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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

#281

Post by tomc1985 »

sidlls wrote: post #151
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.

You can't compare Western Europe to the US. Maybe to specific regions or super-urban areas, e.g., the LA to SD corridor or the Bay Area. In which case the two are comparable: there are few if any middle-class families in the bay area that own their homes except by inheritance or some other luck (gift, lottery). Even condos and other high-density housing are all but completely out of reach for all but the top 10% of i…

Maybe there should be? Maybe not single-family detached homes, but people need to own something

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

#282

Post by throwaway1777 »

mrtnmcc wrote: post #129
discardable_dan wrote: post #101

Earlier quoted context omitted.

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…

Rent has also gone up

Not only that; rent can keep going up.

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

#283

Post by oicU00 »

AlchemistCamp wrote: post #221
oicU00 wrote: post #170

Earlier quoted context omitted.

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.

The EU Apple to US orange comparison you mean? What’s the EU have to do with US home values?

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

#285

Post by spacedcowboy »

EVa5I7bHFq9mnYK wrote: post #277
trgn wrote: post #271

Earlier quoted context omitted.

The US is rotating from housing as commodity investment to housing as intergenerational asset, something which has happened in a lot of other countries already (see e.g. Western Europe, mentioned in other comments here). House prices will remain up because any gain from sale will be plowed into the next home. It's a ratchet upward. Higher mortgage rates are somewhat irrelevant in this dynamic, because the home itself…

Houses in the US couldn't serve as intergenerational asset simply because they are built of wood with average livespan of ~70 years. While in Europe houses are generally build of brick or cement and last centuries.

My (paid for) house in the Bay Area was built ~70 years ago, and it’s just fine, thanks :)

As a European living over here for the last two decades, I agree that European houses are generally sturdier (my parents house pre-dates the USA, I don’t expect mine to last that long), but when you’re spending 6 figures on something, looking after it is a good policy. Catching problems early is the key - as soon as you notice something, fix it and fix the cause…

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

#286

Post by senkora »

EVa5I7bHFq9mnYK wrote: post #277
trgn wrote: post #271

Earlier quoted context omitted.

The US is rotating from housing as commodity investment to housing as intergenerational asset, something which has happened in a lot of other countries already (see e.g. Western Europe, mentioned in other comments here). House prices will remain up because any gain from sale will be plowed into the next home. It's a ratchet upward. Higher mortgage rates are somewhat irrelevant in this dynamic, because the home itself…

Houses in the US couldn't serve as intergenerational asset simply because they are built of wood with average livespan of ~70 years. While in Europe houses are generally build of brick or cement and last centuries.

I think it is clear that the parent is using home-ownership to include land-ownership.

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

#287

Post by seanmcdirmid »

foolfoolz wrote: post #279
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.

i agree. and the other paradox i keep thinking about is everyone says houses are too expensive it’ll to buy, but every house sells within 1-2 weeks on the market

I thought that was weird also until I became a homeowner (in Seattle). There are two other townhomes in my cluster, both are owned but unoccupied most of the time. My neighbors have other homes, one is technically owned by parents in China (who might occupy it someday, my wife is Chinese so chatted about it with the person who occupies it occasionally). It might be totally weird luck, but maybe those houses are being bought by a small segment who are acquiring multiple ones?

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

#288

Post by seanmcdirmid »

EVa5I7bHFq9mnYK wrote: post #277
trgn wrote: post #271

Earlier quoted context omitted.

The US is rotating from housing as commodity investment to housing as intergenerational asset, something which has happened in a lot of other countries already (see e.g. Western Europe, mentioned in other comments here). House prices will remain up because any gain from sale will be plowed into the next home. It's a ratchet upward. Higher mortgage rates are somewhat irrelevant in this dynamic, because the home itself…

Houses in the US couldn't serve as intergenerational asset simply because they are built of wood with average livespan of ~70 years. While in Europe houses are generally build of brick or cement and last centuries.

The really old homes I’ve seen in Europe are made out of wood oddly enough. Of course, when the house was built in the 1400s, it is probably a ship of Theseus. Well, most homes that are around for a whole have to be maintained, even (especially) if they are made out of concrete or brick.

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

#289

Post by quickthrower2 »

JumpCrisscross wrote: post #274

> Locals in Boise are now competing with buyers from San Francisco and other big cities, who often have more money to spend on housing. That is driving up prices beyond the reach of many people earning a typical salary in those regions. I’m always wary of “this time is different.” But sometimes, times are different. If we assume a house bought by an exiting San Franciscan must be resold to a local, yes, the home valu…

If the supply in SF is limited then the army of cashed up buyers is also limited.

Forget SF and just follow the money. More dollars created since 2015 than before 2015. https://fred.stlouisfed.org/series/M2SL. Half the money supply came about in the last 7 years!

Tech workers are closer to the money than ever before (maybe closer than quants etc.) because money is looking for yield at any risk. Tech investment provides that promise.

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

#290

Post by snidane »

Houses lose value by depreciation. In few decades the value is zero, then becomes negative - the price of demolition for the next project.

What gains value over time is land. Poeple only think they invest in houses, but they are fooling themselves and overspend on the construction and interiors. They pay for land.

Easy to prove - construction material and labor are highly mobile. Cement, bricks and imported labor costs the same in New York as in middle of nowhere. The price differs only by transportation costs and temporary lodging of workers. The real difference comes from 1. price of land 2. bribes for construction permits of a respective town. In other words - location is what you pay for.

In Japan, this is more explicit. House value drops to zero in 30 years. https://www.theguardian.com/cities/2017/nov/16/japan-reusabl...

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