TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.
Where we failed is that $120k was supposed to be a middle-class income when living costs this much. The fact the median is 63k is a sign that all the excess value has been sucked out of the masses and funneled into the coffers of the billionaire class.
100% this. It’s not that costs rose as much as it’s that salaries didn’t increase.
In the late 70s around 23% of US corporate revenues went to pay salaries. By 2012 that had fallen to 7% - in other words, just before neoliberalism really took off almost 1/4 of the money workers spent buying goods from US companies was almost directly back in workers’ pockets, whilst by 2012 less that 1/14 of what workers spent buying goods from US companies ended back in workers’ pockets.
All that excess money that doesn’t get recycled back to workers anymore has got to be pooling somewhere.
Wow, now that’s a hell of a statistic! Got a nice reference for it so I can read more?
It’s both. If the price of homes aren’t reflecting an affordable price, you have to ask, who’s buying them? It’s not the average family - it’s corps sucking up homes as investment assets, driving up prices to sell to each other and the “lucky” family or two that get to empty out their retirement fund just to have a place to live. That’s not reflective of a natural, reasonable increase. That’s the result of hedge funds destroying the housing market for the rest of us, just to pad their bank accounts.
That may be true in some of the lower priced Midwestern markets, but I sell real estate in Boston and I don’t see big corporate interests in the single family or owner occupied 2-3 family market. as much as big corporations have ruined a lot of things in this country, I don’t think we Dan just wave our hands and say “corporate buyers” and explain away our housing market problems.
We have a confluence of decades of exclusionary zoning and restrictions on building that make meaningfully adding to the supply of housing almost impossible. We have a huge deficit of qualified workers in the building trades, in part because all the work dried up after the great recession and people left the field and in part because we’ve pushed more and more kids to go to college. We have a mortgage system that’s nearly unique worldwide that allows homeowners tremendous advantages in keeping their housing costs low, but inversely provides tremendous disadvantages to having them move around more often and free up housing stock (so lots of aging singles and couples in big houses better suited for young people with kids). We have a society that’s bizarrely fixated on single family living even though we desperately need more density in most markets. And we have the problem of wage stagnation. None of those things are directly attributable to corporate ownership of large numbers of houses.
I’d love for there to be some silver bullet where we could just say “disincentivize corporations from owning small housing stock” and solve the problem, but it’s nowhere near that simple.
deleted by creator
The link gives great context to the article. Thank you.
I honestly don’t even know why this upsets me so much. I am 50 and all set. I don’t have children and barely any debt. I never considered myself particularly patriotic but somehow this whole thing gets under my skin. I guess it sours my achievements and fruits of decades of struggle (it took three generations of planning and hustle to get us out of poverty). It’s like being a kid having a birthday party at Chuck E Cheese by yourself while all your friends are locked outside and you can see them through the glass windows.
Because you have empathy for others, it’s a good thing.
I agree. Something I wish we saw more of.
Something foreign to MAGAts
It gets under my skin because the west was on the right trajectory; improving wealth equality, quality of life, work life balance, etc — Then Capitalists killed all those gains using Conservatism, Neoliberalism, and a bastardised version of Libertarianism — just to enrich a tiny percentage the human population and return the rest of humanity to feudalism.
Why should they own all the gains from humanities collective efforts, when all of us have a rightful claim to a share of those gains?
In the early 1900s we had huge fights for labor. Strikes yes, but also some literal armed fights.
We won a lot. They conceded a lot.
But they’ve eroded those wins, little by little, for a century or so.
This is what will ALWAYS happen when you live in a system explicitly designed to extract profit from workers and reward greed. It cannot be reformed. It cannot be controlled. It will always slide backwards into this. We need a different system altogether.
Yup, we could be creating an amazing life for more people - and damaging the environment less while we are at it; but instead “we” keep doubling down in the other direction
Wanting other people to have what you have, without your struggle, is an opinion we need more of.
Especially when we have a society with a huge number of people who think that if you’re poor, you deserve it.
What gets me is, a lot of the POOR people say that about POOR people.
We live in the most effectively propagandized society ever created. It hasn’t been until more recently that it’s started to slip. A lot of folks still believe in the old lies and believe that everything would work if we just got rid of the immigrants, Jews, and corrupt politicians. Still I think more people are waking up to the reality that this system is broken not the people in it.
And that’s because they are stupid. They are not educated becasause the education they received was garbage. All by design from your “trickle down” bringing republikkkans. Working as planned.
By “your,” you mean United States’s of course? Because they aren’t mine.
Because you’re not an awful person trying to pull the ladder up while saying “fuck you I got mine”
I’m in a similar boat, except in my early 40’s.
My parents are in their 80’s and working for DoorDash. They are lucky they at least paid off their home, because they didn’t save enough and this country is sucking every penny it can get from them.
I bought a condo that I love, have almost all my debt paid off, and am saving for what I hope will be an early retirement. It breaks my heart to see people struggling everywhere, and if I had Elon Musk money, I wouldn’t be blowing it on a vanity space program.
Here’s what happened in a nutshell.
Lyndon Johnson had great plans for the US, but wanted to win the Vietnam War with one huge push. That quickly turned into a giant quagmire. LBJ and later Nixon, ordered bombing of the North. That meant the US factories were working 24/7. Nice for factory owners and union workers, but LBJ was paying for it with paper money because he didn’t want to raise taxes. Ironically, Nixon ran for President as an anti inflation and pro peace candidate.
Nixon and Kissinger doubled down on the bombing and inflation started to spiral. Also, those factories were getting a bit worn down. Unable to met the deamnd for the bombing and supply foreign markets the US ceded local steel making to Germany and Japan. This is going to bite the US in the ass when the Arab Oil boycott hits. US steel is much more oil dependant than the newer factories, so suddenly Toyotas and VWs are the hot cars, and US manufacturing takes a huge hit.
Carter tried to control inflation and cut oil use, but got kicked out over the Iran hostage mess. Reagan came in and cut taxes for the rich. This increased the debt, but gave the economy an unrealistic jolt.
tl dr. In 1960, minimum wage was $1.00/hour. The average house was $11,000.00 and $1 million was considered a vast fortune.* Middle class meant a High School graduate with a Union job supporting a family of four.
By the time Nixon, Reagan and Bush Sr were done, ‘middle class’ was two college degrees supporting the house and $1 million was what a rich guy paid for a party.
- In case anyone tells you that $1 million is 1960 would be $10 million today, tell them that in 1960, $100,000 would buy a mansion in Beverly Hills.
The massive difference in the purchasing power of what the Official Inflation Figures tell us - when we used them to adjust an amount of money at a past date for inflation over the years and get a supposedly equivalent present day amount - is the same salary now as in 1960, shows just how fake Official Inflation Figures are.
The reason for Official Inflation Figures being so much bullshit and always on the understating inflation side, is because the lower the Inflation used in calculating the Official GDP figures, the higher that latter figure gets.
All that talk of GDP Growth in the last few decades is the product of some very consistent (and hence likely purposeful) understating of the Inflation so that the Maths used to produce the Real (i.e. Official) GDP output a higher number hence politician can proudly declare GDP is growing strongly.
As Mark Twain once said,
There are lies and there are big damned lies, and then there are statistics!
Lyndon Johnson had great plans for the US
I recently learned that Johnson’s “Great Society” plan was partially a continuation of Kennedy’s “New Frontiers” plan (which he wasn’t very successful in pushing through Congress before he was assassinated).
Smith explained how, just a few years ago, $60-$70K a year would have been sufficient to qualify for a home.
Yeah, no. It was more than a few years ago.
I think that this has been trouble since 2007. Financial institutions went from giving lots of home loans to only giving corporations and the elite loans.
2007 was 4 years ago.
checks math
Everything checks out here
I don’t have a full Orlando market research report but pre-pandemic (2018) you could get a house in my neighborhood (Davenport) for $265k-325k. In 2024 the starting price is ~$650k. In 2018 I bought a house (Orlando) for my aunt to live in for $150k. After buying the little bungalow, I saw the rest of that neighbohood get gobbled up by investment funds and now it is almost completely rentals. The current comps have it at $325k.
Homes were dirt cheap from 2009 until about 2013, but everyone was broke. Prices were reasonable from 2014 to maybe 2018 (maybe). The post lockdown boom and investment fund buying spree has been insane.
But then you would have to live in Davenport. I’ve never seen a more literal suburban hell. 30 minutes of side streets to go anywhere without traffic.
You are not wrong.
Poor tax laws on the richest 1% killed the American Dream.
Sufficient application of guillotines will restore it.
wow thats archaic we use the Puyi method now dude
Puyi
death by kidney disease?
Capitalism did that too. Capitalism is in a constant state of decline with short upward bursts of innovation that too will decline. Enshittification infects all.
A friend was looking at getting a home lately and I offered to look into co-signing with them, so we gave our information to see what they would qualify for. With both of our details, they offered them a home loan of something like $100k, really not even enough to get anything that’s on the market now except for the worst crack houses possible. I then looked at what would be possible if I just applied by myself and if I applied for a home loan for a place that I would rent out. Not sure if it was considered a business loan, but I wouldn’t be the occupant, it would be an investment property for me. Suddenly, by myself, I qualified for a $300k loan, same loan agency, just different terms. I do have great credit, so maybe that helped, it’s just weird how they come up with the numbers sometimes. Like you would think two people together would qualify for more than what a single person would qualify for.
I mean, operated as an investment property they have near certainty you will have a stable income source (the tenant) so it makes sense that the loan value is higher. You’re guaranteed to have the income of the rent checks and just as likely all your other potential income on top of that. You actually can afford higher mortgage payments in that situation – and substantially so.
Which is a strong, strong, strong argument why all cities which have housing shortages (basically all cities) should be exercising policies that discourage non-owner-occupied properties.
It’s a risk assessment. A low score as a primary borrower is more risky, even with a secondary borrower, the hassle to get paid if the first defaults isn’t worth it. Investment vs primary residence is also a different risk profile, you can assume some level of income from an investment property.
What happened is that the other person apparently has absolutely terrible credit, so holy hell don’t cosign with him!
What’s to prevent someone from buying a house this way and then just “renting it” from themselves? lol
You’re not renting it from yourself. You happen to be renting from a corporation that you happen to be sole director of. Gotta emulate what the rich do.
deleted by creator
If you want the results of the American dream the only way to do so is crime. Probably always been true, but boy is it truer than ever now.
I achieved the American dream by leaving America.
dont glamorize it man criminals get gulag /supermax
inflation has hit ALL industries
Yeah, back in my day. A simple theft only got you a few days in jail. With inflation, we’re looking months now for the same crime.
Shakes head
transportation costs, suppliers, loss prevention is not 100%, insurances, food, lower customer base due to inflation/ cheaper lower quality alternatives (goes hand in hand), office supplies/ services, etcetera
inflation has hit everyone even in the shady areas
I can technically afford my house and acre on my wife and mys income
Doesn’t mean I’m not currently planning and setting up my network of legit customers of shitake and no other mushrooms to help make sure I can survive, no sir
Just a reminder that high prices are a markets signal to build more.
Let people build housing, is it too much to ask for?
All the housing in the world won’t matter if the same 10 people are buying everything up. Supply isn’t our problem.
It’s literally illegal to build more in most places. Go read the zoning code.
Or maybe part of the reason the prices are so high is that the price of building is also high with labor and materials cost increases?
Or maybe there is also a shortage of affordable, well placed, viable, empty lots to build on?
its a land problem. if you gave every homeless man half an acre yes they would literally just do that. however land has property tax and bums never open letters
so a simple micro acre tax free law would probably solve homelessness. it would have to be someplace like alaska or arklaska. of course these would be called concentratation camps by the far right but its a two bird solution. alaska could easily fit 50 million people
would you sign up for the free half acre in north alaska?
Arklaska?
https://www.rd.usda.gov/sites/default/files/fact-sheet/508_RD_FS_RHS_SFH502Direct.pdf
the federal government will loan you the money for the house at below market rates, and if their rate is still too expensive, they can give you a deferment.
my effective interest rate today is 1%.
please take money from the federal government.
fuck the banks.
Lots of sellers will prefer cash or regular loans so your application is very likely to be last in line. Plus the applications are much, much more complicated and mortgage applications are already a bitch. But then it’s usually a once in a lifetime experience and may be the only option for a lot of people do this is more of a heads up than an attempt to discourage anyone from applying.
Saved bro i need to marry a real welfare qween
Humans can’t marry corporations.
fair warning: my application packet was around 100 pages
Smith explained how, just a few years ago, $60-$70K a year would have been sufficient to qualify for a home.
“Most people are carrying student loan debt, which is at an all-time high, and the average payment in the country is $500 a month for your college degree. [There are] some people I’m seeing in my comment section saying ‘$500, I wish, it was $1,200 a month for me’,” said Smith.
“If you are someone who bought a house before 2020 and you have it paid off or you have a 3% interest rate, you are not burdened by the housing costs like the 2024 adults are now,” the relator said, explaining how debt, especially college debt, housing costs and childcare are burdening millennials and Gen Zers starting their lives.
It’s scary how everything seemed to change so fast, yet the ingredients for this very situation have been simmering for some time. It’s no coincidence that since student loans ballooned it didn’t take much for the dominoes to really begin to fall and have drastic effects on everything else downstream.
At least part of the equation is that Trump pressuring the Fed to lower rates (that were already historically low in the first place) to add even more fuel to what already was an overheated market prior to COVID completely wrecked the housing market for the foreseeable future.
I bought in 2020 and I’m glad I did because if I hadn’t I would’ve likely been permanently priced out.
Yeah, I bought a couple years before and I’m glad I did, but it’s really sad to think of everyone who couldn’t or didn’t for whatever reason.
Everything is so messed up now and the uncertainty will probably continue for awhile.
Note that the source of this opinion piece is TikTok. The salary needed for a middle class existence varies wildly from city to city.
The source is an Orlando area Realtor who happens to have a TikTok.
A local realtor doesn’t have the qualifications to make broad claims about income or affordability for the entire nation.
I’m in Salt Lake City, for example, and a recent article has the necessary salary to afford a home around $140,000/year. I moved here in part because it was a much cheaper alternative to D.C. and the minimum salary to own a home is still $140,000.
This is one of the problems caused by zoning laws in the United States, rather than move to a more productive city full of opportunities, you were forced to move to a less productive city because DC has artificially caused housing to be expensive.
People are moving for affordability rather than economic opportunities.
People are moving for affordability rather than economic opportunities.
I also have a (likely unpopular) opinion that this is not something that you should do. I read the CNN money articles, and I did one of these moves. What I found is that while the price of living may be less (a difference that is increasingly becoming marginal as more move to “cheap” areas), lost earnings can sometimes eat up more than the difference in the cost of living.
In simpler words, yes, it’s the case that you can live a bit better in a “cheap area” on the same dollar amount, however, high COL regions often also offer higher salaries. So you might be able to get a steak for the price of a burger in a big city, but in some cases you’re going to miss out on 30-50k of salary per year…so…maybe not the best move.
The DC mess is entirely on the mayor and city council allowing developers to run rampant and price the average homebuyer (who have fucking high five to mid six figure salaries) out of the market. It’s unreal and while people try to claim the recent crime wave is bad parenting, the fact that no one can afford a house is a major part of it. Doesn’t help that property taxes can jump by 17-40% per year whenever some developer sells a house in your neighborhood for 2.5x what they bought it.
Doesn’t help that property taxes can jump by 17-40% per year whenever some developer sells a house in your neighborhood for 2.5x what they bought it.
This is where I like owning property in California. Prop 13 goes a little too far, but it prevents you from being yuppyed out of your house and having your taxes jacked up because a hipster decided to start flipping houses in your neighborhood.
For those that don’t know, this is what prop 13 does (https://en.wikipedia.org/wiki/1978_California_Proposition_13):
The most significant portion of the act is the first paragraph, which limits the tax rate for real estate:
Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.
The proposition decreased property taxes by assessing values at their 1976 value and restricted annual increases of assessed value to an inflation factor, not to exceed 2% per year. It prohibits reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction. These rules apply equally to all real estate, residential and commercial—whether owned by individuals or corporations.
EDIT: Until the last sentence I’m pretty with them. Why push grandma out of her house? But it shouldn’t necessarily apply to commercial real estate and corporate owned crap.
The DC mess is entirely on the mayor and city council allowing developers to run rampant
LOL, no. The mess – in DC and every other major American city – is entirely on the zoning code not allowing developers to run rampant enough, and instead enshrining single-family houses even when demand warrants multifamily.
There are some pockets of affordability out there.
The map in this article is nice (though you have to scroll through some annoying stuff to get there):
https://www.cnn.com/interactive/2023/06/homes/housing-market-prices-affordability-dg/
I would guess those would be the areas of next major population influx as people continue to flee high cost of living in other areas. Climate change making much of the west and southeast more unattractive in the long run too. While the more affordable areas are still relatively cheap compared to the rest of the country, most of them have already been seeing large spikes in housing prices too. We need some major policy changes to encourage cheap and higher density housing, better use of land in general, can’t just keep building only single family homes in low density areas sprawling out forever.
Mr Realtor can blame his own industry for a good portion of the problem.
Blame SFR
What is SFR?
SFR
Single Family Real Estate. It is buying single family homes as an investment.
Doesn’t help that corporations own 27% of single family homes.
This is ludicrously false.
The statistic you’re trying to say is that about 25% of homes sold in recent months have been bought by investors, which is a very different thing from saying that nearly one-fourth of all single family homes are owned by investors, which falls apart the moment you actually go outside and talk to people, since, for starters, about 65% of Americans own their home.
The homeownership rate of 66.0 percent was virtually the same as the rate in the third quarter 2022 (66.0 percent) and not statistically different from the rate in the second quarter 2023 (65.9 percent).
65% + 25% = 90%. Doesn’t seem “ludicrously false” by that assertion; I wouldn’t be surprised if the remaining 10% accounted for all individual landlords.
Not all homes are for sale every year. The vast majority are not.
If Wall Street buys 30% of all homes for sale this year, that does not mean that they now own 30% of all homes that exist, only 30% of those that happened to go on sale this year.
To answer the proximate question, about 70% of rental properties are owned by individuals.
Okay, so we’d expect about 10% of single family homes to be owned by corporations.
Your source is a bit outdated. Here
Is that 120k for each, or total household?
Kill zoning and get lower prices.
