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.
Bought my house in 2019, and it’s apparently worth 30% more than what I paid for it if my rates bill (local property taxes for the US people) is anything to go by.
Problem is, it’s all paper gains. The only way I see any of that money is by selling my house - which I kinda need in order to live in - and buying something else that has also gone up by 30%, so I’m net-even, less increased property taxes which I directly benefit from via improved infrastructure.
Now if I was a blood sucking parasite and bought a second house as a rental property by using my increased capital to muscle out first home buyers with less capital, then the gains might be enough to allow me to sleep at night under the weight of my own crushing dread at the person I had become. Maybe.
I’m really surprised to see all these bitter comments. Downvote me all you want, but I think people hate the housing market because of a lack of knowledge.
I did my homework, worked my ass off and in a few months I will be buying two houses. One to live in and the other as an investment. And the best part is that the first one will be paid off in 5 years (thanks to publicly available banking tools). The investment property will not be paid off until the end of the mortgage. Why? Because it will give me huge tax deductions (again - great banking tools). After a few years I will be able to buy another investment property which will give me even more tax deductions. And so on and so forth.
You are probably in a different tax bracket than us.
The median house hold income is 60kish in the US. Meaning half of all households make less than that.
2k for rent or 3k mortgages just isn’t doable. But that is the only thing availabe for most of us. The math can’t work with taxes, insurance, and utilities. Children right now is a poverty sentence for 50% of Americans.
And “make more money” can’t work for everyone. The median is 60k per household, meaning 10s of millions of people would need to find much higher paying jobs to be able to deal with this. But that’s not possible, there are not 10s of millions of 80k+ jobs just sitting around.
As I said before - lack of knowledge. You are assuming that the monthly repayment will be $3k. There are tools available for everyone to make it way less.
Let’s start with offset account. Having it setup with your mortgage will decrease the interest part of the repayments as long as you will keep adding money to that account. More money, smaller interests.
Second tool - interest only loan. For first few years you will pay only interests. In my case it will cut the monthly repayments almost by half. Combine it with the offset account and each month you save some money on offset account the interests rate will be lower allowing to save more.
And finally - interest in advance (pay the whole year of interests upfront). I don’t know US tax laws but where I live this gives me tax deductions starting from day one. This will work only for investment property.
Also there is a thing called refinancing a loan. When the interest only and in advance things are coming to an end refinance a loan and start over.
On top of that is the mindset. People need to realise that in order to make things better some sacrifices have to be made. So when buying a house get the investment property first and work your ass toff to pay it off as soon as possible. After few years the value of the property will go up and you will be able to get a bigger loan. Buy another investment property in a better neighbourhood to get a bigger return.
To summarize, talk to someone who knows that stuff (not a banker, a real money guy), check bank offers, read articles about investments, learn about taxes. It’s easy to complain and do nothing.
When people can’t even afford 2K rent, there are no games to play. Median house hold income is 60k After taxes that’s closer to 40k. When rent alone is 24K, there are no games to play, no moves to be made. The math doesn’t work. 2K isn’t me over exaggerating, it’s median.
Then you’re supposed to put 6% into your 401k, then how ever how much for medical insurance , then cost for car insurance ,gas… where is money for food? Where is the 20% for investing for retirement? The basic of budget is 50,30,20. You’re not supposed to spend more than 50% of your income on “needs”, yet the median rent is more than 50% of the median after tax household income.
All those tricks are just putting the debt ahead into the future. That only works if you think you’ll be making more in the future, but wages have been super stagnant.
You can’t play games when rent requires more than half your income.
I own my home, life is fine, I’m fine. But try to do the math, try to make it work. For 60k gross pay and 24k yearly rent, explain how to make it work, how to save up the 10% down for a house and save for retirement.
I was starting with aroud $45k usd before taxes. I live in Australia, one of the most expensive countries. But instead of complaining and saying that math doesn’t work I made it work. For years I was saving on everything, putting away every penny on managed fund. It didn’t give me huge interest but at least I didn’t lose on inflation. Fast forward 7 years and I’m about to buy two houses.
It’s all about mindset, dedication and knowledge. And no, this isn’t moving debt to the future. It’s working around the debt, it’s making the debt to work for you. Again, talk to a real money guy and he/she will explain you how it works.
It was somewhere around 1500 USD per month. On top of that I had to pay for overpriced health insurance (required by my visa - additional few hundred dollars per month) and I had a huge loan I took to move to Australia (visa costs, moving my stuff across the world, car, etc.). In total I was paying around 2300 USD per month, and I still had to pay for utilities and food.
I bought this year in the US w/ my partner. Thanks to my credit union, got a rate about 1% lower than average at the time. Mortgage payment is significantly less than rent and most importantly: it’s going to be way, way, WAY less than rent in 10-15 years. Sure, we’ll have other associated home ownership costs, etc etc, but it’s worth it to us. Also, honestly, we LOVE this house. Took our time to find the right place and it has paid off, much happier here than any of the places we rented.
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.
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.
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.
Because when an entire generation cannot afford housing, and an older generation starts dying, the houses have nowhere to go. Right now, houses are just changing hands and climbing a wealth generation ladder, but the last buyer at the high prices holds the bag when it all falls apart.
This is exactly the reason why corporations are the fasted growing group buying residential property. Once a Ponzi scheme exhausts a buyer base it needs to find a new one to keep going.
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.
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.
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 bitching 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.
(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.
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