The affordable housing crisis

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Ken_J
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The affordable housing crisis

Post by Ken_J »

I'm not sure how it is in other countries, but in the US right now housing costs for the vast majority of Americans is running in excess of 1/2 their monthly income on monthly rent. That's not taking into account things like utility costs, food, car payments and health insurance costs.

I'd like to think that with rental costs in the area Starting at 70% of a minimum wage workers monthly income for a studio with no utilities included. And two bedroom one bath houses on properties with no actual yard or garden space going for a quarter million dollars. That we have to be approaching a point at which the majority of the people in this country will be forced to start making a stand like they are in the 'great resignation, and work from home' push.

But secretly I fear that we just don't have it in us anymore. The fight response isn't there anymore.

in 2012 the statistic was that no person could afford a 2 bedroom apartment on minimum wage anywhere in the country. Now almost a decade later a studio apartment, or in fact a rooming house room, will cost minimum wage worker between 60 and 80 % of the income from a 40 hour work week. a One bedroom aparatement will cost around 90-100% of a 40 hour work week at minimum wage. That does not included utilities, food, or health insurance costs per month. and most employers I've seen will not give wage workers full time hours. 39.8 hours yes, 40, no. and in many cases the hours can drop to less than twenty at slower seasons like late february to early june. That is if they keep the employees at all, which if you work in a 'right to work state' is unlikely. They will often cut 1/3 -1/2 the workers for the slow season.

It's been bad for years, it's only gotten worse. and the cost of buying a home is insane, and in this area of the country even the rotting shacks go for 100,000 minimum. and the property taxes run 4-6 thousand per year. That was before this last year. Now, you just cannot buy one. full stop.

How much worse can it get. I keep thinking that surely we are at a breaking point. but people stubbornly refuse to break. more and more are slipping out of the system and the homeless population is growing, and the solution we see for that most often is police storming homeless encampments and destroying what little they have and forcing them to scatter and try again elsewhere until the next police raid.
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funkervogt
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Re: The affordable housing crisis

Post by funkervogt »

House prices will eventually stop rising. It will take years longer for wages to rise enough to bring the real cost of housing down to where it was five years ago.
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R8Z
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Re: The affordable housing crisis

Post by R8Z »

Some articles to feed into the discussion:

Are Houses Less Affordable Than They Were in Past Decades?
https://www.ccsummerfield.com/blog/70/A ... st+Decades
Image
As the chart shows, when adjusted for inflation, there were only two times in the last 45 years that it was less expensive to own a home than it is today.

- Last year: Prices saw strong appreciation over the last year and mortgage rates have remained relatively flat. Therefore, affordability weakened.
- 2010: Home values plummeted after the housing crash 15 years ago. One-third of all sales were distressed properties (foreclosures or short sales). They sold at major discounts and negatively impacted the value of surrounding homes – of course homes were more affordable then.

At every other point, even in 1975, it was more expensive to buy a home than it is today.
--------

Chart of the day…. or century?
https://www.aei.org/carpe-diem/chart-of ... r-century/
Image
Various observations that have been made about the huge divergence in price patterns over the last several decades include:

a. The greater (lower) the degree of government involvement in the provision of a good or service the greater (lower) the price increases (decreases) over time, e.g., hospital and medical costs, college tuition, childcare with both large degrees of government funding/regulation and large price increases vs. software, electronics, toys, cars and clothing with both relatively less government funding/regulation and falling prices.

Blue lines = prices subject to free market forces. Red lines = prices subject to regulatory capture by government. Food and drink is debatable either way.
And, as always, bye bye.
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R8Z
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Re: The affordable housing crisis

Post by R8Z »

I am not sure I agree with either articles above, but it's a starting point. It feels like (global) inflation is much stronger that it is currently implied.
And, as always, bye bye.
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erowind
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Re: The affordable housing crisis

Post by erowind »

Capitalism is ideally supposed to operate on the principle of supply and demand. Yet, there is more vacant housing in America than homeless people. Among many other examples of competition just leading to cartels and monopoly extracting rent and price fixing this is an example of capitalism’s failure as an economic system.

It’s not just inflation, while inflation is a problem and getting worse it’s a cop out to pin it all on inflation. Even in a highly inflationary economy when there is greater supply than demand according to ideal capitalist theory prices would fall, if not directly at least proportionally to inflation, yet they don’t. It amazes me how people can play ideological gymnastics fearing a coming neofuedalist rent-seeking economy, yet, also have undying support for the flawed economic system that created the conditions for feudalism to attempt a resurgence to begin with.

Also, rent doesn’t follow the law of supply and demand. The price of rent is based off of how much landlords can steal from their tenents without making their tenents bankrupt. Want proof? Notice how in both recesssions and growth periods rent rises. Notice how in both housing gluts and crunches rent rises. Yet, so-called capitalists will defend landlords.

Endless hypocrisy and self-flagellation. Reactionary working-class people tricking themselves into thinking it is in their interest to defend the property rights of those who reduce them to wage-slaves and serfs. Why not fight for our own rights to ownership instead? To own the means of production and the value we create? The right to own our own homes.
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Ken_J
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Re: The affordable housing crisis

Post by Ken_J »

Tadasuke
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Re: The affordable housing crisis

Post by Tadasuke »

I think that accelerating techno-economic developments will make all costly services and goods exponentially cheaper in the future. Including housing. It's only a matter of time. Any rises in costs are temporary and will not go on forever. Dips below or jumps above the long-term trendline get corrected over time. That's how open market works and will work in the future. But I agree that currently the situation is definitely not good enough. It's not technology's fault, but policies' fault, at least in the USA. I predict HUGE changes in every sector during the second half of this century. Costs will be falling down like crazy. We will be moving into a world of abundance. By 2120 we will live in post-scarcity society.
Global economy doubles in product every 15-20 years. Computer performance at a constant price doubles nowadays every 4 years on average. Livestock-as-food will globally stop being a thing by ~2050 (precision fermentation and more). Human stupidity, pride and depravity are the biggest problems of our world.
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wjfox
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Re: The affordable housing crisis

Post by wjfox »

It will be interesting to see what difference 3D printing makes to housing/construction costs. Early indications are quite promising.
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caltrek
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Re: The affordable housing crisis

Post by caltrek »

Why It Is So Hard to Buy a House
by Felix Salmon
May 5, 2022

https://www.axios.com/2022/05/05/housin ... difficulty

Introduction:
(Axios) The proportion of homes being sold for cash — deals where the buyer isn't taking out a mortgage — hit a new high of 28% in March. That's the highest level we've seen since the post-crisis years, when a lot of home sales were foreclosures. (To buy a home out of foreclosure, you have to pay in cash.)

Why it matters: This is a sign that the housing market is still extremely tight, and that there's little hope high mortgage rates will bring down prices. After all, high borrowing costs do nothing to deter cash buyers.

What they're saying: "Cash sales are a sign of a hot market," says National Association of Realtors economist Gay Cororaton.
  • If you want to win a bidding war, making an all-cash offer is strongly advised in many markets. But for the overwhelming majority of Americans, it's also impossible.
The bottom line: It's now harder than ever to move from one home to another with the same value. Not only will the new mortgage cost you a lot more than you're currently paying, but even winning the bidding war for a new place will be hard if you need any kind of financing.
caltrek's comment: "Little hope high mortgage rates will bring down prices." So, while the Fed's hiking interest rates may be checking overall inflation, it can actually increase the cost of buying a house - unless you are able to purchase with cash only.
Don't mourn, organize.

-Joe Hill
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funkervogt
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Re: The affordable housing crisis

Post by funkervogt »

“Our results also imply that the future path of housing costs may depend critically on the path of remote work,” the NBER paper added. “If remote work reverses, then there may be a general reversal in housing demand and potentially house prices. If remote work persists, we may expect important repercussions as increased housing costs feed into inflation and so affect the response of monetary policy.”
https://www.marketwatch.com/story/remot ... eid=yhoof2
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