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I just bought an apartment with 15% down. It's in the EU; 15% down is about the standard here with no special exceptions. With government assistance programmes it can be even 5% down but you'd have to qualify for some protected category.
How long is the rate fixed for?
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What’s the mismatch? Biden got a trillion or two in handouts and Powell bought up all the bonds. Now Biden is taking a step back (not completely but not another trillion) and Powell said he’ll start selling.
Halting rent and college tuition paybacks while also spending trillions for people not to work and businesses to not open while the fed also cut interest rates continuously. They decided to test MMT and it failed so badly.
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The bigger reason is you can buy a house with 20% down (or less) in the US, where that is nearly impossible just about anywhere else in the world Edit: I should say anyone can buy a house for 20% down or less. In much of the world some can do this, but credit is not extended to nearly as many of the population as it is in the US
> that is nearly impossible just about anywhere else in the world I don't know about "anywhere else in the world" but I can guarantee you that you can buy a property everywhere in EU with a 20%. Also, property taxes in EU are generally lower than US. I keep saying that americans, pay lots of taxes, they are simply not aware of it.
I 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.
> 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. No, for the simple reason that (most) people buy homes with mortgages. Take a look at the 30 year mortgage interest rate over the past few months. The total cost to own a newly purchased home is what matters, not the actual sale price. T…
Isn't this one of those "If everyone is crazy, you're crazy" situations? If every house is overvalued by some metric, then maybe the metric is wrong. People's perceptions of value are a large part of the actual value(meaning what someone would really pay) for things like housing that should depreciate over time.
There are multiple ways to value an asset other than its current price. One is cash flows: if you rented it, how much money would you get? Another is historical norms: if historically a city with N million jobs providing average income X can only support housing prices of Y, then one could conclude that housing is overpriced relative to the ability of people to pay for it.
Like all real estate calculations though, this is completely local.
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The bigger reason is you can buy a house with 20% down (or less) in the US, where that is nearly impossible just about anywhere else in the world Edit: I should say anyone can buy a house for 20% down or less. In much of the world some can do this, but credit is not extended to nearly as many of the population as it is in the US
I'm surprised. I only know the US and the UK, but in the UK it can go down as far as a 5% deposit. Honestly US deposit requirements seem high.
Also, in case there's some confusion, "deposit" and "down payment" are distinct. In American real estate parlance a deposit is earnest money (often 5% of the initial offer) to bind the seller into closing--the process of finalizing contracts among all involved parties, and transferring assets. A deposit might be forfeited if the buyer pulls out. A minimum down payment is the minimum equity a mortgagee (e.g. bank) requires the borrower to hold in the property as a condition of making the loan.
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How long is the rate fixed for?
Forever? Here in Brazil we negotiate a yearly rate for the whole extension of the contract. Isn't this standard?
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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]
The argument for overvalued housing is that everyone got antsy during the pandemic and wanted to change houses and change neighborhoods, but that will settle down now that the pandemic is waning.
Tech stocks seem to be falling because the pandemic-driven surge of screen time is fading now that the pandemic is waning.
So: is real estate entirely different from stocks? Or will it see a similar post-pandemic slump but just has more lag?
I 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…
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If they are renting the house out, that means it isn’t being removed from the housing supply. Why would this distort the market?
If a house is being rented it means I can't buy it, supply is low. That's what I understood housing supply meant when talking about house prices. Renting is not a factor, it's another market.
"Housing" is the market, and renting and buying are two options for people in the market.