Americans Need to Be Richer Than Ever to Buy Their First Home (2023)

Meanwhile, the number of vehicles that need mufflers is increasing. It's audible. That is a reliable sign of economic distress.

Nobody can buy a house without a down payment and reasonable job security. The economic gulf widens.

What are these 70k jobs in the south?

One measure is the ratio of CEO compensation to the average employee in the same firm. That ratio was 21 in 1965, today it is 290. Imagine the average worker making 13x what they make today. The late stage capitalism of capital accumulating at the top is accelerating.

Heck, most older houses across CA still have redlined contracts from that era included in the buying history.

"A Raisin in the Sun" was the reality barely 4-5 decades ago.

Which only works because there's a massive Ponzi scheme supported by fresh buyers.

In New Zealand our demographics would lead to a crash (as seen in some places overseas), but we have a lot of immigration that props demand up.

Most people don't see systems, they make decisions based on the current state they see. And voters don't give politicians any incentive to deal with problems.

Years ago when I was doing public policy analysis and advocacy full time, I spent some time thinking about home ownership, being financially and otherwise prepared, understanding the realities of home ownership, and acknowledging ownership is not the only game in town.

Either Fannie or Freddie published a paper about "appropriate" housing options for a person's stage in life. Nothing set in stone, but patterns and priorities.

The paper made the point that not everyone wants the responsibility of owning. These folks have other priorities and don't consider themselves failures by renting. Similarly, families may choose to live with other generations. Some older folks move to rentals, smaller owned homes, or assisted living.

The bee in my bonnet has always been the "I want I should have" mindset. When it comes to housing, it goes like "I want to die in my house." Great if you can afford it - meaning affording maintenance, modifications (ramps, lefts, etc.), skilled and unskilled help, taxes, etc. The rub comes when people can't afford it. Some jurisdictions offer interest-free loans to add ramps, etc.; loans are paid back upon death.

I'm not indifferent to the struggles of aging. But ignoring it does not make it go away. I feel like with the time and energy we put into trying to address affordable housing, for example, we should also pay attention to our individual (and community?) plans for getting older.

Back to the point: In my policy days, hearing stories about how old folks died in their homes and their kids expected a windfall only to find out that the property had to be sold to pay for X, Y, and Z. The house was great collateral but was not a wealth transfer as may have been expected.

Not sure how to balance, accommodate all the competing interests, but what we are doing now is certainly not working.

If we can remove all the factors that force up prices on new builds (and don't care if the market for existing homes crashes) then it may be reversed.

Material cost should be reversible if you don't expect the house to look like you live at a resort. And we have to ensure supply like incentivising new plantations to eliminate timber shortages.

Fixing zoning restrictions will take political will. Stripped local councils of their zoning powers should mean any nimby-isms around building higher density housing, allowing smaller blocks could be ignored.

Land release is also fixable by taxing undeveloped land that is zoned residential. More land available should lower prices.

Stop doing Government incentives to buy houses. Giving first-home buyers grants simply drives up prices everywhere.

Eliminate tax write-offs for "investment" properties: Owning a house should have never been like owning a business. This had the effect of reducing available rentals (and increasing prices) as many were happy to take the growth and the write-off and avoid the maintenance and depreciation that comes with renting the property out. For the renters the price hike made saving for buying a home much more difficult.

It's certainly not a good thing but part of the second order effects of the broad economic change is that household income alone has long stopped being a useful driver/source of house prices - interest rates, second order effect of boomer wealth through bank of mum & dad, more 2 person full time working households, global migratory movement have all changed the dynamic so much that it feels very apple and pears now.

There's also a point around averages being meaningless from a relativity perspective too. Australia is expensive but as someone who moved from London to non-sydney australia, I do sometimes find it amusing that what is deemed expensive here would get you a shoebox in London v 500+ m2 land house here.

The average age of U.S. homebuyers jumps to 56 (2024)

https://news.ycombinator.com/item?id=42048640

Priced out of traditional housing, more Americans are living in RVs

https://news.ycombinator.com/item?id=45340442

Investors bought 27% of US homes in Q1, as traditional buyers struggle to afford

https://news.ycombinator.com/item?id=44554713