4 ms·

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 u

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.
    - TheHypnotist 4y ago
      Not if they borrowed a portion to buy.
    - derekp7 4y ago
      If you borrow 80k to buy that 100k house (20% down), and the house drops to 50k, you still owe 80k. You need to be able to sell it for at least 80k, or you ain't getting that other house for 50k. So what happens is anyone that bought at an inflated price aren't going to sell for a number of years (until their equity gets in line with what they owe, or inflation brings the price of the house back up). Problem is that people were panic buying at inflated prices, because they thought prices would go up further in the future and had to move fast. But they get in over their head, and a slight disruption (life events happen) can cause them to miss payments. Now they are forced to sell or abandon the house, and the bank is forced to take a loss (if in the case of a short sell). And if someone is already losing their house, they aren't going to be doing much maintenance on it so the house ends up in poorer quality even if the current owner doesn't specifically try to sabotage the house. So now you end up with a bunch of houses on the market that aren't really move-in ready, so investors sweep them up limiting the supply, and cause the cycle to bounce all over again.
- deleted 4y ago
  [deleted]
marcosdumay 4y ago
If you have a starter home and want to upgrade, prices falling are the best thing that can happen to you.

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.
  - TheHypnotist 4y ago
    Not if they borrowed a portion to buy.
  - derekp7 4y ago
    If you borrow 80k to buy that 100k house (20% down), and the house drops to 50k, you still owe 80k. You need to be able to sell it for at least 80k, or you ain't getting that other house for 50k. So what happens is anyone that bought at an inflated price aren't going to sell for a number of years (until their equity gets in line with what they owe, or inflation brings the price of the house back up). Problem is that people were panic buying at inflated prices, because they thought prices would go up further in the future and had to move fast. But they get in over their head, and a slight disruption (life events happen) can cause them to miss payments. Now they are forced to sell or abandon the house, and the bank is forced to take a loss (if in the case of a short sell). And if someone is already losing their house, they aren't going to be doing much maintenance on it so the house ends up in poorer quality even if the current owner doesn't specifically try to sabotage the house. So now you end up with a bunch of houses on the market that aren't really move-in ready, so investors sweep them up limiting the supply, and cause the cycle to bounce all over again.
deleted 4y ago
[deleted]

marcosdumay 4y ago

If you have a starter home and want to upgrade, prices falling are the best thing that can happen to you.