Sound about right 
Rule of thumb is at least 80% of purchase price Buyers in Austin have gone crazy. Frankly I don’t know what lead to such insane frenzy.
My best guess is whatever driving the real estate market nationwide + Apple new Austin campus is about to open 
Now here’s the what a starter home in North Fremont sold for 
https://www.redfin.com/CA/Fremont/34225-Whitehead-Ln-94555/home/1325957
Not just April seller. It was sold in Feb for 735K. Feb (735) → June (1375) is a little crazy.
The 6 Best Areas of Austin, Texas to Purchase a Rental Property in 2021
How long and how high can real estate rally last?
In Singapore, prices appreciated seven folds over a 10 year period, from 1987 to 1997 even though annualized rate is 4%.
1998?
what was the inflation / gdp growth in that period?
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No idea. The price wasn’t driven by those fundamentals. Is a deliberate policy to drive up prices by increased plot ratio. Increased plot ratio allow more condo units to be built on the same piece of land. So prices of existing condos shot up.
generally real estate over long term just keeps up with inflation.
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I know. You can draw a best fit straight line with a slope of 4% for the chart. 4% is the long term inflation.
That makes no sense. If RE just keeps up with inflation, while economic development and thus wages increases faster than inflation, that would mean houses get cheaper and cheaper in real term.
Do we find houses getting more and more affordable? No.
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No because your premises are wrong.
Not true.
Context: SG.
Wages are not increasing much. That is indeed the problem we all face. I think wages are increasing at a lower rate than inflation, esp for those who are working in the same company and not job hopping to increase their salaries.
I just did a back of the envelope calculation. In the last 4 years, my net worth (incl. house and investment portfolio) has increased in value by more than my gross (pre tax) earnings for the same 4 years. That’s the result of high asset inflation with practically no wage inflation.
At this point, all it takes is for the asset portfolio to increase by about 7% per annum to basically be equal to pre-tax income.
Income is stagnating while wealth (assets) is going up steadily.
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I use Real NW = nominal NW/ market price of Primary. To date, while my nominal NW has hit an ATH, RNW is reduced by 40%.
For your case, both your RNW and R income have been declining… may be you should re-consider hanging around SFBA.
Why RNW is a better measure of NW is best illustrated using cash…
Say you have 1 Primary worth $1M (cash purchased for easy comparison), $1M cash. Nominal NW = $2M.
After one year, Primary increases by 30%. So nominal NW = $2.3M, however RNW = 2.3/1.3 = $1.77M, a reduction in RNW. Previously, you can afford to buy another house similar to your Primary, but you no longer can afford to in the second year.
Salaries of engineers (in high tech and others) are on decline.
Fed has screwed up the methodology of how inflation is measured and is now beyond repair. So, the index used by FED to track inflation is just as useless.
FED is turning the US in to a chronically sick patient. The one who neither dies nor does recover and walk firmly.
Indeed, this is the real problem. Fed has screwed up the methodology of how inflation is measured and reported. So, there is steady asset inflation, but because the Fed does not consider asset prices in their calculation, they report low inflation.
Companies take their cue from the Fed, and give us 2-3% raises because inflation is “low”. But asset prices are rising 8-10% annually. So, assets are going out of reach. We just have to hold on to what we got…
Did not fully understand your RNW methodology, but agree that I can no longer afford to purchase my primary home. I am baffled as to who can purchase the houses around here any more…,
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Austinites are saying the same thing.
Singaporeans used to say this. We discover one truth. Once you can afford to, immediately purchase one. Ofc, most of the time with parent help. And don’t fear recession, buy.
One important truth from RNW is if you don’t invest well, you are getting poorer. Unless you’re a very high achiever, your income can’t keep up with RE price appreciation.
This is true. I am still in Bay Area because we happened to purchase our first SFH in RBA years ago when prices were a much less than they are today. Otherwise could not afford to live here with 2-3% annual salary increments. My income from job is not keeping up with RE price appreciation, but it is enough to continue to pay my mortgage and stay here. For that, I, like many others, have to thank the reduction in mortgage interest rates.
In 1960, a person pumping gas in silicon valley could afford (with some effort) to buy a SFR home.
In 2000, an engineer working in silicon valley company could afford to buy a SFR home.
In 2020, an engineer working in silicon valley company could afford to rent a SFR home.
