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Originally Posted by ME_Andy
@Isaac I think the answer is, people who can't afford to live there start moving out. Then the wealthy start to realize, "Hey, there's nobody to serve my wine and caviar." Either wages will rise or the rich will start leaving. (At least that's how it works in my fantasy land.) Sucks in the meantime.
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That sounds great in theory, but will never happen. The lack of employees makes businesses offer higher wages, but not high enough to live a normal life here. The thing is that as the local news has said, many people who want a piece of the higher wage pie are roughing it by either being in the working homeless class, or by craming as many buddies as they can in whatever they can find to rent. I've seen trailers with 15 to 20 people living in them.
You also have big companies out of the big city coming and slicing into that pie by paying lower wages, which they can do by furnishing hotel rooms for their employees. Of course this hurts the toursim here because now the tourists don't have a place to stay and that affects local businesses making it even harder to pay a decent wage.
Maybe if the government cracked down on homelessness and housing laws and made all the hotels only put up tourists then businesses would have to charge more so they could pay more to their employees. But that would be a feat to pull off and lots of people would probably be against the idea.
Quote:
Originally Posted by hayden55
You know why that is? Because the banks are giving out loans for 30 years, at 2.5%, with only 3.5% down which I am assuming is just to cover closing cost. Inflation on housing or inflation in general is a lot more than 2.5% so I'm not sure how they are making money on mortgages in the long term. I assume the thinking is hardly anybody keeps the loan for the full 30 years, and it doesn't matter as long as the prices of homes keep going up and they keep getting refinanced by the new owner every couple of years. But change the loan terms where people can only buy what they can actually afford and those prices will come way down. Might crash the economy again. Change to 15 years, 20% down mandatory, and an actual apr rate ~ at least 5%. House prices would drop overnight. Same way with long boat loans, car loans, truck loans, college loans etc... Everything they touched got expensive. Its an upper hand at first until later when its not.
Also, my loan for 200k is about $1015/mo. Thats including all escrow and i don't have pmi.
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$1015 a month would be doable. Right now, the cheapest houses on the market around here would put me at about $1,930 per month for a 30 year loan, which is not doable. And that's if I can get it for asking price, since asking for 15% over seems to be the thing.
I don't know how much changing mortgage requirements would help though since it seems the great majority of people buying property and houses around here, or who come up to rent, have very deep pockets. Lots of houses are being bought up by second home owners and by people wanting to get as many houses they can get to rent them for top dollar.
So even if things were different, they'd still have the money to buy them anyway. And if houses were cheaper, but interests greater, the difference between the two could still be a wash.