4 ms·

If the houses are unaffordable, then they will remain unsold. What am I missing? Maybe people who have more money move in from elsewhere. Or else the seller dr

If the houses are unaffordable, then they will remain unsold. What am I missing? Maybe people who have more money move in from elsewhere. Or else the seller drops the price, or pulls it off the market. One last possibility: someone buys it who can't really afford it. In that case, either they eventually can make it, or they give up and sell or get foreclosed.

hezralig 4y ago
> What am I missing? Entities such as Blackrock. You might not be able to afford a house in the future. People may just be renting as the norm.
- refurb 4y ago
  One of Blackrock’s biggest funds (coincidentally doing quite poorly) was $69B. It was a global fund. The value of residential real estate in the US is
  - EVa5I7bHFq9mnYK 4y ago
    ChatGPT timed out?
    - refurb 4y ago
      Total value of US residential real estate is $4,225B. Blackrock’s fund is 1.6% of that, if it were exclusively a US fund, which its not.
t-writescode 4y ago
Regular people can't purchase it, but extremely wealthy investors can, and then they rent the property out for >= the mortgage rate, and they raise the cost year over year to higher than their mortgage, making more and more money, and costing the regular person more and more and more, such that the regular person can never catch up and be able to afford a down payment themselves. That's literally what's happening in the world at present.
natch 4y ago
That ”more money from elsewhere” option. Family money is not to be underestimated. And even people from poor countries can have vast fortunes due to entrepreneurship or corruption or inheritance.
lukewrites 4y ago
In my neighborhood (east of Seattle, just south of Microsoft) private equity firms started buying houses in our neighborhood (late 50s neighborhood with tons of parks and trails w access to city and highway) after the housing crisis and keeping them as rentals. Starting around 2019 developers started coming in, making all cash offers to the remaining owners, and building 3000+ sqft, multimillion dollar homes. They kept buying up until the big interest rate hikes. Now we have a mix of renters, owners of old homes who are holding on, McMansion owners, and empty houses owned by developers who are waiting for conditions to improve to tear down and replace with a McMansion. Hard to feel optimistic for my kids.
swatcoder 4y ago
One last last possibility: the entities consuming supply and supporting the high prices are not typical households. If you need examples, think of corporate and private rental portfolios, speculators and flippers, vacation rental owners, private nth-home owners, etc It’s one signal that suggests home inventory might be accumulating in the hands of an investor class that skimming some kind of profit at the expense of families who might otherwise be able fully secure housing for themselves as independent owners.
snickerbockers 4y ago
>What am I missing? You're missing the part where this is caused by a restricted supply and a rapidly increasing demand. The OP is that it's unfortunate to the median prospective buyer, not that it's unaffordable to everybody on the planet.

hezralig 4y ago

> What am I missing? Entities such as Blackrock. You might not be able to afford a house in the future. People may just be renting as the norm.

refurb 4y ago
One of Blackrock’s biggest funds (coincidentally doing quite poorly) was $69B. It was a global fund. The value of residential real estate in the US is
- EVa5I7bHFq9mnYK 4y ago
  ChatGPT timed out?
  - refurb 4y ago
    Total value of US residential real estate is $4,225B. Blackrock’s fund is 1.6% of that, if it were exclusively a US fund, which its not.

t-writescode 4y ago

Regular people can't purchase it, but extremely wealthy investors can, and then they rent the property out for >= the mortgage rate, and they raise the cost year over year to higher than their mortgage, making more and more money, and costing the regular person more and more and more, such that the regular person can never catch up and be able to afford a down payment themselves. That's literally what's happening in the world at present.

natch 4y ago

That ”more money from elsewhere” option. Family money is not to be underestimated. And even people from poor countries can have vast fortunes due to entrepreneurship or corruption or inheritance.

lukewrites 4y ago

In my neighborhood (east of Seattle, just south of Microsoft) private equity firms started buying houses in our neighborhood (late 50s neighborhood with tons of parks and trails w access to city and highway) after the housing crisis and keeping them as rentals. Starting around 2019 developers started coming in, making all cash offers to the remaining owners, and building 3000+ sqft, multimillion dollar homes. They kept buying up until the big interest rate hikes. Now we have a mix of renters, owners of old homes who are holding on, McMansion owners, and empty houses owned by developers who are waiting for conditions to improve to tear down and replace with a McMansion. Hard to feel optimistic for my kids.

swatcoder 4y ago

One last last possibility: the entities consuming supply and supporting the high prices are not typical households. If you need examples, think of corporate and private rental portfolios, speculators and flippers, vacation rental owners, private nth-home owners, etc It’s one signal that suggests home inventory might be accumulating in the hands of an investor class that skimming some kind of profit at the expense of families who might otherwise be able fully secure housing for themselves as independent owners.

snickerbockers 4y ago

>What am I missing? You're missing the part where this is caused by a restricted supply and a rapidly increasing demand. The OP is that it's unfortunate to the median prospective buyer, not that it's unaffordable to everybody on the planet.