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A 30-Year Trap: The Problem With America’s Weird Mortgages
(www.nytimes.com)
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this post was submitted on 19 Nov 2023
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And they almost completely ignore the elephant in the room. Nobody has been building new homes!
Do you live in the US? People have been flocking out of the cities to the rural parts of the country because of WFH. I work in general residential contracting in a town that was 20,000 citizens five years ago and is now over 100,000, and we've had to turn away probably 50 potential clients this year alone. We're booked under contract for the next four years.
People are absolutely buying new homes, but not having to make daily commutes to the downtown office is giving them the ability to build in historically cheaper parts of the country.
New home construction in the US was massively reduced back in the 2008 GFC and has remained depressed ever since. It's hyperbolic to say nobody is building, but there's been fewer new homes being added for awhile now and that's one of the central problems in the current housing affordability crisis.
And very few of them are under 350k That's the real issue
Yes. Nobody is building starter homes. Even the 50+ communities going up have 4 bedrooms and 2200 sq ft.
We live in a rural ish area 2-3 hours from DC and homes are going up like crazy. In the last 2 years there have been 3 or 4 100+ home subdivisions built. As I understand it though they are almost exclusively rentals owned by the builder themselves.
And all of the homes are 4 bed, 2 bath or bigger? Nothing in the 2 bed, 1 bath range that people should be starting with.
I've seen anywhere from 2 bed 1 bath to 4 bed 3 bath
That sounds horrible for that city. A five times population increase in only 5 years seems like something that no city would be able to manage well.
It sounds like a Ponzi scheme, mainly because it is one.
Sure do! Been living in Alabama for almost 20 years at this point. Grew up in Minnesota. While I appreciate how slammed your profession is right now, you’re not really having an much of an effect on the market just yet. And none at all at the lower end of the market. I have seen a lot of really nice builds at price points I can’t afford though.
The mediam household income in Alabama is $54,943 and the median individual income is $30,458 according to the US Census Bureau. My wife and I combined make roughly $110k with myself making $70k. My wife is a mental health therapist with a master’s degree and I drive a truck. We’re lucky, but a lot of folks ain’t.
Growing up I was told, when your buying a house, your budget should be no more 2 times 1 persons (the husband’s) salary. Back in 2005 Dave Ramsey said no more than 4 times the household income. I did a bit of digging using both guides to see just what folks could afford in our local property market right now at the most common wages in the area, and the pickings are pretty slim until you get to the wages common for skilled trades. Given how frequently my wife, or I have been out of work, I decided use only a single income in my searches.
Here’s a paste dump of what I found:
$7.50/hr @ 40hr/Wk = $15,600/yr
X2 Gross = $31,200 https://www.zillow.com/tuscaloosa-al/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Afalse%2C%22mapBounds%22%3A%7B%22west%22%3A-87.703283%2C%22east%22%3A-87.366123%2C%22south%22%3A33.028236%2C%22north%22%3A33.454732%7D%2C%22usersSearchTerm%22%3A%2245404%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A14208%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22price%22%3A%7B%22min%22%3Anull%2C%22max%22%3A31200%7D%2C%22mp%22%3A%7B%22min%22%3Anull%2C%22max%22%3A166%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%7D
X4 gross = $62,400 https://www.zillow.com/tuscaloosa-al/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Afalse%2C%22mapBounds%22%3A%7B%22west%22%3A-87.703283%2C%22east%22%3A-87.366123%2C%22south%22%3A33.028236%2C%22north%22%3A33.454732%7D%2C%22usersSearchTerm%22%3A%2245404%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A14208%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22price%22%3A%7B%22min%22%3Anull%2C%22max%22%3A62400%7D%2C%22mp%22%3A%7B%22min%22%3Anull%2C%22max%22%3A333%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%7D
$16.00/hr @40hr/wk = $33,280/yr
x2 gross = $66,560 https://www.zillow.com/tuscaloosa-al/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Afalse%2C%22mapBounds%22%3A%7B%22west%22%3A-87.703283%2C%22east%22%3A-87.366123%2C%22south%22%3A33.028236%2C%22north%22%3A33.454732%7D%2C%22usersSearchTerm%22%3A%2245404%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A14208%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22price%22%3A%7B%22min%22%3Anull%2C%22max%22%3A66560%7D%2C%22mp%22%3A%7B%22min%22%3Anull%2C%22max%22%3A355%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%7D
x4 gross = $133,120 https://www.zillow.com/tuscaloosa-al/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Afalse%2C%22mapBounds%22%3A%7B%22west%22%3A-87.703283%2C%22east%22%3A-87.366123%2C%22south%22%3A33.028236%2C%22north%22%3A33.454732%7D%2C%22usersSearchTerm%22%3A%2245404%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A14208%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22price%22%3A%7B%22min%22%3Anull%2C%22max%22%3A133120%7D%2C%22mp%22%3A%7B%22min%22%3Anull%2C%22max%22%3A710%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%7D
$22.00/hr @ 40hr/Wk = $45,760/yr
x2 gross = $91,520 https://www.zillow.com/tuscaloosa-al/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Afalse%2C%22mapBounds%22%3A%7B%22west%22%3A-87.703283%2C%22east%22%3A-87.366123%2C%22south%22%3A33.028236%2C%22north%22%3A33.454732%7D%2C%22usersSearchTerm%22%3A%2245404%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A14208%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22price%22%3A%7B%22min%22%3Anull%2C%22max%22%3A91520%7D%2C%22mp%22%3A%7B%22min%22%3Anull%2C%22max%22%3A488%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%7D
x4 gross = $183,040 https://www.zillow.com/tuscaloosa-al/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22isMapVisible%22%3Afalse%2C%22mapBounds%22%3A%7B%22west%22%3A-87.703283%2C%22east%22%3A-87.366123%2C%22south%22%3A33.028236%2C%22north%22%3A33.454732%7D%2C%22usersSearchTerm%22%3A%2245404%22%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A14208%2C%22regionType%22%3A6%7D%5D%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22price%22%3A%7B%22min%22%3Anull%2C%22max%22%3A183040%7D%2C%22mp%22%3A%7B%22min%22%3Anull%2C%22max%22%3A975%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%7D
Don't worry, we're actually building a lot of them out here in the totally-long-term-sustainable desert of Phoenix area.
Plumbing not included
There’s plumbing. Just no water.
Didn't Phoenix either put (or look at putting) a moratorium on new building or growing the city limits? There's just no water out there and it's only going to get worse in the future.
Nobody's allowed to build new homes (except way out in the exurbs) because the zoning code is wrong.