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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#281

Post by alexose »

jshen wrote: post #120
alexose wrote: post #74

I know this may be sacrilege to some, but: Consider moving to a less desirable place if you can. I got priced out of my hometown of Seattle. So I moved to a small town in rural Oregon and I couldn't be happier. The combination of spending comparatively little on housing + a tech salary is hard to beat. I have my own shop! It feels like freedom, even if it comes at the cost of being near my extended family.

I don’t think this is good advice financially, though there is more to life than money. First, if by “tech salary” you mean a software engineers salary or a product managers, then you should be able to afford a house in a place like Seattle. It might be tight if you are early in your career, but it is very doable. The main reason this is likely to be bad financially is that your house won’t appreciate like a house in…

Oh, it's not good advice financially.

In retrospect, the best thing I could have done with my money would have been to buy the most expensive house in the best neighborhood I could possibly manage. Put it all on the table.

But I didn't want to play that game, and neither did my partner (We have bad memories of the 2009 recession and both hate the idea of debt). So I suppose I traded the future riches for present flexibility.

Re: Will real estate ever be normal again?

#282

Post by alexose »

hammock wrote: post #275
alexose wrote: post #74

I know this may be sacrilege to some, but: Consider moving to a less desirable place if you can. I got priced out of my hometown of Seattle. So I moved to a small town in rural Oregon and I couldn't be happier. The combination of spending comparatively little on housing + a tech salary is hard to beat. I have my own shop! It feels like freedom, even if it comes at the cost of being near my extended family.

>Consider moving to a less desirable place if you can. I got priced out of my hometown of Seattle. So I moved to a small town in rural Oregon Speak for yourself. That sounds more desirable to me, not less

Hah! I guess I meant generally desirable. I personally find this place desirable.

Re: Will real estate ever be normal again?

#283

Post by jbay808 »

drdec wrote: post #173
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

Inflation can be good for young people. If you really think there will be significant inflation, go buy a house, borrow more than you are comfortable with it necessary. Inflation will make the debt easier to deal with in time.

This might be true in the USA where you can get a fixed rate mortgage. It might not be true elsewhere. I recommend doing your own research.

Re: Will real estate ever be normal again?

#284

Post by refurb »

uejfiweun wrote: post #52
RappingBoomer wrote: post #49

Earlier quoted context omitted.

the problem is that if inflation continues, then interest rates will go up, whether the fed wants them to or not...once rates go up, money will flow from asset investment to bonds etc...and that will crash asset prices...checkmate...one way or another, asset prices WILL crash

How exactly does this work? I thought that the fed controlled interest rates. Under what circumstances could the interest rate rise independently of the fed?

Not an expert, but the central bank can set the interbank loan rate (rate at which banks loan money to each other overnight).

But for things like mortgages, personal loans, corporate bonds, those are not control by the fed and rates are set through auctions.

Of course, the fed controls the money supply so can signal whether they will increase or decrease it, so the rates set at auctions are influenced by what people think the feds will do.

Re: Will real estate ever be normal again?

#285

Post by nostrademons »

bradleyjg wrote: post #67
naveen99 wrote: post #58

Earlier quoted context omitted.

Fed controls only nominal interest rates on treasuries. The real / effective rate is set by the market at auction by adjusting the price on the bonds.

That’s the old world. Now the Fed buys unlimited amount of any securities it cares to. So it can manipulate all interest rates.

Eventual outcome is the same though. Firms lose confidence in the currency and stop accepting it, and then its value falls to zero.

You can say a dollar is worth whatever you want, but unless people believe you, it doesn't matter.

Re: Will real estate ever be normal again?

#286

Post by R0b0t1 »

arcticbull wrote: post #122
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

This is only part of the problem - and a small part of the problem at that. The real problem as always is zoning. Houses cost roughly the same on a $/sqft basis, adjusted for inflation, as they did in the 1970s. They're more expensive now because outside of town they're twice as big on average [1] - in part due to zoning rules. In town, zoning rules preclude densification necessary for supply to meet demand [2]. And,…

I don't think this is entirely right. The cost of building a home has shot up too, to the point you must take out a very sizeable loan to do so.

Re: Will real estate ever be normal again?

#287

Post by mateo411 »

mbesto wrote: post #27
KaiserPro wrote: post #26

Earlier quoted context omitted.

Because there are no jobs there. Yes remote might fix that, eventually. But I strongly doubt that, especially as humans are social animals.[1] However The UK is a more extreme version of this. People move to london because it has the most concentration of high paying jobs, and as a side effect culture (what that is I leave up to you. I don't just mean music, cinema and posh people shit.) Now, I could move back to bum…

> Because there are no jobs there. This is simply not true. There are a record number of job openings. I would go on to say that there has never been a time in history where finding a job was this easy. https://www.bls.gov/news.release/pdf/jolts.pdf https://fred.stlouisfed.org/series/JTSJOL "The number of job openings was little changed at 10.4 million on the last business day of September, the U.S. Bureau of Labor S…

You are correct that there are a record number of jobs.

However, the person you are responding is talking about the economic situation in the UK. I'm pretty sure those links to the Fed reports do not characterize the economic situation in the UK, because that's not their purview.

The housing and job situation in the UK is much more difficult than the US.

Re: Will real estate ever be normal again?

#288

Post by gbh444g »

uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

Population grows exponentially, housing grows quadratically (as circles around towns and cities). About 20 years ago the two curves had met and since then they've been rapidly diverging.

Re: Will real estate ever be normal again?

#289

Post by refurb »

paulcole wrote: post #127
mesh wrote: post #117

Earlier quoted context omitted.

It seems pretty simple, I can spend money to rent a place, and after 30 years (rent), have nothing to show for the money I put in, or I can buy a house (mortgage), spend money for 30 years, and then have an asset I own. Not to mention the freedom to do whatever you want to your home / house without having to ask for permission, or being in a position of putting money into an asset that you don't own.

I think people who parrot this line try to ignore the total cost of their mortgage being quite different from the purchase price of their home, property taxes, repairs, etc. As a lifelong renter, I’ve done quite well by keeping my rent low (my preference is studio/1-bedrooms in relatively dense urban areas) and putting extra money into the market. 30 years from when I started renting, I’ll have quite a lot to show fo…

Precisely. People really underestimate the costs of home ownership.

You need to include everything like: 1) mortgage interest, 2) property taxes, 3) insurance, 4) maintenance, 5) opportunity cost of down payment, 6) transaction costs buying and selling.

Clearly if you see major appreciation in the value of your house you'll clearly come out ahead of renting, but I've been in two situations (one while renting, one while owning) where I would have come out ahead renting. In one case the home values went up 20%, but the stock market went up 50% and adjusting for transaction costs, I made more money continuing to rent than buy.

Re: Will real estate ever be normal again?

#290

Post by pigscantfly »

saghm wrote: post #270
arcticbull wrote: post #141

Earlier quoted context omitted.

It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Any new stock you add increases supply, which leads to lower prices across the board. [edit] and btw, I think builders aren't tripping over their shoelaces to service the low end of the market because they know the city is so aggressively capping how much th…

> It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Any new stock you add increases supply, which leads to lower prices across the board I could definitely see that being how it works in a lot of cases, but it seems like a stretch to assume that's some sort of natural law of prices. If I have a market of te…

The price of a house is not fixed. Likewise, in your example, you would have to lower the price from $10 to sell your goods.
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