5 ms·

Yes, it's the worst time to buy a house. We're at the peak of the bubble, and things are about to start heading down hill. I anticipate that people who bought w

by vinyl7 4y ago

Yes, it's the worst time to buy a house. We're at the peak of the bubble, and things are about to start heading down hill. I anticipate that people who bought within the last 6 months will probably end up under water within a year or two.

paulpauper 4y ago
but what if the bubble bursts 4-5 years from now. Then this means that if may not ever go back to today's prices . As high as prices can seem, they can always go higher.
- rxhernandez 4y ago
  I mean, they can only go meaningfully higher if people can afford those higher prices. I'm not convinced they can go much higher without wages going up substantially.
  - chemmail 4y ago
    The money came from the gov printing $2trillion for the pandemic from thin air. That got thrown into speculative investments like stocks, which had insane highs. Now the air wants it back. Everyone who had inflated net worth from stocks and other investments and leveraged from all those speculative assets will soon be in bad shape.
- Matthias247 4y ago
  There's a super wide spectrum between "prices then will only increase 2% YoY", "prices will stay flat for a while", and "prices will go down significantly". And it will likely depend on the region which option will apply. For extremely supply constrained regions with high prices (like Vancouver), I don't expect a decrease. But my guess is as good as everyone elses.
  - hello_moto 4y ago
    Vancouver market is holding its fort at the moment. There might be older unmaintained house in desirable hood that went higher in Feb-March but unable to fetch that price again today but good product is good product and will demand premium in this region where land is a scarcity.
- vinyl7 4y ago
  The reason why I think it will happen sooner than that is because of everything else going on. Inflation, increased food/gas prices, crashing stock market...we're already starting to see layoffs and hiring freezes in tech. Got companies who are reverting their WFH policies...how many tech people went and bought a house in Idaho or Montana thinking their WFH was permanent?
  - Matthias247 4y ago
    Buying a property is not a bad thing when there is inflation: It locks one in on a certain interest amount - and if that one further increases due to inflation in the next years it won't mattter. It also locks one in onto a certain buying price - so further price increases in the market also won't matter.
  - weberer 4y ago
    Wouldn't inflation keep the prices high?
    - tommiegannert 4y ago
      House prices have already inflated quite a lot higher than 2% per year in many places. Now everything else is playing catch-up, which means people will have less money to spend on housing (mortgage repayments). What institiutions do, I don't know, but I assume the speculative ones will be a bit more careful. So we may have high inflation even if housing prices don't participate. Given the changes in rates, it seems unlikely house prices will continue the way they have.
    - dominotw 4y ago
      that didnt' apply to stocks.
deleted 4y ago
[deleted]
arcticbull 4y ago
How so? The cost per square foot of the average American home has remained exactly the same, adjusted for inflation, since 1974. In major metros, it's artificial supply constraints that have kept prices going up, and those aren't about to ease. In SF for instance, over certain periods, the city added only 10% of the houses needed to keep up with job growth. Even a massive shock to the industry wouldn't have much real effect. I strongly suspect there won't be much to write home about on the housing front this time. Folks seem to think 'expensive' means 'bubble' - but houses have always cost what folks can afford to pay, otherwise, you know, they'd be less expensive.
- 0des 4y ago
  Now do wages, adjusted for inflation, since 1971.
  - arcticbull 4y ago
    They have also kept pace with inflation, why do you ask? [1] [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
    - baremetal 4y ago
      https://image.cnbcfm.com/api/v1/image/106972802-1636474969966-20211109-mobile-fallaback-i3rrt-growth-in-u-s-home-values-outpaces-that-of-incomes.png?v=1636475060 https://image.cnbcfm.com/api/v1/image/106972802-163647496996... from cnbc the growth of real estate prices vs wage growth. wage growth has been flat since the '70s.
      - arcticbull 4y ago
        Nothing in that article contradicts anything I said, you've missed some nuance. The BLS data shows that wages have kept pace with inflation. The Census Bureau data shows that the price per square foot of the average American home has remained the same since the 1970s. The spread is that the average new American home now has twice the square footage per person. [1] Of course in major metros, supply constraints keep prices high (and the gap between supply and demand is so large it would take something truly catastrophic to close the gap - SF barely had a 2008, for instance). Outside metros, houses have gotten enormous. In both places, families are smaller. I'm just saying, I don't see a housing bubble looking at price alone. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...
jeffbee 4y ago
Housing may have a bubble on top, but fundamentally it’s also supply-constrained. It may not pop as much as you’re hoping.
- user_named 4y ago
  Everything is supply constrained.
- lamontcg 4y ago
  demand can drop as people lose their jobs and the companies buying up residential real estate on speculation see their portfolio values drop and their cash positions get squeezed by a recession. forced selling can also increase supply.
  - jeffbee 4y ago
    Demand for housing doesn't really drop when people lose their jobs. They still want shelter! And the demographic process which causes household formation was locked in by decisions made many years ago.
tempsy 4y ago
but rents are also soaring in many major metros…

by vinyl7 4y ago

paulpauper 4y ago

but what if the bubble bursts 4-5 years from now. Then this means that if may not ever go back to today's prices . As high as prices can seem, they can always go higher.

rxhernandez 4y ago
I mean, they can only go meaningfully higher if people can afford those higher prices. I'm not convinced they can go much higher without wages going up substantially.
- chemmail 4y ago
  The money came from the gov printing $2trillion for the pandemic from thin air. That got thrown into speculative investments like stocks, which had insane highs. Now the air wants it back. Everyone who had inflated net worth from stocks and other investments and leveraged from all those speculative assets will soon be in bad shape.
Matthias247 4y ago
There's a super wide spectrum between "prices then will only increase 2% YoY", "prices will stay flat for a while", and "prices will go down significantly". And it will likely depend on the region which option will apply. For extremely supply constrained regions with high prices (like Vancouver), I don't expect a decrease. But my guess is as good as everyone elses.
- hello_moto 4y ago
  Vancouver market is holding its fort at the moment. There might be older unmaintained house in desirable hood that went higher in Feb-March but unable to fetch that price again today but good product is good product and will demand premium in this region where land is a scarcity.
vinyl7 4y ago
The reason why I think it will happen sooner than that is because of everything else going on. Inflation, increased food/gas prices, crashing stock market...we're already starting to see layoffs and hiring freezes in tech. Got companies who are reverting their WFH policies...how many tech people went and bought a house in Idaho or Montana thinking their WFH was permanent?
- Matthias247 4y ago
  Buying a property is not a bad thing when there is inflation: It locks one in on a certain interest amount - and if that one further increases due to inflation in the next years it won't mattter. It also locks one in onto a certain buying price - so further price increases in the market also won't matter.
- weberer 4y ago
  Wouldn't inflation keep the prices high?
  - tommiegannert 4y ago
    House prices have already inflated quite a lot higher than 2% per year in many places. Now everything else is playing catch-up, which means people will have less money to spend on housing (mortgage repayments). What institiutions do, I don't know, but I assume the speculative ones will be a bit more careful. So we may have high inflation even if housing prices don't participate. Given the changes in rates, it seems unlikely house prices will continue the way they have.
  - dominotw 4y ago
    that didnt' apply to stocks.

deleted 4y ago

[deleted]

arcticbull 4y ago

How so? The cost per square foot of the average American home has remained exactly the same, adjusted for inflation, since 1974. In major metros, it's artificial supply constraints that have kept prices going up, and those aren't about to ease. In SF for instance, over certain periods, the city added only 10% of the houses needed to keep up with job growth. Even a massive shock to the industry wouldn't have much real effect. I strongly suspect there won't be much to write home about on the housing front this time. Folks seem to think 'expensive' means 'bubble' - but houses have always cost what folks can afford to pay, otherwise, you know, they'd be less expensive.

0des 4y ago
Now do wages, adjusted for inflation, since 1971.
- arcticbull 4y ago
  They have also kept pace with inflation, why do you ask? [1] [1] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
  - baremetal 4y ago
    https://image.cnbcfm.com/api/v1/image/106972802-1636474969966-20211109-mobile-fallaback-i3rrt-growth-in-u-s-home-values-outpaces-that-of-incomes.png?v=1636475060 https://image.cnbcfm.com/api/v1/image/106972802-163647496996... from cnbc the growth of real estate prices vs wage growth. wage growth has been flat since the '70s.
    - arcticbull 4y ago
      Nothing in that article contradicts anything I said, you've missed some nuance. The BLS data shows that wages have kept pace with inflation. The Census Bureau data shows that the price per square foot of the average American home has remained the same since the 1970s. The spread is that the average new American home now has twice the square footage per person. [1] Of course in major metros, supply constraints keep prices high (and the gap between supply and demand is so large it would take something truly catastrophic to close the gap - SF barely had a 2008, for instance). Outside metros, houses have gotten enormous. In both places, families are smaller. I'm just saying, I don't see a housing bubble looking at price alone. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...

jeffbee 4y ago

Housing may have a bubble on top, but fundamentally it’s also supply-constrained. It may not pop as much as you’re hoping.

user_named 4y ago
Everything is supply constrained.
lamontcg 4y ago
demand can drop as people lose their jobs and the companies buying up residential real estate on speculation see their portfolio values drop and their cash positions get squeezed by a recession. forced selling can also increase supply.
- jeffbee 4y ago
  Demand for housing doesn't really drop when people lose their jobs. They still want shelter! And the demographic process which causes household formation was locked in by decisions made many years ago.

tempsy 4y ago

but rents are also soaring in many major metros…