What's new
By:
Filters

Housing market theories

east_beast said:
The housing market by and large isn't about "price". It's about monthly mortgage payment since the vast majority of home purchases are with mortgages. That payment on say a $400k house at 4% was doable. But at 8% the mortgage payment has jumped 50%. It now has the effective monthly cost of a $600k house back in the 4% market. The Fed created these bubbles by keeping historically low interest rates for a decade. We should've been creeping rates back up long ago but no one wanted to turn off the printers and it just became the new norm.

It's the same thing that happened to vehicle prices.
Click to expand...
I agree the rates should have gone up long ago. People just kicked the can. So now millennials get to be the whipping boys for the mistakes of the pst generation. Maybe when I’m old I’ll treat people the same way. ‘It was good enough for me to live through a housing collapse followed by Jimmy Carter inflation. Fuck the grandkids like I got fucked.’
 
RunningProblem said:
I agree the rates should have gone up long ago. People just kicked the can. So now millennials get to be the whipping boys for the mistakes of the pst generation. Maybe when I’m old I’ll treat people the same way. ‘It was good enough for me to live through a housing collapse followed by Jimmy Carter inflation. Fuck the grandkids like I got fucked.’
Click to expand...
I feel bad for the younger generation. They're fucked for the foreseeable future. These high rates are going to slow construction only adding to the already existing housing supply crunch. And with the higher rates folks aren't going to be chomping at the bit to move as an upgrade within the same area. If you don't have to move for a relocation, etc. you're gonna be staying out for awhile. That's why I don't see prices crashing. It's simple supply and demand. The inventory is practically non-existent.
 
But is there really a housing shortage? It seems to me that low interest rates have turned housing into an object of speculation, fueling an artificial demand for housing, not warranted by population growth. This is at a time when the largest generation (boomers) are downsizing. Again, it's government creating problems, for which they will offer equally problematic solutions.
 
Mikel said:
But is there really a housing shortage? It seems to me that low interest rates have turned housing into an object of speculation, fueling an artificial demand for housing, not warranted by population growth. Again, it's government creating problems, for which they will offer equally problematic solutions.
Click to expand...
No. There isn’t a housing shortage. I learn this fact after the 2008-12 housing bullshit. No shortage. The supply is just limited to a point where demand exceeds it.
 
RunningProblem said:
The supply is just limited to a point where demand exceeds it.
Click to expand...
Also known as a "shortage". :laughing:

What Is a Shortage?​

A shortage, in economic terms, is a condition where the quantity demanded is greater than the quantity supplied at the market price.

www.investopedia.com

Shortage: Definition, Causes, Types, and Examples

A shortage, in economic terms, is a condition where the quantity of a product or service demanded is greater than the quantity supplied at the market price.
www.investopedia.com www.investopedia.com
 
There is a housing shortage when real estate becomes an object of speculation and everyone goes crazy buying properties where they don't plan to live. From a population growth point of view, it is very questionable that there is a nation-wide shortage.
 
east_beast said:
Also known as a "shortage". :laughing:

What Is a Shortage?​

A shortage, in economic terms, is a condition where the quantity demanded is greater than the quantity supplied at the market price.

www.investopedia.com

Shortage: Definition, Causes, Types, and Examples

A shortage, in economic terms, is a condition where the quantity of a product or service demanded is greater than the quantity supplied at the market price.
www.investopedia.com www.investopedia.com
Click to expand...
Emphasis on the QUANTITY supplied. If you have enough supply to meet demand, and keep supply at an anemic low do you actually have a shortage?
 
The way I think about it is this:

Older generations/baby boomers had higher inflation, but low house prices. Their payments were still in line and easily paid with a single income. They start to get into power and slowly begin dropping rates. House values go up on their almost paid off houses and they use that equity to begin buying more houses for rentals, second homes, whatever. As things go along, there is the housing crash where prices plummit. These same people have a lot of equity and cash and buy up more. This continues for another decade where they continue to drop the interest rates and prices go sky high.

Now they hold a large portion of the available houses creating the artificial shortage and jack interest rates back up which just brings up payments. They still control the supply, so prices come down a little but just not enough. Now they have a larger percentage of the population that can no longer afford or qualify for a home loan, so they just created a ton of renters.

Now they still have all these rentals and positive cash flow, so any deal that shows up even with the high interest rate they can still drop cash on.

All the people that were pissed at the world in the 60s and 70s when they were becoming adults saw how the game was being rigged, and they are just getting their piece of the pie with 0 regards toward the younger generations.
 
RunningProblem said:
Emphasis on the QUANTITY supplied. If you have enough supply to meet demand, and keep supply at an anemic low do you actually have a shortage?
Click to expand...
There isn't enough supply to meet the demand. That's why prices have hardly budged despite sharp hikes in rates.
 
In this area at least it's a shortage and a glut all at the same time. It's strangely keeping prices very close to where they've been for the last few years.

The shortage though is mostly in homes that most would qualify as a rental. The prices being what they are (basic starter home <1500 sqft in decent move in shape) are in the 350 to 400 range. Younger folks are buying them up as it's all they can afford barely. This is keeping that market stable while at the same time creating a shortage in the rentals. As of right now a decent rental is going for the mortgage payment of a 400K house, this is basically a basement rental while a decent apartment is ridiculous.

This was all created by the .gov interference in the rental game all in the name of covid.

Landlords selling off due to that equals big supply, new entrants into the market equals big demand. It's a complicated mess but it is what it is and I don't see it bursting anytime soon unless this gets to the point of massive job losses to drive the demand down.

I know, I know. It's as clear as mud right?

:laughing::laughing::laughing:
 
my first house was 700 sqft that was a wreck when i bought it. 99% of the house buyers would never dream of buying a house like that now a days. 70 years ago a 1000 sqft home was middle class. and most families had one car. we have become a spoiled demanding society. one income is plenty if you chuck out the fluff.
 
gunracer1 said:
my first house was 700 sqft that was a wreck when i bought it. 99% of the house buyers would never dream of buying a house like that now a days. 70 years ago a 1000 sqft home was middle class. and most families had one car. we have become a spoiled demanding society. one income is plenty if you chuck out the fluff.
Click to expand...
That probably is the case in some locations but I don't think holds for every market... Here the junkers are going for unreasonable prices and the cheap entry levels are going cash and well above asking price to investors.

Two examples: there is a local house that the previous owners walked off of and left the front door open, it needs gutted including new electrical and plumbing... it is 2x the price of the house I bought in 2008 that was in decent shape and better location. Another house, similar to what you posted, needed gutted but we made an offer 10% over asking and was outbid and it sold cash in less than 2 days.
 
Yeah, around here the junkers are getting snatched up immediately by investors for rental property. There is no "starter home" market. All those houses are going for over list for cash because the rental market is so underserved. I have a 3000 square foot house on 12 acres that I bought less than two years ago. My mortgage payment would get me a complete piece of shit of a rental.
 
gunracer1 said:
my first house was 700 sqft that was a wreck when i bought it. 99% of the house buyers would never dream of buying a house like that now a days. 70 years ago a 1000 sqft home was middle class. and most families had one car. we have become a spoiled demanding society. one income is plenty if you chuck out the fluff.
Click to expand...

Do they even build new single family starter homes anywhere anymore? I see either mcmansion developments or lame overpriced condo complexes. No more new neighborhoods of modest housing. Or did what we think of as modest change, like inflation, from 800 sq/ft to 1800 sq/ft to 2800 sq/ft.
 
Ebs said:
Do they even build new single family starter homes anywhere anymore? I see either mcmansion developments or lame overpriced condo complexes. No more new neighborhoods of modest housing. Or did what we think of as modest change, like inflation, from 800 sq/ft to 1800 sq/ft to 2800 sq/ft.
Click to expand...
A lot of truth to this. McMansions or upscale townhouses/condos. Even in my town, a small southern blue collar town all the new apartment complexes are all upscale hipster shit with $1300+ monthly rents. This is a town where the median home value is in the $200k range. And these places are rented out before they're completed
 
Ebs said:
Do they even build new single family starter homes anywhere anymore? I see either mcmansion developments or lame overpriced condo complexes. No more new neighborhoods of modest housing. Or did what we think of as modest change, like inflation, from 800 sq/ft to 1800 sq/ft to 2800 sq/ft.
Click to expand...

What use to be fields, are just roof tops down here. Neighborhoods slapped together with 1400-2800 sq/ft homes. Maybe 6ft between each house. The supports for the forms when pouring overlap.

Like said before, they use to be sold. Now they're sitting empty.
 
brantb said:
The way I think about it is this:

Older generations/baby boomers had higher inflation, but low house prices. Their payments were still in line and easily paid with a single income. They start to get into power and slowly begin dropping rates. House values go up on their almost paid off houses and they use that equity to begin buying more houses for rentals, second homes, whatever. As things go along, there is the housing crash where prices plummit. These same people have a lot of equity and cash and buy up more. This continues for another decade where they continue to drop the interest rates and prices go sky high.

Now they hold a large portion of the available houses creating the artificial shortage and jack interest rates back up which just brings up payments. They still control the supply, so prices come down a little but just not enough. Now they have a larger percentage of the population that can no longer afford or qualify for a home loan, so they just created a ton of renters.

Now they still have all these rentals and positive cash flow, so any deal that shows up even with the high interest rate they can still drop cash on.

All the people that were pissed at the world in the 60s and 70s when they were becoming adults saw how the game was being rigged, and they are just getting their piece of the pie with 0 regards toward the younger generations.
Click to expand...
All this shit is so unfair
 
Ransil said:
In Florida large corps are buying up all the rental properties
Click to expand...

Someone made the point that in 2008, they were turning mortgages into securities. Now they are turning securities into mortgages.
 
Mikel said:
There is a housing shortage when real estate becomes an object of speculation and everyone goes crazy buying properties where they don't plan to live. From a population growth point of view, it is very questionable that there is a nation-wide shortage.
Click to expand...
All those millions of folks flooding across the border gotta live somewhere

Of course if you ask a liberal, then there’s not anyone flooding across the border …
 
Southernfriedcj8 said:
Just checked the value of my place on Zillow.

986k in June 2022.
6 months later, 910k.

Meanwhile, I just got a quote for the garage doors on my new house. 36% higher than the exact same door quote in December of 2021.
Click to expand...
But has Trump hurt your feelings this week? Don't forget whats really important.
 
Just got our assessment the other day, last year 650K, this year 760K. Real life I could pull 700K pretty easy. The market here has seen a small drop in prices that I still believe is more seasonal than anything, new house construction hasn't slowed much if at all.
 
2big bronco said:
Just signed papers for $345k at 5.5% with $10k is bullshit fees through Rocket mortgage... a full 1-3/4% lower then my credit union could do.

Just an fyi for anyone looking at rates
Click to expand...
LTV under 50% too, right? The low LTV helps get the rates down too.
 
You must log in or register to reply here.
Top Back Refresh