> All else being equal, we would expect 50% of homes to be unaffordable to a median buyer.
Sounded reasonable on first and second reading. But now I question why. Would 50% of avocados be unaffordable to the median buyer? Would 50% of private jets?
Sounded reasonable on first and second reading. But now I question why. Would 50% of avocados be unaffordable to the median buyer? Would 50% of private jets?
Of course, there's also a large set of people who cannot afford to be buyers [in areas suitable for them to live] for various reasons and this median income dataset includes them. Not entirely sure they've used median household income and not median individual income either
Houses are probably more like a car market - it's designed to cover everyone, and so there is a percentage that is unaffordable - and that I think is the real point - the orignal article kind of assumes all houses should be affordable - but that's not true. The OP argues that only 50 % are affordable - that's kind of a guesstimate and think the percentage is more likely similar for cars - not sure what it is but let's guess 80%.
Add in fact that affordability is defined so ways - percentage of incame and will someone give you mortgage and most of the disagreements go away
Designed by whom, Government? Someone else?
If it is designed, is it designed correctly?
I am concerned that pro market position wants to have it both ways, sometimes claims its designed and sometimes that invisible hand knows best.
They seem to be unwilling to examine market failure and fix prohlem before they result in disasters like 2008 did
How did this figure get picked and what does it really mean? In a wealthy district where people are saving a lot of money, obviously they can afford, in the literal sense, interest payments that are higher than that.
The 30% thing is completely arbitrary and a massive distortion of reality.
It would be more correct to use actual living costs in a given area (food, transport, etc.).
Avocados are homogenous. One is generally as good as another. It's hard to convince someone to pay significantly more for an identical product (although- it's possible through marketing and there are boutique produce suppliers with wildly unaffordable prices. Specially imported/handled fruits and the like which aren't found in grocery stores)
Homes are not homogenous. Real estate values vary wildly in value based on location, size, and other characteristics. This will always be true because real estate is inherently a zero-sum system. A skyscraper will have drastically different prices for units along the side of the building with the best view - or near the top, etc.
The product is inherently unequal with large differences in demand between each type of unit, so prices will always be unequal as a result. People with more money will always be able to bid higher than people without. This dynamic exists no matter how many homes are built.
Where did you get the %50 figure from?
"Where did you get the %50 figure from?"
It's literally the definition of a median.
You have not explained how you've connected the 50th percentile wage earner to "50% of homes".
Bringing up other unrelated items which obviously don't have a %50 <-> %50 mapping should have made that clear.
Yes I did. It's the second paragraph of this post. You may want to read it again keeping in mind your question has already been answered: https://news.ycombinator.com/item?id=35041925
"Bringing up other unrelated items which obviously don't have a %50 <-> %50 mapping should have made that clear. "
Incorrect, as I've already explained in the above post. Eggs are a fungible commodity, homes aren't.
> as I've already explained in the above post. Eggs are a fungible commodity, homes aren't.
So all I have to do is find a non-fungible commodity X (which is not as "silly" as private jet), and it will follow that 50% of X will be unaffordable to the median buyer?
No, that's a contradiction in terms. Homes are non-fungible, non-commodities. You'll also need something in broad demand with a fixed supply.
Housing is viewed as an investment, not an expense.
People generally buy the most house they can afford - but not the biggest avocado they can afford.
People buy house for a plethora of reason, walkability, school district, commute, safety, etc. and that's not even getting into anything about the actual house! square footage, back yard, front yard, garage, bathrooms, bedrooms, etc.
People want the most of what they value but two different people with the exact amount of money to spend on a house would likely choose different houses that they both consider the "most". And if you give those people the same amount of money and tell them they must buy a house but they can keep any money they don't spend, they'd probably make a different choice, buying "less" house than the can afford.
People generally buy the house that the like the most that also fits their needs/wants, same with avocados. Sometimes I buy them ripe because I want to eat them today, sometimes I buy want them for a few days in the future for a specific occasion but not more than I can use. Sometimes I just buy them because they're on sale and I like them.