Home prices will just go down soon so that average monthly payment for new buyers stays about the same as for the old ones with "high home price" + "low rate" combo. Of course, in a transition period a handful of people will be unlucky enough to be stuck with "high home price" + "high rate" combo.
> 1. There is a fixed amount of realestate that must be shared by a growing population.
U.S. Population Grew 0.1% in 2021, Slowest Rate Since Founding of the Nation [0]
> 2. Inflation means the cost of everything is increasing
I agree on this one
> 3. Local governments spend a lot of effort maintaining high real-estate values.
Increase in total inventory increases local government overall income and solidifies the need for their own bureaucracy. (i.e. local government would love for their little kingdom to grow to the sky, in my experience... my experience being Morgan Hill, CA)
You're just speculating. Have you ever considered that home prices didn't go up, that inflation went up. Perhaps what needs to balance things out, isn't home prices coming down, but wages going up to keep up with inflation?
Such events have happened in other countries, and if it happens here, home prices will keep going up, wages will go up, and folks will at best be able to afford the same things but most likely less.
Why? I know we aren’t supposed to apply anecdotal experience to macroeconomics, but I have 6 different friends and 3 coworkers in my department who have all bought multiple houses. They did this because debt was so cheap and they essentially bought as much house as they could. They ALL plan on flipping or renting. I have a feeling that losing access to cheap debt is going to have a bigger impact than people realize. None of these people would have bought these houses if they couldn’t get a 3% interest rate and a 30 year loan.
I bought all the house I could, not because I plan on flipping or renting but because the money supply is ridiculous. So much money has been pumped into the economy that I firmly believe inflation is here to stay. If inflation stays that will put upwards pressure on price of everything, houses included too.
FYI, you can still finance a house if you make an all cash offer. I just did that myself. You just need to set the closing date far enough out to get the loan settled.
they wont go down that much, but inflation will keep going up and in australia we've had very poor wages growth while hiding unemployment rates under a cover of "part time and casual" jobs. (ie very very low unemployment but not talking about how so many people have to work multiple jobs to get by.)
it’s cute how people predict the housing market going down / crashing every time something happens.
I don’t think a crash will happen (maybe it’s going down, maybe not, but definitely not a crash) and I believe we are moving in a direction where less and less people will own the home they are living in. It’s sad really but this is what late stage capitalism looks like.
As for people that want to buy a home? buy one if you can afford it. don’t try to time the market, don’t worry about crashes and bad deals. Just do it. In 10 years what happens right now will not matter.
> less and less people will own the home they are living in
as long as the rent isn't increasing faster than inflation, why should there be a problem?
You don't need to own the home to live in a home. And if you own the home, it doesn't mean the cost of shelter isn't paid by the owner (it's just more invisible a payment).
Your graph proves my point. It's lower than right at the 2005 peak, by 3% (though only 1% in 2020), but still higher than any point before 2005, thus near record highs.
If there were a crisis in home ownership you'd expect it to be at historic lows.
> It’s sad really but this is what late stage capitalism looks like.
This is what capitalism hamstrung by government regulation looks like. In many areas builders can't respond to demand and make a profit due to heavy regulation of construction.
I think that's true too. Home prices should work like bonds.
However it will likely keep going and then crash more than fizzle.
As long as the interest rate is below the rate of inflation, you'll make money by borrowing money and trading that money for something pegged to inflation, like a house.
This will work in the short term, and so I think people will keep buying.
