The 'old American Dream died,' Realtor details salary needed to buy a home, afford a middle class life in 2024

finance.yahoo.com The 'old American Dream died,' Realtor details salary needed to buy a home, afford a middle class life in 2024

Orlando realtor Freddie Smith discusses how owning a home and living a typical middle class life has become increasingly unattainable for most millennials and older Gen Z.

TL;DR: Americans now need to make $120K a year to afford a typical middle-class life and qualify to purchase a home. Minimum.

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The 'old American Dream died,' Realtor details salary needed to buy a home, afford a middle class life in 2024

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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.
  
  I also share this view, but unfortunately a lot of people are still moving bc of "affordability"
  
  I'd rather live in a LCOL city than ever have a shoebox in NYC again
  
  I'd rather NYC remove their famously restrictive building code, and live in a nice affordable apartment in NYC and the economic opportunities it provides.
  
  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.
  
  Ironically Prop 13 is one of the reasons California housing market is such a mess right now.
  
  Yeah it's a double edged sword. It also perpetuates suburban sprawl because schools are usually funded through property taxes (which, why? But ok) older areas of cities tend to have crappier schools because the taxes remain low. In order to get around this they build new municipalities that will allow additional taxes, and then you've got another suburb in a fire risk area with a better school that'll attract families.
  
  Ironically DC needs more developers. It's one of the most economically productive areas of our country. The opportunities to improve your life are endless there. People shouldn't be blocked from pursuing a better life because someone person doesn't want to live next to a duplex on someone else's property
  
  Okay but the developers exclusively flip affordable properties into luxury properties. Middle income housing is rapidly disappearing, the average 3 br costs like $800k to $1MM. The big new thing is buying a single family rowhome that would fit a family of 4-6 (or more) and turning it into a 2-unit condo with an HOA where each unit is only a 2 br and charging double or more what they bought the house for (buy the house for $850k, now trying to sell each unit at $890k). It's absurd, unsustainable, displaces the local population, and ironically decreases the number of people that could have lived on the property.
  
  This only exists because local government has made it so hard to build housing. This is the outcome when you limit supply.
  Think about what would happen if there were artificial government limits on the amount of shoes that could be made. Only luxury shoes would be produced.
  
  Maybe elsewhere but not in DC, the city government has courted developers hard since before the pandemic. There are legal building restrictions because of the large number of historic properties but that doesn't explain why costs are skyrocketing as supply increases. The answer is the supply that's increasing is not the 3-5 br that people need when they hit their 30s and 40s. You can have a ton of studios but that doesn't really help a 3 person family. Likewise you can have 3 br condos for $1.2MM and still not help the average buyer.
  
  They're still not building enough, unfortunately. The largest generation of Americans has entered the housing market. Building 13,000 houses a year just isn't very mcuh after decades of restriction and shortages.
  
  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.
  
  DC is rapidly converting affordable homes into multifamily luxury units. Developers running rampant jacked up costs citywide.
  Also, the city is less than 10 square miles and built on a swamp. Just based on infrastructure it can only handle so many people before it runs into serious issues.
  
  DC is rapidly converting affordable homes into multifamily luxury units. Developers running rampant jacked up costs citywide.
  No, you just fail to realize that prices would've been jacked up even higher if developers weren't increasing the housing supply.
  
  How? Most individuals wouldn't sell their house for double unless the demand is there because they can't really afford to let the property sit while they're trying to buy a new place. The developers buy the properties before they hit the market for more than asking, split the property, make minor improvements, sometimes make things worse, then crank up the price. Meanwhile, there was definitely someone who was willing to buy at the seller's original price, they just never got the chance.
  
  Okay, it sounds like there's a misunderstanding. You're talking about house flippers, while I'm talking about razing single-family houses to build apartment buildings in their place.
  
  Yeah we're likely talking past each other a bit. Also, unlike most cities where multiunit buildings will include 3 br or more units, DC just doesn't. It's entirely possible to have kids and live in a condo or commie block style housing, a lot of the world does it. But all those places also account for the fact that needs change and sometimes people need more space. Removing 3 br units from the market decreases housing supply and increases the rental supply. Basically the city is turning into a renter's market because, unsurprisingly, no one wants to buy half a house for double the price. So rental companies will come in and buy those two unit buildings to convert into rental properties and in the process remove supply. It's a very fucked up system.
  
  Fun fact: in a lot of places, 3+ bedroom apartments are rare mostly because of excessive minimum parking requirements (e.g. "1 space per bedroom") that will never get used, but makes them uneconomical to build.
  
  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.
- Just because it on TikTok doesn’t mean it’s suspect any more than it should be on any other platform. The person is qualified.
  
  Qualified to speak to a specific market, perhaps, but I'd still much prefer broad claims like this to be based in actual data over anecdotes.
  If you want to speak to real averages, glancing at a few articles, it seems like the average mortgage payment last year was somewhere around $2300, or $27,600 per year. Take conventional wisdom that housing costs should be limited to around a third of your gross wages, and that puts you with the average house demanding roughly a $92,000 salary. Still high, but more based in reality. Media always hugely overemphasizes urban markets because that's where they're based out of. Looking at my shitty small hometown right now, I'm seeing homes listed for around $150,000, which would come to about $900 a month at today's interest rates and require around $36,000 a year to afford.
  Of course, you'd then live in a tiny conservative hell hole, but that's beyond the point. The true averages for the country are not quite as bad as you'd think if you're only looking at major cities. To be clear, I'm not saying that this is a good state of affairs. The problem is that there are not nearly enough homes in places where people want to live, so they're very scarce relative to demand and owners can demand huge prices.
  Wanna fix it? Petition your local government to advocate for policies that increase housing supply. Insane zoning regulation is a huge one. To throw one example at you, the highly desirable city of Somerville, MA, did a thorough examination of all its lots to see how many actually complied with its current zoning code, since many buildings had been grandfathered in.
  Of 80,000 lots, all but 22 of them were in violation and would be illegal to build today.
  https://www.strongtowns.org/journal/2024/1/4/what-happened-when-this-charming-town-found-out-its-actually-illegal
  
  Did you read the article or watch the video?

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