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The housing market is starting to crack – Sellers are cutting prices

fortune.com

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Re: The housing market is starting to crack – Sellers are cutting prices

#21

Post by deathanatos »

> Existing-home prices are on their seventh consecutive month of growth, […] Average U.S. existing home prices are up by nearly 6% year-to-date and 2.6% year-over-year, which is “well above the median full calendar year increase” in more than three decades of data, […]

> housing affordability has become abysmal for a large portion of millennials and other people of prime homebuying age, “sidelining potential buyers,”

> a prospective homebuyer needs to make $114,627 to afford a home in today’s market, which is a 15% year-over-year increase and the highest annual income on record needed to comfortably buy a home.

… yes, because slight more homes had to lower their price, the cracks are really showing. Were those home lowering to a price point still on a market price curve pointed squarely at the moon, or were these buyers trying to flip a home 2 months after buying it and doing 0 renovations (a listing I have seen more and more often recently) and hoping to get rich quick?

Re: The housing market is starting to crack – Sellers are cutting prices

#23

Post by cynicauliflower »

Lucasoato wrote: post #19

I've thought a lot about this, without finding any comprehensive solution. The housing market suffers from inadequate regulation, allowing speculation and profit-making through the mass purchase of properties and subsequent rental hikes. We need safeguards against such practices; perhaps home ownership shouldn't just be a right but a condition actively safeguarded and championed.

I don’t know, none of the houses I want to buy are in neighborhoods where any substantial portion of the stock is available to rent. Is there evidence of this kind of “profit-making”?

(Not disputing just no experience personally).

Re: The housing market is starting to crack – Sellers are cutting prices

#24

Post by thmsths »

derekp7 wrote: post #8
lastofthemojito wrote: post #4

I've noticed this anecdotally over the past few weeks in my town. After a couple of years of houses being listed on Thursday, shown over the weekend, in-contract for above asking price the following Tuesday, houses have finally begun to sit on the market for several weeks. And I've seen gasp a couple of asking price reductions. Too soon to tell if this is the beginning of a minor correction or a major bubble burst, b…

I think that was the main reason for higher interest rates -- it makes the monthly payments higher, which pushes down the total home price. But it only works if there is inventory. And inventory only happens when people are in a "forced sell" position, such as needing to relocate for their job (back to office push for example). A lack of inventory typically will also spur on new construction, but even in areas where…

Regarding your last point, wouldn't higher interest make housing a less attractive investment since now you need housing to beat the higher returns from bonds?

Re: The housing market is starting to crack – Sellers are cutting prices

#25

Post by toomuchtodo »

thmsths wrote: post #24
derekp7 wrote: post #8

Earlier quoted context omitted.

I think that was the main reason for higher interest rates -- it makes the monthly payments higher, which pushes down the total home price. But it only works if there is inventory. And inventory only happens when people are in a "forced sell" position, such as needing to relocate for their job (back to office push for example). A lack of inventory typically will also spur on new construction, but even in areas where…

Regarding your last point, wouldn't higher interest make housing a less attractive investment since now you need housing to beat the higher returns from bonds?

Yes. The higher the risk free rate goes, the more compelling the return potential must be to attract investment. Easy opportunities to arbitrage dry up.

Re: The housing market is starting to crack – Sellers are cutting prices

#26

Post by glimshe »

Surprise, surprise.

The historical housing bubble was caused by artificially low interest rates adopted worldwide. Ever-increasing housing prices is bad for people who own homes (higher property taxes, property tax distortions across cities, higher fees when changing houses) and those who don't own any. Low interest rates discourage saving and encourage unproductive speculation and house flipping.

The people benefitting from the status quo are only those who make money off trading and borrowing fees (banks, realtors), and the occasional person who left a high price area to a low price area.

Re: The housing market is starting to crack – Sellers are cutting prices

#27

Post by exabrial »

Lucasoato wrote: post #19

I've thought a lot about this, without finding any comprehensive solution. The housing market suffers from inadequate regulation, allowing speculation and profit-making through the mass purchase of properties and subsequent rental hikes. We need safeguards against such practices; perhaps home ownership shouldn't just be a right but a condition actively safeguarded and championed.

I disagree. It suffers from overregulation. How is a person possible able to sell their own house without doing some bullshit thing wrong and making an illegal sale?

Re: The housing market is starting to crack – Sellers are cutting prices

#28

Post by fragmede »

vkou wrote: post #14
derekp7 wrote: post #8

Earlier quoted context omitted.

I think that was the main reason for higher interest rates -- it makes the monthly payments higher, which pushes down the total home price. But it only works if there is inventory. And inventory only happens when people are in a "forced sell" position, such as needing to relocate for their job (back to office push for example). A lack of inventory typically will also spur on new construction, but even in areas where…

You can refi your low-principal, high-interest mortgage later, if interest rates ever come down. You can't renegotiate your high-principal, low-interest mortgage later. (Well, you can, if rates go up, but why would you want to?)

look into mortgage recasting.

Re: The housing market is starting to crack – Sellers are cutting prices

#29

Post by bobthepanda »

Lucasoato wrote: post #19

I've thought a lot about this, without finding any comprehensive solution. The housing market suffers from inadequate regulation, allowing speculation and profit-making through the mass purchase of properties and subsequent rental hikes. We need safeguards against such practices; perhaps home ownership shouldn't just be a right but a condition actively safeguarded and championed.

the root cause is lack of supply, on an incredible scale.

To put in perspective what a program to bring prices down would actually look like, Sweden launched a program in the '70s to build a million homes in ten years, when its population was 8 million. We have not seen homebuilding on that scale in the United States for decades, if ever.

Re: The housing market is starting to crack – Sellers are cutting prices

#30

Post by hemloc_io »

glimshe wrote: post #26

Surprise, surprise. The historical housing bubble was caused by artificially low interest rates adopted worldwide. Ever-increasing housing prices is bad for people who own homes (higher property taxes, property tax distortions across cities, higher fees when changing houses) and those who don't own any. Low interest rates discourage saving and encourage unproductive speculation and house flipping. The people benefitt…

You're missing one more demographic that's a pretty big deal.

California homeowners insulated from property tax due to prop 13.

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