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U.S. home prices are the most unaffordable they've been in nearly 100 years

longtermtrends.net

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Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#31

Post by rootusrootus »

meghan_rain wrote: post #22
shaburn wrote: post #5

Earlier quoted context omitted.

There bubble has popped. There are virtually no transactions.

What do you mean by transactions? House sales?

Lots of people sitting on 2-3% fixed rate 30 year mortgages are suddenly deciding maybe staying in their current home isn't a bad idea after all. If you need a mortgage to buy a house, what you can afford just got a lot more modest.

Sales will pick up a little; some people will need to move for reasons they cannot avoid. Some people who don't have fixed rate mortgages will have to sell because they can no longer afford the payment. But right now, sales are pretty low.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#32

Post by Beaver117 »

It's all just a game looking at the charts until the real estate "investment" companies are invaded by thousands of homeless people and the CEOs executed. Are people just supposed to not live anywhere? How long will this last? Just learn from history.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#33

Post by rootusrootus »

xupybd wrote: post #14
zxexz wrote: post #8

Earlier quoted context omitted.

You sound very confident. Not that I disagree, necessarily, but do you care to elaborate?

The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.

> As interest rates rise people will no be able to afford their mortgages

I really wonder how many people in the last 10 years actually felt like buying a variable rate mortgage was a good idea? People on fixed rate mortgages are staying put, and watching inflation deflate the value of their debt.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#34

Post by kevin_thibedeau »

operatingthetan wrote: post #16
RDaneel0livaw wrote: post #12

Earlier quoted context omitted.

ENTIRE vinyl villages of McMansions will be unlivable. They aren't even built to last the standard 30y mortgage because the builders know the initial buyers will sell and move on. Cheapest possible 2x4's with worst insulation ever known, all covered up in plastic siding. But hey, it's 10k sq ft right?

> with worst insulation ever known, What are you talking about?

Lots of "luxury" housing is made with crap materials by unskilled freelancers. There is a ton of skimping on hidden details like missing flashing around doors and windows. You can't trust any home built within the last 25 years.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#35

Post by echelon »

hn_throwaway_99 wrote: post #30

This article is missing perhaps the most important graph, which is median income to some common monthly payment metric (e.g. average monthly payment for a 30 year mortgage with 20% down). Reason being that the article mentions interest rates, but then just shows graphs comparing to sales price. Ironically, showing a metric that took interest rates into consideration would probably highlight why the current situation…

> Owners won't sell at a loss if they don't have to

Supply and demand. If supply drops and demand doesn't...

That's what /r/REBubble refuses to acknowledge.

Nobody's giving up their 2% if they don't have to.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#36

Post by shaburn »

zxexz wrote: post #8
shaburn wrote: post #6

Earlier quoted context omitted.

Prices will reset to accommodate.

You sound very confident. Not that I disagree, necessarily, but do you care to elaborate?

Most people finance homes. Prices are overwhelmingly a function of affordability based on lending criteria. See financial engineering, thus see the Fed and real estate financing/banking legislation.

Unless, the very thin chance 1. Owners don't need or want to sell 2. No inventory is added through building 3. People somehow pay cash and support the prices ...or some combinations.

Fundamental economics really thereafter.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#37

Post by havblue »

whitemary wrote: post #9
chiefalchemist wrote: post #2

This is to be expected. Sellers are always reluctant to be reasonable when they are on the wrong side of a peak. The raising of interest rates means prices have to adjust. But after so many years of increasing prices sellers are not yet rational. And yes, some more inventory would help. That said, as the population ages, who is going to buy all the McMansions? Price not only need to adjust to interest rate but demogr…

> as the population ages, who is going to buy all the McMansions? The McMansions will be unlivable by that point. They weren't built to last.

If it's an expensive neighborhood in a region with a growing economy then I would think the McMansions would be fine.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#38

Post by OrvalWintermute »

xupybd wrote: post #14
zxexz wrote: post #8

Earlier quoted context omitted.

You sound very confident. Not that I disagree, necessarily, but do you care to elaborate?

The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.

In my HCOL area we are already seeing prices nosedive after they sit on the market for a few months.

The discounts are around 15% off peak, and this is just the start.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#39

Post by operatingthetan »

kevin_thibedeau wrote: post #34
operatingthetan wrote: post #16

Earlier quoted context omitted.

> with worst insulation ever known, What are you talking about?

Lots of "luxury" housing is made with crap materials by unskilled freelancers. There is a ton of skimping on hidden details like missing flashing around doors and windows. You can't trust any home built within the last 25 years.

I'm asking specifically what insulation product they are referring to because I'm unaware of any product that fits that description.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#40

Post by xupybd »

rootusrootus wrote: post #33
xupybd wrote: post #14

Earlier quoted context omitted.

The forces that drove prices are over. Low interest rates, and low productivity due to COVID-19. As interest rates rise people will no be able to afford their mortgages. Prices will fall in response.

> As interest rates rise people will no be able to afford their mortgages I really wonder how many people in the last 10 years actually felt like buying a variable rate mortgage was a good idea? People on fixed rate mortgages are staying put, and watching inflation deflate the value of their debt.

It amazes me that in the US you can fix for the life of your mortgage. Here in NZ 5 years is close to the max.
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