Why are housing prices so high? No one can afford them. (mortgage, sales)
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I know plenty. It's not like Portland, Oregon is the big city. I consider it backwater BFE compared to living in the Bay Area. But, it does sound like you are further out in BFE.
Portland is a major city. It may not be the Bay Area, but it certainly isn't nowhere.
I'm two hours from anywhere with a Costco/Whole Foods.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Originally Posted by Serious Conversation
Portland is a major city. It may not be the Bay Area, but it certainly isn't nowhere.
I'm two hours from anywhere with a Costco/Whole Foods.
Yes, in fact Portland is bigger than Oakland, double the area, 200k more population. You can't compare a city to an "area". The Bay Area includes 9 counties and 101 municipalities (cities/towns).
Inventory here is back to pre-lockdown levels, I don't get it. Rates are what, 3 times what they were at their lows? Prices have to return to reality.
Both the U.S. and Canada have seen record immigration rates in contrast with less housing starts than we had in the 70s. Its a classic "supply and demand" problem where demand for housing is outstripping the supply of housing at an ever increasing rate. Until this trend reverses to the point where supply begins to outstrip demand, prices will continue to increase.
Remember: The market doesn't care if YOU can afford a home, only that SOMEONE can afford a home.
As for the effect of interest rates on housing affordability, do you really think the average Joe who purchased a home for $1 million four years ago is going to take a loss of $400,000 and sell it for $600,000 just so housing becomes more affordable? When people have invested hundreds of thousands in their home they are not likely to sell at a loss unless it is the only economic option available, and even then will probably try to hold on until the mortgage holder forecloses on them.
The thing is, houses are still selling to someone, regardless of the prices and interest rates. Until buyers stop buying, the prices won’t stall or go down. We’ve suffered through that happening. In 2010, we had a hard time selling our house, and the one we bought took about 8 years more to begin to appreciate.
When the rate drops again in the near future, the home price will go EVEN HIGHER!
That isn't clear - there will be two factors:
1) demand will increase, as sidelined buyers will re-enter the market
2) supply will increase, as sellers will re-enter the market because of a reduced mortgage interest rate on a replacement home.
What happens to prices when both demand increases and supply increases?
It depends.
It depends on the slopes of the supply and demand curves, aka price elasticity of demand and price elasticity of supply.
Portland is a major city. It may not be the Bay Area, but it certainly isn't nowhere.
I'm two hours from anywhere with a Costco/Whole Foods.
It's a free country. I have lived all over the place in my 60 years and I grew up poor and without parents. I never spent time whining about it though. The way you talk you never had any choice over where to live.
I think I know what BFE is and this Is it. When I lived on Ft. Richardson in 1984 they were finally building a Costco when we left in 1987 (food bills were outrageous in Alaska back in the day). I lived in Northern Idaho at a time there was just about zero (back in the 70's). Portland is BFE compared to the Bay Area (it was a shocking adjustment).
People do all kinds of things to get ahead in life including, but, not limited to living overseas, relocating for work and now working from home for a company at a great distance. It's your mindset. Do not act like you are married when you are not.
COnsidering that my first Mortgage was at 16% (refinanced three years later at 12% VA) I don't have much sympathy when people complain that ' today's rates have gotten too high '.
It isn't the interest rate that is the problem. It is the ratio of the home price to income that is the problem. Interest rates were way higher back then, but in home price to income ratio was lower so it was more affordable despite the higher rates.
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