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Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

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Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#271

Post by whycombagator »

PragmaticPulp wrote: post #84
strangattractor wrote: post #32

I keep hearing about a housing shortage. How we are not building fast enough. I personally know several people that own more than one home and AirBnB it when not in use. Also hedge funds are now targeting real estate. I can't help but wonder if this is partially an AirBnB and hedge fund created situation. Of course these are the same people that have access to all this free money. The average Joe still has to pay int…

> I keep hearing about a housing shortage. How we are not building fast enough. New construction is temporarily extremely expensive due to supply chain issues. Prices of everything from lumber to copper are (or were) elevated because COVID shut down factories and supply chains. New construction is still happening, but it's slowed down and expensive for a short while. There's a secondary problem that the new construct…

> Meanwhile, the trend is to move toward city centers and popular areas, where housing prices continue to climb.

I don’t have data, but if there was a market where this is happening less than usual. It’s this market

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#272

Post by notanzaiiswear »

nicoffeine wrote: post #181
notanzaiiswear wrote: post #155

Earlier quoted context omitted.

Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers. Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.

Growth only means that there is more economic activity. If you reduce the quality of houses and cars but increase the price and your profit, that's also growth. If you cure cancers, that's bad for growth if you made more profit on treatments than the cure. > Developing a more fuel efficient car is also growth, for example. One of the major economic concerns about electric vehicles is that they have fewer moving parts…

"If you cure cancers, that's bad for growth if you made more profit on treatments than the cure."

That is simply wrong. If you cure cancers, you save human lives, which is worth a lot of money. You are basically falling for the broken window fallacy - breaking a window is like somebody getting cancer. You think the economy benefits because lots of doctors, nurse, undertakers and whatnot get business out of it. But you are wrong.

"Technically true, but in practice, if your product is not 100% recycled and 100% carbon negative to produce, you'll need to extract more of the earth to sell it."

Another fallacy to think the economy only consists of producing things. Also you have to think longterm - sometimes it can be worth it to replace old things with more efficient things, sometimes not.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#273

Post by notanzaiiswear »

inetknght wrote: post #198
notanzaiiswear wrote: post #155

Earlier quoted context omitted.

Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers. Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.

> Growth means that things get better. Growth does not mean that things get better. Growth means that things get more. More is not always better. More humans, for example, seems to destroy habitability of the Earth. Is that better?

No your concept of growth is wrong, or you are talking about different types of growth. If a tree grows, it gets better and there is "more tree" afterwards.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#274

Post by notanzaiiswear »

imtringued wrote: post #193
notanzaiiswear wrote: post #155

Earlier quoted context omitted.

Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers. Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.

You can build a money system that maximizes growth without requiring it to happen predictably every single quarter. What is needed is a money system that lets the economy grow as much as is sustainable, not 3% per year because that is what someone wrote into a contract 20 years ago.

Not sure what exactly you are referring to. What contract that promises 3% growth per year are you talking about?

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#275

Post by SilasX »

IkmoIkmo wrote: post #267
SilasX wrote: post #238

Earlier quoted context omitted.

Color me un-reassured. It never ends well when you have a massive market driven by people who only think in terms of monthly payment.

Why? In a country with mostly variable rate interest rates like NZ, and at most 5y fixed loans, that's disastrous. But in markets like the US where you can fix your payments for 30 years, driving your purchasing decision by the affordability of those monthly payments which are fixed for the entire duration of the contract, is a very decent foundation for a market.

I didn't mean it's necessary a bad choice for the individual, just that it's a systemic issue. When people only think in terms of monthly payment, then total prices become unmoored from fundamentals. But I agree I haven't (and probably can't) spell out this intuition rigorously.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#277

Post by fartcannon »

Johnny555 wrote: post #195
fartcannon wrote: post #116

Earlier quoted context omitted.

Build more and ban investment properties. No more AirBnB, no more rentals. Prices will come down and those people who previously had to rent, will now be able to own and life will be better for everyone except the poor souls who bought in the last 20 years.

There are lots of valid reasons besides "I can't afford to buy" to rent. I've been a renter for most of my life because I liked the freedom of being able to move to a new area (either locally, or in an entirely new region) with little hassle. I'm a homeowner now, but I was renting even when I could afford a house. In an economic downturn many people get stuck with a house that's underwater and unable to sell while al…

You might think I'm crazy, but it's the generational wealth that I think about most. If you rent, you basically guarantee that your children and their children and so on won't ever be land owners. They'll be serfs and someone else will be their lord.

Of course it could all collapse but I sincerely doubt it.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#278

Post by throw123123123 »

lr4444lr wrote: post #138
throw123123123 wrote: post #15

Earlier quoted context omitted.

Lax lending is not the core issue of a market crisis like 2008, it is the amount of leverage and debt. You must look at how many people have cash in their banc accounts to cover mortgages if the stock market dives 50% and rates go up 2~4%. Can that generate a cascade of foreclosures?

That's pretty much the same thing I am saying: if banks properly analyzed your assets like you describe and had prudent lending standards accounting for this, people wouldn't be getting the loans to artificially drive up prices. This article gives me no insight as to whether this is or is not the case.

Banks as well as people cannot take the uncertain fully into account. Without the government taking steps in 2020 there would have been massive foreclosures.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#279

Post by throw123123123 »

after_care wrote: post #42
throw123123123 wrote: post #15

Earlier quoted context omitted.

Lax lending is not the core issue of a market crisis like 2008, it is the amount of leverage and debt. You must look at how many people have cash in their banc accounts to cover mortgages if the stock market dives 50% and rates go up 2~4%. Can that generate a cascade of foreclosures?

How will future mortgage rates generate a cascade of foreclosures for people with existing mortgages?

When housing drops significantly in value the debt is higher than the value of the home, making it underwater: now it is better for the borrower to default than to make payments. If you get defaults, then the bank has to flip the home into the market, increasing supply and dropping price, etc etc.

The narrative of 2008 has made lots of people believe that it was improper risk assessment, but the cycle of leverage and asset price fluctuation is the core mechanic and it acn easily repeat itself.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#280

Post by throw123123123 »

aidenn0 wrote: post #204
dsp wrote: post #149

Earlier quoted context omitted.

Adjustable rate mortgages and people who need to move who are now underwater. I couldn’t easily find nationwide stats on ARM issuance, but a quarter of First Republic Bank’s loans are adjustable rate. https://ir.firstrepublic.com/static-files/1a464a0b-9396-4bd4...

Who is buying ARMs? The fixed rate is near all-time lows and is lower than 5/1 ARMs

ARMs are more risky but its not necessary to generate a mortgage crisis situation. You only need to see higher default rates.
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