9 ms·

FWIW, it seems similar in the Seattle area. Lots of people moving out of the big cities. I assume it's a combination of being able to work from home and people

FWIW, it seems similar in the Seattle area. Lots of people moving out of the big cities. I assume it's a combination of being able to work from home and people no longer being able to afford their incredibly expensive in-city homes due to furloughs and layoffs.

seanmcdirmid 6y ago
Except home prices are rocketing up rather than down ATM. If people are moving out, you’d think more of them would be selling their houses.
- jonahbenton 6y ago
  Mortgage interest rates at all-all-all time lows. It's a little ridiculous to say that given that mortgages are, say, a 50 year old product. All time not very long. But debt and interest have been with us for thousands of years and it is likely that there has never been such low cost liquidity for durable assets (houses) as there is now. When you think about why THAT is, it should make you worried to buy that house.
  - onlyrealcuzzo 6y ago
    Why is it?
    - jonahbenton 6y ago
      To be blunt- the other side of the deal is REALLY INTERESTED in having a party committed to 30 years of payments on a valuation that, they realize, almost certainly has to drop. Mortgage interest could be 0.5% and lenders would...probably still make the deal.
      - nemo44x 6y ago
        They’ve really been doing well selling refinancing for quite awhile now too. The interest rate is nearly immaterial to the closing costs, Selling points, PMI, etc.
      - petersellers 6y ago
        I don't buy this argument. The property itself is collateral for the loan. If the value of the property tanks, and then the owner is also unable to pay their mortgage due to not having a job, then in many cases the bank ends up holding the bag. This happened quite a bit during the Great Recession. Also, given the way that the Fed has been pushing interest rates to near zero, and with the chance that they could go negative (which I find pretty unlikely, but everything seems so wild right now so who knows) there is a chance that inflation could come into play and keep property values high.
        jonahbenton 6y ago
        Maybe. The dynamics are very (very) complicated. The mechanics you describe are not so much factors any more. Lenders don't keep properties on their books, too much risk and plenty of opportunity to sell and diversify. In that model, flows matter, not values. And inflation- in my read inflation is due to a scarcity of money- it is an output of money scarcity, not an input- and what we have now is an abundance. So it is exceptionally unlikely. But at a macro level, values are still extremely important. If there is perception of deflation, flow drops. And there are more govt structures set up to maintain values. I just have less confidence in their ultimate efficacy, and more confidence that politics will change and immigration policies will change and building policies will change. Cheers.
        petersellers 6y ago
        I'll admit I'm not an expert in this area, but it seems like whoever is buying these loans should be doing some due diligence on the property associated to these mortgages, right? It then follows that the lenders should have to do some due diligence up front so that they don't get stuck with something they can't later resell.
        daotoad 6y ago
        Due diligence like got us the 2007 collapse? What limited regulation was added after the crisis has been largely undermined.
  - phkahler 6y ago
    There's only one way for interest rates to go from here, and home prices vary inversely with those rates. For middle class folks still working, I'd say save your money and wait for the next housing collapse. Sure, interest rates may be higher but you'll have cash. Or I could be wrong...
    - klipt 6y ago
      Some economists think negative interest rates can work. I for one look forward to having a mortgage where the bank pays me every month.
      - jameslevy 6y ago
        And cash that disappears from your bank account? Great for going long in the stock market.
        bjo590 6y ago
        I'd pull my emergency fund and short term savings accounts and put it in a safe in my home. The rest of my fiances would be either virtually unaffected or would benefit from negative interest rates.
        torgian 6y ago
        How many fiancés do you have? ;)
        jonahbenton 6y ago
        Yeah, you and billions of other cash holders. Physical dollars are an important medium of global liquidity. Taking them out of circulation is not in anyone's interest. In fact, taking them out of circulation would be extremely bad. Hard to communicate how bad this would be. Pretty much a crossing the streams/total protonic reversal outcome. Could bad outcomes be prevented? Stunts like what was done with Indian currency, or a move to all-digital currency? I don't see it. Since hoarding of the polymer bills seems like a likely outcome of negative rates hitting consumers, and this would be bad, and in the absence of other preventative measures, I highly doubt we'll see negative rates at the consumer level.
- hkmurakami 6y ago
  What's becoming increasingly clear is that the submarkets of urban condos, urban SFH, suburban condos, and suburban SFH are dissociating and exhibiting their own dynamics. Suburban SFH is performing very well.
  - xfour 6y ago
    If you take zip code level as granular enough https://realbloc.com https://realbloc.com has some data for ya.
- boringg 6y ago
  More people buying homes moving out of apartments and condos. People are now constrained to their building and want more space. Strange covid dynamic.
  - olivermarks 6y ago
    The fact that people are now working from home in very large numbers can make multi tenancy buildings noisy since people are SIP but making the sort of noise they'd make at the office, endless socializing on Zoom, phone etc. This claustrophobia is not likely to change soon as corporate balance sheets are lightened by the removal of commercial rents, HVAC, cleaning etc costs and WFH becomes the defacto norm. Ergo more living space and noise exclusion is suddenly at a premium even if just suburbia.
- readhn 6y ago
  People who are moving out now - are mostly renters. Homeowners will move out when they lose their jobs and cant afford high mortgages.
jorblumesea 6y ago
Seattle, I don't think as much, or even at all. Home and rent prices at least in Seattle seem stable or even increasing (for buying homes). Not clear why, maybe we're just behind the curve, or maybe it's because Seattle doesn't suffer from as serious of quality of life issues as SF area does.
- autokad 6y ago
  I have been watching this and wondering the same thing. I think Seattle Washington's lack of city and state income tax is a huge plus and provides insulation. Contrast that with SF California of I think 1.50% + 7.25 - 12.3% taxes. I wonder if a lot of Californians are coming to WA because of this

seanmcdirmid 6y ago

Except home prices are rocketing up rather than down ATM. If people are moving out, you’d think more of them would be selling their houses.

jonahbenton 6y ago
Mortgage interest rates at all-all-all time lows. It's a little ridiculous to say that given that mortgages are, say, a 50 year old product. All time not very long. But debt and interest have been with us for thousands of years and it is likely that there has never been such low cost liquidity for durable assets (houses) as there is now. When you think about why THAT is, it should make you worried to buy that house.
- onlyrealcuzzo 6y ago
  Why is it?
  - jonahbenton 6y ago
    To be blunt- the other side of the deal is REALLY INTERESTED in having a party committed to 30 years of payments on a valuation that, they realize, almost certainly has to drop. Mortgage interest could be 0.5% and lenders would...probably still make the deal.
    - nemo44x 6y ago
      They’ve really been doing well selling refinancing for quite awhile now too. The interest rate is nearly immaterial to the closing costs, Selling points, PMI, etc.
    - petersellers 6y ago
      I don't buy this argument. The property itself is collateral for the loan. If the value of the property tanks, and then the owner is also unable to pay their mortgage due to not having a job, then in many cases the bank ends up holding the bag. This happened quite a bit during the Great Recession. Also, given the way that the Fed has been pushing interest rates to near zero, and with the chance that they could go negative (which I find pretty unlikely, but everything seems so wild right now so who knows) there is a chance that inflation could come into play and keep property values high.
      - jonahbenton 6y ago
        Maybe. The dynamics are very (very) complicated. The mechanics you describe are not so much factors any more. Lenders don't keep properties on their books, too much risk and plenty of opportunity to sell and diversify. In that model, flows matter, not values. And inflation- in my read inflation is due to a scarcity of money- it is an output of money scarcity, not an input- and what we have now is an abundance. So it is exceptionally unlikely. But at a macro level, values are still extremely important. If there is perception of deflation, flow drops. And there are more govt structures set up to maintain values. I just have less confidence in their ultimate efficacy, and more confidence that politics will change and immigration policies will change and building policies will change. Cheers.
        petersellers 6y ago
        I'll admit I'm not an expert in this area, but it seems like whoever is buying these loans should be doing some due diligence on the property associated to these mortgages, right? It then follows that the lenders should have to do some due diligence up front so that they don't get stuck with something they can't later resell.
        daotoad 6y ago
        Due diligence like got us the 2007 collapse? What limited regulation was added after the crisis has been largely undermined.
- phkahler 6y ago
  There's only one way for interest rates to go from here, and home prices vary inversely with those rates. For middle class folks still working, I'd say save your money and wait for the next housing collapse. Sure, interest rates may be higher but you'll have cash. Or I could be wrong...
  - klipt 6y ago
    Some economists think negative interest rates can work. I for one look forward to having a mortgage where the bank pays me every month.
    - jameslevy 6y ago
      And cash that disappears from your bank account? Great for going long in the stock market.
      - bjo590 6y ago
        I'd pull my emergency fund and short term savings accounts and put it in a safe in my home. The rest of my fiances would be either virtually unaffected or would benefit from negative interest rates.
        torgian 6y ago
        How many fiancés do you have? ;)
        jonahbenton 6y ago
        Yeah, you and billions of other cash holders. Physical dollars are an important medium of global liquidity. Taking them out of circulation is not in anyone's interest. In fact, taking them out of circulation would be extremely bad. Hard to communicate how bad this would be. Pretty much a crossing the streams/total protonic reversal outcome. Could bad outcomes be prevented? Stunts like what was done with Indian currency, or a move to all-digital currency? I don't see it. Since hoarding of the polymer bills seems like a likely outcome of negative rates hitting consumers, and this would be bad, and in the absence of other preventative measures, I highly doubt we'll see negative rates at the consumer level.
hkmurakami 6y ago
What's becoming increasingly clear is that the submarkets of urban condos, urban SFH, suburban condos, and suburban SFH are dissociating and exhibiting their own dynamics. Suburban SFH is performing very well.
- xfour 6y ago
  If you take zip code level as granular enough https://realbloc.com https://realbloc.com has some data for ya.
boringg 6y ago
More people buying homes moving out of apartments and condos. People are now constrained to their building and want more space. Strange covid dynamic.
- olivermarks 6y ago
  The fact that people are now working from home in very large numbers can make multi tenancy buildings noisy since people are SIP but making the sort of noise they'd make at the office, endless socializing on Zoom, phone etc. This claustrophobia is not likely to change soon as corporate balance sheets are lightened by the removal of commercial rents, HVAC, cleaning etc costs and WFH becomes the defacto norm. Ergo more living space and noise exclusion is suddenly at a premium even if just suburbia.
readhn 6y ago
People who are moving out now - are mostly renters. Homeowners will move out when they lose their jobs and cant afford high mortgages.

jorblumesea 6y ago

Seattle, I don't think as much, or even at all. Home and rent prices at least in Seattle seem stable or even increasing (for buying homes). Not clear why, maybe we're just behind the curve, or maybe it's because Seattle doesn't suffer from as serious of quality of life issues as SF area does.

autokad 6y ago
I have been watching this and wondering the same thing. I think Seattle Washington's lack of city and state income tax is a huge plus and provides insulation. Contrast that with SF California of I think 1.50% + 7.25 - 12.3% taxes. I wonder if a lot of Californians are coming to WA because of this