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> Mere equity in a home with a flat value is essentially unaffected by lowered property values overall: you'll not be forced to 'save' as much, but the point of
by sp527 4y ago
> Mere equity in a home with a flat value is essentially unaffected by lowered property values overall: you'll not be forced to 'save' as much, but the point of saving was to not have a mortgage payment anymore. If you don't need to 'save' as much to reach the same outcome, if anything that's a net good.
Some of this is hilariously false and the rest is incoherent. There is simply no way to argue that lowered property values won't result in a net destruction of wealth for people holding mortgages or paid off homes.
> Your data is out of date. It used to hover around 200k current dollars on average, but now it's far higher. The increasingly terrible zoning and other building regulations finally caught up to us: https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/
You can't measure from a point of extreme dislocation. We're clearly off trend at present and there's no reason to believe it won't revert, as is being widely discussed right now. Somewhat obviously, monthly mortgage payment inflation cannot greatly exceed wage inflation, on average.
> No, it's just luck compounded by regulations that favor handing out wealth to the elderly over the keeping costs reasonable for younger people.
You're still thinking about extreme markets. And in those markets regulation is only part of the answer. The truly salient determinant of prices is how quickly demand for housing in a region increases, which is fundamentally unpredictable.
- TulliusCicero 4y ago> There is simply no way to argue that lowered property values won't result in a net destruction of wealth for people holding mortgages or paid off homes. For people with existing home equity, sure. But how much does that actually benefit them? You can only actually make use of that money in a meaningful way if you either get a mortgage again, or if you leave and go somewhere cheaper (if it's more expensive than your current area, the current situation makes you even more screwed compared to the hypothetical). Anyway, I was talking about the eventual steady state of the system: as a general principle, low home values would not destroy wealth, any more than reverting back to sane car prices will "destroy the wealth" of car ownership. > We're clearly off trend at present and there's no reason to believe it won't revert It might revert, yes, but unlike the insane housing bubble before, the current situation doesn't appear to be caused by financial shenanigans. There's just a lot of demand chasing not many houses. And if it does revert, it'll almost certainly be because of long-term changes in demand or supply. For demand, that would mean a long period of stagnation or recession. > You're still thinking about extreme markets. And what we're seeing is that increasingly, even markets that we didn't think of as "hot" are getting expensive. Random places look increasingly like the bay area I grew up in in the 90's, when it was already quite expensive, but not insanely so like now.