Fellow home owners, are you ready for the housing market to crash?
I know I'm supposed to want it to keep going up as a wealth generator or whatever.
But like... I wouldn't be able to afford the monthly payments if I bought my house right now and it's scary. Also none of my friends are buying homes, none of them are even renting full places. Just like renting rooms.
So what are your feelings home owners of lemmy?
I hate that we lost sight of what wealth really is and replaced it with the idea of profit. I bought my house to provide myself with financial security, not profit.
My monthly "rent" (mortgage payment) is locked in for the next 25 years and will not go up. At the end of those 25 years when I'm ready to retire, I'll have housing with only taxes and insurance payments. THAT is wealth. THAT is what home ownership is meant to be. If housing prices fall, it won't change my life a bit.
That's why I bought a house instead of renting. One day it will be paid off, and from that on, as long as I keep paying the property tax nobody can kick me out. They can cut my water and electrcity, but the house and the plot remains mine.
Additionally, if overall house prices go up that does mean that your house becomes more valuable.
However, it also means all other houses become more expensive.
So in practice, if you want to move in 10-20 years for whatever reason, it essentially means nothing that your house has gone up in value. All that extra money is going to go to another house which has equally gone up in value.
The value of a house going up means you are technically building wealth, but that wealth is entirely tied up in the house itself. Unless you are intending to become homeless it likely will stay tied up in your house forever.
House prices going up is mostly a good thing for investors. Not so much for people who simply want a place to live.
Except that many people live in their homes until they need assisted living. In which case selling the home nets them more money than they put in to pay for those services. Or consider that home prices raise at different rates in different areas so it’s possible to sell in a hot market and retire to a cheaper area when you no longer benefit from things like proximity great schools as your children are grown.
Man I wish we could get 25 year fixed rate terms in NZ. Longest anyone would quote me is 5.
Meh I don't care. We bought a couple years ago when rates were super lower but prices were high. Our mortgage is less than rent would be and we're not going anywhere for a long time. I think of the house as a place to live, not an investment really. Like a car. It serves a purpose and I'll use it until I can't anymore.
Yup the people that are mostly disadvantaged by (and cause) a housing crash are the people that treat houses like stocks.
Same boat. Got a 10 year lock in at ~2% interest and now the rates are more then double that.
Going to do everything we can to keep that rate although we doing extra repayments just in case.
You point out the Catch-22 that a lot of people miss on this stuff. They get so fixated on increasing their property values because they want to screw someone over when they finally sell their house....not stopping to think that the same thing is about to happen to them when they go to buy one. Not to mention, higher property values means higher property taxes (in some places, anyway).
Yeah like it's cool my 200k town home I bought 4 years ago is now selling for 400k (neighbor just sold for that much).
Except that means that the 350k home I was thinking might be a nice upgrade one day, is 700k.
Like I'm way more screwed over now unless I intend to like sell my home then move to the middle of nowhere. All that higher value means is property taxes like you said. But of course renters are the most screwed.
This was actually my thought process when I got divorced. It probably would have been prudent in many ways to downsize to a condo, since it’s just me, however I could afford to buy my ex out of the house and any percent gains will be off a much higher base. I’m hoping that when I do eventually downsize, that my equity will be higher than if I had a paid off condo. In your example, doubling prices gained $200k inequity for the condo owner, vs $350k gain for the house owner (of course it’s more complicated when you factor in the mortgage)
… so yeah, it would suck for the housing market to crash, or stay down
A housing crash is only bad for you if you’re either outright selling, or moving to a less expensive house.
I have like 15 years left on a 30 year fixed rate. I'd like to move closer to where I work, but I don't want another 30 year loan and a 15 year would currently be a much higher interest rate, so I'm stuck with my house until it's close to being paid off. Doesn't really matter what homes are costing when you have to buy another after selling. Expensive houses only help people who own multiple homes and aren't replacing what they sell.
We need a housing market crash. My pocket book be damned. We'll figure it out. The next generation won't.
Ain't that the truth.
I live in Orem, a city you probably have never heard of. Population of under 100k, not a rich city by any means. Median individual income of 26k, median household income of 65k.
There are no single family homes for sale under 400k, and all apartment/condos for sale are 300k.
Just picking a random apartment for sale for a little under 300k and doing an estimate of 10% down with current rates is a mortgage of 2.2 k a month on 30 year fixed. So of course whoever buys and rents these out are going to do so at AT LEAST that number.
With JUST taxes taken out of 65k bringing it down to 45k, the mortgage/rent alone would be well over half the median house hold income for these things. But of course there would be HOA, withdrawals for 401k, withdrawals for medical care, etc. Meaning it would probably be closer to 70% of median household net just to pay mortgage on the cheapest apartment for sale.
And of course we can repeat this exercise for just about any city and get the same result. It's scary.
Fun part about Orem is that all of those houses for 400-600 were built in the 80s and haven't been updated since then.
So then you start looking at houses in at least Saratoga or Spanish fork. I landed in Springville and I bought 3 years ago before the market got as bad as it did.
Your pocketbook will be fine, unless you're flipping houses. The only thing affected by the price of your primary residence is your borrowing power.
Non-home owner of Lemmy here. I want you all to know that my fondest wish to see the housing market completely implode is strictly not personal.
My only chance to buy a house slipped away a few years ago. House prices have gone up by 50% or more in some locations, and interest rates have more than doubled. What was previously affordable is now completely outside my means to pay for each month.
My last hope now is for a 2008 repeat so I might be able to snag something up for what it's actually worth. I certainly can't count on the state or the government to take the housing crisis seriously enough to have them actually build more affordable housing for people to buy and drive the asking prices lower.
I feel this so much. My dad was a general contractor in California during the 2008 crash; we lost 6 houses that were either ready to sell, or still being built. So I personally know the kind of pain and suffering that a housing market crash can cause for certain people. At this point though I have to look out for me and my family, currently renting part of a way-to-small condo in an area where you'd need 3 incomes to afford a mortgage on a house big enough for all 4 of us.
So yeah, crash and burn market. Give me a chance to get us out of here.
It was a gigantic mistake to ever allow homes to become investments. That economic value growth is only possible by limiting the availability of homes near popular areas, which is by definition exclusionary meaning some people must be priced out of having a home in a place with good opportunities.
It's not just unfair, it's also inherently unstable. You're eventually chasing away many of the workers you're dependent on, you can't avoid bubbles and crashes, etc.
i bought my house at the top (two years ago) and no regrets. less about it being an investment and more about having a stable place to call my own that gives me safety and not at the whims of a landlord. i’d quite like it if house prices became more affordable for everyone, the counter intuitive thing to say. 🤷♂️ i was supposed to become a nimby and vote conservative but now i’m more left wing than ever.
Pretty much this. I'm quite content with losing some of my net worth if it means other people don't have to struggle as much to have their own place to live.
I bought at the peak myself to have stable housing while raising kids.
If house prices just stayed flat until wages caught up and then only increased similar to match wage increases (not inflation) that might be a reasonable compromise between the middle class who have a house and don't. Those who own will still be paying down a mortgage so increasing your equity that way without being decimated if you have to move. Unfortunately at this point, that could take awhile before wages caught up.
I agree with you. I think property is theft; in an ideal world everyone would have the right to shelter and no one would own land privately. And I also think fear of housing insecurity - including the fear of a landlord extorting or evicting you - is the biggest reason America is obsessed with home ownership and I can't criticize anybody for pursuing it. The only way to have secure housing in the US today is to own your home, and everyone has a right to secure housing.
Yes, and it will cost me some money as I'm getting ready to put mine on the market in the coming months.
But I don't give a shit, the current conditions are unsustainable and I have great empathy for the generations behind me that are excluded from what is a fucking FOUNDATION of getting a stable life going. The shit has to come tumbling down at some point, otherwise our social structure will continue to degrade. The people who will removed and moan about it are so out of touch they should be ignored anyway. Bring on the crash.
There are too few people like you in the world. I appreciate your attitude.
Where are you located? How much do you think you'll lose. 30-40%? Or are you willing to lose even more?
I hope whoever buys from you is appreciative and understands your position too.
Colorado. I’m not going to really lose money over what I paid because I’ve owned it for almost 20 years. But it will be way down from the market high here and I think that’s peachy. I’d guess I’ll make 20% less than if I had sold 1-2 years ago. If the market really does crash like 2008 then 30% or more. But Housing prices have got to come down still, a lot. Banning corporations from owning single family residences would help a ton.
I care more about houses being affordable for everyone than I do about turning a profit. Greed is a huge sickness in our world. Hell I don’t think houses should be an investment vehicle in the first place. It’s a place to live not a goddamn wealth generator.
The housing market isn't going to crash. We're at the highest mortgage rates in 23 years and it's STILL a sellers' market. The fact is, inventory being incredibly low + home buying being desirable for many == no reason for a crash. Even the Great Recession only resulted in a temporary price dip.
I know a lot of millennials and zoomers would LIKE for there to be a crash because they think it would let them afford a home. This is a false belief, though: if there were a major crash, it would likely be accompanied by a recession in the labor market too, so there goes your ability to pay for the house.
Also, it's not black and white. If house prices and interest rates cooled off, it would let me (a homeowner) refinance my mortgage.
Morever, there are benefits to home ownership outside of equity / profiting off a sale:
https://finance.yahoo.com/news/housing-market-crash-experts-191734802.html---
This is the right answer.
Look at Europe. For many the closest you get to buying a house is a 99 year lease, and for the majority renting is normal. The main difference is that renters have many more rights so there's less reason to want to own for yourself.
I mean things can get way worse. Look at Canada and Australia. No sign of a crash in either yet, prices just keep climbing. Homeless encampments and the like were alien to us up until recently. The median Aussie household income is ~$65,000. Homes start at about $600,000 and at that price a lot of them are teardowns, you'd be spending at least $200,000 in repairs.
Banks want 20% down.
It is scary, definitely.
I rent a nice house, I'm lucky. I've also not had a holiday in over a decade...
Housing as a wealth generator is a bit of a lie. Prices going up only benefit people or corporations who own multiple homes or those who rent out their homes, and the few people downsizing for retirement by selling their 2500+ sq ft for a small apartment somewhere.
For the regular Joe you always need somewhere to live, so it doesn't matter if your houses is $100k or $1 million, that money is always going to be tied up in the house and not be spendable.
If anything the prices being high is worse for regular home owners because you're going to be paying thousands more in interest on the mortgage that goes straight to the banks.
I'm not arguing in favor for house prices going up but just wanted to point out how a lot of people use the value of their home. You can pull out money from your house and your interest payments don't change when the value of your house goes up.
I'll give the example of my neighbor. They bought their house 10 years ago at about $250k. Interest rates were around 4.5%. We're in a location that got really hot during the pandemic and the house value jumped to about $700k. At that moment, they had the same payments as 10 years ago. Then interest rates dropped down below 3%. His balance on the original mortgage is probably about $175k and now he refinances the house with a mortgage of $325k, pays off the old loan, and pockets $150k out of the house. But due to the lower interest rates, his payment is the same as it was 10 years ago. He just has $150k in his pocket. Meanwhile, I'm the schmuck who had to buy the identical house at $700k at 5% and pay 3x for the same house.
Don't forget the increasing property taxes!
This was my thought, next year my escrow increases by $100 because my property is supposedly 50% more valuable? Nope, it's a wealth stealer, not a generator.
Let's also not forget that in a high value market you can't magically sell a more expensive house and acquire a less expensive house of equal value. You have to downsize and the house of lesser value is still overinflated.
Not to mention the property taxes. I would love for my home value to be cut back down to pre-COVID levels. The taxes are eating me alive.
For the regular Joe you always need somewhere to live, so it doesn’t matter if your houses is $100k or $1 million, that money is always going to be tied up in the house and not be spendable.
I mean, you could take out a loan against your home's appreciated value, but most people do this to put value back into the house, like remodeling or landscaping. The value isn't totally tied behind the sale of the house itself, but your point still stands.
If anything the prices being high is worse for regular home owners because you're going to be paying thousands more in interest on the mortgage that goes
I always wondered why people never seem to think about this side of the equation.
Your interest rate shouldn't fluctuate with the housing market, unless you have an Adjustable Rate Mortgage. Most people choose a conventional mortgage where you're paying interest on the value of the loan you received from the lender, not on the value of the property itself. You can voluntarily refinance the house to get a lower monthly payment if the interest rates go down, but if they go up, you're insulated from the impact except in the fact that you now likely have less mobility because having to pay a 7% interest rate when you are used to paying your 3.5% rate on a same-value house means you can't just sell and expect the monthly price you pay to remain the same.
Your taxes and insurance, on the other hand, do quickly balloon out of control if your property suddenly spikes up in value.
Let it crash!
Big housing prices only benefit the people owning multiple homes.
Because it doesn't matter what the housing cost is if you sell your only home, because you will need to buy a new home at the same cost anyway. Since everyone need a house to live.
Not only that, if you have a small starter house you still benefit from a crash. That 400k house will become 250-300k, while your 180k house will just drop to 130-150k.
I have no issues with that. I'm not living here to make a fortune on speculation. I am living here because it is my home, and I leave selling this to our kids once we are dead, hopefully many decades in the future.
Non-home owner, currently I could live a hundred lives and never own a home. It must crash, and it must become regulated to prevent this from occurring.
Homes should not be considered investments.
Your home rising in value doesn't benefit you, because you still need to live in one if you sold it, and that home has likely also risen in value. Your house doesn't grow when its value does. It doesn't sprout an extra bedroom.
If you own multiple homes, then you can view all but one of them as an investment, as you can sell them when the market is good.
If you own one house and have a mortgage on it, then the market going down is bad because you end up with negative equity.
If you own one house with no mortgage, then the market going up is bad because it's harder to upgrade. I wouldn't mind my house being only worth £10,000 if it meant that I could buy my dream house for £20,000.
If you own one house with no mortgage, then the market going up is bad because it's harder to upgrade.
Unless you're retiring and downgrading. For those with families who grow up and move away, the house can be seen as an investment if they intend to move into a smaller space once they're just a couple again.
Of course, that's assuming their kids don't have to move back home because of astronomical rent prices and a sizeable wealth gap...
You're not supposed to own a second one... otherwise you will be literally the devil !!! /s
As a homeowner, there is nothing to be ready for. Nothing has value unless you're trying to buy or sell it and I'm doing neither in the near/medium future regardless of the price of my home. I bought before prices went stupid so I feel like it is unlikely any crash will do the value to below what I paid.
My condo is paid in full. I want the market to sink like a stone.
This current housing market has everyone trapped. I cannot sell and upgrade because I'm not going to pay 7% interest on the part I don't have in my bank account.
If the market crashes hard enough these huge corporations that have been sucking up all the single family homes will probably start unloading them at lower and lower prices to pay their creditors. It could be good for people who want to buy. Couple that with the coming crash of corporate office space and it could be quite an interesting time.
The real truck is going to be coming up with legal/constitutional bans on corporate ownership of single family houses.
asdfasdf
yea they will be packaged in giant batches with no mortgages, of course.
I don't really know what people are expecting to happen?
It's true that the housing market does not represent real value of the asset at all. You pay double or triple 'real' value, and it seems that OP is suggesting a market correction is due.
Whilst that may be true in some areas that are actively collapsing with major population drain due to crime, lack of work etc (I'm certainly not familiar with the USA or its cities) - overall the supply of houses is still vastly outstripped by the demand of people that would like to own one. The population continues to grow via immigration and births to prop up the never ending shell game of annual GDP growth.
Whilst there may be regional blips, unless there are massive social housing programs that flood the market with cheap, desirable dwellings then I'm not sure why anyone would expect the housing market to crash. Until the shell game and the table they play on is flipped and burned, the housing market will not crash. It's the most basic supply/demand equation out there.
I mean we had those same situations, and we still had the collapse of the housing market in 2008 in the US, because everyone defaulted on loans at once on overinflated houses, then houses shot back to proper value. Losing an estimated 25% value.
So it just feels like that might happen, because housing prices are soaring and interest rate is so high. So I mean, if it happened once in similar situation, it doesn't seem unreasonable to say it might happen again.
One of the major things that is different is that loans are a lot different from what kicked off the '08 crash. We didn't see a flood of interest only, 5/1ARM or other exotic lending setups. Yes, there are some out there but they aren't as large of a slice of the market. Banks have to keep more capital than when WaMU crashed and we even saw some larger regional banks fail this year with only a rather minor impact outside of SV angel investor lending.
This isn't going to be like '08, There would need to be a major situation to cause house pricing to fall like a depression level downturn or industrial level of house construction destabilizes the market.
In what way did the housing market collapse? The only thing that changed was the availability of irresponsible loans to people that can't afford them. Tighter regulation of lending.
The effect on housing prices was a mere blip, and banks are back to their old tricks again. You're right about the same crisis repeating: there's more packages of bad debt that have been sold and re-sold as if they have any value, this will almost certainly come home to roost again but on a longer timeline it's not something that will 'fix' the global housing crisis because supply:demand has not changed in any meaningful way.
If you are a private investment company with wads of cash, you'll take advantage of the temporary instability and buy up massive amounts of private land and housing. Problem just gets worse in the long run because we keep propping up the system that rewards this behaviour.
For me personally, my wife and I are probably going to stay in this house until it's time for the old folks home so it's just numbers that'll never actually mean anything. If it crashes by half or more I'll actually get a reduction to my property tax.
Let it crash, this is unsustainable. Having a secure, long-term roof over your head shouldn't be so fucking hard.
Your HOME is not an investment. Unless you're planning to sell and live in a cardboard box.
When you buy a house, you're essentially locking in your housing costs, which can be especially advantageous if you have a fixed-rate mortgage. Rent, on the other hand, can increase over time. My monthly mortgage payment for a house is already several hundreds less than what my friends are paying for their tiny rental apartments. In about 17 years, my house will be paid off, and then I'll only have maintenance and utility bills remaining, while my friends will still be paying rent, which probably has increased by quite a lot by that time. I don't need to sell my house to benefit from investing into it.
This exactly. The 2 things that affect my fixed rate mortgage are property tax, and homeowners insurance. Even those don't affect the payment much in either direction.
I 100% want a market crash. When I was fresh out of college and checking out possible houses, even in more rural areas, it just never seemed like I'd be able to own a home. It's so much worse now than when I graduated. Literally cannot see a future where I own a home unless I inherit from my parents.
There will absolutely be a population crash in the US & other countries suffering from the housing crisis, nobody will feel like they can raise a family. None of my co-workers or friends foresee ever starting one if they can't get a house.
Was watching a video on YouTube, some hyperactive landlord "influencer" type was removed how new homes were getting built in his town. Went on and on about how it's bad for everyone if more homes get built and if prices went down. Of course, everyone was tearing him apart in the comments.
We need more homes, we need lower prices, unsure if it'll happen though.
I'm 36, the majority of peers my age are childless, and plan on staying that way. Myself and my partner included. It's too expensive, the climate is fucked, and I don't need to bring another serf into the world for the assholes on top to exploit.
We need more well built homes. This is the hidden crisis inside the housing crisis.
I have a friend who has actually paid for two homes but only owns one. It's been one thing after another in large and serious issues.
Shoddy and fast housing has been a problem, but now we are also here ,just after all this flip culture.
Be careful and thorough, if we ever get the chance to buy that is.
The interest on my mortgage is fixed for the next 10 years, so I'm more than OK with a crash. In fact, I hope it crashes hard so those who own properties as investments burn.
Someone is renting out a duplex by me for $2700 a month.
I hope it crashes and burns so they have to sell at a heavy loss for the crime of trying to rent out just a normal home for so much.
Like this was supposed to be the affordable part of town with small homes, town homes, and condos. Now investors are like... what if revenue stream?
Can't wait. Maybe then we can finally afford a decent house instead of our tiny apartment-style condo.
Not worried if we can't sell, cause we can always rent.
Woah don't use that R word around here, gonna have people calling for your death because you're exploiting your renters even if you treat them well.
Why do you think that is? All this raw anger directed at a member of our economic class? Maybe, just possibly it is because everyone has had at least one shit landlord and they know that said landlord got away with it and is still out there ruining another person. Nah crazy talk. It must be totally random.
I think it's still gonna be tough. The prices will go down because of the high interest rates, but they'll stop at the point where people are able to make the payments again. People who buy at that time will pay about the same as they would have, just less on the principal. If the interest rates go down they will do very well after refinancing.
In my area I've definitely seen it slowing. When I bought my house a few years ago, right after lockdowns, a place would be on the market for a day or two and they'd have tons of crazy offers. It took a while to find a place because of this. Now two houses on my street have been on the market for over a month.
Capitalism is a Ponzi scheme. Build up debt, and pay it off by transferring it to the next generation of suckers.
I look forward to the crash, and hope it's not just a reset of the same system.
My mom was complaining about some pyramid scheme get friend fell for and I explained how every business is a pyramid scheme.
You work, you produce way more value than you are paid, that money goes to paying other people and growing the business to make the shareholders rich. You aren't rewarded for your work, generally. Somehow this is normal. The only difference with a real pyramid scheme is that they generally lie about how much you could succeed.
My wife and I are both lucky and we bought our place mortgage free because we were able to save while paying off our old place.
While making the purchase we specifically talked about how if the market crashes by 50%, we're still better off. Because most likely every home will be similarly cheaper. And our earning potential would be similar.
The difference is that it's hard to predict what will happen in an economic contraction like that. There would be a lot of joblessness and a lot of hardship.
I'm hoping we can minimize the joblessness and hardship (which is already happening). People are unionizing, despite the best efforts of the owners of even businesses that had a progressive reputation, and the strikes are getting results! It gives me a lot of hope for fairness without the reset that could lead to mass homelessness and poverty. But having been around the block a few times, I know it will be a close thing.
(German)Homeowner and (small time) landlord here: Yes. And I look forward to it. We bought an old house (think 1940ies) a while back and did renovate it. While it was expensive the absurd thing wasn't actually the price but the price for craftsman and material. The former already crashed heavily here (sadly not for the ones I need).
I rent out three apartments in the same house I live in. We have an average rent index here and I stick to it (even though I could easily get more as we don't include extras in our calculations that we normally could add to get more rent - and with that market we easily could get more.
The way we financed the house is based on the premise that the market will crash - it is not a regular investment in the sense that we will come out with a net positive. It is a way to make sure that we don't need to rent anymore (which is hell at times) and that we do have a place where we must not worry about rent when we are old. If the kids do inherit something,nice,but not a must.
We initially didn't even want something to rent out, but the perfect house was one with more than one apartment. So we said why not.
So why do I want the market to crash? Renting is absurd these days. Craftsman prices are insane. Both of these problems can only be solved once the market has crashed - which means either we have much less people (likely to happen,but late) or first pick up building subsidized apartments on a much larger scale (which makes the later problem much bigger). But if we don't do something soon it will make basic services (nursing is a good example) even unobtainable as people in these jobs won't be able to afford their rent in the more expensive regions. This will affect everyone.
I am gainfully employed but keep an eye on what's available in the US just to see what opportunities are out there. I started seeing some insane salaries and so checked the offers out. Five minutes of research shows that even with the highest salary , there is literally no place to live. Neither rent nor purchase. Because it's a service like Indeed, I don't see a way to contact the job poster directly and see if they are even aware this is an issue. Many of the postings are around one month old.
You mentioned nursing, here in the US, hospitals have been pared back to mostly large urban areas. This caused my brain to hurt.
Cheers and luck, I hope y'all don't end up renting in old age!
Funnily enough with nursing we are currently seeing the reverse effect now. Nursing generally isn't well paid here and due to public insurance/collective agreements we don't see that much variance in nursing wages - while rent does vary considerably between various locations.
This led to hospitals in the big cities (Munich and Hamburg especially) being disadvantaged in the current nursing crisis and patient sometimes have to be transported to smaller hospitals far away from their home. We saw cases last fall where critically ill children have been transported to Garmisch-Partenkirchen, Ingolstadt, Nürnberg or even Austria from Munich due to the lack of PICU nurses there. The opposite was the case for the last decades.
I already have a home. I don't need 20 of them. I'm not going to get mad about something that benefits the majority of the control. It just sucks because a market crash just means that people who already have multiple homes are going to be able to buy even more.
Line goes up? My housing payment stays the same. Line goes down? My housing payment stays the same. I was lucky inasmuch as I borrowed back when banks were practically paying us to take out loans, so if I ever have to refi I'm gonna eat shit, but I also bought what I needed instead of what I could afford and I put more than my mortgage payment into savings every month so shit is gonna have to go real bad before I'd ever be forced to refi. This is my place to live and buying it wasn't so that I could leverage it to get into the aristocrat class. I bought it to protect myself from those same aristocrats who would raise my rent every year until I'm paying twice as much as I am now for half as much house to actually live in.
The only real bummer about a housing market crash is that it will accelerate us into being a renter society overall. A few people might claw their way out, but if prices dropped by half tomorrow all that would mean is the predatory megalandlords can take twice as many houses off the market with the same money.
I also got a great interest rate, and tried to continue my practice of paying extra every month to end the mortgage early. However interest is so low that it’s just not worth it. Pre-paying makes very little difference, and I can put it to better use elsewhere. It’s crazy that even a simple savings account pays me higher interest right now
I talked about this in a different thread: the value of owning your own home isn't just a number. There's a certain psychological value to knowing that, when things seems to be going off the rails pretty regularly nowadays, they're gonna have to go off the rails, over the cliff and into the river before you can lose your home. I overpay every month too, and I see my aggressive savings plan as essentially a self-funded mortgage insurance. It's a 30 year loan, and every month I save the value of the mortgage, so I really only need things to be okay for 15 of those 30 years and I still walk away with my house.
I dunno. I calculated that paying an extra $200/mo on my $240k loan at 3.75% would wipe about 8 years off the 30 year loan. I think the interest savings is a good chunk but not a life changing amount of money when spread out over 30 years. In my view I'd rather have the security of a paid off house than the marginal potential gains from investing that money (in addition to my other investments) over the same time period.
I'm sure on paper it makes more sense to pay the minimum and invest the rest, but again I'd rather be more conservative and it's likely I'd just spend that money on something else like a new car.
The one good thing about a housing crash is that our taxes would decrease dramatically.
I'm paying about $6,000 a year in real estate taxes right now and a crash could drop that by four grand or more which would be nice even if it hurts my feelings a little bit
Hey, newer homeowner here. If the housing market crashes, does that actually affect me at all? Or is it just like, I can't profit if I wanted to sell my house or some shit
It would ruin our equity. So no selling or refinancing for awhile.
It would mostly hurt people selling, renting, renovating, and building homes.
good, fuck em. Seeing houses as an equity Builder was removed in the first place. It's literally not sustainable, if it's supposed to constantly appreciate value no matter what it means that there is an ultimate threshold where it becomes unaffordable for everyone.
A house is a place to live, not a fucking financial asset to make money with.
Ah, that makes sense. Thank you!
This is very region dependent. But here in Canada we have 25-30 year mortgages broken up into 5 year terms, every 5 years we renegotiate our interest rate and have the option to switch lenders.
If your house value were to drop 75%, it might make it harder to switch lenders (does a bank want to lend you more than what the house is now worth).
I think there is an escape hatch here where if you stay with the same lender they will still accept you, but I honestly don't know much about the specifics.
Things would need to get pretty bad for this to actually matter (and I suspect the government might step in if it became widespread)
It can. The housing market doesn't impact all properties across the board, and some neighborhoods get away unscathed while others are devastated.
In the worst case scenario, having a downturn can cause a "buyer's market", where there are more people trying to sell their house than there are prospective buyers, so they have the power to negotiate much better deals. If you purchased your house 10 years ago for 200k, and in that time it appreciated to 400k, and then there was a sudden market downturn and it lost 50% of it's value, your house would be worth about what you paid for it, but all your equity is gone, so you don't profit but you are also not totally screwed.
If you bought your house for 400k right before the market downturn, you will be "underwater", and own a property that is worth less than what you paid for it, meaning that if you tried to sell you wouldn't get enough to cover the mortgage you owe to the lender. Forget about profit at that point.
If you plan to live in the house you are in now until you die, then none of that matters at all, really. In fact, having market downturns benefits you in that scenario because if your property is worth less money (relative to all the properties around you) you pay less in taxes and insurance. But most people don't plan on living in the same house forever. They might want to move to a nicer house, or one in a better location, or downsize when their kids move out, etc. so it's usually seen as a bad thing when the market crashes because you have to spend years building equity and loan amortization means that for the initial few years of your mortgage payment, you are basically paying off the interest only and barely denting the principal.
Completely ready. Neither my loan not my mortgage will change and I'm never selling.
My grandparents bought their house back in the 1950s for the equivalent of 35,000 dollars adjusted for inflation and now that house is worth over half a million. The house I live in now was bought for around 150k back in the early 2,000s and it too would sell for about half a million. And of course, last year housing prices increased by 30% in one year. There is no way in hell this is sustainable. It is not a question of if the housing market collapses but when and it will thoroughly deserve it.
My grandmother bought a new house on top of Mt Soledad in La Jolla, CA for 0 down with a decent mortgage in 1960. I can't even imagine what that house is worth today.
I mean, a crash is usually used and abused by the big players to gobble stuff up if they survived and didn't go bankrupt (hell even if they do another whale usually swallows them) yet I don't see another way for most people to afford a home. But then again, the area I'm in isn't crashing even if the rest of the country does. If it resulted in lower rates would love to refinance tho, 5% isn't great.
Burn it all down and end secondary real estate market. The housings price problem started with that.
Usually things crash when enough people capitulate and think it won't crash. Gotta maximize the pain so that those with money can swoop in and gobble up all the assets. Most likely the crash will be combined with mass unemployment so that even people who have bought into a home risk losing it by not being able to make mortgage payments.
Can't wait. If it could happen in isolation and not involve a lot of people losing their jobs, I would love to see prices come down. No downside for homeowners really, the house is the same house independent of market value but taxes will decrease so monthly cost will decrease.
I'm old and know prices don't go up forever. As soon as those "we will buy your house" signs and phone calls start, it's near the end.
but taxes will decrease so monthly cost will decrease.
Doubt. Your local government isn't going to cut spending just because revenue went down. And why should they? It isn't like the workload changed. When housing collapses it isn't like there will be less crime and less homeless and less school age students. All that stuff is going to continue to happen independently. You will either see raised rates or suddenly a lot of homes will be marked as worth more.
I don't know why you think that's going to happen. Supply is down and demand is as strong as ever. Policy to make housing more plentiful is woefully lacking.
What's the mechanism for a housing crash?
Just the fact that no one can afford housing any more, and lots of folks bought property to rent out at this super high rate, so to not lose money they have to rent out homes for like 2k+ for small rentals.
So the most likely way, if it all, is all the rental properties are forced to go on market at the same time, and then they don't get sold so get foreclosed on.
It's $3k+ for small rentals here.
And if you look at buying, pretty much the entire inventory is full of homes that were sold in the last year or two, relisted at 20-100% mark ups.
Fuck these dickheads.
Legislation could also force a lot of homes on the market.
Houses and condos should only be available to be owned by individuals. Ban corporate / hedge fund ownership of everything except high density apartments (that aren't individually owned).
Ban / cap short term rentals.
Add a tax penalty for individuals after X properties. Ex: if you own more than 3 residential properties, you pay extra taxes.
All of these encourage houses to be occupant owned, while still enabling small scale landlords, because we need both.
I personally would love a crash. I sold my small condo last year in an attempt to upgrade to a house due to getting married and needing more room. I was hoping to time the market, but houses are still out of reach for two middle aged professionals with strong careers, if we ever want to retire.
Edit - to illustrate the problem. In San Diego, where I live, depending on the source, the median home is about $1m.
If you take the estimated monthly cost of leading real estate cites, that's around $7200/mo.
The median household income in San Diego is $83500.
Do the math.
Legislation could also force a lot of homes on the market.
Gonna stop you right there because the rest of your response is fantasy, if legislation can't be passed.
Whose gonna propose those bills? Who is going to vote on them? Where are they going to pass? Give me reasonable answers to those questions and we can proceed.
I bought in Honolulu in 2020 after owning in Oregon for 6 years. The average sale price is 1.5 million, median is 1.1 million, and the houses are straight up rotten garbage (I grew up in North County San Diego in a construction family, SD has much higher build quality).
There are basically no homes for sale in Honolulu county right now. Just scanned the numbers this AM. Tear downs are going for 600-800k.
A crash wouldnt bother me, but its basically unbelievable to me. Ultimately all that money printed is going to find its way into inflated durable goods, and (ding ding ding) residential property.
Sorry to let you know this brother (or sister or non-gender conforming individual), but selling that condo might have been a fatal mistake. Its not clear to me based on macro economic and ongoing political conditions that housing prices will ever materially go down. Honolulu has a ban and cap on short term rentals. Didn't do shit. We've got more homeless than ever and rents have gone up 30% since. Add onto that losses of structures due to climate related disasters. California had the Tubbs fire (1k homes?) and then the Paradise fire (11k homes). We just had the Lahaina fire. Those homes aren't getting rebuilt into affordable housing, I promise.
I've done the math. There is no reasonable scenario I can see where housing prices go down substantially over the next 20 years. We're going to be supply side constrained with ever increasing demand. This is a hold/ buy and hold time.
Wouldn't mind some new neighbors, not planning on selling, not going to contribute to the landlord crisis, I say let it burn.
My house is like 25% paid off, I don't care if it loses 90% of it's "value" I'll keep paying the bills. Rather everyone have affordable housing than some extra cash in my bank account.
I paid 91k in 2017. Zillow says my place is worth 209k just six years later. I'm more than prepared for it to tank but it won't go lower than I paid.
Not a fellow home owner, in my early 20s and debt free. I feel soo bad for people who sign the dotted line on 400k mortgage and agree to decades of slavery to the economy just to have a poorly made suburbanite 2 story 3 bedroom. My parents tell me its not worth it, and I believe them. The only option for my generation that doesn't involve half a lifetime of mortgage slavery is to either buy land somewhere extremely rural and build atop or get used to the idea vanlife/nomadic living. I refuse to get into debt, period. Would rather live out of my van and pay myself rent while working and save up the money for a little plot of land in the mountains. My sympathies to anyone who goes the 'normal' path and eats 500k in debt in this day and age.
If I hadn't bought my house at what turned out to be a steal at 240k with low interest 4 years ago I would be looking at like 50k middle of nowhere properties. If it has even a broken down house there with plumbing/electricity then it would mean that a trailer would hook up nice.
I hope you are able to save up for a nice tiny home away from cost of living nonsense with good internet!
Thank you! I am actually completely content living in a 4 season canvas tent + propane heat and would rather build my own little cabin on-site than pay 60k for a 'tiny home' (glorified shed IMO lol) I also download most of my entertainment to hard drive and have lots of offline games and ebooks (and other hobbies that don't involve the internet) so as long as I can go to the library every month or two and stock up on entertainment with their wifi ill be happy as peaches! Not everyone is willing to give up modern convinence like I am, very grateful to be able to live cheap and minimal.
I don't get it either. Got into a thing with someone I know recently. What exactly is the worse case scenario if I rent for the rest of my life? And all they could come up with is I might not making as much money. Ok, so that is it. I won't be as wealthy as I could potentially have been.
So yeah a slightly shittier nursing home, big freaken deal. It's not like my entire life is going to be ruined it means that I could have had slightly more money when I am too old to do shit with it. Potentially. It isn't even a certain thing the housing market can do whatever it wants.
You people are freaken nuts. Half million dollar bet on a wood house that a single flood or fire could destroy you. You have zero control over your taxes or if some zoning department person wants to just ruin your life. And the entire awful system only exists because the government is going to bail you out. Well guess what, the government will be broke one day.
You people are freaken nuts. Half million dollar bet on a wood house that a single flood or fire could destroy you. You have zero control over your taxes or if some zoning department person wants to just ruin your life.
In fairness, my mortgage is never going to go up aside from property tax which is pretty reasonable here, whereas our rent was going up every year. Also every mortgage payment is at least in part a bank deposit towards when we sell at some point.
I bought a reasonably affordable small home in 2019 when I was 21-22. I got it on a 15 year mortgage. That means by my mid 30’s I’ll own my home outright and will be able to put my entire mortgage payment (minus property taxes) into my bank account every month, opening up tons of possibilities for the rest of the best years of my life. If I was renting that would never be a possibility, and I’d have to pay ever increasing rent until I die.
I'll believe it when I see it. I think there's low inventory.
I'm trying to fix up a few things then get it re-appraised so I can get PMI taken off my mortgage. After that I don't really care, I plan to live here for awhile so if the value goes down in the short term I'm not too bothered.
Not worried in the least, house is < 10 yo and don’t plan on moving anytime soon. I also think my houses “value” is over inflated anyways.
Now if I bought in the last 3 years? Yea I might be sweating a little bit about being under water, depending on price and location.
I wouldn't hold my breath waiting for any sort of epic crash.
I expect that home ownership is going to become solely for the upper-middle class and up, and that home prices won't make any serious downward movement.
I expect the housing crisis will eventually start to ease as areas become more accepting of high-density housing development, and that will become the sole province of people with finances beneath the home ownership class.
Essentially, the establishment of a much more distinct and explicit two-tier system. Prices in one will have minimal impact on the other, much like how any swing in prices for small passenger boats has no impact on the price of yachts.
My condo is paid off, actually. But I still want to to crash, because the price gap between my little place and a larger home is way too big. I basically can't upgrade unless prices fall.
But I am guessing that you property price will also fall, så the question is what the new difference will be.
yeah but generally prices will fall proportionally
It often feels like it doesn't even matter to me. I'm never going to be in a position to get out of massive debt and afford a decent home either way.
US person here
I was lucky to be in a position to buy shortly after the 2008 crash, so another crash would erase a good chunk of equity (but I see most of it as fantasy equity anyway) but otherwise I'll be fine. I was in DevOps/SysOps for a real estate tech company at that time (and until recently) so I got to see the weird market moves in real time.
Nationwide we've already seen about a 4% drop from the end of the 2022 sales season (Memorial Day - Labor Day) to the end of the 2023 season. That decrease is actually as bad the height of the 2008 crisis but the drops were most felt in the most overpriced markets. This allowed the rest of the nation buffer against it so it's not having a big effect on main economy metrics (like the consumer confidence index).
Basically the bubble deflated considerably without popping, which is overall a guard against a (really bad) crash. Of course 1/3rd of China's economy is their housing market and it's on the verge of collapse... I don't know what that will do to the US but it won't be good.
I'm not selling in the foreseeable futher, so i care little.
Your house isn't increasing in value, the buying power of your currency is falling.
And that explains increased cost for imported houses. But what about those that are build locally by local craftsmen?
I'm just trying to build wealth and just entered the market, so I'm not too excited for me, but it needs to happen. It's a basic necessity that the majority of people can't afford, how is that okay? I will lose a bunch if the market crashes and probably never be able to achieve my goals, but its not very feasible right now anyway. I wanted a hobby farm, thats never going to happen regardless. Something has to change.
Home owner, I started buying back in 2007. Been through one crash, and if another crash makes it so I can move again, fuck it. Let the whole thing just burn.
I never counted on equity, and the system was fucked from the start. At least this way I wouldn't feel trapped.
In the US, at least, the last housing market crash was because people couldn't afford their homes. Since most homeowners are now on fixed rates and most people's incomes are significantly up since they purchased, there probably won't be a housing market crash like last one. Even with losing a job, a lot of these people could get a significantly less paying job and still be relatively okay compared to their Great Recession compatriots. With investors, most aren't in real estate for the short term. A lot sit on housing they don't rent or lease, even in a seller/landlords market. So you're left with poor investors and the short term housing investors, who can probably cause a collapse by themselves, but in an increasingly wealthy domestic and international market base, those will most likely be bought up before a significant dent in the housing market happens.
However, the federal government needs to increase housing supply and public transportation infrastructure by an obscene amount very soon, unless it wants a major economic and societal collapse in the coming decades that it may not be able to pull itself out of. A housing market collapse like 2008 should be the least of their worries.