Income : Housing Cost

I perused an article that showed historical averages back to 1980 of housing cost to average income by state. My state is 19% overvalued with some being overvalued by 30%.

While there are many factors determined by the methodology of the study, I ask you, will housing in the USA cost a larger percentage of income going forward?

I am not focusing on rent to net income specifically, rather on the amount of discretionary spending available to households. --149.76.xxx.x

Income : Housing Cost (by WMH [NC]) Posted on: Jun 22, 2024 8:09 AM
Message:

Going back to 1980, I can say for sure that subscription-based EVERYTHING is killing budgets. That, and the price of maintenance goods. Along with the price of cars: the price of a mortgage payment in the 1980's when you combine price with interest rates and length of loans. --198.54.xxx.xx

Income : Housing Cost (by S i d [MO]) Posted on: Jun 22, 2024 8:21 AM
Message:

Maybe the article is right, but is it a true apples to apples comparison? Homes today are built with different materials and contain features 1980s homes did not. Are they adjusting for that or trying to compare a modern desktop PC to a Commodore 64? --184.4.xx.xx

Income : Housing Cost (by WMH [NC]) Posted on: Jun 22, 2024 9:09 AM
Message:

And houses are a totally different SIZE. 1980 was really the start of the McMansion phenom and it accelerated throughout the 80's and 90's and for the next few decades, too. It only started to change just a titch during covid, maybe? I heard that huge open-concept places fell out of favor with houses with more defined rooms becoming more popular. People discovered a small private office was better than working at your dining table with the family surrounding you. --198.54.xxx.xx

Income : Housing Cost (by S i d [MO]) Posted on: Jun 22, 2024 9:36 AM
Message:

WMH, bingo! Different houses today than in 1980. My computer comparison is a joke, as tech has advanced 10,000x since the 1980s whereas housing has changed somewhat, but nothing close to that.

The point though is that saying prices have gone up is just a raw fact until one digs into the "why". It's accepted by the layman that the only reason prices go up is greedy businesses and investors are trying to screw them, rather than looking at how much more bang for your buck you get these days. Innovation and progress do drive up prices somewhat, but I'll take a late model 2010s car over a 1980s hatchback any day! Love those backup cameras, Bluetooth, satellite nav, etc. --184.4.xx.xx

Income : Housing Cost (by PG [SC]) Posted on: Jun 22, 2024 9:50 AM
Message:

As an add to WMH SIZE note.

Did the study factor in regulation and the permitting process over time. --75.182.xxx.xxx

Income : Housing Cost (by Scott [IN]) Posted on: Jun 22, 2024 10:33 AM
Message:

A perfect storm of multiple factors has combined to drive housing prices up. If history repeats itself, then we have a market correction coming. --107.141.xx.xxx

Income : Housing Cost (by Scott [IN]) Posted on: Jun 22, 2024 11:03 AM
Message:

Oops. I should have said housing "costs", not housing "prices". --107.141.xx.xxx

Income : Housing Cost (by RB [TN]) Posted on: Jun 22, 2024 3:00 PM
Message:

Yes ! --69.130.xxx.xxx

Income : Housing Cost (by Sisco [MO]) Posted on: Jun 22, 2024 3:05 PM
Message:

Generally speaking, do people spend a higher percentage of their income on housing? If so, is this a new normal? Or will a market correction bring us back in line with historical averages? --149.76.xxx.x

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 22, 2024 3:25 PM
Message:

Probably, because everyone seems to want more bells and whistles. --76.129.xxx.xx

Income : Housing Cost (by WMH [NC]) Posted on: Jun 22, 2024 3:54 PM
Message:

I think people spend more of their income on EVERYTHING. Saving for a rainy day is not only a forgotten concept, it's a DENIGRATED concept when someone does try to implement it. "Keeping up with the Joneses" is not just a phrase, it's a way of life - because with CREDIT CARDS and the internet everything is within reach, TODAY - RIGHT NOW - 24/7. Why wait? --198.54.xxx.xx

Income : Housing Cost (by Robert,OntarioCanada [ON]) Posted on: Jun 22, 2024 3:54 PM
Message:

The housing crisis began here more then forty years ago where federal government removed subsidies to build a rental complex along with fewer people where moving into single family houses. Building a purpose built rental building costs more per unit then building a condominium complex as building codes are more stringent like elevators, parking, hot water along with structural. The builders built fewer rental complexes then when they brought in a provincial rent control in 1975 new construction was exempt where later the provincial government gave into the reactionary extreme left tenancy advocate groups where from day one the building although was built as a rental complex was registered as condominium where tenants received a letter in mail where i want to stay then buy unit or leave where offered generous terms to do so. In the past five years high immigration where all types of housing increased in price as the rules of supply and demand. There is vacancy decontrol on vacant rental units where that pushed up rental rates. In the province of Alberta there is rent control or provincial sales tax along with government that is hostile to investment with incentives to convert existing buildings to rentals. Free market rents are always lower as there is more supply and less demand. In 1975 when rent control was brought in there was wage and price controls where the wage and price controls three years were dropped then rent control was no longer a temporary measure where the government owned rental units were never under rent control. If the population increases in one year in Ontario by half a million then there needs to be more housing being built. Now the population in Canada exceeds the population in California. All provinces are experiencing a shortage of housing. Living here the cost of everything from grocery to consumer goods, gasoline, natural gas, electricity, taxes are much higher then most states in the Us. The positive is universal medical care where major surgery or illness does bankrupt people along with subsidies for prescription drugs where many of pharmacy products cost less then Us. As there was one day bus trips from Us to buy lower cost insulin. More then likely in October 2025 the federal Liberal party is going to voted out of office where there will be a progressive Conservative party in power like what happened in the province of Ontario where a majority government that can pass legislation without even consulting the other left wing parties. --207.236.xxx.xxx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 22, 2024 4:24 PM
Message:

WMH, I think I just got taught a hard lesson about saving for a rainy day, and maybe that is why nobody does it. The government just robbed savers blind. I didn't realize about inflation so much until now. --76.129.xxx.xx

Income : Housing Cost (by tryan [MA]) Posted on: Jun 23, 2024 11:08 AM
Message:

An apples to apples would be LAND values 1980 to present. Simple look at the tax card would suffice. --198.168.xx.xxx

Income : Housing Cost (by MikeA [TX]) Posted on: Jun 23, 2024 2:42 PM
Message:

I agree with WMH, this is the new norm. It's not only housing that has changed, it is a total mindset change. In 1982 the savings rate was 12% and most people also gave a tithe (10%) to the church. They didn't rely on the government to take care of them in retirement, they saved for it. Wanted to buy a car, save for it. In 2022 the savings rate was 3.3%. So just savings alone accounts for 8.7% more spending then add in the 10% tithe and people spend 19% more of their paycheck today than was the norm in 1982. It makes sense that a good portion of that would be going to raising the standard of living through a nicer place to live.

It is seen as counter culture to save for your future or even retirement today, after all the government will take care of you won't they? The 1982 savings rate is a result of teaching the kids Aesop's fable on the ant and the grasshopper in the 1960's and 70's. All of that was replaced by video games in the 1980's. --209.205.xxx.xx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 23, 2024 3:37 PM
Message:

MikeA, the government will rob you of your savings value. --76.129.xxx.xx

Income : Housing Cost (by MikeA [TX]) Posted on: Jun 23, 2024 5:13 PM
Message:

6, In my humble opinion that's the very thought that keeps people poor, the idea that you could lose it in the future so just spend it today... so they never even try to forge a better future. Just be a satisficer and live on instant gratification in bigger house, better car, all the gadgets, and put that vacation on the credit card without a thought about tomorrow. A perfect example of the grasshopper. This change in society is what drove the savings rate to almost nothing.

Just like the grasshopper as winter approached, lots of words will be said to make you feel sorry for them (affordability, housing rights, today is different, etc). The ants, however, understand the real story. --209.205.xxx.xx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 23, 2024 6:22 PM
Message:

Thank you, MikeA. I appreciate the example given and I do understand. I will look up the story you referred to.

That said, I became a heavy saver at a young age, not because I was taught too at all, but because I saw that as my only way to change my life from childhood experiences, and it worked. So, I am very frugal, live in an old, but well kept, small house, have a 22-year-old truck, don't have the latest and greatest gadgets, ect...And, I don't want them as I am still frugal. However, I have now seen the value of my savings be cut in half at least. So, what is the line to be drawn to save for hard times or unexpected expenses, and yet not lose the value of all the sacrificing and reticule from others from being a saver? --76.129.xxx.xx

Income : Housing Cost (by Ray-N-Pa [PA]) Posted on: Jun 23, 2024 7:19 PM
Message:

Bruce Norris publishes an annual report focused on SoCal property values. He bases his studies on an affordability index. When a certain percentage of people can only afford to buy, the market contracts.

The Norris Group --24.101.xxx.xxx

Income : Housing Cost (by ken [NY]) Posted on: Jun 23, 2024 8:01 PM
Message:

6x6 depending on how much you have in savings you might want to find a deal on a house and buy it and collect rent --74.77.xx.xx

Income : Housing Cost (by Heartland [NC]) Posted on: Jun 24, 2024 8:00 AM
Message:

The cost of housing will adjust over time relative to the cost of living.

I think back to the energy crises of 1973 and 1979.

In 1973, long lines to purchase gas. States implemented rationing. Odd numbered license plates could purchase a few certain days a week. The alternate days were for even numbered license plates. Gas stations closed in the evenings, even on Interstate highways.

In 1979, my wife and I would set a board game on the living room floor where the sunlight from the picture window provided warmth. We each draped a blanket over our shoulders and stretched each blanket over a heat register. Since we kept the thermostat so low, the heater ran infrequently. Because we draped the blanket over the heat register, we could keep warm while playing the board game.

Eventually, the economy and personal income adjusted as supply and demand made further adjustments.

Housing is out of wack due to past government policies and excessively loose mortgage lending standards. As long as the government makes artificial economic changes through laws and regulations, the forthcoming adjustments will gyrate with overreactions and corrections.

Letting the free market make natural adjustments will lead to a better recovery. Will some people suffer? Yes. But those individuals that “saved for a rainy day” will benefit from present circumstances. They will be rewarded for living conservatively. An artificial adjustment example is prohibiting large real estate investors from purchasing housing stock. Well, that inhibits what a retiring couple can sell their house for. It impacts how much resources they will have to provide income for retirement.

Economic cycles are nothing new or unexpected. I think of the Good Book’s story of Joseph interpreting Pharoh’s dreams. Joseph warned of 7 years of plenty followed by 7 years of want. And it happened.

Answers await those who seek. Too many people are distracted by an entertaining lifestyle and don’t seek longstanding truths.

--45.37.xxx.xxx

Income : Housing Cost (by zero [IN]) Posted on: Jun 24, 2024 8:00 AM
Message:

ken, my thoughts exactly.

Your money can only do so much in a savings account.

Make it work for you.

Depending on your age and risk tolerance there are a lot of options out there. --107.147.xx.xx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 24, 2024 8:26 AM
Message:

Ken, thank you. That's what I have done. Getting it ready. --76.129.xxx.xx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 24, 2024 8:26 AM
Message:

Thank you, zero. --76.129.xxx.xx

Income : Housing Cost (by S i d [MO]) Posted on: Jun 24, 2024 8:33 AM
Message:

Inflation will devour the spending power of one's savings. I used to have my emergency fund of 3-6 months of cash tucked away, just like Dave Ramsey says.

Then 2020 - 2023 happened, and now it's down to 1-2 months... my bank account balance didn't change, but the buying power sure did.

So how can we save for the future? We live in a world where reckless Govt spending causes inflation and spurs people to spend now or watch their buying power get sliced and diced, so how do we respond?

Hard assets for one. Real estate is perfect. Anyone who passed HS level economics realizes that the value of real goods rise with inflation, so owning one's home as 60-some percent of Americans do is a great first step. With low/almost no downpayment a thing again, a modest starter home should be within reach of most folks.

But will they WANT a modest starter home, or would they prefer to live their best life now in theirs 20s-30s and "experience life?"

That's the trend I see online. There are a half dozen new acronyms describing 20-30s somethings, but they all boil down to unmarried couples who shack up with a couple of dogs and have no plans to have kids now or maybe ever. The whole 10,000 year of human history that emphasized starting a household, having a family, rearing children, and leaving a legacy that is the next generation has been thrown aside by folks who'd rather follow some social media influencers demand that they throw off the shackless of "the oppressively whatever" and live for today. They think of children as "parasites" and "roadblocks" to spending money on themselves and using their time to do whatever they want, whenever they want.

As MikeA said... the grasshopper on steroids. Selfish hedonism.

People can plan and save today. I don't think they want to, though. We're going to have a lot of people 50-60 years sitting all alone is a run down nursing home and no one ever comes to visit them, with barely any caretakers since they basically refused to raise up the next generation. There simply won't be enough young, healthy people to be paid to care for all of them, regardless of how many millions are in their retirement accounts.

It all comes home to roost, eventually.

--184.4.xx.xx

Income : Housing Cost (by Heartland [NC]) Posted on: Jun 24, 2024 11:13 AM
Message:

Good analysis by S i d. --45.37.xxx.xxx

Income : Housing Cost (by Ray-N-Pa [PA]) Posted on: Jun 24, 2024 12:34 PM
Message:

Sid,

Oh You mean like Japan back in 1990. Look at them even today. It was suppose to be only a lost decade but they are their third one.

Culture has a huge impact on outcomes in society. I wish I could tell you things are going to really rosy in the states in 40 years. The good news is I will not be around to notice any of it. --24.101.xxx.xxx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 24, 2024 7:36 PM
Message:

Is losing the human race a bad thing?

Perhaps we should ask the animals and mother earth?

--76.129.xxx.xx

Income : Housing Cost (by zero [IN]) Posted on: Jun 25, 2024 9:22 AM
Message:

S i d, I liked that entire statement.

I would add that the only people that seem to be multiplying are not taking care of the offspring. They are not getting any education besides the mean streets.

We need to find a couple good people with kids at the right age and push them along so they can be caregivers for when we need them.

A lesson in futility I am afraid. --107.147.xx.xx

Income : Housing Cost (by 6x6 [TN]) Posted on: Jun 25, 2024 9:51 AM
Message:

Is that the reason people have kids, so that they can be the caregivers? --76.129.xxx.xx

Income : Housing Cost (by zero [IN]) Posted on: Jun 26, 2024 8:00 AM
Message:

I had kids because I wanted to be a grandpa.

Alas that has yet to happen and the outcome looks slim at best. --107.147.xx.xx

Reply:

Subject:	RE: Income : Housing Cost
Your Name:
Your State:

Message:

Income : Housing Cost

Would you like to be notified via email when somebody replies to this thread?
If so, you must include your valid email address here. Do not add your address more than once per thread/subject. By entering your email address here, you agree to receive notification from Mrlandlord.com every time anyone replies to "this" thread. You will receive response notifications for up to one week following the original post. Your email address will not be visible to readers. Email Address: