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 hate that we lost sight of what wealth really is and replaced it with the idea of profit. I bought my house to provide myself with financial security, not profit.
My monthly “rent” (mortgage payment) is locked in for the next 25 years and will not go up. At the end of those 25 years when I’m ready to retire, I’ll have housing with only taxes and insurance payments. THAT is wealth. THAT is what home ownership is meant to be. If housing prices fall, it won’t change my life a bit.
That’s why I bought a house instead of renting. One day it will be paid off, and from that on, as long as I keep paying the property tax nobody can kick me out. They can cut my water and electrcity, but the house and the plot remains mine.
Additionally, if overall house prices go up that does mean that your house becomes more valuable.
However, it also means all other houses become more expensive.
So in practice, if you want to move in 10-20 years for whatever reason, it essentially means nothing that your house has gone up in value. All that extra money is going to go to another house which has equally gone up in value.
The value of a house going up means you are technically building wealth, but that wealth is entirely tied up in the house itself. Unless you are intending to become homeless it likely will stay tied up in your house forever.
House prices going up is mostly a good thing for investors. Not so much for people who simply want a place to live.
Except that many people live in their homes until they need assisted living. In which case selling the home nets them more money than they put in to pay for those services. Or consider that home prices raise at different rates in different areas so it’s possible to sell in a hot market and retire to a cheaper area when you no longer benefit from things like proximity great schools as your children are grown.
Usually things crash when enough people capitulate and think it won’t crash. Gotta maximize the pain so that those with money can swoop in and gobble up all the assets. Most likely the crash will be combined with mass unemployment so that even people who have bought into a home risk losing it by not being able to make mortgage payments.
I mean things can get way worse. Look at Canada and Australia. No sign of a crash in either yet, prices just keep climbing. Homeless encampments and the like were alien to us up until recently. The median Aussie household income is ~$65,000. Homes start at about $600,000 and at that price a lot of them are teardowns, you’d be spending at least $200,000 in repairs.
Banks want 20% down.
It is scary, definitely.
I rent a nice house, I’m lucky. I’ve also not had a holiday in over a decade…
I don’t really know what people are expecting to happen?
It’s true that the housing market does not represent real value of the asset at all. You pay double or triple ‘real’ value, and it seems that OP is suggesting a market correction is due.
Whilst that may be true in some areas that are actively collapsing with major population drain due to crime, lack of work etc (I’m certainly not familiar with the USA or its cities) - overall the supply of houses is still vastly outstripped by the demand of people that would like to own one. The population continues to grow via immigration and births to prop up the never ending shell game of annual GDP growth.
Whilst there may be regional blips, unless there are massive social housing programs that flood the market with cheap, desirable dwellings then I’m not sure why anyone would expect the housing market to crash. Until the shell game and the table they play on is flipped and burned, the housing market will not crash. It’s the most basic supply/demand equation out there.
I mean we had those same situations, and we still had the collapse of the housing market in 2008 in the US, because everyone defaulted on loans at once on overinflated houses, then houses shot back to proper value. Losing an estimated 25% value.
So it just feels like that might happen, because housing prices are soaring and interest rate is so high. So I mean, if it happened once in similar situation, it doesn’t seem unreasonable to say it might happen again.
In what way did the housing market collapse? The only thing that changed was the availability of irresponsible loans to people that can’t afford them. Tighter regulation of lending.
The effect on housing prices was a mere blip, and banks are back to their old tricks again. You’re right about the same crisis repeating: there’s more packages of bad debt that have been sold and re-sold as if they have any value, this will almost certainly come home to roost again but on a longer timeline it’s not something that will ‘fix’ the global housing crisis because supply:demand has not changed in any meaningful way.
If you are a private investment company with wads of cash, you’ll take advantage of the temporary instability and buy up massive amounts of private land and housing. Problem just gets worse in the long run because we keep propping up the system that rewards this behaviour.
One of the major things that is different is that loans are a lot different from what kicked off the '08 crash. We didn’t see a flood of interest only, 5/1ARM or other exotic lending setups. Yes, there are some out there but they aren’t as large of a slice of the market. Banks have to keep more capital than when WaMU crashed and we even saw some larger regional banks fail this year with only a rather minor impact outside of SV angel investor lending.
This isn’t going to be like '08, There would need to be a major situation to cause house pricing to fall like a depression level downturn or industrial level of house construction destabilizes the market.
It seems like the build-to-rent market is growing too, so even if there is more supply being constructed you might not actually be able to buy them. That should be outlawed, imo.
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
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.
When you buy a house, you’re essentially locking in your housing costs, which can be especially advantageous if you have a fixed-rate mortgage. Rent, on the other hand, can increase over time. My monthly mortgage payment for a house is already several hundreds less than what my friends are paying for their tiny rental apartments. In about 17 years, my house will be paid off, and then I’ll only have maintenance and utility bills remaining, while my friends will still be paying rent, which probably has increased by quite a lot by that time. I don’t need to sell my house to benefit from investing into it.
This exactly. The 2 things that affect my fixed rate mortgage are property tax, and homeowners insurance. Even those don’t affect the payment much in either direction.
No, that’s just being frugal. Not spending money on something is not investing. Grocery example would be buying in bulk; you pay more for something upfront because it’s going to be cheaper on the long run.
House is an investment even if you build it entirely by yourself from materials harvested and processed by you. You invest a chunk of your time and effort to build something you expect to “pay you back” in the future, eg. keep you dry and warm when it’s cold outside.
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.
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.
Yes, and it will cost me some money as I’m getting ready to put mine on the market in the coming months.
But I don’t give a shit, the current conditions are unsustainable and I have great empathy for the generations behind me that are excluded from what is a fucking FOUNDATION of getting a stable life going. The shit has to come tumbling down at some point, otherwise our social structure will continue to degrade. The people who will bitch and moan about it are so out of touch they should be ignored anyway. Bring on the crash.
Colorado. I’m not going to really lose money over what I paid because I’ve owned it for almost 20 years. But it will be way down from the market high here and I think that’s peachy. I’d guess I’ll make 20% less than if I had sold 1-2 years ago. If the market really does crash like 2008 then 30% or more. But Housing prices have got to come down still, a lot. Banning corporations from owning single family residences would help a ton.
I care more about houses being affordable for everyone than I do about turning a profit. Greed is a huge sickness in our world. Hell I don’t think houses should be an investment vehicle in the first place. It’s a place to live not a goddamn wealth generator.
Yes, owning a house shouldn’t had ever been the end goal for 90% of the population. We should’ve solved housing for all people on earth a hundred years ago FFS! But we were too busy industrializing war and sending kids to die.
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