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I have seen this movie before,people think if they dont buy now,they can never afford to buy.
the lower the interest rate,the higher the house price,no bargain there.
who makes money?the real estate broker.
I have seen this movie before,people think if they dont buy now,they can never afford to buy.
the lower the interest rate,the higher the house price,no bargain there.
who makes money?the real estate broker.
What movie might that be?
The steep home price decline during the Great Recession was an outlier.
As the saying goes, "The generals are always fighting the last war."
Seems to be lots commenters in this thread committing the same error.
“House prices clearly declined significantly during the Great Recession, but in other modern recessions, house price appreciation hardly skipped a beat, and year-over-year existing-home sales growth barely declined,” Kushi said. “The reality is home prices and existing home sales don’t necessarily decline just because of a recession."
In these pandemic times, I would say many saving accounts diminished. But they very well could be using every source they have to buy one. Which goes into my thoughts on panic buying.
Now here's another. What if it crashes, like it very well could. Are we going to see 2008 all over again?
As some have probably already figured, I'm waiting it out.
Didn’t most houses crash close to 50% or even more in 2008? Today’s homes do not seem THAT overpriced to justify a 40-50% decline. I feel like a 20% pull back is about all we would see. If that is the case just buy now, within your affordability as a home is supposed to be a long term 5+ year purchase anyway.
No one should be punished by seeing their savings erode who wants to save for a good down payment or full cash purchase on a home by home prices going up so fast from 2010-2013 levels because of stupid low interest rates, HELOCs, and less than 15-20% down
You bring up a good point about savings maybe not keeping up with appreciation of homes right now. Maybe the old rule of thumb needs to change? That being never invest money in the market if you plan to use it within 5 years. The 2008 crash saw both the stock market and housing industry crash. While it would suck to lose 50% of your invested income at least the price of homes crashed by a nearly equal amount. So in a way a wash.
Edit: Now sure we loss 30% a year ago from a crash but we also saw the quickest 30% gain in history after that crash I believe. So essentially my theory is that any long term recession with a significant 30+ percent decline in the market will also be followed by a housing crash. All other 20-50% declines will be short, less than 12 months and one could wait it out.
Of course we currently own our home so I guess that is easy for me to say “just wait it out”.
Well now that I read Astral_Weeks link I see a giant hole in my theory from about August 2000 to 2006-2007
Last edited by Bill the Butcher; 04-30-2021 at 12:59 AM..
I live in a town with a per capita of about 100k. Around this time last year, a local Ace hardware store had a full parking lot at 8AM. This particular location would always be busy with a steady flow of traffic, but not a full parking lot at 8AM. Stay at home orders were in place in my area, so many people were working from home or strictly driving to and from work. Inventory is thin in my locale as well, since many people who would have look to upgrade, opted to do improvements on their current residence. After adding paint, remodeling the bathroom and kitchen, and adding a deck, all of a sudden they no longer need more space.
Many people just decided to stay put and enjoy the home that they are in. With all the stimulus money, lack of travel, lack of entertainment, and lack of eating out, existing home owners were not only flush with cash, but flush with time. All those home improvement projects that were put off, because of excuses for a bigger house or nicer neighborhood, have been put on hold. Housing demand now is mostly from individuals relocating from densely populated areas and higher COL, to lower COL and less densely populated areas.
What do you mean 'what it's actually worth'? A property is 'worth' whatever someone is willing to pay for it, otherwise houses prices would just be the construction costs and would just track inflation. A 600 sq ft studio in Manhattan will set you back at least $1m. In other areas, $1m will get you a mansion. That's what it's worth 'in reality'. Mortgage appraisals use market conditions and comparable to arrive at a fair market value. Do you think mortgage appraisers arrive at a fair value and then apply some kind of 'common sense' adjustment?
I lived in Denver for 5 years, which had seen housing costs exploding over the last decade, and I'd often hear Denver natives saying 'it's crazy, that house is only worth $300k, but it just sold for $500k!'. No, it's worth $500k now. That's what a market is.
Where is this alternate reality where the price of a house isn't what people are willing to pay for it? No offense, but very little of what you've said in this thread makes any kind of sense.
Yeah true something is worth what someone is willing to pay for it. Why then though do mortgage companies want an appraisal and often it falls less than what the offer is on the home. Why does it not just appraise out to whatever someone is willing ti pay for it. That is its worth afterall right?
Why the need for appraisals even? A home is worth what someone is wiling to pay for it?
You bring up a good point about savings maybe not keeping up with appreciation of homes right now. Maybe the old rule of thumb needs to change? That being never invest money in the market if you plan to use it within 5 years. The 2008 crash saw both the stock market and housing industry crash. While it would suck to lose 50% of your invested income at least the price of homes crashed by a nearly equal amount. So in a way a wash.
Edit: Now sure we loss 30% a year ago from a crash but we also saw the quickest 30% gain in history after that crash I believe. So essentially my theory is that any long term recession with a significant 30+ percent decline in the market will also be followed by a housing crash. All other 20-50% declines will be short, less than 12 months and one could wait it out.
Of course we currently own our home so I guess that is easy for me to say “just wait it out”.
Well now that I read Astral_Weeks link I see a giant hole in my theory from about August 2000 to 2006-2007
Of course do not invest money in market if you lan to use it in 5 years. However, you may not have a choice. If home prices go up too fast, that money losses purchasing power to when you want to buy a house in as little as 1 years time.
And if a home costs $200K and someone wants to save for at least 20% down payment, that down payment will not be 20% down by the time they hit $40K because of fast rising home prices as that $200K home will costs $240K or more in just 3 short years or sooner. That's just not right. They need to get rid of HELOCs, low mortgage rates and less than 15-20% down mortgages.Now if they do the 3 I just listed and home prices rise fast anyway once again just unfortunate good old fair supply and demand.
No one deserves the right to own a home with less than 15-20% down/equity right off the bat. And no one should be using HELOCs.
And if someone wants to save to pay cash, even investing money in the market assuming it is a bull stock market will not keep up with home prices unless you have enough to pay cash for the home at the moment, but are not ready yet but will be in a few years. Then it can keep up assuming stocks go up same or more than homes.
But if you start out with little savings and want to save to pay cash, even investing in market will not be enough. Because if you say can save $30K per year and homes on average go up 10% per year and stock market goes up 10% per year. The average home costs $250K. Obviously a 10% increase in $250K is more than a 10% increase in $30K. But if you already have $250K it is the same either way.
That is why it is unfair to savers who want to save to pay full cash for a house even if they invest their savings all the time. Now maybe if they can invest in some super aggressive fund that goes up way more than 10% per year to make up the difference starting out small assuming the aggressive investment pays off big time.
But really get rid of little to nothing down, HELOCs and stupid low mortgage rates. Start building lots of homes and homes nationally on average will not go up more than inflation rates per year as was case before 2000.
Last edited by Wolverine607; 04-30-2021 at 09:18 AM..
Low mortgage interest rates are a big part of this price increase too by making a more expensive priced home more doable for many. The cities are getting a windfall in higher tax rates as property assessments rise too
I think wanting more space to live and space away from neighbors is a factor in this Covid world we are in now at least on the suburban or less density side of things. That is how I see my DFW city 18 miles from DT Dallas
Price of commodity, interest rates, and confidence in the economy is gonna keep driving prices higher. As long as there are these factors continuing there won't be a drop in prices.
Why don't people just rent and be content. There is nothing wrong with renting when the price of housing is so high.
I agree people have saved a lot, but enough to Over Pay $100,000 to $200,000 more for a house than it's actually worth? Basically speaking.
Another important factor that we need not forget. Real Estate Taxes.
The more a house is worth, the more they are going to Tax people on it. Another thing wrong with this inflated market. Maybe this is part of their devious plan?
Some of the RE Taxes out there even recently were almost a Mortgage payment.
It's worth what someone will pay you for it, just like any real estate.
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