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.
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.
Already happened here, 30% wiped off house values since the end of 2021 and still falling, interest rates still going up. Incompetent goverment has crashed the economy hard. Fortunately we’re mortgage free, and getting renovations done while the economy is down
The reason everything went to shit in the 00s (I think? Time has no meaning) is because of banks and predatory lending. We are increasingly seeing that with the current interest rates and house prices but there is a big difference.
When the market crashed then? The banks were stuck with a shit ton of houses nobody wanted.
Now? Plenty of people have been saving up and will gladly buy the houses at a slight discount. And real estate firms and increasingly corporate hellscapes will buy them at slightly lower discounts.
That is more or less what we saw over the few years of “the good old days”. House prices kept exploding and pricing more and more people out. But those people continued to save and would then start trying to buy a smaller house or take advantage of a better interest rate and so forth.
As for those interest rates:
Yeah, it is fucking insane right now and I am REAL glad I got in while the getting was good. And this is a big issue in me waiting to get an EV.
But… the real insanity was the past few years. Check any website that tracks rates over time. The late 10s and early 20s were an anomaly. The current rates are a lot closer to the historic rates.
Which just gets back to pricing and… again, companies and people with inheritances will keep paying that.
Agree, there won’t be any crash due to financial reasons. But in certain parts of the world it will become very difficult to keep living due to the climate and those areas will have their value decreased. I am from the South of Europe and here in some cities (even historically densely populated ones) the heat is unbearable for a quarter of the year or more.
I can’t speak for the european market, but in the US we are already seeing how this plays out.
Insurance and mortgage companies increasingly are not interacting with Florida (and to a lesser extent California). Which means the people with houses there are just fucked if there is a disaster. Maybe they can sell for a massive loss to someone even dumber than them but… yeah
And when it all goes to shit? The banks will bleed them for every penny and then move on.
What's your opinion of the fall out of the commercial real estate crash due to more WFH and the other effects? Certainly there is more commercial real estate than ever before to the point some is being rezoned due to lack of demand.
Mostly just a matter of stalling until the housing crisis gets bad enough that people want to remove those pesky laws about living spaces needing windows and proper insulation and so forth. Then we’ll see retrofitting
The building codes are written in blood. Most things that are required in construction are the basic amount of safety required. They are not that restrictive.
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.
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
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 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.
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 have a ton of equity in my house, but my house was overpriced when I bought it. It’s depressing thinking that I am “fortunate” among my peers to own a home.
I ranted to my mom and some older family members and none of them get my frustrations. Seeing the mobile home from 1974 down the street on the market for half a million is depressing and angering. Seeing million dollar homes were once bought for $250,000 10 years ago is angering and depressing.
I just wanted a nice home in the suburbs and live a boring life. But all I could afford and didn’t get outbid on was a home built shortly after WWII ended and incredibly small. My monthly mortgage is “low” as is my interest rate. But rent is outrageous and not at all fair or reasonable.
The ratio is way off compared to 20 years ago, for income to housing costs.
I want to cash out my equity, but then I’m just going to have to start all over again, compete against “investors” who offer outrageous amounts for homes, and have to have an insane interest rate.
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.
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.
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.
The cascade of failures is a few steps further along. We had a total of about a 12% market decline in 2008 before enough dept bundles turned toxic for Bear Stearns and ANB to become insolvent. Those potential chickens are still in their eggs.
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.
The only way this benefits a home owner is if they can live somewhere else for cheap or free. If you can’t do that selling is pointless.
Once things come down then I could potentially afford a second home on my income. Additionally people less financially fortunate can afford the first house (or at least see their ridiculous rent prices drop).
It will be unfortunate for people who bought at an inflated rate so naturally those people won’t be so crash happy but that’s just the nature of it. If you are someone in such a situation then selling now and paying high rent elsewhere may be a wise decision. Not that prediciting a crash is a simple task.
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.
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.
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