Americans now need to spend 43% of their income to afford a home | Hacker News Reader

Americans now need to spend 43% of their income to afford a home

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31 pointspaulpauper8 comments

The FED thought it could fix housing prices by raising rates (yes, they did [1]). What they failed to realize is everybody is now so locked in with their sub-4% interest rates, the vast majority are happy to sit for the next 10-30 years. This is going to mess up the market for a long, long time. I say this as someone who was lucky to get one of those sub-4% rates, but now would like to move closer to my new job, but can't justify it.

The future is you either have a house or you don't and the down payment and monthly payments escape your income bracket or destroy it on a monthly basis. Nobody with a sub-4% is going to sell, the cat is out of the bag and its more profitable to hold that low of a rate longterm and rent it out than sell.

[1]: https://www.cnbc.com/2022/09/28/why-are-houses-so-expensive-....

They definitely did not fix housing prices. Demand and purchasing power are lower with the higher interest rates, but supply is abysmal for the reasons you mentioned.

> Nobody with a sub-4% is going to sell

Nobody with a sub-4% is VOLUNTARILY going to sell. Home prices have slowly dropped to adjust for interest rate increases. However, a "price reset" will probably occur in areas where folks need to sell due to financial hardship.

Credit Card usage has already seen an increase, savings contributions have dropped, and car loans payments have seen more defaults. Unfortunately, folks are struggling these days.

A sudden "panic sell" of just a few homes could cause overall homes values in a neighborhood to drop, thus "correcting" or "resetting" over-inflated prices. Unfortunately, this would be a doomsday-scenario for many folks who bought recently in the 6-7% with inflated prices. Until interest rates dropped, they're stuck with a terrible payment while being severely underwater for their homes.

Can you imagine if THEY need to sell? Suddenly the value of their home doesn't even cover their mortgage. Now you're talking bankruptcy for many folks...

Idk which market you’re referring to but prices dropped but have risen in the areas I follow almost back to where they were peak 2022.

The future is a bunch of homeless people squatting beside empty houses listed on airbnb.

That's the current

You just described my neighborhood

The US horrible land use, zoneing and transportation policy in effect. Both housing cost and transport cost combined are huge part of people spendable income.

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