That's sad but real estate industry is actually a bubble and it's not only in USA but same in many other countries as well. In my country, Mumbai is the costliest city and it is regarded as one of the most costliest city on earth. But this is still an excellent choice of investment because the price of real estate actually depends on many factors. It depends on the local infrastructures, industry situation, political stability, job opportunity etc.
But real estate is a tangible asset and also comes under the three basic necessities of human life. So even if it is a bubble, it is also a great inflation adjusted investment asset.
So if anyone has 100k USD for investment, I will advise him to buy a real estate instead of putting this money into bank or cryptocurrency.
Topic: In Nearly 70% Of US Counties, The Average Worker Can't Afford To Buy A Home (Read 161 times)
April 05, 2018, 04:45:09 PM
April 02, 2018, 08:03:59 AM
In China, many workers can't afford to buy a house for many years.
The situation in many countries in the world is basically the same!
Wealth is always in the hands of a few! Ordinary people's wages can only maintain the basic life!
The situation in many countries in the world is basically the same!
Wealth is always in the hands of a few! Ordinary people's wages can only maintain the basic life!
April 02, 2018, 02:00:57 AM
Housing bubbles can be sustained for long periods of time. The stats that you mentioned are probably similar across the world and are not restricted to the US
Some factors which I can think of include
- Artificially constrained time. Planning approvals and long lead time imply that new supply does not automatically enter the market as prices rise.
- Holding power of existing home owners - A lot of people are happy with their increased paper wealth and do not move to sell their houses
- Government actions - Governments have a vested interest in ensuring that house prices do not collapse. They can act to ensure that demand is stimulated and prices are maintained.
Some factors which I can think of include
- Artificially constrained time. Planning approvals and long lead time imply that new supply does not automatically enter the market as prices rise.
- Holding power of existing home owners - A lot of people are happy with their increased paper wealth and do not move to sell their houses
- Government actions - Governments have a vested interest in ensuring that house prices do not collapse. They can act to ensure that demand is stimulated and prices are maintained.
April 02, 2018, 01:53:21 AM
Quote
Housing, as we've pointed out in the past, is perhaps the most reliable bellwether of widening economic inequality in the US. And in its latest quarterly report on housing affordability in the US, ATTOM discovered that median-priced homes aren't affordable to average wage earners in an astounding 68% of US housing markets.
In its report, the company calculated affordability by incorporating the amount of income needed to make monthly home payments - including mortgage payments, property tax payments and insurance - on a median-priced home, assuming a 3% down payment and a 28% maximum "front-end" debt-to-income ratio.
That required income was then compared with the median home price.
Image link: https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/2018.03.28attom.png
The 304 counties where a median-priced home in the first quarter was not affordable for average wage earners included Los Angeles County, California; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California; and Miami-Dade County, Florida. Meanwhile, the 142 counties (32 percent of the 446 counties analyzed in the report) where a median-priced home in the first quarter was still affordable for average wage earners included Cook County (Chicago), Illinois; Harris County (Houston), Texas; Dallas County, Texas; Wayne County (Detroit), Michigan; and Philadelphia County, Pennsylvania.
Image link: https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/2018.03.28attomtwo.JPG
Already, the "hottest" housing markets are seeing an exodus of working- and middle-class individuals who can no longer afford to pay the high rents - let along afford to set aside enough money for a down payment.
Eight of the top 10 counties with the highest median home prices in Q1 2018 posted negative net migration in 2017: Kings County (Brooklyn), New York (25,484 net migration decrease); Santa Clara County (San Jose), California (5,559 net migration decrease); New York County (Manhattan), New York (3,762 net migration decrease); Orange County, California (3,750 net migration decrease); and San Mateo, Marin, Napa and Santa Cruz counties in Northern California.
Furthermore, ATTOM's data found that this problem is getting worse, not better, with 41% of housing markets less affordable than their historical average during the first quarter. That's up from 35% the quarter before
Meanwhile, a staggering 73% of markets posted worsening affordability compared with a year ago, including Los Angeles, Cook County (home to Chicago), Maricopa County (Phoenix) and Kings County (Brooklyn).
Image link: https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/2018.03.28attommthree.png
The counties where the average wage earner would need to spend the highest share of their income to buy a median-priced home are Baltimore, Bibb County (Macon, Georgia) and Wayne County (Detroit).
Continuing with the trend of home prices rising more than twice as quickly as wages, home-price appreciation outpaced wage growth in 83% of housing markets.
When Fed Chairman Jerome Powell warned last month that "valuations are still elevated across a range of asset classes" and that he fears "signs of rising non-financial leverage" it's possible that he was still understating the problem.
https://www.zerohedge.com/news/2018-03-28/nearly-70-us-counties-average-worker-cant-afford-buy-home
In its report, the company calculated affordability by incorporating the amount of income needed to make monthly home payments - including mortgage payments, property tax payments and insurance - on a median-priced home, assuming a 3% down payment and a 28% maximum "front-end" debt-to-income ratio.
That required income was then compared with the median home price.
Image link: https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/2018.03.28attom.png
The 304 counties where a median-priced home in the first quarter was not affordable for average wage earners included Los Angeles County, California; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California; and Miami-Dade County, Florida. Meanwhile, the 142 counties (32 percent of the 446 counties analyzed in the report) where a median-priced home in the first quarter was still affordable for average wage earners included Cook County (Chicago), Illinois; Harris County (Houston), Texas; Dallas County, Texas; Wayne County (Detroit), Michigan; and Philadelphia County, Pennsylvania.
Image link: https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/2018.03.28attomtwo.JPG
Already, the "hottest" housing markets are seeing an exodus of working- and middle-class individuals who can no longer afford to pay the high rents - let along afford to set aside enough money for a down payment.
Eight of the top 10 counties with the highest median home prices in Q1 2018 posted negative net migration in 2017: Kings County (Brooklyn), New York (25,484 net migration decrease); Santa Clara County (San Jose), California (5,559 net migration decrease); New York County (Manhattan), New York (3,762 net migration decrease); Orange County, California (3,750 net migration decrease); and San Mateo, Marin, Napa and Santa Cruz counties in Northern California.
Furthermore, ATTOM's data found that this problem is getting worse, not better, with 41% of housing markets less affordable than their historical average during the first quarter. That's up from 35% the quarter before
Meanwhile, a staggering 73% of markets posted worsening affordability compared with a year ago, including Los Angeles, Cook County (home to Chicago), Maricopa County (Phoenix) and Kings County (Brooklyn).
Image link: https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/2018.03.28attommthree.png
The counties where the average wage earner would need to spend the highest share of their income to buy a median-priced home are Baltimore, Bibb County (Macon, Georgia) and Wayne County (Detroit).
Continuing with the trend of home prices rising more than twice as quickly as wages, home-price appreciation outpaced wage growth in 83% of housing markets.
When Fed Chairman Jerome Powell warned last month that "valuations are still elevated across a range of asset classes" and that he fears "signs of rising non-financial leverage" it's possible that he was still understating the problem.
https://www.zerohedge.com/news/2018-03-28/nearly-70-us-counties-average-worker-cant-afford-buy-home
....
The question of whether real estate is a good long term investment has popped up on this forum more than once.
This could hint at a future housing bubble. Economic and financial imbalance caused by cost of living outgrowing the growth rate of wages by a considerable margin over a lengthy period of time... The term unsustainable has popped up to describe these circumstances with many doomsdayish predictions made by economists and finnacial gurus recently possibly being linked to the negative implications.
Basic analysis: for real estate prices to remain constant, demand must remain constant. If the gap between wages and the cost of real estate expands by a large enough margin, demand will fall as consumers no longer have the wages to sustain it. With falling real estate demand comes reduced prices. The market paradigm shifts in favor of buyers, it becomes a buyers market.
How do people see this panning out? Is it a false alarm? Exaggerated? Will the value of US real estate be maintained by foreign demand? /Other?
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