Unaffordable housing

[I_UndergroundPanther]

http://amp.mortgagenewsdaily.com/article/935384

[PoindexterOglethorpe]

1. I want to offer this.

I live in a city that is reputed to be very expensive. Santa Fe, NM. I live in a perfectly fine 2 bedroom 2 bath 3 skylight attached home, about 900 square feet. It's considerably less than the median home price here.

My point is, that people often focus on the median home price and forget that fully half of all housing will be less than that. And often, the median price is pulled upwards by a relatively few very high priced homes.

Yeah, I do get it that housing is expensive in a lot of places, but in another lot of places it really isn't as dire as people think.

[Massacure]

2. The second sentence in your second paragraph is incorrect

Say the median price of a home is $100,000 in a random city. If you build a new home, the effect on the median price is exactly the same regardless of whether the new home is $100,001 or $1,000,000. It is the mean (not the median) price that will be disproportionately affected by a million dollar home.

[PoindexterOglethorpe]

4. I stand corrected.

But half of the homes are below the median price, and they tend to be clustered together at various amounts. The homes above the median stretch out over a much greater price range.


In my case, the median price in my city is completely out of my price range. But I am hardly living in a hovel.

[TexasBushwhacker]

3. But shouldn't a family with a median income

be able to afford a median priced home? In most places they cannot. The median family income in the US is $63K. The median home price is $315K.

[MineralMan]

5. One of the other factors is that lower-priced homes

are in short supply. With rents at a peak, the lower priced homes are being snatched up to become rental houses. A quick interior paint-up, and they're ready to rent and generate cash flow for residential rental property owners. In the Twin Cities of MN, where I own a home in that category, I'm watching houses like mine being sold before a For Sale sign is in the yard. Most are getting bought to become rentals.

You might be seeing a lot of ads in your market from people who are buying houses as they are, even with your junk still in them. Those buyers are rental property investors. They can clear all of the furniture and other stuff out, bring a painting crew in, slap some laminate flooring down, install low-end new kitchen appliances and have the house rented out within 30 days.

Those buyers know exactly what it costs to do a quick rehab, and even manage to make a profit on the margin between what the house would sell for if it were already ready to sell and their total cost.

Selling as-is is very attractive to people like boomers who are selling to simplify their lives and get rid of outside maintenance hassles.