8 ms·

I don't understand how high prices good news for anyone except people who own multiple houses. Your home is not a luxury. If you're selling it in an inflated ma

by causi 4y ago

I don't understand how high prices good news for anyone except people who own multiple houses. Your home is not a luxury. If you're selling it in an inflated market you're also buying in an inflated market, unless you want to throw your money away renting.

1123581321 4y ago
It’s good for people who want to sell and live in something smaller, since the market inflated the delta between differently valued houses on an absolute dollars basis. And in the age of increased nomadic living, emigration to low CoL countries and multi-generational households, there might not be much of a replacement to buy or begin to expense. Just explaining, not advocating for selling one’s home to retire.
eweise 4y ago
Well no. Its typical to sell in an inflated market and buy in a cheaper one. Market being a different location.
- syspec 4y ago
  By definition that is NOT typical, otherwise the inflated market would have no buyers and the cheaper one would have no sellers
  - lazide 4y ago
    Nope - they’re talking about turnover between current ‘have’s’ and ‘have nots’, allowing the have’s to move to an area that someone who is poorer cannot afford to live due to lack of jobs or the like. There are more than enough actual houses in the US. We aren’t short on space. It’s location and current needs based on time in their life and available assets, etc.
TuringNYC 4y ago
It is good if you want to change jobs and switch cities. If the market has fallen, you cannot sell w/o coughing up the difference in what you owe. (same in the case of owner death/divorce, where you need need to liquidate)
- bombcar 4y ago
  Some states are non recourse or single action. Worth knowing if you’re possibly going to be in a Situation.
  - TuringNYC 4y ago
    >> Some states are non recourse or single action. Worth knowing if you’re possibly going to be in a Situation. Non recourse means they dont pursue you for the difference. It doesnt mean your credit isnt completely ruined for the next 7 years. It would be impossible to get another home (and in many cases to lease another apartment) with a walk-away from debt.
yamtaddle 4y ago
One tends to have a lot more constraints on where one can or would prefer to live when one has kids and/or is working age. Once the kids are out of the house and you retire you can dump the expensive house in commuting range of a high-wage city in the excellent school district, buy one half as expensive somewhere with worse schools and farther from jobs, and pocket the rest of the money.
- rrrrrrrrrrrryan 4y ago
  Property taxes makes this tough in California.
pessimizer 4y ago
> unless you want to throw your money away renting. You're not always throwing your money away when you're renting; I'm pretty sure that housing prices are rising faster than rents, due to a culture of housing speculation.
- pharmakom 4y ago
  Why do people use this phrase? You are paying for a service (somewhere to live). Unless you can afford to buy outright then you’re either “throwing money away” renting or on interest payments.
  - Firmwarrior 4y ago
    In a lot of places, mortgage payments are around the same as rent, so if you can "buy" (qualify for a good mortgage) you'll be paying less AND your net worth will be growing Of course, the situation is more complicated in areas like the SF Bay and Seattle. Housing prices vs rent basically assume 5% year over year growth forever, so if you think housing prices will be flat, it's economically advantageous to rent There's a good calculator without a ton of BS here on this old page: https://michaelbluejay.com/house/rentvsbuy.html https://michaelbluejay.com/house/rentvsbuy.html
    - gassiss 4y ago
      > In a lot of places, mortgage payments are around the same as rent, so if you can "buy" (qualify for a good mortgage) you'll be paying less AND your net worth will be growing sure you'll be paying less, but you'll also be buying a lot of risk. You don't own anything until it's fully paid, and if the interest rates skyrocket good luck with bankruptcy
      - causi 4y ago
        interest rates skyrocket good luck with bankruptcy What kind of lunatic doesn't get a fixed-rate mortgage?
deleted 4y ago
[deleted]
oceanplexian 4y ago
High prices are good news because home building is profitable, you get increased supply and that buffers price shocks. If prices start falling it will put home builders out of business (The same as 2008), and we’ll have another decade of housing shortages. Sure there will be some people who benefit, people with means who can use cash to go scoop up cheap real estate as an investment. The average person is going to be screwed and the bank will not give them a 9% interest loan during a recession. On a more abstract note, deflation is terrible for an economy. In a healthy economy you want people to be building things. It creates jobs, lifts people out of poverty, and so on. Deflation causes people to hoard cash and stop working and investing.

by causi 4y ago

1123581321 4y ago

It’s good for people who want to sell and live in something smaller, since the market inflated the delta between differently valued houses on an absolute dollars basis. And in the age of increased nomadic living, emigration to low CoL countries and multi-generational households, there might not be much of a replacement to buy or begin to expense. Just explaining, not advocating for selling one’s home to retire.

eweise 4y ago

Well no. Its typical to sell in an inflated market and buy in a cheaper one. Market being a different location.

syspec 4y ago
By definition that is NOT typical, otherwise the inflated market would have no buyers and the cheaper one would have no sellers
- lazide 4y ago
  Nope - they’re talking about turnover between current ‘have’s’ and ‘have nots’, allowing the have’s to move to an area that someone who is poorer cannot afford to live due to lack of jobs or the like. There are more than enough actual houses in the US. We aren’t short on space. It’s location and current needs based on time in their life and available assets, etc.

TuringNYC 4y ago

It is good if you want to change jobs and switch cities. If the market has fallen, you cannot sell w/o coughing up the difference in what you owe. (same in the case of owner death/divorce, where you need need to liquidate)

bombcar 4y ago
Some states are non recourse or single action. Worth knowing if you’re possibly going to be in a Situation.
- TuringNYC 4y ago
  >> Some states are non recourse or single action. Worth knowing if you’re possibly going to be in a Situation. Non recourse means they dont pursue you for the difference. It doesnt mean your credit isnt completely ruined for the next 7 years. It would be impossible to get another home (and in many cases to lease another apartment) with a walk-away from debt.

yamtaddle 4y ago

One tends to have a lot more constraints on where one can or would prefer to live when one has kids and/or is working age. Once the kids are out of the house and you retire you can dump the expensive house in commuting range of a high-wage city in the excellent school district, buy one half as expensive somewhere with worse schools and farther from jobs, and pocket the rest of the money.

rrrrrrrrrrrryan 4y ago
Property taxes makes this tough in California.

pessimizer 4y ago

> unless you want to throw your money away renting. You're not always throwing your money away when you're renting; I'm pretty sure that housing prices are rising faster than rents, due to a culture of housing speculation.

pharmakom 4y ago
Why do people use this phrase? You are paying for a service (somewhere to live). Unless you can afford to buy outright then you’re either “throwing money away” renting or on interest payments.
- Firmwarrior 4y ago
  In a lot of places, mortgage payments are around the same as rent, so if you can "buy" (qualify for a good mortgage) you'll be paying less AND your net worth will be growing Of course, the situation is more complicated in areas like the SF Bay and Seattle. Housing prices vs rent basically assume 5% year over year growth forever, so if you think housing prices will be flat, it's economically advantageous to rent There's a good calculator without a ton of BS here on this old page: https://michaelbluejay.com/house/rentvsbuy.html https://michaelbluejay.com/house/rentvsbuy.html
  - gassiss 4y ago
    > In a lot of places, mortgage payments are around the same as rent, so if you can "buy" (qualify for a good mortgage) you'll be paying less AND your net worth will be growing sure you'll be paying less, but you'll also be buying a lot of risk. You don't own anything until it's fully paid, and if the interest rates skyrocket good luck with bankruptcy
    - causi 4y ago
      interest rates skyrocket good luck with bankruptcy What kind of lunatic doesn't get a fixed-rate mortgage?

deleted 4y ago

[deleted]

oceanplexian 4y ago

High prices are good news because home building is profitable, you get increased supply and that buffers price shocks. If prices start falling it will put home builders out of business (The same as 2008), and we’ll have another decade of housing shortages. Sure there will be some people who benefit, people with means who can use cash to go scoop up cheap real estate as an investment. The average person is going to be screwed and the bank will not give them a 9% interest loan during a recession. On a more abstract note, deflation is terrible for an economy. In a healthy economy you want people to be building things. It creates jobs, lifts people out of poverty, and so on. Deflation causes people to hoard cash and stop working and investing.