TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
Is that 120k for each, or total household?
Poor tax laws on the richest 1% killed the American Dream.
Sufficient application of guillotines will restore it.
wow thats archaic we use the Puyi method now dude
Puyi
death by kidney disease?
Capitalism did that too. Capitalism is in a constant state of decline with short upward bursts of innovation that too will decline. Enshittification infects all.
My wife and I manage it because we both work.
I didn’t intend on marriage as a way to own a home but I couldn’t do it without my partner.
I will repeat this here:
While there are a lot of factors, you really cannot understate the size of the homes being built in the US. We are building homes nearly 3x the size (despite cost per square foot only going up slightly), and pretending it has no effect on housing costs. It’s actually pretty insane.
You guys really do build giant soulless houses in empty suburbs and think that living in an apartment is a crime against humanity
I would love to live in apartment if every one I ever lived in didn’t have neighbors blasting their music at 3am.
Because living surrounded by lifeless cement is crime against humanity. People need home, not voluntary prisons.
Average suburbanite before he goes on a 6 hour trip to the grocery store
You can have houses without sprawl.
Both apartments and houses have their merit, both can exist as a viable shelter that fulfills people’s needs. We don’t need to argue over which things corporations and greed took from us is better.
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How close are you to a superfund site?
i dont mean to pry, but i have been trying to work out how i can do this for myself so id be interested how you were able to do it.
im not asking for your life story, and obviously share what youre comfortable with online, but some helpful info would be your salary range, location and cost of home, and down payment (even as just a percentage of the total home cost).
other useful contextual information would be how long it took you to save up for the down payment, whether you did so while paying rent, if you had any other assitance with the down payment (personal loan, gift from family, borrowed against your 401k, etc), state of the home (move-in ready/fixer upper/built yourself), whether you used the loan to acquire furniture, etc.
sorry if thats asking too much but id like to use you as a data point, even if just for myself, and i do need a bit of data to do that.
Where are you at?
That’s anecdotal. The study is an average. That’s like saying, “I’ve never been homeless, so obviously homeless people don’t exist.”
Congrats. Do you live in Central Florida (Orlando area)? How much student loan debt do you carry? The article was fairly specific about that $125k. I’m pretty sure you can buy a home and live well within your means with much less if you lived in Gray, Louisiana.
One thing that the author is not taking into consideration is the post-pandemic ability to “work from home”. Gray, Louisiana is 45 minutes away from New Orleans and five minutes away from Houma. You can buy a 4Bd/3Ba 2100sqft brick house there for $165k. Crimenis relatively low and there is a university close by. You get the full suburban treatment for cheap…but you have to have a skill set that allows for remote work.
but you have to have a skill set that allows for remote work.
And then you have to live in Gray, Louisiana.
A friend was looking at getting a home lately and I offered to look into co-signing with them, so we gave our information to see what they would qualify for. With both of our details, they offered them a home loan of something like $100k, really not even enough to get anything that’s on the market now except for the worst crack houses possible. I then looked at what would be possible if I just applied by myself and if I applied for a home loan for a place that I would rent out. Not sure if it was considered a business loan, but I wouldn’t be the occupant, it would be an investment property for me. Suddenly, by myself, I qualified for a $300k loan, same loan agency, just different terms. I do have great credit, so maybe that helped, it’s just weird how they come up with the numbers sometimes. Like you would think two people together would qualify for more than what a single person would qualify for.
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It’s a risk assessment. A low score as a primary borrower is more risky, even with a secondary borrower, the hassle to get paid if the first defaults isn’t worth it. Investment vs primary residence is also a different risk profile, you can assume some level of income from an investment property.
What happened is that the other person apparently has absolutely terrible credit, so holy hell don’t cosign with him!
I mean, operated as an investment property they have near certainty you will have a stable income source (the tenant) so it makes sense that the loan value is higher. You’re guaranteed to have the income of the rent checks and just as likely all your other potential income on top of that. You actually can afford higher mortgage payments in that situation – and substantially so.
Which is a strong, strong, strong argument why all cities which have housing shortages (basically all cities) should be exercising policies that discourage non-owner-occupied properties.
Don’t cosign anything for a friend, ever. It will screw up your friendship.
What’s to prevent someone from buying a house this way and then just “renting it” from themselves? lol
If you buy a house declared as investment, but you really intended to live there, it’s mortgage fraud.
Generally, mortgages for your primary residence offer more favorable terms then ones for investment properties. The issue in the above story is likely related to the friend. If they had tried the same thing, their offer would likely have been even worse than what they got for a primary residence with a cosigner. Assuming they got an offer at all.
You’re not renting it from yourself. You happen to be renting from a corporation that you happen to be sole director of. Gotta emulate what the rich do.
Note that the source of this opinion piece is TikTok. The salary needed for a middle class existence varies wildly from city to city.
The source is an Orlando area Realtor who happens to have a TikTok.
A local realtor doesn’t have the qualifications to make broad claims about income or affordability for the entire nation.
I’m in Salt Lake City, for example, and a recent article has the necessary salary to afford a home around $140,000/year. I moved here in part because it was a much cheaper alternative to D.C. and the minimum salary to own a home is still $140,000.
This is one of the problems caused by zoning laws in the United States, rather than move to a more productive city full of opportunities, you were forced to move to a less productive city because DC has artificially caused housing to be expensive.
People are moving for affordability rather than economic opportunities.
People are moving for affordability rather than economic opportunities.
I also have a (likely unpopular) opinion that this is not something that you should do. I read the CNN money articles, and I did one of these moves. What I found is that while the price of living may be less (a difference that is increasingly becoming marginal as more move to “cheap” areas), lost earnings can sometimes eat up more than the difference in the cost of living.
In simpler words, yes, it’s the case that you can live a bit better in a “cheap area” on the same dollar amount, however, high COL regions often also offer higher salaries. So you might be able to get a steak for the price of a burger in a big city, but in some cases you’re going to miss out on 30-50k of salary per year…so…maybe not the best move.
I also share this view, but unfortunately a lot of people are still moving bc of “affordability”
I’d rather live in a LCOL city than ever have a shoebox in NYC again
I’d rather NYC remove their famously restrictive building code, and live in a nice affordable apartment in NYC and the economic opportunities it provides.
The DC mess is entirely on the mayor and city council allowing developers to run rampant and price the average homebuyer (who have fucking high five to mid six figure salaries) out of the market. It’s unreal and while people try to claim the recent crime wave is bad parenting, the fact that no one can afford a house is a major part of it. Doesn’t help that property taxes can jump by 17-40% per year whenever some developer sells a house in your neighborhood for 2.5x what they bought it.
Doesn’t help that property taxes can jump by 17-40% per year whenever some developer sells a house in your neighborhood for 2.5x what they bought it.
This is where I like owning property in California. Prop 13 goes a little too far, but it prevents you from being yuppyed out of your house and having your taxes jacked up because a hipster decided to start flipping houses in your neighborhood.
For those that don’t know, this is what prop 13 does (https://en.wikipedia.org/wiki/1978_California_Proposition_13):
The most significant portion of the act is the first paragraph, which limits the tax rate for real estate:
Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.
The proposition decreased property taxes by assessing values at their 1976 value and restricted annual increases of assessed value to an inflation factor, not to exceed 2% per year. It prohibits reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction. These rules apply equally to all real estate, residential and commercial—whether owned by individuals or corporations.
EDIT: Until the last sentence I’m pretty with them. Why push grandma out of her house? But it shouldn’t necessarily apply to commercial real estate and corporate owned crap.
Ironically Prop 13 is one of the reasons California housing market is such a mess right now.
Yeah it’s a double edged sword. It also perpetuates suburban sprawl because schools are usually funded through property taxes (which, why? But ok) older areas of cities tend to have crappier schools because the taxes remain low. In order to get around this they build new municipalities that will allow additional taxes, and then you’ve got another suburb in a fire risk area with a better school that’ll attract families.
Ironically DC needs more developers. It’s one of the most economically productive areas of our country. The opportunities to improve your life are endless there. People shouldn’t be blocked from pursuing a better life because someone person doesn’t want to live next to a duplex on someone else’s property
Okay but the developers exclusively flip affordable properties into luxury properties. Middle income housing is rapidly disappearing, the average 3 br costs like $800k to $1MM. The big new thing is buying a single family rowhome that would fit a family of 4-6 (or more) and turning it into a 2-unit condo with an HOA where each unit is only a 2 br and charging double or more what they bought the house for (buy the house for $850k, now trying to sell each unit at $890k). It’s absurd, unsustainable, displaces the local population, and ironically decreases the number of people that could have lived on the property.
The DC mess is entirely on the mayor and city council allowing developers to run rampant
LOL, no. The mess – in DC and every other major American city – is entirely on the zoning code not allowing developers to run rampant enough, and instead enshrining single-family houses even when demand warrants multifamily.
DC is rapidly converting affordable homes into multifamily luxury units. Developers running rampant jacked up costs citywide.
Also, the city is less than 10 square miles and built on a swamp. Just based on infrastructure it can only handle so many people before it runs into serious issues.
DC is rapidly converting affordable homes into multifamily luxury units. Developers running rampant jacked up costs citywide.
No, you just fail to realize that prices would’ve been jacked up even higher if developers weren’t increasing the housing supply.
How? Most individuals wouldn’t sell their house for double unless the demand is there because they can’t really afford to let the property sit while they’re trying to buy a new place. The developers buy the properties before they hit the market for more than asking, split the property, make minor improvements, sometimes make things worse, then crank up the price. Meanwhile, there was definitely someone who was willing to buy at the seller’s original price, they just never got the chance.
There are some pockets of affordability out there.
The map in this article is nice (though you have to scroll through some annoying stuff to get there):
https://www.cnn.com/interactive/2023/06/homes/housing-market-prices-affordability-dg/
I would guess those would be the areas of next major population influx as people continue to flee high cost of living in other areas. Climate change making much of the west and southeast more unattractive in the long run too. While the more affordable areas are still relatively cheap compared to the rest of the country, most of them have already been seeing large spikes in housing prices too. We need some major policy changes to encourage cheap and higher density housing, better use of land in general, can’t just keep building only single family homes in low density areas sprawling out forever.
100% this. It’s not that costs rose as much as it’s that salaries didn’t increase.
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It’s both. If the price of homes aren’t reflecting an affordable price, you have to ask, who’s buying them? It’s not the average family - it’s corps sucking up homes as investment assets, driving up prices to sell to each other and the “lucky” family or two that get to empty out their retirement fund just to have a place to live. That’s not reflective of a natural, reasonable increase. That’s the result of hedge funds destroying the housing market for the rest of us, just to pad their bank accounts.
That may be true in some of the lower priced Midwestern markets, but I sell real estate in Boston and I don’t see big corporate interests in the single family or owner occupied 2-3 family market. as much as big corporations have ruined a lot of things in this country, I don’t think we Dan just wave our hands and say “corporate buyers” and explain away our housing market problems.
We have a confluence of decades of exclusionary zoning and restrictions on building that make meaningfully adding to the supply of housing almost impossible. We have a huge deficit of qualified workers in the building trades, in part because all the work dried up after the great recession and people left the field and in part because we’ve pushed more and more kids to go to college. We have a mortgage system that’s nearly unique worldwide that allows homeowners tremendous advantages in keeping their housing costs low, but inversely provides tremendous disadvantages to having them move around more often and free up housing stock (so lots of aging singles and couples in big houses better suited for young people with kids). We have a society that’s bizarrely fixated on single family living even though we desperately need more density in most markets. And we have the problem of wage stagnation. None of those things are directly attributable to corporate ownership of large numbers of houses.
I’d love for there to be some silver bullet where we could just say “disincentivize corporations from owning small housing stock” and solve the problem, but it’s nowhere near that simple.
You’re right, it’s more complicated than just blaming corps, and I don’t want to imply an issue this complicated could be completely solved with one change. They’re definitely exacerbating the issues we already have, though, and dealing with them could only help.
In the late 70s around 23% of US corporate revenues went to pay salaries. By 2012 that had fallen to 7% - in other words, just before neoliberalism really took off almost 1/4 of the money workers spent buying goods from US companies was almost directly back in workers’ pockets, whilst by 2012 less that 1/14 of what workers spent buying goods from US companies ended back in workers’ pockets.
All that excess money that doesn’t get recycled back to workers anymore has got to be pooling somewhere.
Wow, now that’s a hell of a statistic! Got a nice reference for it so I can read more?
I read it ages ago when I was still frequenting a certain finance discussion forum (whose name totally evades me now, and I did just try looking up such forums but failed to find it) back in the post 2008 Crash years, hence why the end date in that statistic is 2012.
This is the best I found on the subject. Note that the numbers are quite different from the statistic I quoted since they’re not the same thing (it’s about labour share of income in the whole Economy, rather than the corporate labour to revenue ratio) but you can see the very same trend I mentioned in this report and what’s used there is almost certainly a better statistic to get an overall view of what’s going on.
The link gives great context to the article. Thank you.
The problem is you need to be a couple to have a house.
In the 80s and even 90s the mother of the house probably didn’t work. I know mine didn’t. Now they have to. The prices have gone up to match this “new normal” because there simply aren’t enough houses. Or at least not enough houses in the places people want to live.
The free markets have settled on the idea that a house should cost two incomes. The government needs to step in to build affordable homes and get them into the right hands. No landlords scoffing them all up.
It died along time ago with the dreamer.
This happened because people were lulled into voting for the very people who gave their fair share of corporate profits to the rich. Looking at you, Republicans, especially Ronald Reagan.
And they’ll do it again.
You can argue that Democrats inability to support the working class and unions helped to kill the American dream. “Both sides” are capitalists.
Hell, Clinton essentially adapted Reaganism for the Democratic Party.
I didn’t expect upvotes. It’s an election year for christ sakes.
At least on lemmy, more people understand dems v repubs isn’t left v right, it’s mid right v far right.
Don’t blame me I voted for Kodos
Lemmy is a leftist haven
Mr Realtor can blame his own industry for a good portion of the problem.
Blame SFR
What is SFR?
SFR
Single Family Real Estate. It is buying single family homes as an investment.
Here’s what happened in a nutshell.
Lyndon Johnson had great plans for the US, but wanted to win the Vietnam War with one huge push. That quickly turned into a giant quagmire. LBJ and later Nixon, ordered bombing of the North. That meant the US factories were working 24/7. Nice for factory owners and union workers, but LBJ was paying for it with paper money because he didn’t want to raise taxes. Ironically, Nixon ran for President as an anti inflation and pro peace candidate.
Nixon and Kissinger doubled down on the bombing and inflation started to spiral. Also, those factories were getting a bit worn down. Unable to met the deamnd for the bombing and supply foreign markets the US ceded local steel making to Germany and Japan. This is going to bite the US in the ass when the Arab Oil boycott hits. US steel is much more oil dependant than the newer factories, so suddenly Toyotas and VWs are the hot cars, and US manufacturing takes a huge hit.
Carter tried to control inflation and cut oil use, but got kicked out over the Iran hostage mess. Reagan came in and cut taxes for the rich. This increased the debt, but gave the economy an unrealistic jolt.
tl dr. In 1960, minimum wage was $1.00/hour. The average house was $11,000.00 and $1 million was considered a vast fortune.* Middle class meant a High School graduate with a Union job supporting a family of four.
By the time Nixon, Reagan and Bush Sr were done, ‘middle class’ was two college degrees supporting the house and $1 million was what a rich guy paid for a party.
- In case anyone tells you that $1 million is 1960 would be $10 million today, tell them that in 1960, $100,000 would buy a mansion in Beverly Hills.
$1 million today is still a vast fortune to most people tbh
I think most people would see the gulf between owning one moderately nice house and a small business [$1 million in 2024] and owning an estate with several acres and some horses, a half dozen cars, and enough in the savings account to keep a few families going. [$1 million in 1960]
Lyndon Johnson had great plans for the US
I recently learned that Johnson’s “Great Society” plan was partially a continuation of Kennedy’s “New Frontiers” plan (which he wasn’t very successful in pushing through Congress before he was assassinated).
LBJ is probably the most WTF President of the 20th Century. He pushed the Civil Rights Act, and created the Vietnam fiasco.
I like this story. Someone who worked for Kennedy and Johnson put it this way; if JFK came into your office and saw you reading he’d assume you were working. If LBJ saw you reading a book he’d think you were goofing off.
The massive difference in the purchasing power of what the Official Inflation Figures tell us - when we used them to adjust an amount of money at a past date for inflation over the years and get a supposedly equivalent present day amount - is the same salary now as in 1960, shows just how fake Official Inflation Figures are.
The reason for Official Inflation Figures being so much bullshit and always on the understating inflation side, is because the lower the Inflation used in calculating the Official GDP figures, the higher that latter figure gets.
All that talk of GDP Growth in the last few decades is the product of some very consistent (and hence likely purposeful) understating of the Inflation so that the Maths used to produce the Real (i.e. Official) GDP output a higher number hence politician can proudly declare GDP is growing strongly.
As Mark Twain once said,
There are lies and there are big damned lies, and then there are statistics!
If we hadn’t had Wilson we wouldn’t have had Hitler, or Stalin. We may not have had Nixon and Reagan…
This is what happens when most people think the disparity in wealth should grow.
It does.
Just a reminder that high prices are a markets signal to build more.
Let people build housing, is it too much to ask for?
Or maybe part of the reason the prices are so high is that the price of building is also high with labor and materials cost increases?
Or maybe there is also a shortage of affordable, well placed, viable, empty lots to build on?
In San Francisco, probably the most economically productive city in the US, the government adds over $200k to the cost of each house with just permitting process.
Yikes, yeah that’s another barrier to building that I didn’t even think of. I can see what you meant by “let us” build more.
Just another example of how building isn’t viable or affordable for everyone. My parents made the decision to build, but they also got the land long ago when the lot was cheap, and they did a large chunk of the work themselves including framing, wood floors, trim, doors, etc.
All the housing in the world won’t matter if the same 10 people are buying everything up. Supply isn’t our problem.
That makes no senes. We can literally build as much as we want.
Op is saying it’s a problem of supply not meeting demand
You’re saying that supply can’t meet demand if the rich have infinite demand
These aren’t exactly incompatible. I haven’t seen good evidence that demand from the wealthy explains the massive increase in housing cost, but you can both build more housing to increase supply and try to limit the wealthy buying too much housing. They’re not incompatible
It’s literally illegal to build more in most places. Go read the zoning code.
I know… let us build!!!
its a land problem. if you gave every homeless man half an acre yes they would literally just do that. however land has property tax and bums never open letters
so a simple micro acre tax free law would probably solve homelessness. it would have to be someplace like alaska or arklaska. of course these would be called concentratation camps by the far right but its a two bird solution. alaska could easily fit 50 million people
would you sign up for the free half acre in north alaska?
Texas and california could easily fit an extra 50 million people. They’re both massive.
Arklaska?
Kill zoning and get lower prices.
That 120k a year is still assuming you buy a house on a long term mortgage.
It even says 120k to qualify, not actually comfortably buy.
also out in the Boonies
