How exactly are people able to purchase houses in this economy?

Whoa! Although I understand that people who live in a town of 2500 are not rural, I’d think they are a lot closer to rural than living in a city. I’ve never imagined the conundrums of census writers, but this seems to highlight one of them.

By that definition I can easily see 70% of the country living in urban areas in the 60’s. Actually, by that definition, I would imagine that 1/2 the population would be considered urban by WWI.

Thank you very much for the explanation. It’s easy to see why the country seemed urbanized even though most people didn’t live in towns large enough to introduce, much less support, mass transit.

America is a massive housing construction site : New home construction (aka housing starts) jumped to its highest level since 2006. But due to persistent supply chain issues and labor shortages, completions of those homes are lagging. Bill McBride of the fabulous Calculated Risk newsletter notes there are 1.622 million housing units under construction in the U.S., the most since February 1973. In other words, America is a massive housing construction site.

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Hedge fund comments on housing.

Pretty easy to get 2 lines for $35 or so a month with 4-8GB of data with providers like Red Pocket, US Mobile, or Mint. The first two are on AT&T and Verizon networks, Mint is T-Mo (we use Mint, it works fine in the suburbs of the ATL).

It’s astonishing to me how much houses have gone up in our area, our home has almost doubled in value in a year and a half. My daughter is increasingly worried that she won’t be able to afford a house and also that her rent is going to be jacked more than usual when her lease is up at the end of the year. In major metro areas we are seriously screwing over our younger gens that struggle to afford housing.


Right, but none of those include TV or high-end phones in the price. I also have Mint.

in other news, mortgage rates are up

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Yeah the 30 year rates are up about 2% in the past 12 months.
And as xerty’s chart theres showing that means for most people they can afford about to buy 25% less.
This will effectively cut a lot of buyers out of the market at the low end. Will also slow the buying at every other level too.

Should contribute to cool down the market fair amount, you’d think.

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You’d think. But the people in the industry (on the podcasts I listen to) are saying that where there were 10 bids on a single house, there’s now 7. Demand still outpaces supply and can keep prices stable or push them higher still.


Yeah looks like the inventory of homes for sale is still around 1/2 of what it was a couple years ago.
But I guess going from 10 bids to 7 bids is still cooling down, even just if its cooling from extremly hot to just very hot.

Check out this guy claims. Lots of ads in PHX area. My plan is to use them and compare w/ I-buyers like Offerpad as a baseline.

Sell at a Higher Price
Net $1000s more than selling traditionally

Avoid Daily Showings
Eliminate strangers seeing your home

Choose Your Close Date
Pick your most convenient closing date

Stay After Closing
Remain in your home for up to six months

As far as I know the I-buyers don’t exactly make fair offers, because they are not in it to lose money. They have to be able to sell it for more and earn enough in between. I’d do your own comps on redfin or zillow – compare recent sales for similar properties. Also look at comparable rents, it’s possible that if rents have gone up faster than home prices, then home prices are being supported or pushed up by the rents.


some of those ibuyers are PE funded paying more than fair market. Albeit that might be slowing down now too. Stay After Closing
Remain in your home for up to six months is tempting to time the market. They claim to find PE or landlords willing to let you rent for 6 mo.s and highest offer.

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great detail on the “housing shortage”, including demographic trends in household size vs homebuilding rates, etc.


Home vacancy rate by year :

fed link

From the 80’s through about 2005 the vacancy rate was around 1.6% +/- 0.2%

Then we can see the giant build up of homes around the housing bubble reflected in the vacancy rate when vacancies peaked at 2.8% in '08.

Then the housing bubble crashed and vacancy rate has been trending downwards ever since.
Its now sitting at 0.9% Thats 0.5%+ below what it used to be in the previous 30+ years back when it bounced in the mid 1.x% levels.

I’d think the 1.4-1.8% is about the ‘normal’ level of vacancies we’d have at any time due to people moving and buying and selling and estates being settled, etc.

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Foreign investment in US market also increased quite a bit around 2015-2018.

I’m roughly figuring that they bought up an extra 0.2% of the housing market. Hard to see if that changed the other factors though cause we don’t know exactly how those homes are being used or counted. But its likely enough to matter some I’d think.


How exactly does the average homebuyer decide how much they can afford anyways? Plug their numbers into a calculator and do the maths to identify how much they can pay per month?

In a hot market like this where people are bidding against each other and interest rates are (in my experience) not locked prior to bidding on a house, how are the average home buyers even surviving?

Yes. Or, if you’re not so good at the maths, ask a mortgage broker.


Yeah I think its usually the lenders saying how much people can borrow and that then sets peoples budget for what they can buy.

Most people buy via mortgage so they’re depending on the mortgage to buy. Thats what sets the home buying budget.

When I bought I was prequalified for a loan and had my interest rate locked in. At least for a short period. I don’t know what most people do but I wouldn’t be surprised if most don’t have a rate locked

And that’s one reason why prices go up - an extra $20k on the mortgage is “only” around $100 increase to the monthly payment. If it remains under their qualified amount, then they must be able to afford it, and so you increase your offer regardless of if the house is worth it or not!

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