Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

cbsnews.com

Post reply on HN
Print view View original

311–320 of 768 posts

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

#311

Post by ipaddr »

rrrrrrrrrrrryan wrote: post #206
bkjelden wrote: post #136

Earlier quoted context omitted.

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.

As rates rise to more normal historical levels, and purchasing power diminishes, who will people sell their homes to? Prices will eventually have to come down. This is the argument that homes are currently overvalued.

Companies will. We are in a new era.

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

#312

Post by [deleted] »

conductr wrote: post #139
brewdad wrote: post #110

Earlier quoted context omitted.

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…

The concept of the cash buyer is a bit of a farse as well. What usually takes place is a cash offer. They just need to proof of funds to do this. But then, they get financing to close. Nobody in their right mind is putting that sum of cash in real estate when they could borrow at 2% or whatever it was before the recent run up. The mortgage interest even has favorable tax treatment so it’s effectively much less. Oh an…

[deleted]

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

#314

Post by zamfi »

trgn wrote: post #271
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…

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…

> USA was inoculated for a very long time, because horizontal expansion over cheap land allowed for expansion of supply. That era is over.

True.

> Car and highway technology is no longer adequate to expand cheaply and still remain within viable commuting distance.

False. The US has mind-boggling amounts of land available. What's changed is the ability and desire to build on it. Used to be, the government would pay you (in land, anyway) to build a house. We gave railroads untold amounts of land to develop it.

These days, to build a house you pay the government for all manner of permits, studies, etc. -- and that's if they even let you build in the first place! Zoning laws prohibit new construction in overwhelming amounts of the country, especially in the most expensive areas. In NYC and SF, most existing buildings would be illegal to build under current zoning rules.

What makes building housing expensive is policy, not a lack of "cheap land".

I don't know if the same applies in Europe, perhaps not. In both Europe and the US land has long been the primary vehicle for intergenerational wealth transfer (think estates and productive land, not housing, though -- middle-class homeownership is an extremely recent phenomenon).

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

#316

Post by timthorn »

ChrisMarshallNY wrote: post #307
senkora wrote: post #286

Earlier quoted context omitted.

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

Don’t know how it is in most of Europe, but I think that, in the UK, you don’t actually own the land your house sits on; Lord Such-and-Such owns it, and collects rent from you. In the US, we own the land, and that is usually the real value. I’m the proud owner of a 0.125-acre New York postage stamp. It’s in a fairly affluent area, so is fairly valuable. In Wyoming, they’d laugh at it. I think Japan is similar.

No, that's not the universal case in the UK. My freehold gives me ownership of my house and the land on which it is built.

You're right that most of the value of the property is in the land and not the building though.

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

#317

Post by tryptophan »

s5300 wrote: post #24
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.

Not when you have a populace that is by definition average & in need of a place to live/start a family, but have an external investor class of the foreign ultra rich or Wall street douche canoes buying everything up because fuck you & they can. Crazy if you believe most of our nation should be essentially indentured servants for basic housing. Something like that, I think.

Its the Cantillon effect.

https://river.com/learn/terms/c/cantillon-effect/

Banks will loan some people billions at rates half of which they would give you, if they even gave you a loan. Thus they can buy everything for inflated prices.

We need to end the fed.

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

#318

Post by midhhhthrow »

ChrisMarshallNY wrote: post #307
senkora wrote: post #286

Earlier quoted context omitted.

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

Don’t know how it is in most of Europe, but I think that, in the UK, you don’t actually own the land your house sits on; Lord Such-and-Such owns it, and collects rent from you. In the US, we own the land, and that is usually the real value. I’m the proud owner of a 0.125-acre New York postage stamp. It’s in a fairly affluent area, so is fairly valuable. In Wyoming, they’d laugh at it. I think Japan is similar.

You don’t really own it. That’s just a legal construct. If you have to pay rent to the government (property taxes) to “keep” it then you don’t really own it

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

#319

Post by helge9210 »

rrrrrrrrrrrryan wrote: post #206
bkjelden wrote: post #136

Earlier quoted context omitted.

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.

As rates rise to more normal historical levels, and purchasing power diminishes, who will people sell their homes to? Prices will eventually have to come down. This is the argument that homes are currently overvalued.

> Prices will eventually have to come down.

Or, as an alternative, market is going to freeze.

Post reply on HN