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What happens when housing prices go down?

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Re: What happens when housing prices go down?

#321

Post by aprilthird2021 »

indymike wrote: post #155
aprilthird2021 wrote: post #97

Earlier quoted context omitted.

> Bringing prices down is usually a losing idea with existing asset holders Good. They should lose because they abused government policies through NIMBYism to inflate their assets prices. Happy to see them lose

This would be nearly every family in America. I'm not happy seeing my kids, my 80 year old mother lose money they are counting on. This is really the problem - reducing home prices hurts homeowners. And homeowners are litteraly everyone.

It would not be nearly every family in America, that's the point. That's why people are mad. We work for 30-40 years and have no pathway to home ownership so your 80 year old mother can have a home appreciate 800% over her lifetime without lifting a finger.

Re: What happens when housing prices go down?

#322

Post by aprilthird2021 »

disgruntledphd2 wrote: post #127
aprilthird2021 wrote: post #82

Earlier quoted context omitted.

> the people who celebrate house prices going down don't have a loud voice in political circles and are ignored It's changing though. I'm seeing more people, even homeowners joining this chorus. Insane housing prices make everything expensive, and people are sick of everything being expensive. Even homeowners. I agree that builders leaving is good. It means the prices have come down and demand / supply is getting bet…

> I agree that builders leaving is good. It means the prices have come down and demand / supply is getting better Not really, it just means that the builders can make more profit elsewhere.

Great, then that place is built to meet demand. And on and on and on

Re: What happens when housing prices go down?

#323

Post by aprilthird2021 »

indymike wrote: post #149
avmich wrote: post #65

Earlier quoted context omitted.

> Why would a homeowner send 1-2 paychecks... Can't the asset holder - the homeowner in this case - get rid of the asset which stopped performing? Why such a strange financial behavior? If the houses are financials - why not to deal with them as such?

That would be rational for the home owner, but for many losing money on the biggest investment they have is not really practical. Losing value on a percentage taxed asset is not really practical for govenrment. Also - the mortgage lender may not allow a sale at a lower than loan value price. The result is foreclosure, and even more loss in value.

Allowing our cities to become unlivable, inhospitable, and overall crazy places to accommodate letting people have enormous gains on an asset they do barely any work to improve was not practical but we did it for many years and it's time to stop.

Re: What happens when housing prices go down?

#324

Post by _heimdall »

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%.

I'm often hesitant to consider intent as an important factor, but in my opinion it is one here.

In those situations the governments step in with the intent of bailing out the banks. That bailout does happen to help individuals with debt, but the timing and messaging will always make clear that the government was only willing to step in once a banking crisis was a high risk. Borrows often hurt for months or years before the banks show cracks, the government is almost never doing anything about it when only the borrowers are hurting.

To add examples to my vague use of "always" above, I'd point to the housing crisis and student debt in the US.

Individual borrowers were falling behind on mortgages for a year or two prior to the bailouts. Only after banks recognized the train wreck coming due to the MBS bets and did their best to secure their own positions did the government step in.

Student debt in the US has been a growing problem my entire adult life. Not only is it a type of debt that can't be discharged, lending practices have created a vicious feedback loop with universities continuing to raise tuition and lenders happily writing the notes and expecting the government to deal with it. The Biden administration actually did put in the effort to help borrowers, but banks weren't in trouble and ultimately there just isn't political will to do anything about it until banks (and politicians' investments) are at risk.

Re: What happens when housing prices go down?

#325

Post by _heimdall »

intalentive wrote: post #242
jacurtis wrote: post #167

Earlier quoted context omitted.

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 governmen…

>consumers do need banks We need banking services like accounts and transactions but there’s no good reason that couldn’t be operated as a public utility.

I'm strongly opposed to the idea of citizens using government-run banks accounts. The Soviets did this and proved how easy it is for the government to control what people buy, down to the individual level a la social credit scores.

Even if the government today were to wield that power safely its simply too much risk to load that gun and hand it to all future administrations.

Re: What happens when housing prices go down?

#326

Post by klipklop »

It's pretty simple I feel. As prices drop, the elite will buy more until most/all housing stock for the lower and middle class is owned by them. Then any labor done by most people will be used to pay them tribute.

When you have unlimited access to capital and at a lower rate than the average family, you "might as well" buy it up. If it goes sideways you are "too big to fail" and will be bailed out by the Federal Reserve...at the cost of the tax payer of course.

Re: What happens when housing prices go down?

#327

Post by iJohnDoe »

kjkjadksj wrote: post #264
bluGill wrote: post #142

Earlier quoted context omitted.

Also no discussion of interest rates - I bought my house just a few years ago at just under 3%, today I would be paying more than 6% - I couldn't afford the payments if I refinanced. I believe that interest rates are the primary driver of less construction: people who want to buy can't afford to unless they downsize.

3% change really breaks your budget? Higher rates generally mean lower home prices anyhow making the effective mortgage rate more similar than anticipated.

6%-%7 is crazy high at today’s high home prices. Yes, it’s accurate that someone couldn’t afford their current house at today’s interest rates.

Today’s interest easily shave off about $100k+ in what people can afford.

People won’t sell because they can’t afford to move anywhere unless they take their equity out of state to a lower cost of living.

People not selling means lower inventory. Only desperate people will buy now because they have no choice (relocation etc.)

Raising interest rates is the easiest way to fuck things up. We’re in this for the next 5-6 years.

Re: What happens when housing prices go down?

#328

Post by _heimdall »

andsoitis wrote: post #49
_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.

During the 2008 crisis, the primary focus of the government response was to stabilize the financial system, which was seen as necessary to prevent a deeper economic collapse.

Sure, they wanted to stabilize the financial system but who was it exactly that they stepped in to save? Was the trigger making stabilization necessary the sudden collapse of liquidity among individual mortgage holders or the collapse of liquidity among banks?

Re: What happens when housing prices go down?

#329

Post by bagacrap »

georgeecollins wrote: post #178
queenkjuul wrote: post #152

Earlier quoted context omitted.

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

Because a developer is never too big to fail, it can't issue bonds and it will be outcompeted if it can't manage costs. I am not against cities building, but where I live in California the excessive zoning, permitting and delays are at the core of the problem.

Never heard of corporate bonds?

When developers/investors fail, they do take down projects with them. See: Oak Knoll/Lehman Brothers.

But yeah, I don't believe the state of California is going to do any better.

Re: What happens when housing prices go down?

#330

Post by ta1243 »

9rx wrote: post #302
ta1243 wrote: post #294

Earlier quoted context omitted.

There clearly is a shortage. When 98% of available homes are used that is a shortage. I just did a rightmove search for rental in London and checked the first 8 adverts, every single one was added today except for one which isn't available until september. Your definition of shortage seems very different to mine so there's no point in continuing.

> When 98% of available homes are used that is a shortage. I anticipate that 98% of available jets are used. And I certainly can't afford one. Does that mean there is a shortage of jets? What isn't there a shortage of? > Your definition of shortage seems very different to mine so there's no point in continuing. What, then, was the point of continuing earlier? We have been discussing the technical definition since the…

You seem to ignore the technical definition of unmet demand. I respect your freedom to ignore actual definitions.

> What isn't there a shortage of?

Things which supply can increase to meet that demand.

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