Hacker News Reader

Comment by phkahler | Hacker News Reader

>> the monthly cost of housing hasn’t changed as a percentage of take home pay,

That is by design. Banks figure your monthly payment as a percent of income. Then based on interest rates they figure out how much you can borrow. Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. This is why lower interest rate cause higher house prices.

Interest rates are going up. Home prices have slowed. Speculation is over. Still waiting for the drop. The economy seems to have gotten really good at moving ahead in spite of pressure to slow. I fear there may be built up negative pressure that's about to give. Not sure though.

View on HN

> Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

Of course those groups urge you to spend the maximum: they're all being compensated if you do exactly that.

At the end of the day, it's still you who is signing the contracts, responsible for how you spend your money, and has to live with the outcome of your decisions.

Sure, personal responsibility still matters in an individual level… but that’s irrelevant to the point you’re replying to! I’m not sure of your point.

If those groups can convince a decent percent of people to spend the max that they can get away with, it doesn’t matter what you do personally. Prices will inflate because most others are still spending big.

It most certainly matters what you do personally. What that might mean in consequence is that you decide to buy a cheaper house than you could maximally afford, put a greater percent down, or you might delay buying a house for a while.

The differences among households' incomes are already higher than the reasonable ratio between the max approvable to borrow and the sensible amount to borrow. (A household making $300K can already sensibly borrow more than one making $100K can be approved for and one making $100K can sensibly borrow more than someone making $30K can be approved for.)

Households are still competing with others to buy individual properties, of course. That competition doesn't mean that you should YOLO it with the largest purchase most people will ever make just because others are willing to do so.

   > Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

You are not forced to spend above your ability to pay. People used to be ok with buying smaller homes, or in less hip neighborhoods. If you can afford a $500k house you can also afford a $350k house. People need to stop making excuses for living above their means.

You are ignoring the reality many are facing, where essentially all the available options are above their means.

Back in the late 80s Elizabeth Warren and coauthors showed that the most common reason American families went bankrupt was because their high housing costs were an attempt to get their kids into better schools.

The blunt truth is the 20 major metro areas are where nearly all the high income jobs are, so we've seen a decades long pattern of migration towards them. This is a huge underlying force in so much of US economics, politics, and culture. At the same time, these metro areas have not come close to matching demand with increased housing supply.

The result is increasingly people facing the dilemma where the best economic option for their family is for them to spend 3+ hours of their day commuting to an urban core from an outlying area they can just barely afford to rent in. And god help you if your kid gets sick or your car gets totaled. This is the reality for most working class Americans. It's not a matter of them living above what they can afford, it's about our society becoming so broken many people will never reach a threshold of affording anything like middle class prosperity.

And I am entirely out of patience for folks that earn tech industry money while moralizing about how poverty is just people overspending in some purely hedonistic stupid way.

   > You are ignoring the reality many are facing, where essentially all the available options are above their means.

Again, this just simply isn't true. Go to Zillow, and set your filter to houses under say $150k and check the metro areas of Kansas City, St Louis, Dallas, Little Rock, Memphis, Cleveland, Charlotte, Detroit, Milwaukee, Pittsburgh, Cincy, etc. etc. and you will get hundreds of hits in every one of those metro areas. These are not rural communities, millions of people live and work in these and other metropolitan areas.

People who say this are convinced they need to move to SF/LA/NYC/Boston/Seattle. Yes, real estate is prohibitively expensive in San Francisco, we get it. So don't move there.

The bottom end of the housing market is usually junk or otherwise tied up legally. Just because you get hits, doesn't mean that's a viable option.

I just did a housing search recently and found this out the hard way.

Look at the median for an area and then figure that you can go 10-20% below that for a "fixer upper". Even that isn't an option if you don't have DIY skills.

See above, and try it yourself. On a $150k house a first time buyer can use FHA to put 3% down, and if FHA approved the sale then by definition it is not a fixer upper.

That means a first time buyer can get into a $150k house with FHA for $4,500 down and $1,300/month (which includes property tax and home insurance).

This means someone making $25/hour can afford to buy one of these homes, right now, today.

>The result is increasingly people facing the dilemma where the best economic option for their family is for them to spend 3+ hours of their day commuting to an urban core from an outlying area they can just barely afford to rent in. And god help you if your kid gets sick or your car gets totaled. This is the reality for most working class Americans.

The average commute time for Americans in 2019 (pre-pandemic) was 27.6 minutes each way: https://www.census.gov/newsroom/press-releases/2021/one-way-...

Yes, there are supercommuters out there with very long commutes, but saying 3+ hours a day describes "most" Americans simply isnt true.

> If you can afford a $500k house you can also afford a $350k house.

Those numbers seem insanely high to me. I would've thought people are looking for more like $100k.

You won't find houses for $100k unless they are in poor condition or a bad location. That is roughly the price you would expect to pay for an average condominium in Germany.

Yeah, that's what I mean - not what houses are selling for, but what people are looking for/able to buy. Median income in the US is somewhere around 40k-70k/year depending on the source, and the general recommendation is not to exceed 2.5x that for the price of a home - so around 100k-175k.

Yes, as shown elsewhere on this thread, thousands of those types of houses are available in countless metro areas around the US. They're just not in San Fran or LA or Seattle so people don't want to take advantage of it. They must think jobs only exists in like 5 cities. Or really they just don't think it sounds cool to say they live in Kansas City or Dallas or whatever.

Or maybe living close to friends and family matters more ? Moving 2000km away from family and friends is an uprooting move.

Think about what you're saying logically. The US is huge and the vast majority of humans do not live in those same handful of high COL cities so no, everybody's friends and family don't all live in SF/LA/NYC/Seattle. It's simple - if you want to live in San Francisco then you need to have income to support it. If you want to be able to afford a 3,000 sq. ft. house in your 20's then there are countless places you can do that, but they're not San Francisco.

This reads like people complaining that a new iPhone is $1,200 and then saying "BUT I NEED A PHONE!". Yes, you need a phone. No, you do not need the $1,200 phone. Take the blinders off, there is a whole ass world out here.

Don't take it on me old man, I am just stating a fact you don't like. I am not even saying they are logical, right or advisable (see behavioral economy and all that).

> This reads like people complaining that a new iPhone is $1,200 and then saying "BUT I NEED A PHONE!". Yes, you need a phone. No, you do not need the $1,200 phone. Take the blinders off, there is a whole ass world out here.

And you read like an angry and sour person who wants to rub people's nose in it just to say "told you so" by deliberately missing the point I made. Maybe it makes you feel good but you are not helping anyone.

Except I'm right, which matters more. The best way to help people is to be honest with them. Validating their feelings might make you feel good, but it does them a disservice. I'd rather be right and sound like an asshole than tell them it's ok to keep heading towards their own demise.

I don't understand your beef or where that chip on your shoulder comes from.

All I said was:

> Or maybe living close to friends and family matters more ? Moving 2000km away from family and friends is an uprooting move.

Which is basically a fact that explain why it's hard to move for some. I don't see how it can - or needs - to be argued. I am not even claiming it's a valid reason not to move.

> Except I'm right, which matters more. The best way to help people is to be honest with them. [..] I'd rather be right and sound like an asshole than [..].

Oh but you just don't sound like one. Pretty sure you've already been told that.

Because they're not moving away from San Francisco, they're moving to San Francisco. And they're moving away from those friends and family that you were referring to, to do so.

The solution is simple. Stop moving to the same 5 overpriced cities. Or, don't expect to be able to buy a house there if you do. These are facts, ignoring them causes problems.

> Because they're not moving away from San Francisco, they're moving to San Francisco. And they're moving away from those friends and family that you were referring to, to do so.

No.

> Or maybe living close to friends and family matters more ? Moving 2000km away from family and friends is an uprooting move.

I was talking about why some people would find moving away from SF to more affordable places hard.

It wouldn't make sense to point that living close to friends and family matter more to some when moving to SF than moving to Dallas or Kansas City. What difference would it make to move 2000km away from family and friends to SF or to Kansas City ? Both case you miss friends and family.

You seem to have this preconceived notion in your mind that the Bay Area is the real world, and it's not. The vast majority of the country has affordable housing and available jobs, which means people don't need to move to the same 5 cities driving up the cost of living on those cities, they are choosing to do that because it sounds cool to say they moved there or they believe the lies that all the jobs are in the same handful of cities. And then they complain that they can't afford to live there.

You don't hear people from Dallas or KC or Cleveland or Pittsburgh or wherever complaining they can't afford to buy a house there, because I can go to Zillow and show you hundreds of houses in every one of those metro areas (and more) that are under $150k, and affordable to first time home buyers with an FHA mortgage putting less than $5k down and having a mortgage of around $1,300/month which makes it affordable to anybody making over $25/hour. In short, people are making excuses nd pointing to extremes in the Bay Area or NYC or wherever to validate their feelings.

Those are facts, and that is the math. Everything else is just feelings.

> You seem to have this preconceived notion in your mind that the Bay Area is the real world, and it's not.

Your insistence on trying to paint me into the object of your obsession, that people think the Bay Area is the real world and they are entitled to things you believe they have no rights to, while being wrong and out of place, is preventing any progress on your side in understanding what I am trying to tell you:

> Moving 2000km away from family and friends is an uprooting move.

It's hard, it hurts. That plays a role in people's behavior. You may not like it but it is what it is [0].

All the while you keep trying to convince me of something I don't disagree with (prices of real estate and houses in the US market). Quite frankly it's tiresome and I'll let you have the final word (another copy-paste of a napkin plan to become a homeowner or a rant against the youth-of-today and their damn iPhones I suppose).

[0] That being said, I can understand how frustrating it must be for you since according to your posts you don't seem to hold feelings in high regard or even have some, which would explain it all.

I gave you the math, which you couldn't challenge. It's the reason people continue to buy homes every day. You want it to sound impossible, but that's simply not backed up by the data.

Inflation has been really insane for the last few years, driven by cheap money from the Central Banks. Asset prices have been going parabolic.

>Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

That only applies if housing demand exceeds supply because buyers are competing. When sellers compete they try to reduce the price to cost plus profit where the profit is no lower than 3-5% because at some point other industries pay more.

Reply on news.ycombinator.com