Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble • Hacker News Board

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

#141

Post by [deleted] » Fri, Aug 20, 2021, 6:23 PM UTC

zuminator wrote: post #110

cronix wrote: post #80

Earlier quoted context omitted.

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 denie…

[deleted]

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

#142

Post by Retric » Fri, Aug 20, 2021, 6:24 PM UTC

api wrote: post #114

meterplech wrote: post #105

Earlier quoted context omitted.

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…

I've wondered if we are in a regime today where interest rates simply can't go up. I can't imagine a scenario where they can go up more than a point or two without blood in the streets... possibly literally.

Even minor changes to inflation can deflate asset bubbles without blood in the streets. 2% inflation might make your existing how less valuable for a few years but it’s also rapidly making your mortgage payments more affordable. The real issue is this sets up golden handcuffs where buying an equally valuable house elsewhere would be a huge financial hit for much longer.

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

#143

Post by WarOnPrivacy » Fri, Aug 20, 2021, 6:24 PM UTC

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…

> Go look at current and historical prices of homes (as well as appreciation rate velocity) in Dallas, San Antonio, Houston, Tampa, Orlando, Miami, and major North Carolina metros.. Rents are no better

The rental market in these cities is in an unprecedented state, with hundreds of applicants for each of the precious few listings.

People with money in the bank are finding nowhere to live.

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

#144

Post by symlinkk » Fri, Aug 20, 2021, 6:24 PM UTC

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.

Why do you hope people don’t use houses as an investment?

It’s one of the few investments where:

* you can get a huge loan with a tiny interest rate

* you can actually enjoy the investment by living in it

* everyone around you is doing everything they can to keep house prices up and therefore keep your investment growing

I mean seriously, the only other option is dumping all your money in a stock market that you can’t touch and have no control over.

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

#145

Post by sdze » Fri, Aug 20, 2021, 6:25 PM UTC

sputknick wrote: post #103

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.

http://pricedingold.com/us-home-prices/

Interesting. Clearly an uptrend.

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

#146

Post by b9a2cab5 » Fri, Aug 20, 2021, 6:26 PM UTC

jmharvey wrote: post #35

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...

No. The first paragraph of the article states that these are inflation-adjusted prices. > The average price of American homes, in real terms, is now the highest it's ever been

Core CPI understates localized inflation in certain assets. Real estate happens to be highly inelastic, illiquid, and has a limited supply due to NIMBYism. The federal government has also handed people tens of thousands of dollars in printed money through stimulus checks and extended unemployment benefits. That lets people stay where they live now instead of moving to a place they can afford, which takes supply off the market and brings up prices. Whether you think this is good is a political opinion, but you can't deny that there is an impact on prices.

I bet if you adjust by the price of SPY as inflation instead of CPI you'd get a different story.

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

#147

Post by humanlion87 » Fri, Aug 20, 2021, 6:29 PM UTC

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 recently listed to an NPR Planet Money podcast regarding the housing shortage. One of the points they mentioned was that the number of people joining construction related trade schools (plumber, electricians, etc) dropped because the construction industry was decimated after the 2008 crash. It takes 5+ years for someone to go to school, get an apprenticeship and become skilled in their trade. This scarcity is also impacting the ability to build new homes (apart from the zoning laws and NIMBYism that prevents building new high-density housing). The pandemic is more of a short term supply-shock which is exaggerating the situation.

Edit: edited to include year

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

#148

Post by robertlagrant » Fri, Aug 20, 2021, 6:32 PM UTC

meterplech wrote: post #105

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…

Exactly - low interest rates mean higher house prices. The UK gov paused stamp duty for six months, so guess what - there was more money to spend on the bid price.

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

#149

Post by dsp » Fri, Aug 20, 2021, 6:35 PM UTC

after_care wrote: post #42

throw123123123 wrote: post #15

Earlier quoted context omitted.

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?

How will future mortgage rates generate a cascade of foreclosures for people with existing mortgages?

Adjustable rate mortgages and people who need to move who are now underwater. I couldn’t easily find nationwide stats on ARM issuance, but a quarter of First Republic Bank’s loans are adjustable rate.

https://ir.firstrepublic.com/static-files/1a464a0b-9396-4bd4...

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

#150

Post by jliptzin » Fri, Aug 20, 2021, 6:40 PM UTC

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.

A lot of people prefer renting though, even if they can afford to buy a home. Many don’t want to be homeowners, or enjoy the flexibility of being able to move at any time without the hassle and expense of selling a home.