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I own two homes currently valued prob somewhere between $800k-$900k so I'm not looking for a housing bubble burst no.
Everything is going up, our cable bill is astronomical this month. A home that was affordable in 2020 might suddenly feel unaffordable for that same family because of all their non-housing costs rising so quickly.
The person who said people with student loans aren't home buyers is also wrong, again over 40 million americans have student loans. Every home owner I know in my age group at least 1 of the adults has student loans unless they have wealthy parents who paid for the their education.
I guess I'm the guy that's going to just disagree with the herd on this one.
Location: IN>Germany>ND>OH>TX>CA>Currently NoVa and a Vacation Lake House in PA
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Quote:
Originally Posted by scorpio516
Pretty similar to 08 really. Between 05 and 08, construction costs doubled. Hospitals were costing $600/sf to build, up from 300-400 in 05!
Not really similar at all. A comparatively small rise from '05 to the disaster that was 2008+. This chart looks like a roller coaster at this point. Prices will continue to rise due to the current climate. As long as the US Government keeps printing money like it's for Monopoly, there's not going to be let down in price pressures. Also, the OP was not about hospitals but rather residential housing.
I own two homes currently valued prob somewhere between $800k-$900k so I'm not looking for a housing bubble burst no.
Everything is going up, our cable bill is astronomical this month. A home that was affordable in 2020 might suddenly feel unaffordable for that same family because of all their non-housing costs rising so quickly.
But consider a few things.
They're a lot more likely to cut cable, or eating out, or travel...you name it...before they walk away from the home...In any case, they are unlikely to be underwater in the home, not like in 2008 anyway. And remember that they have to live somewhere...what does the monthly rent or mortgage payment look like wherever they go now?
Where I am the inventory has Never been tighter than it is right now. I would not sit around waiting for a bubble to pop in real estate unless you are in an area where there is a tremendous amount of building going on (I hear Phoenix, Houston, maybe other areas in Texas where there has been unbridled development (and not much in the way of land restrictions)).
Where I am the outlying areas rose much higher and faster than the close in areas. 50+75 miles out prices are up as much as 100% while where I am closer we are up 35% for instance. People can no longer look forward to cashing out and downsizing just outside of the metro area (as was the case up until around 2017ish)...
I would say things could soften and recalibrate as interest rates rise. But, part of what might recalibrate is people's expectations with home size, etc. I've lived in places where my modest home would be considered big. But, here it is much less than average. My $575k house is $1.5M.
Millennials who could not work in 2008-2012 got highly educated and make a ton of money (thus they can afford to buy). Two incomes in high tech (forget about it as people are making a ton of money)... Look at how many people keep buying cars. There's just strong demand based on demographics (biological imperative to do certain things at certain points in life).
I keep hearing people talk about the housing supply, well the other part of that is the demand. Inflation is about to hit 10%, the average American is forking over $276 more a month due to inflation compared to a year ago, that number is probably closer to $300 since everything with Russia started and oil spiked.
Student loans payments are restarting in May for over 40 million Americans and the fed is still planning on raising rates.
Just because it's not the same as 2008 doesn't mean we couldn't see a bubble pop for other reasons. The second the demand dries up because nobody can afford these prices you'll see the bubble pop. Then people will sit on the sidelines waiting to see how low prices will go which will only drive prices down further. In 2008 people got into mortgages they really couldn't afford. Now people got mortgages they could afford but now the world around them is making everything unaffordable.
They aren't giving out mortgages to part time McDonald's workers or the family pets like they were in 2006-2008. That is one difference. Today's homebuyer is fully qualified for the loans they are giving out.
Also, builders would have to build a steady 2 million homes per year for 10 years straight to meet the current demand. Due to the extreme labor shortage (and the current material shortage), there is no way they will meet this demand for years to come. Too many skilled workers are retiring and their is simply not enough younger workers to take their place. Add to that, there is not enough young workers willing to get their hands dirty in the skilled trades as it is, so you've got a double whammy there.
You may see a tapering of the market and gentle up and down cycles, but it's not going to crash like back in 2008. The inability of builders, while a nuisance for them and their balance sheets, is actually a good thing because it's keeping the brakes on overbuilding such as what occurred back then.
Now the Fed just announced that the interest rate hike in March is only going to be 0.25%, so they are turning more dovish already. They don't want to crash the economy.
The bubble wont deflate but the rate of growth will taper at some point, hopefully soon for first time homebuyers but I doubt it. With rapid inflation and so many households locked into 2.x and 3.x mortgage rates. People aren’t going to sell, keeping supply low. We wont see a normal housing market until rates rise for a sustained period, likely years. When that time comes, houses bought recently at todays dollar value and rates wont be outrageous. These prices are the new normal.
Hard for me to see prices coming down in my market for any reason other than a macro event that affects everywhere. There are 57 residential properties for sale right now on the MLS. That is exactly the number of closed properties since Feb. 11. That's turning our total inventory over every three weeks. Not sure what would cause prices to retract other than recession or war escalations.
OP: gonna put your money where your mouth is? Or is this just cheerleading for your preferred disaster?
I honestly can't stand those types, not saying that's what OP is. I don't root for people to go broke just because I didn't buy early. Not hating on people that bought in the 80s. Good for them.
Quote:
Originally Posted by Mikala43
I saw some numbers a while ago on how many homes were being built in the 2000s and how are being built now, and it was a significant reduction.
I would love to see production of smaller, starter homes and such but I'm sure there are draw backs to building smaller for contractors.
I don't feel housing should be so out of reach for people.
In SoCal, there just isn't a lot of places to build. We've expanded east to Riverside/IE and even those are getting pricey.
I was looking when the pandemic started. I came to a dead screeching halt when it happened. Then, maybe three weeks in, I started asking for 20% off *snickers*. Got a few willing to dip 3%. Because of my pride, I passed. Waited two months and ended up paying full price in 2020. OF course, in the time span of 20 months, it's appreciated close to 40%
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