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House prices surpass housing-bubble peak on price-to-rent ratio

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Re: House prices surpass housing-bubble peak on price-to-rent ratio

#41

Post by newaccount2021 »

austincheney wrote: post #2

Houses are way over valued right now due to the lumber shortage and then are selling for inflated values on top of that due to demand following the pandemic. My house, according to Zillow, has increased in value over 20% since the start of the year and I could likely raise the selling price by another 10% if I were to put it on the market.

HN is endlessly obsessed with disavowing monetary policy and the inflation we are seeing as a result. Your grocery bill and cost of gas are rising similarly to housing...just accept it, this inflation

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#42

Post by TimPC »

helen___keller wrote: post #5
JimTheMan wrote: post #3

Earlier quoted context omitted.

While I am sure that is one of the factors in house prices, the main driving factor is very low interest rates and massive amounts of credit.

> the main driving factor is very low interest rates and massive amounts of credit. This doesn't tell the whole story. Low interest rates don't make people offer 150k over asking while waiving all contingencies. I'm closing on a home soon and I saw this kind of stuff. I myself went 25k over with all contingencies waived on a condo in a 100 year old multifamily building. Relatively speaking, I was quite lucky to get t…

Over asking is a misleading metric as realtors are allowed to list a house at any price they choose. Some properties are listed artificially low to get more people to view them. Since people have some sense of what a property is actually worth, they know after viewing it when an over asking offer is needed. In the same neighborhood I've seen similar properties go for $1.6 mil to $1.65 mil Canadian, one at $50K over asking and the other at $363K over asking.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#43

Post by yunohn »

hellbannedguy wrote: post #25
bko wrote: post #7

Earlier quoted context omitted.

> Low interest rates don't make people offer 150k over asking while waiving all contingencies Paying above offer always struck me as strange. In my housing market its very common as well, to the point I believe under-pricing the home is intentional. There's no reason the home should be priced considerably below the market price. Sometimes you get it wrong but homes consistently selling above ask tells you the sellers…

The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. You don't need to be a citizen of this country in order to buy our land? Just money, and a email will buy a house. The federal government could stop some of the insanity of buying a home, if they just made it a bit harder for foreigners to buy our land? Isn't the federal governments purpose to put Americans first?

> if they just made it a bit harder for foreigners to buy our land

I fully empathize with how you feel, and I see the same sentiments in various countries. But I think it’s important to not bring the immigrant straw man into this discussion, when it is easily shown that the problem is much much larger than that. Institutions and investors are the real perpetrator, not an immigrant middle class.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#45

Post by pjc50 »

ChrisLomont wrote: post #17
JimTheMan wrote: post #12

Earlier quoted context omitted.

The repayments seem to stay about the same but the overall payment is incredibly large. And because getting the % deposit is a big factor in whether you can afford a house, it pushes lower income people out of the market. And if you bought in 1980, the high rates kept the lid on prices. However while you may have started with the same payment but the rates have been steadily ticking down since then. Creating a massiv…

>And because getting the % deposit is a big factor in whether you can afford a house, it pushes lower income people out of the market. Median downpayment is 6%, a common low end is 3%, some places and programs go lower. Median house price sold in 2020 was 347k, well over 25% of houses sell for under 250k [1]. So, for a starter home, saving 3% of say 200k is 6k. If someone can pay this mortgage without killing themsel…

97% LTV mortgages are a bit worrying, a big contributor to the last financial crisis was this kind of thing. Or even >100% LTV mortgages.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#46

Post by yunohn »

bequanna wrote: post #27
aurizon wrote: post #20

Of course, this is a massive arranged crime akin to and having it's roots in the sub-prime mortgage crash. Rates are low. corporations can borrow unlimited cash and buy a residence, then rent it out to get 4-5% interest and pay 1.5 to 2.5 = risk free make the spread with no limits. I would like to borrow 10 billion and buy a zillion homes and make the spread ~~3%. They hire property managers and that costs .5% to .75…

This isn’t how taxation works or even can work. It would be trivial to avoid the tax you propose if it is based on income from the properties. If the tax is more like a property tax then it would be impossible for it to not be passed on to renters. Indeed, ALL taxes are passed onto consumers!

> it would be impossible for it to not be passed on to renters. Indeed, ALL taxes are passed onto consumers!

Agreed. While not immediately intuitive, this is unfortunately very true for all taxes that are imposed upon institutions, corporations, investors, etc.

I wish this is something that could be fixed in a fair manner…

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#47

Post by TimPC »

hellbannedguy wrote: post #25
bko wrote: post #7

Earlier quoted context omitted.

> Low interest rates don't make people offer 150k over asking while waiving all contingencies Paying above offer always struck me as strange. In my housing market its very common as well, to the point I believe under-pricing the home is intentional. There's no reason the home should be priced considerably below the market price. Sometimes you get it wrong but homes consistently selling above ask tells you the sellers…

The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. You don't need to be a citizen of this country in order to buy our land? Just money, and a email will buy a house. The federal government could stop some of the insanity of buying a home, if they just made it a bit harder for foreigners to buy our land? Isn't the federal governments purpose to put Americans first?

Canada allows foreign ownership of property. Some provinces have an additional tax at purchase time for foreign ownership.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#48

Post by yunohn »

ghaff wrote: post #33
question000 wrote: post #31

There are a lot of people vaguely guessing around at what the "real value" of a home is. In a world where you need shelter to produce income the value of a house is essentially all your income over the entire span of your life. So really arguments that houses are "overvalued" are ridiculous to me, houses have never decreased in value historically, why would they do so now? I am fully expecting single family residenti…

>Look at the number of single family home that are being bought and immediately rented out, in new construction the renters far outnumber the owners. I'm not sure I see the problem. People are living in the property one way or the other. It's not like there is some infinite pool of renters not living someplace who will absorb any supply. What would be (and is in some places) a problem is if speculators/people parking…

> I'm not sure I see the problem.

I don’t see why only parked properties are a problem? Rentals are always more expensive than the underlying mortgage - that’s what makes it an investment opportunity. This is a big problem since most people could’ve afforded the original property if they weren’t priced out by investors.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#49

Post by question000 »

vinw wrote: post #34
question000 wrote: post #31

There are a lot of people vaguely guessing around at what the "real value" of a home is. In a world where you need shelter to produce income the value of a house is essentially all your income over the entire span of your life. So really arguments that houses are "overvalued" are ridiculous to me, houses have never decreased in value historically, why would they do so now? I am fully expecting single family residenti…

> houses have never decreased in value historically Never?

Yes literally never in my lifetime, even after the 2008 recession those same houses are worth more now then ever. Any findings that show house values are "going down" are just sampling errors, or more likely people being purposefully misleading by distorting the trends.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#50

Post by akudha »

TimPC wrote: post #37
akudha wrote: post #35

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not against people making money and getting rich, but it would be nice if it wasn’t so easy to buy up multiple properties simply because they have the cash. There should be all kinds of incentives for first time home buyers. But it should be made very expensive/very p…

If only there was a law that allowed you to deduct a significant amount of mortgage interest from taxes on a home but not on other property.... Oh wait...

Trying to be sarcastic and clever?

Any taxes that you pay on your second home onwards simply gets factored into the rent and gets passed on to the tenants. It is just cost of doing business, nothing more. The tenants suffer, not the buyers.

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