. Especially for auth endpoints.
I hate it when Trump or whoever touts all the jobs created because I'm sure most of those jobs are of the low-wage variety and aren't really helping anyone. It doesn't matter if a bunch of part-time, crap jobs get created while high paying roles are headed to India or just disappearing.
The government does nothing but lie to our faces.
As far as housing goes, if we do managed to deport 20 million non-citizens, that should at least help some. Oh yeah, yeah, it's so inhumane to disinvite all those folks whom the NGOs and mega-church charities took advantage of and trafficked here. Every one of those people had dollar signs on their backs for someone else. Now we have an affordability crisis caused by government fiat printing and these never-ending scams moving people around the globe. Good times.