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- เผยแพร่เมื่อ 6 ธ.ค. 2023
- We charted America’s homeownership problem.
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Homeownership in the US is basically synonymous with the idea of the American Dream. Owning your own home, the story goes, confers both self-determination and security - instead of paying a landlord, you own a growing asset that will form the base of your wealth. Homeownership is ingrained in US society; the majority of American adults are homeowners.
But somewhere along the line, something changed. Homeownership has been way less accessible to millennials and gen Z than it was to their parents, in part because of dwindling housing supply. But even within that generational disparity, 2023 was a uniquely bad year to try to become a new homeowner. Watch the video above to see exactly how bad, and why.
Sources and further reading:
The US Federal Reserve’s economic data was the basis for a lot of the charts in this video. Here’s median home prices: fred.stlouisfed.org/series/MSPUS
Here’s the homeowner vacancy rate: fred.stlouisfed.org/series/RH...
And here’s mortgage rates: fred.stlouisfed.org/series/MO...
The US Census provides historical median income data: www.census.gov/library/public...
The Urban Institute publishes a monthly housing chartbook, which is where we got some of the data on “price tiers” in active housing listings: www.urban.org/sites/default/f... (that particular data comes originally from realtor.com.)
Zillow’s “affordability index” comes from this dashboard. In the time since we finished this video, the affordability index has gotten even higher: www.zillow.com/research/under...
Vox.com is a news website that helps you cut through the noise and understand what's really driving the events in the headlines. Check out www.vox.com.
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fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Contemplate shifting your investments from real estate to other dependable options such as stocks, cryptocurrencies, or precious metals. Severe recessions present potential buying opportunities in the market, but it's essential to approach them cautiously due to the volatility that can provide short-term trading possibilities. While not offering financial advice, it could be prudent to consider investing, given that holding onto cash may not be ideal during this period.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
nice! once you hit a big milestone, the next comes easier.. who is your advisor please, if you don't mind me asking?
Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Melissa Terri Swayne for the last five years or so, and her returns have been pretty much amazing.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her.
Worst financial mistake of my life was not buying a house when I was 4 in 2008
I made the mistake of spending my money on college in 2008 instead of buying a home. Double whammy of a bad decision there
No it was not buying bitcoin when you first heard of it
did you not pay attention in your preschool economics class? smh
😂
@@mtt59 have fun staying poor 💩
*Treating a home as an investment rather then a basic need is the problem*
thats correct daniel
Yep. Homes can be an investment or they can be affordable...they can't be both, at least not forever.
Hopefully no crypto adviser hijacks this conversation
Huh food and oil are basic needs. But do you tell farmers or oil producers "give me your products for free or cheap because its my human right, and dont you dare think of your work as an investment"
For home owners this is a good thing, for banks and corporations to make a necessity a commodity is a sin.
I don’t want to own a home as an investment. I want to own a home so I don’t have to move every couple years. I want to own a home so I can paint the living room. And sure, I don’t want to be throwing away all my rent money that could go towards actually owning something.
Right these Vox people are out of touch
I signed a 30-year lease in the Bay Area in the 80's
after 15 years they offered to buy me out.
You could say all that money you’re paying for a mortgage is being thrown away too because the majority of it is going to the bank in the form of interest for the first decade at least
@@kevinmcfarland4322
"All the money"???
Some of the money.
I checked my loan, in year 8 of 30 more to principal than interest.
Unless you paid for that home in cash upfront, isn't your mortgage payment just making a financial company more profit? Unless you were born into generational wealth, inherited it somehow, or bought your home in an economically depressed area, who can honestly afford to purchase a home in the US in cash? (I'm excluding other countries because the financial situation for every country is so vastly different. Suffice it to say, the cost of purchasing a home looks vastly different, depending on where you purchase it.)
More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether I'll have sufficient funds for retirement.
I have owned long term and short term rentals for years. I found the short term rentals were a lot easier to manage. On occasions, I had the short term renters leave me gifts! I find people on vacation are in a good mood and 99% of the time left my properties in great shape. So I'm enthusiastic about getting involved. Is this a good time to buy property and where?
I suggest you offset your real estate and get into stocks, A recession as bad as it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too.
You are right! I’ve diversified my portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
Do you mind sharing info of the adviser who assisted you?
“Sonya lee Mitchell’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a meeting.
I’m a new dad, I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.
it’s a personal decision, but according to Forbes, housing activities will remain stagnant for the most part of the year, so maybe hold off a little.
well you could put a downpayment on a home and as well diversify as much as you can into Ai and pharm. stocks like Pfizer and JnJ.
Certain Ai companies are rumoured to be overvalued and might cause a market correction, I’d suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I.
this is all new to me, where do I find a fiduciary, can you recommend any?
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
My grand parents bought their house in 1950 for 16,000$
The same home now lists for 400,000$. They were able to afford it with one working as a chocolatier and the other a mechanic. I manage a theater for Santikos and I can barely afford just rent.
accurate, 1970s/80s you could work in a grocery store as a stock clerk , own a house and raise a family. Now?? You can barely rent a one-bedroom apartment
Quality of that house is probably better than what's built today too
The workforce has been diluted by entry of women and also immigrants pouring in. Wages will not go up since there is plenty of labor.
I bought an unmarketable Fannie Mae foreclosure in 2011 for $50K,
Now $500K
$214/mo
@@diodelvino3048 So true. I live in Huntington Beach CA and my friends dad works at home depot and his mom works at disneyland at the ticket booth. Both been at their job for 30 years and have paid off their house. They bought it in the 80s for like 125k and today its worth 1.3 mil.... They are literally the definition of what you just said. Working legit normal average jobs that dont even need a college degree and were able to buy a home. You cant even afford a luxury apartment with those jobs in todays market.
I think a housing crash will happen because all those people who bought homes over asking price, although it was at a low interest rate, they are over their heads. They have no equity if the housing prices continue to go down, and if for whatever reason they cannot afford the house anymore and it goes into foreclosure because even if they try to sell, they will not make any money. I think this will happen to a lot of people especially with the massive layoff predicted for the future and the cost of living rising at a high speed.
For 2023, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
You are right! I diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
Carol Vivian Constable is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Generally true for most of the US. However some specific areas can vary, mainly in states such as CA or NY
I like how this completely ignored the fact that hedge funds are buying an large percentage of single family homes as investments.
Also ignored wild renting prices as well.
And the solution given was for young people is to "invest" in other things. Basically "you don't need to own your home". That is disgraceful.
I don't CARE about investing in a home. I want a home so I have somewhere to LIVE.
Exactly. I don’t care about making money. I just want a place to live. The rental market forces my housing expenses to increase every year. I don’t really want to buy a home in this market but I fear I won’t be able to afford to live anywhere if I don’t buy a house now. All I can do is lock in a mortgage payment and hope my salary goes up. Maybe refinance if interest rates drop.
thats how poor people stay poor. Your house is not only a place to live but an investment too so treat it like an investment your house is your net worth and social status dont hate the player hate the game.
@@covfefe1787That’s making a big assumption. Currently our dual income is $145k. We live in Utah with 3 kids. Most people would not consider that poor by any means. Both of us have savings/retirement
and manage our money responsibly. Both of us came from poverty. We did not have parents who brought new TVs we didn’t need on credit as the poor stereotype goes. Yet we can barely afford a 3 bedroom house/condo etc. in our area. Possibly a 4 bedroom if we want to be house poor. We’re currently losing 100% of our housing money to rent. At least in a house we build equity. Even if the house depreciates, not all the money is lost. We don’t have the luxury of finding a forever home or the best housing investment. We’ll probably live there for the recommended 10 years out of necessity and not because we’re “playing the game.” Who knows if the market will ever be in a place to buy a second home to rent. At this point we’re surviving.
@@covfefe1787 what an utterly moronic point of view.
What's a "large percentage" and what's your source other than a few high profile articles of blackrock buying start homes?
It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.
I recently sold my home in the Boca Grande area and am considering investing a lump sum into the stock market before the anticipated rebound, couple of folks have been discussing a potential rally, speculating on which stocks may experience substantial growth during the festive season. Do you have any insight into which stocks these might be?
Although the economy has so far held up, the SVB scenario serves as a warning that Fed rate hikes are still having an impact. At times like this, investors must be vigilant about the next inevitability. You don't have to act on every forecast, therefore I'll advise you to hire a financial counselor. This has been my fallback position for a while.
I'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
Christine Ann Podgorny is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
The issue you left out for this was rent prices vs median home prices 😅 rent outpaced even housing
Very few markets are actually profitable to rent. It’s more expensive to buy than to rent at the moment in most population centers of the country.
And also speculators, people who buy and the sell years later for a profit. Its not that there's no supply, but said supply is being bought up by people and corporations that want money.
@@rph8704 dishonest to use negative cash flow as a substitute for "unprofitable". We all know once you account for total asset/liabilities renting is an extremely good way to make money especially on long held assets.
Exactly what I wanted to comment as well. When rent is as high as mortgage payments used to be (which are always higher than rent), then instead of creating wealth for yourself, you're only creating wealth for someone else.
Yeah, no point pointing to long term alternative investments to build wealth, if people renting have nothing left over to invest each month.
In a country like Germany where rents are a little more affordable, and the rights of tenants are stronger, it's easier to achieve financial security through means other than home ownership.
Rates on 30-year mortgages subtracted 8 basis points Friday, lowering the average to 8.33%. On Monday and Tuesday, the flagship average had bolted more than a third of a % point higher to set a new 23-year high of 8.45%. Do I just keep waiting for a housing crash with my $2 million in liquid assets or shift my attention to the equity market
after studying the trajectory of great assets like real estate dividend paying stocks and gold, my conclusion is to buy and invest in what you can afford today! working with a financial advisor can certainly help
nice! once you hit a big milestone, the next comes easier.. who is your advisr please, if you dont mind me asking?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with Carol Vivian Constable for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
lol at the bots promoting a financial advisor
This is an issue all across the developed world right now, but our boomer leadership seems to believe that it's somehow our fault not working hard enough. It's very distressing.
They all printed money and enabled capitalists to take advantage of regular people.
More Americans are working 2 full time jobs now than ever lol
Wall Street journal newspaper costs $5.00. Minimum wage is $7.00.
One big factor that was left out of this housing crisis is all the house flippers who started buying up houses, doing some remodeling, then flipping it for a profit. Taking 'fixer-upper' houses that a first time homeowner could have afforded off the market, and reselling it to people with a higher income.
Yes with wild markups
With this mentality we would still be living in caves cause god forbid someone want something better that might increase the prices for everyone else.
Crabs in a bucket mentality.
Divide the pie zero sum game .
Thanks a lot Property Brothers 🙃
@@joeroganpodfantasy42 Not at all, there is a difference between a family buying a house to live in and remodeling it because they want something "better", and a house flipper buying up 10 houses with the intention to flip them. That is the very reason why most gated communities and condo complexes won't allow a homeowner to sell their property until they have inhabited it for at least 2 years.
You are only focused on the negatives. House flippers improve the quality of housing stock. Most families don't want a fixer upper. Why do you think people pay? Because it has value.
Weird way to end it. “A house is not your only option” no other options offered. 🙄
For freaking reals!!! 🤦♂️
You could just live in your car! 😮💨
The video offered two options, stocks and bonds.They have a much lower barrier to entry and you can flex how much you can contribute. If you wanted you could put $50 into the stock market a month. That isn't super great but it's an excellent start!
@@Nonsense116 Can't live in a stock or bond.
@@fluxophileit’s 10x better than putting your money in the bank
Money being worth less and less and houses more and more is basically a wealth transfer from who bought houses long ago and who works for money right now.
I love lord Biden. Best economy ever. Wages are so high and everything is cheap. Can we just eliminate the constitution and put Biden in forever. Like omg
?
It's definitely not that simple
Yep. The laws have always been made to protect old property owners' investment properties...
@@elijahherman Another way boomers have rigged the economy for themselves and destroyed their kids' future
With the "lack of supply" argument at play here, I would also like to see what that chart would compare to the number of homes purchased by rich "entrepreneurs" who "invested" in homes that are left vacant due to lack of affordability or selling at a loss. The amount of homes that go unlived in because rich people bought them out to sit and sell, artificially inflating the market as a whole.
this is an amazing take, id like to see the numbers behind this
I don't think this is really a thing, especially in any part of the country that houses a significant number of people. Property taxes add up pretty quickly and only like 5 states don't have them.
What is happening is affordable housing is being bought up and remodeled to be resold at a significantly higher price to a wealthy buyer. This is evidenced in the video where they show how much housing is going for 1m+ over time.
@@ab3240 Property tax is subsided by the amount of profit these rich people or companies see from the revenue streamlined by their evil "business" tactics. They say there isn't enough supply, but the websites Zillow or Realtor would beg to differ. Say you are young and looking for a place to live. Go on these websites to find yourself a home, set your search engine to buy, and the statement of supply and demand seems somewhat factual: homes for sale are plentiful but probably not enough to meet demand. However, switching it to rent, suddenly, the page is filled with home after home, showing a much larger supply for young home seekers. The problem is still artificially inflated, unaffordable prices. Not to mention the costs of health insurance, home insurance, car insurance, dental, eye, groceries, utilities, etc., but that's another topic.
Don't forget Airbnb, and companies like Blackstone, Zillow buying up everything in big cities.
This is an issue and there is talk about some areas making property price more expensive if the house is vacant too long.
What if you don't want a home so much as an investment, but as a place you can satisfy the basic need of shelter without getting continually ripped off by some greedy landlord?
You'll need a different kind of economic mode of production for that then
I didn't buy my home thinking of what the value could be in the future I bought it because I want to own my property and never considered renting.
I only ever want these videos written, edited, and published by people who do not own a home
Most people are barely feeding themselves let alone owning a home…
We live in LA and can't really move because one of us works in the film industry. We both have MA degrees and no children and have worried 50-90 hours a week since high school/ early college. We are both relatively far in our career path and in our mid-30s. We have savings, but not enough for a home. Home prices in our neighborhood START at about 1 million for a "fixer upper" in a sketchy neighborhood with a commute. If we can't afford a home, who can? I feel like the only way is to receive a generational inheritance boost, which we do not have.
Me.
@@justagirl4663 Fair point. We have considered Goergia and have friends there. I was born and raised in LA so i would prefer to live in my home town, the studio my wife is at doesn't have a location there (her current job is too good to give up), and the weather and food in LA is much better.
Everyone wants to live in California.
@@info781 True. I do feel at least a little bit entitled to be able to buy and own a house in LA because I was born and raised here, so this is my hometown.
My main point, though, is that I did everything I was supposed to. I finished my MA when I was only 22. I didn't have kids. I was careful with my purchases and money. I invested. I worked up 90 hours a week for a large chunk of my life. I'm married to someone of comparable financial ability.
I'm doing okay. I'm not struggling in my finances in most things, yet I can't afford a house in my hometown in my mid-30s.
I feel like my only failure was not being both to wealth. The housing system here is broken, and I feel like if it didn't work for me, then it really doesn't work for most other people either.
my friends who's in film industry told me a lot of film companies are moving to LV. Perhaps look to move there?
You forgot to mention that rent prices are just as high or higher in some markets than mortgage payments. So then on top of a huge rent you need to also invest in other financial assets.
I bought my first home in 2000, just before the boom. In less than 3 years, the mortgage was lower than rent would be. Rent always goes up, while your mortgage doesn't, unless interest rates change. That's another thing that says buying beats renting.
they’re similar cause a lot of homes are investment properties so they need to match the mortgage
yeah the mortgage is cheaper at 3% BUT right now in Canada it's 8.25% so no its about the same if not getting more then rent@@rogermuller5824
Former renter, now homeowner--comparing mortgage rates to rent is a mistake. The mortgage is only like 2/3 of my monthly housing cost, even before factoring in maintenance. It makes sense for rent to be higher than the mortgage, cause you also have to pay taxes and insurance and maintain the property. Long-term, buying is usually good, except when taxes go up a lot.
move or buy a home if renting is more expensive than a mortgage payment alongside taxes and upkeep
This administration is putting many families in difficult situations. A lot of people are financially struggling to live, put a roof over their head and put food on the table. Things are getting worse these days, if you don't find means of multiplying your money you might wake up a day to realise you didn't plan well for yourself and family.
I agree with you and I believe that Professionals are currently dominating the market since they have access to both the necessary strategy for making money in this industry.
That's awesome to hear. I invested 5k in Robin hood about a year ago and it steadily went down, now my portfolio is down to $800. I don't know what to do and i am in between jobs
@@Florencecoxx Understanding your financial needs and making effective decisions is very essential. If I could advise you, you should seek the help of a financial advisor. For the record, working with one has been the best for my finances.
I’m Glad i stumbled on this. Please, if its not too much of a hassle for you, can you drop the details of the expertise that assisted you and how to get in touch.
@@Florencecoxx I get guidance from *Sarah Alma Martinez* Most likely, the internet should have her basic info..
The bigger factor in my opinion is that private equity firms bought up tons of inventory over the years and renting them back. All those homes that would normally be owned by individuals are no longer available, hence the inventory crunch which begets prices staying high. I wish this video would have addressed this issue. In 2022 1/4 of homes are owned by investors. This year, a significant amount home purchases were by investors.
I make $90,000 a year, have $105k in the bank and I can't afford a home because interest monthly payments are ridiculous.
Uh huh
So you would rather throw away the money into rents and own nothing? We bought a house and opted in for 15 years. After 8 more years, the house will be ours. I'd rather pay the bank than any landlord.
@@LoveLife-oo9cz 100%
People are comparing house prices from 1950s, 80s, even 2008. Well In a neighborhood near me house prices have increased over 3x in the past 5 years. Fun times. Just 5 years ago I was looking at 500k homes like haha those only sell in expensive neighborhoods. Nope its the norm now.
I really wish once in videos like these they would acknowledge that renting BECOMES MORE EXPENSIVE OVER TIME BECAUSE RENT PRICES ARE ALSO GOING UP
Can we talk more about this topic please? Because it's probably one of the biggest problems for this generation (Millennials & Gen Z). I know this problem is also caused by the 2008 financial crisis, but a deep dive explaining it all and connecting the dots would really help to put our lives into context and perspective. Most of us in this generation feel useless and hopeless as a result of all this and it's because we don't understand the things at play causing everything.
Gen X and Baby Boomers destroyed everything for us we even have to burden these high student loan costs
@@justagirl4663Can I please use this quote? This is gorgeous, and I want it on stickers, shirts, and signs. This sums up most financial problems in the United States right now, and everyone needs know
It's not just your generation. I didn't buy a home because I was going through cancer when I was younger and after that I wanted to travel in case I died. I didn't expect homes to triple in price.
Real estate agents, brokers and developers who trade properties like it’s commodity is the reason the prices are x6 higher
I agree we need more jobs in America so that companies have to compete more for their employees thus raising salaries, but one factor that these docs leave out is that yes the average house cost $20,000 in the 50's (inflated to about $200,000 today) however the houses in that time period were small usually a two bedroom 950sq foot home. The average American house today is almost three times it's size at 2,500 sq ft.... So if you did the math and multiplied the $200,000 by 2.5 you'd get a just about the average cost of a house in America at $500,000. I've seen this overlooked in countless reports and documentaries. The problem also arises from our societies constant need to overindulge, myself included.
I'm behind the idea that "treating an home as a asset" is a problem, because for some it's self- and preditory - the problem come with the concept of renting; you cannot save for the future as effective as it is buying a house; at least at the end of a mortgage, you can sell is back for a decent retirement. With a renting - at the end of the term? You get nothing. There Is no reward for you financial stress and pain.
the thing about owning the home though, is that you're no longer subject to a landlord deciding to increase rent. Sure there are other costs and challenges but its a huge weight lifted if you don't need to worry about the cost of your rent skyrocketing over a few years.
While this is true you still have sky rocketing property values which will increase your monthly mortgage payment regardless of your interest rate. This year alone the county doubled mine and everyone else’s property values in my area, and that’s not just happening here but everywhere. I’ve witnessed seniors on a fixed income lose their home that was paid off completely due to the property tax increase.
@@JFitness88 technically that's not the mortgage payment (at least assuming fixed rate mortgage). That is property tax and that is definitely a problem
I'm a 70 year old senior my real estate taxes and house insurance is much lower than what my mortgage was. I can afford to own my home but I could not afford it if I had to rent it
The promise that your home value goes up is a horrible premise. We need to build so many homes that values drop by at least 50% which was just the increase in price since the pandemic. Homes were already unaffordable before the pandemic. The promise you get when you buy a house is you have a place to live thats it. Single family homes in general are a major problem, there needs to be much more high density houses of apartment complexes and condos. We also need to build them around public transit.
I know the target audience is mostly US residents but this same problem is much much worse in Canada and Australia.
I have low 6 figure job in Canada and I'm years aways from being able to comfortably owning a house.
Wheras, my salary and downpayment savings could easily allow me to buy a house in most Metropolitan cities in the US. Excluding the obvs LA, NY, Boston, etc
did you account for AUD/CAD vs USD
@@jk-gb4et yup
@@EngineerInMotion what keeps you in canada just curious?
@@jk-gb4et family, free healthcare. With the exception of real estate, it's a better place to live compared to US imo, no gun violence, etc. Idk, I feel like in America ur two or three major medical procedures away from being bankrupt.
And one thing that people don't generally take into account is that Canada has way better retirement and other registered investment accounts. We have much better versions of 401k and Roth Ira and a few other tax advantage/deferred accounts. If people take advantage of these accounts, theyd be much better off in retirement compared to ppl with similar incomes in the US
@@EngineerInMotion I'm also from Canada but i'm just a kid that was interesting I didn't know any of this
Trust me when i tell you this not an exclusively US problem, everywhere in the world its becoming harder and harder to buy a house. only if your income is keeping track with inflation is if you have a shot .
Vox I expected a much more thorough EXPLANATION than this. Compared to other videos i feel like y’all skimmed off the top with this topic
Well, of course they did. Had to make room for 1,5 minute long sponsor ad on a 9 minute video.
This video wasn't done well
They left out companies using homes as investment to decrease supply, rent prices going up and other factors that are kind of helpful for the explanation.
I hate the phrase "blank wasn't as good as it used to be" but Vox is selling out and it's good journalism is going away
We all know who their bosses are...
@KMBence
bro... since 2008 housing crisis, there have been at least *500 videos, documentaries, movies, talks etc* regarding this issue
NOTHING changes !!... at this point, such knowledge is pointless, because it affects NOTHING!
@@cartatowegs5080 They didn't leave it out. It's not relevant. Investor action in the single family home market is small and among the investment activity in that sector it primarily consists of mom and pop real estate investors not institutional investors. 80-90% of what's happening in the single family home market is the doing of individual buyers and sellers.
The part they did leave out is the impact of two decades of historically low interest rates and describing today's rates as high despite the fact that they're only high from a last two decades perspective but average historically speaking.
Corporations should be banned from buying homes. They can dabble in commercial real estate all they want but legally homes should be strictly limited to people not for the sake of flipping or renting them.
100%. Residential homes should never be owned by businesses (except for builders, who make them)
That won't solve the issue and might even make it worse
That is wishful thinking and definitely not gonna happen. Who do u think lobbies the govt? The govt are slaves to corporations
Easier said than done. Just raise more taxes on unoccupied/second home.
Totally agree. Housing is a basic human necessity.
It’s almost as ridiculous as Australia. In the 70s you could buy a 3 bedroom home in the inner suburbs of Sydney or Melbourne for about $30,000. Now they are worth over $2 million.
The situation is a general indication of greed amongst groups of people. "I want way more than I put in, for the same thing" is an idea driven by entitlement and narcissism. And these are the people that designed economics, to favour themselves.
It's a growing city. It's not the house, it's the land
A lot more people now want to live in that place. You want to drive home prices down? Teardown that suburb of single family homes and build several skyscrapers. One such building can house the same amount of people as a small town. You can't get lots of space, low prices and central location, you can chose up to two of them.
Say on god.
The "free market" at work...
This started off so good, but yikes! Yeah treating housing as an investment and not a basic human right is exactly what im doing so ill just invest my pocket change while i pay 1450 a month for 200 square feet, a literal shoebox, which is actually a good deal in my city! I probably will never be able to buy a home and have reliable, stable housing that doesn't cost me half of my monthly income!
Turns out that homes going up in value forever isn't sustainable!
Sounds like you doubt the exponential growth of capitalism. That's why you're not rich, come on dude, it's the mindest. You need the real grindset.
@@yeet1337the fact I can't tell your joking says more about the world then it should.
@@yeet1337 inflation is exponential growth. housing prices growing on top of that as well is doubly exponential and mathematically it is inevitable no one will be able to afford a house (or the market will have a major crash)
@@ashvio You can't escape the doubly exponential growth of human demise 😂
@@yeet1337 The housing market is not capitalism, because we're not allowing supply to meet demand. Supply of houses low. Demand high. Solution? Build more houses.
Surprised it didn't mention the incredible level of underbuilding from 2008-2019 which is a huge factor as well.
The biggest difference between investing in a house vs stocks (for example), is in order to buy $200,000 of stock you need $200,000. In order to buy a $200k house you need between $10k - $40k and can finance the rest. Try getting a $160k loan to buy stock, won't happen unless you got millions in cash in the back already. But as that house appreciates in values, its appreciating on its $200k value, not the $10k-$40k you spend. So the return on investment is way higher with a house.
Stock is a better investment long term. I had a mutual fund investment during this period, it went up 100% without me doing any work and paying only 35 bucks a year as a fee in six years. Meanwhile the house I bought has barely went up in value, only using as an actual residence not an investment.
@@harveylin3548 Certainly it depends on where the house is located. Personally I bought a house in Phoenix 10 years ago and its more then doubled in value since. My mortgage is $1150/month but I'm renting it out for $1700/month.
Sounds like a pretty good investment to me.
stocks dont have any maintenance costs either. There is no $20k roof repair cost on a 10 year old stock.
You also have to pay interest on the mortgage
@@brianfunt2619 Not that much for my condo either. My total is cheaper than renting this place in a similar place. Not to mention the benefit of doing whatever I want in my own home.
Houses are a ticket to build wealth... from other middle class people. Every dollar a house is sold for is one it's bought for. Nothing but a shell game of money. The more people who play the shell game, the worse it gets for people trying to actually LIVE in the home instead of invest
You have to either join the military or make a minimum of $150K (no student loans) to own a home in the US these days. And that's in the lower cost of living states. But yea, housing is an investment but really it's a private nest. Renting has restrictions on how you live, however you don't have to worry about maintenance which is huge for homeownership. Many don't realize, when your AC goes out, you have to shell out $10K for a new one immediately.
I recently bought a name brand new furnace and central air for $6500 paid cash
Real Estate Value being more than you bought it is a scam.
One reason: When you sell your house you want be able to find another one for the price you previous bought it. You will most likely have to pay the price you sold the house for or a higher price. So did you really profit from it?
My parents bought a house in California in 1970 for $15,000...Today it worth $500,000+...If they sell it and want to buy another they will never find another house in California for $15,000. They would have buy another house for $500k and up. Yea on paper that house value rose $485,000, but that isn't profit. It is an illusion
You have to take leverage into consideration. If they bought it for $15k at a 10% down payment they put down $1,500 - now for a $500k house they would have to put down $5,000. They sold the house for $500k so there is a significant gain although the debt would start again (so it would be wise to invest the remaining profit)
I agree with the other post that part of what is driving the unavailability of owner occupied housing is the conversion (by purchase) of existing owner occupied housing to rental housing,partially by big players like investment capital firms,mutual fund managers and hedge funds
money doesn't lose value over time, fiat loses value over time
Yeah, let me just keep throwing away my rent money each month instead of building equity then tell me it’s not my only option for investment.
The problem is that we as a general population agree to lower wages. Our salaries must be way way way higher, hence the gap between uber wealthy and middle class.
thank you very much for this great video. now it sounds much clear for me
Because so many people overpaid for homes during a period when interest rates were low, I believe there will be a housing crisis because these people are in debt. If housing prices continue to fall and, for whatever reason, they can no longer afford the house and it goes into foreclosure, they will have no equity because they will not make any money if they sell. I feel that many people will be affected by this, especially given the predicted mass layoffs and fast rising living costs.
I recommend investing in shares to balance out your real estate assets. Even the toughest recessions can give wonderful purchasing opportunities if you are prudent. Furthermore, volatility can create wonderful short-term buy and sell opportunities. Although this is not financial advise, you should buy right now because money isn't king right now!
You are correct. With the help of an investing coach, I was able to diversify my 450K portfolio across markets, and I was able to create a little over $830K in net profit by using high dividend yield stocks, ETFs, and bonds.
Would you mind sharing some information on the adviser who assisted you? Since the age of 18, I've been saving for a pension through a company program. As I became more taxed, I enhanced my workplace pension with a SIPP (tax advantages). I'm now 50 and would like to aggressively grow my wealth; there are a couple cars I still want to drive and mega-vacations I still want to take
Her name is Melissa Terri Swaynes can't divulge much. Most likely, the internet should have her basic info, you can research if you like
Thank you for sharing; I will need all the help I can get because I recently sold some of my assets in order to invest in the stock market.
A Realtor here. The main gist of the issue right now with the housing market is that there is a lack of new constructions of new house being built which is the issue why the supply is low and making the existing home more expensive. That.. and including in the 6-7-8 percent interest rate combined together is what makes it soo expensive and unaffordable. The United States is many years behind when it comes to building new houses to keep up with growing U.S households and people wanting to buy.
Force once in a blue moon, it is actually make more sense to rent vs to buy a home right now depends on the cities and states you're at.
I've also noticed the only housing being built for the last 10 years are luxury properties.
I noticed the new construction that is being built are all HUGE homes 2500sq ft and up and very few smaller homes that would be more affordable for 1st time buyers.
mass illegal immigration isn't helping the housing supply issue either.
It's like this everywhere in the world. Except most of us is looking for a home as a necessity to live, not as a form of investment.
I just gonna say that, everywhere in the world, buying a house is sooooo expensive
Well, in Moscow it made in another approach.
Developers sells only 30-35% of flats in "human hive" and then sells 1-2-4 flats from whole building. I.e. from 250+ flats 70-80 are sold out, up to 10 on sale and 160+ are off the market to keep prices as high as possible, i.e. it overpriced for ~3 times.
Its the opposite in japan though
Not true in China and Japan, were houses have become cheaper over time.
Governments be like: 🤔The whole of society needs a house?
Let's consider that an individual responsibility! 😀😀
appreciative of real journalism like this
I still believe a house to be the safest investment option for the average joe.
1. Its tangible
2. U can sub lease space within for cashflow
3. It goes up in value naturally with time
4. U can force equity in it with renovations
5. U can live in it
6. Tax breaks
Etc.
2020: people moved out of their houses and into another and that caused the market to go up. A buyer goes from one house (-1 buy) to another (+1 buy). Moving from one house to another would result in a net 0 change in supply. What would really affect the market are first time buyers and more importantly, investors. Especially the investors who artificially raised the prices in each neighborhood to get rich when COVID started.
Investors =/= Scalpers
I bought land and built my own Off-Grid house. I have no Bills, no Morgage Bill, No Electric Bill, No Water Bill, No Sewer or Trash bills, No Food Bills.
Living Sustainably is the best way to live. I used to be so stressed on how i would pay the bills. Now i can quit my job for a year or two at a time and travel the world. Then come back and get a new job for a few months and save all the money
And how much did you inherit from your family, hmm? How about loans, how much did they loan you?
Your life is not real.
how can you have no food bills, you cant produce everything
So if a house is not a good long term investment maybe we should stop treating them like they are.
It is a good long term investment
@@DCBJ2011 It shouldn't be
Not really. Renting out homes is a perfectly good investment, but most people who just need a place to stay are better off renting.
@@moosesandmeese969get real. You're better off renting a house, and someone has got to supply one
@@moosesandmeese969 But isn't that the same reason those who cannot afford want one..? If it wasn't a good investment, then just continue renting?
The effects of the downturn are beginning to sink in. People are being impacted by the long-term decline in property prices and the housing market. I recently sold my house in the Sacramento area, and I want to invest my lump-sum profit in the stock market before prices start to rise again. Is now the right moment to buy or not?
If you are new to the market, I recommend seeking professional assistance. The most effective approach to creating a well-organized portfolio is to begin with a professional who is knowledgeable about the turbulent yet profitable market.
A lot of folks downplay the role of professionals until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for a licensed FA and came across someone of due diligence, helped a lot to grow my reserve notwithstanding inflation, from $275k to approx. 850k so far.
One of the biggest facts is that almost every area in the US house prices are currently so expensive like Hawaii, California or Washington even if the US isn't the most expensive country in the world, the median income rate is still very high to own a rental home
As others have mentioned: rent is more expensive than a mortgage for a property of lesser quality. On top of that, a house would take the place of an investment and rent... good luck paying rent and investing at the same time
Problem with mortgages is that you need money (for the down payment) in order to save money. Plus confidence that your career will remain within commuting distance of said home the whole time.
Of course rent is more. It covers a lot more. You're prepaying all maintenance on the rental unit: water heaters, washing machines, plumbing, roofs, landscaping, etc. And yes there is some profit for the owner, but that is negligible compared to all the other stuff.
thats why you have a family for help...@@doujinflip
@@FlowerCity585it depends, many regions rent and buy no difference with all the costs adding up. In shortage areas, which is most nowadays, buy is better if can, a form of rent control and control your own destiny rather owner kick you out at anytime if the property value goes up and they want to sell it. You'll be homeless no time to find new rental and over hundred applicants applying for the same vacant rental as you are. Rental agencies collect credit check fees $50-100+ per applicant and do it again every month making money and not renting to anyone.
i think you meant to stop at "good luck paying rent"...... that alone is killing us
You don’t truly own your home though. If you don’t pay property taxes, they can legally sell your home to pay your debt. And you definitely don’t own your home for the 30 years you pay your mortgage
I took a 30-year loan and paid it off in 14 years I'd rather pay my real estate taxes maintenance and homeowners insurance over paying rent
The difference between the house investments and the stock portfolio investments is that you´d never be allowed to leverage your portfolio up 10x while that is just standard in real estate investing. If you could leverage up your stock portfolio at laughably low interest rates, THEN the stock market would be an alternative for you and I....
not to mention the hungry investors that have the means to outbid a family by a factor of 2 and then rent it back to them for double of what the mortgage payments would be, now you're keeping less money in your pocket each month for practically the same end goal, living in that house, just that now some greedy investor has gotten in between to collect the profit
I bought a car from a real estate agent back in 2021, and he said back then to me (21 at the time) that the way the market is going; my generation literally won’t be able to afford a house unless we manage to get rich
In my case the only home I'll ever own is the one my parents pass on to me. I'm stuck here and will be here until that day comes. So many people dont even have that luxury either. It's bad.
Unfortunately people living longer and longer my parents will pass it on to me when they’re 130
I can afford to buy an apartment, later on I'll sell it so I can afford a house. I feel like people don't realise that's possible
@@aceman0000099 I live in Canada, to buy an apartment where I live starts at 300-400k.
You should not have bought that car, you should have bought a van, and you would live a comfortable vanlife forever.
Same in Bulgaria, one 3 bedroom apartment now is like 250-350K euro in the capital Sofia, the average salary is like 1K Euro net. Houses are like 500K to 1mil euro.
Housing should be a commodity, not an investment. In the past, that was how it was treated. The lower the price - the better.
Plot twist: it was a plug for mutual funds all along.
Idk who promised that homes will always increase in value. That is not a given but it’s true as long as a fixed resource (land) is there and population (demand) increases.
You'd think the writer would know better since that was a major fallacy of the housing bubble
When demand outpaces supply like in the case of real estate, it's only natural prices are going to continue to go up. Either cities in the west stop with their strict zoning laws or current owners have to sell
Vox saying "look at other stuff, don't worry about a home"
if only US was the case ,but this is a global phenomenon , every price skyrocketted while wages did not
Capitalism coughing up it's last breath I hope
@@jaspertuin2073Communism and socialism is much better! 😂
It's not really global, just in western countries, and even then not necessarily all of them. Japan doesn't have such a problem because they build enough.
@@Anonymous-dh4id Capitalism just rewards people holding assets while not producing for society. Good for the rich only
@@moosesandmeese969Japan used to have that problem too-until their economy stagnated and their population started declining
My proudest accomplishment is buying a home in 2021! I love my 3% interest rate
Opressed
Your proudest accomplishment is luck. Grats!
Downvoted. Half of this video was an advertisement, and the other half described THAT housing is expensive while doing very little to explain WHY housing is so expensive.
I would have liked to see a section on conversion of homes into rental properties. I see a lot of talk online about how the housing market has been taken over by rentals and it would have been nice to measure that impact in this analysis.
Inflation muddies the waters terribly.
I live in Canada and anyone in the USA think house prices are bad take a look here. We are a more speculative. Market
The UK is just as bad in terms of housing & wealth too
World* not just U.S to be fair Everyones feeling it / got hit
Median home prices rapidly outpacing median income growth might help explain why it is increasingly difficult for many Americans to buy their first home, but if one were to compare the median mortgage payment to median income growth over that same period of time, I suspect the impact is considerably diminished. It's hard to find good data but one source citing data from the Census and Freddie Mac says that the median inflation adjusted monthly mortgage payment (30 year fixed) went from $1250 in 1974 and $1500 in 2019. That's just an increase of 20% over 45 years. A critical piece that's missing from this analysis is the role that interest rates play in both making it easier to afford a home and driving up demand (and the price) of the underlying asset.
There seems to be many variables that are not discussed here. For example: my wife was raised outside of Chicago, one of 3 kids in an 1100 square foot house. Now the median house size is about 2500 square feet; more than twice the size. Americans love to super size everything. Perhaps what we need are builders who are willing to build 2000 sq/ft homes, 3 BD, 2 bath room homes on modest lots. That would be affordable for many more Americans. Consumers need to adjust thinking as well.
There are plenty of Americans who want starter homes that are small. The problem is builders don't want to build them as they aren't as profitable as bigger builds. This is the result when people try to optimize every little thing including profit.
You realize it's not the consumers who decide what size houses get built?
@@kevinsouza7744 If consumers "go along" with whatever builders want to sell, I would agree with you. In the end, more buyers need to demand smaller houses, not move into a trailer. As long as buyers continue to finance bigger and bigger mortgages, there is no incentive for builders to create smaller home options.
@@stevet6676 Consumers don't get a say in the houses being built the way you think they do, demand away that doesn't mean they are going to go through with your demands. Go knock on the door of a building company and tell them you want more smaller houses built, you think they will listen?
Unfortuanately because of low supply builders are going to maximize their profits on each indiviual unit, which means more homes that utilize the maximum footprint on a lot. We've been underbuilding and underapproving builds since the 2008 housing crash, wh8ich feeds this issue. The largest portion of consumers's wants don't matter because the builders only need to take into account the smaller proportion who can afford the larger homes-changing consumer sentiment is needed, but likely we'll also need some kind of government incentives to build those smaller homes to make up profitability gap between a 2,000 sq/ft home and a 3,500 sq/ft home.
I sold my home at the peak of the market in April 2022 for double the amount I bought it for in 2014. I invested the money in an S&P 500 index fund and put one years' worth of living expenses into a high-yield savings account earning 4.5% interest.
People thought I was nuts to sell my house and go back to renting, but my finances are in order. Plus, I no longer have any home maintenance expenses.
Genius!
That's awesome, Erica. What do you think about the Roth IRA and LIRP account will you recommend it as functioning as well as your index funds S&P 500?
A really great point that felt a little pushed to the side. “A home is a NECESSITY you buy at great cost” that alone paints a grim picture towards what we as a society just allow to happen to us…
Perfect reporting! As usual
Thanks vox for another informative video
This also does not speak to home repairs, the new roof, replacing appliances. I would like to see a similar study with some kind of non-mortgage cost of ownrrship
Fun fact, that too is because of high housing costs.
Repair costs are mostly labor and labor is expensive cause a huge part of their paychecks are being sent to rent.
Even with the cost of replacing a new roof furnace and air conditioner paid for in cash I still feel I am better off than paying rent
1. Address the problem
2. Claim there's no solution (as not to incite a revolution)
3. Claim that in future the problem is gonna magically solve itself
4. Repeat
"You won't own anything and you'll like it"
Your family?
@@GrafEisen1indeed you do
sollution - less government regulation, less ''spacing/enviromental'' laws, more building.
no revolution needed
No one asked you@@spacecube8561
This was explained very well
You buy home not only to grow weath but also to stabilize and lower living cost. it makes long term planning much easier. and frees up more income to invest in those ETF and what not.
You can't grow wealth by owning a home
Completely forgot to mention the value of leveraging money through a home… those 5% gains in appreciation on a house is on $500k versus 5% gains on $50k of stocks is a big difference. There’s risk, but that’s the big pay off
What about the fact the average house was significantly smaller in 1970? Or that there were 130 million less people in the country? Or the much more lax codes/regulations? Or just the overall complexity homes, number of bathrooms, how much wiring is needed, cost of HVAC systems, etc. Are these differences factored in?
It's like when people try to compare cost of living now to then. In the 1970s there were like 4 channels you could get over antenna, people had virtually no subscriptions, internet, no cell phone bills, so much stuff that is considered "essential/normal" now didn't even exist then. It just seems hard to do apples to apples comparisons fairly when you think about all the differences.
The correct definition of inflation is a generalized increase in prices, the loss of purchasing power is a consequence. That's why the inflation rate comes from movements of the consumer price index
I would love to see a video on the UK market too
Homes do be like that
Many people say stocks and fixed income (e.g. bonds) often outperform properties as an investment but they leave out the key difference: leverage. Mortgage is the only loan where you can borrow $4 for every $1 you put down because your property is the collateral. The beauty is: your capital gain works off the total value, not just your downpayment. You can do some leverage in stocks using options and margin but it's much higher risk and leverage is never 4:1. A property is NOT an investment, a location is. So, my advice is: don't over analyze, if you believe the demand for a location you want to live in is going to grow, just find a good property and purchase it.
isnt the point of this video to not purchase house becuase its too high right now
@@dns_error I was responding to the conclusion of the video starting at 8:44.
The $4:$1 can also be even larger if you qualify for a loan with a 5% down payment instead of a 20% down payment. Then it's a $19:$1 (discounting PMI which is an additional cost you take on in that case).
@@mattdock7346 Absolutely true, just make sure don't over-leverage, choose whatever your financial situation allows.
Great explanation.
Income has not gone up - houses have gone up - and college loans have gone up - an education that does not help increase income in a meaningful way now as much with only a bachelors, on average. Zoning - is a problem that also raises up that rent. Keeping people renting, means landlords can keep increasing that rent too due to the demand. Student debt management - when I returned to school, doesn't help anyone who graduated around that 2008-9 crash. Everything looks like monopoly money for costs these days compared to earnings.
Um, stating the obvious here, but when you state “if you’re looking for long term investments to grow your wealth, a house is not your only option”, . . . how can people afford to put money into other investments if they’re already paying the equivalent of a mortgage payment in rent each month?
Oh, so renters just have to put away double each month, right?
Payment to the landlord AND payment into their stock portfolio.
Got it.
They definitely glossed over the fact that during the same period between 2020 and 2022, I was hearing multiple horror stories from friends and family about rents going up hundreds of dollars after every lease renewal. Trendy places like Austin were hit hard; I remember people complaining about the skyrocketing rent in Austin on social media. Heck, the apartment that I got when I first moved to North Dallas in 2021 for $1300/month is now over $1800/month.
that is not different from a mortgage holder
@@personzorz well, except, each mortgage payment in its own way (interest aside of course) is a deposit into an investment, (as opposed to lighting it on fire to a landlord).
I’ve owned for 20 years, sold the 1st house to buy the 2nd, and will be mortgage free in another 5.
My friends who are the same age I was 20 years ago don’t seem to have any hope of ever getting even the “starter” homes on the market, and will they still be paying rent to some landlord 20-30 years from now? yup, probably.
And their rent payments are far and above what I’ve ever paid in my monthly mortgage payments, + property taxes and upkeep (including new roof, furnace, etc.)
I feel sad for my young millennial friends and Gen Z kids.
I think the piece you're missing is that the person who is paying the rent never had to plop 20% of the home price plus bank and realtors fees down, nor are they paying for any unexpected upgrades and repairs. If you don't have extra money after paying your rent, you definitely wouldn't have any extra money after paying a mortgage either. What their suggesting is that if you're just trying to build your wealth, putting money away in an investment is currently a better deal than trying to save up for a house. If you don't have money to do either, then it doesn't matter.
That's what financial literacy is, or something.
I made it half way through without realizing it was a commercial :(
In Toronto, Canada, the price of two bedrooms and apartments for 20 years of age far from downtown is 900k rn, people in USA are doing amazing.
it is not just US, in my country we are having the same issue because people invest in houses and they break the pricing of the house