29 ms·

Making sense of what’s going on in the housing market

• the-dude 6y ago
  This time it is different FTA : While the market looks a lot like 2005–2008 on the surface, the underlying fundamentals today are very different from back then.
• JackPoach 6y ago
  "Not a bubble" is exactly what people think, when there's a bubble. Otherwise there would be no bubble. People find ways to rationalize why 'this time it's different'. Sometimes it is, sometimes it's not.
  • emodendroket 6y ago
    This is a little like "they thought Gailileo was a crank." Yeah but they thought a lot of other people were cranks and you don't know them because they were.
  • encoderer 6y ago
    In my experience, bubbles are made from greed not ignorance. In 2007-8 there was a lot of acknowledgment of the real estate bubble but there was always somebody to say well real estate isn’t really a national market so it won’t all pop at once. Ha. Similarly everybody knew it was a bubble in 1999. That’s why you had companies rushing to ipo like lemmings off a cliff. Personally I don’t think we are in a bubble right now and all the early bubble callers (since 2013 or so) have no credibility left.
    • TheAdamAndChe 6y ago
      In my opinion, we are in a bubble now. In stocks, P/E ratios are extremely high, and many companies are IPOing, many more than two years ago. All asset pricing is going through the roof, and money is chasing money. Speculative assets have become trendy again with cryptocurrencies, ARK, and memes like dogecoin. We're all flush with cash and either terrified of inflation or riding a euphoria of asset inflation.
      • lotsofpulp 6y ago
        > either terrified of inflation or riding a euphoria of asset inflation. Why not both? At this point, the biggest risk I see is a materials shortage that the Fed can’t fix by adding zeros in a database. Such as gas prices spiking, or food shortages, or some other critical infrastructure failing.
        • Supermancho 6y ago
          The lumber shortage is forcing homes to be built largely with pressed wood. Ironically this makes home building even more expensive, as pressed wood prices have skyrocketed... passing traditional lumber because of availability issues.
      • fumar 6y ago
        What do you do to prepare for a crash? I follow the asset and commodity price increases. But, I can't see the next logical step. Save more money that is worth less over time? Are we on a train towards hyperinflation that can't be stopped?
        • deleted 6y ago
          [deleted]
        • nicbou 6y ago
          Traditional advice is to park your money in goods with intrinsic value. I believe that the common examples are housing and gold.
      • strgcmc 6y ago
        On the point about IPOs, this would seem to back up the idea that, a boom in IPOs has correlated with recessions and crashes soon after, in the past ~20 years: https://www.statista.com/statistics/270290/number-of-ipos-in-the-us-since-1999/ https://www.statista.com/statistics/270290/number-of-ipos-in... A drop in IPOs seems like a lagging indicator (they will drop off after the economy has cooled off), but it's not clear to me if a boom in IPOs is a leading indicator or not.
    • JackPoach 6y ago
      Greed needs rationalization too.
    • jdsully 6y ago
      Ignorance was a theme of many past bubbles. In the 20's it was the common man not understanding stocks. In the 80s it was "Savings and Loans are just banks, they're safe!". '08 it was "They wouldn't give me a mortgage if it wasn't a good decision". In all bubbles you see a few shrewd hawks and millions of lemmings - that's where all the money comes from. In this scenario its, "There's nowhere else to put my money", but not having a better alternative doesn't necessarily make it a good investment.
    • vladimirralev 6y ago
      It's not greed. The chair of the Fed sat on national television and said they flooded the system with cash and will not stop until everybody gets it while ignoring any stretched valuations or inflation signals. All bubbles are policy decisions by the Fed to spark risk-taking and optimism, guided by the "less than honest" intermediaries on Wall St.
    • robotron 6y ago
      There is a lot of greed driving home sales right now. Every homeowner I know has at least considered making bank in this market. The only thing stopping them is they'll then need to buy a home cheaper and further out or lose that profit.
    • Cd00d 6y ago
      Completely off-topic, but I was just watching a YouTube video about lemmings with my 6 yo to answer some questions she was asking. Lemmings to not commit suicide from cliffs, en masse. This is a myth that came about from a staged incident in a Disney documentary about the arctic wilderness. It's completely made up. Was an interesting 5 or so minutes: https://www.youtube.com/watch?v=2fHYNMvcAhc https://www.youtube.com/watch?v=2fHYNMvcAhc
      • smithza 6y ago
        Myth notwithstanding, lemmings are the proverbial manifestation of "following your friend off a cliff". Disney did this brilliantly. Here is a fun podcast on it: https://99percentinvisible.org/episode/sounds-natural/ https://99percentinvisible.org/episode/sounds-natural/
  • JohnWhigham 6y ago
    This isn't 2006 Las Vegas or some shitty 50 year old Florida suburb propped up by tourism, we're talking about every major metropolitan area that has jobs. People are buying because rates are rock-bottom, yes, but also because that's where the jobs are. This is different from last time, and aside from the Fed raising interest rates (and boy do they need to), there's no end in sight to the insanity.
  • AnimalMuppet 6y ago
    My definition of a bubble is not just prices going up. It's not even people investing based solely on prices going up, rather than on the merits of the investment. To me, it's only a bubble when people are investing solely because the price is going up, using borrowed money. And that's why bubbles are dangerous. When they pop, they don't just destroy the investors. They can destroy the lenders, which can damage the overall economy.
• lazypenguin 6y ago
  This article did little to convince me we’re not in a bubble. The housing supply argument doesn’t hold up to me, as older people leave their homes newer people should be able to take there place. Base asset prices increasing because interest rates are down? Sure that’s finance 101. All asset classes (houses, stocks, cryptocurrency) only ever increasing in value? That’s too good to be true.
  • zapita 6y ago
    Some areas in the country experience major population growth because that’s where the jobs are. In those areas not enough older people leave their homes to compensate for the influx of new residents. It’s not even close. The housing supply argument is completely accurate.
    • almost_usual 6y ago
      Especially in places like the Bay Area where there is a huge influx of global talent.
    • zepto 6y ago
      > In those areas not enough older people leave their homes to compensate for the influx of new residents. It’s not even close. This is true. The question is, why would they? Generally, with a few exceptions like Florida, the places where the jobs are are also the best places to be old.
  • lotsofpulp 6y ago
    > All asset classes (houses, stocks, cryptocurrency) only ever increasing in value? That’s too good to be true. Not if the supply of money is increasing. Also, different regions of the US are experiencing very different levels of changes in price.
  • smalltalks 6y ago
    > The housing supply argument doesn’t hold up to me Strongly disagree with you , I'm in Europe. I'm in the 25% richest of my state , I can't manage to rent a home because every time I contact a landowner for a property to rent there is 30+ person who applied before me within 4 hours... Covid-19 has created a "remote economy" boom as well as accelerated household project to move to another state and acquire a property or just to invest in real estate. Thus real estate market is performing just as expected... As long as the supply does not meet the demand the price goes up. For crypto it's different , 99% of crypto transactions are speculation base. It's by design.
• yardie 6y ago
  As anyone recently or currently going through the house shopping process this is nothing like 2007. Buyers are competing against other buyers with seemingly unlimited cash offers. Which is nothing like the subprime, stated income loans prior to the financial crash. You have to be in great financial shape to even qualify to buy a home. And then you have to do it timely enough to beat other offers. There is more cash moving around these days and not a lot of places to put it. Conservative banks, investors, and pensions are placing them in the few sure things left on the market, bonds and property. Also, inventory is drying up because construction has been heavily affected by the pandemic. Now that the warehouses have been exhausted it's just starting to ripple through supply chains. While the millions of lives lost were felt immediately the long tail of JIT supply chains means we'll be feeling the effects a hell of a lot longer.
  • noofen 6y ago
    More cash because everyone with half a brain knows this money printing won't hold the market up forever, and they're terrified of runaway inflation. The insane market speculation going on is also a symptom of this. It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies. I know about their bullshit CPI numbers, and anyone who is gullible enough to believe "there is no inflation" deserves what's coming.
    • Analemma_ 6y ago
      > It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies Are you willing to bet money on this claim? Because I will happily take the other side of that wager. It is absurd.
      • deleted 6y ago
        [deleted]
      • thaeli 6y ago
        In the long term, everyone with more debt than assets is on the other side of that wager.
• frgtpsswrdlame 6y ago
  An article about housing on hacker news, let's see, let me put on my Carnac hat and guess this article is about zoning. Anyways, I think the pandemic has shown that the monomaniacal focus on zoning reform isn't actually well suited to what people want out of their housing. Hasn't this pandemic pretty well proved that when people aren't at the office they want a little more space? And not just inside but outside too. Yards are nice, people like yards, the single family lot in the suburbs is the American dream. I think the focus on zoning always takes the same rhetorical trick, "Build where people want to live" and abuses the hell out of it. Do people actually want to live in highrises in megacities? Or do they just do it so they can land a decent job? Maybe the problem isn't moving more housing into cities, it's moving more jobs out of them. The zoning reform people only ever look at one side of that equation.
  • zepto 6y ago
    This x 100. It’s a good thing is development of nice places to live and work is pushed out of the current center so that more of the country is livable.
  • devingoldfish 6y ago
    > Hasn't this pandemic pretty well proved that when people aren't at the office they want a little more space? Yea, and they want a pool and a free pony too. Given that people can't all get the housing they want, how do we solve for the housing problems we've run headlong into? Building more housing is absolutely a meaningful way to attack the problem, and zoning reform is a part of that. > Do people actually want to live in highrises in megacities? Or do they just do it so they can land a decent job? Of course jobs are the driver here, but that means that incidentally, yes they do want to live in high-rises in megacities. There's no real sign of large cities releasing their hold on productivity and good paying jobs, the current remote work in a pandemic thing not withstanding. > The zoning reform people only ever look at one side of that equation. As someone who has faced the SF Bay Area housing crisis over the last ten years, I'd be fine with people moving out. But it's not a realistic solution, given that the good jobs are still here. Not to mention, there's not much we can do to reverse the economic incentives that bring people to places like San Francisco, but there is something we can do about local zoning rules. So it's entirely rational that people focus on building housing in these cities rather than trying to convince people not to move here in the first place.
• intergalplan 6y ago
  I think they're right (kind of). I think we're in a bit of a bubble. But I think the main driver is severe asset inflation, so when the bubble pops we'll find it only unwinds a year or two, at most, of the insane price-growth we've seen... well, ever since the recovery from '08, actually.
• tengbretson 6y ago
  The article says that single family zoning rules are causing the shortage that drives up the price we're seeing right now. So they argue that the solution is to open up those restrictions so that more multi-unit buildings can be built and that this will "break the restrictions on homeownership in America." Multi-unit buildings are overwhelmingly more common to be rentals than occupant-owned condos, so how is this a solution that actually increases people's ability to own their homes? Seems like its just a bait-and-switch in favor of landlords.
  • mdorazio 6y ago
    More units available means lower rental prices (in general), which means renters should be able to save more money to purchase a home later. There's a big assumption baked in there that condos & houses don't get snapped up by existing landlords or rise in price faster than the savings rate of renters. But that's the thinking.
  • burlesona 6y ago
    It would be a lot easier and more marketable to take the more run down single family homes that have become too expensive for most people and do rebuilds that turn that lot into two homes. The financial model for a developer is easier too, you do the transaction and you’re done, as opposed to needing to be a landlord for a long time, or find just the right kind of investor to buy a 4-unit apartment (which is really rare). There is an entire spectrum of housing types that are generally referred to as the “missing middle,” which are common in old cities and European cities but virtually non existent in post-ww2 America. That’s what removing or relaxing single family zoning should allow.
  • pbronez 6y ago
    I saw some analysis a while back that said 2-3 story garden apartments are the most economically and environmentally sound level of density to shoot for. Would be neat to see those available as condos. You could double or triple density without pricing people out or creating urban environmental problems.
    • MuffinFlavored 6y ago
• refurb 6y ago
  I get the sense identifying a bubble is similar to identifying alcoholism. If you find yourself having to spend time explain to people why you’re not an alcoholic there is a good chance you are one.
• jeffreyrogers 6y ago
  One thing I find odd about the current housing market is how many people aren't paying rent right now.[0] Once evictions are allowed again surely that is going to have some impact on prices. Especially if, as many people suspect, many of these homes are investments rather than owner occupied. Maybe it won't affect the housing market much though because the problems are mainly in low-income housing? That seems like a sketchy assumption. [0]: I couldn't find a good number for this in my quick search for it, but I remember seeing something about how a fairly high percentage of renters aren't paying rent currently.
  • burlesona 6y ago
    There is also a ton of commercial real estate operating in “extend and pretend” mode. It seems unlikely that all of that just stabilizes with no drama. But I think the policies of the moment are not really aimed at solving that problem, they’re aimed at delaying the worst of the housing crisis until the worst of the pandemic crisis is behind us.
• bko 6y ago
  > as the stimulus packages have been targeted towards basic infrastructure and assistance programs for lower income groups. This made me chuckle. If anyone is curious, this is where the money went [0]. To say that the money was focused on lower income groups is laughable. 2.9 out of 12 trillion allocated went to asset purchases, basically buying treasuries and mortgage backed securities. How many lower income groups hold treasuries? [EDIT] If anyone is curious about an alternative view, I've been kind of obsessed on this topic over the last few weeks are wrote about it extensively [1] and tried documenting the ridiculous rise in asset price levels to levels much higher than even that of pre-covid [2]. To say that there's nothing going on when nearly all asset prices are 30+% past their pre-covid peaks is ridiculous. [0] https://www.covidmoneytracker.org/ https://www.covidmoneytracker.org/ [1] https://mleverything.substack.com/p/where-did-the-12-trillion-of-covid https://mleverything.substack.com/p/where-did-the-12-trillio... [2] https://mleverything.substack.com/p/where-did-the-12-trillion-of-covid-76c https://mleverything.substack.com/p/where-did-the-12-trillio...
  • cryptonector 6y ago
    Wait, it's been $12 trillion??
    • weeblewobble 6y ago
      More like $6T. OP seems to be counting Federal Reserve actions as "stimulus packages" which is pretty non-standard if not outright wrong
  • nightski 6y ago
    Isn't this how the fed injects money into the government? By printing it and buying government securities?
    • jasode 6y ago
      >By printing it and buying government securities? They also printed money to buy billions $ worth of corporate bonds like General Electric Ford, GM, AT&T, etc: https://www.google.com/search?q=%22federal+reserve%22+buys+corporate+bonds https://www.google.com/search?q=%22federal+reserve%22+buys+c... Example list: https://www.investopedia.com/the-fed-s-corporate-bond-portfolio-5069989 https://www.investopedia.com/the-fed-s-corporate-bond-portfo...
• insert_coin 6y ago
  “Any man who must say 'I am king' is no true king at all.” -GRRM
• AdmiralAsshat 6y ago
  So we're not in a bubble, we're just fucked. Cool.
  • 01100011 6y ago
    No, I think boomers with assets are doing fine. Everyone else is fucked. I don't want to push the generational narrative too hard(I'm 46), but it does seem like that generation is willing to do everything they can to keep the party going until they die. After they're gone, it will be up to my generation and younger to figure out what to do with the massive debt and distorted economy. From what I can see, they just don't give a shit.
    • AdmiralAsshat 6y ago
      Yes, perhaps I should have clarified that by "we" I meant my generation (I'm a millennial). And as someone with a significant chunk of savings who still can't afford a house, the possibility of being both left without my own property and having my life-savings essentially rendered moot by runaway inflation is deeply concerning.
      • 01100011 6y ago
        That's exactly the situation I find myself in. I'm 46, divorced and remarried. I joined a FANG and lost my soul so I could have a chance after starting over from scratch at 43. I now have $200k in the bank, which is awesome and I am thankful for it. But it's nowhere near enough to buy a house. I'm already running out of steam, mentally speaking, and can't make the safe bet that I'll be able to keep my FANG job for even another year or so. I guess I just put it all in a TIPS ETF and hope it works out? IDK... Meanwhile I just have to watch while the rich get richer and the folks in the middle get pounded.
• almost_usual 6y ago
  The nation is seeing extreme increases in price, maybe that’s a bubble. HCOL areas like the Bay Area, LA, and Seattle I doubt are in a bubble. There has been a lot of liquidity injected into the market. A portion of it has gone to tech stocks and people wanting to hedge against inflation. Guess who gets that liquidity when they vest? Last year buying a home in the Bay Area was something I planned to do in a few years. A year later I own a home. I’m not the only one, there are tons of all cash offers out there right now. You need 40-50% liquid of the home you’re making an offer on right now to be competitive. No contingencies, cover appraisal gaps, etc. I honestly don’t care if it’s a bubble at this point. If my home value drops 50% whatever I have a home where I want to be. I have equity and other investments like I did while renting.
  • helen___keller 6y ago
    > The nation is seeing extreme increases in price, maybe that’s a bubble. HCOL areas like the Bay Area, LA, and Seattle I doubt are in a bubble. I generally agree. The highly paid workers living in these regions continue to be highly paid, and the quantity of housing continues to be constrained. I think a lot of small/medium cities will see corrections if lumber prices go back down. There will be a building boom, new subdivisions will flood the market and drive prices back down on the fundamental costs of producing housing. In larger cities, we're too space constrained (and building high density is illegal) so this feedback loop has been broken and will continue to be broken, thus prices are set by whatever can be afforded with a local wage.
• paulpauper 6y ago
  One of the best pieces of financial advice I have learned is, is to ignore all predictions of bubbles. They are almost always wrong or premature. Even if you sell, prices may never fall to where you sold even if the bubble bursts. For example, had you sold your stocks in 1996 because of fears of a stock market bubble, when the market did crash in 2000-2003 and again in 2008 it would never revisit the price you sold. You would have also missed out on all the dividends. Pundits also said Facebok was a bubble in 2012 after it went public and Google in 2004 too and Amazon and Tesla, etc. .The list goes on.
  • petercooper 6y ago
    Even the smartest and savviest of people read the tealeaves wrong sometimes: https://signalvnoise.com/posts/2585-facebook-is-not-worth-33000000000 https://signalvnoise.com/posts/2585-facebook-is-not-worth-33... .. or.. does this just prove what a bubble it is!? ;-) More on this one at https://twitter.com/benedictevans/status/1261617044648329216 https://twitter.com/benedictevans/status/1261617044648329216
    • reducesuffering 6y ago
      Ouch, not the finest moment of DHH on that one. He said FB wasn't worth $33B, meanwhile they're set to make that much just in profit this year!
• pjbk 6y ago
  Reminded me a bit to the classical NY Fed paper before the subprime crisis [0]. Each bubble is different as much as each bubble is the same. I guess the main invariant is that what goes up must come down at some point, because of "reasons" and principles of human nature on complex individual and group behavior. Usually those are only clear after the fact. [0] - https://www.newyorkfed.org/research/epr/04v10n3/0412mcca.html https://www.newyorkfed.org/research/epr/04v10n3/0412mcca.htm...
• 2020aj 6y ago
  We might not be in a true bubble, but the set of circumstances that have lead to the market increase have been a "perfect storm". I think once we get to the other side of the pandemic much of what is driving housing prices will revert to or trend towards precovid norms. It's likely there will be a market correction when (if) that occurs, so it's a bit missing the point to say "well technically it's not a bubble".
• zukzuk 6y ago
  Up here in Canada, there is absolutely no doubt that we're in a bubble. By every measure we're in trouble... consumer debt levels, income-to-price and price-to-rent ratios... This infographic has been making the rounds and pretty much sums things up: https://twitter.com/i/status/1377353707478601729 https://twitter.com/i/status/1377353707478601729 Even the apologists who previously tried to to explain this in terms urbanization, desirability, immigration, etc have capitulated. It remains to be seen whether we're just an odd case (along with maybe NZ and a few others), or a canary in the coal mine for our neighbours to the south, but the situation here at this point is virtually guaranteed to end badly for everyone involved.
  • milkytron 6y ago
    From my understanding, Canada's housing market is largely being influenced by foreign investors. I've read that lots of foreign investors are buying homes in cash, over market rate, and then letting them sit vacant. If Canada's laws don't discourage this and others see it as a safe way to store their wealth, this could be a possible explanation for the insane rise in home costs compared to other countries.
    • 908B64B197 6y ago
      > I've read that lots of foreign investors are buying homes in cash, over market rate, and then letting them sit vacant. This is used to launder illegally acquired assets that are brought in the country. Then as a bootstrap toward acquiring western passports. > If Canada's laws don't discourage this It encourages it. Out of control immigration quotas as well as lax regulations regarding birth tourism and a liberal-party friendly immigrant base has made it a no brainer for the current party to keep the bubble expanding.
    • railsgirls112 6y ago
      Hasn't that been the case in places like NYC for a bit now? I remember reading about like single digit occupancy rates in massive luxury apts. I'd imagine that would have only increased but would love a check on my understanding.
    • 6y ago
• iamthepieman 6y ago
  I am currently going through the process of selling my current home and buying a new one. Last year, my real estate agent said she would list our house at 180k. I'm in a rural area so that's a modest 3 bedroom which needs some work on the bathrooms but is otherwise pretty nice. We just signed a contract without ever listing our house for 220k. We're buying a house that was listed at 230k in February of last year but didn't sell and was rented out. It was listed again recently and we made a full price offer for 259k. As far as I'm concerned, we're still coming out ahead because we got 22% more for our house and are only paying 13% more for the house we are buying. I was in the market for a house in 2007/8 as well and the market feels completely different. We might still be in a bubble but the underlying market is NOT the same and the causes of the bubble (if it is one) are different. in 2007 there was not as limited housing supply. There was bad money being used to buy houses via overfinanced buyers and banks willingness to lend to them. Today, there are cash offers all over the place. Lower income buyers are being priced out of the market. Also labor and material prices for new houses are skyrocketing which is increasing the demand and prices for existing housing inventory.
  • jcpham2 6y ago
    Currently living in my second home financed ~2010 post-crisis 369,000 or so. Looking at 500-600 listing. First home was a 1000 sq ft'er and I've rented it for 11 years. Just closed on a new home 505,000 10k over asking, 4 other offers, never listed on MLS. We beat a higher offer because I wrote a hand written thank you note. (psy-op evilness). No contingencies other than appraisal and home inspection. Home was on the market for 18 hours, we made an offer after 4 hours. Market is nuts. Rural Southeast USA.
• saint_abroad 6y ago
  > The system may be fundamentally broken, but the market is not. This gives me some level of confidence in saying that as of April 2021, I don’t believe that we’re in a housing bubble. Markets have the remarkable ability to function right until the very moment they crash. If functioning markets really were to preclude bubbles then, by definition, bubbles would only form in non-functioning (crashed) markets. This is, of course, ridiculous.* *That is, unless non-functioning markets can somehow be distinguished without the hindsight of a crash.
• asciimov 6y ago
  I live in what used to be a very affordable metro. After years of saving and getting out of debt, I am finally able to buy a house. Well I would have been under normal market conditions. When I moved to my neighborhood 7 years ago the average price of a 1500sqft home was 130K. Prices on those homes have gone up slowly up over the years but the last 18 months where price have skyrocketed. Those same homes are now being listed for 240-250k and closing above asking. I've had multiple realtors in my area tell me, that unless I have an extra 50k available beyond my down payment it is unlikely that I will be able to buy right now. Why? None of the houses are being appraised for as much as they are listing, so you have to cover that gap and then you will want to offer 20K+ over asking to make sure you get the house. The last few homes that I have looked at already had offers on them before they were put on the market. These homes open on a Saturday and close Sunday evening with 15-20 offers. And who exactly are getting these homes? Out of towners, usually from the west coast, with cash only offers.
• bogomipz 6y ago
  I feel like there's some relevant factors not really mentioned in the article, and each of these could have consequences. Unlike in 2008 there is now a limit to how much interest you can write off on your loan. That limit is $750K. Anything you mortgage above that you can no longer deduct from your taxes. Housing has appreciated in some markets up to 11% in the past year. This in no way seems sustainable. As a new home purchaser your will not likely not see that same rate of appreciation. If you do sell your house then you likely need to buy something else. That means that you will also need to compete in that same cut throat buyers environment and you will also need pay much more in taxes on your new even more expensive house. I also think that there's many people who will need to sell first before they can buy because whatever they are going to buy also got much more expensive and so would not be able to get a loan without first selling. Some of the shortage is also likely due to Boomers who in a normal year would have downsized going into their retirement who understandably did not as they would be concerned about strangers walking through their houses during a pandemic. Once the pandemic subsides there will likely be a boost in supply as these folks resume the normal downsizing cycle. There's a lot of people who fled the cities for the "country life" because of the pandemic. And while a lot of these people will probably stay, I think there's a lot of people who will decide that "country life" was not for them and head back to the cities in kind of reverse flight when the pandemic recedes. This will likely have ripple effects in those suburban markets that experienced a hot money influx over the last year.
  • bombcar 6y ago
    Another major change is that for most people of moderate income the standard deduction is now so high that there’s no point in itemizing mortgage interest.
    • deleted 6y ago
      [deleted]
• pbuzbee 6y ago
  Any advice for someone looking for their first home? Based on this article and others I've read, it seems like many of these factors (low interest rates, limited new supply, etc.) are likely to continue for at least the next several years. The only change that could help a first-time buyer would be if the end of the pandemic leads to favorable conditions (reset preferences, end of eviction moratorium, etc.). I feel like I could wait another 3-5 years for it to flip towards a buyer's market, but that's certainly not guaranteed and who knows how high prices will have gone in the meantime.
  • stagger87 6y ago
    I just bought and sold a house in a very hot market. The things that people are doing right now to stand out in my market were, - Get pre-approved. - Write a personalized letter why they should get the home. - Offer above list price and be willing to pay above appraisal (part of your offer). - Put your offer in right away. Most people who viewed my home put in an offer within a few hours of seeing it. - Forgo an inspection to get a faster close date. - Pay cash if you can. - Buy new construction, we bought new construction and didn't have to compete with anyone. It costs a little more up front, similar to a new car I imagine, but we plan on staying >10 years if we can help it. As long as you are financially secure I wouldn't wait for a better market. IMO it doesn't matter if the market is high or low, it only really matters if you leave the market.
    • almost_usual 6y ago
      > Write a personalized letter why they should get the home. In CA realtors are trying to push back on this. They claim fair housing law risk. I don’t see any risk though if you’re the first offer.
      • lolinder 6y ago
        Right now you're almost certainly not the first offer, and even if you are, they'll have 5+ more by the end of the day. This means that your letter could theoretically be the deciding factor in which offer they pick, which does have the potential to run against fair housing laws.
• bondarchuk 6y ago
  One thing I don't understand. I hear a lot of stories about a house being sold within a few days (or hours..) for $x over asking price. In these cases, why do sellers not wait for a few weeks, or list the house for a higher asking price?
  • MuffinFlavored 6y ago
    I think the theory is "if you list it at a lower price, it'll incite a bidding war".
    • oh_sigh 6y ago
      It isn't really a bidding war, it is everyone guessing at what the next best offer is and trying to beat it. I never understood why, if you have 20 offers on a house and $500k is the best, the realtor doesn't go back to the other 19 and say they need to offer at least $505k, and repeat the process until there is a single offer remaining.
      • sushid 6y ago
        Risk reward ratios are skewed for the realtor. It might make sense for the owners but it's easier to forgo the extra $150 you get as the realtor and just close the deal right now as is.
  • ativzzz 6y ago
    Same here. I've never bought a house so I don't quite know the details about it, but if people are getting 15-20 offers on a house within 24 hours of it going on sale, why not just raise the price?
    • bombcar 6y ago
      List it low, get 20 offers over the price, pick the highest/best one. Holding it open for longer is unlikely to get higher ones - it’s basically an auction.
  • 6y ago
• mberning 6y ago
  “Investors” aka speculators are pouring into the market and gobbling up what little supply exists. They are trying to monopolize and destroy the secondary housing market in a similar way to how carvana, vroom, carmax, and others have taken over the used car market and are now demanding insane prices for used cars. Zillow and others are all in on the current feeding frenzy. If it continues unabated the only houses you will be able to buy private party will be low end hovels. Everything else will be owned by the Zillows of the world and command a kings ransom to purchase.
• JKCalhoun 6y ago
  > This isn’t just suburbs, as has been historically been associated with single family zoning. Major cities like Seattle, Charlotte, and San Jose dedicate 81%, 84% and 94% of their land, respectively, to SFZ. Live in San Jose: I can't imagine if they increased the density of the housing without also going gangbusters on light rail or some other means to keep the freeways from just getting any more congested than they already are. Rush hour. Now there's a quaint term.
  • Schweigi 6y ago
    Higher density would mean you could live closer to work which solves some of the congestions problems. Because of the big sprawl commutes are long and it's harder to make efficient public transport. But you're right, how to go there after everything is already sprawled out is a good question.
  • 01100011 6y ago
    Their solution is ADUs(accessory dwelling units), which amount to putting sub-par 'granny flats' into the backyards of existing suburban sprawl. That's more or less a bribe to the homeowners to allow densification without changing the fundamental carrying capacity of a neighborhood. Homeowners, who are already likely wealthy due to asset appreciation, are now able to become landlords. Of course this won't change the fact that you'll need a car to commute, so traffic and parking will get worse.
• Shadonototro 6y ago
  you are, but you don't know it since you are inside
• m0llusk 6y ago
  One of the more robust ways to detect a bubble is by constructing a price index that summarizes market activity without getting distorted by short term changes. Perhaps the most respected housing price index is Case-Schiller house price index which currently indicates the market is somewhere between 150% to 200% above historic valuations. Since housing is something all need and is generally supported by incomes there is no reason to think that the current relatively high prices are robust and will endure. This article also points out that there is an imbalance between demand and supply which means that any large scale increase in supply is likely to moderate demand and market prices.
• euthuxnetux 6y ago
  This article is completely ignorant. Bubbles aren't defined by, as some commenters suggest (not TFA), poor lending practices. Please see investopedia's excellent article on asset bubbles [1]. Houses require maintenance, they go out of style, newer buildings have more amenities, etc. In general they retain their value well, but they do become used over time. Historically (hundreds of years) the value of property is highly associated with income, which is highly associated with inflation. Real estate is conventionally considered to be an asset class that maintains its value relative to inflation. Presently, enormous amounts of money have been poured into real estate. Housing costs are now disconnected from the ability of people to afford it, or from the potential of the property to extract rents. Price-to-Income ratios and Rent-to-Income ratios are completely out of line right now. TFA repeats the complaint that housing supply is the issue because wealthy people and financial instruments are buying all the housing and letting it sit empty to appreciate in value. In other words, TFA claims that speculation on housing price increases is evidence that there is no asset bubble. The fact that there is widespread speculation on the price increase of an asset class is, in fact, evidence of a bubble, which is why I called the article ignorant. The fact is that ~11% [2] of housing in the US is currently vacant. But this isn't just a US issue. If this was a supply constraint it would be a geographically local problem. It's not. It's not even isolated to a single nation. Housing prices are exploding globally [3]. This is a speculative asset bubble. The fact that it's not a bubble based on unaffordable leverage doesn't mean it's not a bubble. Finally, it's impossible that this issue resolves without a crash [4]. Since we've had inflated prices for maybe a decade now, I expect that it will take somewhere between 5 and 10 years after the crash for prices to normalize. Put it another way: do you expect housing prices to increase exponentially forever? If not, do you expect prices to remain the same, adjusted for inflation? In other words, have we reached the maximum ability of people to afford houses, and this is just the new price? If neither of those things are true, then there is only one other option. [1] https://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp https://www.investopedia.com/articles/stocks/10/5-steps-of-a... [2] Total Housing Estimate - https://fred.stlouisfed.org/series/ETOTALUSQ176N https://fred.stlouisfed.org/series/ETOTALUSQ176N Vacant Housing Estimate - https://fred.stlouisfed.org/series/EVACANTUSQ176N https://fred.stlouisfed.org/series/EVACANTUSQ176N [3] https://betterdwelling.com/canada-says-property-bubble-not-great-for-locals-good-for-foreign-investors/ https://betterdwelling.com/canada-says-property-bubble-not-g... [4] https://betterdwelling.com/canadas-property-bubble-is-now-so-large-a-soft-landing-would-take-19-years/ https://betterdwelling.com/canadas-property-bubble-is-now-so...
• jzymbaluk 6y ago
  It really strikes me that we've basically re-invented old-school landed aristocracy on a small scale in our big American cities. anyone who was lucky enough to have bought a home 25+ years ago in a city like San Francisco or Seattle or Boston or NYC is a millionaire now, and home ownership is completely out of reach for the average inhabitant of a city. Buying a home is a pretty big reach even for very high earners, like the average audience of HN. Ultimately, housing cannot be both A) an appreciating, scarce investment and B) equitably and humanely distributed.
  • deleted 6y ago
    [deleted]
  • bluGill 6y ago
    As an advocate of houses as an investment, I've always been against A, except to the extent that the appreciation matches inflation, and even then it should only match inflation because you don't count the investment in keeping it "nice" Houses are an investment in shelter over your head. They work out well long term if you live in them long term, but you should never look at what they are worth if you sell, except when calculating your net worth. Even then a renter should have a higher net worth because rent is increasing with inflation, while the house payments are not: the renter needs to have more to cover future rent.
    • chii 6y ago
      > the renter needs to have more to cover future rent. If you're comparing like for like, then a renter with the same amount of capital as a house owner would work out just as well, because the renter would have invested that capital into the stock market (which, i believe, have out-paced real estate). If you're comparing a renter who don't own any capital, to somebody who owns a house, then of course the house owner is better off - they have more capital!
      • bluGill 6y ago
        One small detail, because the home owner has less rent he needs less capital. I fully agree that you can do just as well renting as buying in the long run. Which is better is different for each person, and partially depends in things not knowable in the future.
• UncleOxidant 6y ago
  Are we running out of people with the incomes to support the higher monthly payments? That's what we have to be asking. A house across the street from me just sold in a couple of days for $555,000 ($20K over asking). Previously sold in 2018 for $424,000. The similarly sized house next to it sold for $149,000 in 2012. This is looking pretty bubbly to me.
  • Ancalagon 6y ago
    We are probably not yet running out of buyers, because interest rates are low (and hence monthly payments are low). In a way, right now is a bad time to buy if you have cash in hand _because_ interest rates are low causing prices to skyrocket and the overall amount of money you would spend on a mortgage to increase over a 30 yr period. Despite this, I think whales and normal people are buying property all over the place anyways because its one of the few safe, good remaining investments left, and as the article pointed out, people prefer investing in their own homes more than any other asset.
  • aphextron 6y ago
    >The similarly sized house next to it sold for $149,000 in 2012. This is looking pretty bubbly to me. But 2012 was also the absolute bottom of the worst housing slump in US history. If you averaged out the appreciation of a median priced home at the beginning of the housing bubble in 1998, which was $175,000 [0], at 3.8% annually, the historical average [1], until 2021, the median price would now be just shy of $400k. We currently stand at $350k median price, and that's with a generational tailwind of millennials (the largest generation in US history) now just starting to buy homes. The fact is that it's still the single best financial decision an average person can make, even at what seem like inflated prices. [0] https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/ [1] http://www.fedprimerate.com/new_home_sales_price_history.htm http://www.fedprimerate.com/new_home_sales_price_history.htm
  • cryptonector 6y ago
    Monthly payments stay level even if principals go up, as long as interest rates go down.
• hardtke 6y ago
  >90% of Americans prefer their primary residence as an investment over the stock market. People are likely to move funds from savings and the stock market into their homes, as they believe this to be the best strategy. The way the housing market is structured, it is a vastly superior investment for most Americans. Housing is the only asset where every American can be highly leveraged with a fixed downside. As a house buyer you need only 10-20% down and can mortgage the rest. So if the house price goes up 10%, your return on principle is more than 50%. In California and some other states, first mortgages are non-recourse -- if there is a short sale the homeowner is not personally liable for the difference between the sale price and what is owed on the loan -- this is not true if you buy equities on margin. For these reasons, historically the returns for Americans of modest means has been astronomically larger than the returns on equities. The "all cash" phenomenon is partly investors realizing there are excess returns in this market.
  • aphextron 6y ago
    >As a house buyer you need only 10-20% down and can mortgage the rest. Or less. Zero down mortgages are absolutely a thing right now. You can get $250k of margin on an appreciating asset for nothing more than your signature, credit score, income history, and a few thousand in closing costs. There's truly nothing that even comes close in terms of wealth building for an average person.
• ragle 6y ago
  Whether or not we are in a bubble is increasingly the wrong question to be asking in an age where failure for sufficiently-large institutions is no longer permitted. The question used to be pretty simple: "has a sufficient portion of the market been priced out to the extent that demand collapses"? As we've seen in equities / derivatives (and increasingly, commodity) markets - the answer to that question is now perpetually "lol, number go up" because large investment banks have essentially infinite access to free money and will be bailed out if they get in trouble. On a long enough timeline the end result of this is that more and more Americans write their rent checks to institutional investors. [1] Sure, many Americans own their homes now (or have a nice cushion of equity). But what happens as wage growth continues to stay relatively flat while cost of living rises dramatically and folks need money for medical bills or their kid's college tuition (or w/e)? They sell and become renters. There's a pretty bleak future for American housing absent regulation in this space. [1] - https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/ https://www.theatlantic.com/technology/archive/2019/02/singl...
  • treesrule 6y ago
    I mean, regulation is why the housing market is so bad (SFZ environmental review etc), so really what we need is forced deregulation. Edit: Some people might have misunderstood what I said so here's what I mean: What we really want is states to force localities to reduce zoning restrictions on new construction
    • techrat 6y ago
      Because deregulation did wonders for telecoms, energy companies in texas, boeing, subprime mortages, etc...
      • pibechorro 6y ago
        Deregulation hand in hand with allowing things to fail is the answer. The issue here is the constant bailouts. We live in a fake economy.
• deleted 6y ago
  [deleted]
• dcow 6y ago
  Anyone want to start a city with me? Find some overlooked land near decent water and with good fiber and explicitly build out with unregulated zoning and minimal city planning. City only owns utilities and emergency services. Municipal fiber. A remote work hub. I have no idea how but willing to figure it out as we go. The idea has been crossing my mind more and more frequently of late.
  • bombcar 6y ago
    Sounds like Houston. I’m surprised someone hasn’t bought a rail line with one end in a major metro and the other an hour away in empty land and just built a rail suburb.
  • pomian 6y ago
    Great idea! So many nice communities across the country. I often wonder why more companies don't just take over - giving their employees quality of life options.
  • jjav 6y ago
    California City is waiting, very cheap land. https://www.atlasobscura.com/places/california-city-unbuilt-suburb https://www.atlasobscura.com/places/california-city-unbuilt-...
• DC1350 6y ago
  It could be worse. You could be Canadian
• anthony_barker 6y ago
  Crane count image is interesting... Toronto has almost as much construction as the rest of north america! https://i1.wp.com/www.denverpost.com/wp-content/uploads/2021/04/RLB-north-american-crane-index.png?fit=620%2C9999px&ssl=1 https://i1.wp.com/www.denverpost.com/wp-content/uploads/2021...
• aazaa 6y ago
  This article totally neglects the alarm bells blaring in late 2019/early 2020. The Fed lost control of an obscure but crucial corner of the bond market (the repo market), slinked away from Quantitative Tightening with its tail between its legs after a timid venture into normalizing its balance sheet, and was generally starting to brace for impact. Then, the pandemic and a Niagra Falls of liquidity. Unprecedented in all of American history with the possible exception of WWII. The country has just fought a war. Wars bring inflation and price bubbles. In the aftermath, prices normalize and the speculators get washed out. And by that point, almost everyone is a speculator. The question is not whether evidence for bubbles can be found in every corner of the economy, but to what lengths will the country go to keep the music playing.
  • scsilver 6y ago
    I wonder if the US can manage to drop the load onto the weaker recovering economies. At the end of the day, are you trading your depreciating dollar for another currency? To me, it seems like the US can keep the music playing until the rest of the world gets out of their shutdowns.
• shanecleveland 6y ago
  Many are arguing we are not in a bubble because it is different than the last bubble. What defines a bubble? Is it simply that prices drop from a high after significantly increasing? If the conditions that they argue are resulting in current prices ease (supply, material, labor shortages are a few listed here), and prices drop, isn't that a bubble? I guess they could simply plateau and return to "normal" growth patterns.
• lkrubner 6y ago
  There is only one real question here: why is that 1916-1980 Fed stimulus would tend to raise wages, whereas since 2000 Fed stimulus has no effect on wages but instead becomes asset inflation? The Fed increased the money supply last year. A lot. So asset prices are going up. That much is straightforward. But in another era the same stimulus would have manifested less as asset inflation and more as an increase in wages. The only important question is why that has changed. As we saw in 2019, even very low unemployment no longer leads to rapidly rising wages. What is holding wages down?
  • dragonwriter 6y ago
    > There is only one real question here: why is that 1916-1980 Fed stimulus would tend to raise wages, whereas since 2000 Fed stimulus has no effect on wages but instead becomes asset inflation? Because recent Fed monetary policy occurs in a different fiscal policy environment, and fiscal policy has a lot more impact on distribution of returns than monetary policy. > What is holding wages down? 4 decades of fiscal (both tax and benefit) policy starting with Republicans and then joined by Clintonian Third Way Democrats which has focussed on taking support away from the poor and working class and concentrating gains in the narrow, major investor class in the notional hope that those at the bottom will get trickled-down-upon by the wealthy (a hope which has been realized more in the form of golden showers than showers of gold.)
  • Sammi 6y ago
    Lyn Alden does a deep dive into money printing and inflation and describes the difference between the money printing in the past and what is going on now: https://www.lynalden.com/economic-japanification/ https://www.lynalden.com/economic-japanification/
• spaetzleesser 6y ago
  Isn’t there just way too much money floating around and people have no productive uses for it? Looking at the stock market and the housing market this seems to be the most reasonable explanation.
• scelerat 6y ago
  Count me among people that bought a house in 2020 (late December) partially because of the "practically free" cost of borrowed money due to low interest rates.
• theNJR 6y ago
  I started house shopping in 2019 in a high cost of living suburb. Prices seemed high. The market seemed frothy. I was very cocky and told my agent I wasn't in hurry. Prices would surely normalize. We must be in a bubble! Everyone seemed so irrational. COVID hit and I was beyond smug. See, Mr. Agent, I told you. World wide pandemic will burst the bubble and I'm going to get a house for nothing. $450/foot houses are now $650/foot. We've been priced out of multiple neighborhoods. If you don't have an offer on a house within 3 days of the first showing, don't even bother. Add $100k to the listing price to even begin thinking if you can get the house. And then pray you aren't up against 5 all cash buyers. Meanwhile, I've had the down payment sitting in a savings account for three years and its buying power decreases every month. Should have YOLOed into BTC. Would have turned into one of those damn all cash buyers. Fun times.
  • ggjjjttt 6y ago
    At the very least, convert the down payment to USDC or DAI. Decent interest rate ~8% APY. Of course, this might not be enough...
  • goldenchrome 6y ago
    Ouch. You didn’t even have to do anything crazy with that money (like YOLO BTC). If you just kept it in VTSAX your down payment would have gone up 57% in the last three years.
    • theNJR 6y ago
      I thought housing was going to tank, so obviously I thought the market was going to tank too :(
• lend000 6y ago
  As wild as the housing market currently feels, I tend to agree with the author that we are nowhere near 2007 levels of overextension. Here's a chart that complements the data presented by the author, showing that there is still relative demand for housing as a place to live at current prices, relative to the last few decades: https://fred.stlouisfed.org/series/RRVRUSQ156N https://fred.stlouisfed.org/series/RRVRUSQ156N So there are two problems. One is addressed by the author: build more homes. There aren't enough. Can the federal government do this? Probably not; it's more of a local zoning thing. But while the author touches on high construction costs, they miss an opportunity to identify the most dangerous root cause: inflation. While CPI might say the US has only experienced 2.6% inflation since the pandemic began, that number is faulty beyond repair. Random length lumber futures are up 200% since the pandemic began. Copper and soybean futures are both up 60%. Industrial steel is up 133%. Industrial silicon is up 70%. Sunflower oil +114%. Wheat +20%. Platinum +29%. Gold +20%. Aluminum +32%. Energy futures +30%. Natural gas +42%. SPX is up 25%, despite almost certainly being less productive. You get the idea. Historically, there is a modicum of hysteresis to prices at the early onset of hyperinflation, especially in a large economy like the US with multi-year contracts at pre-defined prices. But when the raw materials are are growing in price by 30%+/annum for all of your products, consumer prices are sure to follow. This is a historic moment. While the government has had to choose between more severe short term recession and long term debt/wealth inequality many times before (and usually chosen the latter pair), the decision in 2021 feels different. Inflation is already here. The money printing has been unprecedented, and the only way to avoid real inflation will plunge millions into unemployment. Do we have the political will to forestall a major inflation catastrophe?
  • scsilver 6y ago
    Isnt hyper inflation on the order of 1000% and not 100%? I think we are looking at somewhere below hyper inflation, but I definitely agree CPI is not showing it. Its not like we lost a war or have impossible debts to pay to our enemies. Everyone else is in the same boat. Do you really think we will see hyper inflation like Zimbabwe and Germany? Im foreseeing large inflation in previously cheap COL areas and low inflation in the already expensive places like SF, NY, DC. It seems like the asset in shortest supply is where can I store my money against inflation. Vacation home housing is one of the best products for that.
• JanisErdmanis 6y ago
  There are multiple contributors who have made the housing market as it is now. The general trend which characterizes the situation is that wages of average folk are rising at A% whereas the housing prices with B%. At the beginning of the 1970s, a teacher in the UK earned decent housing in 5 years, whereas today, it would take around 40 years under a mortgage. In practice, we see that wages had stagnated over the last decades. From a political perspective, it is a change of economic philosophy from supporting consumer demand to supporting the supply of producers. On the other hand, there is a factor of migration. People coming from lower-income regions are putting pressure on local folks to negotiate wage increases, partly also supplemented with not fully accepting immigrants in labor unions. The factors which make B% high are the increase of loans VS wages and guaranteed state protections for nonperforming loans to squeeze everything out of the debtor. Then there are urbanization and speculation on it. Common folk more likely getting better loan conditions in places where it is expected that the property price will grow. That, in turn, stimulates urbanization and vice versa. Also, a factor is capital scarcity in the housing market. In the environment where central banks are buying stocks of nonperforming mega corporations to refloat them (optimistically saving pension funds), there is no better investment than owning such a stock. Hence the housing market is incentivized to serve those whose income grows with B% or known also as the wealthy 1%.
• keyboardCowBoy 6y ago
  2.3 million homeowners are in forbearance. It's been over a year, people are getting use to NOT paying. Banks just also flat out STOPPED foreclosures. So we have millions of homes in forbearance and we don't know the true number of loans that are delinquent. Meanwhile in some markets prices have gone up 30 percent in 1.5 years which for a normal first time home owner means higher loan costs, bigger down payment and more interest. We also have homeowners who WANT to sell but won't until we get back to a normal market. If interests rates go up, we start foreclosing, homeowners start selling, and all those millennials who regretted overpaying for their homes start selling ALL at once, we could easily be in a buyers market.
• hnarn 6y ago
  I'm not an economist and don't claim to understand what's happening, but what I do know is that I considered entering the market before the pandemic but abstained because I felt the prices were inflated by all this "free money" from cheap loans, and I was competing with people who seemed to have no limit on what they wanted to pay. Then, the prices went up by more than 20% during one year, a period where most economies stalled and went into recession. I'm not touching this with a ten foot pole, I don't care if I have to rent for decades. I'll spend my money on something else in the meantime.
• wallacoloo 6y ago
  HN: unaffordable housing is among the top-5 problems facing my generation. Where are the career opportunities? What are the specific startups and companies working to decrease the cost of housing who might hire me on? I understand much of this is an issue of policy (e.g. zoning), but that doesn't mean there aren't other avenues by which to attack the problem either.
• spfzero 6y ago
  I wonder what effect the work-from-anywhere environment we've created, and pushed further with COVID-19 workplace closures, will have? Lots of the places where housing is being built en-mass now are previously rural areas, without onerous zoning restrictions. Houses are being built, just not in the usual areas. Building material costs are rising, as the author notes, but could it be because the demand for them has exceeded the supply? I recently asked a friend (software dev) whether he thought his employer was going to ask them to resume working in the local office and he was skeptical that they ever could do so. Too many of the strongest devs had already moved away, and he felt the chances of replacing them now with local, office-based developers of the same quality would be basically zero. Not everyone can work remote, but enough that it could alleviate pressure in the traditional centers.
• njstraub608 6y ago
  I like the author's analysis and appreciate the breakdown of his sources, but I think he took some shortcuts that makes me question his conclusion. Some examples: "With more money being saved, and investments yielding higher returns, the more there is to spend on homes." I tried dig up more information about how exactly BEA calculations the Personal Savings Rate, but it seems to be an estimate based on aggregate consumption. This savings rate doesn't necessarily imply that this money is invested in the stock market. Even if it was and they bought and then sold investments to pay for their homes they still have to pay taxes on those short-term sales. An increasing savings rate by ~26% over < 12 months is interesting but doesn't seem to be a strong argument. I think we need to go deeper here to see if this is a median number and how it would break down by demographics. "We are in a record low rate environment, we’ve experienced unprecedented support via fiscal stimulus, and mortgage underwriting standards are far stronger than in the oughts, which has lead to less leverage and reduced the likelihood that a pile of cards built on risky mortgages will collapse the economy." Generally with more expensive homes people are left with fewer options with who underwrites large loans, driving them to jumbo mortgage lenders. People may have stretched themselves to be able to buy a home given the low rates and the need for more space.
• jl2718 6y ago
  > housing is not in a bubble Correct. The value of the dollar is dropping, and seems unlikely to recover. If anything, we should be measuring the value of the dollar against the cost of housing, not the other way around. The authors exclusion of this most obvious economic factor raises my suspicions of an agenda.