From "It Will Never Be a Good Time to Buy a House/Maybe in 2030?" (The Atlantic).
"What is a family looking to buy a place to do? Buy in cash, if you happen to be rich enough to do that. (A bananas statistic: This spring, two out of every three buyers in Manhattan paid cash.) Buy and refinance when you can, if you happen to have the risk tolerance and financial room to do that. Buy with as large a down payment as you can muster to cut your mortgage costs. Or just rent. For the next decade. Forever."
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104 comments:
Those of a certain age, having been through woe-is-me times before, recognize that doomsday scenarios like this never prove true.
The federal budget deficit is $1.7 trillion. It doubled this year.
Bidenomics.
No joke.
This was always what the hollowing out of the US economy was going to lead to. When all your stuff is made in China (or Vietnam or So. Korea) sooner or later, you run out of people in the US who can afford to buy your houses. And AI is going to make it worse, when millions of white collar jobs in accounting, banking, media, tech, law and medicine go bye-bye.
Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus.
I bought my house in late 1998 with a mortgage rate not much cheaper than is available right now (6.5%). Of course, I refinanced it down to 4% at once point in the early 2000s. Inflation in materials, though, over the last 3 years is extreme.
It is still possible to buy a house today- what isn't possible for most people is buying the house, leasing a new car every 3 years, buying a new i-phone every year, taking a European vacation every couple of years, and eating out every night. However, it has always been like that.
Move somewhere cheaper.
It is ALWAYS a hard time to buy a house. There is always some factor that makes it more expensive.
"It’s a terrible time to buy a house. But that news, bad as it is, seems to convey some promise: Someday, things will change and it will once again be a good moment to buy. You just have to wait. I’m sorry to tell you that the bad news is even worse than it sounds. It’s not going to be a good time to buy a house for a really long time."
That is the bad news brought on by government interference in the free market.
But as is always the case, when it is a bad time to buy, it likely is a good time to sell. For those of us downsizers who have not yet converted the huge increase in home values into cash assets, the time to sell for great profits is upon us. For whatever reason, no shortage of senior housing has been the subject of discussion around my town, which is ranked #5 or thereabouts in the country in affordable housing.
We used to have market clearing events called recessions but our politicians are quick with Treasury/taxpayer cash so supposedly nobody feels any economic pain ever…except those people what busted hump instead of making irrational economic decisions that put you at the top of the Democrats list for bailouts…
Promoting the “Klaus Schwab Way”…
You vill own nothink und you vill love it!
If mortgages are not affordable, if prices are too high the market will correct- if the government allows it to happen. Not a foregone conclusion. In Boston the socialist mayor believes the solution is rent control. Those who do don’t learn from history…
It all seems to come down to whether the author of the piece has managed to find anything.
Bidenomics in action! Embrace the suck.
There is a long history of periodic debt forgiveness going back centuries.
It is practical, necessary, and beneficial when the economy is mired in debt and no one can sell or buy, as per the heading above. However, debt forgiveness cannot be just for the wealthy, it must extend to all.
The average homeowner is 56 years old. 55% of homeowners are 55 years and older. These people, in very large baby boomer numbers, are very soon going to be moving to smaller homes, nursing homes, or graveyards. What, the houses that they currently own are not going to get sold, or something?
Fortunately, bidenomics will SOLVE this problem TOO!
by the end of resident biden's term.. MOST people in the former USA will be living in tent cities.
rents will be a Thing of the Past!
LONG LIVE BIG BROTHER!! LONG LIVE RESIDENT BIDEN!!! LONG LIVE BIDENOMICS!!
It was never easy to buy a house if you aren't capable of looking down the road. It's a bourgeois event for most people, people that have learned to delay their gratification and demonstrate their long-term values.
We have just come through an era of 'Free Money', where interest rates were effectively 0% and growth was moderate. It has become too easy to go into debt, and make money doing it - and now, the first shock waves are working through the system, at the discovery that There Ain't No Free Lunch. 'Woe is me !' says everybody. Well.... no doubt: You should have known better - there's never was a Free Lunch. Wait'll that national debt starts making its presence felt.
That is the bad news brought on by government interference in the free market.
Holy carp I agree with Gadfly!
Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus
When I was still at home in 1980 my parents were thrilled to find a mortgage at 15 1/2…
In 2021 I refinanced my house in Waukesha County, WI at 2.65% and wrote my ex wife a check for the equity I owed her. $100K that I borrowed on top of my equity. I was supposed to sell in Spring of 2022.
In the spring of 2021 my house appraised for $385K. Bought it in 2015 for $342K. Today, Zillow has it at $550K. Boom! Locked in at 2.65% I couldn't downsize if I wanted to. At 7% I'd pay MORE FOR LESS. At that rate you can bury me in my backyard.
There is NOTHING for sale in Sussex, WI. The town is safe. No crime. Well run. Great schools. No woke bullshit. Far enough from Milwaukee that we don't get our cars stolen.
I have a feeling everyone carrying a mortgage did the same thing I did in 2021 if they were paying attention.
There has to be a correction coming.
The federal budget deficit is $1.7 trillion. It doubled this year. Bidenomics. No joke.
The House controls the purse strings. Those of us trying to support reps trying to reign in spending were vilified a few months ago. We need a GOP victory the critics said…
Let me get this straight: housing prices are high, mortgage rates are high, and rental properties are scarce.
Sounds kind of like a housing shortage situation in an Econ 1-A textbook, doesn't it?
I know what would fix all this: why don't we allow a couple million more low-income economic migrants into the country to add to the competition for our scarce housing?
Sometimes I think moron is too generous a term to describe our current government policy makers.
cassandra lite said...
Those of a certain age, having been through woe-is-me times before, recognize that doomsday scenarios like this never prove true.
i'm seeing a vision, of a roman matron in 410 AD, saying EXACTLY what cassandra just said
to put it in modern terms.. This is Fine!
What happens to all the empty skyscraper office space in America's cities? Do they remain empty, or to they get converted to living space? That would be a HUGE amount of housing inventory. But...you have to live in a shithole like Chicago, NYC, Milwaukee etc...
A correction has to be coming. But, low crime communities and safety matter. Ask an Ivory Tower liberal from White Fish Bay or Glendale WI. They probably wish they were a bit further north from Milwaukee now or could head west to Lake Country in Waukesha County. Low crime, good schools, and just far enough away from shitholes like Milwaukee may protect your property value when the correction hits.
I bought my first house made of straw when I was 27-years-old. Price doubled during the early 2000 bullshit boom in six years. I feel bad for Generation Z. They are soon to be 27 and are nowhere near being able to buy a house. Plus, they're not getting married so there goes two incomes.
"I bought my house in late 1998 with a mortgage rate not much cheaper than is available right now (6.5%)."
Yeah. 1994 and 7.5% for me.
But I didn't have a helpful media wailing that the sky was falling.
However, debt forgiveness cannot be just for the wealthy, it must extend to all.
It never does.
California is a particularly clear instance of the phenomenon. Homeowners are sitting on huge equity that will be taxed heavily upon sale. (California treats capital gains as ordinary income). People have their real estate taxes locked in at a low level by Prop 13. People have 30 year mortgages locked in under 3%.
Prices haven't changed. In Los Angeles, a 3 bedroom home in a "nice" neighborhood costs $1.5 million and up up up. This despite the transition from a high trust well policed city into a low trust dystopia. The weather is still amazingly good.
The buildable land is in the areas that don't get the cool ocean air, and therefore get hot summers and cold winters, and high risks of wildfire, etc.
"debt forgiveness cannot be just for the wealthy, it must extend to all."
Debt forgiveness for none. Lenders and lendees need to be confident in a stable environment for a market to work.
Moondawggie said...
Sounds kind of like a housing shortage situation in an Econ 1-A textbook, doesn't it?
I know what would fix all this: why don't we allow a couple million more low-income economic migrants into the country to add to the competition for our scarce housing?
no Problem with the illegal immigrants! Just call them "refugees", and put them up in hotel rooms, for $400 a night.. Problem Solved!
What's That? WHERE would we get the money? Same Place as ALWAYS! we'll just print More!!
After All, cassadra lite says that there's NOTHING to Worry About! This is FINE!!
HEAR!! HEAR!! Moondawggie!!!
What happens to all the empty skyscraper office space in America's cities? Do they remain empty, or to they get converted to living space? That would be a HUGE amount of housing inventory. But...you have to live in a shithole like Chicago, NYC, Milwaukee etc
Our office building in Boston is supposedly at 60 percent occupancy. The ground floor once full of retail banking and restaurants has two tenants. The unsolvable problem with conversion is there’s inadequate everything for residential- plumbing, electrical, HVAC. Better off razing and starting over…
Despite the October slowdown, new home sales were up 17.7% from the prior year as fewer homeowners put existing homes on the market.
The thing is that everybody and their grandmother was happy for the free money and the free lunch and 20% house appreciation per year, stocks doubling and tripling and quadrupling and Tesla going to the stratosphere together with crypto going into the millions and zillions. It was crazy to put it mildly.
Now the fun inflation is over and the bad inflation is here. Powell and Fed have left themselves no out. They claimed they are data dependent. They had to raise rates. If Powell comes out and gives a lecture how they will definitely, definitely do more rate increases if inflation stays at a high level, this Fed will lose even more credibility. Some people may say they don’t have much credibility to start with but I am not that uncharitable.
Leading up to 2008, the brokers that shorted the housing market figured out all those people who took out low interest 3 to 7 year balloon loans weren't going to be able to afford their payments on the the balloon expired.
There has to be a percentage of people who bought in 2021 and 2022 that took out balloon loans at 4% or under. When those expire and hit 7% that should blow things up quickly and maybe again pop the bubble. Sad really. If you locked in in 2021 or 2022 you're probably in good shape.
Shared responsibility through progressive prices, compensating interest rates, and chaotic asset valuation.
Yawn. Our first mortgage was 13.5%.
We lived within our means and paid it down a bit until we sold it 6 years later, at no profit.
Those cash buyers in Manhattan, I would venture, are largely elites from other countries.
Marx pointed out that capital is a coward, and will flow to where it feels safe. Whether NYC is still safe in that way is an open question.
We took a 30 year in '06 (can't recall the rate) but refied to a 15 year in '12. Keep thinking I should just pay it off but haven't pursued it.
"It is still possible to buy a house today- what isn't possible for most people is buying the house, leasing a new car every 3 years, buying a new i-phone every year, taking a European vacation every couple of years, and eating out every night. However, it has always been like that."
Yep. I saved like a fiend to buy my house.
"I bought my house in late 1998 with a mortgage rate not much cheaper than is available right now (6.5%)."
Yeah. 1994 and 7.5% for me.
Same. 7% in 1997. And, my ex and I were worth NOTHING, but had zero in college debt.
But I bought a house in Elmhurst, IL for $150K. There is a HUGE difference on interest paid at 7% on a 125K loan vs 7% on a $400K to $500K loan today. It's massive.
1997. Borrow $125K at 7% for 30 years. Total monthly P&I is $831.63. First payment $729 interest, $102 principal.
2023. Borrow $400K at 7% for 30 years. Total monthly P&I is $2661.21. First payment $2333 interest, $327 principal.
You think Generation Z can afford that? On top of $100K student debt?
Figure that's an "average" to below average house. Wages have not tripled since 1997.
Let’s be honest. Mortgage rates are near 8%. When Trump left office you could refi your home for under 3%. It costs too much given the high price of gas and food.
“Blogger Birches said...
Move somewhere cheaper.
11/27/23, 10:48 AM”
Not so easy for most. There’s family to consider. Are you going to move to another state and only get to see your kids and grandkids once or twice a year?
Places that are cheaper to live in generally have lower wages. Here in Northern California it’s not unusual for a family to have an income of $300,000 to $400,000. In the Midwest they might get paid half that doing
The same work.
My daughter and her hubby were making such wages in San
Francisco but managed to move 100 miles East where costs are 25% lower and they managed
to keep their Bay Area pay. It was like getting a major pay raise
Birches said...
"Move somewhere cheaper."
But, but, but, Brooklyn is KEWL!
And "Moving somewhere cheaper" that's not the hood means living in flyover country where they shoot guns, and wear MAGA hats, and eat KFC & McDonalds & White Castle. At least they have Starbuck's, though.
None of the candidates running support Hamas.
Where will the dumb-shit youth vote go?
boo hoo.
"It is still possible to buy a house today- what isn't possible for most people is buying the house, leasing a new car every 3 years, buying a new i-phone every year, taking a European vacation every couple of years, and eating out every night. However, it has always been like that."
Yep. Skip the Starbucks drive-thru on the way to work and bring your lunch with you. Make your dinner at home instead of going out. Forego the expensive destination vacation for something inexpensive and closer to home like maybe camping. Do this over the 30 year term of a typical mortgage and you'll save a quarter of a million dollars.
Priorities. Everybody has them.
The reason inflation is what it is - the economic illiterate Soviet left print money. Then they waste it on their money-grubbing pocket stuffing BS programs.
oh fuck
Leftism = economic illiteracy.
I think now is a good time to point out that those crying about not being able to buy a house are the Millennials who 10 years back were saying; "I'll never (ugh!) own a house! I'm going to blissfully spend the rest of my life renting in an urban center!".
I watched numerous houses in my neighborhood get snapped up by investors when the bubble burst. These hipsters doofuses have no one to blame but themselves and I don't want to hear their bellyaching any more.
Ice Nine said...
"The average homeowner is 56 years old. 55% of homeowners are 55 years and older. These people, in very large baby boomer numbers, are very soon going to be moving to smaller homes, nursing homes, or graveyards."
As a 56 year old, I'll just point out that "56" is solidly in the often overlooked Gen X group. The youngest Baby Boomer turns 60 next year.
But I agree with the overall point about the coming lack of available buyers.
At 57, my GI Generation parents downsized to a two bedroom ranch as soon as all of the kids were (almost) gone. (I did college from the new house). They simply didn't need the extra space. And the 800 square feet was the same size as the row house Mom lived in as a kid with her parents and eight siblings.
Contrast that with my Dad's two younger brothers who are part of the Silent Generation in their mid 80s. They built their "Dream Houses" a quarter century ago with 5-6,000 square feet each. But they struggled to sell them with a decent return a few years ago when their poor health meant having to move in with their kids.
I feel bad for Generation Z.
I don't. Gullible bitches and sons of bitches believe anything their professors tell them. Welcome to the real world, assholes. Grow up real fast or die of stupidity.
From "It Will Never Be a Good Time to Buy a House/Maybe in 2030?" (The Atlantic).
Or 18 months after Trump is inaugurated.
All these illegal aliens, they finally got to America just in time for everything to go to shit. Bummer, Amigos. You should have known when all of a sudden it was too easy.
America is an old sofa sitting out on the curb. They wouldn't be giving it away if it was worth anything. But put a sign on it that says $50 and somebody will steal it.
Hopefully they'll look at the America they're squatting in as a fixer upper and not a crack house.
Blogger Yancey Ward said...
Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus.
It's easy to believe. A 2000 square foot house on a quarter acre was $50K. Now it's $400K to $500K.
There are a lot of amortization calculators available. Plug in the math. Wages for these young people have not kept up with cost of housing or the current Biden interest rates.
When I was 24, I was blowing my money on rent, gas, beer, marijuana, cigarettes, and my ex-wife. I was still able to save for my first house at 27. It's not the same today. I am sympathetic to Generation Z. Millennials maybe not so much. They can give up avocado toast and Starbucks and they STILL can't afford housing on top of student debt.
I can understand where the term "OK BOOMER" started.
Yancey Ward said...
"Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus."
I remember when rates went down into the single-digits. My wife and I couldn't get to the bank fast enough to refinance that mortgage. Whooeee! I got an 8.5% loan!
I’m old enough to remember my wife and I buying a townhouse in SoCal in October of 1981, taking on a 16.25% mortgage.
Clean up on Aisle Jimmy Carter!
debt forgiveness will act as the death-nail to our already teetering economic disaster.
From Google: The CPI in 1977 was 60.6 and 300.84 in 2023. $50,000 in 1977 has the same purchasing power as $248,217.82 today.
Comparing interest 7% to 10% interest rates in the late 70s is not a one for one comparison to what young people face in rent and the housing market today. Plus, put healthcare / insurance and the cost of higher education on top of it.
Worst thing in the late 70s was having to pay for a long distance call.
In 1979 a pack of cigarettes was $0.58.
"The thing is that everybody and their grandmother was happy for the free money and the free lunch and 20% house appreciation per year, stocks doubling and tripling and quadrupling and Tesla going to the stratosphere together with crypto going into the millions and zillions. It was crazy to put it mildly."
Yes, everybody and their grandmother loves a good economy (the stock valuations are irrelevant).
My wife, the ever lovely Mrs. JAORE, and I are financially OK to well off. (Although less so than 3 years ago....grrrr).
We've missed many opportunities over the years and mis-timed a few things. First house at 13.125 percent.
But we also did some things right:
When we bult our current home, the developer asked, "How much do you qualitfy for?" I answered, "Twice what I am willing to spend."
We helped our kids get nto good housing in decent neighborhoods. Nope didn't say we paid off the mortgage, but gave them a good start at the downpayment the already saved. And did not sacrifce our future to do so.
Paid more than the minimums on the mortgages. Refinanced as rates dictated.
Retired with no mortgage or any other debt.
Saved from the day we got married. Every raise was split between the tax man, saving for the future and our immediate use.
It adds up.
Rates are high because of Bidenomics.
Homes are expensive because tens of millions of illegal aliens are competing for the same housing as American citizens.
We (not me) voted for this shit...
A house near me was bought in 2019 for $510(ish)K. It's on the market now for $688K.
Property taxes on the house are about $1k/month.
I don't know how people can afford my neighborhood.
Shades of the 1980s.
Bought our first house in the middle of 1979. Mortgage was 14% with 20% down. Somehow we managed.
De-fund the Police + Soros DA's = out of control crime.
Thank you, democrats
Economic idiocy laced with insider corruption = Democrat party.
High inflation = out of control Biden+congressional spending and money printing.
Debt forgiveness = how to keep young morons voting Democrat.
Do people ever stop whining?
No. We just take turns. Your turn next year, maybe.
"I don't know how people can afford my neighborhood."
I hear you, brother.
Anyone wanting a good deal on a new construction 4B/3.5B, 2900sqft house on a quarter acre lot in south Austin, get in touch with me. Heated pool! Four patios! Two ensuite bedrooms with huge soaker tubs, one upstairs, one on ground floor. The damn house would have sold immediately if I'd had it finished in summer 2022 instead of late fall, and now won't sell until probably 2025 or 2026. I am tired of running it as an AirBnB to pay taxes and utilities and upkeep. Althouse, will you pass a DM from any buyers for a reasonable, smallish commission?
Original Mike said...
The federal budget deficit is $1.7 trillion.
rehajm said...
The House controls the purse strings. Those of us trying to support reps trying to reign in spending were vilified a few months ago. We need a GOP victory the critics said…
Since 2001 the Republicans have controlled the presidency and the Senate about half the time. They have controlled the House a good deal more than half the time, and a majority of SC Justices have been appointed by Reps for the entire period. In 2001 Federal expenditures were about $1.86 trillion and the population was about 285 million. That works out to about $6500 per person. In 2022 dollars, that would be a bit more than $10,000.00 per capita. In 2022 Federal revenue was about $4.9 trillion, so if the population was about 335 million, per capita revenue was about $14,600. If we were spending the same amount per capita today as we were in 2021 we would be running a surplus of over a trillion dollars each year, not a deficit of 1.7 trillion. What would interest rates be in that case? What would be the effect on wages and economic growth?
The republicans win a little more than half the elections, but their leadership loses about 95% of the policy fights. No wonder many people think they don’t want to win.
Our first house was financed at 12.5% in 1983. Of course, the house cost $67,000. In beautiful Lawton, OK.
Do people ever stop whining?
Not Crack
Blogger MadisonMan said...
A house near me was bought in 2019 for $510(ish)K. It's on the market now for $688K.
Property taxes on the house are about $1k/month.
I don't know how people can afford my neighborhood
Same in most safe areas of SE WI. But in Sussex our property tax burden is about 1% of gross. Some communities up to 2%.
The house you describe. Let's say it sells for $675K. Someone has $200K to put down (29%). Borrow $475K. 30 Year Fixed. 7.5%. $1000 per month property tax. $2200 per year homeowners insurance.
Total Monthly Payment (P&I, Taxes and Homeowners Insurance Escrowed): First Month breakdown.
Interest: $2968.75
Principal: $352.52
Taxes: $1000.00
Insurance: $183.33
Total Monthly Payment: $4504.60 or $54,055 after tax $$ per year.
I'm sure if young people just sacrifice Avocado Toast and Starbucks they can afford your neighborhood...
So lets see:
Give up Starbucks @ $6 x 365 = $2190
Give up Avocado Toast @ $6 x 365 = $2190
So that's $4380 saved - well done kids!!! We're proud of you!!
Still short of the first month mortgage and only 11 to go.
Perhaps our children and grandchildren should suck it up and give up food all together. We all made sacrifices when we were younger dammit! Quit whining!!
Homeownership is something of a US obsession. The homeownership rate in the US is about 66 percent; by contrast, in Germany, also a wealthy country, it's only about 47 percent.
I'm a homeowner (well, me and the bank). But I could have been happy simply renting, and placing the surplus into some alternative investment. There is no intrinsic reason why the rate of return on residential capital would be higher than other comparably risky assets.
Plus, like many homeowners, I found that as owner, I'm the residual claimant on all adverse events. Basement floods? My problem. Roof leaks? My problem. etc.
Of course, if you rent, the landlord must be compensated for bearing these risks, and that will be reflected in the rent you pay. But you as the tenant have less to worry about on any given day.
Rates are high because of Bidenomics.
No. Home prices corrected a bit after the 2008 crisis, but they've been climbing ever since. I'd say we're due for a massive market correction.
"In 1979 a pack of cigarettes was $0.58."
We're supposed to know what it is now?
'When I was 24, I was blowing my money on rent, gas, beer, marijuana, cigarettes, and my ex-wife.'
Maybe you blew it on your ex-wife.
The others are acceptable...
"Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus interest"
My wife and I bought our first house in 1986 with a 9.5% VA loan. No money down, 30 years fixed rate. We were happy with that rate because we knew just a few years earlier that the rates were much higher, sometimes over 15%. We were less happy a year or so later when the bottom fell out of the market in Colorado Springs due to a perfect storm of bad news. Fort Carson lost one of its brigades, meaning thousands of people were transferred out of the area. Combine that with the Savings & Loan collapse that left a glut of new, empty houses on the market. Further, the aftermath of the Space Shuttle Challenger accident was the Air Force's decision to cancel the Shuttle Operations and Planning Complex at Falcon AFS, leading to a loss of about 1500 jobs. Our house quickly lost about 15% of its value and we were upside down on our mortgage. I was coming up for reassignment in 1989. There was still a glut of empty and foreclosed houses on the market, so selling any house was going to be a challenge. We couldn't afford to pay off the mortgage shortfall and no one was talking about any bail out for people like us, so I volunteered for a remote assignment to the Aleutians for a year with a guaranteed follow-on assignment back to Colorado Springs. I did that to give the market time to correct itself and it worked. The local market finally turned around in 1991.
"Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus interest"
My wife and I bought our first house in 1986 with a 9.5% VA loan. No money down, 30 years fixed rate. We were happy with that rate because we knew just a few years earlier that the rates were much higher, sometimes over 15%. We were less happy a year or so later when the bottom fell out of the market in Colorado Springs due to a perfect storm of bad news. Fort Carson lost one of its brigades, meaning thousands of people were transferred out of the area. Combine that with the Savings & Loan collapse that left a glut of new, empty houses on the market. Further, the aftermath of the Space Shuttle Challenger accident was the Air Force's decision to cancel the Shuttle Operations and Planning Complex at Falcon AFS, leading to a loss of about 1500 jobs. Our house quickly lost about 15% of its value and we were upside down on our mortgage. I was coming up for reassignment in 1989. There was still a glut of empty and foreclosed houses on the market, so selling any house was going to be a challenge. We couldn't afford to pay off the mortgage shortfall and no one was talking about any bail out for people like us, so I volunteered for a remote assignment to the Aleutians for a year with a guaranteed follow-on assignment back to Colorado Springs. I did that to give the market time to correct itself and it worked. The local market finally turned around in 1991.
--- Brooklyn has 1.1 million housing units. Just a dozen of them seemed to fit our requirements and were sitting on the market. All of the options were too expensive.
I just cannot imagine what you DO in such a situation!
I've got it. Write an article and get paid $150 for it. Someone might see it and phone us up. We are so worthy, there is literally nobody more worthy than me, my dogs, kids, and.... oh, yes, well of course, my husband, too! Of course!
Certain house prices are excessive for what they are - but they are in the desirable places for the streaming TV, $1k+ phone, big screen 4k TV, generation.
Interest rates are a big killer, though. Rough napkin math puts a 4 to 8% interest rate increases monthly payment by about 50%.
So, I can sympathize to a certain extent but the shortsighted whiny attitude while playing on their phones suppresses any kind of desire to help, and tell them to keep whining and see where it gets them.
Homes are expensive because tens of millions of illegal aliens are competing for the same housing as American citizens.
The median home price in the U.S. is somewhere around $400,000. I doubt that many illegal aliens are competing for the same housing as American citizens.
This is the uncomfortable equilibrium the market finds itself in today. Nobody’s selling because nobody’s buying.
Not sure I'd call the present market situation an "equilibrium."
It's more like a moment of market disequilibrium due to exogenous interest rate related transaction and replacement costs for buyers and sellers, respectively.
The market IS responding, even if it's still a tough situation for most. Prices are coming down.
I've been following all of this closely because we are within one-two years of retirement. I focused on paying off our house early and did so two years ago---it would sell for something between 450K and 550K at this point. Meanwhile, after retirement we might up and move to the Dallas area to be with our daughter, her husband, and our grandson. I'd started to give up on that plan because the house prices were skyrocketing in her area and I didn't think we could get a nice house for cash. Now, it's looking more possible because their prices are moderating and the builders are no longer having long waiting lists of eager buyers for their upcoming developments.
"Perhaps our children and grandchildren should suck it up and give up food all together."
Or you could move to someplace less expensive. I grew up in SoCal in the 60s-70s, no way I'd be buying a house there when I was bringing home $90/week. So I left. I found a place to rent where I could save some money and eventually, I could afford to buy. My house is paid off now, but my old mortgage payment was $620/mo. I just got my 2024 property tax bill- $720. It was $950 last year. BTW... those amounts are for the whole year, not just one month.
"We all made sacrifices when we were younger dammit! Quit whining!!"
Some people do.
"The median home price in the U.S. is somewhere around $400,000. I doubt that many illegal aliens are competing for the same housing as American citizens."
You don't know the territory. My wife sold her dad's 2800 sf house for $425K a few years ago and three illegal Chinese immigrant families moved in to work at a new local Chinese restaurant. (One of them told me about coming into O'hare with the family on tourist visas.)
Neighborhoods herein Silicon Valley sell fifty and sixty-year-old homes for 1-2 million. Takes about a week or so, and usually over asking price. Bidders write letters to homeowner saying pick me, pick me.
Interesting in that geezers in the 'hoods too old/can't afford maintainance. Middle age keep the homes up but not much remodeling.
When home goes up for sale, owner moves out, contractor comes in and remodels entire home, gets paid upon sale.
So, you have geezer homes with flaking paint, old roofs, weeds in the front yard.Middle age owner homes well kept but relatively old fashioned .Modern , newly remodeled homes owned by millionaires all on the same block. Not to mention the occassional complete teardown, new build.
If high tech really starts moving out, the area will turn back into affordable, but with much fewer jobs, just like the areas formerly dependent upon steel mills, auto production , and other manufacturing .
I've learned that trying to predict the movements in house prices over time is a mugs game. The market is very likely to surprise you.
" I doubt that many illegal aliens are competing for the same housing as American citizens."
Where are they living, then? Once they have a pending asylum claim, which Joe Biden's Border Patrol hand out like candy at the border, we gotta house them, let them work. Where do they go?
The reason we need all of these illegals is to force down wages at the bottom. It's Bidenomics. The benefit of these lower wage service workers flow to affluent Democratic constituencies, of course. People in red states don't have nearly so many topiary trees, or strings of polo ponies, you know, the kinds of things that require lots of cheap labor.
FF (5:36 PM) said "I doubt that many illegal aliens are competing for the same housing as American citizens."
OK, FF, here's a basic econ 1-A truth: low-skill immigrants compete for rental housing with low-income American citizens, which drives up rent for the poorest Americans. The higher rents, in turn, make investing in such rental properties more attractive. So investors start scooping up lower cost properties as investments, thereby
reducing available inventory for starter home ownership. Less inventory results in higher costs for starter homes, pushing American citizens out of the market, which just happens to be exactly the problem we are discussing here.
But thanks for insightfully pointing out that undocumented day-laborer immigrants aren't competing with American citizens purchasing million $1-5M + homes in the Bay Area. We never would have been able to figure it out otherwise!
@ OG Mike -- It would make more sense to tighten fiscal policy since monetary policy isn’t very effective in managing demand.
'When I was 24, I was blowing my money on rent, gas, beer, marijuana, cigarettes, and my ex-wife.'
What's the saying? I spent most of my money on wine, women and song. The rest was wasted.
Thank GOD our house is paid off (and cars to.)
FJB and the Democrat party for what they have done to the USA in the last 3 years.
"It would make more sense to tighten fiscal policy since monetary policy isn’t very effective in managing demand."
No kidding.
Peter Spieker: "The republicans win a little more than half the elections, but their leadership loses about 95% of the policy fights. No wonder many people think they don’t want to win."
LOL
Face reality: the republican leadership is not actually "losing" any policy fights. They and their dem allies are winning those policy fights against the republican base and delivering ever more pathetic Failure Kabuki Theater in doing it.
Unknown said:
``Homeownership is something of a US obsession. The homeownership rate in the US is about 66 percent; by contrast, in Germany, also a wealthy country, it's only about 47 percent.''
Out of curiosity, I looked at the home ownership by country data from wiki and compared it with the GDP per capita data from wiki.
The first thing to note is that Germany has per capita income about 82% of the US. Rich maybe, but it is still nearly a 20% pay cut. Germany is actually quite low at 49.1%, with only a few countries below it: Honk Kong 22%, Nigeria 25%, UAE 28%, Switzerland 42% are the only countries out of the 71 with home ownership that are lower than Germany. So maybe Germany is the outlier, not the US.
The second thing to note is that the countries with really high home ownership countries are Laos, Romania, Kazakhstan (all above 95%), Cuba, Vietnam, China, and Russia are all around 90%. Poland (87%) and Lithuania (89%) are the highest ``Western European" countries on the list. Canada & Australia are next to the US, all around 66%. Mexico at 80% is above the US.
Third, if you do a correlation with per capita GDP, the correlations are negative: about -0.3 for any of the three of IMF, World Bank, and CIA estimates of GDP per capita. Some countries have high correlation between GDP per capita and home ownership, i.e., Nigeria is low at both, Luxembourg, Norway, and Singapore are high at both, but lots of poor countries have high homeownership and lots of rich countries have low homeownership. Since neither home ownership nor GDP per capita statistics change really rapidly, it has probably been this way for a long time.
The point is that home ownership is not positively correlated with per capita GDP, so pulling out a specific example does not tell us much about the general relationship between home ownership and income.
The median home price in the U.S. is somewhere around $400,000. I doubt that many illegal aliens are competing for the same housing as American citizens.
Think that through for a sec. You are saying illegals are competing with poorer American citizens for a limited supply of shelter? And that shouldn't affect homes in the $400k range?
Once Biden gets his student loan forgiveness program fully implemented, there will be plenty of extra money available to bid up housing prices even further.
If you want to move, maybe you can rent your $600K house (financed at 2.5%) for three times the amount of your mortgage. Then, maybe buy similar house elsewhere for 7%. Are you really as financially immobile as you think?
"The median home price in the U.S. is somewhere around $400,000. I doubt that many illegal aliens are competing for the same housing as American citizens."
Then you would be wrong. They are.
"Sometimes I think moron is too generous a term to describe our current government policy makers."
Try "enemies".
"Homes are expensive because tens of millions of illegal aliens are competing for the same housing as American citizens."
...riiiiiiiiiggggghhhhht.
Hard to believe people once took out mortgages in the late 1970s and early 1980s that were 10% plus.
I took out a mortgage in 1995 that was 8%. These rates are a regression (progression?) to the mean.
"'The median home price in the U.S. is somewhere around $400,000. I doubt that many illegal aliens are competing for the same housing as American citizens.'
"Then you would be wrong. They are."
How, exactly, does that work? How do illegal immigrants obtain mortgages? How could they even qualify for mortgages assuming there were no other legal impediments? Assuming there are some rare illegal immigrants who have the cash means to somehow buy $400,000 homes, (a fantastic notion!) and who can somehow avoid completing all the legal documents and requirements involved in buying homes, (another fantastic notion!),how many such magic illegal immigrants can there be such that they somehow skew the home buying market?
In other words, it's not a thing.
Or...provide the stats and data that support the assertion.
Robert Cook said...
("'The median home price in the U.S. is somewhere around $400,000. I doubt that many illegal aliens are competing for the same housing as American citizens.')
"Then you would be wrong. They are."
( How, exactly, does that work?)
Explained for simpletons by Moondawggie at 7:30 p.m.
"Debt forgiveness for none. Lenders and lendees need to be confident in a stable environment for a market to work."
Well, as the saying goes, debts that can't be paid won't be.
'(How, exactly, does that work?)'
"Explained for simpletons by Moondawggie at 7:30 p.m."
He (or she) conveniently doesn't explain how illegal immigrants can even apply for low-income housing, much less pay for it. If they are not citizens and have no visitor's visas or other documents sanctioning their presence, how can they have bank accounts, how can they sign leases for (even low-cost) apartments or houses, etc.? Without stats and data that show this is a thing, I'll assume it is the usual calumny piled on illegal immigrants as being the cause of all (or a significant percent) of our nation's housing and economic woes.
Me? I think it's just the greed of the real estate and financial interests.
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