- cross-posted to:
- housing_bubble_2@lemmy.world
- cross-posted to:
- housing_bubble_2@lemmy.world
The number of US cities where first-time homebuyers are faced with at least a $1 million price tag on the average entry-level home has nearly tripled in the past five years, according to new research.
A Thursday report from Zillow indicates that a typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019, underscoring America’s ongoing home affordability crisis.
“Affordability has been strained across the board,” Orphe Divounguy, a senior economist at Zillow, said. “We see the largest number of million-dollar starter homes in expensive coastal markets. We see them in markets with very low homeownership rates and we see them in markets with more building regulations.”
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Precovid houses I could afford with a weeks pay. Now it’s the whole pay check. Ridiculous. Wanna fix the birth rate fix this. I’m tired of being born at the wrong time for everything. It’s always some bs.
Precovid houses I could afford with a weeks pay. Now it’s the whole pay check.
You mean rent, right? Right?
No, it was ultra cheap in my region. Cheaper than rent. I begged my partner to by a house since it was HALF our rent for a decent 2014 built house with acres of land. But nooo they want to rent for life. Now that I finally convinced them otherwise I can’t afford it. It causes alot of resentment for me.
Your partner is a fucking idiot lol.
Sigh SO different goals caused by huge family trauma is the story of our relationship. In this case SO Family never maintained home and it looks like on it’s way to a Horders house. Literally Bathroom has been torn up for 10 years no work done outside demo. I can see literal floor below me in some parts. And if I offer to help one weekend to finish omfg watch that volcano. Its like reality TV with all the emotions. So the idea of having someone else maintain property was a plus in that traumatized mind. I could go on but I know I’ll reach text limit 6x.
You’re not making sense. What is the difference between “a weeks pay” and a “whole pay check”?
i agree is not clear, but i assume this person means 1 week pay vs full month salary to pay for mortgage, since the increased house prices and interest rates, a double whammy
Oh sorry monthly. Price rose to 3x initial monthly value. So not quite my whole pay check but basically.
Most people are paid bi-weekly, so every 2 weeks. So the mortgage cost pretty much doubled for them.
Just chiming in, most people in the world are not paid bi-weekly, monthly seems to be more of a default.
Price rose to 3x initial monthly value.
most people in the world are not paid bi-weekly,
so to put all pieces together:
most people are payed once only after having worked for it three times that value.
My mortgage payment is $1k at 3.5% interest. That is a 15 year mortgage that I have 5 years left on and the payment includes escrow (taxes and insurance) it was in the $850/$900 range but taxes and insurance have increased.
This is a 4 bedroom/2.5 bath with a 3+ car garage in a small town near a largish college town which is 15 minutes away.
We may be getting an advanced transportation research facility as well.
There are “better” communities in the surrounding area with much higher prices due to very high school rankings.
I hate you. Not really but we’re looking at 4 times that if we want to buy.
To be fair my home value has doubled and my taxes and insurance are only going to keep going up. If I sell I’ll be in the same boat as you and probably couldn’t afford to buy something else.
A side effect of sky rocketing housing prices is the annual tax liability also goes up, so people on a low or fixed income may no longer be able to afford the home they’ve lived in for decades. It’s the same problem that happens when neighborhoods are gentrified.
Some localities limit the increase in taxable value to a fixed percentage, which can combat that. The taxable value of my home is something like 25% of the actual value.
Which has the downside that it locks people into their current home because moving would mean losing their favorable rates.
Rising prices are bad for everyone.
What happens when you sell it?
New owner gets taxed based on what they pay for it, so they county will end up collecting more.
That’s just how life is in a society. Don’t fall for the stupid Prop 13 trap that ruined so much in California.
Edit: how TF does this get downvoted to heck but my reply one down is upvoted even higher even though they say the same thing. Are you all just bandwagoners here? I thought I got away from redditors but I’m having second thoughts now.
As long as people are selling and buying houses what’s the problem?
People aren’t selling, because their tax bill will 10x at whatever place they downsize to. The older generations are all living in 5+ bedroom homes with 1 or 2 people while young people are raising families in 1br apartments. It means that across the state communities are dying out and young people just aren’t having families anymore. On top of this, suburban sprawl is completely out of hand because all the people who bought before prop 13 was passed were living in the metropolises since they were working age. Now that they are retired they still live where the jobs are, and the young working people have to commute 2+hrs each way to get to their jobs.
The people with a 5 bedroom house could sell for so much money they wouldn’t care about the tax bill at the new place. Going from 5 bedrooms to two bedrooms means you could outright buy the new place and have 2 million dollars left over. At that point you’re crying into your Scrooge sized bank account about property taxes.
And if you’re worried about the people who bought condos or other small city homes staying there until they die, that’s the point. The entire point was to prevent people being pushed out of their homes.
It never stopped people from buying a smaller house or moving for new jobs. Not building enough housing to cover the natural rise in population is the reason we are here. Insisting that all new housing be single family detached housing in suburbs is why we’re here. Those are far more impactful things than the people who just never move.
They may not have much money left over after downsizing, however. In markets like California the value is almost entirely from the land. The comparative value of the house (even a 5 bed) is comparatively negligible. So a 5 bed on a small plot would cost almost the same as a 1 bed on the same plot. In Silicon Valley it’s really common to just buy a house and knock it down and rebuild, since the cost of building a new house is much less than the cost of the land.
It’s a genuine issue that the liquidity of the real estate market is impacted by this.
You’re assuming a lot there though. Why would a 1 or 2 bedroom have a plot of land the same size as a 5 bedroom? You can go look at the average prices and there very much is a difference.
This is wildly incorrect in many cities, likely the ones the article of talking about.
Size has so little relevance to cost these days that there is no logical way to downsize. The mortgage doubles whether they sell and buy a house of the same size or one half as big.
What are you talking about? Here’s 4 bed houses in La Jolla, San Diego.
And here’s 2 bed houses in the same community.
Size very much has relevance. Where people are locked in is they got a starter home in the past decade, (or 2) and the price to move into a larger house is so much that not only are they wiped out on any windfall, they’re also back on another full 30 year mortgage at a higher rate, and higher total payoff amount.
Downsizing is easy.
Literally cannot downsize. By that I mean people will be in a house that’s 2500+ sqft and their mortgage might double moving to literally any house in the city regardless of size. Most people don’t actually want a (poorly made cheap pos) mansion twenty or thirty minutes further from civilization, but that’s all that’s legal to build.
You’re just wrong. Even the worst places for housing allow for downsizing. There’s always the possibility that someone couldn’t pay the higher monthly amount for another reason, like having structured debt payments. But generally speaking downsizing is easy. The windfall from selling covers the new house, in the same neighborhood, and literal decades of taxes and maintenance, longer than you will live unless medical science makes a breakthrough.
Obviously it sucks if they have to move, but it’s hard to feel too sorry for people that have become incredibly wealthy…
Also, municipal expenses don’t scale directly with property values… So while local taxes are often based on home values, they are adjusted to the level that meets the municipal budget. If everyone’s house doubles in value one year, taxes stay the same, not double…
Most homes are simply out of reach for most Americans at this point, particularly if you live in a city. Even renting one is extremely expensive unless you move into a smaller town.
In the (rust belt here) midwest it’s almost reversed, homes in the rural areas cost much more than they do in the city. But our cities are car centric wastelands, where whole city blocks have been turned into parking lots.
Not to mention, smaller towns have much lower investment capacity in revitalizing century old infrastructure. There’s not enough appeal or added convenience for most to live in the middle of a 20-60k population center opposed to the privacy and space offered by smaller neighboring municipalities or outskirts. Footing the bill for renovation and raising rent to compensate, because almighty profit, eliminates their only clients. Housing’s fucked here all the way around.
P.s. any one got silly little 20k to pull me out of debt and give me a down payment on a starter home? 🙃
California?
(checks notes)
More than 100 of the 200 are in California. :) Next closest is New York at 31.
Seems like a mostly California problem.
It’s not just a California problem. It’s a coastal city problem.
It’s not really shocking. The coast is valuable and limited. Living in an expensive coastal town isn’t really “starter home” material.
You wouldn’t say that if you saw what they’re selling for a million dollars. House built in the 1940’s with no maintenance except paying off the inspector not to condemn it? Yup that’s a million dollars. Falling into the ocean because of coastal erosion? It has an extra bathroom, it’s 1.5M.
I joke obviously but I’m not that far off either.
Actually, I’d be saying that even more.
People aren’t buying the house. They’re buying the location/
I mean, the coasts aren’t really that densely populated. If we build nicer cities there would be plenty of potential space.
Instead we build shitty suburbs and sprawl, which will always lead to awful, expensive cities
Sure, there are remote coastal areas, but nearly all of Americas most important cities are coastal
this reminds me of the then they came for me thing. I remember when you could pick up a cheap home if you moved to like iowa. Its not as expensive but its not cheap like before.
I didn’t look at the list, but housing prices are out of control in a lot of places, even if they haven’t hit that $1 million mark yet. A $750k starter home is just as absurd and out of reach for the vast majority of Americans.
We’re telling young people not to have kids and not to buy homes. And it’s everywhere, not just California.
Texas is getting hit hard because it’s gone from very affordable to super expensive quickly.
Homes in my area have tripled in cost over past 5 years.
super expensive
There are very few places in Texas that are super expensive.
So you’re not from Texas then
Not from Texas, for sure. But I can say with confidence that there are very, very few places in TX that are “super expensive” compared to California, which was the subject at hand.
I am more focussed on the term “sorry affordable”
20 years ago, my mother bought a house for just under 50k. Houses in my hometown, of the same rough location and type, now go for 4x that.
Insane that housing prices have outpaced inflation by such a ludicrous degree. It’s almost like the system is broken, the ultra-rich and corporations have found all the good tricks and loopholes and are exploiting them to the detriment of both ordinary citizens and the nation as a whole.
I cannot recommend the book “Escaping the Housing Trap” highly enough. It talks a lot about the funding and financial products around housing and some of the fundamental flaws in the system. It’s quite easy to blame institutional owners and they’re certainly partly at fault, but it’s vastly more complex than that. It’s a really great scary read that genuinely had my mouth hanging open at times.
Tldr?
You can’t exactly just tl:dr an entire book, lol
20 years is enough to double twice which would be 4x the price. That is how appreciating assets work.
Housing shouldn’t be an (in real-terms) appreciating asset. In the long run that just leads to feudalism.
Imagine if everything keeps appreciating for 200 years… now only cyborg Elon musk can afford to buy a house.
With finite land, it’s never going to not be appreciating.
What about income…?
Mine more than quadrupled in 20 years.
Try this: when you first started working, what were people with 20 years of experience making in your industry? How does that compare to what you make with the same 20 years of experience now?
My income has not doubled in the 10 years I’ve been working full time. But, more importantly, the amount of money people with 10 years of experience were making when I first started is not drastically different from what I am making with the same experience now.
where did all this extra money come from to pay for these homes at these rates?
Large-scale investors buying up housing stock to rent out.
and where are they getting this extra money?
edit: c’mon people the bush and trump tax cuts were trillion dollar gifts to the worst people on earth and their heirs. These people need to be taxed.
Rich people have money.
Rich people buy things us poor can’t. Or more of those things.
Rich people control the markets.
Rich people squeeze the lifeblood out of us peasants.
Only rich people can afford homes.
Rich people raise rents the servants must pay because being homeless is illegal.
EAT THE RICH
The best way to make money is to already have money invested. You take the proceeds from your earlier investments and invest in MORE assets.
In this case it’s real estate.
Rent payments
COVID and free money.
Working poor people. Money always comes from working poor people.
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Why would Trudeau do this to the USA
Pierre Poilievre… Probably
I hate that there are people who would agree with what you said.
Look what biden has done to Canada!
We need to be liberated!
This smells like bullshit. I mean, if they define “Beverly Hills” as a city, I can see where it might be literally true, but I wouldn’t call even the cheapest house in Beverly Hills, Scarsdale, or Paradise Valley a “starter” home. There’s homes in the LA, New York, and Phoenix metros under $3-400k, if you’re not so choosy about the neighborhood.
From a canadian perspective, it sounds believable. About 10 year ago, you could get a new build on half an acre for 350k in my hometown. Today the oldest, run down, needs lots of renovations houses in the city on a quarter acre are going for over 400k. Those 350k new builds are easily into 700-900k range.
My biggest mistake in life was not buying a house fresh out of high school, but i was an “idiot” who looked at housing as a place to live, not an investment.
Stupid millennials, should have saved up our lunch money for a down payment and spent recess house hunting. If only we had known we were supposed to start saving for retirement ten years before we were born…
Im pretty old but I often think about how much better off I would be if I got an associate degree and some certs and then bought a house asap.
Yes and no. We own a house and we would love to move to another city, but since we live in a less desirable city, we can’t afford a house anywhere else. So if you don’t want to be stuck somewhere forever, be glad you didn’t.
Beverly Hills is literally a city. It is autonomous from the Los Angeles city government. It has its own government and its own laws.
And do please show me where the L.A. homes under $400k are. There weren’t L.A. homes that cheap outside of Watts when we lived there over a decade ago and I’m not even sure about Watts.
https://www.zillow.com/homedetails/20159-Cohasset-St-UNIT-9-Winnetka-CA-91306/68991194_zpid/ I’m sorry if that doesn’t fit your criteria for a “L.A. home,” but it is a place you can live, in Los Angeles, under $400k.
But that’s my point: some cities do not have any “starter” homes, at all, and defining a “starter home” as just the bottom third of every municipality is misleading bullshit. It implies that you need $1M to buy a home, and you don’t.
I agree that home prices have gotten crazy and unaffordable for many. I just want to have a realistic discussion of what that means so we can work on realistic solutions, and “you need $1M mortgage just to get your foot in the door” doesn’t help.
Oh, okay. Sure. If you want to live in the middle of the SFV and are okay with a 3-hour commute, it’s doable. I don’t think you realize how big L.A. is. It took me well over an hour to get from NoHo, which is in the SFV, to the guy I bought weed from in Canoga Park, which is next to Winnetka. But sure. Go out far enough and the homes get marginally cheaper.
I think we’re working with different definitions for ‘starter home.’ To me, ‘starter home’ is a real estate agent’s euphemism for ‘undesireable shithole.’ It is a home you expressly do not want to live in long-term. It’s temporary housing to build equity while you’re young, able to sacrifice living standard and comfort, and waiting to earn enough to upgrade to an actually desirable house.
From the goalposts you’re moving, it sounds like you think a starter house is somewhere affordable that you’d be willing to move into today and live indefinitely. And yeah, that’s probably going to be unavailable to most people. Most people don’t get to live in their dream house in an ideal neighborhood. Never have.
You do realize that you’re calling a house that costs hundreds of thousands of dollars an undesirable shithole, right? I think you’re proving my point.
What exactly is your point? Because my point is that undesirable shitholes costing hundreds of thousands of dollars is a more pressing problem, with different solutions, than not being able to find a house in Beverly Hills under $4M.
So your point had nothing to do with the article, which isn’t about $4 million Beverly Hills homes (which would be cheap for BH)?
It’s almost like we’ve let a ton of rich neighborhoods become cities so they don’t have to pay as much in taxes and they can prevent their staff from living near them. Unless of course they want to live in the “staff quarters”.
"A Thursday report from Zillow… "
Fuck you Zillow! You are mostly at fault as to why the housing market is such shit
I’m wondering what a “starter home” is in this case.
For me that’d be about 40sqm and 150k €
Are people buying bigger homes than they need?
America is deeply obsessed with single family homes.
Most homes are 90 m² or larger. I’m in a medium sized city in the midwest and I have a 3 bedroom 130 m² home I got for 115€ but it’s already inflated in value in the last 15 months to 138€. I wouldn’t be able to afford the house I purchased 15 months ago, if I was house shopping now. And homes currently cost nearly double what they did in 2019.
It’s nearly impossible to find smaller homes in some areas of the US. I lucked out and bought an 800 sq ft home for my starter. I’m now in a 1600 Sq ft condo and it’s more room than my partner and I need. I’m hoping to downsize.
I’m wondering about that too.
In my area, i was above starter home (because of updates) on a 2 bedroom, 1 bath house built in 1946, on a fraction of an acre. But we have an older stock of houses. Where my brothers live, those are not even choices. Those towns really didn’t exist at that time, so most of the houses are much newer, much bigger, on much bigger lots
I lived in a house in Japan that was a rental. It was about 55sqm + loft with a parking space out front (which became my container garden). It was pretty good for the wife and I with me working from home (so using the 2nd bedroom as an office). I looked at what it would cause to buy a similar house used (far western Tokyo about 1.5 hours to Shinjuku station, neighbors on two sides the legally required 90cm or whatever it was away) – 50 million yen give or take a bit. Someone might look at the price in USD or EUR or something and think it’s not much, but it is for someone getting paid in said yen.
Starter home? This is a finisher home! A dwelling of gods, THE GOLDEN GOD
