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I'm curious to who is driving up the price of housing these days? I'm an Xer who has a lot of Millennial friends, early to mid 30s, and none of them has, or can afford a house? Whose driving up the prices if not Millennials? I see quite a few Foreigners at open houses. Are they buying so many houses that it's driving the prices up?
There are more buyers than sellers in much of the country.
Supply vs. Demand.
Foreign money is at play, yes.
And, Millennials ARE certainly buying houses, but just a bit later and in a bit lower numbers than previous generations.
The whole "Millennial" thingie is overblown.
I could not afford to buy a house until I was 36. This is not a tragedy. Millennials will be able to also.. ...eventually and when ready. Why is this a surprise?
I could not afford to buy a house until I was 36. This is not a tragedy. Millennials will be able to also.. ...eventually and when ready. Why is this a surprise?
Mae
And, in the current cultural stereotype, you would be considered a "Millennial" at 36.
"The more things change, the more they stay the same."
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by MikeJaquish
There are more buyers than sellers in much of the country.
Supply vs. Demand.
Foreign money is at play, yes.
And, Millennials ARE certainly buying houses, but just a bit later and in a bit lower numbers than previous generations.
The whole "Millennial" thingie is overblown.
I agree, while many of the new buyers here are immigrants working in tech, there are also many millennials who can afford the older homes at $500-600k and condos, many with young kids.
Some of the millennials come from much smaller families (one or two kids) than the boomers did and therefore often get large down payments from their parents. They can get into single family homes if they have good salaries.
Of course many more millennials, those who do not come from any affluence, need to have more realistic expectations in terms of what kind of house can they afford- think small fixer upper or duplex in "up and coming" neighborhoods- not HGTV propaganda. That has always been true.
Other people buying now are previous home owners simply parlaying equity in one house into another.
You can thank the Fed for this current market distortion due to keeping interest too low for too long. Not just millennnials having issues buying homes- supply tight as investors purchased properties with low interest rates and homeowners refinanced- so unless there is circumstance such as job relocation etc. than no one is moving. I realize no one wants to experience any discomfort including the US economy as a whole but sometimes cycles need to naturally work their way out as opposed to creating demand. I'm not sure what will happen from here but as interest rates rise- either prices will have to lower or their will be significant less demand as many will be priced out of ownership. Here in my area I am seeing houses DOM longer than last year so some of the frenzy is wearing off, hopefully.
You can thank the Fed for this current market distortion due to keeping interest too low for too long. Not just millennnials having issues buying homes- supply tight as investors purchased properties with low interest rates and homeowners refinanced- so unless there is circumstance such as job relocation etc. than no one is moving. I realize no one wants to experience any discomfort including the US economy as a whole but sometimes cycles need to naturally work their way out as opposed to creating demand. I'm not sure what will happen from here but as interest rates rise- either prices will have to lower or their will be significant less demand as many will be priced out of ownership. Here in my area I am seeing houses DOM longer than last year so some of the frenzy is wearing off, hopefully.
So, if interest rates climb to a point that foreigners are dissuaded, housing will become more affordable?
I hate this local market. A market out of balance is not good for anyone, and this market with low and declining inventory with strong population growth is way out of balance.
DOM may well reflect buyer burnout, and I am seeing well-qualified buyers pausing or gravitating toward the sidelines, in the hopes that some semblance of sense is restored.
I am not sure what will precipitate that restoration over the next year or so. I just hope it is gradual and not earth-shaking.
So, if interest rates climb to a point that foreigners are dissuaded, housing will become more affordable?
I hate this local market. A market out of balance is not good for anyone, and this market with low and declining inventory with strong population growth is way out of balance.
DOM may well reflect buyer burnout, and I am seeing well-qualified buyers pausing or gravitating toward the sidelines, in the hopes that some semblance of sense is restored.
I am not sure what will precipitate that restoration over the next year or so. I just hope it is gradual and not earth-shaking.
That is what the Fed is hoping by gradually raising interest rates but when rates rise the payments increase so the price of the home may need to decline to make available buyers. This should have started a few years ago to prevent the current distortion. Another part to this is the Fed has been watching unemployment numbers to justify increases the unfortunate thing is I believe many have been & will be out of the workforce permantly due to automation, job offshoring and increasing executive payouts. This will have an effect potentially on the housing market as well.
I think many are sidelined currently because the increase in house prices has not been normal- historically homes appreciate 1-2% per year but in the past 2 years your looking at 20 -30%, so many are concerned they are overpaying for an asset. I think the same is true with the equity markets- valuations are higher than historically maybe not 1999 levels or for housing 2007 levels but certainly in overvalued territory.
When you look at houses & follow the sales history it is amazing to see the different amount buyers paid- no one wants to be the sucker that pays over $500K for house that in normal circumstances is a $400K home.
That is what the Fed is hoping by gradually raising interest rates but when rates rise the payments increase so the price of the home may need to decline to make available buyers. This should have started a few years ago to prevent the current distortion. Another part to this is the Fed has been watching unemployment numbers to justify increases the unfortunate thing is I believe many have been & will be out of the workforce permantly due to automation, job offshoring and increasing executive payouts. This will have an effect potentially on the housing market as well.
I think many are sidelined currently because the increase in house prices has not been normal- historically homes appreciate 1-2% per year but in the past 2 years your looking at 20 -30%, so many are concerned they are overpaying for an asset. I think the same is true with the equity markets- valuations are higher than historically maybe not 1999 levels or for housing 2007 levels but certainly in overvalued territory.
When you look at houses & follow the sales history it is amazing to see the different amount buyers paid- no one wants to be the sucker that pays over $500K for house that in normal circumstances is a $400K home.
The other dynamic that cannot be denied, but of course cannot be emotionally considered:
In 10-15 years, will a Millennial majority, not one anecdotal Millennial, look back and say, "Wow, but we were farther ahead not to have bought?"
Market timing sucks, for sure.
Are you farther ahead to feel you overpay today (by a much smaller than $100,000 margin) under the assumption that the market will absorb that as an anomaly?
I do predict that population will continue to increase at some rate, and that occupied and new housing inventory over time will need to expand.
Of course, I am speaking broadly. I am uncomfortable in our current sellers' market locally, but I know it is really not as insane as some others.
15 years ago, we passed on houses that we felt were overpriced. Even with the 2008-2010 debacle, that overpricing would have been well-absorbed in the current market.
Should we have bought one of them?
Dunno. "Objects in the mirror are closer than they appear."
I don't second-guess my actions, and the house we are in has survived market volatility well.
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