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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

#221

Post by AlchemistCamp »

oicU00 wrote: post #170
oceanplexian wrote: post #111

Earlier quoted context omitted.

There’s no rule that you should be able to afford a house on a middle class income. In fact in many countries, particularly in Western Europe, it’s unimaginable that you would be able to afford a detached, single family home on a middle class income. Lots of people in that situation will live in apartments, row houses, or condos for the rest of their lives.

Don’t forget to mention they still have full health coverage in the EU. It’s not possible to afford housing or robust healthcare in the US. Keep in mind there’s no rule we have to tolerate either. Imagine being a teenager in the US, having just seen how essential workers are treated, knowing in all likelihood your future is an “essential worker”. Then watch Congress scapegoat Facebook.

What does this have to do with whether or not the housing market is overvalued?

It seems like a thread-derailing comment likely to drag down the quality of discussion.

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

#222

Post by [deleted] »

seanmcdirmid wrote: post #55
maxerickson wrote: post #30

Earlier quoted context omitted.

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).

We lack space in the few urban areas people want to live in. If people were flexible about where they wanted to live, you’d think that the cheap land/lightly zoned places would prosper, but they don’t.

[deleted]

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

#223

Post by ransom1538 »

nitrogen wrote: post #212
bradleyjg wrote: post #163

Earlier quoted context omitted.

A majority of consistent voters own homes and want house prices to increase. That means most politicians want house prices to increase. The government dominates all aspects of residential lending. What’s the smart bet on what will happen?

This comes up a lot. But it's wrong, or at least incomplete. People who want to live in their house don't want the value of that house to go up, because then their taxes go up.

No post body was provided.

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

#224

Post by vdnkh »

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.

Trump's tax cuts certainly didn't help either. Or let's just blame it on "handouts" again.

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

#225

Post by funman7 »

oceanplexian wrote: post #111
pjmorris wrote: post #91

Earlier quoted context omitted.

I think there's a more concrete measure of value: house prices related to income. Historically (Robert Shiller has a chart for the US going back to 1890) house prices (and mortgages and rents) have maintained a stable relationship with income. Occasionally that relationship is strained but it has usually fallen back in line. One exception to this was the extraordinary, ongoing, support to the financial system post-20…

There’s no rule that you should be able to afford a house on a middle class income. In fact in many countries, particularly in Western Europe, it’s unimaginable that you would be able to afford a detached, single family home on a middle class income. Lots of people in that situation will live in apartments, row houses, or condos for the rest of their lives.

Most of those cities have a lot more density. They were designed before cars existed. I wonder what a fresh piece of earth chopped up and designed for the future would look like economically.

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

#226

Post by acchow »

nitrogen wrote: post #212
bradleyjg wrote: post #163

Earlier quoted context omitted.

A majority of consistent voters own homes and want house prices to increase. That means most politicians want house prices to increase. The government dominates all aspects of residential lending. What’s the smart bet on what will happen?

This comes up a lot. But it's wrong, or at least incomplete. People who want to live in their house don't want the value of that house to go up, because then their taxes go up.

> People who want to live in their house don't want the value of that house to go up, because then their taxes go up.

That's the real reason California has Prop 13

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

#227

Post by fny »

bkjelden wrote: post #136
pjmorris wrote: post #91

Earlier quoted context omitted.

I think there's a more concrete measure of value: house prices related to income. Historically (Robert Shiller has a chart for the US going back to 1890) house prices (and mortgages and rents) have maintained a stable relationship with income. Occasionally that relationship is strained but it has usually fallen back in line. One exception to this was the extraordinary, ongoing, support to the financial system post-20…

One major problem I see with comparing housing prices to income is that most homebuyers in the US are using leverage (a mortgage) to buy their home, and the last 15 years or so have seen comparatively low mortgage rates compared to the several decades beforehand. Housing prices have been able to balloon because debt has been very, very cheap. Whether or not that will continue remains to be seen.

This is the exact same phenomenon as with the stock market. Yields progressively moving towards zero means more and more leverage driving PE ratios and prices to extremes.

Given that we've rediscovered fiscal stimulus and inflation as a result, I have a feeling that era is dead. You can't have low rates in an inflationary environment.

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

#228

Post by spaetzleesser »

georgeburdell wrote: post #193
pjmorris wrote: post #91

Earlier quoted context omitted.

I think there's a more concrete measure of value: house prices related to income. Historically (Robert Shiller has a chart for the US going back to 1890) house prices (and mortgages and rents) have maintained a stable relationship with income. Occasionally that relationship is strained but it has usually fallen back in line. One exception to this was the extraordinary, ongoing, support to the financial system post-20…

One criticism I have of Shiller is his index looks at comparable houses across time. This under estimates appreciation due to the housing stock itself becoming more luxurious. In my area, houses are about 500 sqft larger than a generation ago and have amenities like AC and often a granny unit.

This doesn’t really matter if there are no houses available that are 500 sqft less.

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

#229

Post by majormajor »

thereisnospork wrote: post #131
nemo44x wrote: post #53

Earlier quoted context omitted.

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?

>Should the home they deserve just magically appear? They should have the right to purchase one, or have one commissioned, at the fair market value for materials, labor, and land.

What does this mean, exactly? They do have the right to purchase on at fair market value for structure + land - it's just they can't afford it. The land is crazy expensive.

I'm assuming "have one commissioned" is suggesting something about supply/zoning, but it's not clear to me what, exactly - if someone could afford to build or buy a house 3 miles from Dallas, should they also have the right to pay the same price to build something in the middle of Dallas?

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

#230

Post by mattnewton »

nitrogen wrote: post #212
bradleyjg wrote: post #163

Earlier quoted context omitted.

A majority of consistent voters own homes and want house prices to increase. That means most politicians want house prices to increase. The government dominates all aspects of residential lending. What’s the smart bet on what will happen?

This comes up a lot. But it's wrong, or at least incomplete. People who want to live in their house don't want the value of that house to go up, because then their taxes go up.

There are laws like California's prop 13 which allow some demographics of consistent voters and home buyers to have their cake and eat it too by insulating them from property tax increases as their home value increases.
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