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First-Time Home Buyers Are Simply Walking Away
- timmaah 5y agoHow do I get more than a paragraph?
- HardwareLust 5y agoIt was stressful enough before the bubble. Went through it twice, both times in a buyer's market and it was exhausting. I can't imagine what it would be like today, even if I could afford it.
- hprotagonist 5y agobud, i've been waiting for the market to shit the bed for a decade.
- HarryHirsch 5y agoDude, with construction far below what was needed since 2008 and now with the supply chain troubles this won't happen. Concrete gold mustn't lose its value, Blackstone won't permit it.
- newshorts 5y agoEven if we have a downturn, rents tend to continue to rise and housing prices don’t tend to drop more than 8% avg. obviously local markets can vary. My point is, these things can last 40 years. Human adulthood isn’t that long, you might not want to wait. Having said that, we seem to be in a constant state of unpredictable events that may or may not have financial impact on our family. I’m continually feeling uneasy about paying for a house that was 3/4 less 6 months ago, but it’s been going that way for years. We are renting, have been for a decade, but had we bought our net worth would probably be less. Housing in our area didn’t rise as much as stock did over the past few years. If the house is important to you buy it, but financially there are other ways to become an owner of something valuable.
- sokoloff 5y agoLeverage in housing means price changes are magnified as a when compared to your downpayment size. If you put 20% down and the house goes up by 20%, your downpayment investment was doubled. Of course, if it went down by 20%, your downpayment was wiped out.
- refurb 5y agoConsidering we’ve had housing cycles since records have been kept and the last major price correction was 14 years ago I doubt “this will last 40 years”.
- Izkata 5y agoThose two statements don't conflict in any way. A more important question would be, when was the last major correction before the one 14 years ago? (Did some quick searches and all I'm finding is rates over the past 5-10 years, rates over the past century grouped by decade that don't even register 2008, and articles talking about 2008)
- refurb 5y ago2001, before that, 1990.
- simulate-me 5y agoI met a couple early on in the pandemic who were waiting for the housing market to cool down before trying to buy a place. Prices have appreciated over 20% since they. From talking to my parents' generation, it seems like real estate seemed super expensive back then as well. I've come to the conclusion that real estate is always in such high demand that it always seems super expensive.
- chrismatheson 5y agosome un-solicited advise I got on house market (I have recently purchased after searching for 24+mths ) no one sells their house for less than they bought in unless they HAVE to. They just don't sell. So for me, as a buyer potentially waiting for the market to correct, its not worth waiting, your life will have passed by in the meantime.
- harambae 5y agoIf they lose their job in San Francisco bay they just take a new job in San Francisco bay. This is, IMO, why housing essentially never goes down in the bay (until either Prop 13 is repealed or the big earthquake hits and a lot of people are scared out of town). But there are plenty of areas in America where if you lose you're job you're moving, regardless of whether you particularly want to. No one wants to sell stocks at a loss either, and yet people do. So my bet is that if there's a recession home prices will go down. Time will tell.
- vsskanth 5y agoThe odd thing was this time even the rents increased substantially, so much that if you're moving to a new place it might be cheaper monthly to just buy instead of renting. Maybe now with interest rates near 5% and home prices still at its peak, it has shifted the short term advantage back to renting
- bejelentkezni 5y ago"Cheaper" if you ignore the down payments that are approaching 30% of the house's total value.
- vsskanth 5y agoBarring some massive recession you can expect your down payment to have an ROI like a bond when you sell so you can just assume it to be part of your bond allocation. Obviously you'll lose a lot in transaction fees alone if you sell within a few years.
- neilv 5y agoI think I'd love for where I live to outlaw ownership of small-unit-count buildings by someone who doesn't live in the building. Where is the social justice in letting investors outbid people who want to own their own bit of shelter? (Existing homeowners might appreciate the gains to property values from investor bidding up, but I'd say the needs of another person to also become a homeowner trumps the needs of an existing homeowner to make greater profit on the investment aspect.)
- MichaelBurge 5y agoIf some parent get hired for a really good job and has to leave for 2 years, you'd require that family to sell their house?
- HarryHirsch 5y agoAt my institution (regional college in Western MA) we are having trouble hiring, except locally. People won't come, they cannot afford the cost of housing. It's that bad. Let them sell up. Homeowners have had it good the last 40 years, a policy change is needed because things that can't go on won't.
- rdtwo 5y agoYeah won’t go on forever but might go on for longer than a short human little would care
- ericd 5y agoHave you tried increasing the salary on offer? I’m confident that there’s some level at which you’d have no trouble filling all open spots.
- HarryHirsch 5y agoWe can't afford higher salaries, and then there's the demographic cliff in 2025, because couples stopped having children in 2008, they couldn't afford it. (The upside is that our slim budget prevents us from getting into debt by engaging in stupid construction projects to attract students, we can award scholarships instead.) And we can still fill vacancies with locals who are living with roommates or their parents. You can't fix a stuff shortage by throwing money at it, no matter what economists tell you. The housing shortage is the real-world equivalent of stock buybacks - in theory the increased stock price boosts investment and thus innovation, but in practice we get Boeing and Intel. Same with housing. The higher prices should in theory draw more suppliers in, but in practice the only supply that grows is the supply of NIMBYS wanting to "preserve home values" to profit from the intolerable status quo.
- Cerium 5y agoThey gave up after 8 offers? It took me 9 and more than 6 months. A lot of it is calibration to the market in order to estimate the winning bid and the rest is waiting for the chance. Eventually there is a house for sale that fits your needs more than most others.
- 88913527 5y agoBoth the rental and home ownership markets are ossifying. Rents in some markets are +30% in past 2 years. If you're fortunate enough to be holding an old lease, you're quite likely paying below market rent. Likewise, homeowners with mortgages would be giving up their refinanced interest rate (70% have rates below 4%) if they were to sell and buy a new primary residence. It's a real mess.
- mensetmanusman 5y agoI feel like the federal government needs some sort of mechanism to create new cities to add competition on this front…
- jleyank 5y agoThought I'd point out it's quite risky to purchase something when you can't change jobs w/o moving. Yeah, in a hot market you might get away with it, but often downturns cause layoffs or other reasons to change job and you can end up eating the house. If you are near retirement or in a job-rich area, go for it if you can. But we've lost money on all houses but the current one over the decades.
- ykevinator2 5y agoIt's so weird that supply and demand doesn't fix this. there's no real barrier to becoming a house builder other than learning the trade, but it's not rocket science.
- harambae 5y agoYou're basically correct about building homes (even with inflated wood prices), but when there's a housing boom (bubble?) land gets bid up like crazy as well. And no, I'm not talking about Midtown Manhattan. Rural Maine, roughly 3 to 3.5 hours from Boston, is where I was looking and it wasn't easy to find the right spot.
- taylodl 5y agoMy wife is a realtor and aside from the well-known market craziness going on right now the other problem she's been seeing for the past 10-15 years is today's idea of a "starter home" or "first home" is the kind of home people would have purchased previously when they reached their peak earning potential. The untold story is there's a lot of affordable housing but there isn't a much of a market for it. Everyone wants their "dream home" from day one. Those kinds of homes have always been expensive and that hasn't changed. What people have yet to realize is you can't have it all. You wan to live in a cool, hip city with loads of high-paying jobs? You're going to pay for it. You want to live in the cool spot of that uber cool city? Now you're really going to pay for it! Want to move to a mid-size city in the U.S. Midwest? You have lots of affordable options. You want to buy a starter home in one of those mid-size cities in the Midwest? I guarantee you'll pay less than half for your mortgage than what you're currently paying in rent and you'll have a bigger house and a yard. But you can't have it all - you simply can't afford it.