US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says • Hacker News Board

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#141

Post by posixplz » Sat, Aug 11, 2018, 1:57 PM UTC

refurb wrote: post #86

r00fus wrote: post #23

Earlier quoted context omitted.

> At some point you hit the cap of what people can possibly spend. Local population can be priced out if external buyers (ie, foreign cash) can pick up the slack / drive up demand. Foreign investment is likely why case-shiller is so high since mid-2000s.

Meh... even in super hot markets like Vancouver, foreign purchases were 10% of transactions. And a lot of it was in the very expensive houses. It’s locals who are driving most of the price appreciations (and flippers).

10% more overall transaction volume is huge, especially for something as illiquid as real estate.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#142

Post by CamTin » Sat, Aug 11, 2018, 3:07 PM UTC

raincom wrote: post #124

CamTin wrote: post #8

Just today (in Austin) I saw a banner by the road outside a bank offering "100% financing" for homebuyers. If banks breathlessly pitching to lend buyers the entirety of a home's price is not a sign of an overheated debt-led housing market, I don't know what is.

Must be a new construction. Usually big builders offer that when they can't unload units quick.

It was an ad for a bank, not a housing development.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#143

Post by CamTin » Sat, Aug 11, 2018, 3:13 PM UTC

mark212 wrote: post #84

astura wrote: post #41

Earlier quoted context omitted.

I'm a homeowner and I think it's an absolute crime my mortgage interest is tax deductible yet rent isn't. If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit cards, personal loans, auto loans, payday loans, etc. It's shameful. That being said, with the new tax bill, 90+% of both owners and renters will be taking the standard…

The entire (expressly stared) reason to make mortgage interest deductable was to encourage more home ownership. You may disagree that that’s a desirable policy goal (and I might agree with you), but comparing it to some other payment that isn’t deductable misses the point entirely. Especially rent. Congress wanted to create an economic dis-incentive to being a renter and push people to own the homes they live in.

Except it just makes it more difficult for people to actually own their home. Instead, it raises home prices by forcing people who would otherwise be happy renting in modest apartments or {du,quad}plexes into buying detached single-family homes in order to reap the mortgage deduction. And it's not like most of these mortgage holders are taking the loan for convenience's sake, to avoid selling off some art they're rather attached to, or their other home in Monaco. These are ordinary people who decide, based on this distortionary government policy, to take out 30 year loans that they really will need 30 years to pay off, if they can at all.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#144

Post by conanbatt » Sat, Aug 11, 2018, 3:39 PM UTC

lottin wrote: post #128

all_blue_chucks wrote: post #111

Earlier quoted context omitted.

My house in Seattle has been appreciating by about $100k/year over the past five years. In other words, I'm making $100k/year on a $50k investment. You wont find returns like that in a 401k. And my interest payments are less than rent would be. Last but not least, home appreciation is TAX FREE up to half a million bucks. By all means, max out the $20k or so you are allowed to put into a 401k, but don't fool yourself…

You're talking about unrealised profits. In order for the profits to be realised you need to sell the house. So what happens then? Either you keep the profits and are left without a house, or you buy another house and are left without a profit. Because, you see, it's not only your particular house that has appreciated, all houses have.

ITs still a good result: you can sell the house and rent, or move to a place where house appreciation wasnt so pronounced.

Real-estate does give leveraged wins.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#145

Post by Redoubts » Sat, Aug 11, 2018, 3:54 PM UTC

conanbatt wrote: post #144

lottin wrote: post #128

Earlier quoted context omitted.

You're talking about unrealised profits. In order for the profits to be realised you need to sell the house. So what happens then? Either you keep the profits and are left without a house, or you buy another house and are left without a profit. Because, you see, it's not only your particular house that has appreciated, all houses have.

ITs still a good result: you can sell the house and rent, or move to a place where house appreciation wasnt so pronounced. Real-estate does give leveraged wins.

Dumping all my wealth into one leveraged asset sounds scary as shit.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#146

Post by mjevans » Sat, Aug 11, 2018, 4:32 PM UTC

gnicholas wrote: post #126

mjevans wrote: post #120

Earlier quoted context omitted.

The effect on the market is to make the market even less liquid than it would be since sales cost such huge benefits. Plus insulating existing homeowners from the rising market value of land is a tax on literally everyone that does NOT live there.

Thanks for clarifying — I didn't realize what you meant by bubble chasing. I agree that Prop 13 can reduce available inventory and drive prices up. Though note that at age 55, you can move into a less-expensive home and keep your old property tax basis (if you meet certain restrictions). This provides somewhat of an escape valve that allows empty-nesters to downsize and new families to move in.

Someone from CA or who's more familiar with the actual Prop 13 should clarify, however from what I recall reading in prior threads...

I believe the benefits can also be passed in some non-sale transfers of the property; IE passing it on to loved ones. So if something stays within the family those benefits are locked in at the old rate instead of hitting the new rate. Which while it sounds nice for handing off a property among married couples creates an entirely new class (literally) of people as land ownership flows through family generations.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#147

Post by ksec » Sat, Aug 11, 2018, 5:37 PM UTC

anonymous5133 wrote: post #107

danjoc wrote: post #7

Earlier quoted context omitted.

That's not really what happened in the last crash though. The people who bought, held. The only people who got hurt were home owners who go underwater and then lose a job. They can't afford to wait it out, they can't afford to make the payment, so they end up in foreclosure. Then the bank holds and it ends up as a zombie home.[1] The zombie falls to pieces, so the bank gets a bail out, the home is written off, and th…

In my area, the home prices dropped 50% from the peak in a matter of months.

Where is that?

50% is A LOT.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#148

Post by gnicholas » Sat, Aug 11, 2018, 6:56 PM UTC

mjevans wrote: post #146

gnicholas wrote: post #126

Earlier quoted context omitted.

Thanks for clarifying — I didn't realize what you meant by bubble chasing. I agree that Prop 13 can reduce available inventory and drive prices up. Though note that at age 55, you can move into a less-expensive home and keep your old property tax basis (if you meet certain restrictions). This provides somewhat of an escape valve that allows empty-nesters to downsize and new families to move in.

Someone from CA or who's more familiar with the actual Prop 13 should clarify, however from what I recall reading in prior threads... I believe the benefits can also be passed in some non-sale transfers of the property; IE passing it on to loved ones. So if something stays within the family those benefits are locked in at the old rate instead of hitting the new rate. Which while it sounds nice for handing off a prope…

I’m from California and am also a (former) tax lawyer. There is a limited ability to inherit property tax basis. It only applies to children (or grandchildren, if all children are deceased at the time of the grandparent’s death).

It can’t be used to pass off property whenever you wish — only when you die. Given how long people generally live, this means that the people inheriting properties are usually already homeowners themselves, and in many cases already senior citizens.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#149

Post by AnimalMuppet » Sat, Aug 11, 2018, 7:13 PM UTC

CamTin wrote: post #8

Just today (in Austin) I saw a banner by the road outside a bank offering "100% financing" for homebuyers. If banks breathlessly pitching to lend buyers the entirety of a home's price is not a sign of an overheated debt-led housing market, I don't know what is.

I was in a bank yesterday, and saw the same thing. They had a person from their mortgage department approaching customers and informing them that they had 0 down loans available.

This I take to be a bad sign. We're in "this time it's different" territory.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#150

Post by all_blue_chucks » Sat, Aug 11, 2018, 7:19 PM UTC

lottin wrote: post #128

all_blue_chucks wrote: post #111

Earlier quoted context omitted.

My house in Seattle has been appreciating by about $100k/year over the past five years. In other words, I'm making $100k/year on a $50k investment. You wont find returns like that in a 401k. And my interest payments are less than rent would be. Last but not least, home appreciation is TAX FREE up to half a million bucks. By all means, max out the $20k or so you are allowed to put into a 401k, but don't fool yourself…

You're talking about unrealised profits. In order for the profits to be realised you need to sell the house. So what happens then? Either you keep the profits and are left without a house, or you buy another house and are left without a profit. Because, you see, it's not only your particular house that has appreciated, all houses have.

What you say is true only if you never downsize and never leave a hot market. Realistically most people will book those profits when they no longer need to live next to a job center. When you don't need that downtown job anymore you can sell a million dollar house in a big city and buy a nicer house for half that elsewhere, pocketing the other half million as pure, tax-free profit.