I used to believe such things and then I did a median income vs price per square foot worldwide comparison and it turns out the United States is one of the cheapest, if not the, cheapest place in the world when it comes to the “affordability” (median income vs price per square foot).
I think the issue is that the United States has been too cheap and finally that era of abundance at a low cost is coming to an end.
Price/area is a flawed metric. People are not only buying square feet but also houses they can live in and houses with a certain number of bedrooms and other features. A better model would assign a part of the price to a 0-room 0 square feet house, a part of it to each room, and only a part to the size of the house.
The biggest affordability issue I see is that nobody builds starter homes for sale. In most areas, you can easily find a small 1br or 2br apartment to rent, but you can't buy a similar apartment. If you have to continue renting for years after you have settled down, because you can't buy anything smaller than 1000 square feet, it's harder to afford buying that 1000+ square foot house.
Square feet aren't a great affordability measure (they tend to come in rather larger lumps).
In any case, why not just continue the era of abundance? We aren't really running short on space, and there is at least some indication that the lack of housing availability is a policy failure (rather than an expected outcome of some physical process or limit).
We lack space in the few urban areas people want to live in. If people were flexible about where they wanted to live, you’d think that the cheap land/lightly zoned places would prosper, but they don’t.
most of US cities have no public transportation, weird parking zonning rules that making it impossible to have small commercial scene and lack of parks.. just handful of cities are actual cities, not just offices for suburbs.
For sure. I grew up in the deep south outside ATL and houses there are still "cheap". They're certainly outpacing the poor folks who were born and raised there, but you can still snag a house with an acre or so of land in the 100,000s.
Beautiful land too. Forests, creeks, and wildlife.
One issue with this is that it just reflects a certain amount of space bloat - if it's impossible to find anything that's not 50% larger than in a certain other country, but it's 50% less per sqft... you get more space, but it's not more within your reach.
Some parts of the US have pretty high price per square foot and pretty low median incomes within that neighborhood though, so looking at things nationally hides a lot of the nuance that is important to understand the whole. Overcrowding is common among low income people in the U.S. as it is anywhere else in the world. I can take you to parts of CA that will make you think I'm referring to central america and not california with that abbreviation, and these aren't far from cushy white collar jobs and expensive white collar owned homes, sometimes within a couple miles or so. OTOH in areas where housing is considered cheap the poor often aren't faring much better, since social safety nets are either worse or nonexistant and wages (and sometimes even available unskilled labor) amounts to little after the mandatory costs paid in these areas (perhaps car dependency due to a lack of reliable transit to commute to work).
The bigger reason is you can buy a house with 20% down (or less) in the US, where that is nearly impossible just about anywhere else in the world
Edit: I should say anyone can buy a house for 20% down or less. In much of the world some can do this, but credit is not extended to nearly as many of the population as it is in the US
> that is nearly impossible just about anywhere else in the world
I don't know about "anywhere else in the world" but I can guarantee you that
you can buy a property everywhere in EU with a 20%.
Also, property taxes in EU are generally lower than US.
I keep saying that americans, pay lots of taxes, they are simply not aware of it.
Yeah it’s true. Property taxes are so low in the UK. With “free” healthcare and almost no property tax, it’s easy to retire young. But it’s harder to make retirement money.
I wish you well but the way things look, you’re completely fucked. Your interest rates have been so unsustainably low for so long. And now things are going up fast and will likely continue to due to rapid inflation.
In the US, 15, 20, and 30 year fixed are boring standard mortgages, with various adjustable rate mortgages available from 1-10 years (and even some interest only products, where you’re essentially just renting the property from the bank and not building any equity).
Agreed except for your mischaracterization at the end. An I/O mortgage is a leveraged asset speculation you live in, without the “forced low interest savings” of traditional mortgages.
Historically, real estate has always appreciated at a health rate except during a handful of tail events. It’s less speculation and more allocating capital elsewhere versus dead capital in your home (and if the interest rate spread between the note and your other investment growth opportunities is significantly robust to make the effort worth while).
20% down (80% loan-to-value (LTV)) is the standard minimum for avoiding mortgage insurance. If you're willing to pay a mortgage insurance premium, 5% down (95% LTV) is not uncommon AFAIU, especially for large, "jumbo" mortgages, at least in coastal California. (Elsewhere it's probably the case that jumbo mortgages require a greater equity stake, not lower. Coastal California is a little unique. While prices are nuts, the risk of a significant valuation crash is negligible compared to, say, Nevada or Florida, so issuing banks are more comfortable with the additional risk and seemingly more eager to have that asset in their portfolio.)
Also, in case there's some confusion, "deposit" and "down payment" are distinct. In American real estate parlance a deposit is earnest money (often 5% of the initial offer) to bind the seller into closing--the process of finalizing contracts among all involved parties, and transferring assets. A deposit might be forfeited if the buyer pulls out. A minimum down payment is the minimum equity a mortgagee (e.g. bank) requires the borrower to hold in the property as a condition of making the loan.
Many apartments (condos in the rest of the country) in Manhattan are structured as co-ops with huge monthly obligations. The sales prices are lower because you can easily be committing to $2000 a month in payments to a co-op board. The total monthly outlays bring the numbers back in line.
Higher average wages, but not do much higher median wages. Unless those rich people who are driving up the average are giving their money away, the ones who are closer to the median are in a sore spot.
No...average is always average, median is always median. Newspapers often mislabel the numbers they are reporting, but the distinction is always made clear in the data. See:
> The average annual wage in 2019 in the US was $51,916.27, and the median annual wage was $34,248.45. The median wage is the wage “in the middle,” while average refers to the measure of central tendency for all the data.
I think the issue is that the United States has been too cheap and finally that era of abundance at a low cost is coming to an end.