4 ms·

Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard t

Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard time buying a few years ago, because investors kept out-bidding me with all-cash offers. I had to raise my price target to move outside of their impulse buy range, which I was not too happy about.

jeremyjh 11mo ago
So lower prices mean higher prices?
skybrian 11mo ago
How do you know they’re investors?
- al_borland 11mo ago
  In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.
tossandthrow 11mo ago
The dynamic here is that investors accept 3% return for housing because there are no good alternatives. The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made). Investors will likely not be an issue as long as we don't go into zirp again.
pavel_lishin 11mo ago
> Housing prices dropping aren’t so good for those who own homes. Isn't it only bad news for people who are selling their homes?
- carlosjobim 11mo ago
  You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
  - pavel_lishin 11mo ago
    ... people take out loans to buy cars and go on vacation, using their house as collateral?
    - fragmede 11mo ago
      I would personally advise against that, but HELCs are a popular financial vehicle in order to do exactly that.
    - carlosjobim 11mo ago
      Yes, the economy of the entire industrialized world runs on this. People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy? From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...
- al_borland 11mo ago
  Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.
jandrese 11mo ago
> Housing prices dropping aren’t so good for those who own homes. As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.

jeremyjh 11mo ago

So lower prices mean higher prices?

skybrian 11mo ago

How do you know they’re investors?

al_borland 11mo ago
In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.

tossandthrow 11mo ago

The dynamic here is that investors accept 3% return for housing because there are no good alternatives. The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made). Investors will likely not be an issue as long as we don't go into zirp again.

pavel_lishin 11mo ago

> Housing prices dropping aren’t so good for those who own homes. Isn't it only bad news for people who are selling their homes?

carlosjobim 11mo ago
You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
- pavel_lishin 11mo ago
  ... people take out loans to buy cars and go on vacation, using their house as collateral?
  - fragmede 11mo ago
    I would personally advise against that, but HELCs are a popular financial vehicle in order to do exactly that.
  - carlosjobim 11mo ago
    Yes, the economy of the entire industrialized world runs on this. People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy? From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...
al_borland 11mo ago
Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.

jandrese 11mo ago

> Housing prices dropping aren’t so good for those who own homes. As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.