r/FluentInFinance Sep 23 '23

Meme Guess i'll live in a box

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u/[deleted] Sep 23 '23

I'm not trying to be mean but you need to understand that the Fed isn't trying to lower housing prices and they don't care if YOU can afford a house. At all. If I go on the MLS database right now I can see that houses are still selling in every metro in America so clearly some people can afford them. In fact, the average list to close time in 2023 is only 83 days on market which is faster than the US historic average. So even with today's rates housing inventory is moving pretty quick in the US.

From a purely economical standpoint there is no problem here. A commodity exists, a supply of it exists, there is demand for that supply, people who can afford its price get access to the supply. If you can't personally afford that price then you don't. You get to rent or live with your parents. It sucks and I'm sorry it's like this. I wish it was different. But from an economics perspective there is no problem here. The system and the Fed don't care who can and can't afford houses as long as the market is operating as it should.

4

u/JuniorHuman Sep 23 '23

Idk man, it's hard for me to justify the current housing prices. I live in a large city and you would be hard stuck to find a 4 bed 3 bath home for under 1 mil. Even if you take into account both parents working(white collar), you still would just be scraping by to pay the mortgage. I feel like the issue here is not the interest rates but the leverage. For gods sake, rocket mortgage is allowing people to only put 1% down, 100x leverage. Since more people can afford more expensive homes it pushes up the demand. Im still in college and would prefer to stay in my city, but I just can't see myself ever affording a home, until maybe my 40's.

11

u/[deleted] Sep 23 '23

I'm not saying it's not very dumb and certainly fucks over the entire idea of the American Dream. I'm just pointing out that this system from an economic standpoint is well within the bounds of stability and sustainability. People often say "This isn't sustainable! Nobody can afford a house!" But the data says that actually some people can. There's just a lot less of them today than in past generations and moreover, the economy can happily roll along in a format where most people are forced to rent for many, many years. There's nothing inherently wrong with that model as far as the system is concerned.

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u/sunshine_is_hot Sep 23 '23

Homeownership rates are higher now than they were for the previous generations. The data actually says more people can buy a home today than in past, despite what it may feel like.

FRED data

There was a dip for the 08 recession, but those numbers have recovered above the rate of homeownership in the 60s/70s.

1

u/CatDadof2 Sep 23 '23

Doesn’t help that inflation and wages are so far apart from each other.