That is by design. Banks figure your monthly payment as a percent of income. Then based on interest rates they figure out how much you can borrow. Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. This is why lower interest rate cause higher house prices.
Interest rates are going up. Home prices have slowed. Speculation is over. Still waiting for the drop. The economy seems to have gotten really good at moving ahead in spite of pressure to slow. I fear there may be built up negative pressure that's about to give. Not sure though.
> Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.
Back in the late 80s Elizabeth Warren and coauthors showed that the most common reason American families went bankrupt was because their high housing costs were an attempt to get their kids into better schools.
The blunt truth is the 20 major metro areas are where nearly all the high income jobs are, so we've seen a decades long pattern of migration towards them. This is a huge underlying force in so much of US economics, politics, and culture. At the same time, these metro areas have not come close to matching demand with increased housing supply.
The result is increasingly people facing the dilemma where the best economic option for their family is for them to spend 3+ hours of their day commuting to an urban core from an outlying area they can just barely afford to rent in. And god help you if your kid gets sick or your car gets totaled. This is the reality for most working class Americans. It's not a matter of them living above what they can afford, it's about our society becoming so broken many people will never reach a threshold of affording anything like middle class prosperity.
And I am entirely out of patience for folks that earn tech industry money while moralizing about how poverty is just people overspending in some purely hedonistic stupid way.
> You are ignoring the reality many are facing, where essentially all the available options are above their means.
People who say this are convinced they need to move to SF/LA/NYC/Boston/Seattle. Yes, real estate is prohibitively expensive in San Francisco, we get it. So don't move there.
I just did a housing search recently and found this out the hard way.
Look at the median for an area and then figure that you can go 10-20% below that for a "fixer upper". Even that isn't an option if you don't have DIY skills.
That means a first time buyer can get into a $150k house with FHA for $4,500 down and $1,300/month (which includes property tax and home insurance).
This means someone making $25/hour can afford to buy one of these homes, right now, today.
The average commute time for Americans in 2019 (pre-pandemic) was 27.6 minutes each way: https://www.census.gov/newsroom/press-releases/2021/one-way-...
Yes, there are supercommuters out there with very long commutes, but saying 3+ hours a day describes "most" Americans simply isnt true.
Those numbers seem insanely high to me. I would've thought people are looking for more like $100k.
This reads like people complaining that a new iPhone is $1,200 and then saying "BUT I NEED A PHONE!". Yes, you need a phone. No, you do not need the $1,200 phone. Take the blinders off, there is a whole ass world out here.
> This reads like people complaining that a new iPhone is $1,200 and then saying "BUT I NEED A PHONE!". Yes, you need a phone. No, you do not need the $1,200 phone. Take the blinders off, there is a whole ass world out here.
And you read like an angry and sour person who wants to rub people's nose in it just to say "told you so" by deliberately missing the point I made. Maybe it makes you feel good but you are not helping anyone.
All I said was:
> Or maybe living close to friends and family matters more ? Moving 2000km away from family and friends is an uprooting move.
Which is basically a fact that explain why it's hard to move for some. I don't see how it can - or needs - to be argued. I am not even claiming it's a valid reason not to move.
> Except I'm right, which matters more. The best way to help people is to be honest with them. [..] I'd rather be right and sound like an asshole than [..].
Oh but you just don't sound like one. Pretty sure you've already been told that.
The solution is simple. Stop moving to the same 5 overpriced cities. Or, don't expect to be able to buy a house there if you do. These are facts, ignoring them causes problems.
No.
> Or maybe living close to friends and family matters more ? Moving 2000km away from family and friends is an uprooting move.
I was talking about why some people would find moving away from SF to more affordable places hard.
It wouldn't make sense to point that living close to friends and family matter more to some when moving to SF than moving to Dallas or Kansas City. What difference would it make to move 2000km away from family and friends to SF or to Kansas City ? Both case you miss friends and family.
You don't hear people from Dallas or KC or Cleveland or Pittsburgh or wherever complaining they can't afford to buy a house there, because I can go to Zillow and show you hundreds of houses in every one of those metro areas (and more) that are under $150k, and affordable to first time home buyers with an FHA mortgage putting less than $5k down and having a mortgage of around $1,300/month which makes it affordable to anybody making over $25/hour. In short, people are making excuses nd pointing to extremes in the Bay Area or NYC or wherever to validate their feelings.
Those are facts, and that is the math. Everything else is just feelings.
Your insistence on trying to paint me into the object of your obsession, that people think the Bay Area is the real world and they are entitled to things you believe they have no rights to, while being wrong and out of place, is preventing any progress on your side in understanding what I am trying to tell you:
> Moving 2000km away from family and friends is an uprooting move.
It's hard, it hurts. That plays a role in people's behavior. You may not like it but it is what it is [0].
All the while you keep trying to convince me of something I don't disagree with (prices of real estate and houses in the US market). Quite frankly it's tiresome and I'll let you have the final word (another copy-paste of a napkin plan to become a homeowner or a rant against the youth-of-today and their damn iPhones I suppose).
[0] That being said, I can understand how frustrating it must be for you since according to your posts you don't seem to hold feelings in high regard or even have some, which would explain it all.
Of course those groups urge you to spend the maximum: they're all being compensated if you do exactly that.
At the end of the day, it's still you who is signing the contracts, responsible for how you spend your money, and has to live with the outcome of your decisions.
If those groups can convince a decent percent of people to spend the max that they can get away with, it doesn’t matter what you do personally. Prices will inflate because most others are still spending big.
The differences among households' incomes are already higher than the reasonable ratio between the max approvable to borrow and the sensible amount to borrow. (A household making $300K can already sensibly borrow more than one making $100K can be approved for and one making $100K can sensibly borrow more than someone making $30K can be approved for.)
Households are still competing with others to buy individual properties, of course. That competition doesn't mean that you should YOLO it with the largest purchase most people will ever make just because others are willing to do so.
That only applies if housing demand exceeds supply because buyers are competing. When sellers compete they try to reduce the price to cost plus profit where the profit is no lower than 3-5% because at some point other industries pay more.
This is the fundamental problem though, because there is a shortage of housing, as wages increases, housing costs (either rent or mortgage) increase to suck up every available penny that’s earned.
What is needed is for housing supply to be able to meet housing demand.