In 5 or 10 years, who is going to buy these houses?

Mods, if this should be part of the mega-thread please remove. I thought it warranted it's own thread tho.

I'm interested to know how everyone else thinks this scenario plays out..

Joe & Joan Smith have a household income of $110,000, small monthly debts of $450 per month, saved $30,000 for a down payment, good credit and get a rate of 2.8%. Some quick math tells me that should be able to mortgage $420-$450k.

So they decide they want to buy during this crazy hot market, they get a nice home for $440k, which a two years ago would of sold for 375k. Now fast forward 10 years, they are looking to either get into a bigger house, or maybe downsize, doesn't matter, they just want to get out of the current house.

So Billy & Betty Brown come along and see Joe & Joan's nice house for sale and want to buy it. Joe and Joan has it listed for 525k because of course it's supposed to appreciate in value. Now Billy & Betty Brown's household income has increase to $125,000 but their exspenses have also increased to $600 a month, and interest rates are no longer as low, they get 4.2%, even with 50k down they can only afford a house up to 500k. 25k short of what they need to buy the home they want.

So my question is, where are these new buyers going to come up with the capital to purchase homes that old buyers have? Either the prices must come and your home you own won't have appreciated nearly the amount you thought it would, or wages will need to increase substantially, something I doubt will happen.

I know i'm making some large assumptions in the affordability but i think the large point remains, in the long-term future where are the buyers for these houses that are at the moment selling for crazy prices?

submitted by /u/chrisutpg
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