Get Off My Lawn said:

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Kenneth_2003 said:

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Group and I were chatting about housing the other day. It's a spending and saving problem.

Take a young couple... Even if they're actively trying to have kids... Concerns about schools are 5 years away, you don't have to chase the good school areas to start. Plus in 5-8 years where the good schools are can change.

Yes it's $10 Starbucks. It's Netflix, Hulu, Disney+, and Paramount. It's going out to lunch everyday. It's happy hour after work 2-3 times a week. It's the newest iphone or Android when your current isn't even paid off. It's an 8 year car loan on a car that costs more than your parents first house.

It's not any one of those things I've listed above (ok maybe the car) but in aggregate they all add up.

There ARE affordable homes. They may not be in the hottest or trendiest areas. So what? So you want a home or do you want to keep chasing vibes in the trendy part of town where rents are almost equal to the mortgage?

Do you want to buy a home? Or do you want to ***** about not being able to afford it? Just pick one.

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Ok boomer.

(Only half tongue in cheek)

Due to cultural degradation the "good" neighborhoods keep getting worse. Yes, life is full of compromise, but you even admit the "starter home" has a shelf life that previous generations didn't need to account for. That worse deal home will require a massive down payment in proportion to that young couple's income.

Go look into the numbers. It's simply harder now. We do nobody any favors by lying that it's ALL within the frivolous spending. Kids need to out-earn their peers by 2-fold to have a chance at building up a down payment on a house with adequate proximity and neighbors.

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We should all be able to objectively agree on this but there are still some holdouts on here that scoff at it. My wife and I bought our first home in Dallas near downtown in 2007 for $400K. That was actually a little uncomfortable for me at the time but wife was gung-ho about it and our careers were on an upward trajectory so we pulled the trigger.

The only reason we found that house at that price is because it was in a historically designated neighborhood, which at the time, had the effect of keeping prices down simply because the homes were way older (1930 - 1950) and relatively smaller (probably a median sq ft of 1800). It was still adjacent to higher crime areas and we actually had a low income apartment complex smack dab in the middle of the neighborhood which was a damn odd sight to see. We had higher crime all around us and any crime we had in the hood came out of that apartment complex, but the neighborhood itself was/is HIGHLY unusual and rare with extremely involved neighbors. It was a fantastic oasis near downtown Dallas.

We moved away in 2015 and sold the house for $500. That same house is now >$1M ten years later. So, that little pocket is out of reach now for starting out. Single family homes in the urban core with low crime that are affordable were rare then and are unicorns now.

Agreed.

He didn't blame those things on capitalism, he said capitalism isn't working for young people, because of those things. In other words if you resolve the debt trap that is student loans and resolve the restrictions on construction then capitalism can work, but as it stands the restrictions on building inflates asset prices for older individuals already in a home so it works for homeowners, not younger people.

Peter Thiel is a self professed little l libertarian. His prescription to solve problems is going to be less government.

hph6203 said:

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He didn't blame those things on capitalism, he said capitalism isn't working for young people, because of those things. In other words if you resolve the debt trap that is student loans and resolve the restrictions on construction then capitalism can work, but as it stands the restrictions on building inflates asset prices for older individuals already in a home so it works for homeowners, not younger people.

Peter Thiel is a self professed little l libertarian. His prescription to solve problems is going to be less government.

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Student loans have to be calculated risk. If you remove access to student loans then they will cry that they do not have access to the necessary education to compete with rich kids and to change their station in life.

And it does help elevate some borrowers. It is the failures that have beef.

More urban centric living and an American aversion to density has been two of the primary drivers of housing prices becoming more and more unattainable.

There is a huge point to be made about expectations and buying behavior that many just do not want to address.

People could repopulate semi-rural and outlying areas. I suspect certain minorities are doing just that, carving out enclaves.

And not everyone needs a house, lawn and white picket fence. In fact, there are reasons you do NOT want some people to have these things as they lead to micro-salvage yards, pit bulls and cockfighting. Watch that new Netflix about the neighbor who shot the momma over kids playing in side yards.

Some folks, in this instance the white woman, are not intended for areas where density and desire for less density collide.

jja79 said:

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Your mortgage payment is just a budget management tool. I was in banking for decades. Rich people alnost always asked what's the minimum payment and longest term. They realize borrowed money is cheaper than their own money.

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The number of people that both conclude that you should be signing a 50 year loan if available and a 50 year loan doesn't actually address the problem of affordability is disappointing. Most recognize a 50 year loan doesn't address the problem, some think it does, vanishingly few understand it's a tool you should exploit for flexibility.

hph6203 said:

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jja79 said:

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Your mortgage payment is just a budget management tool. I was in banking for decades. Rich people alnost always asked what's the minimum payment and longest term. They realize borrowed money is cheaper than their own money.

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The number of people that both conclude that you should be signing a 50 year loan if available and a 50 year loan doesn't actually address the problem of affordability is disappointing. Most recognize a 50 year loan doesn't address the problem, some think it does, vanishingly few understand it's a tool you should exploit for flexibility.

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It doesn't address higher prices but it does address affordability. Can you afford X payment on Y income is absolutely impacted by a longer term mortgage.

I would offer a 50-year mortgage with a bank option to buy the property at let's just pick say 15 years or 25 years. If bank exercises the option the HO Chas a right to counter and purchase the home at the offer price.

If you cannot figure out how to save and keep your home after 15 or 25 years and saved for that potential, then it should be the banks.

Kenneth_2003 said:

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Group and I were chatting about housing the other day. It's a spending and saving problem.

Take a young couple... Even if they're actively trying to have kids... Concerns about schools are 5 years away, you don't have to chase the good school areas to start. Plus in 5-8 years where the good schools are can change.

Yes it's $10 Starbucks. It's Netflix, Hulu, Disney+, and Paramount. It's going out to lunch everyday. It's happy hour after work 2-3 times a week. It's the newest iphone or Android when your current isn't even paid off. It's an 8 year car loan on a car that costs more than your parents first house.

It's not any one of those things I've listed above (ok maybe the car) but in aggregate they all add up.

There ARE affordable homes. They may not be in the hottest or trendiest areas. So what? So you want a home or do you want to keep chasing vibes in the trendy part of town where rents are almost equal to the mortgage?

Do you want to buy a home? Or do you want to ***** about not being able to afford it? Just pick one.

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In 1975 a starter home in central Texas was ~$20,000. The minimum wage was $2.10 Adjusted for inflation that's about $122,000 in 2025. Currently the starter homes in the same area 250-300k. Minimum wage is $7.25. That math has zero to do with Netflix or Starbucks.

people that make minimum wage don't make enough to own a home

that is why there is a thing called rentals

Wouldn't a 50 year mortgage just increase housing costs? People buy based on the payment, so all of a sudden they can "afford" more house.

Similar to the 72 month notes for buying a car. Look at what car prices have done recently.

jja79 said:

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This idea isn't new and interest only mortgages are available in states other than California. 20 years ago you didn't need to verify income or assets to get a mortgage.

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Those were crazy times pre 2008
I always wondered if the 2008 housing crisis could had been possibly been averted had the banks let the borrowers who were gonna default convert to 50 year or at least deferred the arm adjustments that made the loan payments sky rocket. Similar to how when these auto owners that are upside down and the banks let them roll that into a longer term loan which often lowers the payment .

The wage was to show the change over time. Now substitute teachers pay, firefighter, accountant, doctor or whatever in that same timeframe and the fact remains housing cost has exceeded wage growth.

JP76 said:

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Kenneth_2003 said:

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Group and I were chatting about housing the other day. It's a spending and saving problem.

Take a young couple... Even if they're actively trying to have kids... Concerns about schools are 5 years away, you don't have to chase the good school areas to start. Plus in 5-8 years where the good schools are can change.

Yes it's $10 Starbucks. It's Netflix, Hulu, Disney+, and Paramount. It's going out to lunch everyday. It's happy hour after work 2-3 times a week. It's the newest iphone or Android when your current isn't even paid off. It's an 8 year car loan on a car that costs more than your parents first house.

It's not any one of those things I've listed above (ok maybe the car) but in aggregate they all add up.

There ARE affordable homes. They may not be in the hottest or trendiest areas. So what? So you want a home or do you want to keep chasing vibes in the trendy part of town where rents are almost equal to the mortgage?

Do you want to buy a home? Or do you want to ***** about not being able to afford it? Just pick one.

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In 1975 a starter home in central Texas was ~$20,000. The minimum wage was $2.10 Adjusted for inflation that's about $122,000 in 2025. Currently the starter homes in the same area 250-300k. Minimum wage is $7.25. That math has zero to do with Netflix or Starbucks.

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People don't buy homes on minimum wage. Also, the minimum wage in the market is well above $7.25 today. More like $15+. College graduates also don't buy homes right after graduation. Try the comparison for average salary of a 30 year old across both time periods.

I'm not saying homes aren't more expensive today relative to income, but that's a very flawed analysis.

YouBet said:

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The other thing that always gets ignored on owning a home is the TCO for it. It's not just the mortgage + taxes + Insurance. It's your utility bill - electricity, water, gas. HOA fees.

And then **** breaks, randomly.

Replacing HVAC is $10-20k. Water heaters explode. Roof replacements. Appliances fail. Half of one of your trees falls due to high winds. Gotta replace your fence for $10-20k.

Now I gotta go buy a mower and mow the damn grass or pay someone else to do it. Ah, f* me we have a mold issue!!!! Have to spend thousands to resolve that.

GD it a pipe just burst underneath the floor!!!! Call a plumber and spend hundreds (if you are lucky) fixing that.


Home ownership is not for the feint of heart.

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A mortgage is a forced savings account. Sometimes that is a good thing for those who are not disciplined to do it on their own

Right but a mortgage covers nothing that I posted. That's all on top of your mortgage and many people have no idea what they are getting into when they buy a home. The TCO of a single-family home is a daunting, financial prospect if you are not financially disciplined. The meteoric rise in home prices the last decade are the variables in the cost equation that everyone focuses on while ignoring everything that comes with it post-purchase.

That TCO now is a ***** of a steep curve upwards once you factor the price of everything else now with it.

MemphisAg1 said:

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JP76 said:

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Kenneth_2003 said:

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Group and I were chatting about housing the other day. It's a spending and saving problem.

Take a young couple... Even if they're actively trying to have kids... Concerns about schools are 5 years away, you don't have to chase the good school areas to start. Plus in 5-8 years where the good schools are can change.

Yes it's $10 Starbucks. It's Netflix, Hulu, Disney+, and Paramount. It's going out to lunch everyday. It's happy hour after work 2-3 times a week. It's the newest iphone or Android when your current isn't even paid off. It's an 8 year car loan on a car that costs more than your parents first house.

It's not any one of those things I've listed above (ok maybe the car) but in aggregate they all add up.

There ARE affordable homes. They may not be in the hottest or trendiest areas. So what? So you want a home or do you want to keep chasing vibes in the trendy part of town where rents are almost equal to the mortgage?

Do you want to buy a home? Or do you want to ***** about not being able to afford it? Just pick one.

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In 1975 a starter home in central Texas was ~$20,000. The minimum wage was $2.10 Adjusted for inflation that's about $122,000 in 2025. Currently the starter homes in the same area 250-300k. Minimum wage is $7.25. That math has zero to do with Netflix or Starbucks.

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People don't buy homes on minimum wage. Also, the minimum wage in the market is well above $7.25 today. More like $15+. College graduates also don't buy homes right after graduation. Try the comparison for average salary of a 30 year old across both time periods.

I'm not saying homes aren't more expensive today relative to income, but that's a very flawed analysis.

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Actually prior to 2008 it was possible if both a husband and wife only made minimum wage to do just that. And it was only $515 back then. Currently no way that would happen when that same starter house is 200k versus 70k that it was back then

hph6203 said:

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He didn't blame those things on capitalism, he said capitalism isn't working for young people, because of those things. In other words if you resolve the debt trap that is student loans and resolve the restrictions on construction then capitalism can work, but as it stands the restrictions on building inflates asset prices for older individuals already in a home so it works for homeowners, not younger people.

Peter Thiel is a self professed little l libertarian. His prescription to solve problems is going to be less government.

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Interest rates today are not high by historical norms.

Housing prices today are higher than historical norms.

Those prices are higher because the government artificially manipulated interest rates lower after the 2008 crash.

Low rates allows you to finance bigger homes with nicer finishings and drives up the price of a home. Just compare the average size and finishings of today's "starter" home vs. one from 30 years ago.

When interest rates return to normal like now, it puts those homes out of reach for many people, and it also causes current homeowners to strongly resist a price correction back to historical norms.

A key cause of all this is government involvement in housing markets. Well intentioned, but very harmful impact.

Similar story with the cost of college. The government guaranteeing college loans has led to an explosion in college costs over the past several decades. Annual inflation something like 8%, well above normal inflation.

Similar story for health insurance.

Moral of the story is for government to get the hell out of the way. Government is the source of these problems, not the solution.

In addition, I think this 50-year mortgage idea is getting ahead of reality and is unnecessary simply because we are about to have a major housing glut in the next few years. We already do but it's going to get worse, and prices will HAVE to fall.

But I get why Trump is doing this. He doesn't have time to wait for that because R's are going to get murdered in the mid-terms if something doesn't give...right or wrong; fair or not...so this is him throwing a hail mary to try and get some relief out there.

Scuttle is Pulte and Bessent have been butting heads on housing affordability. Pulte likely loses. I have not dug in to what each one is gunning for, likely Pulte wanting favors for builders and Bessent looking at purely the finances (rates, loans, private equity investments).

I doubt either comes up with something MAGA, let alone conservatives will be happy about.

If the supply is relatively fixed and more people who want to buy can buy, what happens to the price?

It goes up.

Extending payment terms, lowering rates, etc makes affordability go down.

YouBet said:

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In addition, I think this 50-year mortgage idea is getting ahead of reality and is unnecessary simply because we are about to have a major housing glut in the next few years. We already do but it's going to get worse, and prices will HAVE to fall.

But I get why Trump is doing this. He doesn't have time to wait for that because R's are going to get murdered in the mid-terms if something doesn't give...right or wrong; fair or not...so this is him throwing a hail mary to try and get some relief out there.

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If that's the reason, just go for the largish stimulus check. Very tangible and will make a difference with those wanting some help. This sounds like a more convoluted way to do it.

The other problem with this is strictly speaking not a dime should be going overseas to domestic things there -- some people forget the other side of DOGE is it gave the impression D.C. has plenty of money to help, but has been sending it overseas. So its a perception challenge.

What makes you think we have a housing glut? In many areas of the country we remain chronically short of inventory. And builders have been much more sluggish to put inventory in the ground they may not be able to sell.

2008 may not have left lasting memories with banks, but builders sure as **** still remember.

lb3 said:

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California has interest only mortgages.

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you mean rent?

Going through my parents old paperwork, their house they bought in 1972 assumed the mortgage of the original homeowner who built the home. My understanding was that was very common at the time.

I don't think it's common at all these days but I honestly have no idea. With a 50-year term, this should be an option.

College is a scam and unnecessary for 95% of current college students. I've got a 22 year old son who spent a minute in college and said no way. He closed on his first house 2 weeks ago and made 6 figures each of the last two years.

Two weeks ago I was with him and his buddies that went to college and they all said they wish they'd skipped college and the debt.

flown-the-coop said:

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What makes you think we have a housing glut? In many areas of the country we remain chronically short of inventory. And builders have been much more sluggish to put inventory in the ground they may not be able to sell.

2008 may not have left lasting memories with banks, but builders sure as **** still remember.

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Recent analysis showing we have the highest number of homes for sale with fewest number of buyers since it's been measured. Was shared on here somewhere. I think it was from WSJ. Problem is sellers won't drop their prices because no one wants to acknowledge reality. Yet.

Also, now add in all of the boomers that are close to assisted living age who are the largest holder of homes and that will add to the glut.

Russel Brand did a video a couple of years ago showing just how rigged the system is for the banks to be able to take advantage of buyers, qualified or not.

If anyone can find it and drop it in this thread, I think it would be a good watch for those who haven't seen it.

Your initial response said a 50 year mortgage improves affordability.

Not even sure what your bank purchase proposal was trying to say. The bank has zero interest in buying homes. They're in it for interest payments/fees and when a bank ends up owning a home it is a failure on the part of the bank, and generally an expensive one.

Related analysis...a large majority of the homes (I can't recall the percentage, but it was very high) being bought and sold were also by boomers. They almost single handedly were/are keeping the housing market going.

Keep in mind we are STILL recovering from 2008 hit to the market. And that was a very deep hole that we are just nearing the top of the hole after nearly 20 years.

Shortage of supply persists.

https://privatebank.jpmorgan.com/nam/en/insights/markets-and-investing/tmt/a-shortage-of-supply-the-housing-market-explained

Quote:

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So, with demand so subdued, why aren't prices correcting? The answer lies in a persistent supply squeeze. About half of current U.S. mortgage borrowers are still enjoying sub-4% rates, and about 80% are paying under 6%, creating a "locked-in" effectthere's little incentive to sell and take on a higher payment, keeping existing home inventory at historic lows. We estimate the current housing shortage at approximately 2.8 million units, and we believe it could take around 10 years to resolve. This figure is likely conservative, as it only reflects the physical shortfall and doesn't account for the fact that many households haven't been formed due to discouragementsuch as individuals remaining in their parents' homes longer. It's important to note that the shortage isn't uniform across the country; it's most acute in coastal cities, and much less severe in the middle of America.

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It does.

And if a bank is going to issue a 50-year mortgage they sure as **** better have a talented REO group.