Jump to content
House Price Crash Forum
The Masked Tulip

Over Half Of Americans Can’T Afford Their House

Recommended Posts

As the housing market slowly recovers, a majority of homeowners and renters are finding it hard to meet rising rents and mortgage payments, new research finds.

http://www.marketwatch.com/story/over-50-of-americans-struggle-with-home-affordability-2014-06-03

And yet their house prices, except for nutty places like NY, Hollyweird and SF, tend to be significantly cheaper than ours.

Share this post


Link to post
Share on other sites

http://www.marketwatch.com/story/over-50-of-americans-struggle-with-home-affordability-2014-06-03

And yet their house prices, except for nutty places like NY, Hollyweird and SF, tend to be significantly cheaper than ours.

I think the average price is $280,000 or so, similar to here, but they get 2600 ft2 instead of 800...

Guess per sq ft its a LOT cheaper, but cant see americans moving into <1000ft2 houses to reduce their outlay to under $100k

According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.

http://www.zerohedge.com/news/2014-06-02/mcmansions-are-back-bigger-ever

UK house size is relatively small at 76 m2 (818 ft2)

http://shrinkthatfootprint.com/how-big-is-a-house#yKqhP0OH4ZkzSeJk.99

Share this post


Link to post
Share on other sites

I think the average price is $280,000 or so, similar to here, but they get 2600 ft2 instead of 800...

Guess per sq ft its a LOT cheaper, but cant see americans moving into <1000ft2 houses to reduce their outlay to under $100k

According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.

http://www.zerohedge.com/news/2014-06-02/mcmansions-are-back-bigger-ever

UK house size is relatively small at 76 m2 (818 ft2)

http://shrinkthatfootprint.com/how-big-is-a-house#yKqhP0OH4ZkzSeJk.99

Reminds me of something my 8 year old daughter said the other day.. '..But the Simpsons live in a great big house..'

Share this post


Link to post
Share on other sites

http://www.advisorperspectives.com/dshort/guest/Keith-Jurow-140603-Housing-Market-Recovery-Is-Over.php

Good analysis above

'The Basic Problem: Death of the Trade-Up Market

During the roughly 50 years of rising home prices, the first-time buyer was the foundation of the housing market boom. This younger buyer would purchase a home which was smaller and less expensive than most houses. That would enable the seller to "trade up" to a larger, nicer home. These trade-up sellers would then buy and enable another trade-up buyer to do the same.

This trading up was possible because the seller almost always posted a profit on the sale of the house and could plow that into a more expensive home. When the Then prices began to decline. That posed a serious problem for the trade-up buyer. Many of them found that they had little or no profit with which to buy another home. A growing number found themselves "underwater." Because they had put little or nothing down, the value of their home was less than the mortgage on the property.

Making matters worse was that after the sub-prime collapse in the spring of 2007, lenders finally tightened up their underwriting standards. They began to demand down payments as in the pre-boom days – 20% or even more. With little or no profit garnered from selling, would-be buyers could not come up with such a steep down payment. Nor could the first time buyer.

And so the trade-up game came to a screeching halt. It has never returned. You need to understand that it will not be coming back. Do I mean never? Not quite. My answer -- not for a long, long time.

Were it not for all-cash buyers propping up the market in a big way over the last few years, prices would have crashed much further. Housing markets are still heavily dependent on the all-cash buyer. Take a good look at this very revealing table from Redfin. It covers 2014 through April.

HELOC Disaster That is Coming

Although some of these HELOCs have been written off by the banks, the vast majority are still in existence. One of the "too big to fail" banks had $76 billion of these HELOCs still on its balance sheet at the end of the first quarter in 2014. Because these second liens were taken out at the height of the bubble years, it is not an exaggeration to say that perhaps 98% (or more) of homes with these outstanding HELOCs are underwater.'

Edited by Sancho Panza

Share this post


Link to post
Share on other sites

The "trade up profit" was ONLY possible due to a> inflation of wages and b> the purchaser borrowing more than the seller did to buy the place.

Equity is purely a cost born by new entry buyers (assuming no investment by the current owners).

Equity is therefore Ponzi in nature in todays market.

Equity should of course be produced by saving, which, in the case of a leveraged purchase, the repayment of the leverage. Saving in this way COSTS the buyer rather than saving by putting aside which should REWARD the buyer.

Government has turned this on its head...capital no longer returns anything worthwhile for the risk.

Financialisation has now run its course. We will see last ditch attempts to preserve its power and the cost of doing so will become more and more until even the minority cant afford to get involved.

Crack up follows.

Share this post


Link to post
Share on other sites

The "trade up profit" was ONLY possible due to a> inflation of wages and b> the purchaser borrowing more than the seller did to buy the place.

Equity is purely a cost born by new entry buyers (assuming no investment by the current owners).

Equity is therefore Ponzi in nature in todays market.

Equity should of course be produced by saving, which, in the case of a leveraged purchase, the repayment of the leverage. Saving in this way COSTS the buyer rather than saving by putting aside which should REWARD the buyer.

Government has turned this on its head...capital no longer returns anything worthwhile for the risk.

Financialisation has now run its course. We will see last ditch attempts to preserve its power and the cost of doing so will become more and more until even the minority cant afford to get involved.

Crack up follows.

Share this post


Link to post
Share on other sites

There's another factor at work here. We've all seen the figures showing that new household formation is running at about 250-300k a year, while house building is stuck in the 100-150k range. Some of that discrepancy has been made up by converting family homes into flats. I've never been able to find authoritative data for the extent of this, but when you look at areas of London like Richmond, Ealing, or Fulham it's clear that it's been on a massive scale.

I was talking to a small builder the other week (40-80 houses a year) and he was complaining about the number of "affordable" homes he was forced by councils to include on his developments when what he wants to build are larger, lower density houses. His point was that there are plenty of "affordable" homes already, basically most of the flat conversions and small homes built in last twenty years would be plenty affordable if only councils lifted their restrictions on development and allowed a lot more bigger properties to be built.

Share this post


Link to post
Share on other sites

There's another factor at work here. We've all seen the figures showing that new household formation is running at about 250-300k a year

But how many houses become available through death /emigrating and the like

Two houses have become available in the street i live in due to Poleish migrant workers going home

Edited by long time lurking

Share this post


Link to post
Share on other sites

But how many houses become available through death /emigrating and the like

Two houses have become available in the street i live in due to Poleish migrant workers going home

Good point. Quick google search tells me 500,000 people die in the UK every year. That's nice and cheery.

Share this post


Link to post
Share on other sites

http://www.advisorperspectives.com/dshort/guest/Keith-Jurow-140603-Housing-Market-Recovery-Is-Over.php

Good analysis above

'The Basic Problem: Death of the Trade-Up Market

This is why i'm not buying.

The type of house I could afford to buy is the type of house I do not want to (and would) end up being stuck in. There is simply no way that the market will rise enough in say, 5 years create enough equity to trade up, as has been the case over the last 20 years.

buggered if i'm going to be left taking on other peoples debt at the bottom of the pyramid now that the party is over.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   209 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.