How are people affording these crazy home prices?

[TheGrayRider]

Just bail everyone out. Problems solved. Remember Chrysler and General Motors a few years back. “Too big to fail.”

 

[bozeman]

 

[CorbLand]

My guess would be those who knew they were going to foreclose in the future decided to sell while prices were high and at least get their equity out of the deal.

We are not going to see the same foreclosure numbers that we did in 2008 by a long shot but we will see an increase no doubt.

I agree that we are going to see an increase but banks account for foreclosures. If the shock does not exceed what they have accounted for, they will not be forced to liquidate homes quickly.

I don't think we are going to see the shock like people seem (not specifically on here) think. Even if we see a 10-15% pull back, that difference will quickly be eaten up in a .5-1% interest rate hike. That hike is highly probable.

I ran the numbers for what we got. Interest rates are up about .5% since we locked and in order to break even (monthly payment using this for affordability), we would have had to get our home for ~4.5% cheaper.

I vote someone starts a pool and we can all throw some cash on what we think will happen. Winner takes all.

 

[rickjames80]

Exactly.

A few generations back, it was normal to pay something like 40K for a first house. Now there’s a generation being forced out of home ownership by prices that have vastly outpaced income levels, and they’re being told that the solution is to simply spend less on avocado toast or whatever.

This smug scolding completely ignores the continuous massive accumulation of wealth at the top during the last four decades, which is causing the market to be increasingly dominated by gigantic capital firms, whose resources are impossible for a normal working person to compete with.

Meanwhile, money that would have previously gone into equity for new homeowners is instead diverted into rent that further enriches the wealthiest, allowing them to buy up even more properties. It’s a feedback loop that will only further squeeze out new buyers if left unchecked, regardless of how frugally they live.

This self-reinforcing regression to property-distribution inequality not seen since feudalism is a structural problem, not an individual one.

I don't think I could have said it any better.

 

[11boo]

More doom/gloom. Good news is bow season is 4 weeks out.

NEWSER) – Americans owe more money than they ever have before. The New York Federal Reserve on Tuesday shared that household debt increased to $16.15 trillion in the second quarter. It's the first time it's surpassed the $16 trillion mark, and represents a 2%—or $312 billion—rise over Q1, reports CNBC. In a press release, the NY Fed notes the amount owed is $2 trillion higher than at the end of 2019, just prior to the start of the pandemic. About two-thirds of the rise ($207 billion) was due to an increase in mortgage balances, which now sit at $11.4 trillion.


Credit card debt jumped by $46 billion in the quarter, and $100 billion over the last year. That's a 13% annual increase—the biggest in 20-plus years. Also on the credit card front, CNN reports that over the quarter, Americans opened 233 million new card accounts; that's the most since 2008. Auto loans balances were up $33 billion for the quarter, and other miscellaneous balances (retail credit cards, consumer loans) were up $25 billion. The one thing that didn't really budge: the $1.59 trillion student loan balance. All told, non-housing balances grew by $103 billion; that's the largest increase since 2016.

As for who is incurring the debt, an accompanying blog post from NY Fed researchers digs in: "Household debt is held overwhelmingly by higher-score borrowers, even more so now than it has been in the history of our data. ... The vast majority of mortgage balances are now held by borrowers with high credit scores. ... If we exclude mortgages and look at all other types of debt, we see a shifting of balances toward higher credit score borrowers, albeit a less dramatic one." CNBC notes that at the end of the quarter, 2.7% of debt was in delinquency; that's almost 2 percentage points lower than it was as the pandemic began in Q1 2020.

 

[go_deep]

Several comments about lenders haven't given bad loans like '08. If people can't pay their mortgage, they can't pay their mortgage, doesn't matter how good the loan looked at the time.

 

[amassi]

More doom/gloom. Good news is bow season is 4 weeks out.

NEWSER) – Americans owe more money than they ever have before. The New York Federal Reserve on Tuesday shared that household debt increased to $16.15 trillion in the second quarter. It's the first time it's surpassed the $16 trillion mark, and represents a 2%—or $312 billion—rise over Q1, reports CNBC. In a press release, the NY Fed notes the amount owed is $2 trillion higher than at the end of 2019, just prior to the start of the pandemic. About two-thirds of the rise ($207 billion) was due to an increase in mortgage balances, which now sit at $11.4 trillion.


Credit card debt jumped by $46 billion in the quarter, and $100 billion over the last year. That's a 13% annual increase—the biggest in 20-plus years. Also on the credit card front, CNN reports that over the quarter, Americans opened 233 million new card accounts; that's the most since 2008. Auto loans balances were up $33 billion for the quarter, and other miscellaneous balances (retail credit cards, consumer loans) were up $25 billion. The one thing that didn't really budge: the $1.59 trillion student loan balance. All told, non-housing balances grew by $103 billion; that's the largest increase since 2016.

As for who is incurring the debt, an accompanying blog post from NY Fed researchers digs in: "Household debt is held overwhelmingly by higher-score borrowers, even more so now than it has been in the history of our data. ... The vast majority of mortgage balances are now held by borrowers with high credit scores. ... If we exclude mortgages and look at all other types of debt, we see a shifting of balances toward higher credit score borrowers, albeit a less dramatic one." CNBC notes that at the end of the quarter, 2.7% of debt was in delinquency; that's almost 2 percentage points lower than it was as the pandemic began in Q1 2020.

Naw just the fed trying to justify their next move.
13% increase when adjusted for inflation isn't bad, especially thay its held by more responsible borrowers and 2% lower than in 2019


Sent from my SM-G991U using Tapatalk

 

[Crghss]

I am sure investors are buying houses as investments and rentals. But where I live people where buying homes with cash. With crime and politics of Northeast they took their money too the southeast. Demand has dropped off but our home prices are pretty much stable. Can’t foreclose on a cash purchase. I expect too see a small pull back but not much.

The unknown to all this is how committed is Corporate America to remote work? If all the folks working in their livings are forced to move closer to their Company campus then that will put downward pressure on home prices in remote/rural locations. Which was one reason, of many, for driving home prices up.

The real downside to all this is builders are not building single family homes but high density housing. Tearing down shuttered strip-malls and putting up apartments or townhomes. But the surrounding infrastructure was not built to support that many people.

Or worst yet more farms are turning in to suburbs.

 

[SurfAMHuntPM]

I’m blown away this thread started in 21’ and it still holds.
:/

 

[BullsDeep]

I’m blown away this thread started in 21’ and it still holds.
:/

It's nearly a year old.

 

[roymunson]

because if you don't now, you'll wish you did.

 

[11boo]

I don’t know the answer, they are still blowing out houses at crazy $ for my area pricing. Interest ticked up some more, lots of credit cards getting maxed out.

But like the evening news, I’ll close on a positive note.

Archery elk is only 38 days away.

 

[Michael Rankin]

My house dropped about $150k between June 2022 and February 2023

Went up about $50k, then started dropping again.

Things have definitely changed in the PNW since this thread started

 

[Ferrulewax]

My house dropped about $150k between June 2022 and February 2023

Went up about $50k, then started dropping again.

Things have definitely changed in the PNW since this thread started

Take all your people back, the southeast doesn’t want them. Our prices have stabilized, but definitely not dropped, and they are putting them up as quick as they can.

 

[Beendare]

I’m blown away this thread started in 21’ and it still holds.
:/

yeah but there are some common sense reasons;

1) In the 2008 crash, there were a much higher % of Adjustable rate mortgages….now not so much.
2) A huge % of homeowners are locked in to low rate mortgages, which creates a scenario where nobody wants to sell buoying home prices and helping new home builders.
3) the easy money of the last decade is buoying corporations with cheap $$$ in their coffers thus the job market is still relatively strong.

The commercial RE market is breaking…and corp profits are getting hit In some industries…..if that accelerates and we see more layoffs…..thats when we will see home prices fall But my bet is it won’t be another 2008 drop….

 

[Beaveralum]

Where i’m at in OR prices have held and even continued to rise. I just sold this year and made 10k more than I would have this time last year. Now i’ve got my fingers crossed that interest rates drop soon because going from 3% to the high 6’s really sucks….

 

[Bluefish]

The only way I did it was I happened to hit the market to my advantage, bought a second house in 19, sold the first house in 21. Just in that time made $150k in increased value. Also sold for 3x purchase price of house 1. Only took 22 years. Now no Mortgage.

For reference, other places on our block have been for sale for a year, price is just too high for todays market. From what I can see the market has pulled back from its peak in 21/22. It’s not back to 19 prices and probably never will be without a huge crash.
while there is some big $$ around there is a limit for what people will spend. One thing keeping prices up is limited supply. With higher prices and interest rates people can’t move easily. Makes it so few are selling. That alone keeps prices high. It also depends on location. Prime locations are staying hot, other less desirable areas are not quite as strong.

 

[TheGDog]

It's a multi-generational plan up in SoCal man. Somewhere along the family tree before you... an ancestor had to realize he'd have to "spend below his means" in order to post-humously be able to kick you down some help with that down payment. Then it becomes your job, nay Duty! to try to improve the net trajectory of your seed as best you can, by capitalizing on that blessing from beyond the grave.

 

[Pony Soldier]

The problem is not selling with these ridiculous prices but what you have to pay to replace it. I keep telling my wife that the place is for sale for $12M until somebody offers and then it is $14 M.

Our assessment went up $100,000 last year and $150,000 this year The timber land went up $75,000. I can hardly wait to see what the taxes come in at.

My 1963 single wide trailer doubled in value. I wonder if it will be easier to heat now. This stuff doesn't make any sense.

 

[SurfAMHuntPM]

yeah but there are some common sense reasons;

1) In the 2008 crash, there were a much higher % of Adjustable rate mortgages….now not so much.
2) A huge % of homeowners are locked in to low rate mortgages, which creates a scenario where nobody wants to sell buoying home prices and helping new home builders.
3) the easy money of the last decade is buoying corporations with cheap $$$ in their coffers thus the job market is still relatively strong.

The commercial RE market is breaking…and corp profits are getting hit In some industries…..if that accelerates and we see more layoffs…..thats when we will see home prices fall But my bet is it won’t be another 2008 drop….

I’m following; considering $500k fixer uppers ( as in full bath and kitchen remodels) lucky to be sitting on proceeds from a profitable home sale but the ongoing appreciation & new rates eat all of the equity.
I’m very rational but I can’t make sense of cost per sq ft most anywhere.