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The housing market isn’t going to “crash”, is it
- Thread starter PeakPointMatrix
- Start date
Oddly enough NYT just had a story about how once affordable towns and cities are overrun with tech money as people flee: https://www.nytimes.com/2022/02/20/business/economy/spokane-housing-expensive-cities.html
My issue with development where I am (NJ) is there's no consideration to growth when building. While better housing is necessary, many times what we're seeing here is apartments/condos/townhomes just stuffed into plots of land and no other plans put forward to help traffic demand, or public access. Worse is we completely pave over permeable surfaces further increasing flood problems which are already an issue in the area. We get a single storm with 1.5-2" of rain (not uncommon now) and streets all over flood for a few ours.
At least in the high density areas surrounding major metros there needs to be improvements in designs around fostering no-cars and better building town centers. I recently learned about Kendall Yards in Spokane, WA and I have no idea if it's worked out or not (or how it's perceived by the community) but that general planning is what I think will help long term.
My issue with development where I am (NJ) is there's no consideration to growth when building. While better housing is necessary, many times what we're seeing here is apartments/condos/townhomes just stuffed into plots of land and no other plans put forward to help traffic demand, or public access. Worse is we completely pave over permeable surfaces further increasing flood problems which are already an issue in the area. We get a single storm with 1.5-2" of rain (not uncommon now) and streets all over flood for a few ours.
At least in the high density areas surrounding major metros there needs to be improvements in designs around fostering no-cars and better building town centers. I recently learned about Kendall Yards in Spokane, WA and I have no idea if it's worked out or not (or how it's perceived by the community) but that general planning is what I think will help long term.
This. In 2018 I used the WA down payment assistant program. They paid all my closing costs and I got an FHA loan for the mortgage. Wife and I literally got in the home with zero out of pocket. Since values have gone up over the last few years, I refinanced both loans into a single MTG and my LTV (loan to value) came in at 70%. This allowed up to drop the MTG insurance payment. I paid $160k for the home in Jan 2018. Last appraisal in oct 2021 came in at $285k. Prob close to $300k now.
I count my lucky stars for the WA down payment assistant program. Wife and I were saving up for first, last and deposit for an appt when I saw an ad in the paper for a home that was for sale by a guy who flips homes. Talked the wife into going as she was all doom and gloom about being able to afford it. The seller knew his shit and put all the info about the program in the online listing. We liked the house so said what have we got to lose but our pride and we applied. Seller had a broker he recommended and in 6 weeks, we had the keys.
Obviously, the market is worse but we still thought "no way" back in 2018. Look into state programs folks. Between those and an FHA (loans up to 97% of the sales price) you might get lucky.
People whose only big recession was 2008 have a skewed perspective of what happens to housing. Historically you see prices stagnate instead of decline even during recessions.
There won't be a crash. The crash was caused by different factors, whats going on now is because of many economic things just driving up prices and demand.
Things will cool off and normalize a bit but housing is expected to still keep rising this year.
Two things that are supposedly going to slow it down a bit is that the lease and rental protections against foreclosures and evictions is mostly over with so lot of new properties will be going up on the market which will slightly help with the inventory issue. Also mortgage rates are shooting up again which will deter some buyers. Still there is a problem with supply and demand in many areas that wont be quickly fixed
The last market crash happened for totally different reasons which aren't happening now.
Things will cool off and normalize a bit but housing is expected to still keep rising this year.
Two things that are supposedly going to slow it down a bit is that the lease and rental protections against foreclosures and evictions is mostly over with so lot of new properties will be going up on the market which will slightly help with the inventory issue. Also mortgage rates are shooting up again which will deter some buyers. Still there is a problem with supply and demand in many areas that wont be quickly fixed
The last market crash happened for totally different reasons which aren't happening now.
There'll always be another crash, but as with the stock market you simply cannot time it, because by the time it happens it mightn't fall as far as the value it was when you started "staying out". Unfortunately it's hit many people's escape velocity in terms of how much they can save per year. This is why 100% mortgages are important.
You have to consider: is there a lot of space where you could build new homes? Not in most places where people want to live. Is it cheap to build a new home? Prices have risen and likely won't come down soon. Is there a population reduction making more houses available? No. So barring any bigger economic crash - that will ruin your savings anyway - don't put too much hopes.
I don't expect a crash soon but I wish things would cool off. I'm planning on buying my first house with my girlfriend later this year and we're in a weird spot. We don't plan on staying where we're at for more than like 10 years, and we really don't want to buy a house at a super inflated rate and then have the market drop years later.
I was in your shoe OP about a year ago and I went through a lot of emotions trying to buy my first property due to bad the market was then. I did get my foot in after about 2 months of active visits after 8 months of active planning.
Do not listen to those saying wait for the crash. If you have the opportunity to buy a home, do it. Even if you're paying more than you would have a year ago, that's not how the market works. There are far too many investors in the real estate industry now. Homes going for good prices get bought out incredibly quickly by investors due to connections before the general market even gets a notice. Things cool off every now and then, but then it surges again depending on the supply of certain areas.
If a crash does happen, you should also consider the fact that all your savings will be impacted as well. If you believe that's worse and you wouldn't be able to survive without your savings (assuming you fall ill or lose your job, absolutely hope it's not ever the case), then you're not ready to buy a home. Buying a home should be more than just an investment for people, it's a place to live. So do consider that if you're already in a good living condition and the money needs to be used elsewhere, you're not a serious buyer.
Do not listen to those saying wait for the crash. If you have the opportunity to buy a home, do it. Even if you're paying more than you would have a year ago, that's not how the market works. There are far too many investors in the real estate industry now. Homes going for good prices get bought out incredibly quickly by investors due to connections before the general market even gets a notice. Things cool off every now and then, but then it surges again depending on the supply of certain areas.
If a crash does happen, you should also consider the fact that all your savings will be impacted as well. If you believe that's worse and you wouldn't be able to survive without your savings (assuming you fall ill or lose your job, absolutely hope it's not ever the case), then you're not ready to buy a home. Buying a home should be more than just an investment for people, it's a place to live. So do consider that if you're already in a good living condition and the money needs to be used elsewhere, you're not a serious buyer.
A population reduction has already begun in most developed countries, not in net due to immigration, but rural areas aren't benefiting from that. If the right has its way immigration to cities will soon start to dry up and with birthrates as low as they are it will only be a matter of time before population declines hit more urban areas.
This is a few decades out and won't happen if immigration rates are steady, but the building blocks for broad population decline are there. That will obviously have a major impact on housing costs.
Houses are not milk. They do not 'go off'.
Therefore, if the price is not right, the owners of said houses can sit on them for as long as they want until the price does go up to the right amount.
So don't expect to see house prices go down. Level out maybe, but nobody wants to be the person who had to sell their house for less than what they paid for it. That just isn't the done thing.
Therefore, if the price is not right, the owners of said houses can sit on them for as long as they want until the price does go up to the right amount.
So don't expect to see house prices go down. Level out maybe, but nobody wants to be the person who had to sell their house for less than what they paid for it. That just isn't the done thing.
This is not entirely true. If you have to move for work at some point you'd rather sell low than carry two mortgages. Same thing if you need to love to a larger house, have a change in finances, etc.
You're not married to California. Think about moving long term if homeownership is a goal. I say this as someone in another HCOL area.
It's not like California is watching your back here, either. That said, if you have strong relationship there, I can understand the conundrum.
Heck, homeownership is quickly becoming unattainable in many MCOL areas.
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Gonna be selling our house soon, we expect to get lot of offers and likely hope for much more than asking. Everywhere here in South FL is stupid hot right now and houses typically are selling within 24 hours on market over market value. The demand for housing is so high right now with lot of folks moving in not helping, that if you want a house, you gotta bid far more than asking and to avoid mortgage problems, those with cash are throwing obscene money at any home trying to land them. Know several folks who recently sold and all got a lot more than the list price for their homes and got avalanche of offers.
We got lucky on buying our new home last month, I had to put in an aggressive offer and thankfully it stuck, but folks are striking out left and right leaving no option other than paying far more than asking. If you are bidding under asking for any property right now, you might as well not even bother.
In built up areas there isn't much new housing going up, or very limited places to build anymore. South FL here is congested as heck, most areas don't got anywhere to build housing.
We got lucky on buying our new home last month, I had to put in an aggressive offer and thankfully it stuck, but folks are striking out left and right leaving no option other than paying far more than asking. If you are bidding under asking for any property right now, you might as well not even bother.
In built up areas there isn't much new housing going up, or very limited places to build anymore. South FL here is congested as heck, most areas don't got anywhere to build housing.
Saw you edited and glad you did, because like that NYT story I shared I'm seeing MCOL just not be attainable like they once were. I remember stories as a kid of people moving out of NJ/NY to homes 3x the size (land or sq ft) for half and still having jobs. Now, not so much. With tech so widely dispersed and remote really taking hold a lot of those areas are long gone. A lot of it is definitely do to supply (like in Vermont, Montana, Idaho) but it is also competing with folks who have money to burn.
Population reduction is also compensated by more single person households. And lots of developed countries are seeing their growth of population decline, not their actual population, even in 40 years.
We need to build more. We also need to bring back better zoning. Mixed use.
SFH is extremely expensive, both in building them and maintaining the underlying infrastructure.
True, though among friends and colleagues, it seems as though not being able to sell for a profit generally means you postpone the move, or rent out the house, (which brings its own hassle, but that isn't quite as apparent to anyone doing it for the first time).
Having to move for work seems to be less of a thing than it once was. Used to happen a lot back in my dad's day (60's - 80's), nowadays it tends to happen early in your career, and after that its either just a change in commute, or you work remotely.
There absolutely are a certain amount of 'forced' moves, but it doesn't seem to be enough to shift the needle on prices.
See my other comment in here about how it needs to be more than just 'build more'. While true, we need to be smart about how we build and expand to avoid all the mistakes we made in existing urban/suburban sprawls.
You would need to like 10x the inventory and a 5+% interest rate hike overnight to even come close to crashing it.
2008 will never happen again. I can't imagine a situation where tons of cheap housing comes back on the market and isn't immediately snatched by investors. Surely they must look at 2008 and realize how much money they left on the table. Personally, I think the price increases will slow, but probably just continue to rise. The last 2 years have been insanity, and I can't see that being a new normal.
As long as companies in the major metros continue to be remote/hybrid this will continue. I don't know how long, but it will definitely take some time for things to level out as things either go back to in person or markets normalize once everyone has moved.
I've accepted that I will probably never own a home. Was under contract last year after making a desperate offer on a house that I didn't even like that much. The inspection revealed problems with the house so I backed out. Now the housing market is up like 20-30% in the areas I want to move to and the situation doesn't seem any different... you can't actually target a specific type of house or be picky in any way, you just have to make an insane offer on every house you find acceptable and hope your offer is the one that gets picked, and then hope there aren't any major issues with the inspection. The whole process is essentially a giant lottery. It doesn't make any sense to buy anything, let alone a major purchase like a house, under these circumstances.
The townhouse I got a few years ago has already ballooned in price by at least 50% down here in San Diego, but because everything else has too, I can't actually use that to get a better house or anything.
People arguing that crashes are inevitable are thinking too much of the stock market and not the housing market. Housing crashes are far more rare, you can easily wait half your life and never see something like a 20% drop.
The price surge during covid will likely cool off slightly, but it's highly unlikely will see anything change significantly. As things return to "normal" thats still going to look a lot different than 2019. Keep in mind there was an increase of first time homebuyers, likely people who could afford to buy but had been renting in city centers because of the convenience. Those people aren't going to suddenly sell the home they bought and move back into a rental. That ship has sailed, and we'll be dealing with less supply for a long time.
The price surge during covid will likely cool off slightly, but it's highly unlikely will see anything change significantly. As things return to "normal" thats still going to look a lot different than 2019. Keep in mind there was an increase of first time homebuyers, likely people who could afford to buy but had been renting in city centers because of the convenience. Those people aren't going to suddenly sell the home they bought and move back into a rental. That ship has sailed, and we'll be dealing with less supply for a long time.
I don't see it happening. The powers at be will never let 2008 happen again. Things will get bailed out at the first sign of something slipping. Too many big companies and investment firms are mopping up real estate for it to be let go.
I'm trying to get a house asap because I see it only going up. It's just a matter of when you jump in.
I'm trying to get a house asap because I see it only going up. It's just a matter of when you jump in.
Sell in the spring/summer and buy in the winter, you could get lucky
the housing crisis that will show up next isn't prices going down
but lack of homes for people to buy and sky high rents for the existing inventory
but lack of homes for people to buy and sky high rents for the existing inventory
Already here:
National rent prices hit an all-time high, as home prices continue to soar | Fortune
The double-digit escalations come after two years of essentially flat rent rates.
fortune.com
Rent is truly outrageous. We were lucky enough to find a townhouse to buy and it's $700-800 less than a 2 bedroom apartment would be in my neighborhood. My house was renting for $600 more than my mortgage and that's before we did a small renovation. It's insanity right now in the rental market.
We were still in the dip from the crash 10 years ago, or just starting to rise at that point.
Why would they come back down? Why wouldn't banks and wealthy people just buy more of them?
Demand is much greater than supply. There isn't going to be a glut of supply coming from overbuilding or a flood of foreclosures. At best prices may dip, but definitely not crash.
Interest rates are already rising. It means your buying power is decreasing and the house you can afford drops into lower ranges.
Buy now if you can and plan on living there long term.
Interest rates are already rising. It means your buying power is decreasing and the house you can afford drops into lower ranges.
Buy now if you can and plan on living there long term.
There is no metric or statistical rationale that prices go down right now. Like the last 100 years of property values tell you this.
Buy now, or forever rent is the unfortunate reality. It may stop the meteoric rise, but if anything, things will plateau. There is nothing in the market right now or at least in the next few years that would cause negative values. Inventory is still at record lows. There are simply not enough homes for sale vs people looking to buy. If we hit parity, we will see some improvement.
It's a shitty situation.
Save now - get the MTG ASAP and lock in your rate before things go over 4.5 -5%. It's happening this year. The window is probably 60 days right now.
I work in the financing arm of the apartment industry and it's like - rents keep going up but vacancies aren't going up either so there's no incentive to stop.
Plus there's a glut of Section 1031 money out there that everyone is trying to park and when they finally do purchase something then everyone's business plan to a lender is to raise rents. I've never seen a loan request that didn't have a corresponding rent increase baked in.
There's not enough inventory of apartment buildings to go around either so that further pushes prices up. Oh rates are going up quite a bit too right now so that's pushing demand even higher against a limited inventory with people trying to get their rate locks in before rates go even higher.
It's still a major supply issue at the end of the day.
Contractors must be feasting with all these people buying up troubled apartments and fixing them up.
The difference is that it happened over time. This happened in 2 years. In the near term yes prices will be up but I think it was gradually go back down to a more affordable price. I am not saying it will go lower than what it was in 2019.
Either government steps in, interest rates or as inventory comes online. This is just what I think.
In my area I am seeing prices going down slightly and staying on the market far longer.
I hope you're right, but there is nothing I see that would cause prices to go down in any meaningful way. Stop increasing? Yes- as the inventory issue improves. If rates go over 5%, you will see the increases cool off....but that won't help the inventory issue.
Hell, in Toronto, I've heard the bubble will burst since the mid 90s. Shit isn't ever going to pop. There is enough money from non residents of a city like this for it to ever pop. Residents of this city will just continue to be priced out
I don't think it's coming down until something is done about the US's massive inequality. As it stands a few very rich people are trying to find somewhere to put their money, and buying up houses and renting them out is probably a "great investment" for them.
I wish it would crash. Got my house in 2019, so in theory I should be thrilled about my house's value going up a ton, but I don't really benefit from it at all. It just means my property taxes and insurance are more expensive, and if I sell it wouldn't help me get a better house, since that money just goes right into the next house with it's inflated value.
This isn't 2007-2008. No one is giving home loans based on potential earnings or decent credit. You have to earn the loan and with inventory not as wide, it's harder. The market is not going down and these are the prices of homes going forward. It may cool down 50k in some places, but I do not foresee it in most places.