Homes in 97% of U.S. cities are overvalued, Moody's says • Hacker News Board

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

#101

Post by discardable_dan » Fri, May 06, 2022, 2:15 AM UTC

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.

Yes and no. I would agree, but housing is, for the most part, fungible (at least for people with tech salaries). If I sold my house, I could pay for rent in my high-cost area for the better part of a decade with just the income off the sale. I am starting to think I might be crazy not to sell and pocket the money: I could rent down the street and pay rent off my salary while that large pile of money collects rent. A house isn't a particularly liquid asset, and half a house worth of liquidity seems like a safer position in the current market.

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

#102

Post by ahoy » Fri, May 06, 2022, 2:15 AM UTC

nemo44x wrote: post #66

elephanteeee wrote: post #56

Earlier quoted context omitted.

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.

Any landlord who finds themselves so burdened by missed rent payments ought to just sell their properties. The market's never been better. They can use the windfall to start a real business instead.

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

#103

Post by [deleted] » Fri, May 06, 2022, 2:15 AM UTC

mikeryan wrote: post #95

mogadsheu wrote: post #9

Earlier quoted context omitted.

No because houses as an asset class could still be overvalued relative to other assets.

The Moodys analysis, as I understand it, is house prices relative to median incomes in a market. I don’t think it’s a fluke that the overvalued markets correlate to regions that a lot of tech has moved over the pandemic like Boise, FL, TX and Nashville. If they’re measuring current house prices to 2020 and 2021 tax data then they may be missing an influx of income in the denominator as well.

[deleted]

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

#104

Post by ahoy » Fri, May 06, 2022, 2:16 AM UTC

lumost wrote: post #90

Yet another asset crash would annihilate whatever assets millennials have happened to acquire. This would leave the millennial generation largely asset free as they enter their 40s except for inheritance.

I'm not really sure how. I can count on 1 hand the number of under-40 homeowners I know.

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

#105

Post by noahtallen » Fri, May 06, 2022, 2:18 AM UTC

mberning wrote: post #65

In my city, 10 years ago, a nice starter home was around 150k. Now you can’t buy a dump for less than 200k. And those same nice starter homes are 250k+. It’s not hard to imagine why. People flipping burgers can easily make 40k per year now just in base pay. A single person working an incredibly low end job now makes enough money to get approved for nearly 200k loan.

Right, and for good reason. It used to be the case that houses were affordable on a basic salary. That hasn’t been the case for a long time for a lot of people. (And to be fair, still isn’t in urban areas.)

The combo of slightly higher wages, more young people moving out, and low interest rates does mean more people have the opportunity. And that’s not a bad thing. If you cancel any of those factors, you’re blocking access to people who would love to own a home.

I think the factors that should change are supply and investors. It’s not like we live in an era where housing is cheap and bountiful. Clearly it’s severely constrained. The other part is investment. With low interest rates, it’s easy to justify a house as an investment vehicle.

Legislatively, it needs to be easy to build and hard to buy more than one property.

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

#106

Post by robjan » Fri, May 06, 2022, 2:18 AM UTC

frankbreetz wrote: post #96

lumost wrote: post #90

Yet another asset crash would annihilate whatever assets millennials have happened to acquire. This would leave the millennial generation largely asset free as they enter their 40s except for inheritance.

Wouldn't a housing market crash be good for most millennials? They can't afford housing and a real estate crash would change that.

Unless they recently purchased and ended up in negative equity

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

#107

Post by ahoy » Fri, May 06, 2022, 2:18 AM UTC

mberning wrote: post #65

In my city, 10 years ago, a nice starter home was around 150k. Now you can’t buy a dump for less than 200k. And those same nice starter homes are 250k+. It’s not hard to imagine why. People flipping burgers can easily make 40k per year now just in base pay. A single person working an incredibly low end job now makes enough money to get approved for nearly 200k loan.

If you think 40k/yr is buy-a-house money you've never lived off 40k/yr.

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

#108

Post by blueprint » Fri, May 06, 2022, 2:19 AM UTC

aiisjustanif wrote: post #47

matchbok wrote: post #25

Earlier quoted context omitted.

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.

so what you're saying is... you don't need more NIMBY housing in your back yard?

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

#109

Post by blueprint » Fri, May 06, 2022, 2:20 AM UTC

lumost wrote: post #90

Yet another asset crash would annihilate whatever assets millennials have happened to acquire. This would leave the millennial generation largely asset free as they enter their 40s except for inheritance.

nah they're all using robinhood to speculate on stocks instead because they got priced out of the housing market

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

#110

Post by brewdad » Fri, May 06, 2022, 2:20 AM UTC

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.

We'll find out over the next 6-12 months. At some point, a lot of home buyers started shopping by payment without regard to total price. With interest rates near their lowest in anyone's lifetimes that was workable.

With interest rates rising, as buyers who haven't locked in lower rates begin looking at the current payments on offer, they will have to look at lower priced homes or drop out of the market. If this boom has been driven primarily by buyers flush with cash, foreign or domestic, then prices should remain high. Payments are largely irrelevant to cash buyers. Any buyer using debt will be forced into lowering their ceiling of properties they can afford. Home prices should then fall.