6 ms·

Having lived through a housing crash, and long before that a time of much cheaper houses.. I would say wait and see. One of the reasons why people freak out ab

Having lived through a housing crash, and long before that a time of much cheaper houses.. I would say wait and see. One of the reasons why people freak out about the prices of homes is there is often pressure to get one right now. I am moving, I got married, I had a(nother) kid. These are reasons I bought a house in my life and in retrospect I can tell you I did not need to buy a house. In your life it's hard to make a decision on the time frame of house prices (or even market cycles). I am not sure how to tell someone maybe they should wait five years. But clearly sometimes that is the best thing to do. It does not make a lot of sense for homes to sell for so much more then they can rent for. It happens all the time but it is not sustainable. It also happens that their are housing shortages but they don't last forever. People build.

betaby 2y ago
> I would say wait and see How long to wait? Asking in Canadian.
- georgeecollins 2y ago
  Three years? No one can time the market perfectly. The time frame for house prices is much longer than the time frame of opinion piece writers. So you will see pieces in 2006 saying prices will never go down. If you waited 3-4 years they were half off. It happens. Best thing is not to have a fixed plan but to be opportunistic.
  - betaby 2y ago
    Prices never went down in Canada for any substantial amount. Even 10% means we replay back to 1-2 years. Government of Canada actively intervene and change the immigration rate and the discount rate to keep prices from falling.
- bombcar 2y ago
  Instead of waiting, build a calculator in Excel or similar that shows various options, and update the numbers now and then. You'll start to get a "feel" for your options (which include renting, owning, building, moving, etc) and you will be more comfortable acting when the time is right. You can't perfectly time the market but you can at least notice it.
  - sevagh 2y ago
    In Canada big metro cities (Toronto, Vancouver, Montreal), the spreadsheet will most likely tell you that you should have bought on sight instead of making a spreadsheet.
pjc50 2y ago
> It does not make a lot of sense for homes to sell for so much more then they can rent for. Isn't rent also remarkably high in any areas where there's decent levels of employment? You can either rent a house, or rent the money to buy one. Usually the price of renting a house is the price of renting the money plus a margin for maintenance and profit. But since homeownership is pretty much the only situation in which normal people can make a huge leveraged investment - you can't borrow $100k to invest in stocks, they won't let you - it's a very advantageous form of investment. The only way I can see this changing is the forever renters starting to acquire enough political power to overrule anti-building NIMBYs. Birth rates aren't falling fast enough to reduce demand to meet supply.
- georgeecollins 2y ago
  Rent is high in places with good employment, but the penalty you pay for buying (price to rent ratio) is higher their. https://smartasset.com/data-studies/price-to-rent-ratio-in-the-50-largest-us-cities-2022 https://smartasset.com/data-studies/price-to-rent-ratio-in-t... In other words, rent is high in San Jose but renting is cheaper than buying in places like that.
  - HPsquared 2y ago
    In other words, rental yields are low in those places. Probably because the prices are expected to increase, so the owners benefit from capital gains rather than rent. Definitely should be a temporary phenomenon though. Prices are falling in a lot of high-priced urban locations, eg. London.
- geysersam 2y ago
  Is building more really the solution? (sure it's one solution) I think the main issue is the one you formulated so succinctly, the question why people are able to access such huge amounts of credit so cheaply. Why are interest rates for house buyers so low?
  - pjc50 2y ago
    Interest rates everywhere have been low for a long time; the US whacked them up to 5.5% to combat inflation, but that's expected to decline. In general the rates for house buying are so good because the loan is secured on the house, whose value is very stable.
ericmcer 2y ago
I was 19 in 2008, and I don't know if something like that will ever happen again now that the government has shown their willingness to dumping money to prop up any weakening asset. Look at the pandemic, everything kept going up.
- Workaccount2 2y ago
  In 2008 the government opened the floodgates because it was desperately needed, and even then there was a long languishing period afterwards. In 2020 the government opened the floodgates again, but it far beyond overkill for the actual damage done. Most people kept on working and still got tons of economic stimulus (largely in the form of low interest loans and debt moratoriums, not really the checks).
mindslight 2y ago
While agreeing with where you're coming from, one of the big things that makes it hard for me to see relief coming is that construction prices remain quite high. Of course they could be high because the industry is busy building many new construction spec homes. But from what I've seen it feels like there's just too many accumulated layers of administrative workers/overhead, instead of increased wages that would encourage more people to do this work.
- QuadmasterXLII 2y ago
  We had a community of 10 million extremely talented and hardworking people illegally building houses for $4 an hour. It's beyond me to comprehend the moral valence of our decision, starting in 2016, to remove this group from the labor force- it was definitely unethical to deport them, it was definitely unethical to exploit them. Practically speaking though, I don't know why anyone's shocked that afterwards the price to build a home skyrocketed.
  - bombcar 2y ago
    From my experience, illegals weren't making $4/hr building houses, at least not in the areas I knew. You'd pull down $15 minimum and often in cash, in California in the boom times that are now 20 years ago.
    - mindslight 2y ago
      That's still only one third to one half of a fully loaded system legible worker though. And when illegible labor goes away, it's not like there's a supply of legible workers that have been just sitting around waiting to take over the work. This also ties in to the seeming overabundance of management layers, as there are now drastically fewer people to be managed.
      - bombcar 2y ago
        And it’s something people miss - illegal labor does suppress wages somewhat but definitely defrauds the government and any other things that depend on correctly reported income.
nojvek 2y ago
> People build. If they are allowed to. Most major cities are now permit backlogged. Could be years until you get to build. The number of home builders in US are falling down like dominoes. When there is less competition, we get higher prices.

betaby 2y ago

> I would say wait and see How long to wait? Asking in Canadian.

georgeecollins 2y ago
Three years? No one can time the market perfectly. The time frame for house prices is much longer than the time frame of opinion piece writers. So you will see pieces in 2006 saying prices will never go down. If you waited 3-4 years they were half off. It happens. Best thing is not to have a fixed plan but to be opportunistic.
- betaby 2y ago
  Prices never went down in Canada for any substantial amount. Even 10% means we replay back to 1-2 years. Government of Canada actively intervene and change the immigration rate and the discount rate to keep prices from falling.
bombcar 2y ago
Instead of waiting, build a calculator in Excel or similar that shows various options, and update the numbers now and then. You'll start to get a "feel" for your options (which include renting, owning, building, moving, etc) and you will be more comfortable acting when the time is right. You can't perfectly time the market but you can at least notice it.
- sevagh 2y ago
  In Canada big metro cities (Toronto, Vancouver, Montreal), the spreadsheet will most likely tell you that you should have bought on sight instead of making a spreadsheet.

pjc50 2y ago

> It does not make a lot of sense for homes to sell for so much more then they can rent for. Isn't rent also remarkably high in any areas where there's decent levels of employment? You can either rent a house, or rent the money to buy one. Usually the price of renting a house is the price of renting the money plus a margin for maintenance and profit. But since homeownership is pretty much the only situation in which normal people can make a huge leveraged investment - you can't borrow $100k to invest in stocks, they won't let you - it's a very advantageous form of investment. The only way I can see this changing is the forever renters starting to acquire enough political power to overrule anti-building NIMBYs. Birth rates aren't falling fast enough to reduce demand to meet supply.

georgeecollins 2y ago
Rent is high in places with good employment, but the penalty you pay for buying (price to rent ratio) is higher their. https://smartasset.com/data-studies/price-to-rent-ratio-in-the-50-largest-us-cities-2022 https://smartasset.com/data-studies/price-to-rent-ratio-in-t... In other words, rent is high in San Jose but renting is cheaper than buying in places like that.
- HPsquared 2y ago
  In other words, rental yields are low in those places. Probably because the prices are expected to increase, so the owners benefit from capital gains rather than rent. Definitely should be a temporary phenomenon though. Prices are falling in a lot of high-priced urban locations, eg. London.
geysersam 2y ago
Is building more really the solution? (sure it's one solution) I think the main issue is the one you formulated so succinctly, the question why people are able to access such huge amounts of credit so cheaply. Why are interest rates for house buyers so low?
- pjc50 2y ago
  Interest rates everywhere have been low for a long time; the US whacked them up to 5.5% to combat inflation, but that's expected to decline. In general the rates for house buying are so good because the loan is secured on the house, whose value is very stable.

ericmcer 2y ago

I was 19 in 2008, and I don't know if something like that will ever happen again now that the government has shown their willingness to dumping money to prop up any weakening asset. Look at the pandemic, everything kept going up.

Workaccount2 2y ago
In 2008 the government opened the floodgates because it was desperately needed, and even then there was a long languishing period afterwards. In 2020 the government opened the floodgates again, but it far beyond overkill for the actual damage done. Most people kept on working and still got tons of economic stimulus (largely in the form of low interest loans and debt moratoriums, not really the checks).

mindslight 2y ago

While agreeing with where you're coming from, one of the big things that makes it hard for me to see relief coming is that construction prices remain quite high. Of course they could be high because the industry is busy building many new construction spec homes. But from what I've seen it feels like there's just too many accumulated layers of administrative workers/overhead, instead of increased wages that would encourage more people to do this work.

QuadmasterXLII 2y ago
We had a community of 10 million extremely talented and hardworking people illegally building houses for $4 an hour. It's beyond me to comprehend the moral valence of our decision, starting in 2016, to remove this group from the labor force- it was definitely unethical to deport them, it was definitely unethical to exploit them. Practically speaking though, I don't know why anyone's shocked that afterwards the price to build a home skyrocketed.
- bombcar 2y ago
  From my experience, illegals weren't making $4/hr building houses, at least not in the areas I knew. You'd pull down $15 minimum and often in cash, in California in the boom times that are now 20 years ago.
  - mindslight 2y ago
    That's still only one third to one half of a fully loaded system legible worker though. And when illegible labor goes away, it's not like there's a supply of legible workers that have been just sitting around waiting to take over the work. This also ties in to the seeming overabundance of management layers, as there are now drastically fewer people to be managed.
    - bombcar 2y ago
      And it’s something people miss - illegal labor does suppress wages somewhat but definitely defrauds the government and any other things that depend on correctly reported income.

nojvek 2y ago

> People build. If they are allowed to. Most major cities are now permit backlogged. Could be years until you get to build. The number of home builders in US are falling down like dominoes. When there is less competition, we get higher prices.