Ask HN: Why the myth about housing unaffordability in the US? | Hacker News Reader

Ask HN: Why the myth about housing unaffordability in the US?

1 pointRestlessMind16 comments

I have seen a persistent trend of comments talking about housing unaffordability in the US for the last 5-10 years. The reasons cited are NIMBYs, Black Rock and other institutions, Chinese buyers, greedy Boomers etc.

However, the data says otherwise.

1. Since 2015, Homeownership Rate in the United States (https://fred.stlouisfed.org/series/RHORUSQ156N) has fluctuated around the average of what it has been since 1965.

2. Since 2015, Monthly Supply of New Houses in the United States (https://fred.stlouisfed.org/series/MSACSR) is at or above the average of what it has been since 1965 (modulo pandemic years).

3. Even to account for the selection bias of techies on this site from expensive regions, homeownership rate in California has been pretty flat since 1960's (https://www.ppic.org/blog/homeownership-trends-in-california/)

So is it just a phenomenon that those who cannot buy are more prone to complain and those who can don't bother to participate in such discussions?

The share of first-time homebuyers speaks to the issue a bit more clearly than the factors you've been looking at above.

https://www.statista.com/statistics/208072/share-of-first-ti...

People who are already positioned in real estate aren't as affected by rapid price increases when they're looking to sell one home and buy another because the home they're selling was along for the ride. They're impacted, but much less so than first-time homebuyers who are either short on assets altogether (most working individuals/families trying to take the next step on the default treadmill) or have assets that haven't been performing as well as real estate.

Those first-time buyers need to directly relate the purchase price of the home to their savings and income and it gotten very hard for them to that. The worse it gets and the longer it sustains, the more it looks like a failure to attend an entire generation of workers and their families.

I am not able to see that graph since Statista is asking me to log in. Is there any archive link?

Having said that, I agree with your overall argument. That seems interesting and might explain the gap between FRED stats and the general sentiment.

Oh, sorry. They must allow clickthrough from search engines but not direct links. I never even noticed they had a login wall.

I don't know or use any archiving service, but you should be able to bring up a working link by searching "statista first-time homebuyer" on Duck Duck Go (or probably elsewhere)

Otherwsie, maybe somebody else can generate an archive link. Sorry!

Why do you post with a title that sets the narrative rather than asking a genuine question?

Your graphs do not address affordability. Find data that shows housing costs compared to percentage of average income for a given area. Subtract rental costs from the average income to determine loan affordability or even qualification, since loans see rental costs as an expense for calculating available income towards a mortgage.

This data is highly variable depending on location. California as a whole may be fine -- how about it's most populous counties or cities? How much does the rural divide skew the numbers, if any?

Why are the rates you've presented flat since the 1960s?

> Your graphs do not address affordability.

If the homeownership rate is 66%, that means people are able to buy a home. That's how I define affordability.

> This data is highly variable depending on location. California as a whole may be fine -- how about it's most populous counties or cities? How much does the rural divide skew the numbers, if any?

California's rural population is <20% of the state[1], so that's not a big enough number to skew the results big way. E.g. an urban county like San Mateo has homeownership rate >60%[2]

[1] https://dof.ca.gov/wp-content/uploads/sites/352/Forecasting/...

[2] https://fred.stlouisfed.org/series/HOWNRATEACS006081

> If the homeownership rate is 66%, that means people are able to buy a home. That's how I define affordability.

This speaks zero to affordability.

Next time you start a thread, try not to frame it with your pre-determined conclusions.

> This speaks zero to affordability.

You haven't even clarified your definition yet.

These are all secondary factors. Meanwhile you're ignoring the most important primary factor you should be looking at - the change in what is called "cost burden", that is, the portion of one's income required to satisfy a mortgage (and pay brokers' fees up front). There's also the widening inequality gap (quite pronounced since 1965), meaning you should be looking at medians and percentiles, not averages. And this thing known the rental market, which you're not looking at all.

So no, it's not just a bunch of people complaining for the sake of complaining.

> There's also the widening inequality gap (quite pronounced since 1965), meaning you should be looking at medians, not averages.

Homeownership rate being 66% means median household owns its home. I don't know how averages are related here.

> And this thing the rental market, which you're not looking at all.

I am talking about homeownership rate and data. Why is rental market relevant here?

I don't know how averages are related here.

Me neither. You're the one who brought them up.

Why is rental market relevant here?

Because it's what many people mean when the talk about housing affordability.

Especially, you know - regular working people.

> You're the one who brought them up.

I only referred to the average of homeownership rate over the decades. So inequality is still irrelevant there.

> Because it's what many people mean when the talk about housing affordability.

Given the homeownership rate is 66% and has been around that number for many decades, I am sure a lot of "regular working people" are homeowners. Unless you think that segment is a minority of the society, in which case they should not be called "regular".

How big is the group that cannot buy?

Pretty flat since 1965 it seems.

This makes sense. Since housing prices have raised much faster than wages since 1965 it would be obvious that the proportion would stay the same. Things costing more and people having less money wouldn’t impact home ownership because

Rent, not ownership.

The data lies.

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