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Comment by thelastgallon | Hacker News Reader

Since 1965, home prices have increased 7.6x faster than income: https://www.realestatewitch.com/house-price-to-income-ratio-...

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To understand this, understand that to older homeowners and a significant slice of the financial industry this is a huge success.

To everyone else it's a disaster.

Absolutely, same here in Australia. Using markets as a mechanism for price discovery (what they are good at) for a necessity has gone predictably badly. Yes, people will put themselves in huge amounts of debt for a secure living situation, shocking I know.. /s.

I don’t know about Australia but the real problem in the US is that the aforementioned interests (homeowners, speculators) have acted effectively like a cartel to restrict supply. They do this by pulling out every possible objection to block construction permits.

Price signals work if supply can raise to meet demand. When house prices go up it becomes more profitable to build, etc. But when the supply side mechanism is blocked for a necessity then prices will just go up, and up, and up… especially if it can also be bought on leverage.

It's even harder to afford a home when you can't afford transportation to your job.

Since the 1950s vehicle prices have more than doubled, adj for inflation

Here's how entry level pickup trucks fared: https://www.thedrive.com/news/34333/heres-how-much-the-ford-...

It helps to also look before 1965. Right about 1970 or so was a very low point in the ratio of income to home price. It was higher before then, and since. If you look at the early 1970s as abnormal, then 4x is a pretty good estimate of the long term average. It's higher now, and was higher in 2008, but it's correctable.

How has the size of the average home changed? In terms of square feet. I’m curious how that affects the price increase rate. We definitely need to build more housing, that’s for sure. I’m very hopeful that the huge investments into renewables and modernizing the grid will produce a huge growth in worker compensation and another economic boom.

Or for that matter, what percentage of housing is new builds? My house is almost 90, and it doesn’t seem notably old, that’s just how old a lot of the housing in my suburb is.

Home size is a factor, but lot size is a more important one. Many cities explicitly or implicitly require minimum lot sizes and setbacks that make it pointless for builders to make small starter houses.

I wouldn't even say lot size is a factor as much as simply zoning rules and regulations. there aren't a lot of high cost of living areas, with the exception of maybe places like Manhattan, that actually don't have space for more housing. and even there, they have plenty of under-utilized space zoned for other things.

Nil. Smaller over time in new construction. The value is in the land, not the structure.

>How has the size of the average home changed?

Over 100 years, the bedroom-to-sq-foot ratio shrunk. That sucks hard in an economy where it takes 4 typical incomes to pay minimal bills.

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