6 ms·

No because houses as an asset class could still be overvalued relative to other assets.

majormajor 4y ago
So a slightly more sophisticated analysis would be "how does housing appreciation in each market compare to stock market appreciation over the same time period" - but the description in the article leaves that out, looking just at historical incomes/costs/rents. In a world where homebuying is increasingly out of reach of a larger percent of people, you'd expect it to be more disconnected with average or median income/rent, and more pegged to higher percentiles.
- nemo44x 4y ago
  I mean, just about every house has an owner that lives in it. Homes are expensive. Most people just can’t afford a big slice of land and home. They have to accept they will have to make do in an apartment that may be shared. Should the home they deserve just magically appear?
  - HWR_14 4y ago
    > just about every house has an owner that lives in it Just under 2/3 of US homes have an owner that lives in it.
    - davidgay 4y ago
      What's the number of owners + long-term renters? (the likely relevant metric when looking at housing price vs local incomes)
      - HWR_14 4y ago
        Ah, that's one of the ways the statistic I quoted is skewed. Short term rentals aren't considered "homes" by it, so it would be 100%.
    - mellavora 4y ago
      and the trend is clearly and strongly towards fewer owners. Look at the percentage of houses bought by PE vs individuals in 2021. https://www.redfin.com/news/investor-home-purchases-q3-2021/ https://www.redfin.com/news/investor-home-purchases-q3-2021/ Real-Estate Investors Bought a Record 18% of the U.S. Homes That Sold in the Third Quarter yes, I know 18% < 1/3. But I also know that 18% > 6%, which was the figure in 2000. the trend is pretty obvious.
      - HWR_14 4y ago
        You can look at the percentage of people in the under 45 bracket, and it's been trending down for decades. The total is probably remaining high because the lifespan was going up.
  - thereisnospork 4y ago
    >Should the home they deserve just magically appear? They should have the right to purchase one, or have one commissioned, at the fair market value for materials, labor, and land.
    - majormajor 4y ago
      What does this mean, exactly? They do have the right to purchase on at fair market value for structure + land - it's just they can't afford it. The land is crazy expensive. I'm assuming "have one commissioned" is suggesting something about supply/zoning, but it's not clear to me what, exactly - if someone could afford to build or buy a house 3 miles from Dallas, should they also have the right to pay the same price to build something in the middle of Dallas?
      - Dylan16807 4y ago
        Both the price of land and the amount of land you need per unit of housing have some serious fairness problems right now.
      - thereisnospork 4y ago
        Fair is the key word. The present government enforced scarcity is neither a free nor a fair market. A free market lets participants take the economically optimal choice[0]. A fair market cannot require kowtowing to the arbitrary and capricious whims of a planning board. Ergo I hold that the respective governments and their zoning/construction policies are trampling on the individual right to a fair market and worse are creating grotesque amount of economic inefficiency, and by extension social damage, in the process. [0]Trivially: adding units to a lot to capitalize on a high price of land relative to materials + labor.
        nemo44x 4y ago
        Who is going to build these structures? Tradesmen today are already overbooked. And they’re going to work on projects that pay the best. That’s probably not affordable housing projects at scale. The point is between land, materials, and labor, a lot of people can’t afford what they think they deserve.
CPLX 4y ago
They could be overvalued relative to rent which is a much more compelling case, since renting a property is a near exact (not perfect, but close) substitute for owning one, on a practical utility level.
- 10amxn10 4y ago
  Where I live (not USA), monthly rent is about 0.1% - 0.2% of the price value of an apartment. For example, I pay about 350 USD/month and the owner is (trying) to sell the apartment for 180,000 USD. It doesn't make sense to me, but whatever.
DoubleDerper 4y ago
Relative to which assets? Stocks? Cars? Forex? IP? Crypto? Genuinely curious because everything is more expensive than it was before. If everything is overvalued, then nothing is overvalued [relatively]
- alimov 4y ago
  > If everything is overvalued, then nothing is overvalued [relatively] Could it be that maybe peoples work is under valued relative to the value they help create?
  - beckingz 4y ago
    Yes. This is why we're seeing a bunch of whining about a labor shortage, because people can now choose to be paid a little more fairly.
- mumblemumble 4y ago
  I remember a family member saying almost exactly the same thing to me in a conversation about the real estate market that took place in early 2008.
  - deleted 4y ago
    [deleted]
- snowwrestler 4y ago
  Stocks would be an obvious point of comparison. They’re down but real estate prices remain up. The argument for overvalued housing is that everyone got antsy during the pandemic and wanted to change houses and change neighborhoods, but that will settle down now that the pandemic is waning. Tech stocks seem to be falling because the pandemic-driven surge of screen time is fading now that the pandemic is waning. So: is real estate entirely different from stocks? Or will it see a similar post-pandemic slump but just has more lag?
  - majormajor 4y ago
ericmay 4y ago
Agreed. So what’s the historical price of homes relative to gold? S&P500? Do you know?
mikeryan 4y ago
The Moodys analysis, as I understand it, is house prices relative to median incomes in a market. I don’t think it’s a fluke that the overvalued markets correlate to regions that a lot of tech has moved over the pandemic like Boise, FL, TX and Nashville. If they’re measuring current house prices to 2020 and 2021 tax data then they may be missing an influx of income in the denominator as well.
- deleted 4y ago
  [deleted]

So a slightly more sophisticated analysis would be "how does housing appreciation in each market compare to stock market appreciation over the same time period" - but the description in the article leaves that out, looking just at historical incomes/costs/rents. In a world where homebuying is increasingly out of reach of a larger percent of people, you'd expect it to be more disconnected with average or median income/rent, and more pegged to higher percentiles.

nemo44x 4y ago
I mean, just about every house has an owner that lives in it. Homes are expensive. Most people just can’t afford a big slice of land and home. They have to accept they will have to make do in an apartment that may be shared. Should the home they deserve just magically appear?
- HWR_14 4y ago
  > just about every house has an owner that lives in it Just under 2/3 of US homes have an owner that lives in it.
  - davidgay 4y ago
    What's the number of owners + long-term renters? (the likely relevant metric when looking at housing price vs local incomes)
    - HWR_14 4y ago
      Ah, that's one of the ways the statistic I quoted is skewed. Short term rentals aren't considered "homes" by it, so it would be 100%.
  - mellavora 4y ago
    and the trend is clearly and strongly towards fewer owners. Look at the percentage of houses bought by PE vs individuals in 2021. https://www.redfin.com/news/investor-home-purchases-q3-2021/ https://www.redfin.com/news/investor-home-purchases-q3-2021/ Real-Estate Investors Bought a Record 18% of the U.S. Homes That Sold in the Third Quarter yes, I know 18% < 1/3. But I also know that 18% > 6%, which was the figure in 2000. the trend is pretty obvious.
    - HWR_14 4y ago
      You can look at the percentage of people in the under 45 bracket, and it's been trending down for decades. The total is probably remaining high because the lifespan was going up.
- thereisnospork 4y ago
  >Should the home they deserve just magically appear? They should have the right to purchase one, or have one commissioned, at the fair market value for materials, labor, and land.
  - majormajor 4y ago
    What does this mean, exactly? They do have the right to purchase on at fair market value for structure + land - it's just they can't afford it. The land is crazy expensive. I'm assuming "have one commissioned" is suggesting something about supply/zoning, but it's not clear to me what, exactly - if someone could afford to build or buy a house 3 miles from Dallas, should they also have the right to pay the same price to build something in the middle of Dallas?
    - Dylan16807 4y ago
      Both the price of land and the amount of land you need per unit of housing have some serious fairness problems right now.
    - thereisnospork 4y ago
      Fair is the key word. The present government enforced scarcity is neither a free nor a fair market. A free market lets participants take the economically optimal choice[0]. A fair market cannot require kowtowing to the arbitrary and capricious whims of a planning board. Ergo I hold that the respective governments and their zoning/construction policies are trampling on the individual right to a fair market and worse are creating grotesque amount of economic inefficiency, and by extension social damage, in the process. [0]Trivially: adding units to a lot to capitalize on a high price of land relative to materials + labor.
      - nemo44x 4y ago
        Who is going to build these structures? Tradesmen today are already overbooked. And they’re going to work on projects that pay the best. That’s probably not affordable housing projects at scale. The point is between land, materials, and labor, a lot of people can’t afford what they think they deserve.

CPLX 4y ago

They could be overvalued relative to rent which is a much more compelling case, since renting a property is a near exact (not perfect, but close) substitute for owning one, on a practical utility level.

10amxn10 4y ago
Where I live (not USA), monthly rent is about 0.1% - 0.2% of the price value of an apartment. For example, I pay about 350 USD/month and the owner is (trying) to sell the apartment for 180,000 USD. It doesn't make sense to me, but whatever.

DoubleDerper 4y ago

Relative to which assets? Stocks? Cars? Forex? IP? Crypto? Genuinely curious because everything is more expensive than it was before. If everything is overvalued, then nothing is overvalued [relatively]

alimov 4y ago
> If everything is overvalued, then nothing is overvalued [relatively] Could it be that maybe peoples work is under valued relative to the value they help create?
- beckingz 4y ago
  Yes. This is why we're seeing a bunch of whining about a labor shortage, because people can now choose to be paid a little more fairly.
mumblemumble 4y ago
I remember a family member saying almost exactly the same thing to me in a conversation about the real estate market that took place in early 2008.
- deleted 4y ago
  [deleted]
snowwrestler 4y ago
Stocks would be an obvious point of comparison. They’re down but real estate prices remain up. The argument for overvalued housing is that everyone got antsy during the pandemic and wanted to change houses and change neighborhoods, but that will settle down now that the pandemic is waning. Tech stocks seem to be falling because the pandemic-driven surge of screen time is fading now that the pandemic is waning. So: is real estate entirely different from stocks? Or will it see a similar post-pandemic slump but just has more lag?
- majormajor 4y ago

ericmay 4y ago

Agreed. So what’s the historical price of homes relative to gold? S&P500? Do you know?

mikeryan 4y ago

The Moodys analysis, as I understand it, is house prices relative to median incomes in a market. I don’t think it’s a fluke that the overvalued markets correlate to regions that a lot of tech has moved over the pandemic like Boise, FL, TX and Nashville. If they’re measuring current house prices to 2020 and 2021 tax data then they may be missing an influx of income in the denominator as well.

deleted 4y ago
[deleted]