Hacker News Reader

Comment by Domenic_S | Hacker News Reader

> in many areas the median house now costs enough that it's beyond the reach of the median person

I don't see it. Maybe bubbly areas like SJ will correct a bit, but at the end of the day real estate is a supply/demand calculation. YoY% increases don't look like they did in the last bubble.

The more people who want to live somewhere -- whether renters or buyers -- the higher the prices go, until sales start dropping off. Real estate is like anything else: it's worth whatever you can convince someone to pay.

View on HN

http://www.economist.com/blogs/graphicdetail/2015/11/daily-c...

EDIT: I am specifically referring to the "Price to Income" chart in my comment below, not the one that shows up by default. Sorry for the confusion.

Uncheck everything but the 'US' graph. Different data sources give different ratios, but they all show that it's still well above historical norms & headed up. Some data sources say that it's already approximately back to where it was in the peak (see a link further down, that chart is up-to-date), others like this one only show it ~1/2 way there (note tat this chart is two years out of date), but either way we're above what has been stable in the past.

Without numbers it's hard to tell, but it looks to me like the curve is even gentler than 99-03. It's almost always going to be going up and to the right until the population starts shrinking.

People are just stubborn and think that if they can't afford the type of house they want in the type of neighborhood they want in the city they want, then housing must be in a bubble and out of reach.

Assuming continuous inflation, the absolute price of housing will always increase. However, affordability decreases as the ratio of housing price : income increases. There is a limit above which a vast swath of the population can't afford houses, and somewhere just beneath that limit lies another at which the price of housing collapses. That's assuming that the effect of speculation never becomes large enough to outweigh a collapse of real demand.

Free money does a heckuva job creating demand.

Just look to how much online universities typically charge for tuition. Answer: the max given in federal financial aid.

Reply on news.ycombinator.com