How are people affording these crazy home prices?

[z987k]

This is a pretty sad thing to be looking forward to. For that to happen, it means that millions of good, hard working people will lose everything.

It means millions of people made really bad decisions. In order for our whole system to work, there has to be negative consequences for bad decisions. When you touch the hot stove, after being told not to, it's supposed to burn.

If I went out and got a loan I can only afford because it's an ARM or even if it's fixed and I could just barely make the monthly payment, and then something happened like the rate adjusted, or I lost 5% of my income, and that caused me to not be able to make the payment, then I'm a complete idiot. And I should lose a substantial amount of money on that.

 

[timekiller13]

Where do you live? Log cabin on 4 acres would be 1.25-1.5 million around here

North Carolina.

A couple from New York bought my home. Sight unseen. 25k over asking price with no contingencies, no inspection and 10k due diligence money.

Our home prices are high, but nothing compared to many other states.

 

[bozeman]

I've never understood these arguments....housing is too expensive where I live....THEN MOVE.......its really that simple. Not easy, but simple. Too many people want 'easy'..............do you think when people loaded up a wagon and headed west to homestead and build a life that is was 'easy'? Maybe spend less time on an internet forum complaining and more time studying, working, researching. Whining and complaining benefits a person is NO way, shape, form or fashion.

 

[CorbLand]

It means millions of people made really bad decisions. In order for our whole system to work, there has to be negative consequences for bad decisions. When you touch the hot stove, after being told not to, it's supposed to burn.

If I went out and got a loan I can only afford because it's an ARM or even if it's fixed and I could just barely make the monthly payment, and then something happened like the rate adjusted, or I lost 5% of my income, and that caused me to not be able to make the payment, then I'm a complete idiot. And I should lose a substantial amount of money on that.

I forgot that the last time something happened to that level it was only the people that bad decisions that got hurt…

When you touch a stove it only hurts you. When a economy tanks to that level, more than just you loses their job. There were plenty of good people that lived well within their means that lost everything in 2008.

 

[bigeyedfish]

We bought our house on 22 acres about 5 years ago for $350k. Zillow shows it as a $610k house now. Zillow is wrong; it couldn't sell for that, but it would sell quickly for $500k. 40% price increase in 5 years. It is completely insane. The concept is the same as point creep in big game licenses. If you aren't already in the game, you aren't going to catch up unless the market tanks.

 

[fmyth]

Any particular reason why foreclosure may have been kept low in 2020-2021? Historically low interest rates, tax rebates, stimulus checks, frozen student loan payments, loan payment forgiveness and extensions et el.
How do today's numbers compare to 2015? Or 1994? Or the historical average?

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Foreclosure moratoriums(ongoing in some states/cities), mortgage forebearance (ongoing), courts closed for months and now foreclosure case backlogs as long as 2 years in many states. We have kicked the can down the road into 2023 and beyond. This won't be like 2008 because we have put so many obstacles in the way that it will take years for all of the foreclosures to be processed and the properties to be listed/sold.

 

[amassi]

Foreclosure moratoriums(ongoing in some states/cities), mortgage forebearance (ongoing), courts closed for months and now foreclosure case backlogs as long as 2 years in many states. We have kicked the can down the road into 2023 and beyond. This won't be like 2008 because we have put so many obstacles in the way that it will take years for all of the foreclosures to be processed and the properties to be listed/sold.

So pretty simple to see why there is a 200% ytd increase right on foreclosures

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[amassi]

This is a pretty sad thing to be looking forward to. For that to happen, it means that millions of good, hard working people will lose everything.

Yep and the same people that orchestrated and profited off the bad mortgage scheme in 2000-2008 will turn a huge profit from this, gobble up more homes on the cheap and turn them Into forever rentals, which will drive up prices- rates will drop catching more buyers at higher costs and then they'll pull the rug again and again.

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[go_deep]

Airbnb says they have 660,000 places listed in the USA, that's just one short term rental company that's taking all those places off the market for the average family to buy and live in.

 

[Button]

 

[z987k]

I forgot that the last time something happened to that level it was only the people that bad decisions that got hurt…

When you touch a stove it only hurts you. When a economy tanks to that level, more than just you loses their job. There were plenty of good people that lived well within their means that lost everything in 2008.

It won't be anywhere near that level. The loans on the whole are not near as risky. They're not packaged as derivatives and the bad ones are a much smaller percent.

Regardless, their reckless and poor behavior is causing a lot of other people pain right now. People that can no longer afford anything. It'll be nice to see the people that were responsible make a lot of money off the people that were not. That's how capitalism is supposed to work.

 

[bozeman]

@z987k- I agree.....poor decisions SHOULD have consequences......

 

[hunterjmj]

I've never understood these arguments....housing is too expensive where I live....THEN MOVE.......its really that simple. Not easy, but simple. Too many people want 'easy'..............do you think when people loaded up a wagon and headed west to homestead and build a life that is was 'easy'? Maybe spend less time on an internet forum complaining and more time studying, working, researching. Whining and complaining benefits a person is NO way, shape, form or fashion.

I worked with a guy that constantly complained how he'd never be able to buy a house because the housing market was out of reach for him. At the same time driving a new F-150 and saving for down payment on a Tesla. He was going to spend $45,000 so he could save a bit on fuel. This was pre-crazy house prices too. I can only imagine hearing him now. I went a lot of years with a 1990 Chevy pickup so I could save and buy a house. I drive a 2009 Chevy now and have a paid off house but it didn't come easy and I couldn't have done it with a $700 car payment.

 

[riversidejeep]

^^^^ This a 100 times!, It's not really what you make, It's about how much you spend.

 

[CorbLand]

It won't be anywhere near that level. The loans on the whole are not near as risky. They're not packaged as derivatives and the bad ones are a much smaller percent.

Regardless, their reckless and poor behavior is causing a lot of other people pain right now. People that can no longer afford anything. It'll be nice to see the people that were responsible make a lot of money off the people that were not. That's how capitalism is supposed to work.

.25 on the dollar would be significantly worse than 2008 was. .25 on the dollar would be great depression levels.

I dont disagree that if you are make bad decisions there should be consequences. Unfortunately the consequences you are hoping for would take way more than just the bad actors getting hurt.

Mental gymnastics it any way you would like, what you are hoping for is sad. What you are hoping for is not the kid playing with the matches getting burned, its him burning down the neighborhood.

 

[CorbLand]

I worked with a guy that constantly complained how he'd never be able to buy a house because the housing market was out of reach for him. At the same time driving a new F-150 and saving for down payment on a Tesla. He was going to spend $45,000 so he could save a bit on fuel. This was pre-crazy house prices too. I can only imagine hearing him now. I went a lot of years with a 1990 Chevy pickup so I could save and buy a house. I drive a 2009 Chevy now and have a paid off house but it didn't come easy and I couldn't have done it with a $700 car payment.

I have a few people that work in my office that are this way. I have a girl that is paying more in rent than my mortgage is (I bought a couple months ago) because "she cant afford a house in this market." My wife and I have an older home that has been mostly renovated. Needs some work but nothing crazy. According to a couple in my office, my house is "just not up to their standards."

There are a lot of people like you described and I have. Champagne taste with self induced beer budgets. We all know people like that. We also all know someone that is putting the work in and getting absolutely screwed right now. Those are the ones you cant forget about.

 

[TreeWalking]

I've never understood these arguments....housing is too expensive where I live....THEN MOVE.......its really that simple. Not easy, but simple. Too many people want 'easy'..............do you think when people loaded up a wagon and headed west to homestead and build a life that is was 'easy'? Maybe spend less time on an internet forum complaining and more time studying, working, researching. Whining and complaining benefits a person is NO way, shape, form or fashion.

And, build skills that employers value so have a path to make more than average or start your own company. Choose a good partner that works hard on their career. Live by a budget that results in no less than 10% of your household earnings going into savings and try to get to 20%. You may be the most boring person in your group of friends when on a budget but you are playing a game to win that runs for decades rather than this year.

Every generation faces hurdles. Young people today have hurdles I never faced yet I faced hurdles no longer a factor today. I left rural America to find a better life and were no guarantees I would succeed on that gamble. A significant number of my buddies in high school left to join the military and few made a career out of the armed services and almost none returned to live back home. My childhood town has steadily de-populated, especially younger folks.

I encountered recessions and rising unemployment as graduated college and again as completed grad school so I competed for jobs with unemployed persons that had all my skills plus more experience. Fair? Nope. I worked harder to overcome that hurdle.

I left Los Angeles knowing I would never again experience such diversity of world-class food, entertainment and culture. I left to afford a home that did not require a two-hour daily commute. I left to have good public schools so I did not have to pay for private schools for offspring. That move from L.A. was thirty years ago. There was a ten-year stretch since then, 2000-09, where stocks and housing values were basically flat. Wages were flat though I had added skills and experience so beat the odds. This is during what typically would be a chunk of my peak wealth-building years. Fair? Nope. I built even more skills and networked to find a better career.

My ten closest buddies here are interesting to consider. Only two grew up within 250 miles of the first home they bought. None of their adult kids can afford to buy in the neighborhood the kids grew up in. Nor could most of my friends at that age which is why so many of them moved to take advantage of the more affordable housing of that era.

Never has been easy for someone without a safety net or someone to open strategic doors for them as enter adulthood.

 

[Where's Bruce?]

BTW...lemme add that my bursting housing bubble belief may prove false if the interest rates go up considerably (insert memories of the Jimmy Carter administration here) which would drive the current RE buyer slump deeper.

 

[z987k]

.25 on the dollar would be significantly worse than 2008 was. .25 on the dollar would be great depression levels.

I dont disagree that if you are make bad decisions there should be consequences. Unfortunately the consequences you are hoping for would take way more than just the bad actors getting hurt.

Mental gymnastics it any way you would like, what you are hoping for is sad. What you are hoping for is not the kid playing with the matches getting burned, its him burning down the neighborhood.

25 cents was a bit of hyperbole. Realistically it should come down about 15%, but will probably over correct a bit.

 

[scattergun]

Airbnb says they have 660,000 places listed in the USA, that's just one short term rental company that's taking all those places off the market for the average family to buy and live in.

Exactly.

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

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

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

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