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In your opinion, what's actually going on with the housing market?
02-23-2023, 06:14 PM
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#1
In your opinion, what's actually going on with the housing market?
There seems to be no correction on the horizon. Some areas may see prices fall 5-10% but nothing major at least. Other areas likely won't see anything fall.
So, what's everyone's take on this? What's really going on to support this massive rise in prices the last 2-3 years?
My best guess is that there are a lot of people legitimately pay too much for houses that they shouldn't be. It's the only conclusion I've been able to draw that makes any sense at all. People are leveraged out the ass and will be tied up paying a huge percentage of their income toward their mortgage for the next 30 years (if not longer) their loan term.
I have a hard time believing demand swung up so heavily. Or that people actually had more money to dump into homes which accelerated the prices. The only thing that makes sense is people have made dumb choices to commit more of their paycheck than they should for the house they bought. Maybe other miscers have a different take on it?
All that said that doesn't mean I expect prices to drop. In fact just the opposite. I don't expect there will be a significant amount of foreclosures, I think the consequences are that people just won't be saving as much and instead pumping more of their income into their home. So even if they have bought outside their means I don't think it's so far outside that we get a collapse either.
The old rule of thumb was roughly 28% of your income should go to your mortgage. I think all these dumbass people have decided to ramp that up to 40-45% of their income and in effect have f*cked the whole market in the process. That extra 12-17% is basically being stripped from what people should be saving. Those who have f*cked the housing market are essentially never going to retire being the consequences of all this.
So, what's everyone's take on this? What's really going on to support this massive rise in prices the last 2-3 years?
My best guess is that there are a lot of people legitimately pay too much for houses that they shouldn't be. It's the only conclusion I've been able to draw that makes any sense at all. People are leveraged out the ass and will be tied up paying a huge percentage of their income toward their mortgage for the next 30 years (if not longer) their loan term.
I have a hard time believing demand swung up so heavily. Or that people actually had more money to dump into homes which accelerated the prices. The only thing that makes sense is people have made dumb choices to commit more of their paycheck than they should for the house they bought. Maybe other miscers have a different take on it?
All that said that doesn't mean I expect prices to drop. In fact just the opposite. I don't expect there will be a significant amount of foreclosures, I think the consequences are that people just won't be saving as much and instead pumping more of their income into their home. So even if they have bought outside their means I don't think it's so far outside that we get a collapse either.
The old rule of thumb was roughly 28% of your income should go to your mortgage. I think all these dumbass people have decided to ramp that up to 40-45% of their income and in effect have f*cked the whole market in the process. That extra 12-17% is basically being stripped from what people should be saving. Those who have f*cked the housing market are essentially never going to retire being the consequences of all this.
02-23-2023, 06:20 PM
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#2
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Simple supply and demand. Supply was low and demand was high. Sellers dictated the pricing and people paid up.
A lot of people I know sold their houses when prices went up and bought bigger better homes.
Also in my province there are not enough homes (rentals or homes to buy) for all the people anywhere close to a major urban Center , so it drives up demand.
A lot of people I know sold their houses when prices went up and bought bigger better homes.
Also in my province there are not enough homes (rentals or homes to buy) for all the people anywhere close to a major urban Center , so it drives up demand.
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02-23-2023, 06:29 PM
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#3
Originally Posted By thesloshedman⏩
Yeah but how did demand suddenly ramp up so extremely? Is your theory that the country wasn't building enough new homes to support incoming demand? I mean that would make sense from a supply-demand perspective as a reason, but I'm curious what do you believe got the demand so out of whack? It almost happened overnight so I have hard time believing there simply weren't enough new homes available for incoming buyers.Simple supply and demand. Supply was low and demand was high. Sellers dictated the pricing and people paid up.
A lot of people I know sold their houses when prices went up and bought bigger better homes.
Also in my province there are not enough homes (rentals or homes to buy) for all the people anywhere close to a major urban Center , so it drives up demand.
A lot of people I know sold their houses when prices went up and bought bigger better homes.
Also in my province there are not enough homes (rentals or homes to buy) for all the people anywhere close to a major urban Center , so it drives up demand.
I don't disagree that demand went up. But why did it go up? I'm still in the camp that people simply started spending more than they should have to buy houses. People buying things they shouldn't will always increase the demand of something imo.
Imagine if everyone suddenly needed to buy Porsches and irrationally spent more than they should for that car in particular. Porsche would have a hard time keeping up with that demand and it's price would accelerate too.
02-23-2023, 06:35 PM
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#4
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- very low interest rates = can afford higher priced home. it's about the monthly payment
- more money floating around from stock market pumping gains/money printing
- big corporate investors with free/low interest money scooping up homes
- materials inflation (higher cost to build e.g. lumber prices were high)-
- not building enough in the areas where pandemic shifted demand to
- more money floating around from stock market pumping gains/money printing
- big corporate investors with free/low interest money scooping up homes
- materials inflation (higher cost to build e.g. lumber prices were high)-
- not building enough in the areas where pandemic shifted demand to
02-23-2023, 06:37 PM
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#5
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The elite want to turn all houses (except for theirs) into rentals
02-23-2023, 06:40 PM
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#6
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My area is full of people trying to milk the market still with absurd prices and slowly having to chip away at what they put it up for because no one is buying it.
Someone down the street from me bought a house and put it up again 6 months later for 155k more with basic updates like snap on floors, painting, and other cosmetic stuff.
It's been on the market since Oct.
So honestly I just don't know. A lot of people are in the same position as me and doing what I'm doing and waiting with a loaded gun of savings ready to pounce on a place that is in reality of what it's worth.
Someone down the street from me bought a house and put it up again 6 months later for 155k more with basic updates like snap on floors, painting, and other cosmetic stuff.
It's been on the market since Oct.
So honestly I just don't know. A lot of people are in the same position as me and doing what I'm doing and waiting with a loaded gun of savings ready to pounce on a place that is in reality of what it's worth.
02-23-2023, 06:40 PM
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#7
02-23-2023, 06:41 PM
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#8
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A decrease in construction during covid followed by increased demand due to record immigration.
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02-23-2023, 06:42 PM
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Originally Posted By TryingMen⏩
When did demand go up? 🤔 you mean when interest rates were at historically low rates? 🤔🤔Yeah but how did demand suddenly ramp up so extremely? Is your theory that the country wasn't building enough new homes to support incoming demand? I mean that would make sense from a supply-demand perspective as a reason, but I'm curious what do you believe got the demand so out of whack? It almost happened overnight so I have hard time believing there simply weren't enough new homes available for incoming buyers.
I don't disagree that demand went up. But why did it go up? I'm still in the camp that people simply started spending more than they should have to buy houses. People buying things they shouldn't will always increase the demand of something imo.
Imagine if everyone suddenly needed to buy Porsches and irrationally spent more than they should for that car in particular. Porsche would have a hard time keeping up with that demand and its price would accelerate too.
I don't disagree that demand went up. But why did it go up? I'm still in the camp that people simply started spending more than they should have to buy houses. People buying things they shouldn't will always increase the demand of something imo.
Imagine if everyone suddenly needed to buy Porsches and irrationally spent more than they should for that car in particular. Porsche would have a hard time keeping up with that demand and its price would accelerate too.
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02-23-2023, 06:42 PM
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#10
Originally Posted By DeadlyStriker⏩
I'm in the same boat as you but I just don't know if we'll see it. I think there's too many idiots committing more than they should to these houses. I want to believe like you but I thought for sure we'd start to see things regress, not a full collapse, but some regression with the interest rates moving up. I have not seen that. Houses do take longer to sell in my area but I still see f*cktards eventually buying at these higher prices.So honestly I just don't know. A lot of people are in the same position as me and doing what I'm doing and waiting with a loaded gun of savings ready to pounce on a place that is in reality of what it's worth.
02-23-2023, 06:42 PM
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#11
02-23-2023, 06:43 PM
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#12
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- all homes are down 5-15% from peak
- higher-end homes are still going for damn-near asking price due to influx from out of stater's and fleeing californian's
- the higher-end homes will stay strong while lower-end ones will take more of a beating.
- higher-end homes are still going for damn-near asking price due to influx from out of stater's and fleeing californian's
- the higher-end homes will stay strong while lower-end ones will take more of a beating.
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02-23-2023, 06:43 PM
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#13
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Originally Posted By TryingMen⏩
People stuck in appartements dur ing lockdowns and wanting something with outdoor space and a huge number of new immigrants flooding into Canada are driving up demandYeah but how did demand suddenly ramp up so extremely? Is your theory that the country wasn't building enough new homes to support incoming demand? I mean that would make sense from a supply-demand perspective as a reason, but I'm curious what do you believe got the demand so out of whack? It almost happened overnight so I have hard time believing there simply weren't enough new homes available for incoming buyers.
I don't disagree that demand went up. But why did it go up? I'm still in the camp that people simply started spending more than they should have to buy houses. People buying things they shouldn't will always increase the demand of something imo.
Imagine if everyone suddenly needed to buy Porsches and irrationally spent more than they should for that car in particular. Porsche would have a hard time keeping up with that demand and it's price would accelerate too.
I don't disagree that demand went up. But why did it go up? I'm still in the camp that people simply started spending more than they should have to buy houses. People buying things they shouldn't will always increase the demand of something imo.
Imagine if everyone suddenly needed to buy Porsches and irrationally spent more than they should for that car in particular. Porsche would have a hard time keeping up with that demand and it's price would accelerate too.
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02-23-2023, 06:45 PM
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#14
02-23-2023, 06:45 PM
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#15
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Real estate tends to be highly localized, my area is kinda performing the best it has in almost a decade and that’s because oil is doing well and more people are moving here.
I don’t hope for crazy increasing values though, I hope for reasonable prices and stability. Gains from properties can come from rental income at reasonable prices and equity building through paying down the mortgage.
I don’t hope for crazy increasing values though, I hope for reasonable prices and stability. Gains from properties can come from rental income at reasonable prices and equity building through paying down the mortgage.
02-23-2023, 06:45 PM
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#16
Originally Posted By Rotmaxxer⏩
Rates were ridiculously low from 2012 to 2020. Things didn't get out of control until around 2019. If rates were the reason things should have exploded before 7 years of ridiculously low rates.When did demand go up? you mean when interest rates were at historically low rates?
02-23-2023, 06:46 PM
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Originally Posted By friesbruh⏩
I think it will be more a case or urban v suburban v rural than higher or lower end homes. People with means started moving out of urban areas with covid and rising crime sustains the trend.- all homes are down 5-15% from peak
- higher-end homes are still going for damn-near asking price due to influx from out of stater's and fleeing californian's
- the higher-end homes will stay strong while lower-end ones will take more of a beating.
- higher-end homes are still going for damn-near asking price due to influx from out of stater's and fleeing californian's
- the higher-end homes will stay strong while lower-end ones will take more of a beating.
I predict urban prices will fall and suburban and semi-rural will climb.
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02-23-2023, 06:47 PM
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#18
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Too many crazy variables going on so I don’t think anyone can know, but I saw this video recently that makes a lot of sense.
02-23-2023, 06:49 PM
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#19
Originally Posted By DuracellBunny⏩
This would at least make sense to me. So if it's a shift in areas that's happening that's a theory that I could get on board with. We'll need to see the urban areas drop though to know if this one is true. If those stay elevated while suburban also stays elevated we're back to the drawing board for a real reason though.I think it will be more a case or urban v suburban v rural than higher or lower end homes. People with means started moving out of urban areas with covid and rising crime sustains the trend.
I predict urban prices will fall and suburban and semi-rural will climb.
I predict urban prices will fall and suburban and semi-rural will climb.
02-23-2023, 06:50 PM
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#20
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Originally Posted By TryingMen⏩
Yea the problem is that too many people understand right now that a house is an asset to hold onto in these times. Inflation has wrecked the spending power of the dollar so we kind of get screwed both ways.I'm in the same boat as you but I just don't know if we'll see it. I think there's too many idiots committing more than they should to these houses. I want to believe like you but I thought for sure we'd start to see things regress, not a full collapse, but some regression with the interest rates moving up. I have not seen that. Houses do take longer to sell in my area but I still see f*cktards eventually buying at these higher prices.
I've pretty much realized that people in our position need to just focus on increasing salary/cash flow much more instead of focusing on saving. Saving in 2023 is a fools game because we aren't going to outpace inflation unless we keep increasing income.
So I'm focusing on that while I wait and see what happens.
02-23-2023, 06:51 PM
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#21
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Originally Posted By TryingMen⏩
it's very regional right now. some places are already 10-20%+ off the peak mostly in the West (Seattle, California, Phoenix). Rest of the country hasn't declined as muchI'm in the same boat as you but I just don't know if we'll see it. I think there's too many idiots committing more than they should to these houses. I want to believe like you but I thought for sure we'd start to see things regress, not a full collapse, but some regression with the interest rates moving up. I have not seen that. Houses do take longer to sell in my area but I still see f*cktards eventually buying at these higher prices.
and not saying the same thing will repeat. it may or may not, who knows what happens with the economy. but housing market declines can take many years to play out. we could be early in a multi year correction
in terms of rate of change, the housing market is declining faster right now than it did during the beginning of the last housing bubble
02-23-2023, 06:54 PM
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#22
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New flash: inflation. Houses will keep appreciating value as time goes by, especially in hot locations like CA or NY, either you buy it now or you'll regret it as time goes by so what I'm tryna say is that it's time for you to do G4P for that sweet moolah OP
02-23-2023, 06:55 PM
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#23
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Originally Posted By jtaylor2010⏩
He's really just describing the problem without explaining the variables 🤔 tl;dr prices have decreased for the past 5 months so it's slowly crashing 😵💫Too many crazy variables going on so I don’t think anyone can know, but I saw this video recently that makes a lot of sense.
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02-23-2023, 06:55 PM
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Originally Posted By TryingMen⏩
Immigration has to be factored in. Immigrants concentrate in urban areas, placing constant pressure on supply.This would at least make sense to me. So if it's a shift in areas that's happening that's a theory that I could get on board with. We'll need to see the urban areas drop though to know if this one is true. If those stay elevated while suburban also stays elevated we're back to the drawing board for a real reason though.
If immigration increases faster than people leaving urban areas, that could result in prices not falling.
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02-23-2023, 06:56 PM
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#25
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Originally Posted By UnawareJonSnow⏩
I figure that’s why he has settled on the current usernameNew flash: inflation. Houses will keep appreciating value as time goes by, especially in hot locations like CA or NY, either you buy it now or you'll regret it as time goes by so what I'm tryna say is that it's time for you to do G4P for that sweet moolah OP
02-23-2023, 07:00 PM
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#26
Originally Posted By jtaylor2010⏩
This video actually gives me hope. Holy f*ck at that chart at the 6 minute mark. It's even worse than I was estimating with my 45% of income in the original post. 52% of gross income??? Yeah this sh*t is not sustainable. People can't continue committing that high a percentage of their income and think this will end well.Too many crazy variables going on so I don’t think anyone can know, but I saw this video recently that makes a lot of sense.
The takeaway from the video is a bit sobering in that it could take 3-5 years to really see things drop though. That f*cking sucks if true. I don't want to wait 3 years to get a fair price for a house.
02-23-2023, 07:02 PM
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#27
Originally Posted By Rotmaxxer⏩
I don't know I think the 6 minute mark you start to see the variables come into play. People used to commit 39% of gross income, and you see it spike substantially to 53% of income. Income of course has risen, but the really issue/problem is people are dedicating more of it than they should be.He's really just describing the problem without explaining the variables tl;dr prices have decreased for the past 5 months so it's slowly crashing
The question is is it really sustainable to be pumping 53% of your gross income into your mortgage? And if not how long until that corrects?
02-23-2023, 07:08 PM
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#28
Originally Posted By DuracellBunny⏩
Fair point and definitely a reasonable conclusion. F*ck Biden letting everyone inImmigration has to be factored in. Immigrants concentrate in urban areas, placing constant pressure on supply.
If immigration increases faster than people leaving urban areas, that could result in prices not falling.
If immigration increases faster than people leaving urban areas, that could result in prices not falling.
02-23-2023, 07:13 PM
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#29
Originally Posted By TryingMen⏩
don't worry, if it actually happens you won't have a job to pay for it anywaysThis video actually gives me hope. Holy f*ck at that chart at the 6 minute mark. It's even worse than I was estimating with my 45% of income in the original post. 52% of gross income??? Yeah this sh*t is not sustainable. People can't continue committing that high a percentage of their income and think this will end well.
The takeaway from the video is a bit sobering in that it could take 3-5 years to really see things drop though. That f*cking sucks if true. I don't want to wait 3 years to get a fair price for a house.
The takeaway from the video is a bit sobering in that it could take 3-5 years to really see things drop though. That f*cking sucks if true. I don't want to wait 3 years to get a fair price for a house.
housing market isn't crashing unless a ton of people are unemployed
02-23-2023, 07:38 PM
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#30
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The RE market is in a standoff with the Fed, basically.
The real estate explosion of the last decade was driven by rock bottom interest rates and $9T freshly minted Fedbux looking to be investment. That's why the housing market decoupled from wages and economic productivity so badly... fukking Yellen and Powell were stuffing it with USDs like a foie gras duck.
Now the Fed has taken away the punch bowl and hiked interest rates 5% essentially overnight. This means that home values will need to drastically decline for the same monthly payment.
...but it also means the larger national economy is going to suffer.
Which the Fed has always, always, responded to by cutting interest rates. 40 years and they've never once failed to respond to economic pain or crisis by cutting rates. In fact, their rate cuts and stimmys have become more and more aggressive every time.
And 0 interest and a fresh, super-aggressive round of money printing will continue to push home values up again.
So sellers are basically holding tight and waiting for the other shoe to drop.
The real estate explosion of the last decade was driven by rock bottom interest rates and $9T freshly minted Fedbux looking to be investment. That's why the housing market decoupled from wages and economic productivity so badly... fukking Yellen and Powell were stuffing it with USDs like a foie gras duck.
Now the Fed has taken away the punch bowl and hiked interest rates 5% essentially overnight. This means that home values will need to drastically decline for the same monthly payment.
...but it also means the larger national economy is going to suffer.
Which the Fed has always, always, responded to by cutting interest rates. 40 years and they've never once failed to respond to economic pain or crisis by cutting rates. In fact, their rate cuts and stimmys have become more and more aggressive every time.
And 0 interest and a fresh, super-aggressive round of money printing will continue to push home values up again.
So sellers are basically holding tight and waiting for the other shoe to drop.
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