U.S. Housing Unaffordability Remains Near All-Time Peak

Via Political Calculations blog,

In February 2018, the ratio of the trailing twelve month averages of median new home sale prices in the United States to median household income reached an all time high value of 5.45, which is to say that the typical new home sold in the U.S. cost nearly 5 and a half times the annual income earned by a typical American household.

Since then, preliminary sales data indicates that the prices being paid for new homes have slightly declined in recent months, while median household income has inched upward, where as of May 2018, the median new home costs 5.41 times the median U.S. household income.

Looking at the data a little differently, we find that the growth of new home sale prices is indeed decelerating as incomes continue to grow.

That's a small comfort however when we zoom out to look at the data over the entire history for which it is available, where new homes today are selling for somewhere between $90,000 to $100,000 more than what they would cost if homes were as affordable as they were in the years from 1987 to 1999. Or for that matter, from 1967 to 1986....

As for how U.S. housing prices got so far out of whack compared to what had been very long term, stable trends, it took a combination of fueloxidizer and a spark.

Comments

Yen Cross Thu, 06/28/2018 - 20:31 Permalink

 Errrr, Tyler.  Sometimes you drive me nuts.

  Now I have to go back 2-3 weeks and pull all the housing figures to prove my point. [slowdown]

Skip Pernicious Gol… Thu, 06/28/2018 - 21:20 Permalink

That was always a good joke. However I think, long term, it IS a good time to buy.
Why?
Because each and every year 4 million people from the Third World LEGALLY come to live in America.

This country is growing phenomenally, and Asians, Indians, Chinese, Filipinos, Vietnamese, and Hmong, are the fastest growing demographic, then there are the Latinos and the Caribbeans, and the Africans, and the Middle Easterners and on and on EXCEPT for the traditional European element.

Since 2000, All Employment Growth Has Gone to Immigrants

They all have to live somewhere. So REAL ESTATE will get HOTTER AND HOTTER.
Is it any wonder that Whites are killing themselves at record levels?
That White women are DRINKING themselves to death. This was all in the Washington Post and other mainstream media. Indeed they are rather celebratory articles.

US greatest number of asylum claims of any country in world, far surpassing Germany!   June 21, 2018

So housing, whether home buying or renting will be quite costly.
And unless you have money like Zuckerberg or Bloomberg you will not be SAFE.

In reply to by Pernicious Gol…

Return_of_Byzantium Thu, 06/28/2018 - 20:48 Permalink

Would be interesting to see that chart adjusted for real terms. The recent deviation above the trend line, however, is alarming.

 

I’m glad I own my home without having to rent from a bank.

 

Whatever they’re planning is going to be 2008 times 10.

TeethVillage88s Thu, 06/28/2018 - 21:09 Permalink

But Wall Street Journal said it was at like a low, quarterly low of like 2% inflation... downward trend in Rents compared to past quarters and years... a Down Ward Trend in Upward Data and upward Inflation!!!   Sarc!!!!  LOL WALL STREET what kind of journals... maybe Bullshit Journal of the Street... maybe uneducated or uninformed Wall Street Journal boys!!!

- Signed TeethVillage, Editor at Large

HRH of Aquitaine 2.0 Thu, 06/28/2018 - 21:12 Permalink

Some places are taxing residents into the dirt. I was on Zillow, last night, looking at the little house my grandfather lived in after he retired (It was located on Winter Street in Presque Isle, Maine) and at other houses in town. It was shocking as to why the prices were so low and then I looked at the property taxes. Then at the school rating, on Zillow. FFS these towns are driving out young people and taxing anyone that improves their property and incresases the property value to death!

This little town has a mil rate of 25.60! http://presqueislemaine.gov/assessing/

Andover, MA, has a lower mil rate of 15.64! OMFG! https://andoverma.gov/193/Assessor

It took me a while to dig through the numbers and figure out what the fuck was going on. I almost fell off my couch! My city has a mil rate of 13.30 and a generous exemption for people that are over the age of 61 and make less than $40K a year (this was changed a few years ago as the old age was 63 and the income amount was $35K). My city also has a 3-year property tax exemption if you remodel your house!

I have mentioned going to Maine and never understood why people didn't finish the outside of their house. Many homes looked like total crap, I mean like a real Stephen King horror story with nothing finished and barely any paint or unfinished with the siding left off one or two sides. I finally figured out it was a way to devalue the house to decrease property taxes. I never realized how punitive the property taxes were in Maine. It's shocking because you would think they want people to improve their property and homes, make the neighborhood look nice! No wonder my grandfather left for 20 years, worked, and returned at the age of 65. When he knew he would have lower property tax obligations! He was a smart old fox, for sure.

So much for any plans on my living in Maine. Bunch of fucking socialists-in-training as far as I can tell! Sad.

There were also some things in the Maine state income tax code and you can apply for a property tax credit, even if you rent! I know. I was shaking my head going WTF!

Here is a house that sold on 6/1/18 for $24K and was 1400 SF. Yes, in 2018 a large home sold for $24K. Not joking! But the property taxes are a kicker, nearly $2400 a year.

Scroll down to see the property taxes. That's the kicker! This house is about the same size as mine but my house, when it was valued at $228K had property taxes of $2400. https://www.zillow.com/homedetails/33-Oak-St-Presque-Isle-ME-04769/1126…

HRH of Aquitaine 2.0 W.M. Worry Thu, 06/28/2018 - 22:05 Permalink

Nice! Enjoy! I spent some time there many years ago. I'm way too conservative. Bailed.

Oh and you need a plane, a boat, or the ferry to get off the island.

I don't know if you know Tom Forrester, he and his wife built a post-and-beam straw bale house out past Mt. Constitution. I helped build it back in 1997. Kids should be about done with college, by now. He moved out from DC and worked for the land trust. Tom was quite the good little liberal, back in the day. I am guessing that house is easily worth between $750k to $1 million, today. Not bad. Not bad at all for the typical non-profit coordinator.

In reply to by W.M. Worry

W.M. Worry HRH of Aquitaine 2.0 Thu, 06/28/2018 - 22:58 Permalink

I built a lovely house in Friday Harbor a couple of years ago. Paid $140k for a lot within walking distance of the Ferry with a shop building, a foundation, and all the utilities connected and paid for. Spent another $160k (total) converting the shop to a carriage house and building a 1450 sq.ft. upscale residence. Property taxes went up 25% last year after the Mccleary decision but their still only $2400. I enjoy the Ferry, the 1:05 goes too fast for me to make much progress on the jig saw puzzles. Just this Morning I brought a flat bed over from Anacortes with a load of foundation forms and a Kubota tractor on the back, cost .....$35.00

In reply to by HRH of Aquitaine 2.0

HRH of Aquitaine 2.0 W.M. Worry Thu, 06/28/2018 - 23:13 Permalink

Nice! So you are right near the action! Great little ferry. I always loved it. But I mean, how is it? Are you liberal? The place is full of hippies, even very rich ones.

Meh, I don't like the smell of patchouli and my hippie days are over. I am firmly grounded in reality, now.

Great place this time of year so I hope you are taking advantage of all the tourist traffic! June through Septmeber is the time to make bank! I am guessing you bought there for one reason: the location. If you have any trade or skill I am sure you will do just fine! Good luck!

In reply to by W.M. Worry

W.M. Worry HRH of Aquitaine 2.0 Fri, 06/29/2018 - 00:06 Permalink

No such thing as liberal or conservative anymore. You either support endless war and Trillion Dollar defense budgets or you don't. Most of the locals who call themselves conservatives are in the former camp and truth be told they're just assholes. I personally don't vote for either of the war parties R or D. There's a nice sense of community here even our power Co. is a Co-op and they just built a member funded solar installation on Decatur Island. I bought 1500 watts @ $2.00 per. I think this Island could be self sufficient if the SHTF and as far as I know the ravening hordes can't swim very far in 50 degree water.

In reply to by HRH of Aquitaine 2.0

HRH of Aquitaine 2.0 W.M. Worry Fri, 06/29/2018 - 00:24 Permalink

I'm familiar with the power co-op.

But you are deluding yourself if you think there is no such thing as conservative or liberal. You do realize you live very near to Whidbey Island NAS and the nuclear submarine base in Bangor, right?

And you think by not voting you are doing what? Making things better? I'm sure you fit in just fine with the other commies on the island. It's okay if you are gay or commie. But for people like me that are hardcore conservative? FFS, stop it. You are the type that would show up and burn down my house and run me off the island because I hurt someone's feelings.

Self sufficient? Good luck. Flour and sugar don't grow in the rain.

In reply to by W.M. Worry

HRH of Aquitaine 2.0 W.M. Worry Fri, 06/29/2018 - 04:52 Permalink

Your house gets nuked or burned to the ground by rabid leftists.

Is there a difference?  I think so.  Which is why I no longer live on an island surrunded by raving leftists, like you.

You are so mealy mouthed you cannot even come out and admit to being one!

I am proud of being a strong moral and fiscal conservative along with being a nationalist and anti-globalist.  Oh and that oath I took didn't have an expiration date!  Third-generation military, here.

I hope you sleep well while people make sure you never have to experience the ugliness that is out there and while  making sure your property values, not only remain stable, but increase over time.

Another liberal ingrate.

 

In reply to by W.M. Worry

W.M. Worry HRH of Aquitaine 2.0 Fri, 06/29/2018 - 09:59 Permalink

Thanks for making my point about people who call themselves conservative but support endless war. If you're referring to the US Military, you're delusional, they're the hired goons for the New World order, the Project for a New American Century, or whatever the Neocon's are calling their evil plan this week. They can stop winning all these wars anytime they want. I'm tired of all the winning.

In reply to by HRH of Aquitaine 2.0

HRH of Aquitaine 2.0 Anon2017 Thu, 06/28/2018 - 23:15 Permalink

Yes, I understand that. But this isn't in NY state or NJ. It's a crappy town, at the end of I-95 with crappy schools. There is no industry in the area other than being retired, owning a potatoe farm, or working for the government. FFS even the local mall is mostly vacant and the owner, the bank, has asked to have property taxes lowered. You can't claim to want to help people and the only people that are able to live well are the wealthy or the state / city apparatchiks!

It's beyond cruel for the fucking Maine socialists to rob the residents so the streets will be plowed. Complete bullshit. But you know how communists behave, it's for the people and the children. Even if the people live in crapshacks and the children are barely educated.

I would like to see the pension plan for the city / state employees. I am guessing they are doing very well.

In reply to by Anon2017

Byrond Thu, 06/28/2018 - 21:16 Permalink

The chart says DEPRESSION STARTING HERE NOW in bold all caps glaring flashing neon bright retina burning letters. And Trump says MAKE IT SO, WARP 12!

Byrond Thu, 06/28/2018 - 21:21 Permalink

And they're worried about under water houses from global warming in 100 years. I tell you, those houses will be derelict foreclosed opioid houses the day after tomorrow! And the zombies will eat everyone a week after that! And you will pray for floods! On your knees, you will pray!

dogmete Thu, 06/28/2018 - 21:21 Permalink

Our fake economy will come crashing down. I'm guessing no more than one and a half years from today. It'll be stock markets worldwide plunging, real estate collapsing, everyone in public office with their hair on fire making excuses and telling lies about why it's happening and who's at fault  The people being duped again and supporting the next round of bankster bailouts.

3-fingered_chemist Fri, 06/29/2018 - 02:58 Permalink

I hope the masses keep buying a peak unaffordability. This will accelerate the popping of the next housing bubble. I don't want to wait that much longer to pick up property on the cheap. 

katagorikal Fri, 06/29/2018 - 07:38 Permalink

Housing unaffordability is driven by 2 things:

- Low interest rates enable borrowing high multiples.
  So prices are higher, but so are debts and risks.

- Income inequality allows the elite 1% to buy all the houses to rent (BTL).
  It's not the median income earner who is buying all the properties.

It just so happens we have record low rates and record inequality at the moment.

surf@jm Fri, 06/29/2018 - 09:02 Permalink

No, the whole deal boils down to government policy......

Localities before the 2008 housing bubble pop, were living it up on 20% annual home price inflation, fueling their real estate tax coffers........

After the bust, desperate local governments had to resort to huge property tax increases, to keep the good times rolling. This of course resulted in roiling local elections, causing a lot of elected officials to get thrown out of office.

So, the FED, in its infinite wisdom, with big government obummer and his minions in charge, decided that money printing to save the government was worth far more than a keeping a working stiffs paycheck holding value.....

And thats why, a house that cost 80 Grand in 1995, now costs 250 grand......

Government is great!........

Thats also why you have Trump as president......The working stiffs didn`t appreciate being put in the poor house by the government......