7 ms·

Interest rates are the real cause IMO. Sadly, there are still a lot of rich people with money to burn on real estate, but the rates are now what is stopping the

by dadoge 4y ago

Interest rates are the real cause IMO. Sadly, there are still a lot of rich people with money to burn on real estate, but the rates are now what is stopping them. Prices would still be going up and up if The Fed didn’t jump in to hike rates.

konschubert 4y ago
That’s the point. Home prices are too high due to raised interest rates. They will come down to match the interest rates.
- michaelmrose 4y ago
  Raising the interest rates makes homes more expensive over the lifetime of the loan inclusive of interest. It does not however increase the principal cost of the home in fact it has the reverse effect.
  - km3r 4y ago
    People often budget the size of their loan based on the monthly payments. When interest rates go up, payments go up, size of loan goes down. Smaller size loan effectively lowers demand. Lower demand, home prices fall (or just rise slower).
    - konschubert 4y ago
      I think we’re all saying the same thing.
- dadoge 4y ago
  More likely is they will grow more slowly rather than anything Don’t expect anything near pre-covid prices anytime soon for the principal
feet 4y ago
That's such a simplistic view of the system. Tons of homes and real estate have been and are being purchased as investment to rent out. This combined with zoning and other restrictions on building new housing has severely restricted supply. I'll be there are even more factors involved as well
- vba616 4y ago
  Rental real estate is bad? Rental properties increase the supply of homes to people who don't have the credit or income to own. Homeowners freak out at someone buying a property to rent out because they don't want poor people around. Same as with homeless shelters, addiction treatment centers, public housing... Anybody who lives in a neighborhood of mostly homeowners I would expect has seen it firsthand. "Muh property values!" The lower the property values, the more paranoid people get.
  - feet 4y ago
    Yes, landlords don't provide value. Rents capture most increases in wages while giving nothing of actual value back to the community. There was even a board member of a real estate investment firm discussing that it's a great time to press rents because they're at 97% capacity and people have nowhere else to go. That's disgusting behavior and not beneficial, it actively harms people. Editing to add citation: https://www.bloomberg.com/graphics/2022-evictions-monarch-investment-rental-properties/ https://www.bloomberg.com/graphics/2022-evictions-monarch-in...
    - jeffbee 4y ago
      If the big landlords were not in there it would just be more smaller landlords doing the same thing. The only thing to be done if you dislike the power of landlords is to flood the market with supply, which should be policy in every jurisdiction in America, but isn't because the owners/landlords are in control of the policies.
    - vba616 4y ago
      Converting more properties to rentals is bad for rents? Increasing the supply...of rental housing...makes the rental market worse for renters? It doesn't provide value to NIMBYs who don't want those people in their neighborhoods. I know whereof I speak because I live in a neighborhood, where most properties are not rented out, but they resemble apartments, and there was an ongoing soap opera about a vacant lot which was developed to be a rental property. And there probably were unscrupulous things that went on, in terms of permits and zoning and stuff. There were allegations about a retaining wall not being properly constructed to prevent erosion. But people are basically against it because it "looks different" and will bring lower class people in. Personally, I don't care about property values because I'm not in the business of flipping houses, whereas I would rather not pay a lot of property taxes. Do you rent or own your home?
imtringued 4y ago
Higher interest rates make it easier to buy homes upfront for the rich because the mortgage financed competition is paying their money to the bank instead of on the house.

by dadoge 4y ago

konschubert 4y ago

That’s the point. Home prices are too high due to raised interest rates. They will come down to match the interest rates.

michaelmrose 4y ago
Raising the interest rates makes homes more expensive over the lifetime of the loan inclusive of interest. It does not however increase the principal cost of the home in fact it has the reverse effect.
- km3r 4y ago
  People often budget the size of their loan based on the monthly payments. When interest rates go up, payments go up, size of loan goes down. Smaller size loan effectively lowers demand. Lower demand, home prices fall (or just rise slower).
  - konschubert 4y ago
    I think we’re all saying the same thing.
dadoge 4y ago
More likely is they will grow more slowly rather than anything Don’t expect anything near pre-covid prices anytime soon for the principal

feet 4y ago

That's such a simplistic view of the system. Tons of homes and real estate have been and are being purchased as investment to rent out. This combined with zoning and other restrictions on building new housing has severely restricted supply. I'll be there are even more factors involved as well

vba616 4y ago
Rental real estate is bad? Rental properties increase the supply of homes to people who don't have the credit or income to own. Homeowners freak out at someone buying a property to rent out because they don't want poor people around. Same as with homeless shelters, addiction treatment centers, public housing... Anybody who lives in a neighborhood of mostly homeowners I would expect has seen it firsthand. "Muh property values!" The lower the property values, the more paranoid people get.
- feet 4y ago
  Yes, landlords don't provide value. Rents capture most increases in wages while giving nothing of actual value back to the community. There was even a board member of a real estate investment firm discussing that it's a great time to press rents because they're at 97% capacity and people have nowhere else to go. That's disgusting behavior and not beneficial, it actively harms people. Editing to add citation: https://www.bloomberg.com/graphics/2022-evictions-monarch-investment-rental-properties/ https://www.bloomberg.com/graphics/2022-evictions-monarch-in...
  - jeffbee 4y ago
    If the big landlords were not in there it would just be more smaller landlords doing the same thing. The only thing to be done if you dislike the power of landlords is to flood the market with supply, which should be policy in every jurisdiction in America, but isn't because the owners/landlords are in control of the policies.
  - vba616 4y ago
    Converting more properties to rentals is bad for rents? Increasing the supply...of rental housing...makes the rental market worse for renters? It doesn't provide value to NIMBYs who don't want those people in their neighborhoods. I know whereof I speak because I live in a neighborhood, where most properties are not rented out, but they resemble apartments, and there was an ongoing soap opera about a vacant lot which was developed to be a rental property. And there probably were unscrupulous things that went on, in terms of permits and zoning and stuff. There were allegations about a retaining wall not being properly constructed to prevent erosion. But people are basically against it because it "looks different" and will bring lower class people in. Personally, I don't care about property values because I'm not in the business of flipping houses, whereas I would rather not pay a lot of property taxes. Do you rent or own your home?

imtringued 4y ago

Higher interest rates make it easier to buy homes upfront for the rich because the mortgage financed competition is paying their money to the bank instead of on the house.