Housing is Unaffordable for Young People

[Fernando]

An old 1950 Chevy ton and a half truck that put me thru college hauling hay got about 10-12 mpg from a six-cylinder engine. We often had "gas wars" during summer and enjoyed gasoline at 22.9 prices up to 29.9. We probably averaged no more than a quarter per gallon in summer. PS-I'd love to have a brand new 1950 Chevy Truck just like it.
View attachment 97801

That old truck still exists. I saw such a style in Disneyland in the Cars attraction area.

 

[Joe Flacco]

You live in an alternate fantasy universe. The 1970's and early 1980's were not a time where there was widespread reckless speculation and luxury spending. Inflation-indexed wages as a solution?" - What a joke - that is just a euphemism for wage and price controls, which never work out. (You claimm that was successful in other countries - please tell me when and where). Energy independence? You apparently don't realize that you can't just increase oil and other energy production overnight and you apparently don't realize that they tried as hard as possible to achieve energy independence as the number oil rigs operating in the US was at an all time high in the early 80's, peaking in 1981 (see the chart below). Everything you say is complete nonsense.


View attachment 97815

That one doesn't look remarkably consistent to you?

 

[timd354]

Back to the OP...bottom line is that house prices are going to have to fall. Question is when and by how much? We're starting to see it here; how long until it spreads across the US. Lennar, DR Horton, et.al. will have to find a way to accept less than their current 30-35% profit. They can't make the houses much cheaper (in quality) than they currently build; its got to come from somewhere. One thing we are seeing is more duplex 'patio homes' and attached townhomes to try to keep the prices lower. 10-12 units/acre instead of 3-4.

House price don't necessarily have to fall on a nominal basis and won't if we get a big dip mortgage interest rates, but are likely to fall on a real basis over the next few years in any case. One thing to note is that the margins for the large, public builders (the Lennars and DH Hortons of the world) increased significantly over the past 10 years, they can reduce pricing by 5 -10% and still build homes profitably. Also, they became a lot smarter about acquiring control over developable land after the 2008-2010 debacle and largely moved to model of not outright purchasing so much land as they used to but using options and land banks to accumulate control over future lots to build on. They have been particulary agressive in acquieing options and using land banks in FL, TX, GA and AZ among other places, so building at a lower price point in some of these markets is likely to happen which will possibly put some pressure on pricing. In any case, it is likely to be a bumpy ride for the next few years.

 

[Joe Flacco]

Some places are declining. Like Austin. The rate of decline after the initial decline in 2023 has slowed to a point you could say it is stable to declining. But the downward pressure on prices probably continue until the inventory starts going down.

 

[Fernando]

Some places are declining. Like Austin. The rate of decline after the initial decline in 2023 has slowed to a point you could say it is stable to declining. But the downward pressure on prices probably continue until the inventory starts going down.

Interesting, my nephew was one of those who left Austin in 2023. He's back in CA living the good life.

 

[Joe Flacco]

Townhouses and condos in some DC neighborhoods are down. Two of my comps were resales. One of them sold for $1.1m in 2020, $920k in 2023, and $930k in 2025. The other one sold for $900k in 2019 and sold for $850k in 2025.

 

[timd354]

House price don't necessarily have to fall on a nominal basis and won't if we get a big dip mortgage interest rates, but are likely to fall on a real basis over the next few years in any case. One thing to note is that the margins for the large, public builders (the Lennars and DH Hortons of the world) increased significantly over the past 10 years, they can reduce pricing by 5 -10% and still build homes profitably. Also, they became a lot smarter about acquiring control over developable land after the 2008-2010 debacle and largely moved to model of not outright purchasing so much land as they used to but using options and land banks to accumulate control over future lots to build on. They have been particulary agressive in acquiring options and using land banks in FL, TX, GA and AZ among other places, so building at a lower price point in some of these markets is likely to happen, which will possibly put some pressure on pricing. In any case, it is likely to be a bumpy ride for the next few years.

 

[timd354]

Interesting, my nephew was one of those who left Austin in 2023. He's back in CA living the good life.

While a few pople who moved from CA to Austin have returned to CA, the fact is that there net migration to Austin from CA remains postive for Austin. as many more people are continuing to move to Austin from CA than the other way araound.

 

[Fernando]

Townhouses and condos in some DC neighborhoods are down. Two of my comps were resales. One of them sold for $1.1m in 2020, $920k in 2023, and $930k in 2025. The other one sold for $900k in 2019 and sold for $850k in 2025.

I heard some neighborhoods in Virginia are expensive due to DC employment. Must be high paying government jobs.
Reminds me of my daughter telling me of someone she knew there. He said when his father retired, he finally admitted to the family that he worked for the CIA.

 

[Mejappz]

You live in an alternate fantasy universe. The 1970's and early 1980's were not a time where there was widespread reckless speculation and luxury spending. Inflation-indexed wages as a solution?" - What a joke - that is just a euphemism for wage and price controls, which never work out. (You claimm that was successful in other countries - please tell me when and where). Energy independence? You apparently don't realize that you can't just increase oil and other energy production overnight and you apparently don't realize that they tried as hard as possible to achieve energy independence as the number oil rigs operating in the US was at an all time high in the early 80's, peaking in 1981 (see the chart below). Everything you say is complete nonsense.


View attachment 97815

Ah yes, the classic “you live in a fantasy world” defense—usually what people say when they don’t want to actually engage with the argument. Let’s break this down.


First off, the idea that the 1970s and early 1980s had no reckless speculation or luxury spending is just wrong. Ever heard of the real estate bubbles in Texas, Oklahoma, and Colorado? How about the junk bond boom that started in the late ‘70s? Speculative lending was already heating up, and Volcker’s policies actually helped accelerate the shift from productive investment to financial engineering. And while, sure, average workers weren’t blowing cash on yachts, that doesn’t change the fact that Volcker’s one-size-fits-all rate hikes punished productive businesses and homeowners just as much as they punished speculative excess.


Now, on to inflation-indexed wages. You mock it as wage and price controls, but that’s just lazy. Countries like Germany and Switzerland successfully used wage indexing and productivity-linked agreements to stabilize their economies without mass unemployment. The difference? They didn’t go all-in on brute force monetary policy like Volcker did. Instead of just crushing demand, they made sure wages kept pace with productivity to prevent stagflation from spiraling out of control. The result? Lower inflation with less economic devastation.


And on energy independence—yes, you don’t flip a switch and get instant oil production. But let’s not pretend America had no options. While rigs were increasing, investment in alternative energy and infrastructure was nowhere near where it could have been. Instead of throwing everything at short-term extraction, a smarter long-term policy would have focused on reducing dependence on foreign oil in a meaningful way—something that wasn’t seriously pursued until decades later.


Now, about that chart you posted—yes, oil rigs were at an all-time high in the early ‘80s. But a high rig count doesn’t mean the U.S. was anywhere close to energy independence. The real issue wasn’t just drilling more—it was America’s continued reliance on foreign oil imports. Despite increased drilling, the U.S. was still importing millions of barrels per day. The 1970s oil crises happened because of foreign supply disruptions, not because of a lack of domestic drilling. More rigs don’t fix the problem if the country still relies on foreign producers who control the supply and price.


And if this peak in oil production was such a game-changer, why did inflation still require Volcker’s extreme rate hikes? The fact that inflation continued despite record drilling shows that high interest rates were not the only—or even the best—solution. A more comprehensive energy strategy, including investment in alternatives, refining capacity, and efficiency, would have helped reduce dependency and price shocks in the long run.


So no, this isn’t “nonsense.” What’s nonsense is acting like Volcker had no choice but to slam the brakes on the economy, when in reality, there were better, more balanced options that wouldn’t have left millions of workers paying the price for decades.


And here’s the real question—do you actually defend usury? Because it sure seems like you’re indebted to an ideology that says it's perfectly fine for banks to charge unlimited interest and trap working-class Americans in cycles of debt. Volcker didn’t just fight inflation—he helped dismantle usury laws, paving the way for 30% credit card APRs, payday loans, and a system where people don’t build wealth, they borrow it while banks collect the profits. So, are you standing by that? Do you really think that’s the economy we should be defending?


Anyway, I have work to do. The bottom line is this country is a nation of debtors, and if you think past crashes were bad, you ain't seen nothing yet.