https://www.wsj.com/business/autos/car-payments-now-average-more-than-750-a-month-enter-the-100-month-car-loan-fcd7d284
Car Payments Now Average More Than $750 a Month. Enter the 100-Month Car Loan.
The price of new cars and trucks have increased 33% since 2020, and consumers are piling on interest as they stretch out loan terms eight, nine, and nearly 10 years.
Not to worry, our K economy is chugging along with a third quarter 4.3% rise.
The size of homes newly under construction in 2023 dropped to an average of 2,411 square feet, or a median of 2,179 square feet, the smallest size in 13 years, according to the National Association of Home Builders.
So that big ticket item price is still high and shrinking in size.
In many areas that attract retirees you see enormous homes…for two people. Sure they may have company at times, but even so, the size often seems far larger than makes practical sense.
Most of those 2 bedroom 1 bath houses built after WWII were under 1200 sf. 2000 sf is very comfortable for most families. Yes, in the good old days you had to buy a more costly home to avoid capital gains. Then people were building 5000 sf home with office in the master bedroom, his and hers bathrooms, sometimes two kitchens. Pretty excessive for most of us.
2500 sf and more is mostly about more profitable to builder. Not many families need that much space. My 2500 sf-er in NJ had 5 bedrooms. That is plenty for most families.
Yep
I am a 74 year old baby boomer. I lived in 2 houses growing up. The first was roughly 1700 sq ft-3 bedroom-2 bath house on a third of an acre. The second a 2000 sq ft house on a quarter of an acre.
I see in my burg new $300k 2200 SQ ft homes built on 1/8 of an acre. If one wants a decent sized lot–$600k and up.
The oldest boomers are 80. They will begin croaking or want to move into a retirement facility. And they believe they have quite a bit of equity value in their home. But most young people do not have the money to buy. Will residential real estate take a hit? Worse than 2008? Will private equity buy up their homes at reduced pricing?
Anybody got thoughts on this?
I think the larger factor is the opposite problem - old folks not wanting to sell. Homeownership among older folks (60+) has increased relative to years past, because older folks are holding onto their homes longer. Which gunks up the normal life cycle of older homes.
There’s a few reasons for that, some intentional policy choices and some accidental. We’re living healthier longer, which extends the amount of time people live independently. The ADA made single-family homes more suitable for those who have mobility impairments. The 1997 changes to how capital gains on primary residences are taxed discourage older folks from selling their homes. And a lot of jurisdictions have adopted policies that are specifically intended to make aging in place easier, especially property tax caps and other economic assistance to allow people to stay in their homes after they retire.
And of course, there’s the elephant in the room: mortgage rates. From mid-2020 to mid-2021, mortgage rates bounced around record lows of 3% (or less!). Huge swatches of homes were refinanced at rates that were absurdly, historically low. Because mortgages aren’t assumable any more, selling the home means giving up an insanely valuable mortgage. That’s deadweight loss to buyers and sellers that makes it much harder for selling an existing home to be economically worthwhile, at least not until a lot of the principal has been paid back.
Shrinkflation writ large!
My experience is most people move into a family size home when they have children or plan to have them. Most keep their family home after kids leave home. It has space to entertain grandkids etc. They keep it until they are ready to downsize. They are in no hurry to sell.
Rising real estate value makes it a good investment. Rising property taxes can make them more willing to downsize.
Downsizing comes in many forms. Moving someplace cheaper, w better weather, less snow, not as cold etc. Closer to shore or mountains, year round golfing, etc.
Some move to condos, townhouse, retirement community, etc. Many choices. Find one that fits your style.
Sure, but they’re not downsizing as much as they used to. Homeownership in the U.S. hasn’t changed much overall from historical levels, but older folks are staying in owner-occupied homes to a much greater extent than they used to back in the day.
Lots of reasons for that. But the effect is that it slows down the recirculation of housing from older folks to new householders. And homes are like cars - “used” homes are cheaper than new homes, so it’s hard to build your way out of home affordability issues. We’re suffering the consequences of building choices that were made a decade or two ago, and those consequences are exaggerated by other factors that discourage downsizing relative to years past.
Of course downsizers are often able to pay cash for new home from equity in the previous home. That would seem to imply its not about interest rates for many.
Maybe its about longer life expectancy and better health in old age.
I grew up in a ~900 sq ft 3 BR / 1 BA house. Two parents and four kids. When we were teens, the fight for the bathroom/shower was real! In the summertime, on very hot nights, all 6 of us would sleep in my parents room (parents + youngest in the bed, the rest of us on the floor) because they had a small window A/C unit.
Oh, I wish we had that. I grew up in a 1200 sqft house with 2.5 bedrooms, 1.5 bathrooms and 2 parents, 4 kids, and 1 grandmother. My father built the house while we lived in an 600sqft apartment next to the RR tracks.
JimA