How are people affording these crazy home prices?

[CoStick]

What compromise could a young first time homebuyer possibly make to compete with a hedge fund with billions of dollars of borrowed capital? Guess they better quit eating that avocado toast

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Where my wife and I bought our first home they probably wouldn’t want to purchase there. Undesirable area, it became desirable pretty quickly, but you buy where you can afford if you want to own.

 

[go_deep]

Having a family is awesome, but there is a reason most people have 2-3 kids and call it a day. They want to be able to provide for them, put a roof over their head, maybe send them to college, maybe pay for a wedding. There are many people who would love nothing more to have kids but cant for whatever reason, then a segment of our society who has no business having kids (Im not talking about the plumber) can get pregnant by just looking at each other.

If you don't think that having kids should be something considered from a financial responsibility, that is sad. I'm afraid too many people in the world share your thoughtlessness, and that is a big part of the problems we have in society today.

Not my place to judge, that's not thoughtlessness, that's actually being thoughtful for keeping my nose out of somebody else's life.

Lots of countries do child restrictions on families, this great nation isn't one of them, and I'm damn glad a guy like you isn't in charge to rule us how you see fit.

 

[amassi]

Where my wife and I bought our first home they probably wouldn’t want to purchase there. Undesirable area, it became desirable pretty quickly, but you buy where you can afford if you want to own.

Us as well, a 7 mile move saved us 100k but I'm forever spoiled using zero down VA loans. We have many colleagues and friends that can't afford to buy here and can't afford to leave good jobs to move to other areas. What's really sad is the landlords locally are raising rents astronomical amounts when leases run up. Our good friends rent, have been in the same home for 8 years while their kids finish school- thier twins are going to be seniors and their rent just went up 1100 a month so it's going to cost them 10k more to get those kids graduated.

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[Where's Bruce?]

I waited for a housing market crash (aka: rebalancing) and then bought. Buying during a time when the market is peaking is a recipe for being upside-down in the future. JMO...I could be wrong.

 

[CorbLand]

I waited for a housing market crash (aka: rebalancing) and then bought. Buying during a time when the market is peaking is a recipe for being upside-down in the future. JMO...I could be wrong.

Where did you get that crystal ball to know when a market is at its bottom and at its peak?

How many times have people said that the market is at its peak? My grandpa use to tell me stories of how the world was ending when fuel went from 25 cents to 35 cents…

****, I would settle for housing prices to be double their peak in 2007.

 

[go_deep]

Where did you get that crystal ball to know when a market is at its bottom and at its peak?

How many times have people said that the market is at its peak? My grandpa use to tell me stories of how the world was ending when fuel went from 25 cents to 35 cents…

****, I would settle for housing prices to be double their peak in 2007.

I'd say when people are buying something like its a black Friday sale, that's a good indicator not to buy.

 

[Where's Bruce?]

Where did you get that crystal ball to know when a market is at its bottom and at its peak?

How many times have people said that the market is at its peak? My grandpa use to tell me stories of how the world was ending when fuel went from 25 cents to 35 cents…

****, I would settle for housing prices to be double their peak in 2007.

I'm old. Seen it many times. When my own home value is increasing in value 100K every 6-8 months I know the reckoning is coming. It's unsustainable. Add the impact of inflation/recession and the cost of everything going sky high and the Democrat-built financial time bomb is destined to detonate within a 1-3 years. That's soon when you're comparing it to a 30 year loan. Thus the current sales slump. https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/

 

[tony]

My 2 bedroom apt is $350.00 a month. Course it’s a 350 apt. Small, plain, smoked in, and dingy. Some paint and a good cleaning took care of that. I don’t need much, place to sleep, cook, shower and shit.
Im a nurse, single, have day to day bills and a truck note,only kid is grown and gone.
I make good money. Yet at 53, I don’t feel like I can afford, nor want to buy a house at these prices.
Girlfriend,her friend and her husband live in Colorado, she came out to visit my GF. They are in the medical field as well. $500,000 house, believe she said they pay 3k a month for the place.
I thought the anxiety was bad when I bought my truck last year. I can’t even imagine paying that kind of money for a house each month.

 

[Bubblehide]

My 2 bedroom apt is $350.00 a month. Course it’s a 350 apt. Small, plain, smoked in, and dingy. Some paint and a good cleaning took care of that. I don’t need much, place to sleep, cook, shower and shit.
...

That same apartment here would rent for 2500.00, maybe more.

 

[Billinsd]

Where my wife and I bought our first home they probably wouldn’t want to purchase there. Undesirable area, it became desirable pretty quickly, but you buy where you can afford if you want to own.

My dad was a developer starting in the 50s and him and my mom first lived in a bad area of LA. Norwalk. The area has gotten both more expensive and dangerous, lol. Housing prices have been insane in the affluent areas of coastal Southern California since the 70s. Those of us born and raised here were taught or learned you first buy a tiny house in a hell hole and buy and sell your way up to a nice home in general. You also need to make a lot of money and be smart with it. However, here the prices generally don't fall. They fell in the 80s when engineering military jobs moved away and what 10 or so years ago, but they go back up quickly. Phoenix and SLC are a roller coaster, have been for decades.

 

[darcytribe]

Where did you get that crystal ball to know when a market is at its bottom and at its peak?

How many times have people said that the market is at its peak? My grandpa use to tell me stories of how the world was ending when fuel went from 25 cents to 35 cents…

****, I would settle for housing prices to be double their peak in 2007.

Here’s an interesting article/chart related to inflation adjusted housing prices if interested:

Inflation Adjusted Housing Prices

Inflation-Adjusted Housing Prices show that housing prices don't "always go up" giving an unbiased look w/o inflation clouding the picture.

inflationdata.com

if accurate we are probably due for a significant correction. Like Bruce said… if you’ve been around long enough you’ve seen housing price booms before.

 

[darcytribe]

My dad was a developer starting in the 50s and him and my mom first lived in a bad area of LA. The area has gotten both more expensive and dangerous, lol. Housing prices have been insane in the affluent areas of coastal Southern California since the 70s. Those of us born and raised here were taught or learned you first buy a tiny house in a hell hole and buy and sell your way up to a nice home in general. You also need to make a lot of money and be smart with it. However, here the prices generally don't fall. They fell in the 80s when engineering military jobs moved away and what 10 or so years ago, but they go back up quickly. Phoenix and SLC are a roller coaster, have been for decades.

True, different markets do their own unique variables.

 

[Wags]

We're in a position to buy a rental but we're waiting. I'm not paying the current prices and interest rates. I've got time, no need to over pay.

 

[amassi]

My dad was a developer starting in the 50s and him and my mom first lived in a bad area of LA. Norwalk. The area has gotten both more expensive and dangerous, lol. Housing prices have been insane in the affluent areas of coastal Southern California since the 70s. Those of us born and raised here were taught or learned you first buy a tiny house in a hell hole and buy and sell your way up to a nice home in general. You also need to make a lot of money and be smart with it. However, here the prices generally don't fall. They fell in the 80s when engineering military jobs moved away and what 10 or so years ago, but they go back up quickly. Phoenix and SLC are a roller coaster, have been for decades.

Well bill as they say, the times they are a changing.
Those tiny houses in hellholes are owned by investors and funds and they aren't for sale. No developers are building small first time homes so what's a prospective homeowner to do- they pay rent, often times more than my mortgage and they fall further and further behind those lucky enough to already be in.

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[amassi]

Here’s an interesting article/chart related to inflation adjusted housing prices if interested:

Inflation Adjusted Housing Prices

Inflation-Adjusted Housing Prices show that housing prices don't "always go up" giving an unbiased look w/o inflation clouding the picture.

inflationdata.com

if accurate we are probably due for a significant correction. Like Bruce said… if you’ve been around long enough you’ve seen housing price booms before.

Another article that sites the crash of 2008 as evidence of impending doom. Mortgages are exponentially more risk adverse than they were then. Inventory is lower than it was then et el.


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[CorbLand]

Here’s an interesting article/chart related to inflation adjusted housing prices if interested:

Inflation Adjusted Housing Prices

Inflation-Adjusted Housing Prices show that housing prices don't "always go up" giving an unbiased look w/o inflation clouding the picture.

inflationdata.com

if accurate we are probably due for a significant correction. Like Bruce said… if you’ve been around long enough you’ve seen housing price booms before.

Corrections are always imminent. It’s why people can toot that horn for years and always be right. What you never hear is people that predict the peak. Most of the people that are claiming a correction is coming have been for 5 years. Even if they are correct and housing fell 50% today, prices would be the same as they where 5 years ago. Most people that have been claiming correction since then will run around claim how they were right and yet, it’s the same.

Real estate is a great hedge against inflation. Even if you don’t make money on it over 30 years, it beats what a bank would have given you.

 

[Yoder]

What compromise could a young first time homebuyer possibly make to compete with a hedge fund with billions of dollars of borrowed capital? Guess they better quit eating that avocado toast

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I had to relocate in 2005 to NY or lose my job. A POS trailer in a trailer park near my job was selling for $200k at the time. I couldn't even afford that. I compromised. I bought a house for $150k 75 miles away in PA. The house was a piece of crap and only 850 square ft. It was in a great neighborhood in a good school district. It took quite a bit of money to fix the place up and my commute sucks but I had a nice place to raise my kids. I know I'll never make a profit on this house but in three years it will be paid off. That kind of compromise. Move, commute, get more jobs.

 

[Crghss]

What is a correction? Maybe we’ll see a slight dip of 5-10%, maybe.

I don’t see a major “crash” coming. This surge in housing Prices is fueled by house shortage and migration. People from NY, CA, IL selling their property and using cash to purchase elsewhere. Bad loans are not part of this surge that I can see.

I do see a big slow down in buying and stagnation of prices.

 

[z987k]

What is a correction? Maybe we’ll see a slight dip of 5-10%, maybe.

I don’t see a major “crash” coming. This surge in housing Prices is fueled by house shortage and migration. People from NY, CA, IL selling their property and using cash to purchase elsewhere. Bad loans are not part of this surge that I can see.

I do see a big slow down in buying and stagnation of prices.

Bad loans aren't like they were in 08, but people were gobbling up those 3/1 and 5/1 arms in the last 2 years with the far less than 2% interest rates so they could wildly overpay for a house they couldn't actually afford.
We'll see just about every one of those for sale around 2024 and 2026, 8-10 months after the rate adjustment from 1.3% to 6.5%. Shortly after, they'll be foreclosed on because you can't sell a 350k home for the 500k note you have on it.
I wouldn't call them NINJA loans, but it's still likely a future foreclosure. Right now about 4% of all loans are ARMs. Thankfully that's rather small, but 4% of the mortgages written in the last 2 years is about 1.6 million.

 

[z987k]

Prices are already correcting here. We don't have the problem of mass immigration from CA, IL and NY. It's too cold for them here. Which is perfect. The cold keeps the bad people away. The crazy low interest rates did get a lot of people to buy or move into something bigger, which did drive prices up, but we're not seeing "immigration".
Homes that ballooned into the 800k and up range almost all have dropped over 100k already. Most still are not selling. The stuff over 1.5 that were selling just 3 months ago I'm seeing 2-400k drops in prices. No one's even looking at them let alone putting in offers. Stuff below 500 is actually selling at it's appraised value again.