My impression is that too high a percentage of our annual incomes goes where? Into having a roof over your head. Funny how if you buy all the pieces one by one, you don't spend NEARLY so much. I would present the argument that we are all paying so much because we have validated what has become a "parasitic industry", by making it possible, and monetarily encouraged, to own as many homes as possible, in the interest of turning a profit. Either buy a house and sell it for more, and repeat as often as possible, or simply buy and jack the rent up to cover your cost and make what I feel is increasingly a "dirty buck".

Yes we call it capitalism here in the USA.

There is a big big built in problem with this so called "industry". It is merely putting a strain on the nation as a whole. I am beset with the impression that prices are being artificially inflated simply on the basis of prior sales. Not actual demand for purposes of living... but demand for the purposes of further escalating the cost and therefor profitability of continuing this irresponsible cycle. "Your just jealous because your not the one getting rich"... as an argument has nothing to do with whether it can be seen as right or wrong. If we allow the housing industry to continue unabated under it's current financing mechanisms, and rules allowing multiple home purchases and ownerships for reasons other than for the purpose for which they are ultimately intended (assuming that housing is built to provide housing not to fuel a vampiric economic cycle), then there will come a time, when this whole "homeless" debate will involve each and everyone of us since, we will not a one of us be able to afford to even live in the houses we thought we already owned. I admit that I have a personal belief that the land cannot be "owned" by any human, and it is my personal right to have that belief, but that I can also not expect that view to be held by everyone or even anyone else. I would however appeal to the common sense of the masses and hope to see some agreement on the FACT that this is an artificially inflated and unduly burdensome market influence on every man woman and yes... child in our country. Can you imagine the "progress" we can make if so much of our money wasn't just "thrown away" or "sucked into the void" of the housing/real-estate economic machine?

Get ready for your personal battle with homelessness. Cause thanks to mindless money-sucking market mechanics, it's crawlin up yer doorstep.

Yea people make money doing this and then spend it, usually, but can't they get a real job? One that actually contributes to society? I think it needs to be illegal to own more than 1 home per nuclear family, and it needs to be illegal to buy a home then sell it in less than a 5 year time frame. We could at least enjoy a deceleration of this continuing artificial inflation.

Yea.. I like drama. Sometimes.

Residential real estate prices are determined by the sales in the area, usually those that have taken place in the past six months, and the condition of the property, improvements, and any extras that are included. It is demand based, because it depends upon what people are willing to pay for a home. Right now, for example, it is a Buyer's market, and prices are coming down.

Now, I'm not an economist, so I can't debate the ins and outs of inflation with you, but I can say that realtors aren't out there scheming to raise the price of houses, and they need to make money just like everyone else. It's hard work, and you may not realize that. Additionally, many people who buy houses, put a lot of time and money into refurbishing them. It is a "real" job, and the equity that is built from owning a home is often a major portion of what contributes to peoples' retirement. It is an investment, and it is an investment that is attainable by the average American who is willing to save the initial cash (usually 3% for a first time home buyer and 5% for others) and keep their credit clean. I see this as a good thing.

I'm thankful for the "buyers market" vs "sellers market", though, I suspect that people are also willing to pay $X where $X is "whatever it takes" to get and keep a house. I doubt many people are happy about how much they are paying for their homes unless they bought them many years ago when they were a lot cheaper, where their satisfaction with the expense of a home is a rational based on the difference in what they pay vs what they would pay if they bought one only now because of how much the cost has risen. I look forward to a further shift in the balance in favor of the "buyers market" because the amount of energy and wealth consumed in this country by this market boggles my mind. Can't get a grip on it I suppose, because somehow, deep down, there is a disconnect as to "what makes sense".... could be tweezers in a wall socket when I was 2.. dunno haha.... Perhaps the "investment" factor only exists because of this rampant market mechanism.... Somehow, I get the feeling your right that real-estate agents aren't conspiring out there, they are faced with the growing difficulty of getting people to take ever growing chunks outta their livelihoods "to own".

I have one kind of solution. Create urban campgrounds. Just like any other campground. Have a place people can pitch their tents, put up their tipis or park their trailors. You have a central area for bathrooms, showers, lockers, telephones where you can get called for a job, day care or whatever. Space wise it's far more efficient than homes and of course the homes would be of the portable variety. You could simply charge cost and set up leasing arrangements of however long was practical.

People are very adaptable. I lived on a boat for about 2 years. A lot of people do quite well without having 3000 sq. ft. to ramble around in.

The "Bedouin solution" if expanded widely enough and made appealing enough(Be neat for kids) could eventually challenge the costliness of the big box approach.

The real estate business is like any other business. The idea is to make a profit. As long as everything is above board there is nothing dirty about it.

One seldom simply buys a buidling and jacks up the rent to cover the costs. There are many state and city laws and regulations that property oweners must adhere to. There are stiff standards that are enforced. Most cities have annual property inspections and landlords are charged heavy fines if property is not up to code.

Income property owners work many hours each year to get their property in shape and keeping it up to code. If they arn't handy themselves, they must pay professionals to do the work, which lowers their profits.

Of course the owners of income property want rents to cover their expenses. They have invested money in the property, they have the responsibility of the property, they maintain the property. They need to be compensated for their labor, the same as any other business.

I don't agree that there should be laws allowing only one house per family. If a person is industrious and wants to own more than one house , I believe he should have that right.

If he wants to buy, fix and sell homes for a profit, I believe he should have that right. Property is a good investment. It's worthwhile and it's a real job.

Madtown

Homes are one of the few tangible investments out there. Homes are more affordable to buy than they have been in years. Programs help people buy houses with 5% down and other programs make this number much lower. The government helps first time buyers get into homes through the FHA and then helps homeowners out by letting them charge off their interest at tax time. We have a higher percentage of homewoners at this time than ever before. And the home industry is really one of the few remaining industries that is not entirely dominated by large corporations. Aside from the mortgage business, home construction companies tend to be local, property management firms also tend to be local.

If you want to attack an industry pick the auto industry. We pour billions of dollars into autos and the money is gone. Financial "guru" Dave Ramsey has quite an influence in the Tennessee area and his mantra is paying off debt, and he points out rather accurately that Americans have a consumption problem. We buy ourselves out of security. He cites statistics that claim the average car payment today is around $375 dollars and the average term is 55 months. In his ideal world you could go without a car during your career and have a nest egg of $4 million built up from not spending money on cars.

Also, people who sell and move and sell and move often end up hurting themselves. They pay the hefty transaction fees each time they upgrade, often they keep taking 30 year mortgages and they have difficulty building up equity.

I would say that the problem with home price inflation is because there is too much governmental meddling with the housing market. What we need is less regulation, not more.

Fannie Mae and Freddie Mac provides money to people that normally would not even be qualified for a mortgage. And thus increases the number of buyers and drives up home prices. Also, tax laws favors mortgage holders. So, the tax system drives up home sales and increases prices.

If the government would step out of the housing market, then it would be just another industry and run according to the free market.

I'm not an economist and I really don't understand everything about inflation. But I certainly support those organizations that help first time buyers, even if they are people who would not otherwise qualify for a mortgage.

The pride of home ownership is very important to Americans. Being able to own their own home makes a big difference in peoples lives. For the better!

Madtown

Having just bought a new house 2 weeks ago, I can honestly say that owning a home is a good investment. As with anything else, you cannot regulate people from doing stupid things. If a person takes out a note on a house that is too high of a portion of their take home pay, then that is no one's fault but their own. You cannot blame market conditions for that. Prices are usually dictated (as with any other product) by what people are willing to pay. People are willing to pay more for the same home in a nicer neighborhood than a poorer one. It only makes sense. I do not understand the prices of real estate in markets such as New York or parts of California. The prices people pay are unbelievable, but again, demand is high and people are willing to pay those prices. You could make the argument that people who have to move there for a job have no choice but to pay the asking price. Not sure what you can do about that. In regards to my home, I would gladly pay the price I paid for my house as opposed to something $10k cheaper that is not in as nice of an area. This is what drives the prices up in my particular area of town. Again, the people willing to spend extra $$$ on a home in a nicer home are more than likely going to make sure they keep their yards and homes kept up, thus preserving the value of their property. I truly believe that owning a home is a great investment. When I think about the 3 years I paid $800 a month in rent it makes me sick. Also, a home is one of the few tax free investments we have. (if you live in it for at least 5 years.)

Without government programs allowing me to buy with a smaller down payment I may never have gotten into a position of home ownership. I think the government wants people who buy a piece of their society. These citizens are much less likely to rise up in revolt. Also, without these types of programs the people with capital to invest could have many more working families subsidizing their way of life by owning property and renting it out to the larger group of Americans who could not afford to buy a home. Also, this is not charity, I have to pay insurance against the risk of my own foreclosure until I own 20% of the value of the house.

Houses get more and more expensive.
People can't afford housing cause it's expensive.
So, the government helps out those people to buy houses.
Housing prices rise with governmental intervention in home buying.

It's just a cycle that feeds itself.

As for myself, as long as I can continue to cash out while prices are going up, then I'm fine with the situation. But, when it comes all crashing down ... I don't want to think about it.

The government has been at this since the 1930s. Are we riding a 75 year housing boom?

While government programs do increase the demand for homes (one government program that does actually accomplish what it sets out to do) it does not push up house prices much in an environment where new home building is possible, supply increases with demand, therefore little increase in prices. In areas that are already built up it can have a small effect on house pricing. While as a Libertarian I disagree with these programs as another transfer of income program as a realtor I love them. Those living in Harris county, TX are currently eligible for a $20, 000 "loan" that is forgiven at the rate of 20% a year for 5 years.

In some ways I agree with osteng. Government subsidies drive the demand to a degree which pushes the prices up. It sort of ends up being a zero sum game or a ponzi scheme if you like. The problem is simply shifted or deferred. Also how do you like that below cost federal insurance offered to people in floodplain areas or coastal hurricane zones.

Buckminster Fuller who created a lot of uniquely engineered shelters felt that the government subsidizing conventional housing meant that there was little incentive to experiment with less expensive better engineered approaches to housing or for that matter well planned community housing where many of the private functions are shared.

It's funny. We're all socialists when we feel we are benefiting by something the government is doing and we're all free enterprise capitalists when we feel we aren't.

You make the mistake of assuming supply does not increase with demand, in most cases supply does increase with demand.

And don't forget that demand is rising because of an increasing population as well.

Owning a home is the best investment a person can make.

The unfortunate facts are that a majority of the general public is not an investment expert. Purchasing a house, at any price, is better than renting, and probably one of the safest investments available.

When I think of the amount I have thrown away to rent in the last six years ($40, 980 to be precise), it disgusts me. It would be nice to be able to recoup that money, but when you rent you pay 100% interest.

Well, I have a first hand story that is currently unfolding. Here's what I know:

Jaime and I are looking to buy a house. Nothing big, a small little starter house. Down here, $80,000 can get you a 1,200 square foot 3 bedroom, two bath house.

Well, at any rate, we're doing this rather fast so don't have much of a down payment. Normally, that would be a problem, but we were prequalified for 100% financing at a pretty good rate.

I say we were prequalified, because a few days ago many of the lenders stopped loaning money in the fine State of Georgia.

See, last year the Gerogia legislature decided to pass a Predatory Lending Bill. The bill, aimed at protecting the consumer, has created a disaster.

The first portion of the bill took effect last October. This portion limits the amount of fees a broker can place on a loan. Apparently our lawmakers think that the attorney the mortgage holder pays to conduct the closing can't answer the mortgage holder's questions, or that the mortgage holder is too stupid to ask questions and make sure they're not getting ripped off. Whatever happened to let the buyer beware?

Anyway, the new part of the bill just took effect at the beginning of this month, and this is where we are effected. The newly effective portion of the bill dictates that every loan must offer a high enough "net tangible benefit" to the consumer. The do not define a net tangible benefit.

That's all well and good, but if there is no net tangible benefit, who do they punish? Well, they determined it would be whoever is the final holder of the note. So, (follow me here) if Acme Mortgage brokers a refi with John Public, and uses Bigmoney Lending Corp, and Bigmoney Lending Corp sells the note to Conglomerate Holding Group, Conglomerate Holding Group could be on the hook for the term of the loan if the net tangible benefit was not great enough.

Whew. If you followed that, you can see that this presents a problem. A crooked broker's actions could lead to a multi-million dollar predatory lending suit aimed at a company that had no involvement in the brokering of the loan, 29 years after loan closed. The final holder of the note, who bought the note in a package of hundreds of notes, is on the hook. As a result, they wouldn't want to buy the notes.

So, what happened? The lenders have pulled out of Georgia. The only people writing loans are local banks, and lenders gambling on the fact that the law will be overturned. And the lender Jaime and I were going to use is no longer lending in Georgia, and as a result, we don't get a home until the law changes.

This is a huge problem, created simply by over-regulation. In an attempt to protect a few, the legislature has harmed many more.

Now, they are hammering out the details of an updated bill, removing the liability sections. It should pass within a week. Jaime and I are hopeful.

Mike

I have reread the part of your post describing the purpose of the law. It still does not make any sense. Any law which is not clear in its intent is a poor law. Laws should be simple. Complicated laws are overregulation.

I hope you are an owner soon. The tax benefits to owning property go beyond those of a home. The ability to have equity in regards to dealing with any financial institute are related directly to owning property. You will have a more difficult time succeeding as an independent person without property ownership.

What are the regulations from the national level on buying a home? I am aware of the loan programs but are there regulations other than the state ones?

Grey Seal, as I understand it (I work for a real estate company, but I am not a real estate broker), there are federal laws that pertain to real estate sales such as the fair housing laws, but the majority of the industry is regulated through the states.

Though we can build more houses to keep up with demand, there is one thing that remains constant, the amount of available land. So, prices rise in high demand locations.