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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

#101

Post by kjkjadksj »

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…

A lot of people still buy with like 5% down and pay pmi even in hot markets. There are also first time homeowner benefits. My city offers a down payment loan where you can pay 1% down up to like a 750k home if you are lower income.

I think that not a lot of people are well educated on homeownership and think that you need to have a huge down payment or an all cash offer, when thats just not true, and often don’t know about the benefits offered to first time homeowners by multiple levels of government.

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

#102

Post by geebee »

skystarman wrote: post #90
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.

I'm not sure they'll even drop if building codes are relaxed. After all, those SFH owners also own the land beneath their house. The price per square foot of living space could drop while the price per square foot of land goes up.

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

#103

Post by sputknick »

I don't have the source, but I saw recently that if you price houses in gold bars, prices have remained highly consistent over the past 125 years at a price between 225-250 ounces of gold for the average new home in America. It's the dollar that has changed it's value.

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

#104

Post by mixmastamyk »

PragmaticPulp wrote: post #84
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 construct…

Yes, and the lack of enough construction is decades in the making.

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

#105

Post by meterplech »

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% (…

100% true.

And a good reminder of how much exposure housing prices have to interest rates. To frame the same math another way:

If you bought a house for, say, $580k with a $500k mortgage... You paid $80k down payment + $20k closing costs and your monthly would be ~$2,073/month.

If interest rates go up to 6%, and the person buying your house also wants to pay the same ~2,073/month, they would only be able to afford a $344,649 mortgage. Assume the same $80k down payment and $20k closing costs... and they should be willing to pay $444,649 for your house ($135,351 less than you paid!).

Obviously with inflation the person may be willing to spend more than you spent! But there's a lot of risk for homeowners who need/want to sell if/when interest rates go up. That's why the 30 year fixed is such a fantastic bet if you are willing + able to hold and lock that fixed price... but housing is a pretty lousy investment if you need to sell.

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

#106

Post by MontyCarloHall »

PragmaticPulp wrote: post #81
MontyCarloHall wrote: post #74

Earlier quoted context omitted.

> 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 affordabili…

While I 100% agree with you that matching demand with a commensurate increase in supply is the only true fix to the problem of housing costs, in practice I don’t see it happening for a couple main reasons:

Firstly, the people with the most political power are not coincidentally those who would lose the most if housing prices decrease. NIMBYism therefore inevitably wins.

Secondly, building additional housing in regions that need it most (i.e. dense urban areas) would require dramatically improving public transit in those areas. The transportation networks of e.g. San Francisco, Boston, or even New York (which has by far the best public transit in the country) are already at a breaking point and simply cannot tolerate the influx of people more housing stock would bring. Sadly, I don’t think the US has the ability anymore to build large infrastructure projects at reasonable prices.

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

#108

Post by avidiax »

acchow wrote: post #86
avidiax wrote: post #76

Earlier quoted context omitted.

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 w…

You can use your equity in the first house to buy the 2nd house, right?

And this person with the $2M home in California can, even after taxes and transaction fees, recover their original investment, plus have enough left over to e.g. buy a $1.5m home in cash, or a much higher priced home with a mortgage?

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

#109

Post by mixmastamyk »

Armisael16 wrote: post #75
mixmastamyk wrote: post #58

Earlier quoted context omitted.

Use yes-and rather than no, for better results. Reminding myself as well. https://en.m.wikipedia.org/wiki/Yes,_and ...

What's the yes-and version of that comment? Assuming you want to say basically the same thing then the answer to the question really is no.

Yes, and Chinese billionaires are buying up supply, adding to higher prices.

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

#110

Post by zuminator »

cronix wrote: post #80
Panther34543 wrote: post #31

The ongoing eviction moratorium comes up quite a bit in real estate circles as one of the many reasons for current prices. Of course, the very low rates, high construction costs, demand to leave cities, and various other factors also come into play. However, yesterday I was very surprised to learn that the eviction moratorium that is preventing landlords from selling their properties is actually an order from the Cen…

They don't. A case went to the Supreme Court and said Congress needed to make that decision, not an unelected CDC, but that they wouldn't rescind the current existing order...which then expired. Biden basically said as much, and that he was going to do it anyway and extended it after it lapsed. For some reason, the news doesn't really cover that Biden is in direct violation of the Supreme Court with his latest extens…

Your conclusion that "Biden is in direct violation of the Supreme Court" isn't supported by anything else that you said. Nor is it supported by the actual Supreme Court ruling, which you can read for yourself here:

https://www.supremecourt.gov/opinions/20pdf/20a169_4f15.pdf

The actual text of the ruling is simply: "The application to vacate stay presented to THE CHIEF JUSTICE and by him referred to the Court is denied." The additional wording that follows is simply Kavanaugh's personal feeling on the matter which for now doesn't carry the force of law, as well as several judges lamenting they would've vacated the moratorium if they had the votes, which they didn't.

(Note: I happened to agree that Biden should not have extended the moratorium. And it may yet prove to be that he will be overruled by the US Sup. Ct., but that hasn't happened yet.)

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