Median priced home in the 2's. Please point me in that direction, im sure where houses are priced in the 2's that the avg yearly income is 24-40k. Where I live houses are $650,000 and up, 1 bedroom condos $300,000+++. Taxes in some areas as high as 12-15k a yr to live in an area with a good school system. That whole talk about housing being affordable is a MYTH, its out of reach for so many people.
Also keep in mind that in the last 5 years or so many consumers were borrowing billions of dollars against their houses, now that housing prices are coming down using your house as an ATM isnt what it used to be. This could hurt consumer spending over the next 12-18 months. With GDP making up 2/3 of consumer spending expect it to slow even more.
Hey, I live in TWO of those markets. I too know the reality. Here's a clue for you. Ownership is not and has never been a right. Except for the 90's asset accumulation has never been easy. Ever hear dialogue in old movies like, "Stocks? Nah, that's a rich man's game." Many older New Yorker's, Bostonian's and Chicagoan's never owned property in their lives. People MOVED to where they could AFFORD to buy. Condominiums are a new (70's) thing. Suburbia? Until the 50's it was for rick folks in estates. Most Americans lived in a tenement. Even those with money lived in what's now the "inner city". These days though the manager at Budget is pissed that a 2000sq central air SFO with good schools is out of his reach. Boo fuckin' hoo. It was ALWAYS out of reach, Jack.
Couldn't agreed more. I have been looking for a 2 family house in Brooklyn, NY in a decent neighborhood for a while, and I don't see how I can afford it. According to US censor, my wife and I's earning are way about average. Yet, we cannot afford it. Of course, we can buy it and live on bread and water for a few years.
As for zillow, its so lagging it worthless. Homes in san diego keep selling 20% below their zillow "zestimate".
Exactly - even a leveling out in housing prices (rather than a more probable decline) should lead to decreases in consumer spending. I also think that perception is important here as well - consumers likely spend more money when they feel wealthier, even if they do not actually increase borrowing against their home.
I think it depends on the given area. Zillow is spot on in my neighborhood of Denver Metro, maybe off by 3k at the most. But then our neighborhood only appreciates about 3% a year, even during the RE run up of the last few years.
Well stated. the RE run up of the last several years fueled the economy in the US almost completely. Unless you work for a defense contractor or own part of the Carlyle Group. The majority of decent paying jobs created in the last several year were RE related, whether it be brokers, construction related, etc. Let's wait and see what happens when 2 trillion in adjustable loans reset this year. I am glad I am not one of them. I would not want to be in gentle Ben's shoes right now.
Shiller has said that if not an implosion, one of the ways the housing market will destructively deflate is by a relative lack of appreciate when compared to even the most general rate of inflation. He has said that one model shows housing values losing 40% over a 10% period by failing to appreciate in a manner commensurate with inflation. This is very similar to what happened in Japan. Whether by implosion or stagnation, given that housing and its direct and indirect derivative jobs and consumer led spending comprise, conservatively speaking, a fifth of the economic activity in the U.S. (and 6.4% of absolute GDP - directly), it's bad.