171–180 of 297 posts
people in the comments don't seem to realize if prices drop, you can buy and refinance later when rates come down. so it's really a great time to keep an eye on the market
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> you think people are going to pay mortgages they are massively underwater on? Yes? Why wouldn't you? It seems pretty short-sighted to just put your arms in the air, give up, get foreclosed on, lose your home, and have your credit be absolutely wrecked for the next 7 years. Just keep making your payments and ride it out. The market will eventually recover. I think the only reason to give up is if you fell for the sc…
I bought a house in the Chicago suburbs in August 2007 for $275k. I short sold it 4 years later for $115k. It sold 2 years ago (13 years afer I bought it) for $210k. "Eventually" is doing a lot of work in your comment.
The difference is higher inflation, which likely leads to higher pay rises, so actually the real interest rate is lower than it was.
Still waiting on that sweet inflation adjusted pay raise.
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you think people are going to pay mortgages they are massively underwater on? This also ignores the fact that the Fed's stated goal with raising interests rates is to increase unemployment to slow inflation. You are already seeing the results in quarterly financials. Once layoffs start happening people won't have an option but to sell when they can't make payments
> you think people are going to pay mortgages they are massively underwater on? Yes? Why wouldn't you? It seems pretty short-sighted to just put your arms in the air, give up, get foreclosed on, lose your home, and have your credit be absolutely wrecked for the next 7 years. Just keep making your payments and ride it out. The market will eventually recover. I think the only reason to give up is if you fell for the sc…
Because it's upside down? You can buy another place and owe less on it?
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A good time to be looking for a house. A terrible time to be looking for a mortgage.
I guess in my mind, short of the ultra-rich (someone with half a million plus in cash) and investment firms, the two are equivalent.
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> Real estate IS A LONG TERM investment, not day trading. US history over the last 3 decades suggests otherwise.
Are you just saying things or have you actually looked? Average home price in 1965 was $21k. Average home price in 2020 was $514k. Long term after every drop the prices have surpassed ATH. https://fred.stlouisfed.org/series/ASPUS
plumbing/electrical/insulation are all different. Many would not enjoy living in a 1950 house, and a typical 1950 house would not sell for the price of an average house in 2020
[1] https://www.nahb.org/blog/2022/03/new-single-family-home-siz...
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I sometimes hear people say this, but it makes zero sense to me, and I can never get anybody to explain what they mean by it. Could you try to explain how we have enough houses but somehow corporations are the problem?
Basically RE prices went through the roof and became an object of investment that gained in value during a time when money was cheap and cash was a bad place to store it. This caused management funds, BlackRock Berkshire etc, to start purchasing the homes as investment vehicles. These vehicles then will either sit on a house or simply rent the house out at a rate that makes fiscal sense, regardless of the economic re…
Private owners would also sit it out if they can. Unless they can't. You think that's better? People having to sell at a big loss?
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I don't understand how a corporate purchaser is worse than any other investor; I live in an area with almost only single family homes, and a huge fraction of them are investor owned and rented out. The small time land lords have a huge variance in how well they behave, but I'm not sure why corporate landlords are worse.
I think the idea is that corporate owners are helping keep prices propped up because they’re much less sensitive to vacancy. They can let a house sit unoccupied for much longer before dropping the price to get someone in compared to a small time landlord. Smalltimers don’t usually have the capital available to do that and will either need to drop prices to get someone in the house or sell the house.
So those who have recently bought a property, even corporate buyers, are far far more likely to keep a property occupied than most landlords.
1. homeowners, who have total confidence in the market, willfully ignoring the influence of federal reserve policy, and everything "just work out in the long term," and
2. aspiring homeowners, who are hoping for a fall in prices, regardless of how destructive the secondary effects might be.
Yet another fault line to fracture American culture.
Anyway...
Prices are going down. Both groups 1 and 2 will feel some kind of pain - both groups are connected and do not realize or ignore that fact. It's the debt we will all have to pay for pretending we were rich.
A lot of assumptions will be challenged - including the assumption that asset prices always go up in the log term.
I find all of this to be very sad and avoidable.