site banner
PaperclipPerfector  1yr ago (text post)   3985 thread views

Small-Scale Question Sunday for August 27, 2023

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

3
Top Bottom Old Controversial Comments
Jump in the discussion.

No email address required.

The real monthly median mortgage payment has been remarkably stable for decades, so I expect that home ownership will not remain "unaffordable" for long.

That chart is not actually the median mortgage payment, but what a mortgage for the median home sale price at current mortgage rates would be, correct?

Isn’t that just a clearing price? It wouldn’t reflect anyone who can’t get a mortgage. Which, for the last 10 years, has been an unusually high percent.

Combine that with the axis malfeasance on his income and homeownership plots, and I start to distrust the blog.

I am not sure why you say that an unusually high percent of people have been unable to get a mortgage for the last ten years. It seems unlikely, given mortgage rates over the last ten years. Do you have data on that?

I am usually quite critical of not starting the y-axis at zero, but when the point is that numbers have been generally within a narrow band, starting above zero is not misleading.

I’m looking at the homeownership rates in that page and noticing the dip since 2008. Those people are presumably not holding mortgages.

This reprt shows a dip and recovery in new mortgages, but a lasting collapse of refinancing. I’m not sure if I’m reading it right.

Well, of course it is not as high as in 2008 -- The years leading up to 2008 were the subprime years, in which they were giving mortgages to anyone with a pulse. You are looking at an outlier and thinking it is the norm.

My point is that the mortgage rate is confounded by those stats.

A stable median payment doesn’t just mean that the supply and demand curves haven’t moved. It can also mean they both moved up or both moved down. As long as the shifts are similar, the clearing price will stay level, even though the clearing quantity is changing.

Given that we know the supply contracted, and the price didn’t really change, demand must have contracted too. Makes sense, as people lost their jobs or otherwise got booted from the housing market. Fewer people were willing to pay a given price. Isn’t that the definition of “unaffordability?”

In other words, median mortgage rate measures clearing price. OP was instead asking about demand.

First, we dont know that the supply contracted. Certainly not over the last ten years. See data re existing home sales and new home sales

Second, I don’t know what you mean about people losing their jobs. The trend over the last 10 years has been the opposite.

Remember, we are talking about your claim that "for the last 10 years," there has been "an unusually high percent" of people unable to get mortgages.

Right. I was referring to the first graph from that Kevin Drum article: homeownership, ages 25-34. The rate plummets after 2008 for obvious reasons. That’s the unusually high percent who are not holding mortgages.

I’m not arguing against a crash (2008) and recovery (2016). I’m saying that it makes the median mortgage payment a bad indicator of affordability. It’s “remarkably stable” even when we know the housing market is freaking out.

That link shows mortgage rates going from 1500 (approx) in 2020 to 2500+ in 2023, while in the same time frame wages rose from 45k (approx) to 48k (approx). In order to restore affordability some combination of the following would have to happen:

  • Home prices fall
  • Mortgage rates fall
  • Wages rise faster than home prices

So when you say you don't think that home ownership won't remain unaffordable for long how do you think the affordability will be restored and how long will that take to happen?

It depends. If mortgage rates remain high, I expect real home prices to fall eventually, at least relative to income. Because home prices are in part a function of mortgage rates, and we have already seen some evidence of that happening.

What is this place?

This website is a place for people who want to move past shady thinking and test their ideas in a court of people who don't all share the same biases. Our goal is to optimize for light, not heat; this is a group effort, and all commentators are asked to do their part.

The weekly Culture War threads host the most controversial topics and are the most visible aspect of The Motte. However, many other topics are appropriate here. We encourage people to post anything related to science, politics, or philosophy; if in doubt, post!

Check out The Vault for an archive of old quality posts. You are encouraged to crosspost these elsewhere.


Why are you called The Motte?

A motte is a stone keep on a raised earthwork common in early medieval fortifications. More pertinently, it's an element in a rhetorical move called a "Motte-and-Bailey", originally identified by philosopher Nicholas Shackel. It describes the tendency in discourse for people to move from a controversial but high value claim to a defensible but less exciting one upon any resistance to the former. He likens this to the medieval fortification, where a desirable land (the bailey) is abandoned when in danger for the more easily defended motte. In Shackel's words, "The Motte represents the defensible but undesired propositions to which one retreats when hard pressed."

On The Motte, always attempt to remain inside your defensible territory, even if you are not being pressed.


New post guidelines

If you're posting something that isn't related to the culture war, we encourage you to post a thread for it. A submission statement is highly appreciated, but isn't necessary for text posts or links to largely-text posts such as blogs or news articles; if we're unsure of the value of your post, we might remove it until you add a submission statement. A submission statement is required for non-text sources (videos, podcasts, images).

Culture war posts go in the culture war thread; all links must either include a submission statement or significant commentary. Bare links without those will be removed.

If in doubt, please post it!


Rules


Recommended Posts And Communities

Recommended Realtime Chats