3 ms·

Yep, after 15 years of the market beating records after records, and an incredible amount of money printed and ongoing bubbles not popping by QE, people forget

Yep, after 15 years of the market beating records after records, and an incredible amount of money printed and ongoing bubbles not popping by QE, people forget that the market can go down, so the value of their overpriced property. When they paid $2M for a house in SF 2021, and their whole family is laid-off and nobody is hiring as the economy is going down the drain... good luck on believing that your house that costed maximum 300K to build will still be worth 50% than what it was...

WWLink 2y ago
> your house that costed maximum 300K to build When you buy real estate you're mostly paying for the value of the land. Sometimes I'd even say the land might be worth more if there wasn't already a house on it lol.
- tossandthrow 2y ago
  This really depends. Currently in SF, yes. But the value of the land is also not given.
- thiago_fm 2y ago
  Nope, in most of the US (so, not NY/SF and big centers), which has the most land, land is really cheap and the costs to build the house is the highest. Also in a lot of places in the world is like this.
  - WWLink 2y ago
    In most of the US, a house costs more than 300k. The average price atm is 513,000 according to https://fred.stlouisfed.org/series/ASPUS https://fred.stlouisfed.org/series/ASPUS I'll suggest neither of us are actually right anyway. A raw piece of land that was never setup for building a house on would definitely be worth less than a piece of land that was ready for a house. Especially if it had city water/sewage, power lines, fiber for internet, etc. Add in school districts and whatever else, and again the land becomes more valuable. So having a piece of land with a house on it might be worth more than an empty piece of land - but that comes back to location! A piece of land in the middle of a developed city would be worth more than a random piece of land in rural Ohio. Anyway, I still think it tracks. In my town an empty house-sized plot of land with utilities would probably cost similar to a house (maybe minus that $300k cost to build a house).
WheatMillington 2y ago
When I bought my house in 2009 people thought I was NUTS. In the thick of the GFC, house prices stagnant. Why would you ever buy a house now?! It has tripled in value, and buying a house was by far the best decision I ever made in my life.
- tossandthrow 2y ago
  In retrospect. I see houses bought in 2006 and sold in 2015 with a loss (in capital cities). The thing is, if you entered the housing market in 2006 you would be set significantly back. If you entered in 2009 you would be at advantage. People are betting on which of these cases we are in now. Anyhow, when people think you are nut for buying, it is probably the right time. Currently the FOMO is real and everybody are recommending me to buy. I take that as an indication of over optimism, which is factored into the price.
  - lotsofpulp 2y ago
    > People are betting on which of these cases we are in now. Very, very few US homeowners are betting on profiting from home price changes within 10 years. They are betting on reducing monthly shelter cost volatility, and the freedom to modify their home, by purchasing a home with a very long fixed rate mortgage and maybe selling after a couple decades.
    - jen20 2y ago
      Note that this is not the same worldwide - for example, in the UK mortgages are typically not fixed rate for a long time, and so interest rates are a much more useful tool for the Bank of England to cause economic pain.
      - tossandthrow 2y ago
        cause economic pain -> reduce spending. That is certainly one of the cool things about entering the housing market: Now you are a monetary instrument.

WWLink 2y ago

> your house that costed maximum 300K to build When you buy real estate you're mostly paying for the value of the land. Sometimes I'd even say the land might be worth more if there wasn't already a house on it lol.

tossandthrow 2y ago
This really depends. Currently in SF, yes. But the value of the land is also not given.
thiago_fm 2y ago
Nope, in most of the US (so, not NY/SF and big centers), which has the most land, land is really cheap and the costs to build the house is the highest. Also in a lot of places in the world is like this.
- WWLink 2y ago
  In most of the US, a house costs more than 300k. The average price atm is 513,000 according to https://fred.stlouisfed.org/series/ASPUS https://fred.stlouisfed.org/series/ASPUS I'll suggest neither of us are actually right anyway. A raw piece of land that was never setup for building a house on would definitely be worth less than a piece of land that was ready for a house. Especially if it had city water/sewage, power lines, fiber for internet, etc. Add in school districts and whatever else, and again the land becomes more valuable. So having a piece of land with a house on it might be worth more than an empty piece of land - but that comes back to location! A piece of land in the middle of a developed city would be worth more than a random piece of land in rural Ohio. Anyway, I still think it tracks. In my town an empty house-sized plot of land with utilities would probably cost similar to a house (maybe minus that $300k cost to build a house).

WheatMillington 2y ago

When I bought my house in 2009 people thought I was NUTS. In the thick of the GFC, house prices stagnant. Why would you ever buy a house now?! It has tripled in value, and buying a house was by far the best decision I ever made in my life.

tossandthrow 2y ago
In retrospect. I see houses bought in 2006 and sold in 2015 with a loss (in capital cities). The thing is, if you entered the housing market in 2006 you would be set significantly back. If you entered in 2009 you would be at advantage. People are betting on which of these cases we are in now. Anyhow, when people think you are nut for buying, it is probably the right time. Currently the FOMO is real and everybody are recommending me to buy. I take that as an indication of over optimism, which is factored into the price.
- lotsofpulp 2y ago
  > People are betting on which of these cases we are in now. Very, very few US homeowners are betting on profiting from home price changes within 10 years. They are betting on reducing monthly shelter cost volatility, and the freedom to modify their home, by purchasing a home with a very long fixed rate mortgage and maybe selling after a couple decades.
  - jen20 2y ago
    Note that this is not the same worldwide - for example, in the UK mortgages are typically not fixed rate for a long time, and so interest rates are a much more useful tool for the Bank of England to cause economic pain.
    - tossandthrow 2y ago
      cause economic pain -> reduce spending. That is certainly one of the cool things about entering the housing market: Now you are a monetary instrument.