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dragontamer ,

Sounds like bullshit to me.

  1. If everyone knows that home prices will rise, they will rise right now instead of later. After all, why sell a house at $300k if “everyone knows” its going to be worth $350k in a few months?
  2. Mortgage rates continue to increase. We’re at 7.23% mortgages, the highest in multiple decades, and this high level of mortgages leads to a very very much higher rate in monthly payments. That is to say: even without houses going up in prices, people are already paying a $thousand+ extra dollars per month compared to a few years ago when 3% mortgages were the norm.
  3. The cited reason, dearth of inventory of homes for sale. People aren’t selling because they can’t afford to move (!!!). That’s the problem. Naturally, the people moving right now are just the rich people who can afford to move, and therefore they’re willing to spend a bit more $$ to buy lower-quality homes (and simultaneously, pay a higher % interest rate or even entirely-cash to avoid the monthly bills).

IMO, its more likely that we run out of buyers (people who can afford such high valued, overpriced homes) rather than we run out of sellers.

OwlPaste ,

Not sure how it is in the states, but keeping an eye on this side of the pond, and yeah interest rates are through the litteral roof and i look at house prices in an area, they are either going down from time to time or permanently staying on the market. Some get sold but very few.

Screwthehole ,

In my Canadian market, they are building lots of homes. Many are big, brand new, and listed for 1.2+. Entire streets are just sitting with rows of for sale signs out front. The reason? Only the top 2-3% of income earners qualify for mortgages on these.

Until they drop prices, or interest rates, they won’t going anywhere

KingJalopy , (edited )

This is so fucked. I bought my home 11 years ago for 120k (3.125%) and my most recent tax paperwork home value thingy said estimated value of my home is now 285k which is great but even if I sell i wouldn’t be able to afford a comparable home even with the 190k I’d have in my pocket after selling. This shit is crazy.

FlyingSquid ,
@FlyingSquid@lemmy.world avatar

Yep. We want to move to another town, but there’s no way we can afford to do it despite owning a home that isn’t huge, but is in a decent neighborhood.

TheaoneAndOnly27 ,

We're in the same boat. We want to sell but there's no point because we couldn't afford something even comparable to what we're in with these interest rates. It's nothing amazing either. It's three bedroom two bath, 1275 sqft built in 2000.

TropicalDingdong ,

Where do you live?

KingJalopy ,

Tulsa Oklahoma

TropicalDingdong ,

Ok. Just FYI, tax assessments mean absolutely fuck all when it comes to property values.

KingJalopy ,

Good to know, but my neighbor just sold their house which isn’t as nice or big as mine for a comparable price so I’m confident it’s worth at least that much. But still it doesn’t matter I won’t find comparable housing for the same price.

Bizarroland ,
@Bizarroland@kbin.social avatar

I bought my house 3 years ago. It has increased about 35% in value so far, but with these new interest rates even with the excess I wouldn't be able to buy another house within a 20 mi radius.

CthuluVoIP ,

But all of those things contribute to inflation of home values. Not sure if I’m just agreeing with your point or not, but a reduction in buyers doesn’t mean nobody is trying to buy right now, but if conditions are such that sellers aren’t incentivized to make moves, those who are can charge a premium when they do.

It’s bullshit, not because it’s factually incorrect, but because it’s a completely made-up scarcity given how much vacant property exists in the US and worldwide. In the US, we’ve regulated property development to protect existing homeowners and limit high occupancy housing to “less desirable” neighborhoods. Until those areas become desirable - at which point we evict all the low income families, turn entire floors of apartments into single condos, and charge millions of dollars for them.

Further, evidence that the inflation rates are indeed slowing as the Fed makes borrowing more expensive signals real estate investors to just weather the storm, because the return of rock bottom rates is, in the scheme of things, just around the corner.

I don’t think we’ll ever see coastal real estate markets truly bottom out or even meaningfully correct without a complete economic collapse of the US, which would really be a complete global economic collapse.

dragontamer ,

But all of those things contribute to inflation of home values.

#1 is bullshit, because prices change near instantly upon expectations. Any information that’s publicly known immediately comes up to debate / discussion. That is, if any “agreement” has been made on higher prices, its already factored into the price.

#2: Higher Mortgages have always caused home values to fall in the past. In practice, the US consumer is monthly $$ bound: they buy what they can afford. US Buyers don’t think “$500,000 house”. Everyone converts that into $2700/month (current 7.3% rates), or $1700/month (3% rates).

A $1700/month house at 7.3% is a $250,000 house, literally half the cost of a $500k house at 3%. That means everyone who “can afford a $1700 house” has now been priced into $250k in today’s market, instead of $500k homes like 3 or 4 years ago.

KevonLooney ,

Here’s Robert Shiller, who developed the current index for housing prices.

fortune.com/2023/07/24/…/amp/

Basically he thinks they may go sideways for now. The house price futures market (which I didn’t know existed) predicts a 10% fall in prices from now till 2024 or 2025.

ImFresh3x ,

If home prices can stay flat or sideways with the current mortgage interest rates, I can only imagine what will happen when rates are lowered again. Housing prices are gonna go up by 30% (instantly, or as quickly as the fed moves) if the fed decides it’s safe to lower rates to below 4% again. Housing scarcity in desirable locations (places with jobs, airports, music venues, etc. ) is never going away.

aesthelete ,

Housing prices are gonna go up by 30% (instantly, or as quickly as the fed moves) if the fed decides it’s safe to lower rates to below 4% again.

I suspect they’ll lower them very slowly knowing this.

A lot of inflation was simply record rises in housing costs.

KevonLooney ,

Housing scarcity in desirable locations (places with jobs, airports, music venues, etc. ) is never going away.

“Never” is a long time. Demographics drive housing costs more than interest rates. Millennials are having kids right now, so they are going to want to move out of expensive cities to larger acreage soon. Gen Z has even less money than millennials. Plus, boomers are retiring and will soon be selling their places downtown that they bought for a song in 82.

So we have:

  • Boomers - leaving cities for retirement communities
  • Millennials - leaving cities for smaller towns with more room
  • Gen Z - stuck 10 to a room, unable to purchase anything

Who’s going to be buying expensive places in cities?

BraveSirZaphod ,
@BraveSirZaphod@kbin.social avatar

+1 for the "zoning is the cause of essentially all problems" people.

Increasing supply would massively help all of this mess. But then the neighborhood character might change!

FlowVoid ,

If everyone knows that home prices will rise

Some people don’t pay attention to forecasts. Some people sell because they need money now. Some people sell because they need to move now. Those people won’t wait for prices to increase.

Nobody knows what will happen. It’s a forecast. If I forecast 2% inflation next year, my forecast does not automatically cause prices to immediately increase. Next year, everyone will see if the forecast was accurate.

dragontamer ,

Some people don’t pay attention to forecasts.

That’s literally your Real Estate agent’s job.

Some people sell because they need money now. Some people sell because they need to move now. Those people won’t wait for prices to increase.

Your opponent in the negotiations doesn’t need to know that. That’s why its your Real Estate Agent’s job to negotiate a good price for you. If you got a good relationship with your Real Estate agent, they can possibly sell your home to a flipper (possibly working with the real estate firm) who can give you a fairer price while simultaneously making more money for themselves.

Iampossiblyatwork ,
  1. Agreed
  2. I’d argue that people can only pay what they can pay. They won’t pay extra, they’ll buy smaller homes with smaller valuations to keep their payments reasonable. If you can’t afford to put up another 1k/month then you won’t.
  3. Again, people can afford to move just not for their established QoL. If you own a 4bd house in a good school district are you going to downgrade to a 3bdrm in an ok district? Maybe? Probably not unless the money is good.

Also rich people aren’t buying homes with mortgages. They are just buying them with cash… Or putting so much down that their mortgage is reasonable.

Brunbrun6766 ,
@Brunbrun6766@lemmy.world avatar

Values WILL increase! Says people who profit from increased values.

baked_tea ,

money.com

dan1101 ,

If that’s all the value raises I will be a little happier than the past few years, each of those years the value has risen over 10%, which is tough for property taxes.

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