How are people affording these crazy home prices?

[5MilesBack]

In the USA the CBO predicts that we'll add nearly 40 million people in the next 20 years

And that's just from illegal migration.

Recently around here I've seen homes go on the market for $1.5 million and are under contract two days later. Then some homes in the $1 million range sit there and some sell. Similar for the under $750k homes.......some selling, some not. Some of those selling I kind of scratch my head at because they're nothing special, and others at lower price points seem like better houses/lots/locations. You just never know.

 

[cptorrez3]

I moved from 75 degree weather to 100 plus to afford my house. Paid 530 out the door and got in at 3.75% not sure how it will play out in the future but for know we got the mortgage handled, we will see where the value goes

 

[Boarmaster]

The housing market always cycles. Always for different reasons and values fluctuate to different levels Up and down.

Due to inflation you may never be able buy that house for what you could in 2010 but you may be able to buy it at 2018 prices at some time. Where you live matters as well.

Much is dependent on the economy in your area. When peoples incomes go down they cant pay for what they once could easily. Other factors are insurance and obviously interest rates. Insurance is a big wildcard. If someones insurance suddenly doubles and their adjustable interest rate adjusts up a few percentages all in a short time they could find themselves unable to keep up.

If alot of people end up in this situation at one time there will be a lot of inventory for sale. This of course makes new hones less attractive so builders slow down. The new home industry employs a lot of folks directly and indirectly. A slow down in new home building means a reduction on income. It creates more people that cant afford their payments.

 

[TheGDog]

I've thought and wondered.... It almost seems like these yahoos get into this habit of creating inflation just so homeowners will be enticed to make dumb decisions in terms of taking out a loan upon their homes new-found equity, you know... like maybe they're doing it in order to also have the side effect of it urging all these peoples wives into doing things like getting their kitchen remodeled, etc. thus creating some perceived economic growth they can tout or something.

 

[bojangles808]

i don't think prices are dropping anytime soon bc if you are locked in at > 3% you probably aren't moving unless there's some extreme circumstance. That's keeping inventory low, keeping prices still the same. when rates do drop they'll be a run and prices will just go up because there's still limited inventory vs demand. and if you are at 3% it's still probably not worth it. Just glad we bought our place in 2017.

 

[Yoder]

The older I get, the more I think a house is a way to enslave you. It's the main expense that you constantly have to repair and invest money in. If you think you own it, stop paying the property tax and see what happens. It's a false dream of freedom that drives the economy. The other big thing is medical insurance. Medical insurance keeps people working until they can get Medicare. Otherwise, I know a lot of people who would have retired already. Be a good ant and go to work.

 

[bozeman]

@Yoder I disagree.......the enslavement, as you call it, only comes when you want a house as a showpiece for others to see that you cant truly afford. Having a modest house that can be paid off (and it can be) because you dont have 9 cell phone bills, 4 car payments for vehicles you dont need (another showpiece) and throwing money at frivolous things. There are other options for health care such as cost sharing that many take advantage of. Think outside the box and you dont have to be an 'ant'..........

 

[Yoder]

My house will be paid off next year. I live well within my means. I just know a guy who got divorced and had to sell off everything. He had a $600k house, didn't make much off of it since he remortgage it. He now rents a 2 bedroom apartment. I'm mowing, painting, replacing decks, getting my driveway sealed. He does whatever the hell he wants.

 

[wind gypsy]

The older I get, the more I think a house is a way to enslave you. It's the main expense that you constantly have to repair and invest money in. If you think you own it, stop paying the property tax and see what happens. It's a false dream of freedom that drives the economy. The other big thing is medical insurance. Medical insurance keeps people working until they can get Medicare. Otherwise, I know a lot of people who would have retired already. Be a good ant and go to work.

As opposed to paying the same each month in rent and having no equity?

 

[WiscoHoundsman]

This might be true for the average American family, but this is Rokslide... We each need 2 bedrooms converted to gear rooms for all the stuff everyone here recommends. Hell, I need to build another shed to be able to store my soon to arrive tiller that I didn't know I needed

I am also trying to figure out where mine is going!

 

[Happy Antelope]

As opposed to paying the same each month in rent and having no equity?

Well Rents go up also, the mortgage won't. Your mortgage will seem cheap in 20 years, etc.

 

[Dos Perros]

As opposed to paying the same each month in rent and having no equity?

It's not as cut and clear as some people think.

How many people pass on better jobs because it's too far from their home? I know I have. The mortgage kills flexibility.

I made less money on my last home sale than the realtors and contractors did, and I carried the risk all that time.

 

[ODB]

My house will be paid off next year. I live well within my means. I just know a guy who got divorced and had to sell off everything. He had a $600k house, didn't make much off of it since he remortgage it. He now rents a 2 bedroom apartment. I'm mowing, painting, replacing decks, getting my driveway sealed. He does whatever the hell he wants.

Ah yes, the old “you’ll own nothing and like it” model. That perception of freedom is great until the one who actually owns your house (landlord, Blackrock, the government) raises rent, decides to sell, or that someone else needs it more than you (likely a subsidized renter), then life ain’t so grand after all.

 

[Happy Antelope]

It's not as cut and clear as some people think.

How many people pass on better jobs because it's too far from their home? I know I have. The mortgage kills flexibility.

I made less money on my last home sale than the realtors and contractors did, and I carried the risk all that time.

Don't concetrate on a job, concetrate

Ah yes, the old “you’ll own nothing and like it” model. That perception of freedom is great until the one who actually owns your house (landlord, Blackrock, the government) raises rent, decides to sell, or that someone else needs it more than you (likely a subsidized renter), then life ain’t so grand after all.

Yes you have to own a home, your only hedge against inflation. Anyone who approaches an age they can no longer work will be in very very bad shape if they do not have a home (Shelter) paid for. Most of the comments against home ownership on here are thinking very short time. Owning a home is one tool to create wealth for your family. Not to mention the tax implications.

 

[Beendare]

Its never guaranteed you will make money from any investment- a home is an investment.

Plenty of folks over paid at the wrong time ….or were over leveraged….and when property values drop- like in the period right before 2008- they got slaughtered.

Some here in Ca bought homes before 08 and those home prices dropped 30% + wiping out all of their equity.

Think of it as an investment and consider location, historical prices, fees, prop taxes, and general market factors. If you have staying power you can usually outlast a bad market.

Timing matters; The flip side, if you would have bought in 2010 around here, many of those homes are up 250%.

.

 

[PNW bow hunter]

My house will be paid off next year. I live well within my means. I just know a guy who got divorced and had to sell off everything. He had a $600k house, didn't make much off of it since he remortgage it. He now rents a 2 bedroom apartment. I'm mowing, painting, replacing decks, getting my driveway sealed. He does whatever the hell he wants.

I think his apartment being a winning proposition is as perception of freedom.

Also it will be something that may seem better today, but will prove to be a terrible choice down the road.

Apartments around me are $2k a month and up. That never goes away, and just goes up each year.

My monthly utilities, property tax, and home owner’s insurance is WAY less than rent.


It also sounds like most of the projects you listed are things that would be done once every 15-20 years. It’s not like your repainting, replacing decks, and redoing asphalt each year.

The apartment may sound good now to you with all those major projects, but next year when you write that last mortgage payment, I bet your divorced buddy living in an apartment will be wishing he was you.

 

[S.Clancy]

The biggest mistake I think people made over the last 2-3 years is completely ignoring location. Location is always the determining factor in appreciation for real estate. Location was absolutely lost when people got FOMO bad. There are houses in shit areas that people paid more than our house, which is in a really nice area. We waited till rates popped high, got ours for under asking and paid our rate down. Yes, it was unfortunate timing for when we were buying, but just saying "I need a house somewhere, anywhere in town!" would have made it worse if/when the bubble pops.

 

[william schmaltz]

What are yu talking about? We're ALREADY at 7.888 Bil (2021). Like I said... we're projected to hit 10 Bil by 2050.

Again, I'm just echoing what others that I find to be extremely reliable in their sources. It appears that the consensus on this forum anyway is that we are near the peak.

The world replacement rate is down to 2.3, which is barely above break even. Cultures will change extremely quickly in places that are still above 2.1. We are extremely close to going negative, or at least level ing off considering in 1960 the world replacement rate was 4.7 https://www.visualcapitalist.com/worlds-plummeting-fertility-rate/#:~:text=In%202020%2C%20the%20world's%20fertility,the%20fertility%20rate%20of%20countries.

Back to the market. My wife sent me a camper yesterday that she's been watching. Same camper would've been $15k this time last year. They just dropped the price from $12K to $9K. She said that she's jumping at $7K. Boats are also sitting on Marketplace with prices plummeting. We looked at a gutted log cabin on 3 acres this weekend that's been on the market for 2 months. It's sitting at $175 and I think if they need to get out from it, we can swoop in for $125. We shall see. I've been waiting for opportunities from almost 4 years now.

 

[ODB]

Again, I'm just echoing what others that I find to be extremely reliable in their sources. It appears that the consensus on this forum anyway is that we are near the peak.

The world replacement rate is down to 2.3, which is barely above break even. Cultures will change extremely quickly in places that are still above 2.1. We are extremely close to going negative, or at least level ing off considering in 1960 the world replacement rate was 4.7 https://www.visualcapitalist.com/worlds-plummeting-fertility-rate/#:~:text=In%202020%2C%20the%20world's%20fertility,the%20fertility%20rate%20of%20countries.

Back to the market. My wife sent me a camper yesterday that she's been watching. Same camper would've been $15k this time last year. They just dropped the price from $12K to $9K. She said that she's jumping at $7K. Boats are also sitting on Marketplace with prices plummeting. We looked at a gutted log cabin on 3 acres this weekend that's been on the market for 2 months. It's sitting at $175 and I think if they need to get out from it, we can swoop in for $125. We shall see. I've been waiting for opportunities from almost 4 years now.

Yup. I’ve been telling the wife all the toys will go on sale very soon.

 

[birdhunter17]

This is a huge problem for the younger generation just out of school. Both my 20 something kids live at home because there is no way to buy and no where to rent here.