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

#151

Post by rrrrrrrrrrrryan » Fri, Aug 20, 2021, 6:41 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…

This logic doesn't hold in all housing markets.

In California, people generally buy the absolute most house they can possibly afford. Houses are extremely expensive and people don't want to live in shacks, so they stretch their budget as far as they can. Home prices in these markets are extremely sensitive to changes in interest rates, as you've described.

However in other markets, interest rates can wiggle up and down without having as dramatic an effect on prices, because livable homes aren't as expensive and people have more slack in their budgets.

In markets with lots of cash buyers, home prices may also be somewhat isolated from interest rate swings.

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

#152

Post by MontyCarloHall » Fri, Aug 20, 2021, 6:42 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.

I wouldn’t go as far as to ban rentals outright (people moving to a new city can’t be expected to buy a property before moving), but I would certainly support steep taxes on non-owner occupied properties, with deductions available for maintenance/upgrades (thus making rental businesses de facto non-profits). I would also add deductions for developers building new rental housing stock to encourage new construction.

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

#153

Post by Armisael16 » Fri, Aug 20, 2021, 6:42 PM UTC

mixmastamyk wrote: post #140

Armisael16 wrote: post #136

Earlier quoted context omitted.

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.

>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.

It's obvious that the the initial post didn't agree with that proposition.

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

It wasn't pedantry. It was half the content of the comment.

I really hope this technique isn't being popularized this way. A person doing this outside of very specific brainstorming-type processes reads like a person willing to lie or say whatever in order to get agreement (even if they won't stick to it).

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

#154

Post by OrvalWintermute » Fri, Aug 20, 2021, 6:43 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…

There is a specific locality to housing that is key to think about.

This report from Brookings [1] titled "The Washington, DC region has built too much housing in the wrong places", lays out a strong case for what is happening in my general geography. All politics aside, this is very accurate anecdotally as all the major housing developments I know of were fairly distant from work. We have housing going up, but not in the right place for the employees. Had colleagues commuting > 90 minutes one way for work, pre-pandemic. COVID changed all that for the better.

Before getting married, my wife & I rented individually, and our combined housing expense (mortgage) for a medium sized TH in a good neighborhood is fairly close to our rents, previously. This is thanks to the low interest rate environment which has increased affordability despite the higher prices.

[1] https://www.brookings.edu/research/the-washington-dc-region-...

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

#155

Post by notanzaiiswear » Fri, Aug 20, 2021, 6:45 PM UTC

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.

Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers.

Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.

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

#156

Post by DanTheManPR » Fri, Aug 20, 2021, 6:46 PM UTC

lxe wrote: post #107

US population also added 50 million people. I'm willing to bet it also affects real estate prices to a considerable degree.

To expand on that: the home building rate kept pace with population growth up until the housing crash, and then collapsed. I'm not sure how much of a lag time there is between population growth and the demand for more housing, but eventually all the kids born in the last 20 years will need to live somewhere. https://www.statista.com/statistics/1041889/construction-yea...

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

#157

Post by nicoffeine » Fri, Aug 20, 2021, 6:48 PM UTC

gruez wrote: post #85

minikites wrote: post #72

Earlier quoted context omitted.

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 d…

Modern capitalism depends on fiat currency and investment from those with capital. Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even.

So, it's not "nice" if the economy grows, it's an absolute requirement to keep investors interested.

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

#158

Post by Dma54rhs » Fri, Aug 20, 2021, 6:50 PM UTC

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.

It's much more insane that so many laws don't allow or discourage people building a shelter from.

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

#159

Post by tedunangst » Fri, Aug 20, 2021, 6:54 PM UTC

larrik wrote: post #25

gnur wrote: post #7

Earlier quoted context omitted.

Anything related to storage or compute? I couldn’t image having a 2tb drive 20 years ago, but having a 2tb ssd in my laptop is kind of amazing

compute? GPUs used to basically top out at $400, now the cheap ones go for more than that.

I'd rather have a $1200 GPU than dick around with triple SLI.

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

#160

Post by mullingitover » Fri, Aug 20, 2021, 6:57 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…

The eviction ban is arguably contributing to the shortage in rentals - people aren't interested in getting locked into a tenant who can stop paying rent at any time and who can't be evicted. A lot of landlords are eating the cost and staying out of the market, which restricts supply and drives prices up.