Affordability discussion (split from Iran thread)

#77
#77
I'm glad this was split because I wanted to add this question. Be kind as I'm not a market or economics guy. I have a basic understanding but that's about it.

How much of our issue is due to us being a service based economy?

Hear me out, we don't manufacture a great deal compared to imports. So everything is either service added to the good or installation of those goods. With that in mind isn't there a saturation point...... In that at some point just adding more to the bottom line for that good or service doesn't it at some point become unsustainable/unaffordable?

If so how much of that is our issue......... Along with our government spending like a trust fund kid with a black card?
 
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#78
#78
Vol8188 said:
Sure, the value of degree (your income minus cost) has diminished and thatā€™s directly correlated with the supply that you told me didnā€™t matter
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It doesnā€™t matter that much is what I said and it doesnā€™t. Hasnā€™t the share of jobs requiring a degree doubled since 1990?
 
#79
#79
EasternVol said:
It doesnā€™t matter that much is what I said and it doesnā€™t. Hasnā€™t the share of jobs requiring a degree doubled since 1990?
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It obviously matters a lot. Not according to chat gpt. I donā€™t care enough to look beyond that, but per chat gpt itā€™s less than the increase in degree holders. By ā€œdoubledā€ they couldā€™ve meant total jobs, but it doesnā€™t seem to have doubled in terms of % of jobs requiring a degree

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#80
#80
Vol8188 said:
It obviously matters a lot. Not according to chat gpt. I donā€™t care enough to look beyond that, but per chat gpt itā€™s less than the increase in degree holders. By ā€œdoubledā€ they couldā€™ve meant total jobs, but it doesnā€™t seem to have doubled in terms of % of jobs requiring a degree

View attachment 819229
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What I picked up was a doubling in share of jobs from about 20% to about 40%.
 
#82
#82
hog88 said:
Could part of the reason be a lot of the younger (mid 20s through 30s) generation doesn't want to own a home? They value flexibility and leisure time more?
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It probably is. But 13 years is a huge gap and cost of housing is undoubtedly a big factor.

The indirect problem here is that home ownership is the best way to build wealth and if that process doesn't start until 40 they're really missing out.
 
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#83
#83
McDad said:
according to Google:
1995 median household income = 34k
1995 median home price =115k - 134k

2026 median household income = 84k - 90k
2026 median home price = 400k - 420k

both are close to about 4 times income for home price. 2026 is slightly more.
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Per chatgpt:

Housing affordability has changed dramatically.
  • Since the late 1990s, U.S. home prices have increased far faster than median wages.
  • After the 2008 Financial Crisis, home prices eventually surged againā€”especially after 2020.
  • Down payments and monthly mortgage costs now require many more years of saving.
Example trends:
  • Median home price ~1998: ~$150k
  • Median home price ~2024: ~$420k+
  • Median wages did not triple in the same period.

Result: people need more time to save for down payments and qualify for mortgages.
 
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#84
#84
hog88 said:
Could part of the reason be a lot of the younger (mid 20s through 30s) generation doesn't want to own a home? They value flexibility and leisure time more?
Click to expand...
ā€œBack in the 1990s, nearly 70% of the total wealth belonged to working-age households. Since then, the share of wealth has steadily shifted. Now, roughly 65% is with those 60 and up.

Due to older Americans having had more time to watch their assets grow and to experience compounding returns, itā€™s likely the wealth has become more concentrated to those generations.

This could suggest owning assets like real estate or securities for the long-term results in greater value. In comparison, younger generations havenā€™t had nearly as much time to watch their assets grow.

The cost of living should also be factored in.

Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.ā€œ

 
#85
#85
The Knoxville area has ranked at or near the highest rate of home cost increase in the nation in the past 6+ years. Desirable areas have easily doubled in price in that time, and many have actually tripled in just over a decade. Homes in our old Lenoir City neighborhood have rocketed from $200k to $700-800k since 2009 (when we moved out of there). $1M in Farragut gets you a nice but not extravagant 4-5 BR. There are 26 homes in my zip code alone for sale over a million, several over 2, and they are not on the water (like many in the 37922 zip). It's unreal.

At the end on the day, it's simple economics -- the demand from the influx of population leaving higher-cost states has overwhelmed the supply, and they are willing to pay. It has killed younger people and families living on lower or middle-income wages.
 
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#86
#86
OHvol40 said:
ā€œBack in the 1990s, nearly 70% of the total wealth belonged to working-age households. Since then, the share of wealth has steadily shifted. Now, roughly 65% is with those 60 and up.

Due to older Americans having had more time to watch their assets grow and to experience compounding returns, itā€™s likely the wealth has become more concentrated to those generations.

This could suggest owning assets like real estate or securities for the long-term results in greater value. In comparison, younger generations havenā€™t had nearly as much time to watch their assets grow.

The cost of living should also be factored in.

Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.ā€œ

Click to expand...

Someone else (Duck I think) pointed out something important which is private pensions are far less common now and instead people have 401ks that are represented in their ā€œwealthā€. While pensions would not have been included in the number
 
#87
#87
hog88 said:
Dude I grew up the son of a small dairy farmer, that's practically Bill Gates money there.
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wait yer dad who had a dairy farm named his kid hog? not as cool as a jimmy carter pic smeared with grizzly blood & carried on a cross country harley ride but not too shabby
 
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#88
#88
hog88 said:
When in our history has the next generations quality of life been worse than their parents/grandparents?

Now, I do think what qualities an individual values can lead to someone considering that it's worse but overall our quality of life has never diminished.
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The great depression? Not for all but definitely for some.....
 
#89
#89
OHvol40 said:
Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.ā€œ
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The inflation number is interesting, but misleading. I donā€™t know what a better metric is, but you canā€™t build a 1400 sf 3BR 2Ba house on a nice lot for less than $205k now.

So, inflation probably isnā€™t the best measure.

The point does remain, however, housing costs are out of control, especially for young buyers.
 
#90
#90
Ttucke11 said:
Fair enough, I do disagree though. I think if anything it will continue to get progressively worse. Its not like any good news is coming down the pipe.

Hog will probably disagree, and I respect his opinion, but the older generation is completely blind to this. Or they don't care, not sure which.

Its going to create a lot of apathetic people who completely disengage from society (already happening) and it will also probably cause some radicalization as well. Kids were sold a false reality.
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I see your point and Iā€™ll add to it. A lot of the young men of today are marshmallow soft, lazy and unmotivated. This will contribute to it as well.
 
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#91
#91
Ritzwatch said:
The inflation number is interesting, but misleading. I donā€™t know what a better metric is, but you canā€™t build a 1400 sf 3BR 2Ba house on a nice lot for less than $205k now.

So, inflation probably isnā€™t the best measure.

The point does remain, however, housing costs are out of control, especially for young buyers.
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Iā€™m trying to understand why itā€™s misleading. They are saying average housing prices in the mid 60s, if adjusted for inflation now, would average $200kā€¦ as opposed to the current average price of a home is north of half a million. So homes used to be much more affordable, even when adjusted for inflation.

Maybe Iā€™m misunderstanding.
 
#92
#92
OHvol40 said:
Iā€™m trying to understand why itā€™s misleading. They are saying average housing prices in the mid 60s, if adjusted for inflation now, would average $200kā€¦ as opposed to the current average price of a home is north of half a million. So homes used to be much more affordable, even when adjusted for inflation.

Maybe Iā€™m misunderstanding.
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I think what I am trying to say is that the cost of a lot and a build has increased at a rate higher than the inflation adjustment, so I expect the price to have exceeded the inflation adjusted amount as well.

I assume the builder in the 60ā€™s made money, so I suspect the average cost to build was less than $19k.

Right now, it costs more than $205k to buy a lot and build a 1400 sf house. If construction costs have exceeded inflation, I donā€™t think using inflation adjusted sales figures mean a lot as a expected price point.

None of which is to suggest that I do not think prices are not crazy high, because I do.
 
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#93
#93
Ritzwatch said:
I think what I am trying to say is that the cost of a lot and a build has increased at a rate higher than the inflation adjustment, so I expect the price to have exceeded the inflation adjusted amount as well.

I assume the builder in the 60ā€™s made money, so I suspect the average cost to build was less than $19k.

Right now, it costs more than $205k to buy a lot and build a 1400 sf house. If construction costs have exceeded inflation, I donā€™t think using inflation adjusted sales figures mean a lot as a expected price point.

None of which is to suggest that I do not think prices are not crazy high, because I do.
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Got ya. Maybe so, I donā€™t know enough about it honestly so Iā€™m relying on other sources. Regardless, the reason our younger generations arenā€™t buying homes is pretty clear. They are being priced out of the middle class on every front, not just housing.
 
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#95
#95
Carl Pickens said:
I see your point and Iā€™ll add to it. A lot of the young men of today are marshmallow soft, lazy and unmotivated. This will contribute to it as well.
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It seems like that's probably true as a majority.

But looking at it from their perspective, I'm not sure I would be any different. ***** too expensive, never going to afford a house, have to compete with a ton of foreigners and AI for jobs (and women, other generations didn't), the women are full of liberal brain rot and hate being women, politics has weaved its nasty head into everything including sports, inflation is astronomical, if you're young and white you're blamed for everyone's problems but you received none of the benefits, etc.
 
#97
#97
OHvol40 said:
ā€œBack in the 1990s, nearly 70% of the total wealth belonged to working-age households. Since then, the share of wealth has steadily shifted. Now, roughly 65% is with those 60 and up.

Due to older Americans having had more time to watch their assets grow and to experience compounding returns, itā€™s likely the wealth has become more concentrated to those generations.

This could suggest owning assets like real estate or securities for the long-term results in greater value. In comparison, younger generations havenā€™t had nearly as much time to watch their assets grow.

The cost of living should also be factored in.

Take housing as an example. As of Q1 2025, the average sales price of homes sold in the U.S. was $514,200, per the Federal Reserve Bank of St. Louis. Back in Q1 1964, that number was $19,600. That same $19,600 house would only cost $205,357 when adjusted for inflation.ā€œ

Click to expand...
Thatā€™s apples to oranges though, right?

Back in the 90ā€™s, the retired generations were all on pensions - they didnā€™t have fat 401k & IRA balances in their name.

Now, the size of the Boomer generation combined with their retirement accounts has flipped the numbers.
 
#98
#98
OHvol40 said:
Iā€™m trying to understand why itā€™s misleading. They are saying average housing prices in the mid 60s, if adjusted for inflation now, would average $200kā€¦ as opposed to the current average price of a home is north of half a million. So homes used to be much more affordable, even when adjusted for inflation.

Maybe Iā€™m misunderstanding.
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Land scarcity/pricing is worse today. Zoning rules have increased

Labor and materials have exploded

We've had long periods of moderate to very low interest rates.

allowing people to buy a home with 3.5% down or even 0% down has made financing easier but has expanded the market and has been detrimental to pricing. Once you needed 20%-30% down with little to no exceptions

Real estate became an investment asset

Houses in 60s were often built with shag carpet, inferior shingles, linoleum, no garages.....then HGTV came along and now everyone wants to live in a strangely chic farmhouse.

Regulations grew with enhanced permitting, inspections, and Lord knows you can't just dig a hole and stick your septic tank in it. Some tanks require pumps, drip systems, etc.

after 1971, we went off the Gold standard and our currency became FIAT. Money supply expanded, mortgage credit exploded.

Once you either saved up a huge chunk, or you just rented until you died or inherited the home you grew up in. Can't have it both ways, easier mortgages and low rates drive up prices. The very thing young/low-income people asked for (a lower barrier to enter into a mortgage) is a big reason why affordability has gotten worse. Bring back 30% down payments and 12% mortgage rates and prices will get back in line quickly.
 
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#99
#99
85SugarVol said:
Thatā€™s apples to oranges though, right?

Back in the 90ā€™s, the retired generations were all on pensions - they didnā€™t have fat 401k & IRA balances in their name.

Now, the size of the Boomer generation combined with their retirement accounts has flipped the numbers.
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I donā€™t think itā€™s as much apples and oranges as much as it is cause and effect. Regardless, the fact remains that the boomers are generally thriving while the working class is becoming the working poor due to rising prices and stagnant wages.
 
#100
#100
OHvol40 said:
Got ya. Maybe so, I donā€™t know enough about it honestly so Iā€™m relying on other sources. Regardless, the reason our younger generations arenā€™t buying homes is pretty clear. They are being priced out of the middle class on every front, not just housing.
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Part of it as well (if we are to believe the younger generations when they tell us) is that they value things differently than prior generations.

[which is true for every succeeding generation]

Young people today place great value on experiences. They are much more likely to spend money on travel, events, etc - and derive great satisfaction from that. Some arenā€™t interested in having children and owning property, they prefer what they perceive as greater freedom. Which is their prerogative.
 
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