Housing Appreciation and Inflation: Future Outlook?

[SAJ-99]

Your “Basic Formula” is divorced from reality.

Why? is the your argument people don't want to work hard or even if they work hard it doesn't matter? Or do you just want to argue?

Fiscal responsibility dictates 25-30% of income should be allocated to a mortgage. This is closer to 65%.

Agree. Not trying to argue really. I will point out that the number is based on gross income, not net, but your math is right. There are some serious problems with household income. The median wage in Spokane is over $30/hr, so a two-income couple (household) with full time jobs should be closer to $130,000 than it is to $65,000. Again, that is a different discussion about how we measure things and how they can be distorted. Here is what I know, the market is functioning at these levels. DR Horton is building new homes in the $430-$500k in the Valley. Someone is buying them. There isn't much existing inventory (increased slightly recently), people with good incomes are moving up, houses priced right move fast, and renting is a viable alternative (probably cheaper than buying).

I had the same situation in 2007 as @Rie Bread does now. I couldn't afford the house I lived in if I bought it again. That was corrected by a global fiscal crisis with an extended period of high unemployment. Do we fix the current problem the same way? I hope not, but it would fix a lot our complaining about prices of things because demand would fall off a cliff. We have an entire generation of Americans that have lived with relatively stable financial conditions because the Fed plows money/liquidity into the system to fix the problem.

 

[Nick87]

Basic formula = Be willing to work hard, set yourself up to have options, and make choices with future you in mind with equal importance to present you.

Yah that's nothing new. Doesnt add up presently imo.

 

[HighDesertSage]

in my neck of the woods homes are sitting with price cuts happening. Outside of the million dollar plus sales, very little sales activity. Common theme, houses are going on the market that have been sitting empty for awhile. My strategy, cheap rent, stash cash, and see what 2026 brings. If I get priced out of Wyoming I’m going to Missouri.

 

[Nick87]

in my neck of the woods homes are sitting with price cuts happening. Outside of the million dollar plus sales, very little sales activity. Common theme, houses are going on the market that have been sitting empty for awhile. My strategy, cheap rent, stash cash, and see what 2026 brings. If I get priced out of Wyoming I’m going to Missouri.

I hope you find what your looking for. The empty house thing happened around around a year ago here but wasn't enough to change much like I thought it might. Maybe there is more of them around you.

 

[Sytes]

On 500k, 5% down, good credit, say 5.5% current, 30 year, monthly 2,700 (+PMI ($400?))

First 12 payments.
Principle $520-550
Interest alone would be $2150-2175 monthly.

Missoula / Kalispell, MT where entry houses were 150-300 that's, on simple view more than doubled.

That's a tough pill to swallow even if Target pays $17 currently.

More power to people who sweat their time through far too many years where equity slowly steps up to build actual value.

Then again, Real Estate is one of the most safe, high value returns on the years sweating out.

 

[SAJ-99]

Yah that's nothing new. Doesnt add up presently imo.

I think presently a large % of the younger generation isn't thinking "I want to buy a house". They are thinking "I want to buy a house in X area, that has A, B,and C things and I want to pay this $ amount".

 

[Nick87]

I think presently a large % of the younger generation isn't thinking "I want to buy a house". They are thinking "I want to buy a house in X area, that has A, B,and C things and I want to pay this $ amount".

Could be. This isn't really a hot area by any means by I don't know if i could pull it off starting out right now when taking the price of everything else into consideration at the present time. Tbh I think it may be everything else handicapping them more than the price of the houses alone.

 

[SAJ-99]

Could be. This isn't really a hot area by any means by I don't know if i could pull it off starting out right now when taking the price of everything else into consideration at the present time. Tbh I think it may be everything else handicapping them more than the price of the houses alone.

I agree. I guess everything in RE is location specific. Most Americans live in metro areas. If we want to "fix" the problem on a large scale, we have to look there. WY, MT, ID are almost completely different problems with different drivers. For those places, the advent of apps like Zillow just spread the problem, making what were once hidden little alcoves are now spotlighted equal to whatever popular spot they are next to. I continue to preach that this is the bifurcation of the American economy (driven by income inequality). The upper third drive the economy now, while the bottom 2/3rds are riding in their wake. This idea is become more accepted. I just don't have a solution.

 

[morley.tyler]

The 2024 reality is that young people may need to be willing to move in order to own a house. $400k is a lot of scratch for a starter home- at least at the income levels common for the <30 age group.

Exactly this. I have family, a young married couple in their late twenties, both college grads with good jobs and were probably making between $160-190K in Seattle, 4 years ago. They couldn't afford a house w/in an hour's drive of downtown. At least not anything livable.
He took a transfer to a mid-sized midwest city, she quit her job, and their disposable income and quality of life went up.

 

[SAJ-99]

Exactly this. I have family, a young married couple in their late twenties, both college grads with good jobs and were probably making between $160-190K in Seattle, 4 years ago. They couldn't afford a house w/in an hour's drive of downtown. At least not anything livable.
He took a transfer to a mid-sized midwest city, she quit her job, and their disposable income and quality of life went up.

Optionality is a wonderful asset. The ability/willingness to move benefits the entire economy in the long run.

 

[cgasner1]

Kinda feel like a house could be affordable for a young couple if they really wanted it. The cost of child care combined with these mortgages I feel like it’s made it so you get one or the other. My child care costs me 200 more a month than my mortgage.

 

[ismith]

Kinda feel like a house could be affordable for a young couple if they really wanted it. The cost of child care combined with these mortgages I feel like it’s made it so you get one or the other. My child care costs me 200 more a month than my mortgage.

 

[Rie Bread]

My wife and I lived in a 16’ travel trailer to save up for a house so maybe we are more on the dirtbike side of things but somewhat have a brain

 

[SAJ-99]

Oh, I notice.

 

[cgasner1]

I was almost in the no kid boat. Thank god I had a stroke instead of a heart attack

 

[hank4elk]

I skippered my way around kids in my boat.

I have a better boat and watch the show. From afar.

 

[TOGIE]

wonder how many of you preaching that one only needs to move to buy a house would've done so when you were buying your first house. you know, leave the first time grandparents, move away from all of your lifelong friends, move away from brother and sister, leave your well established job... there's a reason people oft aren't moving.

not unrelated, i'm pretty sure it's the dickwads moving somewhere to buy a house that are a big contributor to the problem with inflated housing prices.

 

[brymoore]

wonder how many of you preaching that one only needs to move to buy a house would've done so when you were buying your first house. you know, leave the first time grandparents, move away from all of your lifelong friends, move away from brother and sister, leave your well established job... there's a reason people oft aren't moving.

not unrelated, i'm pretty sure it's the dickwads moving somewhere to buy a house that are a big contributor to the problem with inflated housing prices.

I did all of that but for different reasons.

Every house I bought was at a painful price for my current income at the time, including being a single income family for three of the purchases. I bought my last house at the peak of the last housing bubble. I watched value decline during the housing recession. Would I do it again? Hell yes. I’d buy every house I could afford at 2008/9 prices based on the appreciation over the last 15 years.

 

[BuzzH]

The 2024 reality is that young people may need to be willing to move in order to own a house. $400k is a lot of scratch for a starter home- at least at the income levels common for the <30 age group.

Great theory, but most places that are more affordable you can't find a job that pays worth a shit to be able to afford the lower house price.

 

[Treeshark]

Great theory, but most places that are more affordable you can't find a job that pays worth a shit to be able to afford the lower house price.

In many instances I know that you’re right, but there are plenty of opportunities to find a better income-to-housing circumstance. The increase in remote work I’ve the past decade has made that even more doable.

I’m not arguing that housing hasn’t become way more expensive (in terms of % of annual income) than it has been in forever- it absolutely has. Just pointing out what I feel is a reality in 2024.