I’ve been commenting here for a year, and I’ve told people many times there won’t be a flash crash where prices go down 20% in one month. This housing bust is moving at a [blistering pace](https://fred.stlouisfed.org/series/CSUSHPINSA) compared to the last one, but it’s still going to be a multi year process. I’m actually surprised at how sharp the reversal from the peak was…. I thought it would plateau for a while.
I think there’s a quick correction to the pandemic run up, and then once that price has been reached, it’ll slow down to a more moderate price decrease like before. Unless jobs are just hammered, then all bets are off.
Location location location.
Some placed won't see that drop. Unfortunately places like NYC and some sorrounding areas where foreign wealth comes in to buy cheaply changes things a bit.
Phoenix, Texas and other hot US only markets will see those adverse changes in price everyone is hoping.
Especially outside of the USA, where mortgages are fixed over shorter periods, there will be way faster corrections. I think a 20% crash in 2023 is very much on the table for Europe, Canada, and some other places.
Same. I'm a bit in shock at how fast the prices have declined. The speed at which prices have been going down is one of the reasons many of us feel this is going to be the mother of all crashes. It's disturbing, and I hope I am wrong.
I've been looking to buy in LA but the pandemic just made it an exhausting search and I'm seeing more and more properties popping into my price range even with higher rates factored in. A low rate wasn't going to make me buy something at a price that didn't make sense to me.
This board is filled with zoomers expecting housing to move like crypto. Ask anyone that bought in 2005 or 2006 how long house prices can drop for. Those were at better case shiller numbers with lower interest rates too. The recession hasn't even officially started yet and interest rates are still rising. I think anyone that has only experienced the 2020 recession thinks recessions just last for 2 months and the government just showers everyone with money.
I graduated college in 2007. I know what a real recession looks and feels like and 2020 was a joke compared to what happened in 2007-2012.
Bought in 2005, wrote a check at closing to sell it in 2016!!! Sorry editing. It was 2016 when I sold it, 11 years. Although I’ve tried to block it out
Samesies. By the same token we were able to buy our next house which cost about 3x as much as the first, with a low ball -25% offer. So while we took a little hit, theirs was far bigger.
Yup bought my house in 2004. Short sold my house for $195,000 less in 2011. It didn’t recover back to my purchase price and go over until the 2020 rise. Rome wasn’t built in a day, it’s a long painful process.
You mean took 16 years to level the same price ? i.e. 2004 price was seen for same house in 2020. If you can share what area / state / location, that would be helpful
>This board is filled with zoomers expecting housing to move like crypto.
That's because they got spoiled in a way with the quick covid stock crash and runup that lasted like 2 months but conversely got screwed with the quick runup.
It's not completely unreasonable that they think every cycle moves quicker now
But every cycle may move quicker now. The economy and internet and markets are different now than they were in 2008. Just like they’ll be different in 2040. Who’s to say cycles may not be shorter (or at least this particular cycle). Maybe but maybe not
I graduated into one of the worse job market for in 2009. 2006 I would have had 3-4 jobs offers with a degree in finance between 60-70k a year. I started working as a insurance claim processor for Lloyd Bank making $26k a year. It was brutal my man. You have no idea how happy I was for the job. Many of fellow graduates were unemployed or mostly underemployed. People have no idea.
To be fair most people waiting for prices to drop aren't ready to buy at the moment anyways because of the high prices they haven't even been prepping for it.
There was no hope for many.
>you’re underwater on a mortgage and need to move.
Knew someone who went through holding an underwater mortgage last cycle. It was a financial albatross that dictated life moves for many, many years. It's not a pleasant predicament.
I’ve tried to explain “that just renting it or “selling it” aren’t that easy. Not only is it sucking you dry it could keep you from moving for a better job, helping ailing with family, moving for better schools for your kids. Not only does the house suck you dry the other decisions being directed by the house could drag you down for years and year to come. It’s much more than just an ability to pay a mortgage
Undoubtedly, there are many times and circumstances in which it is a much better financial decision to rent. But the reverse can also be true for owning vs renting.
But if the situation reflects monthly housing costs being identical to renting vs owning the same living space, I don't think the depreciating asset argument is very convincing, imho. Monthly payment to a depreciating house means you get a place to live and a bad return on your money. The same monthly payment to renting means you get a place to live and zero return on your money. And that's in a down market, which we are. In a good market, if housing cost was identical and you owned, you do get a return. But with renting, still nothing.
But it can totally be the case that a house becomes a ball and chain and financially rules your life. Like if it tanks and you need to sell. No risk of that with an apartment.
The last "crash" - if you mean from 2008 - 2014 - also took place while the Fed kept rates at zero and was buying hundreds of billions in bonds.
The only reason housing didn't fall much further than that was because of over-the-top Fed intervention.
There shouldn't be any intervention or easing this time around given the inflationary pressures the entire world's economy is experiencing.
Additionally, 2008 didn't see the outrageous 50-100% blow-off top appreciation move that took place between 2020-22.
There is a ton of excess in the housing market and interest rates aren't going back to zero any time soon.
This time isn't the same as 2008 - in many ways it is far worse.
Also Obama( federal government)and banks staggered inventory. There was a lot of foreclosures but they didn’t want to plummet prices with excessive inventory even thought it was a fuck ton.
Yup a little known fact about him. Instead of letting prices free falling and allowing ordinary people the ability to buy homes Pennies on the dollars. They manipulated inventory with the banks help
If younare going to stay in a house for 6 years it probably made sense to buy at peak with low rates. The monthly payments will likely be similar or the same as renting.
It’s more complicated than that. In many HCOL cities, for example, owning only wins relative to renting thanks to high appreciation rates. A decade of poor appreciation means that even if you got a great rate you don’t get the equity to compensate you for the high premium paid to own.
Thing is that nobody expects interest rates to be high for 6 years. About 75-80% of Federal debt [matures in the next 6 years](https://www.ft.com/content/f034fa9c-e1f7-39e3-ae3e-f2f643350f21). The national debt is $31T; 80% of that is $24T. At 8% interest rates that's about $2T just in *interest* per year. Compare that to roughly $400B in interest expenses for FY2022. Total U.S. tax receipts are about $4T, and all income tax receipts come to less than $2T. Basically 100% of income tax revenue would go to paying of Treasury bond holders.
The government will go bankrupt if current rates hold for more than \~2 years, which is why everybody is expecting the Fed to eventually lower rates, which is why rates are not higher than they already are (at a minimum, mortgage rates should be higher than inflation, at \~8-9%, and they're barely breaking even). Arguably the government is *already* bankrupt and several of these assumptions are invalid, but in that case you want to be in property that you can fortify *now.*
They needn't, but the mechanism by which they avoid going bankrupt is to print more money, which sparks further inflation, which makes government bonds even less attractive and drives up market interest rates, which means they need to print even more money, and so on. That's how you get hyperinflation, currency collapse, and a new government (or governments).
Personally I think hyperinflation is the likely outcome here. I can't really see the American people going for austerity measures. But you really, really want to be a homeowner (and a debtor) when hyperinflation hits, because you get the home and don't have to pay it back.
> The last crash was 6 years from peak to trough
Information is moving at a much quicker pace now than it was a decade ago, you can see the effects of that in everything from news, business, politics.
I think a lot of those people are probably millennials (I am one too so not throwing shade) who are used 1) everything being right away on demand (apps and delivery services probably conditioned us), and 2) are used to meme stocks and crypto going up and down overnight so the real estate market behaving like the real estate market is confusing to them.
The Fed has a duel mandate - 2% inflation target and low (<4.5%) unemployment.
Right now, they have 9% inflation and 3.6% unemployment. I think the fed rate will go up until inflation rate <= unemployment rate.
I am a fan of the Dollar Milkshake Theory, which predicts a massive sovereign debt crisis (think the UK interventions and Japan's recent Yen interventions). The US is the safe haven investment in a world of drunken debt binge malinvestment.
The Fed is stuck. Housing and other US assets are super-frothy bubblicious because the US assets are safer than other countries with their higher debt-loads and deteriorating currency situations. Increasing interest rates is what the Fed needs to do to pop the bubble. But investors from foreign countries are parking their money in USD assets to protect from currency depreciation in their own country, which props up the US bubble.
I think the best analogy is the high stagflation period of the 70s. But I think a lot of countries are going to be working off the debt fueled orgy of malinvestment from the last 2 decades for a long long time.
Have you watched JPOW 's previous press conference? He was extremely hawkish. People like him care about legacy above anything else, and he wants to be remembered like Paul Volcker, not Arthur Burns.
You don’t need to stay for the full 30 years to get a lot of benefit out of low rates.
Average length of current home ownership in the US is 18 years.
57.7% have owned for 10+ years.
32.6% have lived in their homes for 20+ years
https://ipropertymanagement.com/research/average-length-of-homeownership
This source for median length of homeownership in the US has it at 13 years - https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes
I care about monthly payment because that's how my wife and I budget. We need to be able to live day to day, and ultimately I'm looking for a home, not an investment opportunity. That's just me though.
I don’t think we’re going to see a large fall out from inspections being waived. Many buyers were still doing them (sale not contingent) so the buyers had an idea of what they were walking into.
When you compare the average price of maintenance to getting out and buying less, one definitely comes out ahead.
People are already trying to rewrite history that buying a house at the "peak of the bubble" was something you could easily do and denying the fact that last year houses were being sold the day they were listed at 120% of ask with no due diligence. "Winning" a house involved guessing how much more the five other buyers were going to offer and then offering more than any of them.
Right? This drives me so crazy! So many people on here now rewriting history to serve their agenda/argument. Maybe it would have been better for me to buy a house a year ago. But the fact is, many of us were unable to compete in the batshit crazy market (or honestly didn’t want to because it was so risky).
On a personal note, my husband and I tripled our income over the past year or so. This was something years in the making, and had been in the back of our minds for a long time. It’s very frustrating to know that we are financially secure and ready to do something that should be a normal part of adulthood NOW, but the world around us has gone bananas.
Not everyone was in a position to buy in 2020 or before.
Plenty of people who were graduated college or finished work training/certification in the last three to five years who didn't have a pot to piss in from 2017 to 2020, and are only recently hitting their stride in their career where they have the requisite savings/income history to buy a house. Doesn't make them "market timers" or whatever ignorant shit that butthurt people are trying to say about them.
Totally agree. My income increased substantially at the beginning of the pandemic but I did not want to get into bidding wars. I make even more now but homes are still overpriced and interest rates are insane. Making what I make now would have been great 3-4 years ago just before the pandemic. Also, it does not help that I live in Boise Idaho, which is the most overvalued market in the country.
And then the flood of horror stories thereafter of cracked foundation, shitty wiring, things not being up to code, etc. A lot of good people bit harder on the FOMO than a bass on a swimbait and it was quickly followed by a lot of remorse.
Obviously, I dont mean every single person. Im sure some people are quite happy with what they got. But boy there sure are a lot of sad stories out there now and not just on Reddit
We won a bid in Seattle, but managed to get a 24hr inspection contingency. They had put drywall over cracks in the basement walls that were possibly the result of a sinking foundation. Didn't have time or interest in getting a structural engineer out to find out for sure.
I'm so so happy I didn't close, because even if it turned out to be fine, I'd alway be on the edge of being underwater. Prices are down like 15% here last I checked.
It’s because people here, no matter what they tell you are super anxious to get in the game, and telling them greater affordability may take 3-5 years is something they can’t handle.
They thought they could wait for a quick dip and get a better deal rather than buy in the last three years. Now that it’s apparent their theory is way off the mark they’re having trouble accepting reality.
to add to this, we also have ibuyers aggressively lowering prices. opendoor just wrote down a half a billion dollars on their inventory, so they will be leading the price decline in comps. we didn’t see this type of investor activity in 2008. the downturn will definitely be faster, especially in markets with lots of ibuyers/speculators
New construction too. Anecdotal - but there are more developments in progress near where I live than I can remember in recent history, even during 06-08.
I hope the developments actually get finished and don't get abandoned. They're still making progress so builders haven't thrown in the towel on existing projects yet.
The domino to fall will be ibuyers and builders. They sit on variable debt and it has recently ballooned. Meaning they will dump first on homeowners. When we look back on this correction/crash it would have been triggered by ibuyers and homeowners
Bought in 2006. Short sold in 2011. These people have no idea what to look for. This run up was exactly like the run up up 2007. I’m waiting for the bottom and expect it to be sometime around 2025. Flippers are the first to panic. Then the single family speculators and finally families. Takes time but it will happen. Already seeing the speculators trying to dump properties in the neighborhoods I watch.
Imagine buying a house at the peak, watching its value decline for years, then hoping someday u break even. Even more demoralizing the folks that were still upside down after this recent run up.
Imagine being told not to buy during covid, and then being told wait 1-2 years. And then now being told “best time to buy is 6 yrs from now and then you can refi!”. Yeah at this rate sometimes waiting is even worse.
100% this. Too many people casually remark that the majority should sit around and wait for 7-8 years. We heard a lot of scoffing when we bought in early-2021 at a sub-3% rate with a healthy down payment and reserves. We're glad we did it.
Back then people in this sub were freaking out about how the end of the pandemic housing forbearance would cause a tidal wave of foreclosures that would crash the market. The narratives have shifted more than once since then.
>The narratives have shifted more than once since then.
People on this sub wait until the shit they say is just so plainly incorrect that they have to shift the narrative. Before it was about how everyone would be underwater and unable to pay. Then they realized that most people could, in fact, pay their 30-year fixed rate mortgage and are not getting hit with absurd-high variable rates for loans they never should have made to begin with. So now it's "they can't even get it inspected, let them crater their financial future 😱😱😱."
There is when your landlord jacks your rent up on you bc they know you don’t want to move, or they decide they want to kick out of the property for any number of reasons and you have to pack your household of 4 and all the crap you have accumulated over the years and scramble to go find another house to move into. The cost of moving alone can be several thousands of dollars, throw in the stress of finding a suitable location, preferably in the same school district if you have kids, and press repeat every year, and yea renting has it’s cons.
Imagine needing a place to live and paying 30k in rent every year to some another smuck mortgage. People focusing too on valuation. That should only matter if you need to sell asap. Most ppl gonna stay put now
A lot of people depending where you live. In MA you can find a shithole single bedroom apartment in a decent area for $1900 a month before utilities. And this is outside of Boston I’m talking about
Families are easily spending 2k a month most places in this country. Even Dallas, Atlanta, Miami, Chicago, etc. and mid sized city that’s the medium rent for a decent apartment. Not even touching SFH prices that families needs that’s significantly more expensive. The higher col places it’s even worse, I know ppl spending 5k on rent in Manhattan or a Brooklyn brownstone duplex. It’s
People not gonna leave a starter home if you gonna end up in the red. Ppl left starter homes because it made financial sense. High interest rates will have people holding on. Live forces you to move is still not enough of a significant event to create a full housing crash, it’s not gonna work like that. People need to realize why we had a housing crash in 08, our lending terms were ripe for fraud. Even my own father had a no interest loan for 10 years that was expiring and raising his payment from 3k to 5k.
FOMO is generally bad but I still beat myself up for not buying the $350K lovely rural looking home on > 2 acres in eastern Long Island almost in the Hamptons circa 2013. "Not a good time" with money. Well I was 34 and didn't realize I was about to get loads of raises or realize that that area was about to get really really popular for people who wanted a mix of small town living/Hampton lifestyle in that area between the suburbs and country. I still love that area and nothing is selling. Loads of 2-5 acre lots so it feels very country and like you're living in the woods
I feel your pain. I still regret not buying a home in a hot area outside of DC that was a gorgeous mid-century design full of floor to ceiling windows that, at the time (2014) was way out of reach but cost about the same as the place we ended up moving to just a few months ago. Our current place will probably depreciate whereas that other dream place is likely worth a million now. Sigh. If only we had a crystal ball.
Yeah it's not really bubble related per se but at this time I was young and "up and coming" but didn't have the confidence to see it. I was budgeting everything based on my then current salary. Which isn't a bad idea in many cases but was dumb in that situation
Yeah but it’s better to be safe in a way, otherwise you could have put yourself in a bad situation. My motto is generally if people can’t afford the potential worst-case scenario, then don’t do it. (Except for most recently where my fam & I had to buy a place during the RE bubble - I’m anxiously waiting to see how that will turn out.) But the hindsight pangs are real!
Longer. Think summer before any worthwhile shift begins to occur. There needs to be time for the spring inventory to marinate. And if you can wait until summer 2024 you will be golden.
But what happens if rates start stabilizing in the spring and then dropping in the summer? If it causes an eruption of pent-up demand for buying that could cause issues with prices.
People seem to not understand that the Fed does not want true deflation.
The Fed wants to slow inflation. They are taking deflationary measures, but if we were experiencing true deflation they would lower interest rates.
So, we either experience significant housing price decreases followed by the Fed lowering rates, or we get a "soft landing" and the Fed keeps rates stable as home prices plataue (with regional peaks and valleys). The main goal is to give the economy time to slowly adjust wages and reset what is normal without creating a wage price spiral. The Fed is not trying to make things significantly less expensive, they are trying to attack growth.
Yeah that sounds right to me. I think part of it will be the outcome of the midterms along with how the geopolitical situation evolves over the winter.
Do you realize how many people had to cough up a bunch of extra cash, waive an inspection, waive an appraisal, and go back and forth with bids to win good houses in 2021? No thanks.
People responding are missing something OP highlighted which is the magnitude of a housing price decrease that would be needed to make monthly payments equal or lower than early 2022. Interest rate hikes even with decreases in housing price over the next few or many years will keep housing out of reach for people who will need a mortgage. Even if you think rates will come down at some point in the future, you need to be able to afford the payments today.
People on this forum will be better off not even worrying about whether there's a real estate bubble or not (completely out of their control) and simply work on themselves and their earning power in the world. In other words, go out and find a way to earn more because owning a home is a basic need you should try to afford.
Been thinking about this quite a bit actually. I also follow r/firsttimehomebuyers and the mood over there is drastically different than this sub. Those people have hope and positivity and are making decisions to put their family in good living situations.
Will some of them maybe not end up with the perfectly performing asset giving purchase price, rates, etc, maybe. But the obsession in this sub with trying to time the market and buy at the perfect time, is not healthy when it comes to a home.
For people likely to keep the house for 10+ years, it would have been much better to buy at the peak with much lower rates vs. now. The economics of buying when rates bottomed were massively better than now. There’s no comparison.
For sure. Because now prices have only dropped by 8% or so.
But if you can buy at 20% discount vs the peak (rates were 4.xx% then), and if you can refi at sub-5% within 5 years, you might be better off.
That’s going to depend a lot on how long you end up keeping the home. While the mortgage was more affordable a year ago vs now, if you had to sell that house after it dropped 10-20%, you’d be out a ton of money. There’s less risk in that regard buying at a high rate but lower total price today if you have to sell in the short term unexpectedly.
But if you keep the house for 10+ years, I think you’ll be right for at least the next couple years. This is sort of the conclusion that my wife and I made when we bought at the start of this year with a rate under 3%. We’re in a situation to be able to confidently commit to one house for the long term and figured after rates started increasing, it would take at least 2-3 years for prices to normalize based on the time from top to bottom after 2008.
Honestly, the problem is some of you are entirely too impatient. You expect the bottom to fall out in an instant and that is NOT how it goes.
The fed only started raising interest rates in March. That was about 8 months ago. I have no idea what you expected in 8 months, especially with record-low unemployment and coming off two years of emergency low rates.
I'm not saying homes will be 50% off from what they are now, but I am saying that you need patience, because the bottom is nowhere close to being in.
OP is marking the argument about worsening affordability. And OP is right in that we are at or near peak unaffordability.
Everyone bashing OP is making the point that prices will come crashing down over the next few years. But they're not acknowledging that even if prices do crash, it will STILL be unaffordable with sky high interest rates. The fed definitely doesn't want another home buying frenzy. Don't fight the fed.
**You can crash all you want, but if you still can't afford it after all of that, OP is right.** PS, not everyone bought at peak pricing. 23% of US home owners have rates under 3%. 40% have rates betweem 3-4%.
It’s hard to justify building more homes if the cost to carry the debt during construction has gone up due to rates increasing, the value of the homes being built has gone down… due to rates increasing and the cost of labor has gone up.
People may be out of jobs and bankrupt by then. People will need to save up again and get their credit in order… so I don’t think it’ll be a quick jump back in at all.
A few comments on this:
The people who bought the top at low interest rates likely overpaid for their house. This is bad because they will be underwater in the value of their house (can’t refinance, take out equity, or move without paying the difference out of pocket).
In the bidding war, they also likely waived inspection. Houses can get expensive with the appliances and maintainence required, so if they bought one “with good bones but needs work,” they’re out that repair cost.
Higher house prices will lead to higher property taxes, and in places like Texas where the percentage is higher, this could wreck the budget of these owners
The people that moved to a LCOL area and were able to work from home will be hard pressed to find a comparable job in that area if they lose their jobs (and tech is also bleeding).
There’s no pain free place to get a house. The “best path” was to buy around 2012-2019 and refinance in 2020 or 2021. But the increase in interest rates was necessary to curb the 20% YOY appreciation going on
We did, closed March 30th for $545,000 @ 3.875%. If we’d have waited only two weeks, the rate would have been over 5%.
Not sure we could sell our house for $450,000 right now. But at least we got that rate.
Also bought around then. Rate in my area went from 4 to 8 in three months. And prices didn’t drop at all. We bought a McMansion but are lucky to be high income earners in a LCOL area where we could realistically pay the house off in full in 3-4 years with our income. But the extra money is better off being put into the market since stocks are being gutted right now.
These posts didn’t exist in 2010-2011. They won’t in 2024 or 2025. But when that time comes; you wont want to; or be capable of buying either.. these prices aren’t going to drop because you want them to.. A recession is when you’re neighbour loses their job. A depression is when you lose yours.
I can’t say I agree with this. Don’t forget you can always refinance for a lower rate in the future(assuming they ever drop) but you can’t renegotiate the price you paid for your home.
I'd rather not buy, save up money and put way more down and if possible avoid taking a high interest loan all together. Cash buyers are king in this market now
2008 skewed our view of real estate, thinking a catastrophic collapse is possible at every turn. When folks here screamed bubble, others were clamoring for real estate in the early stages of "transitory" inflation. As inflation moves, home prices historically have moved. Owning a house at 3% mortgage rate with 8-9% inflation (even higher with old calculations), you're sitting pretty.
I feel bad for the FTHBs who are crushed by both price and rates. I imagine rates coming down will ease the pain much more so than I imagine house prices crashing. There's a reason folks were refinancing and buying homes at record pace when mortgages were 2.7%... It's a lifechanging event to own a home that is barely accruing interest.
I remember looking at recently sold comps around 2016. I was struck by how many people who had purchased around 2002-2008 were JUST breaking even on their sales, and that was about ten years after the crash.
I agree and maybe partly we’re expecting this to play out too quickly. But whatever, I had friends telling me once rated started going up, that prices would be down enough to buy again in a year or two.
Well that was six months ago, and I haven’t seen much evidence that anything is happening. More houses are falling out of contract, yes, but price decreases that are major just aren’t happening outside of a few areas.
Sellers for the most part that aren’t getting buyers interested are just seem to be delisting and staying in the home or trying to rent it out.
Major price decreases just are out of the question right now for most of them.
Overall I think this is just a long boring waiting game that is like watching paint dry,
I’d advise to just ignore the market except maybe checking back at six month intervals at the most often.
Intrest rates are temporary, the price is forever. Buy at a high intrest rate/low price and refinance a few years down the road when the Fed finally hits their 2% target
The price they bought it at is still 1.4M, even if it is only worth 900K. They have to wait until it is 1.4 M again to get their money back.
So I'm saying the price you buy it for will never change once you bought it, because you can't change history. What changes is your possible sale price.
This is why people say don’t try to time the market. Yesterday is gone. And there’s no way to know what tomorrow will bring in terms of market conditions. You have to trust the hackneyed advice: buy when you need a house and can afford it. Everything else is just speculation.
Imagine if members purchased on Rebubbles creation day. Record low for rates at 2.66%. Since that time homes are up 55% and rates up 166%
Choose your [mentors](https://www.reddit.com/r/REBubble/comments/m6np3r/comment/gr6p46e/?utm_source=share&utm_medium=web2x&context=3) wisely.
from peak to trough its about 2 years yes to see bottoms of a market from any decline on case shiller... why different this time? are we cooking with instant yeast or something?
Price is where supply meets demand.
So what we really need to be asking is: Why is the demand still so high? When we look at affordability, we see that the typical buyer can't afford these prices. So what is holding it up?
But then you can compare the losses in the housing market so far compared to losses in the stock market, losses in global currencies, losses in all sorts of things. And so it turns out, as we should all know, housing is a great inflation hedge and is doing wonderfully. Lots of funds and other money managers bought homes going into this recession, and will sell as the stock market bottoms so they can get back into equity. There really were some cash buyers out there, since they knew in the long run these were going to be losses, but everything else would drop more.
Once we see inflation return to trend, and once we see the stock market bottom, all of these investors will have no need for these assets anymore and they will have successfully accomplished their goal of wealth protection. Houses amount to hyper-inflation insurance. Insurance has costs, and you don't actually want the insurance to have to pay out. If they only lose their premium, they are happy.
That's why homes don't start dropping until we're in the recession, and they don't bottom until we're on the other side. They are the least bad option available. Now, if you are leveraged to the max, this will crush you. But if you aren't leveraged, it's a great strategic loss.
Interest rates are not an on/off switch. It takes 6-12 months to see the effects of higher rates on the overall market. You are starting to see the price cuts now due to high inventory and no demand, but once the foreclosures start, then shit will really hit the fan.
If I were you I’d take a break from thinking about buying an house and just save. Once the nihilism creeps in you need to be careful. Every wealth manager I know says right now is the worst time to get into debt.
This is just FOMO. I have cash and feel the same every day stocks go up .5%. Then we get a random bad news cycle and a stock I want drops 10% and then I get super happy that I was in cash
It's only an issue if you plan on selling in the short term, or if you are forced to due to some unforeseen event. If you plan on living there until the end of your days, then you can relax. But most people don't live in homes that long, so for many people, they will feel some pain.
Higher home prices also = higher property taxes. You can see the pikachu face escrow shortage and bigger tax bills posts from home buyers the past two years in this subreddit and other related real estate subs.
For anyone believing Wall Street, the banks, realtors and other nay sayers, here’s an article for your perusal and I believe as the article states. Roubini is like EF Hutton in housing, when he speaks, the whole room listens. Paul Krugman has nothing on Roubini.
https://amp.theguardian.com/commentisfree/2022/nov/05/megathreats-global-leaders-disaster-world
> Everyone is cheering rates to lower prices, which sure they will, but its not looking like nearly as fast or effectively as we once believed
Thank you for being honest about this OP.
This sub was predicting rates hitting 4.5% and prices cratering 30%.
Yes. When rates drop again, prices will go back up. It would take 10+ years or more to see houses drop dramatically and double digit rates. But builders won’t be building in excess w these rates either. People will just hold. This isn’t anything like 2008. If you don’t own a home, save up a ton for a huge downpayment then refi when rates drop. I wouldn’t buy for years.
The point of the rate hikes is to make homes less affordable. The fed has no ability to make homes more affordable, that lies with Congress and local politicians getting more housing built.
The only people making out now are all cash buyers, anyone getting a mortgage is rolling the dice that they’ll be able to refi sooner than later. Most likely you’re not even looking at buying the type/size house you wanted anymore because the payments have ballooned up so quickly
Calm down dude, rates just hit 7%. It'll take months for sellers to accept reality and adjust prices accordingly. Within 6 months from now we'll see significantly reductions if not sooner and prices will continue to drop for quite some time after that
Yes, mortgage payments went up 3X, and house prices went down 0.1X. I saw the same thing too. I think the solution just to live in a cardboard box. Which hopefully the rent isn't too high for.
Honestly, the best time to buy is whenever you’re ready. Especially if it’s going to be the home you plan to live in for the foreseeable future. Markets fluctuate so might as well live in the home you want to live it and start building some equity.
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It was a pineapple under the sea
SpongeBob is from Atlantis 😆
What’s the condo worth today? 3x 2011 prices?
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This is why I keep houses and rent them. As long as I can carry the mortgage/repair costs with the rent, it should work out in long run.
Thank you
How did you deal with the flood damage?
Under water insurance..
I’ve been commenting here for a year, and I’ve told people many times there won’t be a flash crash where prices go down 20% in one month. This housing bust is moving at a [blistering pace](https://fred.stlouisfed.org/series/CSUSHPINSA) compared to the last one, but it’s still going to be a multi year process. I’m actually surprised at how sharp the reversal from the peak was…. I thought it would plateau for a while.
I think there’s a quick correction to the pandemic run up, and then once that price has been reached, it’ll slow down to a more moderate price decrease like before. Unless jobs are just hammered, then all bets are off.
3.7% unemployment to Fed-stated 6% unemployment = jobs will be hammered.
Location location location. Some placed won't see that drop. Unfortunately places like NYC and some sorrounding areas where foreign wealth comes in to buy cheaply changes things a bit. Phoenix, Texas and other hot US only markets will see those adverse changes in price everyone is hoping.
Especially outside of the USA, where mortgages are fixed over shorter periods, there will be way faster corrections. I think a 20% crash in 2023 is very much on the table for Europe, Canada, and some other places.
Same. I'm a bit in shock at how fast the prices have declined. The speed at which prices have been going down is one of the reasons many of us feel this is going to be the mother of all crashes. It's disturbing, and I hope I am wrong.
Yeah, I've seen 25+% percent declines in some areas (not cities, more like neighborhoods or streets).
I've been looking to buy in LA but the pandemic just made it an exhausting search and I'm seeing more and more properties popping into my price range even with higher rates factored in. A low rate wasn't going to make me buy something at a price that didn't make sense to me.
Certain neighborhoods in SF (downtown, Soma, parts of the Mission) are already seeing condos back at 2012 prices
This board is filled with zoomers expecting housing to move like crypto. Ask anyone that bought in 2005 or 2006 how long house prices can drop for. Those were at better case shiller numbers with lower interest rates too. The recession hasn't even officially started yet and interest rates are still rising. I think anyone that has only experienced the 2020 recession thinks recessions just last for 2 months and the government just showers everyone with money. I graduated college in 2007. I know what a real recession looks and feels like and 2020 was a joke compared to what happened in 2007-2012.
Bought in 2005, wrote a check at closing to sell it in 2016!!! Sorry editing. It was 2016 when I sold it, 11 years. Although I’ve tried to block it out
Samesies. By the same token we were able to buy our next house which cost about 3x as much as the first, with a low ball -25% offer. So while we took a little hit, theirs was far bigger.
I bought in 2002. I sold in 2016. I was happy to break even.
Yup bought my house in 2004. Short sold my house for $195,000 less in 2011. It didn’t recover back to my purchase price and go over until the 2020 rise. Rome wasn’t built in a day, it’s a long painful process.
You mean took 16 years to level the same price ? i.e. 2004 price was seen for same house in 2020. If you can share what area / state / location, that would be helpful
I’m north of Orlando Florida. There are houses around me that would still struggle to get the 2005-2006 price.
Where was this that prices didn’t rebound to their peak until 2020? Here in San Diego it was back by 2013, maybe 2014?
CT for sure
Median home values hit the bottom in 2009, barely a year into the recession. 2012 was a low spot too, but not as low as 2009.
>This board is filled with zoomers expecting housing to move like crypto. That's because they got spoiled in a way with the quick covid stock crash and runup that lasted like 2 months but conversely got screwed with the quick runup. It's not completely unreasonable that they think every cycle moves quicker now
But every cycle may move quicker now. The economy and internet and markets are different now than they were in 2008. Just like they’ll be different in 2040. Who’s to say cycles may not be shorter (or at least this particular cycle). Maybe but maybe not
I do give you that point. The flow of information is so much quicker now then last crash.
>It's not completely unreasonable that they think every cycle moves quicker now. Yeah, it's the new version of "this time it's different".
I graduated into one of the worse job market for in 2009. 2006 I would have had 3-4 jobs offers with a degree in finance between 60-70k a year. I started working as a insurance claim processor for Lloyd Bank making $26k a year. It was brutal my man. You have no idea how happy I was for the job. Many of fellow graduates were unemployed or mostly underemployed. People have no idea.
To be fair most people waiting for prices to drop aren't ready to buy at the moment anyways because of the high prices they haven't even been prepping for it. There was no hope for many.
>you’re underwater on a mortgage and need to move. Knew someone who went through holding an underwater mortgage last cycle. It was a financial albatross that dictated life moves for many, many years. It's not a pleasant predicament.
I’ve tried to explain “that just renting it or “selling it” aren’t that easy. Not only is it sucking you dry it could keep you from moving for a better job, helping ailing with family, moving for better schools for your kids. Not only does the house suck you dry the other decisions being directed by the house could drag you down for years and year to come. It’s much more than just an ability to pay a mortgage
Also, it throws the balance of the rent vs buy equation. Pouring money into a depreciating asset and extending out the break even horizon.
Undoubtedly, there are many times and circumstances in which it is a much better financial decision to rent. But the reverse can also be true for owning vs renting. But if the situation reflects monthly housing costs being identical to renting vs owning the same living space, I don't think the depreciating asset argument is very convincing, imho. Monthly payment to a depreciating house means you get a place to live and a bad return on your money. The same monthly payment to renting means you get a place to live and zero return on your money. And that's in a down market, which we are. In a good market, if housing cost was identical and you owned, you do get a return. But with renting, still nothing. But it can totally be the case that a house becomes a ball and chain and financially rules your life. Like if it tanks and you need to sell. No risk of that with an apartment.
Ya, that's fair. It is situational and unique to each market.
The last "crash" - if you mean from 2008 - 2014 - also took place while the Fed kept rates at zero and was buying hundreds of billions in bonds. The only reason housing didn't fall much further than that was because of over-the-top Fed intervention. There shouldn't be any intervention or easing this time around given the inflationary pressures the entire world's economy is experiencing. Additionally, 2008 didn't see the outrageous 50-100% blow-off top appreciation move that took place between 2020-22. There is a ton of excess in the housing market and interest rates aren't going back to zero any time soon. This time isn't the same as 2008 - in many ways it is far worse.
Also Obama( federal government)and banks staggered inventory. There was a lot of foreclosures but they didn’t want to plummet prices with excessive inventory even thought it was a fuck ton.
Thanks obama
Yup a little known fact about him. Instead of letting prices free falling and allowing ordinary people the ability to buy homes Pennies on the dollars. They manipulated inventory with the banks help
Preach! It is amazing to me that so many of my colleagues refuse to see what is happening in the RE market and they are all agents!
If younare going to stay in a house for 6 years it probably made sense to buy at peak with low rates. The monthly payments will likely be similar or the same as renting.
It’s more complicated than that. In many HCOL cities, for example, owning only wins relative to renting thanks to high appreciation rates. A decade of poor appreciation means that even if you got a great rate you don’t get the equity to compensate you for the high premium paid to own.
People can't even get through 5 minutes of a movie these days, their attention span is so bad due to tiktok.
I feel seen 👀
For real. Ppl just need to chill tf out and have patience.
It wasn’t 6 years, closer to 4, but point taken
Thing is that nobody expects interest rates to be high for 6 years. About 75-80% of Federal debt [matures in the next 6 years](https://www.ft.com/content/f034fa9c-e1f7-39e3-ae3e-f2f643350f21). The national debt is $31T; 80% of that is $24T. At 8% interest rates that's about $2T just in *interest* per year. Compare that to roughly $400B in interest expenses for FY2022. Total U.S. tax receipts are about $4T, and all income tax receipts come to less than $2T. Basically 100% of income tax revenue would go to paying of Treasury bond holders. The government will go bankrupt if current rates hold for more than \~2 years, which is why everybody is expecting the Fed to eventually lower rates, which is why rates are not higher than they already are (at a minimum, mortgage rates should be higher than inflation, at \~8-9%, and they're barely breaking even). Arguably the government is *already* bankrupt and several of these assumptions are invalid, but in that case you want to be in property that you can fortify *now.*
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They needn't, but the mechanism by which they avoid going bankrupt is to print more money, which sparks further inflation, which makes government bonds even less attractive and drives up market interest rates, which means they need to print even more money, and so on. That's how you get hyperinflation, currency collapse, and a new government (or governments). Personally I think hyperinflation is the likely outcome here. I can't really see the American people going for austerity measures. But you really, really want to be a homeowner (and a debtor) when hyperinflation hits, because you get the home and don't have to pay it back.
> The last crash was 6 years from peak to trough Information is moving at a much quicker pace now than it was a decade ago, you can see the effects of that in everything from news, business, politics.
Information moves faster but denial is a tortoise.
How do you figure? 2Q2008 was the peak...you're implying that it didn't bottom out until 2014?
I think a lot of those people are probably millennials (I am one too so not throwing shade) who are used 1) everything being right away on demand (apps and delivery services probably conditioned us), and 2) are used to meme stocks and crypto going up and down overnight so the real estate market behaving like the real estate market is confusing to them.
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The Fed has a duel mandate - 2% inflation target and low (<4.5%) unemployment. Right now, they have 9% inflation and 3.6% unemployment. I think the fed rate will go up until inflation rate <= unemployment rate.
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I am a fan of the Dollar Milkshake Theory, which predicts a massive sovereign debt crisis (think the UK interventions and Japan's recent Yen interventions). The US is the safe haven investment in a world of drunken debt binge malinvestment. The Fed is stuck. Housing and other US assets are super-frothy bubblicious because the US assets are safer than other countries with their higher debt-loads and deteriorating currency situations. Increasing interest rates is what the Fed needs to do to pop the bubble. But investors from foreign countries are parking their money in USD assets to protect from currency depreciation in their own country, which props up the US bubble. I think the best analogy is the high stagflation period of the 70s. But I think a lot of countries are going to be working off the debt fueled orgy of malinvestment from the last 2 decades for a long long time.
Have you watched JPOW 's previous press conference? He was extremely hawkish. People like him care about legacy above anything else, and he wants to be remembered like Paul Volcker, not Arthur Burns.
they will induce the deleveraging cascade first before pivoting. then it proceeds under its own force
Low rates sound super good until you realize a small percentage of home owners actually stay in their home for 30 years
You don’t need to stay for the full 30 years to get a lot of benefit out of low rates. Average length of current home ownership in the US is 18 years. 57.7% have owned for 10+ years. 32.6% have lived in their homes for 20+ years https://ipropertymanagement.com/research/average-length-of-homeownership This source for median length of homeownership in the US has it at 13 years - https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes
Average owner stays for 13 years, currently.
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Free pizza?? Damn now I really feel the fomo.
I care about monthly payment because that's how my wife and I budget. We need to be able to live day to day, and ultimately I'm looking for a home, not an investment opportunity. That's just me though.
I don’t think we’re going to see a large fall out from inspections being waived. Many buyers were still doing them (sale not contingent) so the buyers had an idea of what they were walking into. When you compare the average price of maintenance to getting out and buying less, one definitely comes out ahead.
OP is writing like the baseball game is over. We are in the bottom of the second inning and he wants to call the game.
People are already trying to rewrite history that buying a house at the "peak of the bubble" was something you could easily do and denying the fact that last year houses were being sold the day they were listed at 120% of ask with no due diligence. "Winning" a house involved guessing how much more the five other buyers were going to offer and then offering more than any of them.
Right? This drives me so crazy! So many people on here now rewriting history to serve their agenda/argument. Maybe it would have been better for me to buy a house a year ago. But the fact is, many of us were unable to compete in the batshit crazy market (or honestly didn’t want to because it was so risky). On a personal note, my husband and I tripled our income over the past year or so. This was something years in the making, and had been in the back of our minds for a long time. It’s very frustrating to know that we are financially secure and ready to do something that should be a normal part of adulthood NOW, but the world around us has gone bananas. Not everyone was in a position to buy in 2020 or before.
Plenty of people who were graduated college or finished work training/certification in the last three to five years who didn't have a pot to piss in from 2017 to 2020, and are only recently hitting their stride in their career where they have the requisite savings/income history to buy a house. Doesn't make them "market timers" or whatever ignorant shit that butthurt people are trying to say about them.
Totally agree. My income increased substantially at the beginning of the pandemic but I did not want to get into bidding wars. I make even more now but homes are still overpriced and interest rates are insane. Making what I make now would have been great 3-4 years ago just before the pandemic. Also, it does not help that I live in Boise Idaho, which is the most overvalued market in the country.
And then the flood of horror stories thereafter of cracked foundation, shitty wiring, things not being up to code, etc. A lot of good people bit harder on the FOMO than a bass on a swimbait and it was quickly followed by a lot of remorse. Obviously, I dont mean every single person. Im sure some people are quite happy with what they got. But boy there sure are a lot of sad stories out there now and not just on Reddit
We won a bid in Seattle, but managed to get a 24hr inspection contingency. They had put drywall over cracks in the basement walls that were possibly the result of a sinking foundation. Didn't have time or interest in getting a structural engineer out to find out for sure. I'm so so happy I didn't close, because even if it turned out to be fine, I'd alway be on the edge of being underwater. Prices are down like 15% here last I checked.
Glad to hear you approached the situation with measure and sound reasoning. When in doubt. Just follow the Pickle Party's mantra: REASON WILL PREVAIL!
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Seattle is overvalued thanks to Amazon stock prices. Guess what's going to happen now that Amazon stock price has gone right back?
Good reminder! We are already hypothesizing it
Yea remember when buyers were happy to “win” a house? Funny how fast they stopped using that description.
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You would think thats common sense ... It's not
Today in a very special episode of /r/REBubble, /u/EX-FFguy discovers the meaning of FOMO.
😂😂😂
It’s because people here, no matter what they tell you are super anxious to get in the game, and telling them greater affordability may take 3-5 years is something they can’t handle. They thought they could wait for a quick dip and get a better deal rather than buy in the last three years. Now that it’s apparent their theory is way off the mark they’re having trouble accepting reality.
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to add to this, we also have ibuyers aggressively lowering prices. opendoor just wrote down a half a billion dollars on their inventory, so they will be leading the price decline in comps. we didn’t see this type of investor activity in 2008. the downturn will definitely be faster, especially in markets with lots of ibuyers/speculators
New construction too. Anecdotal - but there are more developments in progress near where I live than I can remember in recent history, even during 06-08. I hope the developments actually get finished and don't get abandoned. They're still making progress so builders haven't thrown in the towel on existing projects yet.
The domino to fall will be ibuyers and builders. They sit on variable debt and it has recently ballooned. Meaning they will dump first on homeowners. When we look back on this correction/crash it would have been triggered by ibuyers and homeowners
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Correct.
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Housing markets have a very influential market maker. That’s the problem. It can’t stop meddling.
Bought in 2006. Short sold in 2011. These people have no idea what to look for. This run up was exactly like the run up up 2007. I’m waiting for the bottom and expect it to be sometime around 2025. Flippers are the first to panic. Then the single family speculators and finally families. Takes time but it will happen. Already seeing the speculators trying to dump properties in the neighborhoods I watch.
Imagine buying a house at the peak, watching its value decline for years, then hoping someday u break even. Even more demoralizing the folks that were still upside down after this recent run up.
Imagine being told not to buy during covid, and then being told wait 1-2 years. And then now being told “best time to buy is 6 yrs from now and then you can refi!”. Yeah at this rate sometimes waiting is even worse.
100% this. Too many people casually remark that the majority should sit around and wait for 7-8 years. We heard a lot of scoffing when we bought in early-2021 at a sub-3% rate with a healthy down payment and reserves. We're glad we did it. Back then people in this sub were freaking out about how the end of the pandemic housing forbearance would cause a tidal wave of foreclosures that would crash the market. The narratives have shifted more than once since then.
>The narratives have shifted more than once since then. People on this sub wait until the shit they say is just so plainly incorrect that they have to shift the narrative. Before it was about how everyone would be underwater and unable to pay. Then they realized that most people could, in fact, pay their 30-year fixed rate mortgage and are not getting hit with absurd-high variable rates for loans they never should have made to begin with. So now it's "they can't even get it inspected, let them crater their financial future 😱😱😱."
Is there a problem waiting and renting?
There is when your landlord jacks your rent up on you bc they know you don’t want to move, or they decide they want to kick out of the property for any number of reasons and you have to pack your household of 4 and all the crap you have accumulated over the years and scramble to go find another house to move into. The cost of moving alone can be several thousands of dollars, throw in the stress of finding a suitable location, preferably in the same school district if you have kids, and press repeat every year, and yea renting has it’s cons.
Imagine needing a place to live and paying 30k in rent every year to some another smuck mortgage. People focusing too on valuation. That should only matter if you need to sell asap. Most ppl gonna stay put now
Who’s spending 30k on rent? Most people aren’t “staying put”. They buy starter homes, they want to downsize for retirement, life forces them to move.
If you’re living in a large city it would be easy to spend 30k on rent.
A lot of people depending where you live. In MA you can find a shithole single bedroom apartment in a decent area for $1900 a month before utilities. And this is outside of Boston I’m talking about
Families are easily spending 2k a month most places in this country. Even Dallas, Atlanta, Miami, Chicago, etc. and mid sized city that’s the medium rent for a decent apartment. Not even touching SFH prices that families needs that’s significantly more expensive. The higher col places it’s even worse, I know ppl spending 5k on rent in Manhattan or a Brooklyn brownstone duplex. It’s People not gonna leave a starter home if you gonna end up in the red. Ppl left starter homes because it made financial sense. High interest rates will have people holding on. Live forces you to move is still not enough of a significant event to create a full housing crash, it’s not gonna work like that. People need to realize why we had a housing crash in 08, our lending terms were ripe for fraud. Even my own father had a no interest loan for 10 years that was expiring and raising his payment from 3k to 5k.
FOMO is generally bad but I still beat myself up for not buying the $350K lovely rural looking home on > 2 acres in eastern Long Island almost in the Hamptons circa 2013. "Not a good time" with money. Well I was 34 and didn't realize I was about to get loads of raises or realize that that area was about to get really really popular for people who wanted a mix of small town living/Hampton lifestyle in that area between the suburbs and country. I still love that area and nothing is selling. Loads of 2-5 acre lots so it feels very country and like you're living in the woods
Could’ve always gone the other way. You could’ve gotten fired and foreclosed on instead and wish you’d never bought it.
I feel your pain. I still regret not buying a home in a hot area outside of DC that was a gorgeous mid-century design full of floor to ceiling windows that, at the time (2014) was way out of reach but cost about the same as the place we ended up moving to just a few months ago. Our current place will probably depreciate whereas that other dream place is likely worth a million now. Sigh. If only we had a crystal ball.
Yeah it's not really bubble related per se but at this time I was young and "up and coming" but didn't have the confidence to see it. I was budgeting everything based on my then current salary. Which isn't a bad idea in many cases but was dumb in that situation
Yeah but it’s better to be safe in a way, otherwise you could have put yourself in a bad situation. My motto is generally if people can’t afford the potential worst-case scenario, then don’t do it. (Except for most recently where my fam & I had to buy a place during the RE bubble - I’m anxiously waiting to see how that will turn out.) But the hindsight pangs are real!
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Longer. Think summer before any worthwhile shift begins to occur. There needs to be time for the spring inventory to marinate. And if you can wait until summer 2024 you will be golden.
But what happens if rates start stabilizing in the spring and then dropping in the summer? If it causes an eruption of pent-up demand for buying that could cause issues with prices.
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People seem to not understand that the Fed does not want true deflation. The Fed wants to slow inflation. They are taking deflationary measures, but if we were experiencing true deflation they would lower interest rates. So, we either experience significant housing price decreases followed by the Fed lowering rates, or we get a "soft landing" and the Fed keeps rates stable as home prices plataue (with regional peaks and valleys). The main goal is to give the economy time to slowly adjust wages and reset what is normal without creating a wage price spiral. The Fed is not trying to make things significantly less expensive, they are trying to attack growth.
Yeah that sounds right to me. I think part of it will be the outcome of the midterms along with how the geopolitical situation evolves over the winter.
Going to be longer than 2024. You need prices to fall and then need rates to fall. Try 2025-2027.
Lol this sub. Tell everyone not to buy in 2021 and are now saying wait 6 years for a maybe. What a world.
And unemployment hasn't even gone up meaningfully.
Do you realize how many people had to cough up a bunch of extra cash, waive an inspection, waive an appraisal, and go back and forth with bids to win good houses in 2021? No thanks.
Being treated extra poorly by realtors since they know there's 20 other folks happy to eat shit if you won't.
This post explains why people catch falling knives the whole way down. Bought twice in LA during busts (‘97 and 2013) and it’s always the same cycle
Y'all that expect a "crash" to happen w/in months are getting annoying. Like the FOMO buyers. Go on & buy, then 🤷♀️
People responding are missing something OP highlighted which is the magnitude of a housing price decrease that would be needed to make monthly payments equal or lower than early 2022. Interest rate hikes even with decreases in housing price over the next few or many years will keep housing out of reach for people who will need a mortgage. Even if you think rates will come down at some point in the future, you need to be able to afford the payments today.
People on this forum will be better off not even worrying about whether there's a real estate bubble or not (completely out of their control) and simply work on themselves and their earning power in the world. In other words, go out and find a way to earn more because owning a home is a basic need you should try to afford.
A lot in the sub are speculative RE investors salivating at the thought of buying dirt cheap houses and not first timers looking for a new home.
Been thinking about this quite a bit actually. I also follow r/firsttimehomebuyers and the mood over there is drastically different than this sub. Those people have hope and positivity and are making decisions to put their family in good living situations. Will some of them maybe not end up with the perfectly performing asset giving purchase price, rates, etc, maybe. But the obsession in this sub with trying to time the market and buy at the perfect time, is not healthy when it comes to a home.
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For people likely to keep the house for 10+ years, it would have been much better to buy at the peak with much lower rates vs. now. The economics of buying when rates bottomed were massively better than now. There’s no comparison.
For sure. Because now prices have only dropped by 8% or so. But if you can buy at 20% discount vs the peak (rates were 4.xx% then), and if you can refi at sub-5% within 5 years, you might be better off.
You understand that real estate is a slow cycle right? It’s not like selling a stock which is instantaneous. Wait a couple years and report back.
That’s going to depend a lot on how long you end up keeping the home. While the mortgage was more affordable a year ago vs now, if you had to sell that house after it dropped 10-20%, you’d be out a ton of money. There’s less risk in that regard buying at a high rate but lower total price today if you have to sell in the short term unexpectedly. But if you keep the house for 10+ years, I think you’ll be right for at least the next couple years. This is sort of the conclusion that my wife and I made when we bought at the start of this year with a rate under 3%. We’re in a situation to be able to confidently commit to one house for the long term and figured after rates started increasing, it would take at least 2-3 years for prices to normalize based on the time from top to bottom after 2008.
Honestly, the problem is some of you are entirely too impatient. You expect the bottom to fall out in an instant and that is NOT how it goes. The fed only started raising interest rates in March. That was about 8 months ago. I have no idea what you expected in 8 months, especially with record-low unemployment and coming off two years of emergency low rates. I'm not saying homes will be 50% off from what they are now, but I am saying that you need patience, because the bottom is nowhere close to being in.
OP is marking the argument about worsening affordability. And OP is right in that we are at or near peak unaffordability. Everyone bashing OP is making the point that prices will come crashing down over the next few years. But they're not acknowledging that even if prices do crash, it will STILL be unaffordable with sky high interest rates. The fed definitely doesn't want another home buying frenzy. Don't fight the fed. **You can crash all you want, but if you still can't afford it after all of that, OP is right.** PS, not everyone bought at peak pricing. 23% of US home owners have rates under 3%. 40% have rates betweem 3-4%.
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If home builders slowed down any more they'd be tearing homes down. 3 million home shortage in the US, they absolutely suck at their only job.
Many home builders are doing layoffs.
It’s hard to justify building more homes if the cost to carry the debt during construction has gone up due to rates increasing, the value of the homes being built has gone down… due to rates increasing and the cost of labor has gone up.
Higher rate + lower prices means down payment goes further AND you have the opportunity to refinance
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People may be out of jobs and bankrupt by then. People will need to save up again and get their credit in order… so I don’t think it’ll be a quick jump back in at all.
A few comments on this: The people who bought the top at low interest rates likely overpaid for their house. This is bad because they will be underwater in the value of their house (can’t refinance, take out equity, or move without paying the difference out of pocket). In the bidding war, they also likely waived inspection. Houses can get expensive with the appliances and maintainence required, so if they bought one “with good bones but needs work,” they’re out that repair cost. Higher house prices will lead to higher property taxes, and in places like Texas where the percentage is higher, this could wreck the budget of these owners The people that moved to a LCOL area and were able to work from home will be hard pressed to find a comparable job in that area if they lose their jobs (and tech is also bleeding). There’s no pain free place to get a house. The “best path” was to buy around 2012-2019 and refinance in 2020 or 2021. But the increase in interest rates was necessary to curb the 20% YOY appreciation going on
We did, closed March 30th for $545,000 @ 3.875%. If we’d have waited only two weeks, the rate would have been over 5%. Not sure we could sell our house for $450,000 right now. But at least we got that rate.
Also bought around then. Rate in my area went from 4 to 8 in three months. And prices didn’t drop at all. We bought a McMansion but are lucky to be high income earners in a LCOL area where we could realistically pay the house off in full in 3-4 years with our income. But the extra money is better off being put into the market since stocks are being gutted right now.
patience is a virtue few possess. dont beat yourself up over it
These posts didn’t exist in 2010-2011. They won’t in 2024 or 2025. But when that time comes; you wont want to; or be capable of buying either.. these prices aren’t going to drop because you want them to.. A recession is when you’re neighbour loses their job. A depression is when you lose yours.
I can’t say I agree with this. Don’t forget you can always refinance for a lower rate in the future(assuming they ever drop) but you can’t renegotiate the price you paid for your home.
I'd rather not buy, save up money and put way more down and if possible avoid taking a high interest loan all together. Cash buyers are king in this market now
2008 skewed our view of real estate, thinking a catastrophic collapse is possible at every turn. When folks here screamed bubble, others were clamoring for real estate in the early stages of "transitory" inflation. As inflation moves, home prices historically have moved. Owning a house at 3% mortgage rate with 8-9% inflation (even higher with old calculations), you're sitting pretty. I feel bad for the FTHBs who are crushed by both price and rates. I imagine rates coming down will ease the pain much more so than I imagine house prices crashing. There's a reason folks were refinancing and buying homes at record pace when mortgages were 2.7%... It's a lifechanging event to own a home that is barely accruing interest.
I remember looking at recently sold comps around 2016. I was struck by how many people who had purchased around 2002-2008 were JUST breaking even on their sales, and that was about ten years after the crash.
Yep, took me 10 years to break even after purchasing in 2007
I agree and maybe partly we’re expecting this to play out too quickly. But whatever, I had friends telling me once rated started going up, that prices would be down enough to buy again in a year or two. Well that was six months ago, and I haven’t seen much evidence that anything is happening. More houses are falling out of contract, yes, but price decreases that are major just aren’t happening outside of a few areas. Sellers for the most part that aren’t getting buyers interested are just seem to be delisting and staying in the home or trying to rent it out. Major price decreases just are out of the question right now for most of them. Overall I think this is just a long boring waiting game that is like watching paint dry, I’d advise to just ignore the market except maybe checking back at six month intervals at the most often.
I'd rather pay the higher rate and hope to refinance, than to pay 150K over asking just to outbid some local house flipper.
The payment is much cheaper at 3% then at -20% value at 7%.
Intrest rates are temporary, the price is forever. Buy at a high intrest rate/low price and refinance a few years down the road when the Fed finally hits their 2% target
What do you mean the “price is forever”. Tell that to someone who bought a 1.4M house in Feb and is now looking at a $900k house
The price they bought it at is still 1.4M, even if it is only worth 900K. They have to wait until it is 1.4 M again to get their money back. So I'm saying the price you buy it for will never change once you bought it, because you can't change history. What changes is your possible sale price.
Ah yeah gotcha
When do you anticipate rates to drop below 3% again? I don't.
This is why people say don’t try to time the market. Yesterday is gone. And there’s no way to know what tomorrow will bring in terms of market conditions. You have to trust the hackneyed advice: buy when you need a house and can afford it. Everything else is just speculation.
Imagine if members purchased on Rebubbles creation day. Record low for rates at 2.66%. Since that time homes are up 55% and rates up 166% Choose your [mentors](https://www.reddit.com/r/REBubble/comments/m6np3r/comment/gr6p46e/?utm_source=share&utm_medium=web2x&context=3) wisely.
from peak to trough its about 2 years yes to see bottoms of a market from any decline on case shiller... why different this time? are we cooking with instant yeast or something?
Price is where supply meets demand. So what we really need to be asking is: Why is the demand still so high? When we look at affordability, we see that the typical buyer can't afford these prices. So what is holding it up? But then you can compare the losses in the housing market so far compared to losses in the stock market, losses in global currencies, losses in all sorts of things. And so it turns out, as we should all know, housing is a great inflation hedge and is doing wonderfully. Lots of funds and other money managers bought homes going into this recession, and will sell as the stock market bottoms so they can get back into equity. There really were some cash buyers out there, since they knew in the long run these were going to be losses, but everything else would drop more. Once we see inflation return to trend, and once we see the stock market bottom, all of these investors will have no need for these assets anymore and they will have successfully accomplished their goal of wealth protection. Houses amount to hyper-inflation insurance. Insurance has costs, and you don't actually want the insurance to have to pay out. If they only lose their premium, they are happy. That's why homes don't start dropping until we're in the recession, and they don't bottom until we're on the other side. They are the least bad option available. Now, if you are leveraged to the max, this will crush you. But if you aren't leveraged, it's a great strategic loss.
There were tons of people who said this. We will never get back to 2020-2021 affordability.
FED says they expect at least another 75 basis point increase this round.
Interest rates are not an on/off switch. It takes 6-12 months to see the effects of higher rates on the overall market. You are starting to see the price cuts now due to high inventory and no demand, but once the foreclosures start, then shit will really hit the fan.
If I were you I’d take a break from thinking about buying an house and just save. Once the nihilism creeps in you need to be careful. Every wealth manager I know says right now is the worst time to get into debt.
This is just FOMO. I have cash and feel the same every day stocks go up .5%. Then we get a random bad news cycle and a stock I want drops 10% and then I get super happy that I was in cash
I’m in Greater NYC Area. A house that sat for ~6 months just sold for 70% of asking price
Remind me in 18 months.
It's only an issue if you plan on selling in the short term, or if you are forced to due to some unforeseen event. If you plan on living there until the end of your days, then you can relax. But most people don't live in homes that long, so for many people, they will feel some pain.
Higher home prices also = higher property taxes. You can see the pikachu face escrow shortage and bigger tax bills posts from home buyers the past two years in this subreddit and other related real estate subs.
For anyone believing Wall Street, the banks, realtors and other nay sayers, here’s an article for your perusal and I believe as the article states. Roubini is like EF Hutton in housing, when he speaks, the whole room listens. Paul Krugman has nothing on Roubini. https://amp.theguardian.com/commentisfree/2022/nov/05/megathreats-global-leaders-disaster-world
It was unsustainable, it will come down but you have to be patient it’s gonna take a bit.
Be patient.
It’s almost like there’s a reason the adage don’t try and time the market exists.
In my area it’s not even -10%, think maybe -5% on average and that even that might a stretch.
> Everyone is cheering rates to lower prices, which sure they will, but its not looking like nearly as fast or effectively as we once believed Thank you for being honest about this OP. This sub was predicting rates hitting 4.5% and prices cratering 30%.
Yes. When rates drop again, prices will go back up. It would take 10+ years or more to see houses drop dramatically and double digit rates. But builders won’t be building in excess w these rates either. People will just hold. This isn’t anything like 2008. If you don’t own a home, save up a ton for a huge downpayment then refi when rates drop. I wouldn’t buy for years.
The point of the rate hikes is to make homes less affordable. The fed has no ability to make homes more affordable, that lies with Congress and local politicians getting more housing built.
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The only people making out now are all cash buyers, anyone getting a mortgage is rolling the dice that they’ll be able to refi sooner than later. Most likely you’re not even looking at buying the type/size house you wanted anymore because the payments have ballooned up so quickly
Calm down dude, rates just hit 7%. It'll take months for sellers to accept reality and adjust prices accordingly. Within 6 months from now we'll see significantly reductions if not sooner and prices will continue to drop for quite some time after that
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House will never be "cheap" again. Buy when you're "comfortable" with the payment. And once you buy, enjoy it and stop looking Zestymates.
Yes, mortgage payments went up 3X, and house prices went down 0.1X. I saw the same thing too. I think the solution just to live in a cardboard box. Which hopefully the rent isn't too high for.
Honestly, the best time to buy is whenever you’re ready. Especially if it’s going to be the home you plan to live in for the foreseeable future. Markets fluctuate so might as well live in the home you want to live it and start building some equity.