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Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political clim

Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political climate. Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! I have been patiently waiting for the next "bubble" to pop, even as my realtor insists that oh no, we're not really in a bubble, this is just the new norm. Surely this cannot continue forever, right?

Armisael16 5y ago
Price can't rise literally forever, no, but there really isn't much evidence that we're in a bubble right now. There isn't any reason price need to drop either.
- geebee 5y ago
  they probably can rise "forever" as long as the rate of increase keeps pace with general wealth and economic growth. now, a bubble can't last forever, but moderate price increases (inflation) are pretty normal.
- betwixthewires 5y ago
  There's plenty of evidence we are in a bubble. I know this guy, and he's not smart. One of the stupidest people I've ever met actually. Washed his clothes with dish soap stupid. He bought a house 2 years ago with less than 10% down and he's got equity totaling more than 150% of the value of the house when he bought it. Even monetary inflation aside, if an investment can bring windfalls to anyone who can fog up a piece of glass, something isn't right in that market and it isn't sustainable. There's an anecdotal indicator, but housing prices are rising significantly faster than monetary inflation and population nationwide, that's pretty good evidence for a deviation from fundamentals.
lotsofpulp 5y ago
> Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! The reason for price increasing is always supply curve of the house you might want is not keeping up with demand curve of people with more money who want that house. There are lots of places in the US with house prices that are stagnant or increasing much slowly than elsewhere. But that is because there is lower demand.
Ancalagon 5y ago
Even if it is a bubble, the market can stay irrational longer than you can hold out/believe. (Disclaimer I do have a vested interest in the housing market, but even if I didn’t I really believe it’s not possible for the average layman to know which way a market will go and when).
minikites 5y ago
Capitalism is predicated on the idea of perpetual and infinite growth. Those assumptions are reflected in many ways and we're going to need to rethink our economy and political systems with entirely different assumptions soon enough because we're already running into their limits.
- gruez 5y ago
  >Capitalism is predicated on the idea of perpetual and infinite growth First sentence from wikipedia: >Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. How does this predicate "on the idea of perpetual and infinite growth"? I mean, it'll be nice if the economy grew infinitely, but I'd still want to invest my money into production even if that didn't exist.
  - nicoffeine 5y ago
    Modern capitalism depends on fiat currency and investment from those with capital. Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. So, it's not "nice" if the economy grows, it's an absolute requirement to keep investors interested.
    - nicoffeine 5y ago
      For the downvoters: "The single most important question in investing this year is whether the rampant inflation of the moment is temporary, as the Federal Reserve believes, or marks a historic shift. I argued last week that we are on the cusp of a major change and long-run inflation is now more likely." https://www.wsj.com/articles/if-inflation-is-coming-here-is-what-to-do-about-it-11620694235 https://www.wsj.com/articles/if-inflation-is-coming-here-is-...
      - betwixthewires 5y ago
        Why have I been seeing so much attention given to voting in threads on HN these days? Is there an influx from Reddit or something by a bunch of people who didn't take the time to learn the etiquette here? We speak only when there's something to be said, vote only based on the quality of the comment and move on. You don't need to address downvoters. If you had something to address them with it should've been in your original comment, then maybe they wouldn't have downvoted.
avidiax 5y ago
I used to think 'no', but I think it pretty much can. You can have 2 classes: property owners and non-owners. The property owners have real estate that they can sell or collateralize to purchase different or additional real estate. This is why, for example, current California owners have no problem buying in e.g. Washington: even if a house in both places were $1billion*, they can just trade. Obviously, non-owners may be priced out, but this doesn't affect the owners, and they, as a class, can ask for any amount to transfer the ownership. TL;DR: In musical chairs, so long as there are no new chairs produced and nobody on a chair is forced to stand, there's no ceiling on the asking price for a chair. *Neglecting transaction costs.
- acchow 5y ago
  > This is why, for example, current California owners have no problem buying in e.g. Washington: even if a house in both places were $1billion, they can just trade. If it's your primary residence, you can't trade one from California to Washington because you would have a large tax bill when selling one. You can't even trade within California itself. If you bought a home for $500k 20 years ago and now discover it is worth $2M, you cannot even trade your $2M for a different $2M a few blocks over. You would have to pay taxes on a $1.5M gain. If instead the home s an investment property which you rent out (which have higher interest rates), then you could do a 1031 exchange.
  - avidiax 5y ago
    You can use your equity in the first house to buy the 2nd house, right? And this person with the $2M home in California can, even after taxes and transaction fees, recover their original investment, plus have enough left over to e.g. buy a $1.5m home in cash, or a much higher priced home with a mortgage?
    - acchow 5y ago
      That is not at all a trade. That is picking up more debt to make up for the tax losses when trying to swap homes. Suppose you haven't worked for the past 20 years.
pjdemers 5y ago
Not forever, but longer than anyone who is already able to qualify for a mortgage can wait. It will go on until baby boomers start dying in large numbers. That won't happen until the mid 2030s. By 2050 housing will be a buyer's market.
skystarman 5y ago
If you live in a place like the Bay Area/NYC where cities/local zoning boards are preventing almost and and all new construction then in all likelihood your home price will continue to appreciate throughout your lifetime. Supply and demand. There are way more people that want to live in these places than houses available. And we keep making new people every year.
- geebee 5y ago
  I'm not sure they'll even drop if building codes are relaxed. After all, those SFH owners also own the land beneath their house. The price per square foot of living space could drop while the price per square foot of land goes up.
  - bluGill 5y ago
    Any change will take 20 years to start working through the system. That said, prices will change. SFH owners move once in a while. Even if you live in the same house for 50 years (about the max possible given human lifespans), someone else on your block will move every few years. When someone moves a developer will look at the location and decide if it is wroth buying the house for the lot, tearing down and building something else. Right now in the Bay you could buy a lot of SFHs, tear them down, replace with a 10-plex and rent it out for enough to make it worth it. (Assuming zoning codes would allow this without a large cost over the cost of labor and materials) Eventually though housing will catch up and rent will fall until it isn't worth it. We can't prove the above because of course zoning codes won't let you do it.
- betwixthewires 5y ago
  > There are way more people that want to live in these places than houses available. That's like the saying "government bonds are 0 risk." It's usually true, til it isn't. These problems with housing costs in these cities absolutely will make the cities less desirable, I think we will see a large deurbanization period in north america very soon and you'll see most of these cities that are constricting supply of housing crumble like Detroit.
beej71 5y ago
In a lot of places (where I luckily own a home included), prices hockey sticked hard. It's not natural. I don't see it staying this way. And if it does, my house--which I bought for $285 8 years ago--will be worth a couple million bucks in a couple years and I can sell out and retire on the road. Not banking on that. And if it does, we've entered some kind of new era for the haves and have-nots. :(
snarf21 5y ago
As long as the Fed keeps interests at 0% and prints money, assets will keep inflating.
xenadu02 5y ago
You can end up worse off for waiting, even if there is a "bubble pop". Even people who correctly identify market bubbles and have good timing can lose in the long run because the gains during the run up of the market compound so much it ends up being smarter to ride out the dips. Unlike any other investment a home has direct utility for the buyer as shelter. You should buy what home you can afford and don't try to time the market. You are much more likely to end up worse off by waiting. Here's a hypothetical scenario for an SF home: A home that would have sold for 1.7m in 2015 blows up to 3.1m today, then the supposed bubble "pops" and it drops over the next year to 2.5m. Then over the following 5 years it recovers to 2.8m. At no point was it a good idea to wait. Buying in 2015 was the best move. Buying today (at the supposed top of the bubble) only loses you 300k, while waiting to purchase cost you up to 1.4m. Buying post-pop costs you at least 800k, far more than you'd lose buying at the peak. All while paying rent instead of building equity. Waiting for a bubble to pop assumes you have excellent timing, you invest $(mortgage - rent), that investment gains enough to offset the dead weight loss from paying rent, and that the pop is so catastrophic that home prices revert to the mean... all while this catastrophic scenario doesn't hurt your income/investments such that you are well-placed to take advantage of the pop (as opposed to laid-off or suffering from 50% losses on your investments).
- SevenSigs 5y ago
  > Even people who correctly identify market bubbles and have good timing can lose in the long run because the gains during the run up of the market compound so much it ends up being smarter to ride out the dips. I tripled my investment when I sold last year, but I would probably have done 3.5x now... lets see what happens next year. The wood prices went back down a lot, at least: https://ns.reddit.com/r/HomeImprovement/comments/p7rfsq/every_time_i_hit_the_big_box_store_i_always_check/ https://ns.reddit.com/r/HomeImprovement/comments/p7rfsq/ever....
- frumper 5y ago
  In your made up scenario there hasn't been a pop so of course it's been better to buy asap. If you chose 2006-2011 as your 5 years there absolutely is a time when it was a good idea to wait.
axiolite 5y ago
> I have been patiently waiting for the next "bubble" to pop, The moratorium on evictions (due to COVID-19) still lingers on. When it once and finally ends, things will change. Companies switched to remote work, allowing people more flexibility in where they could live, and giving them fewer expenses. Those companies will either 1) Require their people to switch back to in-office work, or 2) Start to ask why they need to hire US workers in high cost-of-living cities, when remote world could be done from countries with far less expensive employees. In either case, you'll start to see people shifting where they live, either because it's no longer practical to live in that area, or because they can't really afford it. So hold tight. I can't tell you exactly what all the changes will look like, but things will certainly change, soon.
imtringued 5y ago
It probably can't. You'll hit a massive floor at -10% interest.

Armisael16 5y ago

Price can't rise literally forever, no, but there really isn't much evidence that we're in a bubble right now. There isn't any reason price need to drop either.

geebee 5y ago
they probably can rise "forever" as long as the rate of increase keeps pace with general wealth and economic growth. now, a bubble can't last forever, but moderate price increases (inflation) are pretty normal.
betwixthewires 5y ago
There's plenty of evidence we are in a bubble. I know this guy, and he's not smart. One of the stupidest people I've ever met actually. Washed his clothes with dish soap stupid. He bought a house 2 years ago with less than 10% down and he's got equity totaling more than 150% of the value of the house when he bought it. Even monetary inflation aside, if an investment can bring windfalls to anyone who can fog up a piece of glass, something isn't right in that market and it isn't sustainable. There's an anecdotal indicator, but housing prices are rising significantly faster than monetary inflation and population nationwide, that's pretty good evidence for a deviation from fundamentals.

lotsofpulp 5y ago

> Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! The reason for price increasing is always supply curve of the house you might want is not keeping up with demand curve of people with more money who want that house. There are lots of places in the US with house prices that are stagnant or increasing much slowly than elsewhere. But that is because there is lower demand.

Ancalagon 5y ago

Even if it is a bubble, the market can stay irrational longer than you can hold out/believe. (Disclaimer I do have a vested interest in the housing market, but even if I didn’t I really believe it’s not possible for the average layman to know which way a market will go and when).

minikites 5y ago

Capitalism is predicated on the idea of perpetual and infinite growth. Those assumptions are reflected in many ways and we're going to need to rethink our economy and political systems with entirely different assumptions soon enough because we're already running into their limits.

gruez 5y ago
>Capitalism is predicated on the idea of perpetual and infinite growth First sentence from wikipedia: >Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. How does this predicate "on the idea of perpetual and infinite growth"? I mean, it'll be nice if the economy grew infinitely, but I'd still want to invest my money into production even if that didn't exist.
- nicoffeine 5y ago
  Modern capitalism depends on fiat currency and investment from those with capital. Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. So, it's not "nice" if the economy grows, it's an absolute requirement to keep investors interested.
  - nicoffeine 5y ago
    For the downvoters: "The single most important question in investing this year is whether the rampant inflation of the moment is temporary, as the Federal Reserve believes, or marks a historic shift. I argued last week that we are on the cusp of a major change and long-run inflation is now more likely." https://www.wsj.com/articles/if-inflation-is-coming-here-is-what-to-do-about-it-11620694235 https://www.wsj.com/articles/if-inflation-is-coming-here-is-...
    - betwixthewires 5y ago
      Why have I been seeing so much attention given to voting in threads on HN these days? Is there an influx from Reddit or something by a bunch of people who didn't take the time to learn the etiquette here? We speak only when there's something to be said, vote only based on the quality of the comment and move on. You don't need to address downvoters. If you had something to address them with it should've been in your original comment, then maybe they wouldn't have downvoted.

avidiax 5y ago

I used to think 'no', but I think it pretty much can. You can have 2 classes: property owners and non-owners. The property owners have real estate that they can sell or collateralize to purchase different or additional real estate. This is why, for example, current California owners have no problem buying in e.g. Washington: even if a house in both places were $1billion*, they can just trade. Obviously, non-owners may be priced out, but this doesn't affect the owners, and they, as a class, can ask for any amount to transfer the ownership. TL;DR: In musical chairs, so long as there are no new chairs produced and nobody on a chair is forced to stand, there's no ceiling on the asking price for a chair. *Neglecting transaction costs.

acchow 5y ago
> This is why, for example, current California owners have no problem buying in e.g. Washington: even if a house in both places were $1billion, they can just trade. If it's your primary residence, you can't trade one from California to Washington because you would have a large tax bill when selling one. You can't even trade within California itself. If you bought a home for $500k 20 years ago and now discover it is worth $2M, you cannot even trade your $2M for a different $2M a few blocks over. You would have to pay taxes on a $1.5M gain. If instead the home s an investment property which you rent out (which have higher interest rates), then you could do a 1031 exchange.
- avidiax 5y ago
  You can use your equity in the first house to buy the 2nd house, right? And this person with the $2M home in California can, even after taxes and transaction fees, recover their original investment, plus have enough left over to e.g. buy a $1.5m home in cash, or a much higher priced home with a mortgage?
  - acchow 5y ago
    That is not at all a trade. That is picking up more debt to make up for the tax losses when trying to swap homes. Suppose you haven't worked for the past 20 years.

pjdemers 5y ago

Not forever, but longer than anyone who is already able to qualify for a mortgage can wait. It will go on until baby boomers start dying in large numbers. That won't happen until the mid 2030s. By 2050 housing will be a buyer's market.

skystarman 5y ago

If you live in a place like the Bay Area/NYC where cities/local zoning boards are preventing almost and and all new construction then in all likelihood your home price will continue to appreciate throughout your lifetime. Supply and demand. There are way more people that want to live in these places than houses available. And we keep making new people every year.

geebee 5y ago
I'm not sure they'll even drop if building codes are relaxed. After all, those SFH owners also own the land beneath their house. The price per square foot of living space could drop while the price per square foot of land goes up.
- bluGill 5y ago
  Any change will take 20 years to start working through the system. That said, prices will change. SFH owners move once in a while. Even if you live in the same house for 50 years (about the max possible given human lifespans), someone else on your block will move every few years. When someone moves a developer will look at the location and decide if it is wroth buying the house for the lot, tearing down and building something else. Right now in the Bay you could buy a lot of SFHs, tear them down, replace with a 10-plex and rent it out for enough to make it worth it. (Assuming zoning codes would allow this without a large cost over the cost of labor and materials) Eventually though housing will catch up and rent will fall until it isn't worth it. We can't prove the above because of course zoning codes won't let you do it.
betwixthewires 5y ago
> There are way more people that want to live in these places than houses available. That's like the saying "government bonds are 0 risk." It's usually true, til it isn't. These problems with housing costs in these cities absolutely will make the cities less desirable, I think we will see a large deurbanization period in north america very soon and you'll see most of these cities that are constricting supply of housing crumble like Detroit.

beej71 5y ago

In a lot of places (where I luckily own a home included), prices hockey sticked hard. It's not natural. I don't see it staying this way. And if it does, my house--which I bought for $285 8 years ago--will be worth a couple million bucks in a couple years and I can sell out and retire on the road. Not banking on that. And if it does, we've entered some kind of new era for the haves and have-nots. :(

snarf21 5y ago

As long as the Fed keeps interests at 0% and prints money, assets will keep inflating.

xenadu02 5y ago

You can end up worse off for waiting, even if there is a "bubble pop". Even people who correctly identify market bubbles and have good timing can lose in the long run because the gains during the run up of the market compound so much it ends up being smarter to ride out the dips. Unlike any other investment a home has direct utility for the buyer as shelter. You should buy what home you can afford and don't try to time the market. You are much more likely to end up worse off by waiting. Here's a hypothetical scenario for an SF home: A home that would have sold for 1.7m in 2015 blows up to 3.1m today, then the supposed bubble "pops" and it drops over the next year to 2.5m. Then over the following 5 years it recovers to 2.8m. At no point was it a good idea to wait. Buying in 2015 was the best move. Buying today (at the supposed top of the bubble) only loses you 300k, while waiting to purchase cost you up to 1.4m. Buying post-pop costs you at least 800k, far more than you'd lose buying at the peak. All while paying rent instead of building equity. Waiting for a bubble to pop assumes you have excellent timing, you invest $(mortgage - rent), that investment gains enough to offset the dead weight loss from paying rent, and that the pop is so catastrophic that home prices revert to the mean... all while this catastrophic scenario doesn't hurt your income/investments such that you are well-placed to take advantage of the pop (as opposed to laid-off or suffering from 50% losses on your investments).

SevenSigs 5y ago
> Even people who correctly identify market bubbles and have good timing can lose in the long run because the gains during the run up of the market compound so much it ends up being smarter to ride out the dips. I tripled my investment when I sold last year, but I would probably have done 3.5x now... lets see what happens next year. The wood prices went back down a lot, at least: https://ns.reddit.com/r/HomeImprovement/comments/p7rfsq/every_time_i_hit_the_big_box_store_i_always_check/ https://ns.reddit.com/r/HomeImprovement/comments/p7rfsq/ever....
frumper 5y ago
In your made up scenario there hasn't been a pop so of course it's been better to buy asap. If you chose 2006-2011 as your 5 years there absolutely is a time when it was a good idea to wait.

axiolite 5y ago

> I have been patiently waiting for the next "bubble" to pop, The moratorium on evictions (due to COVID-19) still lingers on. When it once and finally ends, things will change. Companies switched to remote work, allowing people more flexibility in where they could live, and giving them fewer expenses. Those companies will either 1) Require their people to switch back to in-office work, or 2) Start to ask why they need to hire US workers in high cost-of-living cities, when remote world could be done from countries with far less expensive employees. In either case, you'll start to see people shifting where they live, either because it's no longer practical to live in that area, or because they can't really afford it. So hold tight. I can't tell you exactly what all the changes will look like, but things will certainly change, soon.

imtringued 5y ago

It probably can't. You'll hit a massive floor at -10% interest.