The problem with a collapse in house prices is that it normally comes with a collapse in everyone’s personal finances.
If you can’t afford before a crash, there’s a very good chance you won’t be able to afford after a crash either.
The only thing that will bring house prices down is building a fuckload more houses, and building them in places that people actually want to live.
Millennial here, bought a house in late 2022, process were not low, but interest was (this was right before all the inflation nonsense that’s plagued the market in the past year or so). Locked in for 3 years.
I don’t care if my overpriced home drops in value. The value we get from owning it is the only thing we care about, and we have no intention of leaving or selling it. So I’m in support of a big crash; unfortunately unless something serious happens I’m not sure that we’ll get a crash.
Every time something inexpensive hits the market it’s snatched up by some investor or something; so the only homes left for normal buyers are overpriced. The businesses that are buying these properties are creating an artificial scarcity and leaving homes empty until they can either rent them for more than they’re worth, or sell it at an incredible markup.
I can see this in action in the neighborhood I live in now. Two new homes were built and they’re up for sale. Naturally I was curious. They both have less floor space, fewer bedrooms, and overall they’re not nearly as valuable, but the market price that’s listed for them is more than double the price we paid for our home less than a block away.
The stupid thing is that they’ll eventually sell probably at that price or something close to it. My home’s value will probably go up by proxy, but honestly, I could not possibly care less. The whole thing is stupid, and unreasonable for normal buyers. They’re modest homes; new, sure, but not special. There’s nothing notably better or variable about the houses. They just cost more.
I’m angry about it. I want families to be able to buy a home. The amount we paid was more than we would normally have been able to afford. We pooled our finances to afford the mortgage, and we’re still struggling to find a balance so that we don’t financially sink trying to afford it. Our situation aside, it should be easier. Others should be able to do it without having to pool resources with others to make it work.
There is a strong correlation between unaffordable homes and people voting strong men and far right. It’s a policy choice to stop the “homes as an investment”, a policy that advantages the rich the most. But that policy choice determines where society will go.
Where I live, they’re now taxing people that own properties where nobody lives. It won’t be enough, but we’ll see.
Okay well we’ve had three years without a strong man president and all we’ve gotten are higher interest rates and a letter telling us the economy is doing great. Not even an acknowledgement of the problem, let alone expressed interest in solving it, or a plan, or action.
This is on the blues right now. They need to do something fast if you don’t want a strong man president.
How’s unemployment right now? The debt is solely on the shoulders of someone downplaying issues from a crazy sickness. Telling them to just drink bleach. And then needing to try and save everything Since we couldn’t take it seriously early enough that we then had to bail ourselves out. And not even trickle down like reds like. But they actually had to feed everyone or the housing and well literally every commodities market was going to collapse. We gained 8 trillion dollars in debt last time a Republican was in office and the worst unemployment numbers since the great depression. Good thing someone came in behind and cleaned up the hot mess Republicans left us in.
How does any of that prevent Biden from acknowledging that housing is expensive and a desire to incentivize housing construction for individual ownership?
I’m not asking for the moon here. Silence on the matter is a very loud statement about keeping things the way they’re headed. They’ll get a rude referendum on that. No one will be happy with the outcome.
I wish more people shared the sentiment of just wanting a home and not an investment. I don’t care how much my house goes up or down in speculative value.
Then, rent? It’s actually cheaper to rent a home than buy it these days in most cases. You also don’t need to spend money on upgrades and repairs.
Edit: the downvotes and general backlash against this comment likely all come from folks who don’t own a home and don’t really know the stakes because they haven’t been in a position to consider them. It’s mob mentality. Around me a house is a $10k/monthly payment, renting is $5k. Renting is a no brainer, especially considering that you don’t need to make repairs. The $10k/month is the minimum you’ll pay. Need a new HVAC? 20k. Need a new roof? 40k. Need to remodel an outdated part of the house? 10-60k. Garage door spring broke? $350. Plumber fixed a leak? $500. Need an exterminator to kill some rodents? $150. Tree removal to take down a dangerous tree? $3k. These are all costs that you’ll eventually need to pay as an owner. Given this and the fact that being a landlord involves taking a financial risk on a tenant, buying should be cheaper than renting. If you think of being a landlord like running a business, you’ll quickly realize that no business would operate at a loss willingly for long. Well, when renting is cheaper than buying, that’s essentially what is happening. The market is such that buyers are paying a premium for an asset they can’t get much of a return on, so you’re better off renting. This was actually one of the indicators that predictors of the 2008 housing crash looked at. But, go ahead, tell me I’m an idiot. Follow the mob. Recite platitudes. Don’t think critically or evaluate the nuance in things, it’s your money, not mine.
No. I want the freedom of changing my house to my exact liking and renting doesn’t allow for that. Furthermore if I’m renting, then I’m paying for someone else’s speculative property.
Prices around me are insane. It’s twice the monthly payment to buy than to rent. And, that’s before spending on repairs and upgrades. This means most people are not buying to speculate because there is very little upside and no way to cover the monthly costs by finding a renter.
This is moronic advice.
I’d rather own my home and not worry about some asswipe jacking up rent.
If you rent every cent that goes towards rent is paying someone else’s mortgage and you’ll never see that money again.
If my home value goes down I still have equity. I can sell and regain at least some of that money instead of flushing all of it down the toilet.
Rent is skyrocketing right now. My mortgage is still the same. If I were renting I’d be much worse off.
You’re making several assumptions in your comment.
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Like a landlord can raise rent infinitely at will. This is not true. Renting is a market. It’s why renting is cheaper than buying right now. Don’t you think the people buying right now with high prices and high interest rates would like to know they can rent their property for the same price as their monthly costs? Yes. Then why don’t they? Because the rental market is a market. They might try to charge a tenant the $5k/month they’re paying for their mortgage + tax + insurance, but if the going rate is $2.5k, there is no way they can raise rent to that level. Also, depending on where you live, your monthly payment can be very much dependent on property taxes. It may not be the landlord raising your monthly payment, instead it will be the local government. All that increase in equity on your home just becomes extra money every year that you’ll shell out to the city or county.
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If you rent, you’re basically paying to live in a house as a service. You have almost zero risk. Your monthly payment is locked in for 12 months. If anything needs repair, you aren’t on the hook. How awesome! That $40k roof replacement? Not your problem. Random $1k furnace repair? $500 plumbing bill? $350 garage door spring replacement? $1500 termite tenting bill? $100 rodent extermination bill. None of your problems! Renting is fixed cost, low stress, and pretty much risk free. If you’re an owner, all those bills are your problem and it’s also money that you aren’t going to see again. All properties will eventually have these costs.
If your home value goes down, I still have equity. I can sell and regain at least some of that money…
Not necessarily. The moment you buy a property you are underwater on selling fees. Even if you turned around and immediately resold the property for the same price you bought it for, you’re going to lose 5-8% on selling costs. Also, home values don’t always go up all the time. You might have to wait years before you can sell the property for more than a loss. This means you really can’t leave or get out of the property unless you’re willing to take a loss. If you’re a renter, you can pack up as soon as your lease ends and wash your hands of the place.
Also, remember your monthly payment includes taxes and interest. That’s money you won’t get back. Depending on your rate, you’ll likely pay 2-3x the value of your house in interest over a 30 year mortgage. That means even if you sell the property for 2-3x what you bought it for, you’re just breaking even. That doesn’t include the annual tax you’re paying the city or county, or repairs and maintenance.
So, when renting is half the price of buying (which it is around me), you’re better off renting. Buying should be cheaper than renting given all the risks and extra costs I cited above. In a normal market, that would be the case. When it’s not that way, be suspicious.
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It’s rarely cheaper to rent when you factor in that you’ll never own the asset.
