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Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

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Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#81

Post by PragmaticPulp »

MontyCarloHall wrote: post #74
PragmaticPulp wrote: post #20

They cite the numbers in "real terms", which would mean inflation adjusted: > The average price of American homes, in real terms, is now the highest it's ever been Of course, you really need to be looking at mortgage rates to understand housing affordability: http://www.freddiemac.com/pmms/pmms30.html July 2021 average 30-year mortgage rate: 2.87% (with 0.7 points) 2008 12-month average 30-year mortgage rate: 6.03% (…

> excluding down payment Therein lies the rub. It’s true that inflation adjusted average monthly mortgage payments have remained surprisingly constant over the last 40 years [*], since as you point out, low interest rates generally offset high home values (and vice versa). However, accruing enough cash in the first place to afford huge down payments keeps a lot of people out of the market who could otherwise afford t…

The down payment hurdle is indeed a problem.

However, if we took steps to make down payments easier (by lowering down payment requirements or through something like Biden's first-time homebuyer credit) then we're also pumping more money into the housing market. That will drive prices up again, further raising prices and making it even harder for future buyers to enter the market.

The only real way to push affordability down, long-term, is to build more. I'd personally like to see incentives targeted toward something like all-new construction (no tear-down rebuilds, only new houses where previous houses didn't exist).

Give people money to spend on new construction and the new construction will follow.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#82

Post by pjdemers »

AdmiralAsshat wrote: post #34

Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political climate. Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! I have been patiently waiting for the next "bubble" to pop, even as my realtor insists that oh no, we're not really in a bubble, this is just the…

Not forever, but longer than anyone who is already able to qualify for a mortgage can wait. It will go on until baby boomers start dying in large numbers. That won't happen until the mid 2030s. By 2050 housing will be a buyer's market.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#83

Post by sumtechguy »

toomuchtodo wrote: post #13
skywal_l wrote: post #3

So is this finally the inflation that we were promised for so long? I guess all that money created during covid had to go somewhere. Too bad it's not going into education or healthcare...

It's not inflation from money printing. Its reduced supply along with higher wages from income earners getting smeared across the country instead of inflating housing costs in traditional HCOL locations. Before, lower income earners in the suburbs and more rural areas didn't have to compete against higher wage earners who were previously stuck in cities. No longer. In the Sunbelt, I see homes getting bought all cash…

I would posit that it is a combination of things. To discard inflation all together would be an interesting take. The other bits of your argument are good however.

Also inflation is not necessary for people to act like it will happen. You may see investment firms looking to 'park the cash' into something they can just borrow against. Not enough inventory to cover that would make the problem worse. It is like the oil crunch a few years ago. We had plenty of oil. The problem was not enough oil to cover real usage and speculative usage at the same time so prices went up.

So if (when) more inventory happens. Then you will see a decrease in price. As that could spook the investor crowd and cause inventory to grow. Something akin to what 2008 looked like could easily happen. It will not be the same cause but the effect will probably be similar.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#84

Post by PragmaticPulp »

strangattractor wrote: post #32

I keep hearing about a housing shortage. How we are not building fast enough. I personally know several people that own more than one home and AirBnB it when not in use. Also hedge funds are now targeting real estate. I can't help but wonder if this is partially an AirBnB and hedge fund created situation. Of course these are the same people that have access to all this free money. The average Joe still has to pay int…

> I keep hearing about a housing shortage. How we are not building fast enough.

New construction is temporarily extremely expensive due to supply chain issues. Prices of everything from lumber to copper are (or were) elevated because COVID shut down factories and supply chains.

New construction is still happening, but it's slowed down and expensive for a short while.

There's a secondary problem that the new construction is happening in the suburbs and outskirts where there's still land available. Meanwhile, the trend is to move toward city centers and popular areas, where housing prices continue to climb.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#85

Post by gruez »

minikites wrote: post #72
AdmiralAsshat wrote: post #34

Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political climate. Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! I have been patiently waiting for the next "bubble" to pop, even as my realtor insists that oh no, we're not really in a bubble, this is just the…

Capitalism is predicated on the idea of perpetual and infinite growth. Those assumptions are reflected in many ways and we're going to need to rethink our economy and political systems with entirely different assumptions soon enough because we're already running into their limits.

>Capitalism is predicated on the idea of perpetual and infinite growth

First sentence from wikipedia:

>Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.

How does this predicate "on the idea of perpetual and infinite growth"? I mean, it'll be nice if the economy grew infinitely, but I'd still want to invest my money into production even if that didn't exist.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#86

Post by acchow »

avidiax wrote: post #76
AdmiralAsshat wrote: post #34

Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political climate. Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! I have been patiently waiting for the next "bubble" to pop, even as my realtor insists that oh no, we're not really in a bubble, this is just the…

I used to think 'no', but I think it pretty much can. You can have 2 classes: property owners and non-owners. The property owners have real estate that they can sell or collateralize to purchase different or additional real estate. This is why, for example, current California owners have no problem buying in e.g. Washington: even if a house in both places were $1billion*, they can just trade. Obviously, non-owners ma…

> This is why, for example, current California owners have no problem buying in e.g. Washington: even if a house in both places were $1billion, they can just trade.

If it's your primary residence, you can't trade one from California to Washington because you would have a large tax bill when selling one. You can't even trade within California itself. If you bought a home for $500k 20 years ago and now discover it is worth $2M, you cannot even trade your $2M for a different $2M a few blocks over. You would have to pay taxes on a $1.5M gain.

If instead the home s an investment property which you rent out (which have higher interest rates), then you could do a 1031 exchange.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#88

Post by Armisael16 »

latchkey wrote: post #68
lghh wrote: post #29

Earlier quoted context omitted.

That's not how you compare prices.

How do you compare prices?

You compare like-to-like. You compare the same kinds of bread, not cheap white bread to artisanal. You compare a 27" 1080 TV to another 27" 1080p TV, not an 8k TV.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#89

Post by vasco »

c7DJTLrn wrote: post #55

It is atrocious that the law allows using shelter as an investment. Only for the initial sale of the property should it be permitted to make profit. After that, properties should only be sold at cost between buyers.

And how do you propose we define real up to date cost?

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#90

Post by skystarman »

AdmiralAsshat wrote: post #34

Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political climate. Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! I have been patiently waiting for the next "bubble" to pop, even as my realtor insists that oh no, we're not really in a bubble, this is just the…

If you live in a place like the Bay Area/NYC where cities/local zoning boards are preventing almost and and all new construction then in all likelihood your home price will continue to appreciate throughout your lifetime.

Supply and demand. There are way more people that want to live in these places than houses available. And we keep making new people every year.

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