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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

#131

Post by amznthrwaway »

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 median down payment is only 8%, and the median first time home buyers puts down only 5%.

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

#132

Post by sfblah »

latchkey wrote: post #2

Name something that costs less in 2021 than in the 2000s?

There are just all kinds of things people don't need to buy anymore bc of smartphones. I think on balance life is cheaper now. The main exceptions are things like housing if you live in a big city.

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

#133

Post by long_time_gone »

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% (…

Any idea on the average down payment for each year? That’s a big part of affordability. If banks are requiring more money down, a lower interest rate also makes sense.

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

#134

Post by ffggvv »

fartcannon wrote: post #116
PragmaticPulp wrote: post #81

Earlier quoted context omitted.

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…

Build more and ban investment properties. No more AirBnB, no more rentals. Prices will come down and those people who previously had to rent, will now be able to own and life will be better for everyone except the poor souls who bought in the last 20 years.

im choosing to rent a house.. so now am forced to rent an apartment or buy a house?

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

#135

Post by avidiax »

minikites wrote: post #46

Doing everything we can to ensure house prices/values only go up is going to cause disaster soon enough. It's time we stopped bending over backwards to feed this beast.

It's not clear to me what disaster will happen. It's certainly distortionary and inefficient, but doesn't seem critical.

Eventually we could get a voting shift where sufficient power is held by people priced out of owning, which could result in improved housing policy. Those eventual changes will be calculated to not disrupt the market, though.

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

#136

Post by Armisael16 »

mixmastamyk wrote: post #109
Armisael16 wrote: post #75

Earlier quoted context omitted.

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.

That's a different statement, and assuming they meant what they said, a lie. A technique doesn't get credit for being more persuasive if it requires that you throw out your message.

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

#137

Post by vondur »

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% (…

I wonder how long before interest rates rise as inflation levels rise. That would really put a damper on the market. Would also kill car sales too I'd imagine.

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

#138

Post by lr4444lr »

throw123123123 wrote: post #15
lr4444lr wrote: post #11

Don't see the important question being answered: is this price rise accompanied by lax lending standards? Almost every sober analysis of thr 2008 crash involved dysfunction in the mortgage market. Skewed supply and demand does not a bubble make.

Lax lending is not the core issue of a market crisis like 2008, it is the amount of leverage and debt. You must look at how many people have cash in their banc accounts to cover mortgages if the stock market dives 50% and rates go up 2~4%. Can that generate a cascade of foreclosures?

That's pretty much the same thing I am saying: if banks properly analyzed your assets like you describe and had prudent lending standards accounting for this, people wouldn't be getting the loans to artificially drive up prices. This article gives me no insight as to whether this is or is not the case.

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

#139

Post by [deleted] »

b9a2cab5 wrote: post #130
throwdecro wrote: post #121

Earlier quoted context omitted.

Affordability is only part of the picture though. A higher value loan means higher risk as well. If interest rates rise, or something else happens that reduces the value of the property, then that $500,000 mortgage might be against a house worth less than $500,000. At that point people have to start playing chicken with the banks again, trying to mitigate the losses with strategic defaults.

2008 had a lot of variable rate mortgages. That's not the case today. Most people (at least I'd hope) don't use their house as an investment so if their mortgage is still the same payment each month and they can afford it there's no reason they'd default and tank their credit. The losses are purely paper losses.

[deleted]

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

#140

Post by mixmastamyk »

Armisael16 wrote: post #136
mixmastamyk wrote: post #109

Earlier quoted context omitted.

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

That's a different statement, and assuming they meant what they said, a lie. A technique doesn't get credit for being more persuasive if it requires that you throw out your message.

Pedantry does not persuade. It’s the whole point of the technique.

It’s obvious that high home prices are supported by inflation, low interest rates, laws, birth rates, nimbys, prop 13, AND speculation. And more in concert.

A “no, it’s really this one thing in isolation…” argument is not realistic.

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