5 ms·

If the downturn is so short you need to "pounce quickly" it isn't much of a downturn. Some countries have had stagnant real estate markets for years. Anyway in

If the downturn is so short you need to "pounce quickly" it isn't much of a downturn. Some countries have had stagnant real estate markets for years. Anyway interest rates are not going down to 2% anytime soon so don't hold your breath. People who bought/refinanced in 2020-2021 will probably never sell.

saiya-jin 4y ago
Prices going up and down isn't symmetrical behavior in terms of speed. People love increase sale prices as soon as possible and detest lowering them down, many can afford to wait if they expect massive additional income within few years. US is more flexible than say Europe in this (and other aspects of society) but I have no doubt this applies there too.
hyperbovine 4y ago
This. We refi’d in 2020 and our monthly payment is just stupendously cheap now, like < 1/7 my monthly take home pay. Even though we sort of need a bigger house at this point, the thought of giving this up makes entering the market again a complete non-starter. I feel bad for anyone trying to buy a house in the US right now, particularly their first.
- benj111 4y ago
  High inflation is good if you've just bought a house though. Yes it's hard to begin with but compound inflation soon erodes the value of the debt.
  - cudgy 4y ago
    This assumes housing moves with inflation, which will not be the case if real wages to pay high interest mortgages do not rise with inflation or prices for housing drop to compensate, which has already started. Buying at the peak even with low interest rates is not a panacea.
    - benj111 4y ago
      >This assumes housing moves with inflation No it doesn't. When you buy a house your price is locked in. It assumes wages track inflation which is generally the case. I also made no assumption as to whether this is a peak or trough in the housing market. Obviously it's better to buy at the bottom but that requires market timing. But in either scenario, assuming wages track inflation, the value of your mortgage is eroded faster, the higher inflation is.
cudgy 4y ago
> People who bought/refinanced in 2020-2021 will probably never sell. They may not be able to sell for 10-12 years if prices move down like they did in the last real estate down cycle. There is a reasonable risk that this process has already started.
baq 4y ago
I see HN didn't take my horoscope well, so I'll leave this chart as an addendum ;) https://data.sca.isr.umich.edu/get-chart.php?y=2022&m=9&n=41h&d=ylch&f=pdf&k=4a8b738a9e6aff21fd7216fec0f0027a89d9a18b90f5b9ce88c7f85b1ebd2da0 https://data.sca.isr.umich.edu/get-chart.php?y=2022&m=9&n=41...

saiya-jin 4y ago

Prices going up and down isn't symmetrical behavior in terms of speed. People love increase sale prices as soon as possible and detest lowering them down, many can afford to wait if they expect massive additional income within few years. US is more flexible than say Europe in this (and other aspects of society) but I have no doubt this applies there too.

hyperbovine 4y ago

This. We refi’d in 2020 and our monthly payment is just stupendously cheap now, like < 1/7 my monthly take home pay. Even though we sort of need a bigger house at this point, the thought of giving this up makes entering the market again a complete non-starter. I feel bad for anyone trying to buy a house in the US right now, particularly their first.

benj111 4y ago
High inflation is good if you've just bought a house though. Yes it's hard to begin with but compound inflation soon erodes the value of the debt.
- cudgy 4y ago
  This assumes housing moves with inflation, which will not be the case if real wages to pay high interest mortgages do not rise with inflation or prices for housing drop to compensate, which has already started. Buying at the peak even with low interest rates is not a panacea.
  - benj111 4y ago
    >This assumes housing moves with inflation No it doesn't. When you buy a house your price is locked in. It assumes wages track inflation which is generally the case. I also made no assumption as to whether this is a peak or trough in the housing market. Obviously it's better to buy at the bottom but that requires market timing. But in either scenario, assuming wages track inflation, the value of your mortgage is eroded faster, the higher inflation is.

cudgy 4y ago

> People who bought/refinanced in 2020-2021 will probably never sell. They may not be able to sell for 10-12 years if prices move down like they did in the last real estate down cycle. There is a reasonable risk that this process has already started.

baq 4y ago

I see HN didn't take my horoscope well, so I'll leave this chart as an addendum ;) https://data.sca.isr.umich.edu/get-chart.php?y=2022&m=9&n=41h&d=ylch&f=pdf&k=4a8b738a9e6aff21fd7216fec0f0027a89d9a18b90f5b9ce88c7f85b1ebd2da0 https://data.sca.isr.umich.edu/get-chart.php?y=2022&m=9&n=41...