The Amalgimated Brain Trust

[Edwin Santos]

A lot of this analysis varies dramatically based on location. I say this in terms of both sides of the equation, one being income opportunity and the other being cost of housing/living.

Interest rates for mortgages are an important factor, but for the purposes of evaluating pure affordability, it is not hard to look at the ratio over time between income and housing prices. This is basically what Doug has pointed out above. Over time, that ratio has spread significantly, meaning housing is much less affordable in relation to income today versus in the past. Personally I think those of us that got in when we did should be a little bit grateful, and the younger generation that is trying to get a foothold in today's economics deserve a little bit of empathy. Consider education and medical cost, and the picture becomes even worse. Maybe not much of a concern for those of us now on Medicare and/or who obtained their education when it cost 1/10 of what it costs today.

Again, this can vary a lot from location to location. And there are always plenty of anecdotal specific examples or outliers that will make any case you like, but don't let those distract you from a larger trend.
What I am referencing above is more of an average scenario in urban areas nationwide.

[Doug Garson]

What are the three most important things in real estate? Location, location, location.

Ron posted " NO house in my 800+ home sub devolpment sells for over 350k. One just listed for 234k. " Ok convert that to Canadian dollars that's about $480 Cnd and $320 Cnd. In my area you can't buy a vacant lot for those prices, the average home price is $1.3 million Cnd and it's not a high end neighbourhood. The average school custodian makes about $50k (which is 25% above the national average), don't think too many custodians are buying $1.3 million dollar homes.

[Edward Weber]

As I've said, you can make numbers say what you want.
Look at the median home prices by state.

State	Price
Alabama	$286,000
Alaska	$384,000
Arizona	$443,000
Arkansas	$259,000
California	$799,000
Colorado	$582,000
Connecticut	$432,000
Delaware	$335,000
District of Columbia	$606,000
Florida	$409,000
Georgia	$376,000
Hawaii	$713,000
Idaho	$460,000
Illinois	$295,000
Indiana	$258,000
Iowa	$239,000
Kansas	$282,000
Kentucky	$257,000
Louisiana	$260,000
Maine	$389,000
Maryland	$433,000
Massachusetts	$640,000
Michigan	$260,000
Minnesota	$353,000
Mississippi	$263,000
Missouri	$267,000
Montana	$527,000
Nebraska	$296,000
Nevada	$437,000
New Hampshire	$468,000
New Jersey	$498,000
New Mexico	$354,000
New York	$531,000
North Carolina	$378,000
North Dakota	$308,000
Ohio	$249,000
Oklahoma	$256,000
Oregon	$510,000
Pennsylvania	$300,000
Rhode Island	$471,000
South Carolina	$381,000
South Dakota	$332,000
Tennessee	$385,000
Texas	$362,000
Utah	$545,000
Vermont	$390,000
Virginia	$445,000
Washington	$621,000
West Virginia	$297,000
Wisconsin	$307,000
Wyoming	$323,000

Some of the prices mentioned in this thread are in the lowest brackets.
CA has the highest, at three times the prices of a few other states. Are the wages three times higher, he asks rhetorically. It is, what it is.
You can only ever change your circumstance to a certain degree, otherwise you play the cards you're dealt.
I've lived in 5 different states, they all have their pros and cons.

[Doug Garson]

It is, what it is.
You can only ever change your circumstance to a certain degree, otherwise you play the cards you're dealt.

Agreed and several Millennials I know, with good paying jobs and dual income households, accept the fact that home ownership, at least at this phase of their lives, is out of reach. So they save some money for future retirement (one works for a financial planner), and enjoy life with the rest of their money.

[Edwin Santos]

I think it becomes more interesting to take Edward's data and add in the income per capita and calculate the ratio. Historically for financial planners a 4x ratio was a good rule of thumb for affordability, but now almost all states are above that. I don't have any Canadian data on hand, but having visited there, I would guess the greater Vancouver area to easily be >10 these days.

If you're interested, I found an interesting site that charted the ratio of affordability over time. You can see on this chart that other than the housing bubble in 2006, we are WAY higher than historical norms right now. https://www.longtermtrends.net/home-...hold%20income.

State	Price	Per Capita Income	Ratio of Home Price/Income
Alabama	$286,000	50,916	5.62
Alaska	$384,000	68,635	5.59
Arizona	$443,000	58,442	7.58
Arkansas	$259,000	52,618	4.92
California	$799,000	77,036	10.37
Colorado	$582,000	75,722	7.69
Connecticut	$432,000	82,938	5.21
Delaware	$335,000	63,243	5.30
District of Columbia	$606,000	95,970	6.31
Florida	$409,000	64,806	6.31
Georgia	$376,000	56,589	6.64
Hawaii	$713,000	61,779	11.54
Idaho	$460,000	56,614	8.13
Illinois	$295,000	67,655	4.36
Indiana	$258,000	58,323	4.42
Iowa	$239,000	60,222	3.97
Kansas	$282,000	60,424	4.67
Kentucky	$257,000	51,921	4.95
Louisiana	$260,000	54,501	4.77
Maine	$389,000	60,599	6.42
Maryland	$433,000	70,228	6.17
Massachusetts	$640,000	84,561	7.57
Michigan	$260,000	57,038	4.56
Minnesota	$353,000	68,840	5.13
Mississippi	$263,000	46,370	5.67
Missouri	$267,000	57,818	4.62
Montana	$527,000	60,984	8.64
Nebraska	$296,000	64,268	4.61
Nevada	$437,000	62,085	7.04
New Hampshire	$468,000	73,910	6.33
New Jersey	$498,000	77,199	6.45
New Mexico	$354,000	52,194	6.78
New York	$531,000	75,407	7.04
North Carolina	$378,000	58,109	6.51
North Dakota	$308,000	70,360	4.38
Ohio	$249,000	57,777	4.31
Oklahoma	$256,000	56,298	4.55
Oregon	$510,000	62,303	8.19
Pennsylvania	$300,000	64,506	4.65
Rhode Island	$471,000	63,557	7.41
South Carolina	$381,000	53,618	7.11
South Dakota	$332,000	68,176	4.87
Tennessee	$385,000	58,292	6.60
Texas	$362,000	62,586	5.78
Utah	$545,000	59,457	9.17
Vermont	$390,000	63,039	6.19
Virginia	$445,000	68,985	6.45
Washington	$621,000	75,332	8.24
West Virginia	$297,000	49,993	5.94
Wisconsin	$307,000	61,475	4.99
Wyoming	$323,000	73,248	4.41

[Doug Garson]

"The median household income in Vancouver is $86,988, which translates to being able to afford a purchase price of $347,000 with an insured mortgage or $411,000 with an uninsured mortgage. Meanwhile, the average price of a Vancouver home is $1,211,700. "

That makes the ratio 13.9, well north of 10 and West Vancouver where the real money is, the ratio is about 17. But that pales in comparison to Shanghai China at 43.8 which explains why so much of Vancouver's real estate is owned by Chinese nationals which is one of the reasons Vancouver real estate values are so high.

[Lawrence Duckworth]

today's average homes are nearly double the square footage of those built in the 70s. Modern homes often feature more bathrooms, ..elaborate kitchens, ..and outdoor living spaces. ....some friends recently remodeled their kitchen, and their cost was four times what we paid for our first home... there's a slew of other reasons young people are screwed when it comes to buying a new home especially first time buyers.. and you guys know why


wow, I just read the OP no where near on topic...

[Zachary Hoyt]

I would not have been able to afford a median priced home, but I was able to buy a house in a tax auction and completely repair it. I'm self employed and have no credit history at all, so a mortgage was not going to happen. I've spent about $95,000 at this point, which includes a new septic system, all new plumbing and wiring, complete spray foam insulation, all new windows, doors, woodwork, flooring, some roofs, a woodshed, a new 16x32 workshop, two wood stoves and a mini split, new porches, new cabinets in the kitchen, etc. I spent all the money I had saved up beforehand and a bit more over time, but now at age 37 I have a ~900 sf house that is largely new inside and all paid for, and I only have to pay taxes, insurance, electricity and internet. This would not have been financially feasible if I had dependents, unless I had a more lucrative career, or if I didn't have the skills to do most of the work myself (other than the septic system and spray foam).

[Maurice Mcmurry]

I would not have been able to afford a median priced home, but I was able to buy a house in a tax auction and completely repair it. I'm self employed and have no credit history at all, so a mortgage was not going to happen. I've spent about $95,000 at this point, which includes a new septic system, all new plumbing and wiring, complete spray foam insulation, all new windows, doors, woodwork, flooring, some roofs, a woodshed, a new 16x32 workshop, two wood stoves and a mini split, new porches, new cabinets in the kitchen, etc. I spent all the money I had saved up beforehand and a bit more over time, but now at age 37 I have a ~900 sf house that is largely new inside and all paid for, and I only have to pay taxes, insurance, electricity and internet. This would not have been financially feasible if I had dependents, unless I had a more lucrative career, or if I didn't have the skills to do most of the work myself (other than the septic system and spray foam).

Zach is a good poster child for the "I Don't Believe" thread. If a person loves their craft they will make it work.

[Alan Rutherford]

... all paid for....

Whether you're talking about houses, cars, cell phones or something else, that's a great feature.

[Doug Garson]

wow, I just read the OP no where near on topic...

Well, this is the "Off Topic" section.

[Bill George]

When I suggested moving some place or state less expensive like Iowa I got laughed out of another Thread. House prices for housing costs are taken from the major cities. I can guarantee you that you can find lower cost houses by moving... houses are not going for $300k in Wyoming or Alaska rural areas or smaller towns.

Get a skill. I have been working at skilled jobs all my life and most were Union. Both my sons also, we all have nice houses my youngest built most of his $350k new one, before that he remodeled two others for a healthy profit,,, yes we all have skills. I make more in retirement than most of the people I know working full time jobs. I was Union Refrigeration Pipefitter running mostly service and control work and also a licensed Master Electrician. Oh and I taught HVAC the last 12 years before retiring. In the JPG posted below those wages are higher today... but you get the idea, work with your hands and brain.

[Tom M King]

Back a little bit on topic, when I was involved with a Boy Scout Troop, we had a wide range of backgrounds that the kids came from. Some from educated families to some from families who could not read. From my experience, I can say that well educated families are educating their children better than educated families did when I grew up. Uneducated are about the same.

I grew up in a very rural county in Virginia where we had one High School and a few Elementary schools, so kids from all backgrounds went to the same school. All my friends who ended up with PhDs came from families that had gone to college. These kids from educated families came to the first grade not reading better than anyone else, but they always got what they could get out of school and always had good grades. The kids from uneducated families always struggled. I always expected the better educated kids got help and motivation from home. The gap grows wider.

These days, the very well educated people my age have children that they read to a lot and their kids could read very well when they were four years old. These children had a running start in school, ended up getting scholarships and higher education with very good jobs to start with. The ones from families who couldn't read ended up getting through school somehow but are still struggling decades later and hoping for someone to "give" them a high paying job.

I had one parent who finished high school, but somehow managed to get through school pretty easily and was lucky. We also read to our children a lot when they were young, probably at least 20 minutes a night when they were old enough to look at the book and listen, to longer as they grew. Both are pretty successful now and can do what they want to.

One problem we saw with the young guys starting in Boy Scouts was that they weren't comfortable talking to people who weren't their age. We went on a lot of camping trips and when we stopped at a fast food place on the way on long trips, they were required to order their own food. Most had not ever done this by age 11 or 12 and it took some effort to get them to the point that they could do it.

As leaders we saw and discussed that every year the boys that came in were less and less capable than last years boys, and most leaders gradually just dropped away from the job. Even the newer, younger leaders that came in were less and less capable of doing simple tasks like pitching a tent.

I could talk for hours about personal experiences, including working with guys who no one else would hire when I was building new houses. Out of the 30 or so that went through my "program", several are in jail, a couple shot and killed, and really only a couple of success stories over 33 years. One that took pride in never working on Mondays, changed his ways and is now married to a Nurse with three well behaved little girls. He owns 3 dump trucks, has every building license there is, and thanks me with high praises whenever we run into each other every few years.

It's a hard path to get out from a poor start. People who can't read think that being able to make out words on a page is knowing how to read. They will never understand.

As far as personal experience in owning a house, I/we lived in a tent during Summers for several years, and in the house I was building for sale through cold weather. The phenomenal, gorgeous woman that I've been with for 46 years and married to for 43 years stuck with me for a few of those years in a tent in Summer. We built a small house out of scraps, leftovers, and recycled materials around the time that we were married. We thought we'd stay here for a while and build a "real" house when we could. We're still here and raised two successful, capable children who have been grown and gone for a couple of decades now out of it. I have added onto the house a few times since then. We now have accumulated what is our dream place, and a lot of other people tell us theirs too, and I'm working on getting it to support itself to leave it to our kids.

[Pat Germain]

Back a little bit on topic, when I was involved with a Boy Scout Troop, we had a wide range of backgrounds that the kids came from. Some from educated families to some from families who could not read. From my experience, I can say that well educated families are educating their children better than educated families did when I grew up. Uneducated are about the same.

I grew up in a very rural county in Virginia where we had one High School and a few Elementary schools, so kids from all backgrounds went to the same school. All my friends who ended up with PhDs came from families that had gone to college. These kids from educated families came to the first grade not reading better than anyone else, but they always got what they could get out of school and always had good grades. The kids from uneducated families always struggled. I always expected the better educated kids got help and motivation from home. The gap grows wider.

These days, the very well educated people my age have children that they read to a lot and their kids could read very well when they were four years old. These children had a running start in school, ended up getting scholarships and higher education with very good jobs to start with. The ones from families who couldn't read ended up getting through school somehow but are still struggling decades later and hoping for someone to "give" them a high paying job.

I had one parent who finished high school, but somehow managed to get through school pretty easily and was lucky. We also read to our children a lot when they were young, probably at least 20 minutes a night when they were old enough to look at the book and listen, to longer as they grew. Both are pretty successful now and can do what they want to.

One problem we saw with the young guys starting in Boy Scouts was that they weren't comfortable talking to people who weren't their age. We went on a lot of camping trips and when we stopped at a fast food place on the way on long trips, they were required to order their own food. Most had not ever done this by age 11 or 12 and it took some effort to get them to the point that they could do it.

As leaders we saw and discussed that every year the boys that came in were less and less capable than last years boys, and most leaders gradually just dropped away from the job. Even the newer, younger leaders that came in were less and less capable of doing simple tasks like pitching a tent.

I could talk for hours about personal experiences, including working with guys who no one else would hire when I was building new houses. Out of the 30 or so that went through my "program", several are in jail, a couple shot and killed, and really only a couple of success stories over 33 years. One that took pride in never working on Mondays, changed his ways and is now married to a Nurse with three well behaved little girls. He owns 3 dump trucks, has every building license there is, and thanks me with high praises whenever we run into each other every few years.

It's a hard path to get out from a poor start. People who can't read think that being able to make out words on a page is knowing how to read. They will never understand.

As far as personal experience in owning a house, I/we lived in a tent during Summers for several years, and in the house I was building for sale through cold weather. The phenomenal, gorgeous woman that I've been with for 46 years and married to for 43 years stuck with me for a few of those years in a tent in Summer. We built a small house out of scraps, leftovers, and recycled materials around the time that we were married. We thought we'd stay here for a while and build a "real" house when we could. We're still here and raised two successful, capable children who have been grown and gone for a couple of decades now out of it. I have added onto the house a few times since then. We now have accumulated what is our dream place, and a lot of other people tell us theirs too, and I'm working on getting it to support itself to leave it to our kids.

I observed many of the same things when I was in the Navy. It seemed half the guys in my Boot Camp company were functionally illiterate. I can only assume someone fudged their ASVAB scores so they could get into the Navy. You could ask these guys to name the three parts of the fire triangle and they could correctly answer. Then they would take a written test and get it wrong. I couldn't figure out why this was happening. Then it became apparent they simply couldn't read and understand the test which was in front of them. When I got aboard ships, it was these same guys who were always struggling to get promoted because they couldn't pass the Seaman's test. These were the same guys who were always in trouble and ending up at Captain's Mast. Some got kicked out. Some just left the Navy after their enlistment was up and went back to their home towns. No doubt some ended up homeless.