Last year the market tanked pretty hard coming into November and December.
The messaging is different this time, so the result will be different.
The housing market is starting to crack – Sellers are cutting prices
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Re: The housing market is starting to crack – Sellers are cutting prices
#32I'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).
In many first world capitals, it's actually a common investment to buy real estate and not rent it out at all. The running costs are lower, there's no maintenance costs and no one pesters you about miscellaneous issues. All these people do is sit on the homes and wait for them to go up in price while everyone else struggles to find a place to live. Them not renting out reduces supply which further drives up prices. You don't see them up for rent because that's not the business they're in, they're in the buy-hold-sell business instead. It's a good example of ridiculously perverse incentives, and why the regulation needs to be changed to make this a thing of the past.
Re: The housing market is starting to crack – Sellers are cutting prices
#33Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can afford less, so they either aren't buying or are buying a smaller/worse home than they would've previously.
But since most people aren't forced to sell, the available supply will shrink, which will push up prices eventually, until people can sell at a profit again. The rising rates also make it harder for developers to get loans, and lower prices make development projects riskier, compounding the supply problem.
Re: The housing market is starting to crack – Sellers are cutting prices
#34Fundamentally we are still not building more homes where more people would like to live, so my optimism is very limited
But... it's a chicken and egg problem. People only want to live there because it's nice and uncrowded.
Re: The housing market is starting to crack – Sellers are cutting prices
#35Surprise, 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…
> 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.
I think that second category should also include retirees who downsize from their empty nest SFH to a cheaper, smaller condo, which is something that I think happens way more than occasionally.
Re: The housing market is starting to crack – Sellers are cutting prices
#36It won't matter for Millennials trying to buy their first homes.
I'm seeing single-family houses going for $310k that should be going for maybe 2/3rds of that on a good day. Typically they're flipped houses.
If you were to bring down the value of every single-family home in the US, that means accepting about 2/3rds the value of each of these mortgages, along with all of the securitized derivatives of them. That's a 2007-2009-level crash, which the banks just won't tolerate.
The far more likely play is that large regional, national, or international investors wait for the price to drop a little more and use what is basically an infinite pile of money to buy them up for speculation or rental stock, which will keep this problem going.
Re: The housing market is starting to crack – Sellers are cutting prices
#37On CNBC today: Mortgage rates plunge and demand finally inches back https://www.cnbc.com/2023/11/08/mortgage-rates-plunge-and-de...
Unless the Fed cuts rates, how can mortgage rates plunge? Is CNBC doing it's old (and maybe continuing) cheerleading?
Re: The housing market is starting to crack – Sellers are cutting prices
#38Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…
There should just be a pandemic or something that puts a lot of people out of work so that they have to sell at low prices so that large real estate companies can buy their houses and then rent them back to them. They can even have a reverse rental program that allows people to stay in their homes through the hard times and instead pay rent to the new owners.
Re: The housing market is starting to crack – Sellers are cutting prices
#39Fortune is engagement farming. Still not building enough, and the market always cools in winter. Big Tech isn’t killing the internet. All the Ferengi that went into engagement farming are with their clickbait.
The cynicism is both appropriate and appreciated.
The housing market hasn’t meaningfully changed until I stop seeing every single story 1k sq-ft, 2-3 bedroom 1-2 bath house being listed for over half a goddamn million dollars in a 70k pop city.
I started waiting for the market to crash 10 years ago, and I’m likely going to keep waiting for at least as long, barring a catastrophic economy collapse, which would be even less desirable than the current situation.