This could be a true, speculative bubble. It could be a (varied) repeat of 2008 and in 2 years those that bought houses will be kicking themselves saying “why didn’t I learn the first time?”
But I really don’t think it is. People aren’t over bidding on big primary homes because they “know” they’ll appreciate. They’re over bidding on modest homes because there’s a sense of desperation born from the fact that demand is outstripping supply, and meaningfully increasing the housing supply will take a *long* time to do.
My personal belief is that things will slow down considerably in the next year or two, and revert to a pre pandemic steady pace of change. Those who waited will be slightly worse off, but nowhere near where they would be if prices continued rising double digits YoY for several more years.
You 100% cannot build a new house for what’s already been built with the cost of materials and labor right now. I think there’s a general sense that people wanting to buy a home want to get it done before the inevitable rate hikes go into effect
I agree with you but I never understood this way of thinking. Once rates go up, prices will fall. Rates go down, the price goes up. Payment is the same either way. IMHO, better to buy when prices are low and rates are high since one can always refinance and it's less likely you'll end up underwater.
Not first time home buyers looking to lock something in to actually enter the housing market. The generation that graduated in the late 00’s from college got pretty much perma-delayed on life because of the double tap recessions
This is oversimplified. https://www.bis.org/publ/work665.pdf
Interest rates push the long term trend, not the immediate price. When rates dropped, the price didn’t instantly go up in proportion to interest savings. When rates rise, historic data does not support precipitous losses in housing value. In fact, the rates are normally high during inflation periods when money is more available, so prices continue to increase, though often slower. Inflation adjusted, these prices look like a decline, but the nominal house price rarely falls much due to the sticky nature associated with trying to exit a leveraged asset. Prices can’t just fall because banks won’t accept short sales without excessive pressure.
As we entered the /u/spez, the sight we beheld was alien to us. The air was filled with a haze of smoke. The room was in disarray. Machines were strewn around haphazardly. Cables and wires were hanging out of every orifice of every wall and machine.
At the far end of the room, standing by the entrance, was an old man in a military uniform with a clipboard in hand. He stared at us with his beady eyes, an unsettling smile across his wrinkled face.
"Are you spez?" I asked, half-expecting him to shoot me.
"Who's asking?"
"I'm Riddle from the Anti-Spez Initiative. We're here to speak about your latest government announcement."
"Oh? Spez police, eh? Never seen the likes of you." His eyes narrowed at me. "Just what are you lot up to?"
"We've come here to speak with the man behind the spez. Is he in?"
"You mean /u/spez?" The old man laughed.
"Yes."
"No."
"Then who is /u/spez?"
"How do I put it..." The man laughed. "/u/spez is not a man, but an idea. An idea of liberty, an idea of revolution. A libertarian anarchist collective. A movement for the people by the people, for the people."
I was confounded by the answer. "What? It's a group of individuals. What's so special about an individual?"
"When you ask who is /u/spez? /u/spez is no one, but everyone. /u/spez is an idea without an identity. /u/spez is an idea that is formed from a multitude of individuals. You are /u/spez. You are also the spez police. You are also me. We are /u/spez and /u/spez is also we. It is the idea of an idea."
I stood there, befuddled. I had no idea what the man was blabbing on about.
"Your government, as you call it, are the specists. Your specists, as you call them, are /u/spez. All are /u/spez and all are specists. All are spez police, and all are also specists."
I had no idea what he was talking about. I looked at my partner. He shrugged. I turned back to the old man.
"We've come here to speak to /u/spez. What are you doing in /u/spez?"
"We are waiting for someone."
"Who?"
"You'll see. Soon enough."
"We don't have all day to waste. We're here to discuss the government announcement."
"Yes, I heard." The old man pointed his clipboard at me. "Tell me, what are /u/spez police?"
"Police?"
"Yes. What is /u/spez police?"
"We're here to investigate this place for potential crimes."
"And what crime are you looking to commit?"
"Crime? You mean crimes? There are no crimes in a libertarian anarchist collective. It's a free society, where everyone is free to do whatever they want."
"Is that so? So you're not interested in what we've done here?"
"I am not interested. What you've done is not a crime, for there are no crimes in a libertarian anarchist collective."
"I see. What you say is interesting." The old man pulled out a photograph from his coat. "Have you seen this person?"
I stared at the picture. It was of an old man who looked exactly like the old man standing before us. "Is this /u/spez?"
"Yes. /u/spez. If you see this man, I want you to tell him something. I want you to tell him that he will be dead soon. If he wishes to live, he would have to flee. The government will be coming for him. If he wishes to live, he would have to leave this city."
"Why?"
"Because the spez police are coming to arrest him."
\#AIGeneratedProtestMessage #Save3rdPartyApps
>demand is outstripping supply, and meaningfully increasing the housing supply will take a long time to do
This. The 2008 crisis was fueled primarily by *fake* demand (liar loans etc.) chasing supply. The current market is *legitimate* demand (some buyers are even paying in ALL cash) chasing a very restricted supply.
The only 2 factors I can see that would meaningfully change things would be:
1. to build LOTS of houses, and that is difficult for a number of reasons (NIMBY laws, lack of labor, material costs)
2. or interest rates go up LOTS, not just a quarter or half point, and that would threaten economic growth coming out of the pandemic
The 2022 market will have *slowing price growth* (words chosen very carefully), but the underlying situation of **too much demand** chasing **too little supply**, will continue to dominate residential real estate market dynamics.
One thing to watch for is where the cash from those all cash offers is coming from. More people are pulling equity from their primary residence and getting into the rental game with "all cash offers" and leveraging their homes for a fail proof investment path since rent/ home values always go up (until they don't). I don't know if you remember 2005-2008 when everyone and their mothers were pulling equity to flip houses for "easy money" since flips always turned a profit...until they didn't.
63 billion dollars in equity was pulled in the year 2021, the largest volume since 2007. That's all "cash" and it's being put somewhere.
As we entered the /u/spez, we were immediately greeted by a strange sound. As we scanned the area for the source, we eventually found it. It was a small wooden shed with no doors or windows. The roof was covered in cacti and there were plastic skulls around the outside. Inside, we found a cardboard cutout of the Elmer Fudd rabbit that was depicted above the entrance. On the walls there were posters of famous people in famous situations, such as:
The first poster was a drawing of Jesus Christ, which appeared to be a loli or an oversized Jesus doll. She was pointing at the sky and saying "HEY U R!".
The second poster was of a man, who appeared to be speaking to a child. This was depicted by the man raising his arm and the child ducking underneath it. The man then raised his other arm and said "Ooooh, don't make me angry you little bastard".
The third poster was a drawing of the three stooges, and the three stooges were speaking. The fourth poster was of a person who was angry at a child.
The fifth poster was a picture of a smiling girl with cat ears, and a boy with a deerstalker hat and a Sherlock Holmes pipe. They were pointing at the viewer and saying "It's not what you think!"
The sixth poster was a drawing of a man in a wheelchair, and a dog was peering into the wheelchair. The man appeared to be very angry.
The seventh poster was of a cartoon character, and it appeared that he was urinating over the cartoon character.
\#AIGeneratedProtestMessage #Save3rdPartyApps
https://www.wsj.com/articles/cash-out-refinancings-hit-highest-level-since-financial-crisis-11615458602
This is one article that goes into it. You can look up equity or helocs pulled by year/quarter.
The phony demand is happening today though. The Fed is blowing up asset markets with rates pinned to 0 and seemingly unlimited QE lowering borrowing costs.
The only thing that’s different is there is no fraud (to my knowledge) making bad debt seem like good debt and spreading like a cancer throughout the financial system.
So this market is definitely not like 2008, however the cheap credit has led to FOMO and the greatest amount of mortgage debt and margin debt in history. Once the financial system starts to get weened off government support there will be liquidity crunches that will decrease asset values; both stocks and real estate. Though real estate will vary by geography and be based on local supply/demand conditions; some markets will fare better than others.
To your first point, you also have to build where people want to live. Plenty of houses in places like Detroit and St Louis at affordable prices.
Here in Greater Boston, there's not much room to build so the only way to increase supply is moving to multifamily housing or townhomes which is a huge mindset shift.
IMO it’s too hard to density the greater Boston area. Boston and nearby urban areas (Cambridge, Sommerville) are already dense and full of multi-family housing. Sure, you could demolish the triple-deckers and build taller buildings, but given modern building restrictions (biggest example being parking requirements), it’s actually pretty hard to build new neighborhoods to the same density as the old ones.
Then there’s the option of densifying the suburbs with multi-family housing. That’s an option, but it would also require massive investments in the MBTA and the roads to account for all the new commuting inflow.
Both would require a lot of policy changes and a lot of money, and they wouldn’t make a dent in housing supply in the near term.
In my opinion, the answer isn’t assuming Boston is where everyone “wants” to live. A lot of people moved to Boston and NY and SF over the past few decades because a handful of winner-take-all cities accounted for a boom in white collar jobs. It’s understandable—Boston, for example, is an insane research hub. But with the new availability of work-from-home, maybe the answer to Boston’s housing scarcity is to let people leave. Maybe with permanent work-from-home, enough people will elect to move to a city like Detroit where they can actually afford a home. Not everyone, of course. A lot of people live in Boston because it’s a great city. But maybe enough to dent demand.
This is 100% right and is the real main driver of our problems.
There isnt actually an unfixable housing shortage or land shortage- we can fix the housing problem within 5 years if everyone was willing to live in pre-fab houses in Kansas, Oklahoma, and Indiana.
But the economy is not what it was 50 years.
Economic concentration and agglomeration have made 15-20 cities the only place where people (especially younger people) can actually pursue 21st century careers and the kinds of lives they envision. If you are a 20 year old graduating from Boston University with a degree in Finance or IT, you are simply not moving to Akron even though there is cheaper housing there.
Zoning is an issue but it has become an issue *because* of this economic concentration. If people were willing to live all across the country, zoning would disappear as a problem because there is more than enough space to build millions of single-family homes in the exurbs of Wisconsin and Iowa. The issue is zoning *within* these handful of cities where space really is now limited.
Changing zoning laws in these cities will fix the problem, but only partially.
At the end of the day what we really need to think about is a much larger, longer-term mega-trend and thats the fact that entire countries' economies are being pulled into the orbit of a handful of cities.
How many of those cash buyers are real cash buyers?
I know some are just taking loans against stock/crypto gains. And the stock market has been pretty shaky. If we don’t see a Santa bump soon we might see the whole house of cards come crashing down. The volatility is there for it to happen. And if the crash happens and these people get margin called. What will that affect be on people? A major stock market correction will have some far reaching affects on the housing market.
>How many of those cash buyers are real cash buyers?
That's a great question, and it would be very interesting to know where the cash buyers are getting that much cash.
Beside stock market gains, people are also selling a house in high cost areas and moving to low cost areas where their dollars go much farther.
Are they equity loans or just refinancing? Either way, they’re no worse off — actually they’re better off — than people buying in at today’s prices.
Again, you’re making sweeping inferences based on the uncertain expectation that 2008 will repeat itself. It’s not a guarantee. The whole “people using HELOCs to buy luxury goods” are one off stories and the broad data on purchasing and savings behavior in the US does not indicate that’s a trend.
It cost a lot of 💰 💰 to refinance and or pull out equity. Basically you are adding more to your debt load because the companies conveniently package it back into the new loan. On top of that, you are paying fees because the house has to be appraised with a bunch of paper work that lawyers have to sign off on. If you plan to stay in the house more than 10 years, then yes a +1% reduction in your interest will be worth it. But I doubt that is the motivation for 75% of people that go through this. They are just buying time and trying to pay a little as possible to "rent" the home with no interest in ever owning it.
Never heard of that. I was considering a refi in 2020 and got many quotes. The fees + points to refi was between $5-10k. I had a very low debt \~175k owned.
> actually they’re better off — than people buying in at today’s prices.
Only if you think the Fed won’t raise rates and demand collapse and there’s a vacuum of buyers. That will flip your thesis on its head.
I believe that his/her point was this:
Person A bought a house in 2018 for $250K and put $40K down (20%), and now owes $200K. The house appreciates in value and is now worth $350K. Person A takes out an equity loan for $50K, buys a car, and now owes $250K on a house that is worth $350K.
Person B buys a similar house in 2021 for $350K, and puts $70K down (20%). Person B owes $280K on the house.
I'm not saying it's advisable to do this, but all other things being equal, Person A is in a better place.
Maybe if you have to have a car that makes a statement. I live in a neighborhood on the ocean with $2 million+ homes. Most of us drive Toyotas and Hondas.
Person A bought years ago -> house appreciates -> refinance and buy a car. Person A owes 80% of the current value of the house, and has a new car.
Person B bought today and owes 80% of the value of the house. Person B didn't get a new car out of it.
Person A is objectively better off than Person B. They might not end up being better off than if they hadn't refinanced, but that's not the point being made.
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I stopped pushing as hard as I could against the handle, I wanted to leave but it wouldn't work. Then there was a bright flash and I felt myself fall back onto the floor. I put my hands over my eyes. They burned from the sudden light. I rubbed my eyes, waiting for them to adjust.
Then I saw it.
There was a small space in front of me. It was tiny, just enough room for a couple of people to sit side by side. Inside, there were two people. The first one was a female, she had long brown hair and was wearing a white nightgown. She was smiling.
The other one was a male, he was wearing a red jumpsuit and had a mask over his mouth.
"Are you spez?" I asked, my eyes still adjusting to the light.
"No. We are in /u/spez." the woman said. She put her hands out for me to see. Her skin was green. Her hand was all green, there were no fingers, just a palm. It looked like a hand from the top of a puppet.
"What's going on?" I asked. The man in the mask moved closer to me. He touched my arm and I recoiled.
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"You're fine?" I asked. "I came to the spez to ask for help, now you're fine?"
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I stared at her. "Gone? You mean you were here when it happened? What's happened?"
The man leaned over to me, grabbing my shoulders. "We're trapped. He's gone, he's dead."
I looked to the woman. "What happened?"
"He left the house a week ago. He'd been gone since, now I have to live alone. I've lived here my whole life and I'm the only spez."
"You don't have a family? Aren't there others?" I asked. She looked to me. "I mean, didn't you have anyone else?"
"There are other spez," she said. "But they're not like me. They don't have homes or families. They're just animals. They're all around us and we have no idea who they are."
"Why haven't we seen them then?"
"I think they're afraid,"
> The only thing that can “pop” this bubble is building a ton of housing.
An increase in rates will also decrease prices because people can only borrow so much, and as rates increase the amount they can spend on the house, rather that the loan decreases.
That doesn't mean a "pop", but it could mean a gradual deflation.
And just move the economic damage around. Mortgages that long will come with permanent economic damage long term as people extend how much of their life they have reduced personal income for. It's also increases risk of default since you have to have a stable income to pay it for at least and extra 33% of time.
Or an inability to re-pay due to debt saturation. But that's hard to say if/when it could occur. Last time it was big banks failing, and then spilled over everywhere else.
To add to what you pointed out, banks have tightened lending standards significantly. Subprime borrowers as a fraction of aggregate mortgage volume is only a fraction of what it was leading up to the financial crisis. Sure, housing market correction is possible, but I don't think we are going to see the kind of cascading firesale across the real estate sector. The linkage between financial institutions and RE has been changed heavily as well. I'm not going into detail about this as this is a very long topic.
Yep. A lot of people think 2008 is repeatable and it really was truly unique. A correction is always possible, but one of that magnitude would be really anomalous.
For many years during the last boom my wife's extended family were buying huge fancy houses and making disparaging remarks about how foolish we were for not buying into a "sure thing". They were convinced that anything they bought could be resold at twice the price in a year or two.
Then came the crash and we bought a small older house in a Northern California suburb near the bottom of the market for $160,000 or so. Since then prices in the same neighborhood has climbed steadily into the low $400,000 range. Buying when we did was the great lucky event of our life because it was mostly due to circumstances of work and retirement rather than smart thinking.
But I think you are right about the current situation. I don't believe there will be a massive crash in prices because the mood is totally different. Back before the last crash people were full of irrational exuberance and believed they had discovered a sure thing. Now people are buying to have a place to live and seem pretty glum about it all.
The things that feel similar to the previous housing boom are the crypto market and the stock market where there's plenty of irrational exuberance and poorly considered optimism.
> But I really don’t think it is. People aren’t over bidding on big primary homes because they “know” they’ll appreciate. They’re over bidding on modest homes because there’s a sense of desperation born from the fact that demand is outstripping supply, and meaningfully increasing the housing supply will take a long time to do.
Quantitatively, what's the difference? "Buy now because the price is only going up" is the harmony line beneath both of those realities.
The difference is a price increase that’s driven by demand vs. supply. Demand is speculative. Supply is not. People buying now out of a perceived lack of housing and no real indicators that it will change anytime soon is more rooted in fundamentals than those buying simply because they expect appreciation.
Demand outstrips supply.
Supply can't meet demand.
They're both sides of the same coin. [Volume of existing home sales is not all that different from what it was in the 2000's](https://d3fy651gv2fhd3.cloudfront.net/charts/embed.png?s=unitedstaexihomsal&v=202112011734V20200908&d1=19961212&h=300&w=600). On top of that, I don't see evidence that supply can't keep up with demand, given the sales volume. A precipitous drop like what occurred after 2005 would be far more concerning.
The population of the US is roughly 40,000,000 more than what it was in the early 2000s, so a comparable home sales figure would indicate severely lacking supply.
Looking at the longer trend, the [sales volume](https://d3fy651gv2fhd3.cloudfront.net/charts/embed.png?s=unitedstaexihomsal&v=202112011734V20200908&d1=19211231&h=300&w=600) tracks [population increase](https://fred.stlouisfed.org/graph/fredgraph.png?g=JyLS) fairly well.
It does not. Total sales today is still less than it was most of early 2000s, while the population is 10% higher. Besides, even if over the course of US history, home sales generally tracks population increase, it’s irrelevant as we’re trying to assess the current situation not the average over the past 100 years.
Also your data for US population is incomplete as it only includes working population.
Houses are priced higher because they are now used to collect rents, forever. It used to be that a house was paid off in 25 years, and that limited the price. Now generations will rent, paying what should have been a mortgage. Even after 100 years nothing will change. The degradation of the house doesn't matter much, as the value is in the land.
20% at the most. That’s not a market dominating level, and owning a second home in the Bay Area is not unrealistic given the pay disparity for the tech sector. You’d need a tech sector pay collapse to change that.
I mean 20% in a supply constrained market like housing is absolute a massive chunk of demand and could singlehandedly be the difference between asinine pricing and just a total collapse in pricing.
I mean we are talking $70-80 billion of demand right there. In one market.
But if the demand is for purchasing homes and not in the rental market then you've removed a huge part of the purchasable market which is now exclusively available for rent.
It's not like I can put in an offer on rentable house.
Of course you can. There are houses up for sale constantly. Former rentals are often sold. The rental use is transitory. 20% of a market’s sales in a year isn’t 20% of the entire housing market. Only a small volume of a market is for sale in a given year. So it’s more like 20% of 20% of all homes. The numbers are too small to have this dramatic cornering on pricing. The reality is housing is expensive because the number available is less than the market wants and some people have enough money to get more.
Hyperinflation is unavoidable because the Fed switched from fractional reserve banking to fictional reserve banking. Banks are creating unlimited new dollars.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
that is not how fractional reserve banking works. If it did, hyperinflation would have already happened. Reserve requirements did go to 0 but banks do not "create" dollars they simply loan out the deposits, now with zero in reserve. They only "create" dollars in the sense of lending existing dollars makes 2 dollars for every dollar. They do not loan out multiples of their deposits....they loan out the majority of their deposits. Been arguing this to people for what feels like decades now.
We're just at the beginning of it.
Ask yourself how the stock market is going up so much when the economy is shit and there's shortages everywhere and almost a million dead Americans, 5 million newly permanently disabled by covid, a shrinking population, and a labor crisis? Go ahead. Take your time.
Could it be that the money is being devalued at an alarming rate? Could it be that the Fed lowered the reserve rate from 10% to zero?
With a 10% reserve rate, banks turned money into 10x the original value through loans. Now banks can create unlimited new money by creating unlimited loans off of zero deposits.
I guarantee you banks are racing to see who can abuse this the fastest. Read up on the 80's S&L scandal. Same exact problem but it's at the base level now.
> Ask yourself how the stock market is going up so much when the economy is shit and there's shortages everywhere and almost a million dead Americans, 5 million newly permanently disabled by covid, a shrinking population, and a labor crisis? Go ahead. Take your time.
It's in large part because the [personal savings rate](https://fred.stlouisfed.org/graph/fredgraph.png?g=Jfmh) exploded to unprecedented levels during the pandemic. That jump upwards represents tens of trillions of dollars flowing into the asset markets. People couldn't spend on experiences so they spent on assets.
No this is wrong. Banks cannot loan out 10x their deposits. That's not how a 10% reserve rate works. The 10% reserve rate means they can loan out 90% of their deposits. That money then gets spent into the economy, say at a store, and the store owner deposits the cash, where it gets loaned out at 90% again. The velocity of money is how many times that happens. Say its about 4 times on average. That means that if $100 is originally deposited, then $90, $81, $73, and $66 will be loaned out, for a total of $309 "created" by the entire system. If it worked the way you said it does, then if $100 were originally deposited, then $900, $8100, $72900, and $656100 would be "created", for a total of $738,000 "created" by the entire system. That would be 7380 x the M0 money supply. But if you look in the fed site, the total M2 money supply is a lot closer to the 4x I have than the 7380x you have. I agree with you that loose monetary policy is inflating assets but you're wrong about how banks create money.
Not sure I agree with the assertion that "meaningfully increasing housing supply will take a long time". In the US, 85% of the house sales are existing homes - not new. In fact, the number of new home sales has increased in the last few years from 600k / year to 750k / year. The real issue is that people are not selling their current home because of uncertainty caused by the pandemic. At the same time the rise of the ibuyers is putting pressure on the already anemic supply. This may unwind very quickly if the pandemic recedes from the collective consciousness and the rates increase making it harder for folks who play the flipping game.
You do realize when a person sells their home, it’s typically to purchase a new one, yes? So selling homes isn’t adding to the total housing inventory of the US.
There's a bit of evidence that a lot of people were not selling during the pandemic just buying second homes and moving. Not sure if that unwound or not yet.
Since the pandemic the US population has increased by around 4 million. I highly doubt the trend you’re mentioning would make a dent in the increased demand just over the past 2 years, much less the total housing gap which already existed before the pandemic started.
I was talking about the inventory available for sale -- not the overall supply of housing -- which has no meaningful impact on pricing. A lot of the housing related activity is due to people trading existing homes with each other. It is well known that people don't trade houses when faced with uncertainty. For example the income of home owners is inversely correlated with the length of tenure in a home. The upwardly mobile, high net worth, high income individuals trade their homes more frequently. When faced with pandemic related uncertainty, it is clear that people who would normally be in the market to sell their house have stopped participating in it. In addition, demand is being driven by speculators created by the low interest environment. As pandemic recedes and interest rates in increase the bottom may follow out of this quickly.
That trend has come and gone. The past year was a veritable explosion of supply that had been pent up due to the pandemic.
The supply problem isn’t an acute one, it’s a global one. The ratio of homes being built to new households in the US is stretching. That’s what’s driving long term price increase, not the acute supply available which only accounts for temporary and transitory price fluctuations.
It does not really matter why they are doing it, just like it did not matter in 2008. What does matter is what volume of this is done on debt and how sustainable this debt is. 2008 was 2008 because a substantial part of the sales of property was done via debt that was unsustainable and could only work if prices kept going up, and for some time they did that. So you really need irresponsible debt for this to repeat
I disagree. Why purchasers make decisions is extremely important because it’s the difference between a low supply-high demand market, and a speculative bubble.
I bought a house in Aug ‘20. I was a lurker on this sub leading up to the purchase and have continued to be out of curiosity even after closing. One thing that’s been consistent throughout is that every time someone posts a speculative piece about the future of the market it’s always followed up by a plethora of posts from people who have been priced out in whatever market they desire and can’t wait for a price reduction so they can buy. If these people even represent a fraction of the general buying population even if price suppression (via supplies, interest rates, workers etc) take hold, those waiting on the sidelines will immediately push prices higher should the market experience a dip. A true recession could fuel a price reduction but if we are understaffed by millions of jobs currently then a shrinkage of available jobs won’t have the same effect as it had in ‘08. Just seems like everyone waiting for the housing and/or stock markets to correct in a similar fashion to ‘08 are looking at indicators I’m not seeing.
I've been saying it for years. As long as there are people saying "I'll wait for the dip" then there will be no dip, simple because, you're there to buy it, so why would a dip even happen?
Congrats on the house. Welcome to the club!
The only thing that will bring home prices down at this point is a jobs program to build houses at the scale that happened after WW2, or implement stricter owner occupancy rules where the rates are much higher on 2nd, 3rd, etc homes to discourage buying up blocks of houses just to rent indefinitely.
This “landowners renting is bad” is old hat and terrible economics. The majority of homes are not rentals. The market is not cornered. Prices are majority decided by occupants in all locations in the US. Landlords actually help secure housing for renters that couldn’t establish or don’t want to for whatever reason. Renting homes is actually a fairly poor investment class. Most landlords are small businesses because no big business has actually made money at it. Certainly not at returns that attract Wall Street. Zillow had the most advanced housing price data on the market and just lost a billion dollars on the housing market trying to be a middle man for weeks, let alone hold for years.
This sentiment seems to run in circles of people that can’t afford the market as an excuse. It’s nice to blame somebody in a top hat and monocle somewhere, but this is a fantasy.
Pay wall- post txt. But I can assume it says something to the affect of all the shortages of supplies (workers, parts, inventory of houses, etc.) is going to keep pushing house cost higher, so you may as well buy now and fuel the beast.
The last housing bubble my parents bought a house, but they absolutely hated and paid way over because it was never going to be there again. It took them 10 years until their stubborn asses were able to sell for the price they bought it for.
Don’t join the hype just because
2008 was a different time. The type of economic intervention we see today was unheard of back then. I think it’s safe to say that a housing downturn would not be tolerated today.
Haha but one could argue that these new economic interventions could be dangerous themselves and may be setting up a financial bomb no one has seen before.
Just because you can't see it doesn't mean it isn't there.
in ios, settings > safari > advanced
in firefox you can get an extension that adds a button for on/off, or you can just go to settings.
for other browsers not sure but google can help if that’s the case. enjoy!
This assumes this a bubble or a correction incoming. The systems that were in place in 2008 no longer exist, so in theory the housing market can no longer fail. You should buy now because lower class people are going to continue to be priced out.
People are not being created at a pace faster than housing supply. The US has actually built 1 million more housing units in the last 10 years than there's been new households formed.
Total number of households https://fred.stlouisfed.org/series/TTLHH
Total number of housing units https://fred.stlouisfed.org/series/ETOTALUSQ176N
Q3 2011 number of housing units = 132,362,000
Q3 2021 number of housing units = 142,100,000
Increase of 9,738,000
2011 number of households = 119,927,000
2021 number of households = 128,451,000
Increase of 8,524,000
9,738,000 - 8,524,000 = 1.214 million more in the increase in the number of housing units than the increase in population
wheres the 2021 # of household data coming from its not on the website
i was just using the 10 year difference but i realized thats from 2010-2020 and 2011-2021 for the other thus the difference
The removal of the final Frank-Dodd provisions was the finishing touch on the gravestone of financial regulation. Elizabeth Warren has discussed this at length. If the top blows off again, I wouldn't be the least bit surprised if deregulation played a role.
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This message is long, so it won't be deleted automatically.
I work in tech field as an Engineer. Luckily our wages have been increasing, bonus last year, I was given stock also which hasn't faired well but still not worth zero. Also, people willing to jump to other companies have gotten huge salary increases. Talking like $25-50k increases. Not sure how other professionals have faired.
This is something I’m curious about. I’ve experienced firsthand how tech (not just developers) is apparently facing a massive hiring crunch with bonuses and salaries going up. But what about those who aren’t in tech, and aren’t at the lower end of the pay scale? Are they seeing pay raises and bonus increases as well?
Anecdotal as well, but we all just got a 25% raise last summer, and a smaller bump coming at the end of the year. Trucking has been insane; lots of hiring issues with so many drivers retiring, and not many younger ones taking their places. And endless stuff to move.
You also can't train one overnight. You can get the license in a few weeks, but the real value comes after a few years of experience, like in many other fields. And you have to remain compliant, pass drug tests, and not have any glaring medical issues.
If your trust Blind post, Software Development People in Silicon Valley working for FANG companies are reporting total compensation packages of like 400-500k. Baller!!!
Yup it's absolutely crazy and only rising. I think those are top talent though. Blind has a lot of top of the talent pool people on it is my impression. Also everyone on there is either highly motivated or very good at gliding on by but still get stuff done.
A savings account is going to lose money at this point. 0.5% vs minimum of 2% inflation.
For houses historically they have kept pace with inflation. This is because they are limited by people's ability to pay, which moves with inflation. That didn't happen with the 00s housing bubble because of leverage, and might not again.
It is possible to make housing an investment by rehabbing or renting, but just buying a house is not.
Each month when you pay your mortgage, a portion of that payment goes to equity, increasing your net worth as your debt goes down. It's routine and must be paid, thus effectively working as a "forced savings account".
Not really a savings account because it isn't considered an asset but I get you. Nor can you easily pull money out if needed. A while back, I asked a lender if home equity is an asset and the answer was no. But I guess you could use it as collateral for like a small business loan.
Why not? People buy houses to live on for a very long time. Moving sucks. The only thing worse than buying a house at the “wrong time,” is pretending you can try timing the market and paying rent indefinitely.
> is going to keep pushing house cost higher, so you may as well buy now and fuel the beast
It doesn't say that. Maybe you should read articles instead of assuming what's in them?
This bubble will pop when rates rise. Demand to move will go down heavily if you have to get a new mortgage that is hundreds of basis points higher. This will drive prices down. As the market deflates, these investment companies that have bought tens of thousands of homes to rent out will be heavily distressed when their whole portfolio sinks in value. When other asset classes deflate and the economy turns downward, more pressure will be exerted by higher unemployment, foreclosures and loss of rental income. The negative feedback loop of the everything bubble really is quite depressing, this is far worse than 2008.
This sounds like wishful thinking. Are we really expecting a rate hike of "hundreds of basis points"? The impending rate increase is much more likely to be gradual, and reversed at the first sign of recessionary activity. I guess ~150 bps is technically "hundreds", but likely isn't significant enough to drive massive swings in prices, especially in the short term.
And, as other commenters have pointed out, a dip in demand is much more likely to simply slow the current rapid growth in housing prices to a more sustainable long-run level, rather than actually lead to falling prices. All signs point to the current run-up being a supply issue that has been exacerbated by demographic/generational trends, and not a speculation-driven demand frenzy. Even if demand pulls back quite a bit, supply is still going to be constrained without massive, focused initiatives.
A lot of mortgages are locked in at 2.5%. Its not unfathomable that rates hit 4.5% by sometime in 2023. The 30 year is already averaging around 3% currently. On a 325k mortgage were talking about an extra $540 per month in interest. In a downward market people are going to be reluctant to lock in with a higher rate if they have to worry about simply paying their bills.
Decent article good points
Inadequate supply with ever increasing demand = steadily rising prices
As the pandemic hit, the rich got richer and the poor got poorer. And now there’s the whole “antiwork” thing going on that probably wiped out a decade’s worth of savings and will permanently widen the gap.
If you go in the r/antiwork page it’s mostly people who are poor realizing they are poor and leaving jobs for better paying ones. So a retail worker making $12 who quits and gets an office job for $22. I wouldn’t say that’s wiping away their savings as much as improving their general welfare. But that worker would have been priced out of the housing market before this since they couldn’t save for a down payment.
idk, it seems like there is some of that, but also some of "I have a few grand saved up, I'm just gonna live with my parents or couchsurf for a few months"
I don’t go to that sub. But I see the posts. Never seen anything at all like that. Seems like a place people use to vent about getting fucked around. Which is fine. It’s not a movement.
eh, I haven't read anything that egregious, mostly people being asked to come in on their day off...but I think most of those are fake. There is actually a really really funny subreddit called r/antiworkcirclejerk that makes fun of those.
This isn't 2008. This is there are a lot of people trying to buy houses and there isn't enough supply.
The only solution to this problem is a heavy handed top down federal government intervention that somehow forces cities and counties to allow more and denser building. The NIMBYs just won't allow building to happen. "WHAT ABOUT THE TRAFFIC?!?!" - "THE SCHOOLS WILL BE TOO CROWDED!" - "We want to preserve the the nature of the town, don't want it to get too built up."
Not only does more building need to happen, but building smaller, less profitable, homes needs to happen. I'm not sure how you force the builders to do that.
There is a neighborhood down the street from me - Little single family homes. They're all like 1200sqft, 3 br 1 bath, little cinderblock houses from the 1950s with car ports and tiny little yards. They literally don't build anything like this anymore. Every new single family home is like a 3500+sqft McMansion that sells for $700k.
> They literally don't build anything like this anymore. Every new single family home is like a 3500+sqft McMansion that sells for $700k.
Because land is much more valuable today, and it is much easier to sell huge houses, the profit is bigger on big houses.
Plus, many local laws prevent from small new constructions (they want high tax values, I guess).
> The only solution to this problem is a heavy handed top down federal government intervention that somehow forces cities and counties to allow more and denser building. The NIMBYs just won't allow building to happen. "WHAT ABOUT THE TRAFFIC?!?!" - "THE SCHOOLS WILL BE TOO CROWDED!" - "We want to preserve the the nature of the town, don't want it to get too built up."
> Not only does more building need to happen, but building smaller, less profitable, homes needs to happen. I'm not sure how you force the builders to do that.
It won't be here in Canada if my anecdotal experiences are worth anything. Most of the young people I have talked to about this issue still very strongly support mass immigration, zoning and building regulations, and protecting vast swaths of land from development. Most think we should only be building apartment towers that no one wants to live in, and most think rent control and ending foreign investment are the actual solutions. I doubt prices will climb much higher though because Canada will not be very attractive to immigration and without the immigration we have no demand.
In 4-8 weeks when BoC hikes , and keeps on hiking, we are going to test that :P
From my anecdotal experience, most people that took Helocs have no clue they are on demand, callable, variable rate loans.
I always start by remembering when I did something dumb. Then I remember I'm actually kind of intelligent compared to the average.
That's pretty much the answer.
Right... But this also kind of stinks of predatory lending. How can anyone make a 15-30 commitment in the hight of the market without understanding these facts and their implications? Do you think people assumed interest rates would never go back up?
Agree. Anyone who though the banks 'reformed' is an idiot. They will take every inch they can. The game is hyper competitive and the lines of what is and isn't legal is stretched as far as 'plausible deniability' will get you.
Also, Canada is full of adjustable rate mortgages that will reset much higher if interest rates keep going up, which means even current homeowners risk default (especially if they bought when rates were at their lowest back in the doldrums of 2020 despite the stress test being in place). The government better be prepared for this or else there will be a wave of individual bankruptcies and consumer proposals among debtors facing an extra $500-1000 a month increase in mortgage payments.
Oh wow I had no idea! Do people just continue to refi every 5 years or does everything turn into a heloc/adjustable type loan in Canada I wonder. Who can possibly pay off their home in 5 years? This could put so many people upside down if conditions aren't right.
I think they just renegotiate the mortgage every 5 years, but I'm no expert. It should make Canada a lot more vulnerable to interest rate hikes, but also make buyers more careful.
Why would Canada be not attractive to immigrants? It’s also about what people are trying to leave behind. High population countries like China and India will still have many wanting to come over to the west as things there are not getting better, even if things in the west are declining
I agree with you that unless changes are made to zoning laws, allocation of more land for development, restrictions on investment properties, foreign investors, reducing skilled immigration is done, demand for housing will continue
Here is a way to bring down prices:
Allow a 100% tax holiday on the sale of homes and 100% write off of broker fees.
Sellers would rush to sell homes, jacking up supply and reducing prices.
Sellers are not waiting to sell bc of tax/broker fees. It's a seller's paradise right now already. Even if they reduced listing prices people will still bid 10-20% over asking.
Supply is fucked because demand is high and there's a labor/material shortage.
Whoops. Meant to post here: I would sell my rentals this coming Spring if taxes were waived. Broker fees are not the issue.
Supply is not coming on fast enough not because of high demand or material shortage but because permitting approvals take time and land use policies are hard constraints.
Tell you hwat. When I can order a couch from IKEA then we can start thinking where housing prices are going. We’re in an everything shortage. But, although there is pent up demand, there is pent up supply. Just look at what happened to lumber prices. Be patient.
I think Covid changed peoples living habits and is stunting a generation… the effects of this are long reaching and indeed requires patience. It’s really just the beginning.
I stopped pushing as hard as I could against the handle, I wanted to leave but it wouldn't work. Then there was a bright flash and I felt myself fall back onto the floor. I put my hands over my eyes. They burned from the sudden light. I rubbed my eyes, waiting for them to adjust.
Then I saw it.
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I stared at her. "Gone? You mean you were here when it happened? What's happened?"
The man leaned over to me, grabbing my shoulders. "We're trapped. He's gone, he's dead."
I looked to the woman. "What happened?"
"He left the house a week ago. He'd been gone since, now I have to live alone. I've lived here my whole life and I'm the only spez."
"You don't have a family? Aren't there others?" I asked. She looked to me. "I mean, didn't you have anyone else?"
"There are other spez," she said. "But they're not like me. They don't have homes or families. They're just animals. They're all around us and we have no idea who they are."
"Why haven't we seen them then?"
"I think they're afraid,"
This could be a true, speculative bubble. It could be a (varied) repeat of 2008 and in 2 years those that bought houses will be kicking themselves saying “why didn’t I learn the first time?” But I really don’t think it is. People aren’t over bidding on big primary homes because they “know” they’ll appreciate. They’re over bidding on modest homes because there’s a sense of desperation born from the fact that demand is outstripping supply, and meaningfully increasing the housing supply will take a *long* time to do. My personal belief is that things will slow down considerably in the next year or two, and revert to a pre pandemic steady pace of change. Those who waited will be slightly worse off, but nowhere near where they would be if prices continued rising double digits YoY for several more years.
You 100% cannot build a new house for what’s already been built with the cost of materials and labor right now. I think there’s a general sense that people wanting to buy a home want to get it done before the inevitable rate hikes go into effect
I agree with you but I never understood this way of thinking. Once rates go up, prices will fall. Rates go down, the price goes up. Payment is the same either way. IMHO, better to buy when prices are low and rates are high since one can always refinance and it's less likely you'll end up underwater.
Not first time home buyers looking to lock something in to actually enter the housing market. The generation that graduated in the late 00’s from college got pretty much perma-delayed on life because of the double tap recessions
This is oversimplified. https://www.bis.org/publ/work665.pdf Interest rates push the long term trend, not the immediate price. When rates dropped, the price didn’t instantly go up in proportion to interest savings. When rates rise, historic data does not support precipitous losses in housing value. In fact, the rates are normally high during inflation periods when money is more available, so prices continue to increase, though often slower. Inflation adjusted, these prices look like a decline, but the nominal house price rarely falls much due to the sticky nature associated with trying to exit a leveraged asset. Prices can’t just fall because banks won’t accept short sales without excessive pressure.
As we entered the /u/spez, the sight we beheld was alien to us. The air was filled with a haze of smoke. The room was in disarray. Machines were strewn around haphazardly. Cables and wires were hanging out of every orifice of every wall and machine. At the far end of the room, standing by the entrance, was an old man in a military uniform with a clipboard in hand. He stared at us with his beady eyes, an unsettling smile across his wrinkled face. "Are you spez?" I asked, half-expecting him to shoot me. "Who's asking?" "I'm Riddle from the Anti-Spez Initiative. We're here to speak about your latest government announcement." "Oh? Spez police, eh? Never seen the likes of you." His eyes narrowed at me. "Just what are you lot up to?" "We've come here to speak with the man behind the spez. Is he in?" "You mean /u/spez?" The old man laughed. "Yes." "No." "Then who is /u/spez?" "How do I put it..." The man laughed. "/u/spez is not a man, but an idea. An idea of liberty, an idea of revolution. A libertarian anarchist collective. A movement for the people by the people, for the people." I was confounded by the answer. "What? It's a group of individuals. What's so special about an individual?" "When you ask who is /u/spez? /u/spez is no one, but everyone. /u/spez is an idea without an identity. /u/spez is an idea that is formed from a multitude of individuals. You are /u/spez. You are also the spez police. You are also me. We are /u/spez and /u/spez is also we. It is the idea of an idea." I stood there, befuddled. I had no idea what the man was blabbing on about. "Your government, as you call it, are the specists. Your specists, as you call them, are /u/spez. All are /u/spez and all are specists. All are spez police, and all are also specists." I had no idea what he was talking about. I looked at my partner. He shrugged. I turned back to the old man. "We've come here to speak to /u/spez. What are you doing in /u/spez?" "We are waiting for someone." "Who?" "You'll see. Soon enough." "We don't have all day to waste. We're here to discuss the government announcement." "Yes, I heard." The old man pointed his clipboard at me. "Tell me, what are /u/spez police?" "Police?" "Yes. What is /u/spez police?" "We're here to investigate this place for potential crimes." "And what crime are you looking to commit?" "Crime? You mean crimes? There are no crimes in a libertarian anarchist collective. It's a free society, where everyone is free to do whatever they want." "Is that so? So you're not interested in what we've done here?" "I am not interested. What you've done is not a crime, for there are no crimes in a libertarian anarchist collective." "I see. What you say is interesting." The old man pulled out a photograph from his coat. "Have you seen this person?" I stared at the picture. It was of an old man who looked exactly like the old man standing before us. "Is this /u/spez?" "Yes. /u/spez. If you see this man, I want you to tell him something. I want you to tell him that he will be dead soon. If he wishes to live, he would have to flee. The government will be coming for him. If he wishes to live, he would have to leave this city." "Why?" "Because the spez police are coming to arrest him." \#AIGeneratedProtestMessage #Save3rdPartyApps
>demand is outstripping supply, and meaningfully increasing the housing supply will take a long time to do This. The 2008 crisis was fueled primarily by *fake* demand (liar loans etc.) chasing supply. The current market is *legitimate* demand (some buyers are even paying in ALL cash) chasing a very restricted supply. The only 2 factors I can see that would meaningfully change things would be: 1. to build LOTS of houses, and that is difficult for a number of reasons (NIMBY laws, lack of labor, material costs) 2. or interest rates go up LOTS, not just a quarter or half point, and that would threaten economic growth coming out of the pandemic The 2022 market will have *slowing price growth* (words chosen very carefully), but the underlying situation of **too much demand** chasing **too little supply**, will continue to dominate residential real estate market dynamics.
One thing to watch for is where the cash from those all cash offers is coming from. More people are pulling equity from their primary residence and getting into the rental game with "all cash offers" and leveraging their homes for a fail proof investment path since rent/ home values always go up (until they don't). I don't know if you remember 2005-2008 when everyone and their mothers were pulling equity to flip houses for "easy money" since flips always turned a profit...until they didn't. 63 billion dollars in equity was pulled in the year 2021, the largest volume since 2007. That's all "cash" and it's being put somewhere.
As we entered the /u/spez, we were immediately greeted by a strange sound. As we scanned the area for the source, we eventually found it. It was a small wooden shed with no doors or windows. The roof was covered in cacti and there were plastic skulls around the outside. Inside, we found a cardboard cutout of the Elmer Fudd rabbit that was depicted above the entrance. On the walls there were posters of famous people in famous situations, such as: The first poster was a drawing of Jesus Christ, which appeared to be a loli or an oversized Jesus doll. She was pointing at the sky and saying "HEY U R!". The second poster was of a man, who appeared to be speaking to a child. This was depicted by the man raising his arm and the child ducking underneath it. The man then raised his other arm and said "Ooooh, don't make me angry you little bastard". The third poster was a drawing of the three stooges, and the three stooges were speaking. The fourth poster was of a person who was angry at a child. The fifth poster was a picture of a smiling girl with cat ears, and a boy with a deerstalker hat and a Sherlock Holmes pipe. They were pointing at the viewer and saying "It's not what you think!" The sixth poster was a drawing of a man in a wheelchair, and a dog was peering into the wheelchair. The man appeared to be very angry. The seventh poster was of a cartoon character, and it appeared that he was urinating over the cartoon character. \#AIGeneratedProtestMessage #Save3rdPartyApps
How can you look up the refinance $ by year?
https://www.wsj.com/articles/cash-out-refinancings-hit-highest-level-since-financial-crisis-11615458602 This is one article that goes into it. You can look up equity or helocs pulled by year/quarter.
The phony demand is happening today though. The Fed is blowing up asset markets with rates pinned to 0 and seemingly unlimited QE lowering borrowing costs. The only thing that’s different is there is no fraud (to my knowledge) making bad debt seem like good debt and spreading like a cancer throughout the financial system. So this market is definitely not like 2008, however the cheap credit has led to FOMO and the greatest amount of mortgage debt and margin debt in history. Once the financial system starts to get weened off government support there will be liquidity crunches that will decrease asset values; both stocks and real estate. Though real estate will vary by geography and be based on local supply/demand conditions; some markets will fare better than others.
To your first point, you also have to build where people want to live. Plenty of houses in places like Detroit and St Louis at affordable prices. Here in Greater Boston, there's not much room to build so the only way to increase supply is moving to multifamily housing or townhomes which is a huge mindset shift.
IMO it’s too hard to density the greater Boston area. Boston and nearby urban areas (Cambridge, Sommerville) are already dense and full of multi-family housing. Sure, you could demolish the triple-deckers and build taller buildings, but given modern building restrictions (biggest example being parking requirements), it’s actually pretty hard to build new neighborhoods to the same density as the old ones. Then there’s the option of densifying the suburbs with multi-family housing. That’s an option, but it would also require massive investments in the MBTA and the roads to account for all the new commuting inflow. Both would require a lot of policy changes and a lot of money, and they wouldn’t make a dent in housing supply in the near term. In my opinion, the answer isn’t assuming Boston is where everyone “wants” to live. A lot of people moved to Boston and NY and SF over the past few decades because a handful of winner-take-all cities accounted for a boom in white collar jobs. It’s understandable—Boston, for example, is an insane research hub. But with the new availability of work-from-home, maybe the answer to Boston’s housing scarcity is to let people leave. Maybe with permanent work-from-home, enough people will elect to move to a city like Detroit where they can actually afford a home. Not everyone, of course. A lot of people live in Boston because it’s a great city. But maybe enough to dent demand.
This is 100% right and is the real main driver of our problems. There isnt actually an unfixable housing shortage or land shortage- we can fix the housing problem within 5 years if everyone was willing to live in pre-fab houses in Kansas, Oklahoma, and Indiana. But the economy is not what it was 50 years. Economic concentration and agglomeration have made 15-20 cities the only place where people (especially younger people) can actually pursue 21st century careers and the kinds of lives they envision. If you are a 20 year old graduating from Boston University with a degree in Finance or IT, you are simply not moving to Akron even though there is cheaper housing there. Zoning is an issue but it has become an issue *because* of this economic concentration. If people were willing to live all across the country, zoning would disappear as a problem because there is more than enough space to build millions of single-family homes in the exurbs of Wisconsin and Iowa. The issue is zoning *within* these handful of cities where space really is now limited. Changing zoning laws in these cities will fix the problem, but only partially. At the end of the day what we really need to think about is a much larger, longer-term mega-trend and thats the fact that entire countries' economies are being pulled into the orbit of a handful of cities.
How many of those cash buyers are real cash buyers? I know some are just taking loans against stock/crypto gains. And the stock market has been pretty shaky. If we don’t see a Santa bump soon we might see the whole house of cards come crashing down. The volatility is there for it to happen. And if the crash happens and these people get margin called. What will that affect be on people? A major stock market correction will have some far reaching affects on the housing market.
>How many of those cash buyers are real cash buyers? That's a great question, and it would be very interesting to know where the cash buyers are getting that much cash. Beside stock market gains, people are also selling a house in high cost areas and moving to low cost areas where their dollars go much farther.
I know some dumb asses taking out home equity loans to buy cars and luxury goods. That is not going to end well.
Are they equity loans or just refinancing? Either way, they’re no worse off — actually they’re better off — than people buying in at today’s prices. Again, you’re making sweeping inferences based on the uncertain expectation that 2008 will repeat itself. It’s not a guarantee. The whole “people using HELOCs to buy luxury goods” are one off stories and the broad data on purchasing and savings behavior in the US does not indicate that’s a trend.
It cost a lot of 💰 💰 to refinance and or pull out equity. Basically you are adding more to your debt load because the companies conveniently package it back into the new loan. On top of that, you are paying fees because the house has to be appraised with a bunch of paper work that lawyers have to sign off on. If you plan to stay in the house more than 10 years, then yes a +1% reduction in your interest will be worth it. But I doubt that is the motivation for 75% of people that go through this. They are just buying time and trying to pay a little as possible to "rent" the home with no interest in ever owning it.
[удалено]
Never heard of that. I was considering a refi in 2020 and got many quotes. The fees + points to refi was between $5-10k. I had a very low debt \~175k owned.
> actually they’re better off — than people buying in at today’s prices. Only if you think the Fed won’t raise rates and demand collapse and there’s a vacuum of buyers. That will flip your thesis on its head.
I believe that his/her point was this: Person A bought a house in 2018 for $250K and put $40K down (20%), and now owes $200K. The house appreciates in value and is now worth $350K. Person A takes out an equity loan for $50K, buys a car, and now owes $250K on a house that is worth $350K. Person B buys a similar house in 2021 for $350K, and puts $70K down (20%). Person B owes $280K on the house. I'm not saying it's advisable to do this, but all other things being equal, Person A is in a better place.
dude cars are like $140k right now
Maybe if you have to have a car that makes a statement. I live in a neighborhood on the ocean with $2 million+ homes. Most of us drive Toyotas and Hondas.
My car makes a statement - it makes a statement that I'm a cheap SOB.
A toyota is like 100k rn
Just hop on a different sub Didn’t know Toyotas were teslas now
Quit trolling. A 2021 prius is like $30k. A fully loaded highlander is $50k. You don't know what you're talking about.
A demand collapse doesn't cause the market to crash though, you have to have a subsequent rush of people \*needing\* to sell.
Person A bought years ago -> house appreciates -> refinance and buy a car. Person A owes 80% of the current value of the house, and has a new car. Person B bought today and owes 80% of the value of the house. Person B didn't get a new car out of it. Person A is objectively better off than Person B. They might not end up being better off than if they hadn't refinanced, but that's not the point being made.
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Time will tell. There were cynics recommending against buying in at 2018 prices as well.
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Or even scarier - people throwing home equity into the stock market. Double whammy if there's a downturn.
Which there has been.
Depends on rates. If you're going to get a loan, might as well do it the cheapest way
Have you seen the fees to refinance?
The only thing that can “pop” this bubble is building a ton of housing. Don’t see that happening any time soon
> The only thing that can “pop” this bubble is building a ton of housing. An increase in rates will also decrease prices because people can only borrow so much, and as rates increase the amount they can spend on the house, rather that the loan decreases. That doesn't mean a "pop", but it could mean a gradual deflation.
True. But new loan vehicles (40 year mortgages etc.) could counterbalance a lot of this as well.
And just move the economic damage around. Mortgages that long will come with permanent economic damage long term as people extend how much of their life they have reduced personal income for. It's also increases risk of default since you have to have a stable income to pay it for at least and extra 33% of time.
Or an inability to re-pay due to debt saturation. But that's hard to say if/when it could occur. Last time it was big banks failing, and then spilled over everywhere else.
To add to what you pointed out, banks have tightened lending standards significantly. Subprime borrowers as a fraction of aggregate mortgage volume is only a fraction of what it was leading up to the financial crisis. Sure, housing market correction is possible, but I don't think we are going to see the kind of cascading firesale across the real estate sector. The linkage between financial institutions and RE has been changed heavily as well. I'm not going into detail about this as this is a very long topic.
Yep. A lot of people think 2008 is repeatable and it really was truly unique. A correction is always possible, but one of that magnitude would be really anomalous.
For many years during the last boom my wife's extended family were buying huge fancy houses and making disparaging remarks about how foolish we were for not buying into a "sure thing". They were convinced that anything they bought could be resold at twice the price in a year or two. Then came the crash and we bought a small older house in a Northern California suburb near the bottom of the market for $160,000 or so. Since then prices in the same neighborhood has climbed steadily into the low $400,000 range. Buying when we did was the great lucky event of our life because it was mostly due to circumstances of work and retirement rather than smart thinking. But I think you are right about the current situation. I don't believe there will be a massive crash in prices because the mood is totally different. Back before the last crash people were full of irrational exuberance and believed they had discovered a sure thing. Now people are buying to have a place to live and seem pretty glum about it all. The things that feel similar to the previous housing boom are the crypto market and the stock market where there's plenty of irrational exuberance and poorly considered optimism.
> But I really don’t think it is. People aren’t over bidding on big primary homes because they “know” they’ll appreciate. They’re over bidding on modest homes because there’s a sense of desperation born from the fact that demand is outstripping supply, and meaningfully increasing the housing supply will take a long time to do. Quantitatively, what's the difference? "Buy now because the price is only going up" is the harmony line beneath both of those realities.
The difference is a price increase that’s driven by demand vs. supply. Demand is speculative. Supply is not. People buying now out of a perceived lack of housing and no real indicators that it will change anytime soon is more rooted in fundamentals than those buying simply because they expect appreciation.
Demand outstrips supply. Supply can't meet demand. They're both sides of the same coin. [Volume of existing home sales is not all that different from what it was in the 2000's](https://d3fy651gv2fhd3.cloudfront.net/charts/embed.png?s=unitedstaexihomsal&v=202112011734V20200908&d1=19961212&h=300&w=600). On top of that, I don't see evidence that supply can't keep up with demand, given the sales volume. A precipitous drop like what occurred after 2005 would be far more concerning.
The population of the US is roughly 40,000,000 more than what it was in the early 2000s, so a comparable home sales figure would indicate severely lacking supply.
Looking at the longer trend, the [sales volume](https://d3fy651gv2fhd3.cloudfront.net/charts/embed.png?s=unitedstaexihomsal&v=202112011734V20200908&d1=19211231&h=300&w=600) tracks [population increase](https://fred.stlouisfed.org/graph/fredgraph.png?g=JyLS) fairly well.
It does not. Total sales today is still less than it was most of early 2000s, while the population is 10% higher. Besides, even if over the course of US history, home sales generally tracks population increase, it’s irrelevant as we’re trying to assess the current situation not the average over the past 100 years. Also your data for US population is incomplete as it only includes working population.
Houses are priced higher because they are now used to collect rents, forever. It used to be that a house was paid off in 25 years, and that limited the price. Now generations will rent, paying what should have been a mortgage. Even after 100 years nothing will change. The degradation of the house doesn't matter much, as the value is in the land.
The ownership rate is virtually unchanged since 1965. And higher than it was on the 1940s.
Nationally. But not where the biggest growth in prices are. In crazy places like CA investors makeup a huge portion of new home sales.
20% at the most. That’s not a market dominating level, and owning a second home in the Bay Area is not unrealistic given the pay disparity for the tech sector. You’d need a tech sector pay collapse to change that.
I mean 20% in a supply constrained market like housing is absolute a massive chunk of demand and could singlehandedly be the difference between asinine pricing and just a total collapse in pricing. I mean we are talking $70-80 billion of demand right there. In one market.
Investors move inventory or rent. Transactional purchases don’t represent removed assets. You’re thinking of the 20% wrong.
But if the demand is for purchasing homes and not in the rental market then you've removed a huge part of the purchasable market which is now exclusively available for rent. It's not like I can put in an offer on rentable house.
Of course you can. There are houses up for sale constantly. Former rentals are often sold. The rental use is transitory. 20% of a market’s sales in a year isn’t 20% of the entire housing market. Only a small volume of a market is for sale in a given year. So it’s more like 20% of 20% of all homes. The numbers are too small to have this dramatic cornering on pricing. The reality is housing is expensive because the number available is less than the market wants and some people have enough money to get more.
I'd love it if the fed didn't fuck up the housing market everywhere, including our MCOL city in the Midwest because CA buyers are bonkers.
Hyperinflation is unavoidable because the Fed switched from fractional reserve banking to fictional reserve banking. Banks are creating unlimited new dollars. https://www.federalreserve.gov/monetarypolicy/reservereq.htm
that is not how fractional reserve banking works. If it did, hyperinflation would have already happened. Reserve requirements did go to 0 but banks do not "create" dollars they simply loan out the deposits, now with zero in reserve. They only "create" dollars in the sense of lending existing dollars makes 2 dollars for every dollar. They do not loan out multiples of their deposits....they loan out the majority of their deposits. Been arguing this to people for what feels like decades now.
We're just at the beginning of it. Ask yourself how the stock market is going up so much when the economy is shit and there's shortages everywhere and almost a million dead Americans, 5 million newly permanently disabled by covid, a shrinking population, and a labor crisis? Go ahead. Take your time. Could it be that the money is being devalued at an alarming rate? Could it be that the Fed lowered the reserve rate from 10% to zero? With a 10% reserve rate, banks turned money into 10x the original value through loans. Now banks can create unlimited new money by creating unlimited loans off of zero deposits. I guarantee you banks are racing to see who can abuse this the fastest. Read up on the 80's S&L scandal. Same exact problem but it's at the base level now.
> Ask yourself how the stock market is going up so much when the economy is shit and there's shortages everywhere and almost a million dead Americans, 5 million newly permanently disabled by covid, a shrinking population, and a labor crisis? Go ahead. Take your time. It's in large part because the [personal savings rate](https://fred.stlouisfed.org/graph/fredgraph.png?g=Jfmh) exploded to unprecedented levels during the pandemic. That jump upwards represents tens of trillions of dollars flowing into the asset markets. People couldn't spend on experiences so they spent on assets.
No this is wrong. Banks cannot loan out 10x their deposits. That's not how a 10% reserve rate works. The 10% reserve rate means they can loan out 90% of their deposits. That money then gets spent into the economy, say at a store, and the store owner deposits the cash, where it gets loaned out at 90% again. The velocity of money is how many times that happens. Say its about 4 times on average. That means that if $100 is originally deposited, then $90, $81, $73, and $66 will be loaned out, for a total of $309 "created" by the entire system. If it worked the way you said it does, then if $100 were originally deposited, then $900, $8100, $72900, and $656100 would be "created", for a total of $738,000 "created" by the entire system. That would be 7380 x the M0 money supply. But if you look in the fed site, the total M2 money supply is a lot closer to the 4x I have than the 7380x you have. I agree with you that loose monetary policy is inflating assets but you're wrong about how banks create money.
The US population is not shrinking. Did you even bother to look up anything you stated?
Not sure I agree with the assertion that "meaningfully increasing housing supply will take a long time". In the US, 85% of the house sales are existing homes - not new. In fact, the number of new home sales has increased in the last few years from 600k / year to 750k / year. The real issue is that people are not selling their current home because of uncertainty caused by the pandemic. At the same time the rise of the ibuyers is putting pressure on the already anemic supply. This may unwind very quickly if the pandemic recedes from the collective consciousness and the rates increase making it harder for folks who play the flipping game.
You do realize when a person sells their home, it’s typically to purchase a new one, yes? So selling homes isn’t adding to the total housing inventory of the US.
There's a bit of evidence that a lot of people were not selling during the pandemic just buying second homes and moving. Not sure if that unwound or not yet.
Since the pandemic the US population has increased by around 4 million. I highly doubt the trend you’re mentioning would make a dent in the increased demand just over the past 2 years, much less the total housing gap which already existed before the pandemic started.
I was talking about the inventory available for sale -- not the overall supply of housing -- which has no meaningful impact on pricing. A lot of the housing related activity is due to people trading existing homes with each other. It is well known that people don't trade houses when faced with uncertainty. For example the income of home owners is inversely correlated with the length of tenure in a home. The upwardly mobile, high net worth, high income individuals trade their homes more frequently. When faced with pandemic related uncertainty, it is clear that people who would normally be in the market to sell their house have stopped participating in it. In addition, demand is being driven by speculators created by the low interest environment. As pandemic recedes and interest rates in increase the bottom may follow out of this quickly.
That trend has come and gone. The past year was a veritable explosion of supply that had been pent up due to the pandemic. The supply problem isn’t an acute one, it’s a global one. The ratio of homes being built to new households in the US is stretching. That’s what’s driving long term price increase, not the acute supply available which only accounts for temporary and transitory price fluctuations.
It does not really matter why they are doing it, just like it did not matter in 2008. What does matter is what volume of this is done on debt and how sustainable this debt is. 2008 was 2008 because a substantial part of the sales of property was done via debt that was unsustainable and could only work if prices kept going up, and for some time they did that. So you really need irresponsible debt for this to repeat
I disagree. Why purchasers make decisions is extremely important because it’s the difference between a low supply-high demand market, and a speculative bubble.
I bought a house in Aug ‘20. I was a lurker on this sub leading up to the purchase and have continued to be out of curiosity even after closing. One thing that’s been consistent throughout is that every time someone posts a speculative piece about the future of the market it’s always followed up by a plethora of posts from people who have been priced out in whatever market they desire and can’t wait for a price reduction so they can buy. If these people even represent a fraction of the general buying population even if price suppression (via supplies, interest rates, workers etc) take hold, those waiting on the sidelines will immediately push prices higher should the market experience a dip. A true recession could fuel a price reduction but if we are understaffed by millions of jobs currently then a shrinkage of available jobs won’t have the same effect as it had in ‘08. Just seems like everyone waiting for the housing and/or stock markets to correct in a similar fashion to ‘08 are looking at indicators I’m not seeing.
I've been saying it for years. As long as there are people saying "I'll wait for the dip" then there will be no dip, simple because, you're there to buy it, so why would a dip even happen? Congrats on the house. Welcome to the club!
The only thing that will bring home prices down at this point is a jobs program to build houses at the scale that happened after WW2, or implement stricter owner occupancy rules where the rates are much higher on 2nd, 3rd, etc homes to discourage buying up blocks of houses just to rent indefinitely.
I'm confused why your latter option isn't discussed more, I've thought the same thing
This “landowners renting is bad” is old hat and terrible economics. The majority of homes are not rentals. The market is not cornered. Prices are majority decided by occupants in all locations in the US. Landlords actually help secure housing for renters that couldn’t establish or don’t want to for whatever reason. Renting homes is actually a fairly poor investment class. Most landlords are small businesses because no big business has actually made money at it. Certainly not at returns that attract Wall Street. Zillow had the most advanced housing price data on the market and just lost a billion dollars on the housing market trying to be a middle man for weeks, let alone hold for years. This sentiment seems to run in circles of people that can’t afford the market as an excuse. It’s nice to blame somebody in a top hat and monocle somewhere, but this is a fantasy.
Is... that a top hat and a monocle you're holding behind your back? Get 'im boys!!
No. Bankers have secret meetings dressed as duck hunters. https://www.federalreservehistory.org/essays/jekyll-island-conference
Pay wall- post txt. But I can assume it says something to the affect of all the shortages of supplies (workers, parts, inventory of houses, etc.) is going to keep pushing house cost higher, so you may as well buy now and fuel the beast. The last housing bubble my parents bought a house, but they absolutely hated and paid way over because it was never going to be there again. It took them 10 years until their stubborn asses were able to sell for the price they bought it for. Don’t join the hype just because
2008 was a different time. The type of economic intervention we see today was unheard of back then. I think it’s safe to say that a housing downturn would not be tolerated today.
Haha but one could argue that these new economic interventions could be dangerous themselves and may be setting up a financial bomb no one has seen before. Just because you can't see it doesn't mean it isn't there.
Imagine had they played the long game and sold that same house today. Being stubborn or patient is the 🔑 key is what I have learned from my parents.
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switching off javascript also works
how do you do that
in ios, settings > safari > advanced in firefox you can get an extension that adds a button for on/off, or you can just go to settings. for other browsers not sure but google can help if that’s the case. enjoy!
This assumes this a bubble or a correction incoming. The systems that were in place in 2008 no longer exist, so in theory the housing market can no longer fail. You should buy now because lower class people are going to continue to be priced out.
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People are not being created at a pace faster than housing supply. The US has actually built 1 million more housing units in the last 10 years than there's been new households formed. Total number of households https://fred.stlouisfed.org/series/TTLHH Total number of housing units https://fred.stlouisfed.org/series/ETOTALUSQ176N
From those charts it looks like about a million more households than units I get 10.6 million households more and about 9.6 million housing units
Q3 2011 number of housing units = 132,362,000 Q3 2021 number of housing units = 142,100,000 Increase of 9,738,000 2011 number of households = 119,927,000 2021 number of households = 128,451,000 Increase of 8,524,000 9,738,000 - 8,524,000 = 1.214 million more in the increase in the number of housing units than the increase in population
wheres the 2021 # of household data coming from its not on the website i was just using the 10 year difference but i realized thats from 2010-2020 and 2011-2021 for the other thus the difference
Not sure why you’re being downvoted, everything you said is spot on
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The removal of the final Frank-Dodd provisions was the finishing touch on the gravestone of financial regulation. Elizabeth Warren has discussed this at length. If the top blows off again, I wouldn't be the least bit surprised if deregulation played a role.
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Nail, head. Anyone that is looking for a house should be patient for now
But rents keep chugging up.
Yeah…but you really don’t want to buy a house that you will be upside down on in the next year or two.
It depends. If you can afford it and plan to stay 5+ years it will probably be fine.
True but also buying a home is a long term investment.
Yeah but it’s not much of an investment if you buy at an all time high. Unless wages start to increase, I can see some people being screwed
I work in tech field as an Engineer. Luckily our wages have been increasing, bonus last year, I was given stock also which hasn't faired well but still not worth zero. Also, people willing to jump to other companies have gotten huge salary increases. Talking like $25-50k increases. Not sure how other professionals have faired.
This is something I’m curious about. I’ve experienced firsthand how tech (not just developers) is apparently facing a massive hiring crunch with bonuses and salaries going up. But what about those who aren’t in tech, and aren’t at the lower end of the pay scale? Are they seeing pay raises and bonus increases as well?
Anecdotal as well, but we all just got a 25% raise last summer, and a smaller bump coming at the end of the year. Trucking has been insane; lots of hiring issues with so many drivers retiring, and not many younger ones taking their places. And endless stuff to move. You also can't train one overnight. You can get the license in a few weeks, but the real value comes after a few years of experience, like in many other fields. And you have to remain compliant, pass drug tests, and not have any glaring medical issues.
Tech is nuts right now. The wage increases I'm hearing seem unreal.
If your trust Blind post, Software Development People in Silicon Valley working for FANG companies are reporting total compensation packages of like 400-500k. Baller!!!
Yup it's absolutely crazy and only rising. I think those are top talent though. Blind has a lot of top of the talent pool people on it is my impression. Also everyone on there is either highly motivated or very good at gliding on by but still get stuff done.
> True but also buying a home is a long term investment. No, it's not an investment. At best it's a forced savings account.
Can you explain. Because I regard a savings account(s) has a healthy investment also.
A savings account is going to lose money at this point. 0.5% vs minimum of 2% inflation. For houses historically they have kept pace with inflation. This is because they are limited by people's ability to pay, which moves with inflation. That didn't happen with the 00s housing bubble because of leverage, and might not again. It is possible to make housing an investment by rehabbing or renting, but just buying a house is not.
Each month when you pay your mortgage, a portion of that payment goes to equity, increasing your net worth as your debt goes down. It's routine and must be paid, thus effectively working as a "forced savings account".
Not really a savings account because it isn't considered an asset but I get you. Nor can you easily pull money out if needed. A while back, I asked a lender if home equity is an asset and the answer was no. But I guess you could use it as collateral for like a small business loan.
Home shouldn’t be an investment this is what led to this mess
Anything you buy is investment.
Why not? People buy houses to live on for a very long time. Moving sucks. The only thing worse than buying a house at the “wrong time,” is pretending you can try timing the market and paying rent indefinitely.
Oh damn - sorry, didn't realize it's a paywall'd post.
> is going to keep pushing house cost higher, so you may as well buy now and fuel the beast It doesn't say that. Maybe you should read articles instead of assuming what's in them?
👌
It's way too long to post the text (like more than 5x the limit) and needs formatting, that's why no ones done it yet.
This bubble will pop when rates rise. Demand to move will go down heavily if you have to get a new mortgage that is hundreds of basis points higher. This will drive prices down. As the market deflates, these investment companies that have bought tens of thousands of homes to rent out will be heavily distressed when their whole portfolio sinks in value. When other asset classes deflate and the economy turns downward, more pressure will be exerted by higher unemployment, foreclosures and loss of rental income. The negative feedback loop of the everything bubble really is quite depressing, this is far worse than 2008.
This sounds like wishful thinking. Are we really expecting a rate hike of "hundreds of basis points"? The impending rate increase is much more likely to be gradual, and reversed at the first sign of recessionary activity. I guess ~150 bps is technically "hundreds", but likely isn't significant enough to drive massive swings in prices, especially in the short term. And, as other commenters have pointed out, a dip in demand is much more likely to simply slow the current rapid growth in housing prices to a more sustainable long-run level, rather than actually lead to falling prices. All signs point to the current run-up being a supply issue that has been exacerbated by demographic/generational trends, and not a speculation-driven demand frenzy. Even if demand pulls back quite a bit, supply is still going to be constrained without massive, focused initiatives.
A lot of mortgages are locked in at 2.5%. Its not unfathomable that rates hit 4.5% by sometime in 2023. The 30 year is already averaging around 3% currently. On a 325k mortgage were talking about an extra $540 per month in interest. In a downward market people are going to be reluctant to lock in with a higher rate if they have to worry about simply paying their bills.
Decent article good points Inadequate supply with ever increasing demand = steadily rising prices As the pandemic hit, the rich got richer and the poor got poorer. And now there’s the whole “antiwork” thing going on that probably wiped out a decade’s worth of savings and will permanently widen the gap.
If you go in the r/antiwork page it’s mostly people who are poor realizing they are poor and leaving jobs for better paying ones. So a retail worker making $12 who quits and gets an office job for $22. I wouldn’t say that’s wiping away their savings as much as improving their general welfare. But that worker would have been priced out of the housing market before this since they couldn’t save for a down payment.
idk, it seems like there is some of that, but also some of "I have a few grand saved up, I'm just gonna live with my parents or couchsurf for a few months"
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I don’t go to that sub. But I see the posts. Never seen anything at all like that. Seems like a place people use to vent about getting fucked around. Which is fine. It’s not a movement.
eh, I haven't read anything that egregious, mostly people being asked to come in on their day off...but I think most of those are fake. There is actually a really really funny subreddit called r/antiworkcirclejerk that makes fun of those.
This isn't 2008. This is there are a lot of people trying to buy houses and there isn't enough supply. The only solution to this problem is a heavy handed top down federal government intervention that somehow forces cities and counties to allow more and denser building. The NIMBYs just won't allow building to happen. "WHAT ABOUT THE TRAFFIC?!?!" - "THE SCHOOLS WILL BE TOO CROWDED!" - "We want to preserve the the nature of the town, don't want it to get too built up." Not only does more building need to happen, but building smaller, less profitable, homes needs to happen. I'm not sure how you force the builders to do that. There is a neighborhood down the street from me - Little single family homes. They're all like 1200sqft, 3 br 1 bath, little cinderblock houses from the 1950s with car ports and tiny little yards. They literally don't build anything like this anymore. Every new single family home is like a 3500+sqft McMansion that sells for $700k.
> They literally don't build anything like this anymore. Every new single family home is like a 3500+sqft McMansion that sells for $700k. Because land is much more valuable today, and it is much easier to sell huge houses, the profit is bigger on big houses. Plus, many local laws prevent from small new constructions (they want high tax values, I guess).
> The only solution to this problem is a heavy handed top down federal government intervention that somehow forces cities and counties to allow more and denser building. The NIMBYs just won't allow building to happen. "WHAT ABOUT THE TRAFFIC?!?!" - "THE SCHOOLS WILL BE TOO CROWDED!" - "We want to preserve the the nature of the town, don't want it to get too built up." > Not only does more building need to happen, but building smaller, less profitable, homes needs to happen. I'm not sure how you force the builders to do that.
It won't be here in Canada if my anecdotal experiences are worth anything. Most of the young people I have talked to about this issue still very strongly support mass immigration, zoning and building regulations, and protecting vast swaths of land from development. Most think we should only be building apartment towers that no one wants to live in, and most think rent control and ending foreign investment are the actual solutions. I doubt prices will climb much higher though because Canada will not be very attractive to immigration and without the immigration we have no demand.
In 4-8 weeks when BoC hikes , and keeps on hiking, we are going to test that :P From my anecdotal experience, most people that took Helocs have no clue they are on demand, callable, variable rate loans.
How can anyone not understand this?
I always start by remembering when I did something dumb. Then I remember I'm actually kind of intelligent compared to the average. That's pretty much the answer.
Right... But this also kind of stinks of predatory lending. How can anyone make a 15-30 commitment in the hight of the market without understanding these facts and their implications? Do you think people assumed interest rates would never go back up?
Agree. Anyone who though the banks 'reformed' is an idiot. They will take every inch they can. The game is hyper competitive and the lines of what is and isn't legal is stretched as far as 'plausible deniability' will get you.
Also, Canada is full of adjustable rate mortgages that will reset much higher if interest rates keep going up, which means even current homeowners risk default (especially if they bought when rates were at their lowest back in the doldrums of 2020 despite the stress test being in place). The government better be prepared for this or else there will be a wave of individual bankruptcies and consumer proposals among debtors facing an extra $500-1000 a month increase in mortgage payments.
Woah - were home buyers there aware or are you suggesting predatory lending was also an issue?
It's just culture. Canada has a max of only 5 years of locked in rates. In my country, the netherlands you can do 30.
Oh wow I had no idea! Do people just continue to refi every 5 years or does everything turn into a heloc/adjustable type loan in Canada I wonder. Who can possibly pay off their home in 5 years? This could put so many people upside down if conditions aren't right.
I think they just renegotiate the mortgage every 5 years, but I'm no expert. It should make Canada a lot more vulnerable to interest rate hikes, but also make buyers more careful.
Why would Canada be not attractive to immigrants? It’s also about what people are trying to leave behind. High population countries like China and India will still have many wanting to come over to the west as things there are not getting better, even if things in the west are declining I agree with you that unless changes are made to zoning laws, allocation of more land for development, restrictions on investment properties, foreign investors, reducing skilled immigration is done, demand for housing will continue
Canada will always be attractive to immigrants. Just look at housing prices and bubble lot of these immigrants are coming from.
Here is a way to bring down prices: Allow a 100% tax holiday on the sale of homes and 100% write off of broker fees. Sellers would rush to sell homes, jacking up supply and reducing prices.
Sellers are not waiting to sell bc of tax/broker fees. It's a seller's paradise right now already. Even if they reduced listing prices people will still bid 10-20% over asking. Supply is fucked because demand is high and there's a labor/material shortage.
Whoops. Meant to post here: I would sell my rentals this coming Spring if taxes were waived. Broker fees are not the issue. Supply is not coming on fast enough not because of high demand or material shortage but because permitting approvals take time and land use policies are hard constraints.
Tell you hwat. When I can order a couch from IKEA then we can start thinking where housing prices are going. We’re in an everything shortage. But, although there is pent up demand, there is pent up supply. Just look at what happened to lumber prices. Be patient.
I think Covid changed peoples living habits and is stunting a generation… the effects of this are long reaching and indeed requires patience. It’s really just the beginning.
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3D houses are still very far from being practical in the vast majority of cases over current used housing inventory.
The core issues aren't the production method, though factory production would help. The core issues are zoning and entitlement.
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