Crazy Home Prices!

By
Services for Real Estate Pros with Freelance Writer

I was just watching a youtube instructional video about the housing crisis. According to this guys math, housing prices artificially rose up to 60% between 2000 and 2006, while incomes per capita actually went down.

I'm in southwestern Pennsylvania and we, as investors, can still find homes, livable homes in half decent neighborhoods, in the 20 to 30k range. My husband's parents bought their home for less than 10K in 1970 and had it paid off in less than 10 years. My parents in the 80s bough their home for 70K at a horrible interest rate, and just made their last payment last month. Was this a housing bubble too that never burst?

My question is how far can these prices rise over time? Do we really need to spend over 100K for a starter type home? Should home prices be out of reach for those people with an hourly paying job?

As nice as it may seem to have your home's value skyrocket, normal everyday people, with normal every day jobs simply cannot, and should not have to, shell out a grand for a house payment every month. I also think everyone deserves to own where they live. It makes for a better community, and therefore better neighborhoods and less crime, mostly because people care about what is theirs. I've seen first hand what renters can do to properties they don't own. It is not pretty.

House prices must come down if this is going to happen. People making minimum wage should be able to buy a home of their own and not spend an eternity paying it off. I'm not talking newly built homes in chopped up farms, I'm talking about renewed old neighborhoods, infused with the extra cash these workers will have to fix up these unpolished gems by having a $300 house payment, instead of a $1300 house payment.

Then, maybe the housing market will look more like it did in the 1950s, no 30 year mortgages, no artificially inflated house prices, and modest bank profit. 

Comments (3)

John Rakoci
Eagle Realty - North Myrtle Beach, SC
North Myrtle Beach Coastal Carolinas

It is unlikely many want to see the housing market like the 1950s again. I lived in NW Pa for decades only moving less than 10 years ago and still visit often. Although there are livable homes in the $60 - $100 range in a decent neigborhood, there is nothing I know of in the 30K range anyone would want to raise children or retire in. I live and work in a resort area. Many of the jobs pay minimum wage and a $300 monthly rent could not be found in anything not ready to be condemed. We did see 'artificially' inflated home prices and now we may be seeing the opposite. Instead of trying to find $300 house payments it would be better to find people jobs that pay more so they can afford more. Ask anyone living in a $30K house if they like it better than the $200K home up the road. I prefer to see all people have a better life instead of moving backward 4 or 5 decades!

Sep 08, 2009 06:36 AM
Anonymous
Bill Sutliff

Not necessarily on topic but along the same vein is the re-use of already developed space instead of developing virgin land (Like chopping up farms, etc.). There are plenty of houses/buildings in almost every city that could be taken down and that area used to rebuild upon. Even better would be to deconstruct the existing buildings and use as much as is possible to rebuild with. There are too many cities with entire blocks or even full neighborhoods of abandoned housing stock collapsing under their own weight. People just keep on moving outward, and they abandon the older inner core and it becomes rotted. I believe Cleveland has some of these problems. Instead of bulldozing grassland and woods to install roads, sewers, utilities, etc. why not rebuild in an area where the infrastructure is already in place? Deconstruction and reuse also helps environmentally, and there are lots of salvaged materials that are better in quality , not to mention aesthetics, than today's materials (Solid tight-grained old growth wood versus chipboard). I understand that their are lots of issues involved with this, but it could breathe much-needed new life into some of our old and run-down cities.

Grab your tools and head for Detroit. Let's give the media something positive to say about it for a change!

Sep 21, 2009 02:28 PM
#2
Christine Emmick
Freelance Writer - Wall, PA
Woman of many words

John, although we could get these people "better" jobs, we'd need people to do the job they are leaving. This of course creates a new person with a new need for housing, at the same pay rate. Same problem, different person. Creating an atmosphere of what is "acceptable" home ownership leaves some out of the picture, hourly wage earners for example. I propose we lower our standards and influx our decaying neighborhoods with homeowners that can afford the homes they are in, hence the 300 dollar house payment.

Bill, thanks so much your comments, that is exactly what I'm talking about. Infrastructure, from what I remember civil drafting and designing pre-babies, is immensely expensive, not to mention time consuming. It is sometimes easier to clear land and put in pipes than update existing systems, but not always. My point, and yours, is that there are great places to live, with solidly built construction, in our older neighborhoods. While some are too "far gone" to be livable, some of their structure, especially the foundation and utilities, can be reused, and the majority can be renovated to clean livable homes for those who otherwise could not afford to own their own.

Dec 07, 2009 02:42 PM