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What happens when housing prices go down?

clmarohn.substack.com

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Re: What happens when housing prices go down?

#161

Post by postalrat »

almosthere wrote: post #144
stego-tech wrote: post #89

Ultimately, there is no solution in which the core groups will all be appeased: * If prices keep going up, then home ownership remains a luxury of the wealthy and an exploitation of the poor. Asset holders will be thrilled with returns, but the majority struggling to get or stay on the proverbial property ladder will grow increasingly angry at sky-high rents and prices with stagnant wages * On the other hand, if pric…

Simple to make people sell, make property tax near Infinity if you rent it out in the first 5 years of property purchase. Old rentals stay rentals, new construction is for people.

New construction is still very expensive.

Re: What happens when housing prices go down?

#162

Post by ecshafer »

tsunamifury wrote: post #135
eviks wrote: post #81

The whole article is a mess of basic misunderstanding and conflation of cause and effect and reasoning from a price change instead of understanding what caused it. > When prices actually go down, builders get nervous, lenders get cautious, financing dries up, and projects disappear. No, it depends on the causes that drove the prices down. Some of those will get builders nervous, while others will make them giddy. > N…

I find it funny how confidently hners criticize perceived incoherence with their textbook prognostications of how simple the models are when even the Fed and world renowned economics can’t give such confident solutions.

What do "Gamers" have to do with anything?

Re: What happens when housing prices go down?

#163

Post by arethuza »

queenkjuul wrote: post #137
tsunamifury wrote: post #126

Earlier quoted context omitted.

This was tried the 60s in the us and uk, which gave rise to the ghettos torn down in the 2000s. There is little appetite on any side to re do that It’s amazing how little history people seem to remember or know. I think people might be open to trying again if you could address what went wrong last time (extreme crime and poverty traps)

Post war UK social housing was a huge success, and US social housing was deliberately turned into ghettos through deliberate lack of maintenance. It's amazing how little history people who think they know history actually know

Social housing, at least here in Scotland, is actually built to a higher standard than that produced for sale.

Re: What happens when housing prices go down?

#164

Post by stego-tech »

thinkingtoilet wrote: post #160
stego-tech wrote: post #89

Ultimately, there is no solution in which the core groups will all be appeased: * If prices keep going up, then home ownership remains a luxury of the wealthy and an exploitation of the poor. Asset holders will be thrilled with returns, but the majority struggling to get or stay on the proverbial property ladder will grow increasingly angry at sky-high rents and prices with stagnant wages * On the other hand, if pric…

>Existing asset owners will be angry at losing (illusory/on-paper-only) money I wouldn't be. I bought my house to live in it, not as a financial vehicle. I would be thrilled if prices came down and others in my generation could afford a house because I had the dumb luck of purchasing one in 2018 before the shit hit the fan. I couldn't even afford my own house now.

You and I are in a growing minority on this, I find. When I started my homebuying journey four years ago, I did so expecting to eat an on-paper devaluation of up to 50% during my lifetime - and was fine with that, because I wanted stability, not profit.

Re: What happens when housing prices go down?

#165

Post by andsoitis »

VWWHFSfQ wrote: post #72

> You’re not the homebuyer; you’re the mortgage payer. The product that matters isn’t the home; it’s the decades of payments you have promised to make. A very succinct way of describing the actual relationship. New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it.

> New homeowners are not "buying a house". This is a misconception. They are agreeing to pay _double_ the home's present value for the next 30 years and then get it.

New homeowners, who take out a mortgage, are:

a) buying a home (they get it immediately, not 30 years later; their name is on the title, they can make changes to it, they can sell it, etc.)

b) borrowing money because they don't have the cash to buy outright (or prefer to borrow because it is cheaper than liquidating another asset that is increasing in value)

c) the loan is secured by the property (the lender saw a large sum of cash flowing out and there's a risk the borrower will default)

Re: What happens when housing prices go down?

#166

Post by ecshafer »

queenkjuul wrote: post #152
anthonypasq wrote: post #148

Earlier quoted context omitted.

no, you just strip NIMBY's of their power. I frankly don't give a shit about grandma's opinion if the owner of the land wants to put a highrise there.

Why do you care whether it's a developer or the city building it, then

I absolutely care if its a developer or the city building it. If its the developer who puts a high rise on my block, they want to make money and they sell it for a profit. The people that move in are the people that can afford a condo in a high rise. If its the city building it, they don't want to make a profit, they want to get votes. So after they fill the high rise with their quota of homeless people and a drug dealers. Its going to have a very different population and affect my neighborhood in a much more negative way.

Re: What happens when housing prices go down?

#167

Post by jacurtis »

onlyrealcuzzo wrote: post #57
_heimdall wrote: post #26

Earlier quoted context omitted.

At least in the US, the government could care less about bailing out homeowners. Banks are another story, we'll bail them out all day but tax payers and homeowners are left holding the bag.

If you drop interest rates to 0%, it's hard to argue you're not bailing out everyone who's in debt (which is every home owner with a mortgage). Sure, maybe you are PRIMARILY bailing out banks. But you are also bailing out everyone with a mortgage and enough brain cells to refinance and cut their by-far-largest monthly expense by 30-50%.

Both you and the parent are correct.

The "bailout" for consumers is that they lower interest to 0%. That's what we did in 2007. If people can refinance their homes from 7% to ~2% then they save a fortune and it spurs buyers back into the market and current homeowners to move around and shuffle inventory.

Of course the Parent comment is also correct because banks get bailed out by low interest rates, but the government also bailed out several banks directly. Corporate bailouts are always a debatable topic. In one way we should let bad businesses fail, they failed because of the risks and choices they made and bailing them out is just inviting those mistakes to happen again. But on the flip side, consumers do need banks (as much as we refuse or hate to admit it). Yes banks make money off of us, but we as consumers also need banks. Which is why bailouts get approved.

We have seen this movie before. I'm not sure why everyone is debating the ending. We watched and lived the ending. It wasn't pretty in the middle there, but the market eventually recovered. Here we are getting ready to rewind and watch the movie again.

Re: What happens when housing prices go down?

#168

Post by andrewmutz »

rwarfield wrote: post #77

This article is a mess. From the third paragraph: > What happens when prices actually start to fall? Because that’s not just a hypothetical. It’s already happening in places like Phoenix, Atlanta, Miami, Dallas... Then two paragraphs later > In The Atlantic, Rogé Karma recently pointed out that housing prices are rising fastest in the very cities once seen as escapes from high-cost coasts, places like Phoenix and Dal…

It is indeed a mess. It's full of strawmen, like:

> Price Drops Don’t Lead to Supply. They Kill It.

No one believes price drops cause an increase in supply. They believe an increase in supply causes price drops.

> If “build more” was going to bring prices down and stabilize the system, we wouldn’t be seeing these mixed signals.

People believe that increasing supply will lower prices, not "stabilize the system". The current system is plenty stable, and thats the problem.

Re: What happens when housing prices go down?

#169

Post by stego-tech »

almosthere wrote: post #144
stego-tech wrote: post #89

Ultimately, there is no solution in which the core groups will all be appeased: * If prices keep going up, then home ownership remains a luxury of the wealthy and an exploitation of the poor. Asset holders will be thrilled with returns, but the majority struggling to get or stay on the proverbial property ladder will grow increasingly angry at sky-high rents and prices with stagnant wages * On the other hand, if pric…

Simple to make people sell, make property tax near Infinity if you rent it out in the first 5 years of property purchase. Old rentals stay rentals, new construction is for people.

It’s not that simple, although taxation is a lever I see more governments willing to tug cautiously on in this crisis. I do think multipliers on low-density housing that’s not owner-occupied year-round is an excellent starting point, though, one that would really only harm a smaller subset of landlords while loosening supply in the short-term (1-5yrs).

Still, tax policy alone won’t solve such a complex issue. We need deregulation in matters of zoning, and increased regulation in terms of rent-setting (both amounts and lengths). We also need higher-density housing near transit stops, regulations on sales of existing homes with fossil fuel heat (gas and oil) that promote their proactive replacement prior to sale, stripping HOAs of authority to police familial genetics or relationships in household makeup (to promote more shared housing in existing developments), and so much more.

It’s a complex crisis that requires a complex solution.

Re: What happens when housing prices go down?

#170

Post by queenkjuul »

ecshafer wrote: post #166
queenkjuul wrote: post #152

Earlier quoted context omitted.

Why do you care whether it's a developer or the city building it, then

I absolutely care if its a developer or the city building it. If its the developer who puts a high rise on my block, they want to make money and they sell it for a profit. The people that move in are the people that can afford a condo in a high rise. If its the city building it, they don't want to make a profit, they want to get votes. So after they fill the high rise with their quota of homeless people and a drug de…

Ridiculous. Such disdain for poor people! Not even poor people either. Plenty of working and middle class people can't afford decent homes right now.
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