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This is why I’m 100% sure we’re headed towards another real estate meltdown sooner or later. Real estate prices and rates have skyrocketed. The number of people

by spaceman_2020 3y ago

This is why I’m 100% sure we’re headed towards another real estate meltdown sooner or later. Real estate prices and rates have skyrocketed. The number of people who could afford 500k mortgages at 3% is much higher than people who can afford 750k mortgages at 7%. But lenders aren’t going to suddenly go from approving 100 loans a month to just 10 a month. The incentive structures are designed to weasel and lie to pump out flattering bottomlines every quarter. You can trot out the statistics but you can’t change human behavior without changing the incentives.

frumper 3y ago
It's crazy to see homes still selling with an increase in value of 10% from a year ago and interest rates more than doubled.
- spaceman_2020 3y ago
  Wonder what percentage of this demand is organic home owners vs. investors (including foreign investors). There’s been massive capital movement across the globe. Money moving out of China and Russia in particular. And the gulf countries with a surplus of cash thanks to multiple years of expensive oil.
  - seanmcdirmid 3y ago
    There might be something to that. Russia has become a bad place to invest money, while china’s real estate bubble looks to finally be popping. It could be that Russians and Chinese are accelerating on capital flight from their own countries due to current circumstances. But it’s really just speculation. I haven’t noticed an influx of ore Chinese buyers into my market.
  - red-iron-pine 3y ago
    You can track political developments in China, Russia, and Saudi by the price of BTC and foreign housing (esp. places like Vancouver, Canada, or London, England).
araes 3y ago
Looked at this a bit ago and share the sentiment. Vancouver, BC was an excellent case study. House prices average: ~$1.1M. Loan rate average: ~5%. Month payment: $5900. Yearly: $71k. Avg Salary: $60k (before tax). After tax: Maybe $48k or less. Result: No normal worker can afford the loan, and the bank won't give you the loan. You pay everything you can each year, and you owe more. This isn't even with property taxes, utilities, other basic Maslow's heirarchy stuff taken out.
throwaway29812 3y ago
The problem with that is there still is very strong demand for new home buyers, many of whom just couldn't find anywhere to buy. Yes prices are crazy but if demand is still not being met, then prices are meant to be crazy.

frumper 3y ago

It's crazy to see homes still selling with an increase in value of 10% from a year ago and interest rates more than doubled.

spaceman_2020 3y ago
Wonder what percentage of this demand is organic home owners vs. investors (including foreign investors). There’s been massive capital movement across the globe. Money moving out of China and Russia in particular. And the gulf countries with a surplus of cash thanks to multiple years of expensive oil.
- seanmcdirmid 3y ago
  There might be something to that. Russia has become a bad place to invest money, while china’s real estate bubble looks to finally be popping. It could be that Russians and Chinese are accelerating on capital flight from their own countries due to current circumstances. But it’s really just speculation. I haven’t noticed an influx of ore Chinese buyers into my market.
- red-iron-pine 3y ago
  You can track political developments in China, Russia, and Saudi by the price of BTC and foreign housing (esp. places like Vancouver, Canada, or London, England).

araes 3y ago

Looked at this a bit ago and share the sentiment. Vancouver, BC was an excellent case study. House prices average: ~$1.1M. Loan rate average: ~5%. Month payment: $5900. Yearly: $71k. Avg Salary: $60k (before tax). After tax: Maybe $48k or less. Result: No normal worker can afford the loan, and the bank won't give you the loan. You pay everything you can each year, and you owe more. This isn't even with property taxes, utilities, other basic Maslow's heirarchy stuff taken out.

throwaway29812 3y ago

The problem with that is there still is very strong demand for new home buyers, many of whom just couldn't find anywhere to buy. Yes prices are crazy but if demand is still not being met, then prices are meant to be crazy.