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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

#81

Post by streetcat1 »

nwiswell wrote: post #62
coward123 wrote: post #7

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…

So this is not entirely correct. If I am not mistaken 30% of buyers are cash buyers, hence they do not care about the mortgage rate.

Second, the big issues is with houses supply. The high rate basically lock most current sellers which have very low mortgage rate (compared to 5%), hence reducing the supply more.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#82

Post by HWR_14 »

nemo44x wrote: post #53
majormajor wrote: post #13

Earlier quoted context omitted.

So a slightly more sophisticated analysis would be "how does housing appreciation in each market compare to stock market appreciation over the same time period" - but the description in the article leaves that out, looking just at historical incomes/costs/rents. In a world where homebuying is increasingly out of reach of a larger percent of people, you'd expect it to be more disconnected with average or median income…

I mean, just about every house has an owner that lives in it. Homes are expensive. Most people just can’t afford a big slice of land and home. They have to accept they will have to make do in an apartment that may be shared. Should the home they deserve just magically appear?

> just about every house has an owner that lives in it

Just under 2/3 of US homes have an owner that lives in it.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#83

Post by colinmhayes »

avelis wrote: post #2

It 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.

Institutional investors are responsible for 2% of sales. This is populist nonsense. The real problem is that we slowed down build speed after 08.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#84

Post by rufus_foreman »

melissalobos wrote: post #4

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.

>> Isn't this one of those "If everyone is crazy, you're crazy" situations?

No.

Hopefully you aren't using that justification to do something stupid.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#85

Post by refurb »

coward123 wrote: post #7

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.

Housing is a notoriously illiquid asset with high transaction costs. In addition, the percent that turns over each year is an incredibly small percent of all homes (and homes aren’t fungible, each one is unique, so comparables are imperfect).

That makes price discovery harder and means that the market price can lag what is a sustainable long-term price.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#87

Post by jltsiren »

endisneigh wrote: post #11

I 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.

Price/area is a flawed metric. People are not only buying square feet but also houses they can live in and houses with a certain number of bedrooms and other features. A better model would assign a part of the price to a 0-room 0 square feet house, a part of it to each room, and only a part to the size of the house.

The biggest affordability issue I see is that nobody builds starter homes for sale. In most areas, you can easily find a small 1br or 2br apartment to rent, but you can't buy a similar apartment. If you have to continue renting for years after you have settled down, because you can't buy anything smaller than 1000 square feet, it's harder to afford buying that 1000+ square foot house.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#88

Post by maximus-decimus »

bezospen15 wrote: post #48
ianhawes wrote: post #37

Earlier quoted context omitted.

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

They probably mean losing money compared to investing in something else.
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