When I was still in my 20s I was able to buy my first house – because my first house was only $155k. That was in Northern Virginia, if you can imagine. Just a few minutes away from Dulles Airport. Of course, that was also back in the mid-’90s. Today, my old house would list for $600k-plus. Some of that is inflation but about $300,000 of it isn’t – at least according to the government’s inflation calculator.
When I plugged in the $155k I paid back then and asked the calculator to tell me what that sum would be equivalent to in today’s depreciated dollars, I got $313k. That’s still a lot of money – but it’s not $600k. My old house has become a rich man’s house rather than a first house for a young person in their 20s. This probably explains the stat I came across the other day about the current average age of a first-time buyer. It is – hold onto your helmet – pushing 40. The median age of home buyers is now 56.
So, what to do if you’re in your ’20s today? Assuming you don’t want to be middle aged by the time you are able to buy that first house?
Well, the first thing to do is move away from any place like Northern Virginia. There is no longer any reason to remain there. Once upon a time, there was – if you wanted a “good job” and were trying to work your way up to a better one. The “good jobs” were chiefly in the cities, so you went there and went to work. It’s what I did, when I was in my ’20s. But today? A person who wants to be a journalist or almost anything else can do that from almost anyplace. If you are good at what you do, you can make it anywhere – and your money goes a lot farther elsewhere.
The cities have priced the young out of homes via many methods but one of the most effective is zoning them out of homes. It is why even a quarter acre of land in Northern Virginia now costs more than my old house did back in the ’90s – and of course, even if you could afford to buy the land, you probably can’t afford to build the type of house required by the zoning. But in less rigid areas, you can still buy a small plot for a sum that people in their ’20s today can afford. As an example, one can buy an acre or so in my part of SW Virginia for $10,000 or less – and because there is no zoning in my area, you are allowed (oh, thank you massa!) to build something you can afford on the land.
The property taxes are also a third or less what they’d be in Northern Va or any other city or close-to-a-city area.
If I were in my ’20s today, that is something I’d consider doing. You don’t even have to build it. There ‘s a burgeoning business in pre-fab sheds that can easily be upgraded into what are styled “tiny homes.” These can be bought for less than $20,000 and for that they bring the thing to your site and put it together. Learn to do some basic wiring and plumbing and finishing work, something anyone with a little gumption can do.
Voila! You are now a homeowner for a lot less than it cost me to buy my first house back in the ’90s. You’ll have your own place and you’ll have something just as important as far as your future: Equity. Owning things of real value – such a real estate – is how you build rather than bleed wealth. Paying rent is an example of how to bleed wealth. You can pay rent for years – to the tune of many tens of thousands of dollars – and have literally nothing to show for it at the end of those years except empty pockets. If you must rent, rent cheap. Split the cost of rent with other young people; when you’re in your ’20s it’s normal and can even be fun to share a place with others your own age. It’s embarrassing – and depressing – when you have to do that when you’re twice that age.
By saving as much as you can on rent, you will be able to buy a place of your own sooner. It is not that hard to save up $50,000 when you’re not spending $2,000 per month to rent an apartment. In fact, if you cut that down to $1,000 per month by sharing the apartment, you’d have saved $12,000 in just one year. After four, you’re very close to that $50k it’d take to buy a small piece of land and put a tiny house on it. Start saving at 24 and by 28 you could be a homeowner like I was before you’re 30 rather than waiting until you’re 40.
Or 56.
Just not in Northern Virginia or any big city.
But that’s a plus rather than a minus these days, especially since almost everything it used to be worth living in a city for – such as an abundance of good food – is now readily available almost everywhere else. Without the crime and the legally required vulnerability to criminals who are pleased to know that you live in a “gun free” zone.
Every time has its good and bad times. It is definitely a bad time to be young in any big city or near one. But that doesn’t mean it’s a bad time to be young somewhere else.
. . .
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Ok I surrender kids….
youse guys totally kick my ass when it comes to comments…….However…
Bizarre
real estate woes here though……sitting in my parents basement reading these comments……..Yikes!
My Father received his degree as an Architectural Engineer at Esslingen Polytechnic
Krautland (49)…
Literally “Hand Crafted” .. this structure …FROM START TO FINISH!….This, house is a Masterpiece of Craftsmanship!!!!!
The only problem???
There is some deadbeat neighbor….next door that won’t trim a dangerous tree…..
I tried to talk to the klowns but no…. they act like some bigshots………
The driveway is about a quarter mile up the road…
and the Aholes have a GUARD GATE AND GATEHOUSE!!!
Does anyone know who these Klowns are?……..
The outside sign tout’s itself as……”STANLEY BLACK & DECKER WORLD HEADQUARTERS”….
There goes the Neighborhood!!!
I can’t wait to get back to the laid back Caribbean!!!!………
(i.e.REAL Libertarian ….environments)
And I just missed free mango season!……….ended July 4th…
also, ep those asskick domicile pictures are right up my ally……
Perfect size!
I feel bad for those under 4O who have jobs, show up, and make an effort. I know if I were in that situation I’d probably turn to a life of crime against high value garbage elitists. I bought my first house thirty years ago. for 65K. Not far from UNLV on east tropicana it was a four bedroom, two bath 14OO square foot house that was already forty years old. Some elbow grease, paint, patch, flooring, cabinets, bathrooms. Eight years later, you could see the change in the local business and stores. I sold the house soon after that for 23O K. That was a decent chunk of change back then, not so much now. Being debt free, I could’ve lived on that $$$ for 1O plus years back then, now its maybe five or six.
Looking at the insane housing prices today is a good illustration of all the horseshit we’ve had shoveled on us. Wages have been suppressed, as 4O1ks, stonks, and real-estate have gone stratospheric. All so the already fifty rich can grab even more. If I was a youngster I would take this as a direct assault on my future. I hope the housing market crashes in Ozzymandis fashion. Sorry for those who may get hurt. I prefer to take the side of the young on this one.
Amen, Norman –
My path was similar to yours. I bought my old fixer-upper and fixed it up; sold it for a nice profit and used that to buy my current house, which I bought to live in rather than as an investment. I was lucky to have bought it when I did (2004) because I could never afford it now. What I spent on this house would maybe buy a single wide on two acres here now. It is insane. Like you, were I in my 20s today, I think I might do just as you have described, too.
Live in the pod.
I looked up my first house, purchased for $58,500.00. at age 32 in 1978.
Inflation calculator says the amount is $297,309.00 today.
Trulia says house last sold in 2021 for $435,000.00.
Your point made crystal clear.
Yep, it sure seems like the current ‘Housing Bubble’ took off in ~ 1976.
…Where’s that chart of house prices since the year 1500?
I can’t find it. It was basically a flat line until ~ ’76. Then, it was, “To The Moon, Alice!”
The houses ain’t worth more, the jew money ain;t worth shit. Weimar, here we come, instead of Hitler, we got Moishie Trumpstein.
Fourth of July fireworks in Kyiiiiiiv:
‘Kyiv, Ukraine’s capital, tonight after Russia launched a massive drone and missile attack on the city.
‘Numerous sites across Kyiv were hit, including multiple civilian and residential buildings, just days after the U.S. froze shipments of air defense munitions.’
https://x.com/Osinttechnical/status/1940944474349490257
Somebody should call the sheriff, Peace President Trump.
Oh wait, they already did! 🙁
One of the major affordability problem with most areas is the lack of new homes. Especially normal ones. Yes, plenty of new McMansions for the most part, but most can’t afford (or don’t want) them.
I am not talking about tiny homes, which most families with kids can’t do. A single person can do 400 square feet, but even couples let alone ones with kids, it’s not practical.
I am talking about the 800-2000 square foot normal house. It doesn’t have more than two bathrooms and most don’t have more than three bedrooms. Mostly likely a ranch style, and it can be sold without a garage (which you would build later). Yes, it doesn’t have many fancy finishes like tray ceilings, granite countertops or even central air (you add that later).
Basically the houses that were once built in the millions (yes millions) in the 1950’s and 1960’s. Those kind of homes stopped being built in most places in the 1970’s and were basically regulated away by the 1990’s.
Yes, many of them still exist, but they are old or in places where they aren’t affordable anymore. They need to be built again. At this point they can only probably only be built in small metro areas or in rural areas.
The missing middle you hear about often. But of course none of the “solutions” proposed will work of course, well because……
Those 800 to 1200 sf average houses you mention arent built anymore. Either a shoebox joke or half a million for a 2500 sf min HOA lot filler nightmare. Land lease scam condos for swingles. Renting is suicidal.
Your “reward” for timely and compliant slavery awaits. . .
Jump in, Larry luvs ya
Happy forth
Hmm, “I am not talking about tiny homes, which most families with kids can’t do.”
Seems like, mega-b.s..
“Can’t”? Or, won’t?
Lotsa examples out there, say otherwise.
The Jewish elites who consider us goyim to be their animals have been broadcasting to us for decades that we must live a lifestyle that they determine to be “sustainable”. Agenda 21, Agenda 2030 and WEF bashes at Davos every year center around this Tikkun Olam goal of theirs. The reason they constantly bitch slap us with this nonsense is to demoralize us.
Some of the key cornerstones of their Tikkun Olam sustainability goals are the 15 minute cities, public transport (no automobiles) and 40 m2 (or about 400 sf) living space per household, which in their sustainable goyim family world means no children.
It is no mere coincidence that these tiny homes are all around 400sf in size like Klaus Schwab keeps prattling on about.
But we have to recognize that zero carbon goals, EV’s, and self driving cars that no one “owns” all fit perfectly into this Utopia that the Jews are constructing for their goyim cattle (I know, I repeat).
Obviously, the goys are not going to give up their ranch style suburban homes and Ram 2500’s powered by 7 liter Cummins diesels without a fight. What should a Jew do?
This is where the constant woke mantras like “cut off your dick”, “women don’t need a man” and “watch porn and masturbate” come from. But the elimination of the family still doesn’t get us to where the Jew wants us to be in the time frame their rabbis demand.
Clearly the best way to force the goyim to give up their suburban homes and ICE vehicles is to impoverish them, and the easiest way to accomplish this is to keep inflation high while lying in typical Jewish fashion about the real inflation that is being caused by the constant wars and subsidies to the Jewish homeland in stolen Palestine.
Related. What ever happened to rooming with people, or having roommates? As a 20’s young adult, I roomed with college friends for years, renting. At 25’ish it was time to take ownership, and bought my first house for $106K, not in the best place, and the only way I could afford it was having roommates. Once I met my future wife, we now had dual income and could afford to do our own place. Makes sense to me. Granted $4-500K average house cost is way more than earlier times, even inflation adjusted as Eric mentioned.
Today? I don’t know any young adults that room with each other anymore. I ask why. No one wants to do it, IDK why.
I think it’s more common than you think. Sometimes you can’t do it openly, due to zoning that forbids non related people from living in the same space. Yes, that is a regulation that has come to many places. If three or four adults share a house, there are 3 or 4 cars that have to be parked somewhere. Even if that isn’t a real problem, all it takes is one nosy and entitled neighbor to make it a problem.
RE: ” I ask why.”
Maybe, they learned from others?
One, ‘rule’ I learned the hard ways, “roommates”, never work out.
Maybe, there’s exceptions & it looks cool on the TeeVee, but I’ve never known of, nor experienced it working out for very long.
Perhaps, the idgit young’uns have figured that out? Idk. Just a guess.
Plus, there’s that whole online gaming situation & that Plandemic B.S. which conditioned them to prefer isolation & avoidance of social… Idk.
And, maybe, they don’t have a down payment & abhor the idea of talking to Mr. Banker?
“At 25’ish it was time to take ownership, and bought my first house for $106K”
I mean, did you, “buy” your 1st house, or did you sign up to Mr. Banker’s home-owership plan of payments & servitude? Which, in turn meant, you couldn’t tell the boss to, ‘sit on it’ you had to smile and say, “Yes, Boss”. ?
[Unless, you had your own bizness & you were da boss, ‘er your customers were? But still, you had to smile & not shuck it. A.k.a. slave to the payment.]
Slavery avoidance?
You’ve said it precisely with this article, Eric. Own a modest home early and you can have much nicer things later. Rent, and you’ll be a slave on a hamster wheel.
RE: “Rent, and you’ll be a slave on a hamster wheel.”
Wait! I thought Eric was stressing in other articles that home-owership was just renting from The State? That you never truly owned your own home, ever?
You just did upkeep & maintenance for the true owners who would kick you out anytime you fell behind in your tributes, ‘er I mean, tax payments.
Renters don’t seem to be burdened as much or bother with upkeep & maintenance the way home-owers do, plus, they can walk away at any time & not miss “equity” they are mobile-ready. I never once had to pay for a roof replacement, fix a CAC unit, or repair a water line as a renter.
[I won’t paste the numerous ‘History’ I read on Realtor.com of home-owers buying at X Dollars, then doing XY$ repairs or upgrades, and then selling for negative -X Dollars below the price they paid. Super common.]
I dunno, the real, “slave on a hamster wheel” seems to be home-owers. Perhaps, even IF you do it right, like you are now? Idk.
Are home-owers just feeding an alligator?
Are PAID-FOR so-called, ‘home-owners” doing that, too?
Que the Beetles song, ‘The Taxman’.
Hi Helot,
Property taxes do diminish ownership but you are still able to do more with “your” place than a rental and while property taxes are high, they are much less than rent. I think the current national average rental cost is about $2,000 per month. So even if you are forced to hand over say $5,000 annually in property taxes, you’d still be paying far less than what you’d be spending on rent and you have equity. You have nothing when you rent.
RE: “You have nothing when you rent.”
Not exactly. You have mobility. A person can up & move real easy & quick if they need to in order to make money/get a new job.
If they want to move, renters also don’t have to bring a boatload of money to the table unlike some home-owers upside down on their loans. Read of countless tales of tears about just that.
All I know for certain is, I was more easily able to save & had far fewer housing related expenses when I was a renter. Maybe I should embrace the mega-deferred maintenance, repairs & upgrades so many slumlords practice? Then, in the end, wind up selling for less than the purchase price? Common story. YMMV.
Hey Helot,
Right now, I pay about $200/year for property taxes. Now, they may increase that, but it will certainly beat what you pay for rent anywhere. The cheapest rent I ever had was about $200/month by renting a space for my RV. That didn’t last long, however. I hear they’re renting that space for about $700/month, now.
Yes, we should end property taxes. DeSantis was talking about that in Florida. I’m guessing it hasn’t gone anywhere.
A local elderly lady lived in a small home, probably 12×20, easy to heat in winter, a small house was an advantage.
Before natural gas pipelines to houses, each house had a coal bin and an octopus coal burning firebox to heat your home.
It was a guarantee that you had heat. Ca. 1958, burn zee coal.
My paternal grandmother lived in a small dwelling, no running water, kitchen wood stove for cooking and heat, minimal electricity, 12×16 with a small attached bedroom probably 10×12, and the kitchen was small, probably a cistern with a sink and a hand pump to pump water from the cistern. You collected water from the roof when it rained, then diverted the rainwater to the cistern.
A well pump outside for fresh water from the well and an outhouse.
That was in 1959, the year the music died. Purdy much a complete living situation, a garden and a few chickens, she lived on the edge of a small town. Third world existence, almost.
Humble beginnings for sure.
One couple my dad knew lived in a converted railroad boxcar for many years until they moved into an apartment after retiring.
Be a homesteader on 160 acres in a western state, build a 12×16 foot shanty with tar paper siding, live in it for five years, the land is yours. An oxcart full of goods and cargo, an ox, have to be prepared, you find Beulah Land.
Hydrocarbons changed housing everywhere.
See, yah, perfect contrary examples of richb’s quibble above about, “tiny homes, which most families with kids can’t do”.
They can. And, they have.
Sorry but I don’t believe living in a fucking shack is the answer. People did that during the Depression, maybe. Pioneers did it but only until they could build a bigger place.
The fact of the matter is that the cost of housing is completely rigged due to several factors. The mortgage interest deduction skews prices higher. The Federal Reserve keeping interest rates at zero for a decade skewed prices higher. The government allowing more immigrants in creates market pressures. Federal Reserve money printing has debased the currency and inflated prices. Building codes, especially “green energy” codes have raised costs. And of course you have REITs and companies like Black Rock financializing the housing “market” for oligarchic gain. Anybody remember 2008-2009? I guess not.
If the government was committed to creating affordable housing for middle-class white people (and affordable vehicles for middle class white people) we would have it, like we did in the 1960s. Instead the government is concerned about immigrants and foreigners and blacks and Wall Street oligarchs.
You are a peasant, do not forget that. Peasants live in shacks.
To the PtB we are all peasants….
Remember in the aftermath of hurricane Helene, when FEMA dropped the ball again, an Amish group went in and built a bunch of tiny homes which were not allowed to be used because they were not inspected. Instead, people froze in tents during the winter.
Your assertion that government should provide solutions is a non-starter. Government by definition does not create wealth. Government simply steals from the productive and gives to the unproductive. The most effective solution would be for government to get out of the way and let people peacefully exchange goods and services and let the market decide on optimum solutions to problems….
As Carlin explained “It’s a big club and you ain’t in it”
I’m mad as hell and I’m not gonna take it anymore.
I bought my place in “87 for $108,000. It was a fixer upper with one bath and three bedrooms. That was all I could afford. Now that I’m older and with more money I’m planning on moving up and changing my handle to “EuroLord”.
Oh I forgot that aristocratic titles are not allowed, so I’m still looking for a new handle. I ‘ve thought about “Mental Muscle” or “Rebel without a brain” or “?”. A few more beers and some LSD and I’ll finally make my decision. Thanks Eric for spell checker.
‘A few more beers and some LSD’ — europeasant
Works for me. Share the blotter acid …
RE: “Sorry but I don’t believe living in a fucking shack is the answer.”
So, your solution is to hope & pray government will become committed to creating affordable housing? …Someday?
That seems to be what your main bitchin’ is.
Sorry, da goobermint isn’t coming to the rescue & ain’t fixing nothing.
Morning, Helot!
I don’t see tiny homes as shacks. Many are nicer and better built than the small, single family homes of the past (e.g., Levittown). When you’re young and single and even if married, a 600 square foot place of your own on your own piece of land not only isn’t an apartment, it’s ownership. Your first place. When you’re ready to move up, you’ll be to because you’ll have equity in the old place. Or just keep living there. Why not? Ive looked at some of these places and many of them are outstandingly clever in terms of use of space and very cheerful/cozy in their layout, too.
We had to leave Palo Alto where I grew up, in the early 80s. My husband went to college there but we moved out of the area closer to Sacramento. We saved for five years then bought a small old home in his hometown that needed some fixing. It was hard to accept that we had to live in a 1,000 squire foot home but we got used to it, lived there for 16, years while saving money to buy a bigger house in 2002. Then it took years to fully furnish and install the back yard. When the 08 recession hit my mothers home sold for 190,000. She had purchased it for $325,000 in 1999. The elderly lady who bought it got a steal.
So for young people yes definitely team up keep your eyes open and lower your expectations. You will not die if you live in a small town in a small funky house with 1 bath and hand me down furniture. In fact you will be living the way most of our parents and grandparents had to live if you came from modest means. But you will be building equity and becoming members of a community. If you are planning college skip the pricey 4 year college and student loans. Go to a community college then transfer to a four year as a junior to get the resume degree. Or go into one of the trades, electricians plumbers and contractors make a lot of money. Nurses are in demand in our area.
Good advice, RS. 👍
Exactly so. I remember in my youth when we lived in a house with two adults, four kids and a single, small bathroom. The standard of living has been reduced due to government actions and the middle class has been hollowed out, BUT….
Americans have been spoiled rotten starting with the Boomer generation. This is important because expectations have been high due to increased wealth among the middle class. As the U.S. governments at all levels have embraced massive debt and so largely has the populace, basic necessities have become less affordable. Eric’s advice is good, but as a savings mechanism, fiat currency remains an unstable base. I’d figure out a way to save in some fungible asset like gold or silver or even crypto so as to protect against the continued debasement of the fiat currency.
Due to the perfidy of government and it’s endless wars, life is going to be more challenging. The good news is that humans are very adaptable and barring nuclear war, we will survive. On a positive note, there is some degree among the youth of how corrupt our food system and medical system have become.
You might think that with the egregious $7,500 EeeVee tax credit going bye-bye, buyers would be advised to tread carefully. But you’d be wrong — here’s some July 4th brain damage from APe News:
‘The up-front cost of an electric vehicle might be higher, but for those who can afford to consider the lifetime fuel and maintenance savings, Ingrid Malmgren of Plug In America said the EV is still a good financial and environmental move in every state.
‘Electric vehicles might not be cheaper to buy, but they are cheaper to drive. Malmgren said that even without the federal tax credits, an electric vehicle owner would still come out ahead.
‘A 2020 study in the academic journal Joule found that the average EV in the U.S. charged with a typical mix of public and private chargers saves the driver $7,700 in fuel costs over a 15-year life span, compared to filling a car with gas.
EVs are still cleaner, even when they charge on coal power
“They are a no-brainer,” Peter Slowik of International Council on Clean Transportation said. “Electric vehicles are already inherently so much more efficient.”
A 2023 analysis by Yale Climate Connections found that electric vehicles are responsible for less carbon dioxide pollution [sic; LOL] even in areas where the electricity used to charge them comes from coal.’
https://tinyurl.com/32zvmk96
Ah, Christ shit howdy, the wokester stenographers are never gonna stop!
Death to the Lügenpresse.
Hi Jim,
Gawd. This is such obvious bullshit it makes my teeth ache. The first obvious bullshit being this “15 years” thing. An EV’s life might be that short but almost any late-model vehicle has a 20-plus year useful service life. How ’bout factoring in the longer useful life of a vehicle (rather than an EV) as part of the savings vs. cost? Then how about cost, itself? One can buy a new Nissan Versa for just over $17k, sticker. That’s easily $10k less than the base trim (low range) Nissan Leaf. The Versa carries 11 gallons of gas and has a range of about 300 miles. Most people would only need to fill up once a week at a cost of about $33 so about $132 per month or about $1,600 annually. So it would take about six years for the owner of the Leaf to reach break-even vs. the Versa on fuel costs. And by then, the Leaf’s battery would likely be losing charge capacity. How much is a new replacement battery for the Leaf? About $6,500 – and there goes your “savings.” Plus the EV will need new tires sooner. And it also needs other service, just like any other car.
Plus the environmental cost of at least two container ships sinking due to car battery fire. that I know of
Yeah, “15 year lifespan” my ass. I doubt the battery will last half that long so kiss that “savings” goodbye.
I’m about the same age as Eric, a little younger perhaps. My first job was in a college town (State College, PA). The housing market in the mid 1990s was starting to explode in town, and it was surrounded by large gentleman farmer plots that were priced much more affordably but still because the plots were large, out of my price range.
Then the .dot.com boom happened. All of the sudden people were leveraging their stock portfolios into a building boom in town. Didn’t help that the AARP started promoting college towns as great places to retire. Between the college day traders and the old folks escaping Philadelphia prices skyrocketed.
Next came 9-11. A lot of people who were on the cusp of retirement anyway decided to escape the cities, but not too far away. So now State College was overrun with New Yorkers too. Selling their million dollar condos for McMansions and gentlemen’s farms, pushing affordable housing further away from the city.
So I left for a part of the country that I knew was overpriced going in, and had wages a little closer to match. When the 2008 housing bubble burst I started watching prices. And saving a lot of cash. When I found a hidden gem I bought (and paid off the mortgage in 7 years). It was possible, and on one income too. Sure, it’s not a 5 bedroom monstrosity, or on 3 acres of land, but it’s bigger than a tiny home and backs up to a green space.
The constant drum beat from big government types out here is “affordable housing” for workers. Most of the workers are huddled in lousy employee housing or trailer parks. The Aspen hospital has a parking lot full of RVs for staff. The trend is to build a bunch of tiny homes that are then rented out, the worst of both worlds. No one ever considers that if they want working class people to own houses or condos, maybe they need to look at who they’re hiring and how much they’re paying them. Most of the workforce these days has an ITIN number, not a social security number, if you catch my drift. Because they’re the only ones dumb enough to work for minimum wage in a resort town.
I’m between Harrisburg and York. Same here. Over the last 20 years it went from available land for affordable prices to plots starting at $75,000. Plenty of houses under $150,000 to nothing you’d want to live in for less than $300,000.
If I were starting over, I couldn’t live here.
The escape from Philthadelphia has been one of the most underreported stories of the last 20 years. I mean, those of us from the Pittsburgh end of the state never really wanted to associate with the down-easterners, but Phy looks like it’s in competition with Detroit and Baltimore for the “worst places to live… or die” list.
This house price to income chart ends in 2023, but it captures the big bubble-up starting in mid-2020:
https://tinyurl.com/mr4xvt6w
It shows we’re in the biggest property price bubble evahhhhh — even bigger than 2006.
Home sales have ground to a halt in my little town. Properties linger on the market for months. Agents do open houses where hardly anyone shows up. Mortgage rates near 7 percent are a drag on the market. Suddenly AirBNB rentals — of which there are dozens — aren’t easy money anymore. Whoops!
How does an out-of-whack market like this one re-equilibrate? A 30 percent price drop would be one way.
Dipshit developer Donnie Fubar just wants lower interest rates no matter what. Running $2 trillion annual deficits (which the bill he’s gonna sign today guarantees) is not conducive to lower interest rates.
Longer-run, this is an inflationary set-up. Short-term, a recession could drop prices as demand craters.
Running permanent 8 percent of GDP deficits just to keep the economy treading water is patently f*cking insane. I deplore living in a command economy managed by ignorant stooges. Military Keynesianism, comrades: it’s what’s for freaking dinner.
The 28% Rule
Mortgage lenders have long employed a “28% rule” when evaluating applicants. They
approve loans only when the new housing costs are 28% or less of the applicant’s income.
This chart (link below) shows that the standard is now unreachable for most potential buyers.
Under the 28% rule, the median buyer can only afford a $2,019 monthly payment. The
median US home payment, including taxes and insurance, is now $2,860. This helps
explain why the housing market is frozen… and the only solution may be for sellers to
drop their prices.
https://x.com/biancoresearch/status/1938351128934040053
An $841 shortfall is pretty significant. I think my mortgage was only $900 or so and that was in 2013. Trump wants lower interest rates because that way sellers don’t need to lower prices. Powell is playing a game of chicken with the real estate markets, seeing who breaks first. There’s no doubt prices are too high, but 5.9% on a 30 year mortgage is more than 3-4% of the last 30 years too. Doesn’t help that private equity is still buying and setting up rentals.
Nice to see you’re paying attention, “the only solution may be for sellers to drop their prices”.
More than, that. I expect. Regulations etc..too.. but there’s a whole party machine working hard to make sure none of that happens.
…Pushing on a string?
There is an elephant in the room very few address…why are homes more expensive today? Yes, inflation and government building codes are contributing to the higher cost in housing, but the main culprit is a lack of housing.
In the “old days” we paired up. People married after high school and college. Families started young and debt driven by a four, six, or eight year degree was unheard of. Today people are no longer marrying and they leave college with $150k hanging over their head. There is a reason that the median age is 40 for the purchase of a new home…the four year degree has finally been paid.
Now onto the housing shortage. Twenty years ago John and Sara married at 22. Now, John and Sara are marrying at 35 or aren’t marrying at all. What does this mean? Instead of John and Sara sharing a home they now need two separate homes. So does Rob and Becky, Mitch and Michelle, and Andy and Amy. Instead of only four homes or apartments we now need eight. Hence, the demand in housing and the increase in prices.
Many of the “new arrivals” aren’t above sharing a trailer between a few families, especially brothers, cousins and between generations. Something the “nuclear family” doesn’t. Of course if the code enforcers find out you have too many families living under the same roof you’ll be fined. Somehow they don’t ever inspect the trailer parks.
Hi RK,
Another reason for a housing shortage…the mass entrance of border crossers. When we add 20 million extra people in a 4 year period we need more housing.
Yup, a lot of this extreme housing pricing is demand. In our urban place (NE), they are building condo’s/apartments in numbers I have never seen before. Even though our area is suburban, it will be changing. Our ‘town’ is 10K people, and I’ve calculated they are adding 3-4000 in the next year or so once these places are finished. I keep telling my friends and family that our suburban area is about to change for the worse, likely forever.
The ‘why here’ question is elusive to anyone I ask.
Luckily we have a reprieve in a rural area if we need to ‘escape’, maybe forever….. we’ll see. I think my spidy sense is correct.
I thought yous guys was smart, I may have to re-evaluate that:
“Instead of only four homes or apartments we now need eight.”
“Another reason for a housing shortage…the mass entrance of border crossers.”
“a lot of this extreme housing pricing is demand”.
The prices are high because of: – fake money + price-fixing – and goobermint regulations up the wazzo. All the rest of your excuses are just noise & misdirection.
There’s miles & miles of empty dirt on the edge of every city. Ask yourself, why isn’t it being made more useful?
There is also the expectation of living in the McMansion that you grew up in. This trend toward larger and larger buildings on postage stamp lots has been around for a generation or two. It has also brought about a lack of efficiency in design. As you point out, Eric, zoning (the equivalent of the Federal Motor Vehicle Safety Standards and CAFE rolled into one) has had a deleterious effect on building design and land use. GovCo strikes again!
Between minimum square footage per person and building codes (some for “safety”, others for appearance) they’ve dictated ever growing home size. People can live quite nicely in a single-wide trailer on an acre but, GovCo says NO! you must comply with our mountain of regulations. Basic protection from the elements will not be tolerated. As one bureaucratic bitch once stated in my presence, “We want our city to look nice”. Her royal air was a putrid stench.
Today we recognize Independence Day. The slogan should be, Meet the New Boss…well…you know the rest.
Morning, Mark!
Yup. When my old house was built in the early ’70s, it was part of a modest, working-class development. But in those days, working class people could still afford a modest detached home on a small plot of land. By the time I bought the house in the late ’90s, they still could; these houses were still lower middle class/working class homes, which is why I was able to buy one. Within a few years of that, the market – driven by speculators – had gone ballistic. My house more than doubled in “value” by the early 2000s. Since I sold it – back in 2004 – its “value” has more than quadrupled. Houses in my old neighborhood – the same houses, mind, that were originally and until fairly recently, modestly priced homes – now sell for $600k-plus. Back in the ’90s, that amount of money bought an estate home in Fairfax County.
Today, it buys a T-111 sided old ’70s house built on a slab on an eighth of an acre lot. A “nice” house in that area of Loudoun County – where I used to live – now starts around $800k.A similar house in Fairfax would be closer to $1 million.
I don’t think it’s possible to buy even a townhouse on the periphery of Northern Va – an hour’s drive from DC – for less than $300,000.
Peter schiff made a good point once – an areas land and housing value is determined by what it produces. NY got expensive by trade, industry and then services. SF by tech. LA movies. The Washington DC area has some of the most expensive real estate in the country…. What exactly is it that DC “produces”??!!
War. It’s very lucrative.
Bingo. You win the internet today.
We moved to Maryland in ’88 and closed on our house in Jan. ’89. Due to a corporate merger I was canned in September of that year. We paid $150k for a new house in a development in Howard County and sold it in October for $170k. It’s currently listed for $650k Most of the folks on our street worked in DC. It was like living in the U.N. As you, we split for a rural county west of Charlotte…and now they’re coming again.
Oh, I forgot one thing, the house was a piece of crap. At the closing after the walk through I told my wife I hoped we weren’t the last suckers in line.
At 600k, that 1970’s house is a really bad deal. It’s now 50 years old, and track houses that are that age, need plenty of replacement parts at this point. They were built with deposable parts, so the siding, windows, roofing, HVAC need replacement. It also probably needs electric and plumbing repairs and upgrades. That doesn’t even consider any cosmetic upgrades that many would want (but not be able to actually afford). So you are looking at a 100-150k rehab on top of that 600k.
See, now that’s a really excellent observation, richb.
Hi Mark.
As homes grow in size people now need to rent offsite storage for all their stuff.
Aah to live in those days of old when all your stuff could fit neatly on your own property.
The massive growth of self-storage facilities (and car washes) seems to be largely ignored.
That, to me, is another sign that the American consumer STILL has a ravenous appetite for taking on debt and the end of this “economy” still has a long way to go.
Basements, garages and attics are bursting at the seams because of the firehose of Chinese crap, people will waste money to store it. Even tariffs won’t get in the way of a credit card. Insane.
Hi Flip:
Yep, quantity over quality. The sad thing is that the Chinese stuff can be pretty good quality for the price you pay. I’ve had nary a problem with Chinese wrenches. Bottom end Chinese multimeters don’t respond well for use with generators but I guess that’s why I’ve got a couple Flukes.
I flip some small engine stuff and at least in the better Honda clone engines they seldom give much trouble. Run from the low end stuff as it can be pretty bad.