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Think about how many years over-building went on before the collapse in 2008. There's a good chance that, in the coming years, labor and materials prices will

Think about how many years over-building went on before the collapse in 2008. There's a good chance that, in the coming years, labor and materials prices will fall such that builders will start construction on too many homes. But that's a while away. material prices are falling, but they are still elevated. And houses take a while to build -- four months minimum, nine+ more typical. So even if overbuilding started today, there's still a good year or so before that stuff comes on the market. In these situations, I'm a big believer in contrarian outcomes. Because if a large number of people think some event will occur, then they act in a way which gives them the best outcome should that event occur. The popular trend right now is to speculate a housing collapse. Thus, I think most people are going to put off buying at "elevated" prices for a few years, until it becomes crystal clear that they were wrong. My prediction: House prices will be like the stock market circa 2016. Everyone will be predicting a collapse "any time now" while prices soar at a crazy pace and continue to do so for a decade.

throwawaygh 5y ago
> The popular trend right now is to speculate a housing collapse. Price action is sentiment. Words are hot air. People are NOT speculating on a housing collapse. Exactly the opposite.
- mywittyname 5y ago
  I disagree. Prices demonstrate the attitudes of people who are buying houses. I'm concerned with the attitudes of people who are not buying houses. Why aren't they buying houses? Because they think the are going to fall in the near future. Why do I think that? Because this is a popular sentiment expressed by normal people on social media. Yes, it's wholly unscientific of me to use Reddit and Facebook as a barometer of society, but I'm not a professional economist, just another rando on the internet making bad predictions.
  - throwawaygh 5y ago
    > I'm concerned with the attitudes of people who are not buying houses. That's fair. > Why aren't they buying houses? I think a lot of people are buying. > Because they think the are going to fall in the near future. One major reason people with massive hoards of cash aren't buy is uncertainty around WFH. "Where to buy? Depends. Let's see how this whole return to office thing goes..." > Yes, it's wholly unscientific of me to use Reddit and Facebook as a barometer of society, but I'm not a professional economist, just another rando on the internet making bad predictions. Aren't we all :)
  - oblio 5y ago
    It depends on the place, but as a random data point, in a very hot market, Romania, I have a few separate data points of people with means to buy that are holding off for exactly the reason you mention.
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  - AnimalMuppet 5y ago
    OK, but the number of people who are buying houses is high enough to drive the prices into the stratosphere. If the non-buyers were trying to buy, prices would be even higher. So I'm not sure that you can use the existence of non-buyers to say that there's fear of a collapse. There's less fear than normal right now, as measured by what the market is doing.
    - nitrogen 5y ago
      There's less fear than normal right now, as measured by what the market is doing. How broad is the market relative to society? Could say 3% of people investing tons of money, while 97% are not, create the same result we are seeing today?
      - AnimalMuppet 5y ago
        Yes, that's possible. I do not have the data to either confirm or disprove it.
  - DSMan195276 5y ago
    > Why aren't they buying houses? My experience is that there are a lot of people looking to buy a house, there's just no houses to buy. I bought a house earlier in the year and put an offer in the day it went on the market, and I was still only one of several offers they got that day. I also have a friend who's looking at houses right now and it seems to be basically the same, houses are getting multiple offers and selling within a few days of going on the market, and anything that doesn't sell that fast isn't worth buying. The good question is probably "Why aren't people selling?", but I'm not sure that's actually the issue. Google suggests at least as many homes will sell this year as last year, which leads me to believe there must be more buyers than normal.
    - throwawaygh 5y ago
      > there must be more buyers than normal. Petite investors. I saw somewhere on another thread speculation that a crash could come from prospective land lords not being able to make their properties affordable. That seems possible.
      - DSMan195276 5y ago
        > Petite investors Is there a reason to assume there are more people attempting this than normal? I would think this is the worst time to attempt that since the prices are so high. You may very well be right, but it feels like we're going full circle since presumably those 'investors' think the prices are going to continue to go up or else they wouldn't be buying...
        throwawaygh 5y ago
        I wish there were better data. All I can offer is anecdote. Oh, another important point: they aren't necessarily buying investment properties! They might be buying their padnemic/wfh home and then not selling their already paid off starter home/condo
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- throwoutway 5y ago
  Two Anecdotes: I have a friend who recently sold his house because he expects a collapse (sell high, buy low). I am waiting to buy a house because I also expect it to collapse. One is active, the other passive
sofixa 5y ago
> And houses take a while to build -- four months minimum, nine+ more typical. So even if overbuilding started today, there's still a good year or so before that stuff comes on the market. The ECB is talking about Germany, France and the Netherlands, where the average home is an apartment in a shared building. Going on anecdata from my surroundings, those take at least two years from project for sale to finished and ready for use. That coupled with limited place and an already existing housing shortage and growing prices, it will IMHO take much longer than a year for the current shortage to be corrected.
to11mtm 5y ago
I don't think you're wrong but I don't think you're right. Housing starts aren't necessarily responding to demand, because yeah, nobody wants to over-build and contribute to a default. Plus there are other factors that impact housing starts in most high-cost areas (i.e. availability of land to build on.) I don't see a pop, yet I'm not certain prices will soar. People will typically shop based on 'what they can afford' and that usually means monthly payment; as rates went low, it was easier to bump up the ask price; the best way to put it is, if rates drop from 4% to 3%, you can finance around 10% more money over 30y with the same overall monthly payment. I do think there might be some 'bumps' in the road, but ironically, many of the people 'waiting' will probably end up pulling us out of the bumps (or, maybe, causing another surge.) I think overall the most likely scenario is we'll see some periods of paused growth or slight decline. Worth throwing out there, at least in US the housing market typically cools down a bit over the winter, so take any news of decreases in volume with a grain of salt.
lotsofpulp 5y ago
> And houses take a while to build -- four months minimum, nine+ more typical. So even if overbuilding started today, there's still a good year or so before that stuff comes on the market. Tract builders target 100 days to complete a home from ground up. The permitting, zoning, and land acquisition is the slowest part, but once all of the paperwork is done, they can pump out entire neighborhoods in a couple years max.

throwawaygh 5y ago

> The popular trend right now is to speculate a housing collapse. Price action is sentiment. Words are hot air. People are NOT speculating on a housing collapse. Exactly the opposite.

mywittyname 5y ago
I disagree. Prices demonstrate the attitudes of people who are buying houses. I'm concerned with the attitudes of people who are not buying houses. Why aren't they buying houses? Because they think the are going to fall in the near future. Why do I think that? Because this is a popular sentiment expressed by normal people on social media. Yes, it's wholly unscientific of me to use Reddit and Facebook as a barometer of society, but I'm not a professional economist, just another rando on the internet making bad predictions.
- throwawaygh 5y ago
  > I'm concerned with the attitudes of people who are not buying houses. That's fair. > Why aren't they buying houses? I think a lot of people are buying. > Because they think the are going to fall in the near future. One major reason people with massive hoards of cash aren't buy is uncertainty around WFH. "Where to buy? Depends. Let's see how this whole return to office thing goes..." > Yes, it's wholly unscientific of me to use Reddit and Facebook as a barometer of society, but I'm not a professional economist, just another rando on the internet making bad predictions. Aren't we all :)
- oblio 5y ago
  It depends on the place, but as a random data point, in a very hot market, Romania, I have a few separate data points of people with means to buy that are holding off for exactly the reason you mention.
  - deleted 5y ago
    [deleted]
  - deleted 5y ago
    [deleted]
- AnimalMuppet 5y ago
  OK, but the number of people who are buying houses is high enough to drive the prices into the stratosphere. If the non-buyers were trying to buy, prices would be even higher. So I'm not sure that you can use the existence of non-buyers to say that there's fear of a collapse. There's less fear than normal right now, as measured by what the market is doing.
  - nitrogen 5y ago
    There's less fear than normal right now, as measured by what the market is doing. How broad is the market relative to society? Could say 3% of people investing tons of money, while 97% are not, create the same result we are seeing today?
    - AnimalMuppet 5y ago
      Yes, that's possible. I do not have the data to either confirm or disprove it.
- DSMan195276 5y ago
  > Why aren't they buying houses? My experience is that there are a lot of people looking to buy a house, there's just no houses to buy. I bought a house earlier in the year and put an offer in the day it went on the market, and I was still only one of several offers they got that day. I also have a friend who's looking at houses right now and it seems to be basically the same, houses are getting multiple offers and selling within a few days of going on the market, and anything that doesn't sell that fast isn't worth buying. The good question is probably "Why aren't people selling?", but I'm not sure that's actually the issue. Google suggests at least as many homes will sell this year as last year, which leads me to believe there must be more buyers than normal.
  - throwawaygh 5y ago
    > there must be more buyers than normal. Petite investors. I saw somewhere on another thread speculation that a crash could come from prospective land lords not being able to make their properties affordable. That seems possible.
    - DSMan195276 5y ago
      > Petite investors Is there a reason to assume there are more people attempting this than normal? I would think this is the worst time to attempt that since the prices are so high. You may very well be right, but it feels like we're going full circle since presumably those 'investors' think the prices are going to continue to go up or else they wouldn't be buying...
      - throwawaygh 5y ago
        I wish there were better data. All I can offer is anecdote. Oh, another important point: they aren't necessarily buying investment properties! They might be buying their padnemic/wfh home and then not selling their already paid off starter home/condo
- deleted 5y ago
  [deleted]
throwoutway 5y ago
Two Anecdotes: I have a friend who recently sold his house because he expects a collapse (sell high, buy low). I am waiting to buy a house because I also expect it to collapse. One is active, the other passive

sofixa 5y ago

> And houses take a while to build -- four months minimum, nine+ more typical. So even if overbuilding started today, there's still a good year or so before that stuff comes on the market. The ECB is talking about Germany, France and the Netherlands, where the average home is an apartment in a shared building. Going on anecdata from my surroundings, those take at least two years from project for sale to finished and ready for use. That coupled with limited place and an already existing housing shortage and growing prices, it will IMHO take much longer than a year for the current shortage to be corrected.

to11mtm 5y ago

I don't think you're wrong but I don't think you're right. Housing starts aren't necessarily responding to demand, because yeah, nobody wants to over-build and contribute to a default. Plus there are other factors that impact housing starts in most high-cost areas (i.e. availability of land to build on.) I don't see a pop, yet I'm not certain prices will soar. People will typically shop based on 'what they can afford' and that usually means monthly payment; as rates went low, it was easier to bump up the ask price; the best way to put it is, if rates drop from 4% to 3%, you can finance around 10% more money over 30y with the same overall monthly payment. I do think there might be some 'bumps' in the road, but ironically, many of the people 'waiting' will probably end up pulling us out of the bumps (or, maybe, causing another surge.) I think overall the most likely scenario is we'll see some periods of paused growth or slight decline. Worth throwing out there, at least in US the housing market typically cools down a bit over the winter, so take any news of decreases in volume with a grain of salt.

lotsofpulp 5y ago

> And houses take a while to build -- four months minimum, nine+ more typical. So even if overbuilding started today, there's still a good year or so before that stuff comes on the market. Tract builders target 100 days to complete a home from ground up. The permitting, zoning, and land acquisition is the slowest part, but once all of the paperwork is done, they can pump out entire neighborhoods in a couple years max.