5 ms·

> Or in other words: we are playing flirting dangerously with real, scary inflation, it's just happening in our homes so we think it's all good. Home prices ha

> Or in other words: we are playing flirting dangerously with real, scary inflation, it's just happening in our homes so we think it's all good. Home prices have gone up way more than incomes over the last 10 years. Economists don't seem to want to call it inflation until incomes are rising. I'm glad I bought a house for $180K in 2011 that's worth $360K now 10 years later, but I really wonder how folks who are entering the market now are able to deal with the much higher monthly payment. That's going to divert spending away from other parts of the economy for quite a while.

gruez 6y ago
>Home prices and rents have gone up way more than incomes over the last 10 years Home prices, maybe. But rents (aka housing)? AFAIK it's kept pretty consistent: https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1024.png?x91208 https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1...
- UncleOxidant 6y ago
  Depends on location. I was charging $850/mo for a detached 3BR/2BA house in 2010. I'm charging $1500/mo for the same now - and I could easily be charging $1800/mo, but I like the renters and don't want to lose them.
  - pnutjam 6y ago
    Looking at an old lease of mine, in 2007 I paid $959 for this 3bd/B style. Now they are at least $1360. https://www.sunblest.com/floorplans.aspx https://www.sunblest.com/floorplans.aspx These are the best value apartments in this area. The new ones they built down the street have a $3300 list price for a 3bd. This is an affordable midwest area.
    - deleted 6y ago
      [deleted]
    - pnutjam 6y ago
      To clarify, the raise is about 8% over the regular inflation rate. The bigger issue is the fact that all new stuff is not significantly different or better, but almost 3 times the price. The floor is falling out.
  - castlecrasher2 6y ago
    >I was charging $850/mo for a detached 3BR/2BA house in 2010. Out of curiosity, what was the comparable rent in 2005/before the crash in 2008?
- putnambr 6y ago
  My rent went up 5% two years ago, another 5% a year ago, and we just renewed at +33%. The housing crisis is hitting the rental market.
  - stainforth 6y ago
    Why should landlords extract more from their renters, just because they can?
    - putnambr 6y ago
      That's exactly it, maximizing profit. Lots of rental units, at least in my area, aren't owned by individuals anymore. They're owned by corporations or private equity who have an obligation to their shareholders to maximize profit. If I stop renting, someone else will pick up the bill. The landlords' operating costs haven't gone up significantly either. They own the property outright, the same maintenance crew is around, they're down a leasing agent and manager from a year ago, and property tax increases are capped in this city. Any rent increase they can push beyond inflation directly lines their pockets.
      - chii 6y ago
        > If I stop renting, someone else will pick up the bill. aka, they are charging the market rate, which other people in the market are willing to pay for the use of the building. The increase in rental income for landlords mean that there should be pressure to build more buildings to let out. Market forces _should_ cause stablization, if only it is allowed to work long term. Short term, there will be pain, because you can't build a new building instantly, but this pain is what causes new buildings to spring up. Market-distorting forces, such as building density/height regulation, and local residents' complaints (NIMBYism) is the cause for the lack of stablization imho.
- cryptonector 6y ago
  The things to compare are not home prices vs rents but home monthly payments vs rents. Having a mortgage is like renting capital, after all.
quickthrowman 6y ago
> I really wonder how folks who are entering the market now are able to deal with the much higher monthly payment. I’m simply choosing not to play, I’ll keep renting my place for $9900 a year in a metro area of 3.5 million, I’m not tripling my housing costs just to get ‘equity’, I’ll dump the extra 20k a year into VTI and come out ahead in the long run, equities don’t require roofs or furnaces.
- bluGill 6y ago
  Maybe. IF the inflation predictions are right this time your rent will jump to $50k/year, while the mortgage of those who bought stays the same, so they have the money to invest not you. That is a big if, and there are lots of different ways things can turn out. God doesn't advise me, so only time will tell what really happens...
  - deleted 6y ago
    [deleted]
  - harambae 6y ago
    If his $10k/year rent goes to $50k/year he probably won't want to live there anyway on account of the constant looting and rioting.
    - bluGill 6y ago
      One would assume wages go up you compensate.
      - harambae 6y ago
        Is that how it worked out in Venezuela recently with those levels of inflation?
        bluGill 6y ago
        There is typically a lag between wages going up an inflation, and that lag will catch a lot of people, but in general it does work that way in the long run. The long run can be 10+ years though, which isn't good for the person caught in the cycle.

gruez 6y ago

>Home prices and rents have gone up way more than incomes over the last 10 years Home prices, maybe. But rents (aka housing)? AFAIK it's kept pretty consistent: https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1024.png?x91208 https://www.aei.org/wp-content/uploads/2020/01/cpi2020-875x1...

UncleOxidant 6y ago
Depends on location. I was charging $850/mo for a detached 3BR/2BA house in 2010. I'm charging $1500/mo for the same now - and I could easily be charging $1800/mo, but I like the renters and don't want to lose them.
- pnutjam 6y ago
  Looking at an old lease of mine, in 2007 I paid $959 for this 3bd/B style. Now they are at least $1360. https://www.sunblest.com/floorplans.aspx https://www.sunblest.com/floorplans.aspx These are the best value apartments in this area. The new ones they built down the street have a $3300 list price for a 3bd. This is an affordable midwest area.
  - deleted 6y ago
    [deleted]
  - pnutjam 6y ago
    To clarify, the raise is about 8% over the regular inflation rate. The bigger issue is the fact that all new stuff is not significantly different or better, but almost 3 times the price. The floor is falling out.
- castlecrasher2 6y ago
  >I was charging $850/mo for a detached 3BR/2BA house in 2010. Out of curiosity, what was the comparable rent in 2005/before the crash in 2008?
putnambr 6y ago
My rent went up 5% two years ago, another 5% a year ago, and we just renewed at +33%. The housing crisis is hitting the rental market.
- stainforth 6y ago
  Why should landlords extract more from their renters, just because they can?
  - putnambr 6y ago
    That's exactly it, maximizing profit. Lots of rental units, at least in my area, aren't owned by individuals anymore. They're owned by corporations or private equity who have an obligation to their shareholders to maximize profit. If I stop renting, someone else will pick up the bill. The landlords' operating costs haven't gone up significantly either. They own the property outright, the same maintenance crew is around, they're down a leasing agent and manager from a year ago, and property tax increases are capped in this city. Any rent increase they can push beyond inflation directly lines their pockets.
    - chii 6y ago
      > If I stop renting, someone else will pick up the bill. aka, they are charging the market rate, which other people in the market are willing to pay for the use of the building. The increase in rental income for landlords mean that there should be pressure to build more buildings to let out. Market forces _should_ cause stablization, if only it is allowed to work long term. Short term, there will be pain, because you can't build a new building instantly, but this pain is what causes new buildings to spring up. Market-distorting forces, such as building density/height regulation, and local residents' complaints (NIMBYism) is the cause for the lack of stablization imho.
cryptonector 6y ago
The things to compare are not home prices vs rents but home monthly payments vs rents. Having a mortgage is like renting capital, after all.

quickthrowman 6y ago

> I really wonder how folks who are entering the market now are able to deal with the much higher monthly payment. I’m simply choosing not to play, I’ll keep renting my place for $9900 a year in a metro area of 3.5 million, I’m not tripling my housing costs just to get ‘equity’, I’ll dump the extra 20k a year into VTI and come out ahead in the long run, equities don’t require roofs or furnaces.

bluGill 6y ago
Maybe. IF the inflation predictions are right this time your rent will jump to $50k/year, while the mortgage of those who bought stays the same, so they have the money to invest not you. That is a big if, and there are lots of different ways things can turn out. God doesn't advise me, so only time will tell what really happens...
- deleted 6y ago
  [deleted]
- harambae 6y ago
  If his $10k/year rent goes to $50k/year he probably won't want to live there anyway on account of the constant looting and rioting.
  - bluGill 6y ago
    One would assume wages go up you compensate.
    - harambae 6y ago
      Is that how it worked out in Venezuela recently with those levels of inflation?
      - bluGill 6y ago
        There is typically a lag between wages going up an inflation, and that lag will catch a lot of people, but in general it does work that way in the long run. The long run can be 10+ years though, which isn't good for the person caught in the cycle.