Easily solved by devaluing the currency they're valued in.
Homes in 97% of U.S. cities are overvalued, Moody's says
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Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#42Earlier quoted context omitted.
No because houses as an asset class could still be overvalued relative to other assets.
Relative to which assets? Stocks? Cars? Forex? IP? Crypto? Genuinely curious because everything is more expensive than it was before. If everything is overvalued, then nothing is overvalued [relatively]
I remember a family member saying almost exactly the same thing to me in a conversation about the real estate market that took place in early 2008.
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#43Where I live, in an affluent town on the east coast, homes have been going for 50%+ over ask. And the asks were high.
Something is broken. Homes that wound have been listed at $1,000,000 in 2019 are going for $1.750,000 today. Interest rates going up should cool it off but I fear it will break much of the rest of the economy. There was a massive mismatch in executive policy and fed policy and here we are.
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#44I picture that vertical M2 supply graph from March 2020 whenever I hear ‘overvalued’ when it comes to real assets. The money has changed, not the property. I’m now curious how undervalued it really is and what a huge accounting trick it was to play on everyone over the past two years.
Its because they changed the definition of m2 in may 2020 not because anything fundamentally changed - not sure why people keep thinking this.
>Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#45Earlier quoted context omitted.
Such a simple analysis ignores e.g. the higher wages in the US offset by the lack of social nets
It also ignores the vast differences between densely populated and not very populated cities.
Even Manhattan is cheaper than most places according to the same metric.
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#46I can’t help but think of that saying “the market can stay irrational longer than you can stay solvent.” Yes, prices in many markets are very high and appreciating at a rapid clip, but if there are buyers, competition, and houses are continuing to move quickly, then it’s a bold statement to say they are overvalued and that we should predict a significant decline.
> but if there are buyers, competition, and houses are continuing to move quickly, They’re not though. Thats the whole problem. Asset bubbles can inflate the paper value and there might still be some trading activity. But if nobody can actually buy the asset, it’s pretty much useless.
That is what they are saying though - people are actually buying the assets? All anecdotes I have seen recently say that houses go off market very quickly.
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#47It doesn't help that corporations buy all these houses up at full price and well above listing just so they can use it as rental income.
Those purchases are less than .5% of the market. Don't let NIMBYs think that that is the problem. We need more housing.
We definitely need more housing. Just not more NIMBY housing. I legit don’t need a yard.
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#48It doesn't help that corporations buy all these houses up at full price and well above listing just so they can use it as rental income.
I’ve heard this but I’ve not experienced it. If corporations are buying houses and using it as rental income, they’re probably losing money. Ignoring vacation rentals, detached homes are among the hardest to rent.
Newsflash, they aren't losing money
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#49I used to believe such things and then I did a median income vs price per square foot worldwide comparison and it turns out the United States is one of the cheapest, if not the, cheapest place in the world when it comes to the “affordability” (median income vs price per square foot). I think the issue is that the United States has been too cheap and finally that era of abundance at a low cost is coming to an end.
Square feet aren't a great affordability measure (they tend to come in rather larger lumps). In any case, why not just continue the era of abundance? We aren't really running short on space, and there is at least some indication that the lack of housing availability is a policy failure (rather than an expected outcome of some physical process or limit).
Incomes are not going up with housing costs so eventually it’ll diverge to the point where it’s the same as other countries
Re: Homes in 97% of U.S. cities are overvalued, Moody's says
#50A 10% drop is nothing for anyone that has owned for more than 3 years, at least in my area.
A 10% drop would set me back in equity to where we were 6 months ago. Market is crazy, of course something has to give eventually.