10 ms·

Good! If you bought your home as shelter nothing has changed for you. If you bought homes as an investment, pricing out families, turning entire neighborhoods

by yardie 4y ago

Good! If you bought your home as shelter nothing has changed for you. If you bought homes as an investment, pricing out families, turning entire neighborhoods into Airbnbs, and destroying their culture you have my sympathies /S.

spoonjim 4y ago
This is a little cold. To get into the market, most people need to put in all the money they’ve ever saved plus a good fraction of all the money they’ll ever earn in the future. People will naturally be anxious about the value of that asset as they may need it to fund their retirement, nursing home, etc.
- jeffbee 4y ago
  That may be true but as a society we have to end that reality. There is no future for a society where shelter appreciates to such an extent that you can retire on it. Your retirement should be secured by having done something productive, not by merely squatting.
  - spoonjim 4y ago
    Can’t disagree with that. I’ve made more (paper) money in the last two years owning my house than working at my job.
  - fezfight 4y ago
    How about the folks whose retirements are guaranteed to never happen now? The millenials are the most financially fucked group in modern history.
    - pessimizer 4y ago
      > How about the folks whose retirements are guaranteed to never happen now? The people who were priced out and who never had any possibility of retirement are not going to sympathize. Maybe homeowners will decide to fight with them, not against them.
      - fezfight 4y ago
        Yeah, there's never any sympathy on either side. I kinda think that's by design.
- georgeecollins 4y ago
  As a policy, homes can be a savings tool (like a cushion against disaster or emergency retirement capital) but if they become investments that is antithetical to affordable housing and thus ultimately economic growth and social well being.
- pc86 4y ago
  > To get into the market, most people need to put in all the money they’ve ever saved plus a good fraction of all the money they’ll ever earn in the future. This is only true in the most expensive metro areas - nobody forces anybody to live there except for rare combinations like NYC + investment banking, which also tend to be very well compensated. There are plenty of low profile metros with tons of amenities and reasonable housing markets (especially now as home prices will come back from orbit and after some time, rents along with them). My fiance and I bought 3-4 months ago and mortgage + taxes is approximately 13% of our take home pay. We make good money but nothing astronomical (no FAANG salaries for sure, for either of us) and by every reasonable metric we make 2-2.5x what we need to in order to afford this house without dumping our entire lives into it.
  - Spivak 4y ago
    > This is only true in the most expensive metro areas This is true in all metro areas. Mortgage lenders are actually having to loosen the "percentage of cash flow one spends on a mortgage" requirements because without spending a third if your income you can't buy into the market. I live in a famously inexpensive housing market and a house that sold for $300k last year is now going for $450k. This is not just NYC and SF, it's the same story in Austin, Seattle, Atlanta, Columbus, Minneapolis, Dever. Nobody forces you to live where the jobs in your field are, got it. I cannot understand how people assume that everyone just has the mobility to just pick up their entire lives (like they don't have friends and family), sell their house (which is taking a loss now), move and be able to find a job anywhere. Like good lord not everyone works in a field where you can work remotely from a cabin in the woods. Some people do actually have to be on-prem. So many people in this thread are vastly overestimating the agency people in real life have to participate (or not) in the systems that surround them. If the SWE job market ever cools off I feel like the tone is going to shift dramatically.
    - pc86 4y ago
      It's not true in all metros. I am within a reasonable daily commute to a major city. Being willing and able to move ~30 miles would add two other major cities. At least one of them, by nearly all metrics, is more expensive than several of the cities you listed. And just because home prices drop a fraction of a percent doesn't mean you're suddenly taking a six figure loss if you sell and move, especially if like your example the price has increased 50% in the last year.
derekp7 4y ago
If you bought your home as shelter and are going to live in it for the next 30 years then this doesn't affect you. Quite a few people buy starter homes, then upgrade as their family grows. Or have to move due to employment. Or a number of other things that can affect them.
- Spivak 4y ago
  Yep and because housing is completely unaffordable without betting a third of your income over 15 years housing prices won't go down this just fucks you with no recourse. So yayy! We designed a system where having shelter requires leveraging yourself to the chin in an asset market (if you're renting you just happen to not be playing, but your landlord is) and then putting the blame on the people who didn't have any other option.
- pizza234 4y ago
  True, but generally (generally) speaking, the market changes affect both ways; if the value of the home to be sold dropped, it will also drop the price of the home to be purchased.
  - orev 4y ago
    It does not drop the amount remaining on the mortgage, so people get stuck paying more for an asset that’s not worth as much as the loan. They can’t sell it because they won’t make up the difference between the new sale price and the amount remaining on the mortgage. Only inflation solves this problem.
    - pizza234 4y ago
      If one buys a home for 100k, then the prices drop 50%, they can sell, say, for 50k, and buy a new home for 50k. Considering the price drop, the new home will be equal, in value, to the one they originally bought for 100k. This does not include transaction prices (which can be high, of course), but they incur regardless.
      - 4y ago
TheHypnotist 4y ago
This is new homes only. All homes: https://fred.stlouisfed.org/series/ASPUS https://fred.stlouisfed.org/series/ASPUS New Homes: https://fred.stlouisfed.org/series/MSPNHSUS https://fred.stlouisfed.org/series/MSPNHSUS
- jeffbee 4y ago
  Yeah, it's important to note the mix effect. New home price can only affect jurisdictions where new homes are actually permitted (i.e. not in the Bay Area).
refurb 4y ago
If you bought your home as shelter but need to sell because you lose your job, get divorced, get a job in another city, then this will affect you. The average person owns a home for less than a decade.
- yardie 4y ago
  If you bought a home and had to sell, but made money, congratulations you beat the market. You get to brag at the next barbecue about how your a financial wizard. If you bought a home and had to sell, but lost money, congratulations you were an unofficial renter. You lick your wounds and lean into the next financial scheme.
  - JamesSwift 4y ago
    That presumes you can sell it. From personal experience in the 2008 market, you can be upside down enough on your mortgage that you financially are unable to sell your home because you don't have enough cash on hand to set fire to. Its not a good feeling not knowing how long you are going to be stuck in the home. Hope you don't want to move due to things like having kids or getting a new job while you are upside down.
    - ryathal 4y ago
      The mortgage market has changed a lot as a result of 2008. It's harder to end up underwater now with requirements for less biased appraisals, actual income, and actual assets. The other thing to note is that even in 2008 almost every home in the country had recovered to above 2008 prices within 5 years. Buying a house without a reasonable confidence of living 5 years in that home is taking a big risk.
      - refurb 4y ago
        Cities like Las Vegas just recovered to their 2008 peak just before Covid hit. And if they see a correction now they may drop below their 2008 peak. https://fred.stlouisfed.org/series/LVXRNSA https://fred.stlouisfed.org/series/LVXRNSA
fezfight 4y ago
If you bought a house to raise your family in the past couple of years, you're toast! You're still on the hook for the absurd loan the bank gave you, interest rates are going up so your payments will too, and your house is worth less.
- rsyring 4y ago
  Given how low fixed mortgage rates have been for years, hopefully not too many people will see their payments go up.
- awinder 4y ago
  Looking around ARM mortgages were around 3% of all mortgages in 2020-2021 era, so I don’t think it’s fair to generalize that peoples mortgages are going up. But yeah, people will become immobilized if their property has decreased in value, until it recovers, and that’s unfortunate.
  - Marsymars 4y ago
    Depends on jurisdiction. That’s the case in the USA, but in Canada, for instance, 5-year fixed terms are the standard for mortgages.
    - fezfight 4y ago
      Yes! Starting in 2023, many families are going to start going bankrupt and losing their homes in Canada.
      - Marsymars 4y ago
        Why starting in 2023? Are you expecting much higher rates starting in 2023? There's a rolling set of people who are continually coming up to their 5-year renewal dates.
- pessimizer 4y ago
  We call housing expensive because it takes such a huge part of our income (unjustifiably), but as soon as housing prices go down, people start killing themselves.
Dracophoenix 4y ago
> Good! If you bought your home as shelter nothing has changed for you. Property taxes

by yardie 4y ago

spoonjim 4y ago

This is a little cold. To get into the market, most people need to put in all the money they’ve ever saved plus a good fraction of all the money they’ll ever earn in the future. People will naturally be anxious about the value of that asset as they may need it to fund their retirement, nursing home, etc.

jeffbee 4y ago
That may be true but as a society we have to end that reality. There is no future for a society where shelter appreciates to such an extent that you can retire on it. Your retirement should be secured by having done something productive, not by merely squatting.
- spoonjim 4y ago
  Can’t disagree with that. I’ve made more (paper) money in the last two years owning my house than working at my job.
- fezfight 4y ago
  How about the folks whose retirements are guaranteed to never happen now? The millenials are the most financially fucked group in modern history.
  - pessimizer 4y ago
    > How about the folks whose retirements are guaranteed to never happen now? The people who were priced out and who never had any possibility of retirement are not going to sympathize. Maybe homeowners will decide to fight with them, not against them.
    - fezfight 4y ago
      Yeah, there's never any sympathy on either side. I kinda think that's by design.
georgeecollins 4y ago
As a policy, homes can be a savings tool (like a cushion against disaster or emergency retirement capital) but if they become investments that is antithetical to affordable housing and thus ultimately economic growth and social well being.
pc86 4y ago
> To get into the market, most people need to put in all the money they’ve ever saved plus a good fraction of all the money they’ll ever earn in the future. This is only true in the most expensive metro areas - nobody forces anybody to live there except for rare combinations like NYC + investment banking, which also tend to be very well compensated. There are plenty of low profile metros with tons of amenities and reasonable housing markets (especially now as home prices will come back from orbit and after some time, rents along with them). My fiance and I bought 3-4 months ago and mortgage + taxes is approximately 13% of our take home pay. We make good money but nothing astronomical (no FAANG salaries for sure, for either of us) and by every reasonable metric we make 2-2.5x what we need to in order to afford this house without dumping our entire lives into it.
- Spivak 4y ago
  > This is only true in the most expensive metro areas This is true in all metro areas. Mortgage lenders are actually having to loosen the "percentage of cash flow one spends on a mortgage" requirements because without spending a third if your income you can't buy into the market. I live in a famously inexpensive housing market and a house that sold for $300k last year is now going for $450k. This is not just NYC and SF, it's the same story in Austin, Seattle, Atlanta, Columbus, Minneapolis, Dever. Nobody forces you to live where the jobs in your field are, got it. I cannot understand how people assume that everyone just has the mobility to just pick up their entire lives (like they don't have friends and family), sell their house (which is taking a loss now), move and be able to find a job anywhere. Like good lord not everyone works in a field where you can work remotely from a cabin in the woods. Some people do actually have to be on-prem. So many people in this thread are vastly overestimating the agency people in real life have to participate (or not) in the systems that surround them. If the SWE job market ever cools off I feel like the tone is going to shift dramatically.
  - pc86 4y ago
    It's not true in all metros. I am within a reasonable daily commute to a major city. Being willing and able to move ~30 miles would add two other major cities. At least one of them, by nearly all metrics, is more expensive than several of the cities you listed. And just because home prices drop a fraction of a percent doesn't mean you're suddenly taking a six figure loss if you sell and move, especially if like your example the price has increased 50% in the last year.

derekp7 4y ago

If you bought your home as shelter and are going to live in it for the next 30 years then this doesn't affect you. Quite a few people buy starter homes, then upgrade as their family grows. Or have to move due to employment. Or a number of other things that can affect them.

Spivak 4y ago
Yep and because housing is completely unaffordable without betting a third of your income over 15 years housing prices won't go down this just fucks you with no recourse. So yayy! We designed a system where having shelter requires leveraging yourself to the chin in an asset market (if you're renting you just happen to not be playing, but your landlord is) and then putting the blame on the people who didn't have any other option.
pizza234 4y ago
True, but generally (generally) speaking, the market changes affect both ways; if the value of the home to be sold dropped, it will also drop the price of the home to be purchased.
- orev 4y ago
  It does not drop the amount remaining on the mortgage, so people get stuck paying more for an asset that’s not worth as much as the loan. They can’t sell it because they won’t make up the difference between the new sale price and the amount remaining on the mortgage. Only inflation solves this problem.
  - pizza234 4y ago
    If one buys a home for 100k, then the prices drop 50%, they can sell, say, for 50k, and buy a new home for 50k. Considering the price drop, the new home will be equal, in value, to the one they originally bought for 100k. This does not include transaction prices (which can be high, of course), but they incur regardless.
    - 4y ago

TheHypnotist 4y ago

This is new homes only. All homes: https://fred.stlouisfed.org/series/ASPUS https://fred.stlouisfed.org/series/ASPUS New Homes: https://fred.stlouisfed.org/series/MSPNHSUS https://fred.stlouisfed.org/series/MSPNHSUS

jeffbee 4y ago
Yeah, it's important to note the mix effect. New home price can only affect jurisdictions where new homes are actually permitted (i.e. not in the Bay Area).

refurb 4y ago

If you bought your home as shelter but need to sell because you lose your job, get divorced, get a job in another city, then this will affect you. The average person owns a home for less than a decade.

yardie 4y ago
If you bought a home and had to sell, but made money, congratulations you beat the market. You get to brag at the next barbecue about how your a financial wizard. If you bought a home and had to sell, but lost money, congratulations you were an unofficial renter. You lick your wounds and lean into the next financial scheme.
- JamesSwift 4y ago
  That presumes you can sell it. From personal experience in the 2008 market, you can be upside down enough on your mortgage that you financially are unable to sell your home because you don't have enough cash on hand to set fire to. Its not a good feeling not knowing how long you are going to be stuck in the home. Hope you don't want to move due to things like having kids or getting a new job while you are upside down.
  - ryathal 4y ago
    The mortgage market has changed a lot as a result of 2008. It's harder to end up underwater now with requirements for less biased appraisals, actual income, and actual assets. The other thing to note is that even in 2008 almost every home in the country had recovered to above 2008 prices within 5 years. Buying a house without a reasonable confidence of living 5 years in that home is taking a big risk.
    - refurb 4y ago
      Cities like Las Vegas just recovered to their 2008 peak just before Covid hit. And if they see a correction now they may drop below their 2008 peak. https://fred.stlouisfed.org/series/LVXRNSA https://fred.stlouisfed.org/series/LVXRNSA

fezfight 4y ago

If you bought a house to raise your family in the past couple of years, you're toast! You're still on the hook for the absurd loan the bank gave you, interest rates are going up so your payments will too, and your house is worth less.

rsyring 4y ago
Given how low fixed mortgage rates have been for years, hopefully not too many people will see their payments go up.
awinder 4y ago
Looking around ARM mortgages were around 3% of all mortgages in 2020-2021 era, so I don’t think it’s fair to generalize that peoples mortgages are going up. But yeah, people will become immobilized if their property has decreased in value, until it recovers, and that’s unfortunate.
- Marsymars 4y ago
  Depends on jurisdiction. That’s the case in the USA, but in Canada, for instance, 5-year fixed terms are the standard for mortgages.
  - fezfight 4y ago
    Yes! Starting in 2023, many families are going to start going bankrupt and losing their homes in Canada.
    - Marsymars 4y ago
      Why starting in 2023? Are you expecting much higher rates starting in 2023? There's a rolling set of people who are continually coming up to their 5-year renewal dates.
pessimizer 4y ago
We call housing expensive because it takes such a huge part of our income (unjustifiably), but as soon as housing prices go down, people start killing themselves.

Dracophoenix 4y ago

> Good! If you bought your home as shelter nothing has changed for you. Property taxes