A weekend topic starting with Strong Towns. "In 2008, the list of investors swimming naked was long. Among them were America’s banks, big and small. Their reserves were investments believed to be the most secure, including AA- and AAA-rated mortgage-backed securities (MBS). By the end of the year, it was clear those beliefs were wildly wrong. By the end of 2008, the discount rate was all the way down to 0.5%, kicking off an extended period of what came to be known as zero interest rate policy (ZIRP). It would be more than six years before interest rates moved higher."

"Adding to ZIRP’s massive distortion of financial gravity was the Federal Reserve’s Quantitative Easing (QE) program. It was announced the same month as the TARP pivot. With QE, the Federal Reserve was able to do what the Treasury Department with TARP could not: create a market for MBS by buying them in unlimited quantities. They bought them from Fannie and Freddie, who continued to buy them from everywhere else. This essentially laundered the market’s questionable securities until prices stabilized."

"This was all initially done in the service of market stabilization. At some point, the goal of stabilization morphed into a new goal: recovery. Yet what exactly did it mean for the housing sector to recover? The period between 2000 and 2008 is called a 'housing bubble.' Even the country’s most senior economic officials used that term. So how exactly does an economy recover to a bubble? What is it that is being restored?"

From Wealth of Geeks. "It’s not just your imagination. Housing prices really are getting more expensive — to the tune of 423% higher since 1985. From 1985 to 2022 — the last full year for which housing and income data are available — home values grew 1.9 times faster than income. During that time, the median U.S. home price increased 423%, while the median household income increased just 216%, according to a new study from Home Bay. Worse yet, the disconnect between home prices and income seems to be accelerating. Since 2000, home prices have skyrocketed 162% — from $165,300 to $433,100. In the same time frame, income increased a relatively meager 78% — from $41,990 to $74,580."

"Crunching these numbers shows that home prices have grown 2.1 times faster than income since 2000. According to the survey, the median U.S. home costs just over $433,000, while the median household income is $74,580, which translates to a home-price-to-income ratio of 5.8. That’s more than double the level deemed affordable. With a home-price-to-income ratio of 5.8, buying a home is 66% more expensive than in 1985 and 49% more expensive than in 2000."

"In 2021, a home-price-to-income ratio of 2.6 or below existed in six of the 50 most populous U.S. metros: Pittsburgh, Cleveland, Oklahoma City, St. Louis, Birmingham, and Cincinnati. Two years later, all six had shot past that mark. None of the 50 most populous U.S. metropolitan areas has a home-price-to-income ratio below the 2.6 ratio financial experts recommend. four of the most prohibitively expensive markets are in California, while one is in Florida. San Jose is the most unaffordable city, where the tech boom has produced a home-price-to-income ratio of 12.1. San Francisco is in second place at 10.4, followed by San Diego at 9.5, Los Angeles at 9.0, and Miami at 8.6."

"'Buy with a like-minded home buyer,' says Cindi Hagley, a real estate agent in the Bay Area. 'Share the down payment and expenses, sell after a couple of years, split the equity, and move forward with a solo purchase. Or offer the seller a higher interest rate to carry the loan interest-only for a year or so until you’ve built up equity to refinance into a conventional loan.' Measures like these, which use a hot market to generate capital to buy into it, may become more common if prices continue to climb."

Middlesex East in Massachusetts. "'There’s not a month that goes by where there aren’t one or two sales we hear about and our jaws just hit the floor…You have this [phenomenon] now where neighborhood appears to be becoming less and less important,' said Brian Macdonald, Stoneham’s former chief appraiser, back in Dec. of 2020, referencing a new trend where odd-shaped lots, completely dilapidated homes, and even parcels riddled with ledge and other development obstacles began to sell at a premium. 'I’ve long since abandoned trying to interpret what people are paying for when they buy into a community. I don’t know if it’s schools. I don’t know if it’s the air of eliteness,' commented longtime Reading Town Assessor Victor Santaniello in an interview back in 2020. 'What I do know is that every year I’m amazed at what people pay for homes.'"

"Noting that almost every community in the state is experiencing a similar explosion in property values, Burlington officials during the town’s annual tax classification hearing argued the community actually remains quite affordable. 'Being a resident and business owner in Burlington, I cannot describe how good this is for all of us. These taxes are not going to scare residents and commercial property owners off. These rates are very reasonable,' stated Select Board member Joseph Morandi during that late November public hearing."

"Ten years ago, the typical single-family home in Reading was valued at about $446,100 and local residents were paying around $6,828 in real-estate taxes. However, since that time, assessed home values have climbed on average by some $413,000 to $859,000 and Reading residents can expect their annual tax bill to surpass the $9,000 mark in FY’24 for the first time in the community’s history."

From Deseret News. "Between 2020 and 2022, there was a price increase of 49% in the average median home price here in Utah. Only 15% of Utah’s renter households have enough income to purchase a modestly priced $300,000 to $400,000 home” (which, let’s be honest, is the low end of the housing cost distribution). Combine all this with a high 7+% mortgage interest rate and home ownership looks hopelessly out of reach."

KERA in Texas. "Home prices in every corner of Dallas have increased over the past five years — with prices rising fastest in the lowest-cost neighborhoods, according to a new analysis commissioned by the city. The median sales price of a home rose from $133,300 in 2018 to $395,788 in 2023. In the least expensive areas, home values have more than quadrupled. In 2018, these neighborhoods had a median sales price of $41,500. By 2023, the neighborhoods with lowest home sales prices saw the median at nearly $193,000. These neighborhoods represented about 15% of the Census block groups analyzed in the study, and are located mostly in southern and southeastern Dallas."

"The city’s most expensive neighborhoods also saw a rise in housing prices, though less dramatic than in the least expensive areas. They saw median home sale prices of $1.4 million in 2023, up from just over $1 million in 2018, a roughly 40% increase. These areas – representing about 4% of the census block groups analyzed – are concentrated in north and northeast Dallas. In a city with a median family income of $58,200, fast-rising home values are dampening the dream of homeownership for more and more Dallasites."

The Union Tribune in California. "At one free food pantry in Vista, visits by hungry San Diegans swelled by 900 more households in October, November and December. At a free produce distribution point in Sorrento Valley, tomatoes and berries have been flying off the tables, as more than 800 households stock up there every month. Back in 2022, the weekly traffic was less than 100. Donors are squeezed as well. 'With this increase in numbers served, the San Diego Food Bank is definitely experiencing its greatest need/demand for assistance since the height of the pandemic,' Casey Castillo, the bank's chief executive, wrote in an email. 'We rely so much on grassroots donors. And those are the donors that are heavily impacted by where the economy is, and specifically, inflation. I think the loss in those donors really can be attributed to the economy, and the lack of disposable income.'"

"The region remains prohibitively expensive for people earning $20 an hour, said Kyra Greene, the executive director of the Center on Policy Initiatives, a research and action nonprofit. 'Even with the new $20-an-hour minimum wage, a fast food worker will have to spend 66 percent of their pre-tax pay to afford a two-bedroom apartment in San Diego County. This leaves little for food and other necessities,' she said."

The Globe and Mail in Canada. "Pierre Poilievre is strong at observing that skyrocketing home values have driven 'a colossal wealth transfer from the working wage earner to the wealthy asset owner.' He described those who have gained especially large windfalls as 'landed aristocrats.' He may mean people like me. My home has increased in value by $1.5-million. This windfall came from 'doing absolutely nothing,' as Mr. Poilievre rightly observed. My gain is a loss for those who enter the housing system after me, because they must pay higher rents and larger mortgages."

"We can start by calling out those among us who fail to show sympathy for younger Canadians struggling with housing. Like one person who left a comment on my last column. The commenter mocked: 'My wife and I are finally empty nesters and are putting our home to work for us. One of the spare bedrooms is a reading room, another is my audio listening room and the third is the cat’s bedroom.' A bedroom for the cat? Perhaps the individual means to be funny. Spare bedrooms may not yet be the sign of a housing aristocrat. But it is an increasing marker of the housing 'haves' and 'have-nots.' As one younger reader responded to the commenter’s belittling comment: 'I really envy the life your cat seems to live.'"

The London Free Press in Canada. "London-area home sales in 2023 hit the lowest level in more than 20 years, the latest local market snapshot shows. Blame interest rates for the less-than-banner year on the home sales front, LSTAR president Adam Miller said Friday. 'It’s been two decades since we’ve seen numbers like this. It’s a bit deceiving too because 20 years ago the population of London was quite a bit smaller,' Miller said. 'It’s a pretty significant down year as a whole. . . . They wanted the interest rate hikes to slow the housing market and it certainly did, with a sledgehammer.'"

"The average local home prices last month and through the fall were far off the record set in early 2022, before a series of Bank of Canada interest rate hikes to address inflation put the brakes on the runaway market. Average home prices in the LSTAR area hit $825,000 in February 2022, dropping to $762,400 by May and hitting $648,000 by August 2022."

The Daily Hive in Canada. "An Ontario home re-listed for sale nearly a dozen times and eventually sold at a massive loss shows just how much prices tend to fluctuate in the GTA real estate market. The detached home, located at 1099 Caldwell Avenue in Mississauga’s Lorne Park neighbourhood, has four bedrooms, four bathrooms, and a two-car garage. In June 2021, the property was sold for approximately $400,000 over asking at $2.65 million. From there, the home was listed and re-listed 11 times over the next two years as the sellers repeatedly attempted to get the property sold — ranging its price from $3.39 million to $1.99 million."

"After several attempts, the home was finally sold for $1.8 million in December 2023 through a power of sale, roughly $800,000 less than it was sold for just two years prior."