Trying to buy first house (1 Viewer)

[Eric_L]

But you'll also notice that there is a corresponding positive variance with income in these same places. While the ratio is not going to be exactly consistent across the country; it will be similar enough to be useful.

Megalopolises (Megapoli?) also were some of the fastest appreciating. As they revert to the target ratios they are now among the fastest contracting markets.

All in all - it fits well into the expected averages and ratios.

So far as jobs go - the service economy will likely tip further towards production as the weaker dollar makes home-grown production more affordable. In spite of the service sector's exponential growth the past few decades, the US is still the 3rd largest exporter of products in the world. (Behind #1 Germany and#2 China)

I feel there is a high need for unskilled jobs, but there also is a VERY high need for skilled labor, sadly there is an abundance of unskilled laborers, and a scarcity of skilled tradesman in America right now. IMHO there has been too much emphasis on college at the expense of trade schools. I think some of the loss of jobs has been due to the poor prospect for skilled labor and the scarcity of employees with a good work ethic (like showing up for work sober and on time - a sad scarcity in unskilled labor)

 

[DaveF]

Big Cities are contracting most rapidly, but they are still prohibitively expensive. That $360k average home in LA is unreasonable for your $42k average earner.

So why do people tolerate it? Because everyone wants to be in CA, or the big cities, with all the jobs.

Well, everyone but Dennis.

As for the trades: I agree. I see a risk of labor shortage in my field, where we need skilled optical & mechanical technicians.

But it also seems we're sending evermore of those jobs outside the country. I can't outsource my plumber and auto service guy, but all the factory line-workers, the furniture makers, the tool and die makers can have their jobs shipped to parts cheaper. My experience isn't broad enough, but it's not clear to me that we have the manufacturing base to support a broad middle class of skilled tradesmen.

 

[Dennis Nicholls]

In the not too distant future, Al Qaeda will get the bomb.

Both New York City and Los Angeles will cease to exist, and all people living there will die.

It may be anticipated that only those cities who are not down-wind of NYC and LA will maintain their property values.

 

[Eric_L]

This outsourcing has been in large part because of the scarcity you've observed. It also was due to the historically strong dollar. One problem is resolving itself now. All we gotta do next is get some more people out there to pursue viable skills....

 

[David Hobbes]

people are MORONS for paying the huge prices they pay for houses.

If people would stop paying outrageous amounts for houses then the prices would fall. But there will always be those yahoo's that will fork over way too much money for a house.

 

[Eric_L]

update;

So far my estimate is on track. Median prices are down about 7% from last year. Inflation is becoming more and more of a concern. My guess is that early next year we'll see a raise in minimum wage which will start the wage inflation. A little wage inflation coupled with a few more housing value drops like this most recent one and we'll see the housing correction behind us in as little as a few years. Also, fuel costs could indirectly start propping up vales in urban areas...

 

[Eric_L]

A little bit of grave-digging. I was thinking about this thread during a conversation last week. It looks like most of my estimates were right on track; We had a decline in real housing prices. More immediate than I thought but over 10 years it still played out close to as I imagined. The wage growth and inflation was much more tepid than I imagined - due largely to the great recession. At the time few people could imagine that the 45% overvalue of real estate could correct itself as quickly as it did.
Maybe we'll see the dollar weaken over the *next* 10 years....

 

[Francois Caron]

I have a 50 mile commute because there is no way I'd be able to buy a home near my work place (Norwalk). It absolutely amazes me how people do it. I have friends who (combined with their spouces) make less than I do. They have kids and STILL are able to manage. How the heck are they doing it??????

Financial help from parents and a meth lab in the basement.

Seriously, it's really bad today, even in Canada. I had bought a condo back in 1999 for $125,000 CAD, a beautiful loft in the hip and ideally located Plateau district of Montreal. Eight years later, I sold the place for $275,000 in a weekend and without help from a real estate agent.

The value of the property -- a condo no less -- MORE THAN DOUBLED in just eight years! Since then, most people's salaries have remained stagnant, but real estate prices just kept going up!

It's no wonder that much of today's young workforce is homeless even when they do have a supposedly well paying job.

 

[Dennis Nicholls]

Of course that's national. It ignores local insanity.

I sold my 1,000 square foot house in San Jose in 2006 for almost $700K. It fell in comps down to around $450 by 2010. But then it resold in 2018 for $1.4 million. That's crazy.

I bought my nice house in Boise for $272K in 2006. It fell in comps down to around $180K by 2010. But it now comps at around $350K.

Of course these are two of the hottest and craziest markets in the country right now.

 

[Eric_L]

A large part of the problem is scarcity. The nimbys have run amok in many towns making it near impossible to build enough to meet demand. Supply/demand then causes pricing to escalate.
Another issue is regulation. The high cost of compliance with many codes has added 20% or more to the cost of construction above and beyond what the same type home would have cost twenty years ago; often for requirements of dubious merit.

 

[Dennis Nicholls]

The scarcity problem in San Jose is that it lies between two mountain ranges: the Diablo range and the Santa Cruz mountains. Once you run out of flat land (in the 1970s) building up on a slope becomes much more difficult and expensive.

With San Francisco and Manhattan, there's water on three or four sides.

In San Diego, there's the border with Mexico.