5 ms·

This would kill the housing market overnight.

by s1k3 4y ago

Spivak 4y ago
Generally speaking I think people are aware that any significant change that drives housing prices down would destroy the market, collapse our economy, and all of western civilization would become as Mad Max. We can still think of what we wish the rules had been in the begging or what to do after unsustainable housing price increases cause Mad Max anyway.
- nephanth 4y ago
  Not sure this would significantly bring housing prices down, it may simply bring homeownership down (in favor of rental), because only investors would be able to buy.
anoonmoose 4y ago
The housing market being a core component of the US economy is a bug, not a feature.
- twblalock 4y ago
  It is an intentional feature that has been pursued as such by government policy for decades.
phkahler 4y ago
>> This would kill the housing market overnight. So does raising interest rates - see 2008. Look at the fed funds rate spike which set it off (not to say there weren't other problems to make it worse). Also look watch the housing market right now. Housing as a percent of income has been fairly constant for 50 years (there was a recent HN link on this). Lower interest rates mean you can borrow more dollars at the same monthly payment. This combined with an overall decrease in rates since 1980 have fueled the housing market. Long terms loans just mean building equity takes a long time, and people who sell within 5 years really don't have any (it will maybe cover moving costs). The problems with interest rates changing and putting people under water are really a problem of people not having equity in their home. Reducing the length of the loans will reduce that problem significantly.
- twblalock 4y ago
  Mortgate rates went from ~2.5% in 2021 to over 6% right now for a 30-year fixed-rate mortgage and the housing market is doing just fine. When rates go up, people lower prices, but not by a lot. Ultimately the price of housing is determined by supply, not interest rates, and supply is still historically low.

This would kill the housing market overnight.

by s1k3 4y ago

This would kill the housing market overnight.

Generally speaking I think people are aware that any significant change that drives housing prices down would destroy the market, collapse our economy, and all of western civilization would become as Mad Max. We can still think of what we wish the rules had been in the begging or what to do after unsustainable housing price increases cause Mad Max anyway.

nephanth 4y ago
Not sure this would significantly bring housing prices down, it may simply bring homeownership down (in favor of rental), because only investors would be able to buy.

anoonmoose 4y ago

The housing market being a core component of the US economy is a bug, not a feature.

twblalock 4y ago
It is an intentional feature that has been pursued as such by government policy for decades.

phkahler 4y ago

>> This would kill the housing market overnight. So does raising interest rates - see 2008. Look at the fed funds rate spike which set it off (not to say there weren't other problems to make it worse). Also look watch the housing market right now. Housing as a percent of income has been fairly constant for 50 years (there was a recent HN link on this). Lower interest rates mean you can borrow more dollars at the same monthly payment. This combined with an overall decrease in rates since 1980 have fueled the housing market. Long terms loans just mean building equity takes a long time, and people who sell within 5 years really don't have any (it will maybe cover moving costs). The problems with interest rates changing and putting people under water are really a problem of people not having equity in their home. Reducing the length of the loans will reduce that problem significantly.

twblalock 4y ago
Mortgate rates went from ~2.5% in 2021 to over 6% right now for a 30-year fixed-rate mortgage and the housing market is doing just fine. When rates go up, people lower prices, but not by a lot. Ultimately the price of housing is determined by supply, not interest rates, and supply is still historically low.