Supply and demand explain pricing. There is just not enough supply for the demand. The new supply is much more expensive to build compared to just 4-5 years ago. And of course in most cities there isn’t room to add new units, money had been going to replace old homes with new ones - no new net housing units, except that some older apartments are being redone and some old industrial areas are rehabbed into multi unit luxury units. You have to go a far out of town to find new developments of single family residents.
If you are in a state like California and owned your home for many years you have almost no incentive to sell. You have low (or zero if paid off) mortgage and interest payments, high equity, and your property tax is capped by law and tied to your cost basis. If your home value has doubled or quadrupled why would you sell it when it costs you so little to keep it? Why move? You could have have your property tax reset and your mortgage rate will be 8% instead of under 4%. The only people selling are those forced to by work, by financial considerations, or who are elderly or widowed and want to downsize. Everyone else could rent the home for much more than their cost of ownership, over which is income they could use to cover living costs in a smaller apartment or in another state.
So bottom line, lower inventory and steady demand means higher prices. High interest rates makes the higher prices unaffordable to many buyers. And as someone mentioned upthread, if the banks want you to allocate 30% max of income to mortgage and property taxes then it’s that much harder to get a loan in a high inflation high cost of living high income tax environment.
It makes me wonder how Spain took care of it’s muslim issue in 1492. The ‘solution’ included Jews. I guess it had to do with having a king. NY had Rudy. It had to get bad enough. Chile had Pinochet. What do we we have? The will?
“if the banks want you to allocate 30% max of income to mortgage and property taxes”
That percentage is about 70 years old, and outdated.
Housing is a cost of doing business for working people.
Pay could be direct deposited to a mortgage company. Then the mortgage company could direct deposit the balance after mortgage payment to your bank.
Housing in areas with lots of good-paying jobs costs more.
Area A: $108,000 after tax income, $42,000 housing costs
Area B: $70,000 after tax income, $22,000 housing costs
Area A puts $18,000 more into a family’s pockets annually. Housing in Area A grows in value faster than in Area B.
FHA allows up to a 46% DTI ratio for mortgages...doesn’t seem so awfully tight to me...