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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

#251

Post by IkmoIkmo »

arcticbull wrote: post #167
IkmoIkmo wrote: post #163

Earlier quoted context omitted.

Yep, two points to add to the monthly costs approach: 1) you still have to correct the nominal monthly fees for nominal income levels of households, roughly 50k in 2008 to 70k today. https://fred.stlouisfed.org/series/MEHOINUSA646N 2) the monthly fees is not a full expense figure. A 30 year mortgage that gets paid off 100%, has 3.3% of principal paydown per year on average, versus 2.8% mortgage rates. That means a go…

> That means a good chunk of the mortgage payments are in essence savings, rather than money you'll never see again like interest. Interest on the first $750K is tax deductible, so you will see up to half that money again :)

True but that hasn't really changed compared to before.

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

#252

Post by maxerickson »

100-xyz wrote: post #189
rrrrrrrrrrrryan wrote: post #151

Earlier quoted context omitted.

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 do…

Sincere question - can you point me to such markets where interest rates can wiggle up and down without having as dramatic an effect on prices?

In lots of smaller towns, lots of decent houses are priced at 3x an okay annual salary.

Interest rates have less impact on that price than houses that are priced at 10x annual salaries.

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

#253

Post by atwebb »

jscheel wrote: post #173
sbahr001 wrote: post #170

This is really scary as a whole. Even though you have less interest rate you could be overpaying for you house by 100k+ in the current market. When interest rates do rise in the future(if it doesn't we will have larger problems) more people will be underwater with their homes, some may choose not to pay as they may never be able to be positive on their homes. Take into account that salaries are not rising at an equal…

We were about to put an offer down on a home in a rural-ish area of north Nashville when we got additional information that showed it was ~120k overvalued. It still ended up with multiple offers in less that 24 hours.

Now I'm just curious which area is considered ruralish (assuming it is outside Williamson). There's a ton of buildable land left in Middle TN since there aren't too many natural boundaries, I've always found that interesting when looking at the possible density.

I know it is a bit seasonal and all and anecdotal but prices are stabilizing in several TN areas where it was growing XX%, we'll see I guess.

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

#255

Post by atwebb »

DisjointedHunt wrote: post #65

Lots of people miss the fact that the Fed has intervened in unprecedented ways in the past year, that we may not understand fully for decades.

I don't think it is missed, at least personally, my thoughts are: "When will it stop?". If the argument is interest rates / incentives, then there really doesn't seem to be much turning back unless there are serious wage increases. The response seems to be "It won't stop."...just like housing always goes up in price (except when it doesn't).

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

#256

Post by nicoffeine »

betwixthewires wrote: post #227
nicoffeine wrote: post #188

Earlier quoted context omitted.

For the downvoters: "The single most important question in investing this year is whether the rampant inflation of the moment is temporary, as the Federal Reserve believes, or marks a historic shift. I argued last week that we are on the cusp of a major change and long-run inflation is now more likely." https://www.wsj.com/articles/if-inflation-is-coming-here-is-...

Why have I been seeing so much attention given to voting in threads on HN these days? Is there an influx from Reddit or something by a bunch of people who didn't take the time to learn the etiquette here? We speak only when there's something to be said, vote only based on the quality of the comment and move on. You don't need to address downvoters. If you had something to address them with it should've been in your o…

> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.

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

#257

Post by throw0101a »

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% (…

> In other words: Houses are still way cheaper, in actual out-of-pocket terms for average people, than they were in 2008. Today's interest rates are way too low.

I don't disagree generally, but one niggle: housing prices do effect downpayment sizes, which may be a problem for people to save for if prices get too high (relative to wages).

Adjusted monthly payments are the cheapest they've been since 1989:

* https://awealthofcommonsense.com/2021/03/what-if-housing-pri...

Though, there's a lot of bidding so good luck actually landing a purchase to take advantage of these low monthly payments:

* https://awealthofcommonsense.com/2021/05/has-there-ever-been...

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

#258

Post by beeboop »

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.

Agreed. It's really sick that we turn an essential of living into something that costs $850k on average in the city I live in.

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

#259

Post by betwixthewires »

nicoffeine wrote: post #256
betwixthewires wrote: post #227

Earlier quoted context omitted.

Why have I been seeing so much attention given to voting in threads on HN these days? Is there an influx from Reddit or something by a bunch of people who didn't take the time to learn the etiquette here? We speak only when there's something to be said, vote only based on the quality of the comment and move on. You don't need to address downvoters. If you had something to address them with it should've been in your o…

> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.

What in particular is this in response to?

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

#260

Post by dlp211 »

belter wrote: post #199
dlp211 wrote: post #191

Earlier quoted context omitted.

Um, no: https://fred.stlouisfed.org/series/MEHOINUSA672N Median household income is greater than it has ever been.

What matters is the Housing Affordability Index, not income levels. Houses prices might rise in price more than income plus it needs to be in the area where you live/work. See my post in this thread.

But that wasn't the claim I was addressing:

> Actual average people are making significantly less today than they were in 2008.

This is simply not true. Median household income is greater today than any time in American history in real terms.

There can be other reasons that homes are not affordable, but the average person making less than in 2008 is not one of them.

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