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Comment by pocketarc | Hacker News Reader

> The income needed to comfortably afford a home is up 80% since 2020

Based on the $343,000 house price, and the 3%/7% rate difference they mention between 2020 and 2024, the mortgage on a house the exact same price would've gone up from $1900/mo to $2650/mo. That alone is already a 40% increase.

Obviously houses prices have inflated along with everything else, but the pain is really mostly coming from the increased mortgage rates. Even a cheaper house would still be painfully more expensive today.

What I wonder is... when would it make sense to try to return to a low interest rate environment (if ever)? Is there a point where we think it will?

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Conversely, perhaps that $343k home actually shouldn’t be worth that much. In a properly functioning market (e.g. no perverse incentives to own a unit and decline to rent it instead of renting it for less money, along with genuinely unpenalized liquidity such that a long-time owner can sell and buy something different without paying utterly absurd taxes and fees), prices should tend toward the market-clearing price.

Sadly, in real estate, one can easily own a $1M house, prefer to live in a $800k house, and have a situation in which making that trade results in a net loss of cash.

I think it's easy to say that, until you had to build one for that price. The lot alone and hook up fees, taxes would probably hover around 1/3-1/2 of that price. Then House it self is a lot of labor to construct. Even moving the materials sometimes is very labor intensive. Plumbing, Bathrooms, Lighting, there's a lot that goes into it. Immigrant and cheap manual labor is probably what makes it affordable.

>The lot alone and hook up fees,

Along with many of the places people keep building are in areas short of water. Since most of it is SFH larger water transport infrastructure has to be installed at great cost and though places that are already developed. Then you add more expensive road infrastructure that taxes on the SFHs won't fully pay for. You build a huge infrastructure debt trap that we're both paying for now (from the past) and the us in the future will have to pay even more for.

This guy built a house entirely alone after his old one burned down. He has a timelapse of the entire process and the costs along the way. He spent 120k in Europe. It's possible to do it for cheaper, but you have the hard hard work yourself. This is somewhat modest home, and probably near the limit of what is feasible to do by yourself. And this guy has carpentry skills most people would not have. https://www.youtube.com/watch?v=NBusSKZQbl0

In theory, a lot is worth whatever something built on it is worth minus the cost to build. So the lot should probably be worth less. Hook up fees are often hilariously inflated. Trenching on an empty lot is not very expensive.

My point is that, if you remove distortions from a market, prices may go down.

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