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I agree it's not yet quite as bad, but where do you get the idea that Millennials have so much money???
Millennials are already the most debt burdened generation in the history of this country. Good paying jobs are scarce, they have dim prospects for any future wage growth, they have an enormous amount of student loan debt. They arguably have the LOWEST amount of discretionary potential of any generation in history?
How again are they going to buy up all this real estate when they already graduate from college with a non-dischargeable mortgage (student loan)?
No, they are not paying less than they would in rent. You forgot to account for taxes, insurance, maintenance, cleaning, lawn care, repairs, opportunity cost of down payment, opportunity cost of closing costs, opportunity cost (and depreciation!) of appliances and furniture, opportunity cost of added emergency fund, added commute cost (gas, vehicle maintenance and repair, depreciation) due to inability to move closer to place of employment, opportunity cost of time spent on the house and aforementioned commute, etc.
In an efficient market, the beta-adjusted return on housing should be equal to that of equities, and right now, it is much, much lower.
No but they still are investing in what is real asset. Landlords do not rent at a loss or to break even. My home is worth minimum of 1500 per month in retirement even with insurance and expenses even if I could find a equal. Pay me now or pay me forever as saying goes.There is a reason that investors are 40% of buyers of existing homes now and its not to lose money even with tax differences of homeowners being better. Fixed asset investment have skyrocketed over average persons market recovery to 2008 levels even.
Rising house prices is not, in itself, a sign of a bubble. Bubbles occur when assets are bought with unrealistic expectations of future housing price rises. What are you seeing is a "correction".
Here in New England we are not seeing bubble prices. Very few markets are anywhere near their 2008 prices. The New England home price index is 15.1% below its Mar 2007 peak.
Second, the average new home sales price in the month of November...
....is a worthless statistic that is misleading.
Quote:
Originally Posted by Don Jenver
Be prepared.
For what?
Like I actually give a damn about housing or real estate.
It takes years to build a bubble. Earliest possible time-frame for potential problems is 2017.
Quote:
Originally Posted by Don Jenver
Hi OregonWoodSmoke.
This is US data compiled by the US Federal Reserve:
Yeah, so?
Quote:
Originally Posted by JasonF
Your teeny tiny set of observations does not invalidate an overall trend in prices.
Quote:
Originally Posted by Don Jenver
Average Sales Price....
...is totally meaningless.
What is the median price, adjusted for Purchasing Power Parity?
There are 1,539 separately functioning economies in the US.
Prices will vary, for many reasons, including the fact that the Cost-of-Living varies greatly throughout the US.
Your own government says that in some parts of the US, a single person with an annual income of $9,101 has too much money to have their housing subsidized by the taxpayers.
The very same government says that in other parts of the US, a single person with an annual income of $54,390 does not have enough money for housing and the taxpayers subsidize their housing.
Do you understand that in terms of wages, at 2,000 hours annually, $9,101 is $4.55/hour?
And that $53,900 is $26.75/hour?
It just astounds me that you people go through such acrobatic lengths to make Economics harder than it has to be.
Quote:
Originally Posted by james777
That is a good question. Another good question is why does the government have any role in the mortgage market at all? I think there are much better uses for our tax dollars than to run several government departments whose job is to help finance homes.
You, sir, get the prize for the Question of the Day.
The government should not have any role in mortgages.
The government, by artificially suppressing interest rates, plus flooding the Real Estate Market with cash and credit, creates Interest Inflation which artificially inflates the value of housing in all Markets.
If, as a matter of policy, the government intends to back mortgages, then such backing needs to be heavily restricted.
For example, if you have a government-backed mortgage, then you are barred from obtaining a 2nd or 3rd Mortgage, and barred from a HELOC.
People who want to use their homes as giant credit cards need to find a lender to back them, not the freaking tax-payers.
Quote:
Originally Posted by shamrock847
And interest rates are lower which makes spending $XXX,XXX on real estate more affordable now than a few years ago.
That's true if, and only if, the interest rates are not artificially suppressed, and the Market is not flooded with cash and credit.
Quote:
Originally Posted by GoldenZephyr
Millennials are already the most debt burdened generation in the history of this country.
Which proves how stupid they are.
I got two undergrad degrees and two graduate degrees without any student loans...I worked....and, why yes, that was this Century....and, why no, I don't wanna hear any sob stories.
Millennials still haven't figured out the difference between "needing" and "wanting"...you want student loans, but you don't actually need them.
Not bubbling...
That is not true. Homes are not selling for anywhere close to what people paid back in 2008. Many people are actually paying less than what they would pay in rent. In addition, there are a lot of cash buyers.
Real estate is local. I bought my house in 2008 and sold it in 2013 for $50k more (about 15% appreciation).
...uhh you realize this data is only for NEW HOMES (i.e. homes that were just built and are being sold for the first time), which make up a small portion of the housing market.
And interest rates are lower which makes spending $XXX,XXX on real estate more affordable now than a few years ago.
Yes, and also the OP is quoting "average" prices, not "median", which is a more realistic idea of where things stand. The median is still not back to what it was pre-crash on a national basis (or even in most local areas).
I agree it's not yet quite as bad, but where do you get the idea that Millennials have so much money???
Millennials are already the most debt burdened generation in the history of this country. Good paying jobs are scarce, they have dim prospects for any future wage growth, they have an enormous amount of student loan debt. They arguably have the LOWEST amount of discretionary potential of any generation in history?
How again are they going to buy up all this real estate when they already graduate from college with a non-dischargeable mortgage (student loan)?
I dunno where all the money comes from. Ask Millennials. It's obviously working for them. Remember they're buying their FIRST homes, NOT the McMansions the Boomers bought in the 80s/90s. So the cost will be lower. And remember that they're delaying childbirth, buying that first home, etc. for stability and ensuring they can have fun and enjoy their youth, and advance at work. Also remember many Millennials are staying at home after graduation and working, which means they can save bucu bucks.
I dunno where all the money comes from. Ask Millennials. It's obviously working for them. Remember they're buying their FIRST homes, NOT the McMansions the Boomers bought in the 80s/90s. So the cost will be lower. And remember that they're delaying childbirth, buying that first home, etc. for stability and ensuring they can have fun and enjoy their youth, and advance at work. Also remember many Millennials are staying at home after graduation and working, which means they can save bucu bucks.
When you factor in the commute, living at home may not be cheaper than living near work with roommates, because of all those pesky car expenses people tend to omit from their budgets...
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