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IMO, very unpopular opinion, it's not because governments are not allowing more houses, it is because of mortgage. People who bought 10 years ago for 200k do n

IMO, very unpopular opinion, it's not because governments are not allowing more houses, it is because of mortgage. People who bought 10 years ago for 200k do not want to sell it for 250k, because they paid more interest, let's say "initial price + interest = 300k" today. If anyone wants to sell, they want to get at least 300k, buyer again gets a mortgage and in 10 years same house costs 400k or more. rinse and repeat, houses will cost double digit millions. See Seoul for example, avg house costs around 1M$, while average salary is around 35K$/year (30x difference)

ttymck 3y ago
> People who bought 10 years ago for 200k do not want to sell it for 250k, because they paid more interest, let's say "initial price + interest = 300k" today. I think you are significantly overestimating the average American's willingness and ability to calculate and understand something as simple as their "cash on cash return".
- throwaw12 3y ago
  > I think you are significantly overestimating the average American's willingness and ability to calculate and understand something as simple as their "cash on cash return". I think you are also underestimating market forces, average American doesn't need to calculate, real estate agents will tell you the price, they are not going to sell your house for 100K, if it costs 1M
A_D_E_P_T 3y ago
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tzs 3y ago
I think what most people who are living in their house look at when deciding if they well sell is if (selling price - remaining amount on mortgage) will give them enough that when they put the proceeds toward buying a house where they are moving too they will be in good shape financially.
jjav 3y ago
> People who bought 10 years ago for 200k do not want to sell it for 250k, because they paid more interest, let's say "initial price + interest = 300k" today. I doubt there are many people who think that way. If they want to sell, the market determines the price so stomping your feet and saying I want 300K just because, isn't going to work. Second, that's an incorrect calculation anyway. They may have put 300K into it, but they also got 10 years worth of a place to live out of it already, which is a lot of value. So the breakeven price considering the rent they didn't have to pay for 10 years is not the full 300K.

ttymck 3y ago

> People who bought 10 years ago for 200k do not want to sell it for 250k, because they paid more interest, let's say "initial price + interest = 300k" today. I think you are significantly overestimating the average American's willingness and ability to calculate and understand something as simple as their "cash on cash return".

throwaw12 3y ago
> I think you are significantly overestimating the average American's willingness and ability to calculate and understand something as simple as their "cash on cash return". I think you are also underestimating market forces, average American doesn't need to calculate, real estate agents will tell you the price, they are not going to sell your house for 100K, if it costs 1M

A_D_E_P_T 3y ago

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tzs 3y ago

I think what most people who are living in their house look at when deciding if they well sell is if (selling price - remaining amount on mortgage) will give them enough that when they put the proceeds toward buying a house where they are moving too they will be in good shape financially.

jjav 3y ago

> People who bought 10 years ago for 200k do not want to sell it for 250k, because they paid more interest, let's say "initial price + interest = 300k" today. I doubt there are many people who think that way. If they want to sell, the market determines the price so stomping your feet and saying I want 300K just because, isn't going to work. Second, that's an incorrect calculation anyway. They may have put 300K into it, but they also got 10 years worth of a place to live out of it already, which is a lot of value. So the breakeven price considering the rent they didn't have to pay for 10 years is not the full 300K.