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> If you are liquid, a good time to pick up some real estate will probably be in about a year's time. Why do you say that? There seems to be this idea among y

> If you are liquid, a good time to pick up some real estate will probably be in about a year's time. Why do you say that? There seems to be this idea among younger individuals online that because prices jumped so quickly that a correction is inevitable, and it’s just not. There’s a ton of demand still out there, and the second any sort of meaningful dip is perceived all those buyers will be right there. Prices went up because a shit ton of money was printed with sub-3% rates. Why would any sane person with a 3% mortgage ever sell, especially when inflation is 9%? It’s quite literally free money.

deleted 4y ago
[deleted]
opportune 4y ago
Because they died or need to move? Because they have no liquidity? I agree in general that waiting on the sidelines doesn’t guarantee you a better price later. The problem of there being other buyers wanting to scoop dips providing price support would only be fixed by those buyers loosing liquidity, which would likely impact any individual waiting on the sideline too.
jaxn 4y ago
Hiring slows, wages go down, remote work becomes less normal, rates go up, prices cool to offset rates, boomers downsizing (pass passing property to heirs) increase supply as part of the largest generational wealth transfer ever… People who stretched to buy at the peak of the market end up upside down, refinancing gets harder, selling takes longer, foreclosure starts… 2008 all over again. May not be likely, but wouldn’t be surprising
outworlder 4y ago
> Why would any sane person with a 3% mortgage ever sell Because they can no longer afford their morgage as the economy goes to the gutter and they get laid off + their purchase power gets eroded due to inflation? Or they got a new job, but now they have to relocate? Many reasons.
RowanH 4y ago
It maybe slightly different in NZ as we are on variable rates, or fixed terms for upto 5 years or so that changes things. But we are now in correction period. Prices sky rocketed as money was printed, now the shine has worn off and the fundamentals don't support sky high prices. With much the same story as a number of countries - interest rates causing cost of living hikes and wages not keeping place, the "sure bet" of the housing market is no longer, and the prices have dropped. https://tradingeconomics.com/new-zealand/housing-index https://tradingeconomics.com/new-zealand/housing-index NZ was living off that "they'll never go down" attitude. The people that bought in the last year are starting to hurt, and unfortunately/fortunately (depending on which side of the coin) the sentiment just starts shifting. Once it starts shifting, people get nervous - over confidence bidding is out the window. Even though we (theoretically) have a supply and demand issue, even though construction costs are sky rocketing, people start realising they don't need that 4-5 bedroom monster, or that 2nd holiday home that they can air bnb out. Seriously at one point during I think it was 2021 - I was in a c/md level position, and our house went up more than I earned in one year - we're talking a fairly standard 3 bdrm house - nothing fancy. That was spectacular... that spurned on a lot of "mom and pop" investors to go nuts buying houses, when they shouldn't have. And now they're looking into negative equity territory.
- xupybd 4y ago
  Yeah my friends purchased at the peak thanks to FOMO. Now they owe over half a million on a small provincial home. On a teacher's salary I'm not sure how they're going to survive if rates continue to climb. My house has dropped more than a years income since it peaked. That's an average 4 bedroom place in Palmy.
camnora 4y ago
People living in homes financed with a generous rate (~3% like you mentioned) mortgage are unlikely to move - that's correct. However, that's not the only piece of the puzzle. Keep in mind that home builders have recently produced at the highest level since 2008 [1]. When you pair this with high rates [2], it's likely that we will see inventory sitting on the market. [1] https://calculatedrisk.substack.com/p/new-home-sales-decrease-sharply-record-02a https://calculatedrisk.substack.com/p/new-home-sales-decreas... [2] https://www.freddiemac.com/pmms https://www.freddiemac.com/pmms
llampx 4y ago
> There seems to be this idea among younger individuals online that because prices jumped so quickly that a correction is inevitable, and it’s just not. There’s a ton of demand still out there, and the second any sort of meaningful dip is perceived all those buyers will be right there. There's the idea among the older generation that just because assets have been in a secular bull market, that they will continue to rise up in price, and it's probably not the case.

deleted 4y ago

[deleted]

opportune 4y ago

Because they died or need to move? Because they have no liquidity? I agree in general that waiting on the sidelines doesn’t guarantee you a better price later. The problem of there being other buyers wanting to scoop dips providing price support would only be fixed by those buyers loosing liquidity, which would likely impact any individual waiting on the sideline too.

jaxn 4y ago

Hiring slows, wages go down, remote work becomes less normal, rates go up, prices cool to offset rates, boomers downsizing (pass passing property to heirs) increase supply as part of the largest generational wealth transfer ever… People who stretched to buy at the peak of the market end up upside down, refinancing gets harder, selling takes longer, foreclosure starts… 2008 all over again. May not be likely, but wouldn’t be surprising

outworlder 4y ago

> Why would any sane person with a 3% mortgage ever sell Because they can no longer afford their morgage as the economy goes to the gutter and they get laid off + their purchase power gets eroded due to inflation? Or they got a new job, but now they have to relocate? Many reasons.

RowanH 4y ago

It maybe slightly different in NZ as we are on variable rates, or fixed terms for upto 5 years or so that changes things. But we are now in correction period. Prices sky rocketed as money was printed, now the shine has worn off and the fundamentals don't support sky high prices. With much the same story as a number of countries - interest rates causing cost of living hikes and wages not keeping place, the "sure bet" of the housing market is no longer, and the prices have dropped. https://tradingeconomics.com/new-zealand/housing-index https://tradingeconomics.com/new-zealand/housing-index NZ was living off that "they'll never go down" attitude. The people that bought in the last year are starting to hurt, and unfortunately/fortunately (depending on which side of the coin) the sentiment just starts shifting. Once it starts shifting, people get nervous - over confidence bidding is out the window. Even though we (theoretically) have a supply and demand issue, even though construction costs are sky rocketing, people start realising they don't need that 4-5 bedroom monster, or that 2nd holiday home that they can air bnb out. Seriously at one point during I think it was 2021 - I was in a c/md level position, and our house went up more than I earned in one year - we're talking a fairly standard 3 bdrm house - nothing fancy. That was spectacular... that spurned on a lot of "mom and pop" investors to go nuts buying houses, when they shouldn't have. And now they're looking into negative equity territory.

xupybd 4y ago
Yeah my friends purchased at the peak thanks to FOMO. Now they owe over half a million on a small provincial home. On a teacher's salary I'm not sure how they're going to survive if rates continue to climb. My house has dropped more than a years income since it peaked. That's an average 4 bedroom place in Palmy.

camnora 4y ago

People living in homes financed with a generous rate (~3% like you mentioned) mortgage are unlikely to move - that's correct. However, that's not the only piece of the puzzle. Keep in mind that home builders have recently produced at the highest level since 2008 [1]. When you pair this with high rates [2], it's likely that we will see inventory sitting on the market. [1] https://calculatedrisk.substack.com/p/new-home-sales-decrease-sharply-record-02a https://calculatedrisk.substack.com/p/new-home-sales-decreas... [2] https://www.freddiemac.com/pmms https://www.freddiemac.com/pmms

llampx 4y ago

> There seems to be this idea among younger individuals online that because prices jumped so quickly that a correction is inevitable, and it’s just not. There’s a ton of demand still out there, and the second any sort of meaningful dip is perceived all those buyers will be right there. There's the idea among the older generation that just because assets have been in a secular bull market, that they will continue to rise up in price, and it's probably not the case.