[HN Gopher] High-income job losses are cooling housing demand
___________________________________________________________________
High-income job losses are cooling housing demand
Author : gmays
Score : 215 points
Date : 2025-12-01 18:21 UTC (4 hours ago)
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| engineer_22 wrote:
| We're in a recession.
| pinkmuffinere wrote:
| Someone please tell the stock market, I moved my investments to
| be more risk averse and it hurts to watch the green line go up.
| outside1234 wrote:
| The market can stay insane longer than you can stay
| insolvent.
|
| Also, its possible that the market thinks job losses are good
| (aka that AI is replacing jobs)
| reactordev wrote:
| The brutal truth...
|
| Stocks go up, wages and income go down, things keep on
| keeping on because AI has quietly replaced you.
| jvanderbot wrote:
| First time?
| iwontberude wrote:
| Except in reality this isn't happening outside of press
| releases. God y'all drank the koolaid.
| thatfrenchguy wrote:
| There is generally no point in doing this, keep a constant
| asset allocation that match your risk appetite, otherwise
| you're just playing the casino.
| caminante wrote:
| Timing the market is bad, but I'm reading "risk averse" as
| selling equities and buying bonds.
|
| The problem is that this recent equities run has been extra
| terrible for more conservative 60/40 portfolios [0].
|
| [0] https://www.morningstar.com/economy/6040-portfolio-150-
| year-...
| dboreham wrote:
| > selling equities and buying bonds
|
| There's an intermediate option: sell high P/E stocks and
| buy lower P/E stocks with dividend paying history. There
| are ETFs designed for this purpose too.
| tossandthrow wrote:
| That is also what I read in going risk averse.
|
| In particular bulking up in EM, EU, and small cap. And
| slimming down in us large cap.
| caminante wrote:
| Uhhh...you're describing something like QAI? [0] And
| you're going to short a portfolio of TSLA, NVDA, AMZN,
| META, GOOGL, MSFT, AAPL, NFLX, AMD...?
|
| That's crazy.
|
| [0] https://finance.yahoo.com/quote/QAI/
| anonymars wrote:
| They say time in the market generally beats timing the market
| alistairSH wrote:
| Almost all of the gains on SP500 are from 7 stocks - I'll let
| you guess which 7. The market overall is nowhere near as
| exuberant.
|
| https://www.washingtonpost.com/business/2025/11/24/sp500-sto.
| ..
| stego-tech wrote:
| You and me both, but working poors like us should be
| investing for long-term gains, not short-term returns. I put
| my money into bonds and international indices because I want
| to be better protected when the AI CAPEX bubble pops here,
| but I have no idea when that'll happen.
|
| We can't time the market, but we can protect the scraps we've
| accumulated at least.
| QuercusMax wrote:
| I saw HUGE ramen displays yesterday at Safeway, including some
| of the less common flavors like blue (Soy Sauce, formerly
| "Oriental") and yellow (Creamy Chicken).
|
| I can't find the blog post from the last major recession where
| people were talking about all the crazy flavors you only see
| when the economy is REAL bad.
| bluedino wrote:
| I was always taking noodle bowls to work. Fill with water,
| microwave, enjoy at my desk. A dollar or two.
|
| Couldn't believe how many people would go to the sushi
| restaurant at the base of the building and spend $25 on lunch
| a couple days a week. Yikes.
| foogazi wrote:
| > Fill with water, microwave, enjoy at my desk
|
| Getting lunch with coworkers once in a while doesn't hurt
| bluedino wrote:
| Sure. And there's also shared lunchroom areas you can
| take your own lunch to.
| kulahan wrote:
| It's not nearly as filling, but I saw a character on TV
| smashing up their noodles and pouring in the powder,
| shaking the bag, and eating them like popcorn. I've become
| incredibly addicted.
| potato3732842 wrote:
| Prepare it and eat it per the instructions and it's
| infinitely more filling.
|
| Also there's fairly wide variance in calorie count brand
| to brand for the same size square, not sure why.
| kulahan wrote:
| I believe ramen noodles are made by frying noodles to
| make them crisp and dry for packaging. That and noodle
| thickness probably matter a lot?
| vel0city wrote:
| Ramen noodle chips are definitely a thing. Quite tasty
| too. Very crunchy.
|
| https://www.heb.com/product-
| detail/15219522?shoppingStore=79...
| sph wrote:
| Wheat in a watery soup flavoured with monosodium glutamate
| isn't very nutritious compared to rice and fresh fish.
| There's a reason ramen costs a dollar or two compared to
| sushi.
| bluedino wrote:
| What about fried shrimp, bbq sauce imitation crab,
| mayonnaise and cream cheese? Because that's what most of
| the 'sushi' is at that place.
| ssl-3 wrote:
| "Hey, I heard you like eating sushi. Have you ever tried
| having a bowl of par-cooked microwaved noodles, instead?
| It's basically the same thing!"
|
| Edit: The last time I worked in an office building, I had a
| limited time for lunch. I could have brought in ramen, or
| purchased something from the decently-stocked break room
| coolers. I could have sat at my desk or gone outside or
| eaten in the break room.
|
| And sometimes, I did do those things.
|
| But what I quickly discovered was that what I wanted on my
| lunch break was primarily a _break_.
|
| I wanted to get the hell away from that place, surround
| myself with something completely different, and spend time
| relaxing my brain before getting through the second half of
| the day.
|
| So I often went out to get lunch.
|
| But because time was limited, it had to be nearby, and my
| options were thus very limited.
|
| So I ate a _lot_ of bargain-menu Wendys and tacos from
| Qdoba because I could get there, and eat, and relax a bit,
| and be back on time.
|
| If there were instead a sushi place right downstairs, I'd
| have probably hit that once or twice a week, too. It would
| have had a higher monetary expense, but my brain would have
| thanked me for the extra time to unwind and I'd have had a
| better and more-productive rest of my day and come home in
| a better mood than I might have otherwise.
| vel0city wrote:
| I feel you man. I had a lot of lunches alone at a
| McDonalds walking distance from the office having a
| quarter pounder with a side salad streaming shows on my
| Windows Phone through a Slingbox back in the day. Just
| gotta get out and disconnect for a half hour to reset my
| mind from the problems of the day.
|
| That was the same year where I was homeless while
| technically having a "tech" job.
| vunderba wrote:
| Noodle bowls are _usually_ pretty high in saturated fat
| (between 8-15 grams on average). I can 't imagine eating
| them daily.
|
| At the very least you should consider steaming some
| vegetables (also very cheap), slice them up, and mix'em in
| to get some moderate nutritional value from it.
|
| https://www.health.harvard.edu/heart-health/whats-your-
| daily...
| sph wrote:
| Saturated fat is not the problem. Fat with carbohydrates
| in the same meal is.
|
| The problem with ramen is the amount of carbs and little
| nutrition which only spikes your insulin and makes you
| hungry 2 hours later if your metabolism is not great, not
| saturated fat in a vacuum. I wish popular knowledge about
| food had moved on from the misguided research of Ancel
| Keys already.
| endemic wrote:
| I've been seeing "air dried" noodles recently, which have
| way less sat fat -- still tons of salt, but these have
| been my go to.
| bluedino wrote:
| We're talking about budgets here. Not health. I think
| everyone knows that pre-packaged ramen noodles aren't the
| healthiest thing for you but they aren't any worse than
| half the other takeout crap you can eat. At least they
| are low in calories and cheap.
| BizarroLand wrote:
| Unless you're making them yourself or at least customizing
| them a good bit, noodle bowls are pretty unhealthy food.
|
| Nothing fresh in them, high sodium, freeze-dried ramen or
| noodle bowls were originally survival food and should be
| treated as such.
|
| Not saying don't eat them, and I don't know your
| socioeconomic background or anything, but if you want to
| eat them or have to eat them, try to add a little something
| extra into them.
|
| A cup of shredded cabbage and/or a few cherry tomatoes
| and/or a half cup of onion slices and/or an egg, things
| like that should be cheap and easy to add and will help
| dilute the sodium and add a healthy component to the meal,
| and your kidneys and heart will thank you for it.
| vel0city wrote:
| I don't disagree with a lot of what you said (need to
| really dress up the ramen to make it even close to
| healthy) but FWIW ramen isn't usually freeze dried it's
| just fried until fully dried out.
| lo_zamoyski wrote:
| > I don't know your socioeconomic background or anything
|
| It sounds like a habit drawn from poverty, but frankly,
| you'd have to be _really_ poor to reach for something
| like this daily (I 'm talking extreme survival situations
| that even the homeless don't typically face). Those with
| low income can still get much better food at a reasonable
| price. They don't need to shop at Whole Foods.
|
| I'm not sure you can even eat like this for very long
| either. The malnutrition is that bad. Expect high medical
| care costs or an early death down the line.
|
| Penny wise, pound foolish.
| BizarroLand wrote:
| If they're eating a reasonable breakfast and dinner,
| having instant ramen for lunch isn't anything close to a
| death sentence, it's simply not ideal.
|
| But, odds are, the person who eats instant ramen 5
| lunches a week isn't going home to a balanced dinner and
| likely eats fast food or frozen dinners most nights,
| which is why I suggested adding a few inexpensive extras.
|
| A cup of pre-shredded bagged cabbage would add ~$0.50 to
| a ramen meal. If they do 30 minutes of meal prep on a
| sunday they could pre-portion a full portable soup
| container with all of the extras for the week and be
| ready to go for maybe an extra dollar a day.
| QuercusMax wrote:
| A few years ago when I started WFH full-time I attempted
| to make "healthy" noodle bowls using Indomie ramen as a
| base. Indomie packets are smaller than Top Ramen, so they
| have less carbs / salt. I'd stir fry the noodles with a
| bunch of veggies like shredded cabbage, onions, and
| peppers, and toss in some protein (leftover chicken,
| cubed tofu, etc). Seemed pretty healthy!
|
| Until my blood sugar (A1C) and blood pressure numbers
| started climbing...
| mystifyingpoi wrote:
| Are they doing it on company time? Because it might just be
| true that both you and your sushi eaters get net result 0
| from this meal.
| bluedino wrote:
| You don't get an hour lunch?
| lo_zamoyski wrote:
| You don't have to spend $25, of course, and you can make
| lunch. But microwavable noodle bowls, especially at your
| price point, are terrible for your health.
|
| Why do people cheap out on food, but spend that money on
| less important things? We're talking about your health
| here! It's even worse when people with high incomes do it.
| gruez wrote:
| Are you sure they're not trying to capitalize on the ramen
| craze from kpop demon hunters?
| pavel_lishin wrote:
| Creamy Chicken is virtually impossible to find in stores
| where we live!
| micromacrofoot wrote:
| objectively we're not yet, but things are certainly weird
| mistrial9 wrote:
| bifurcation, and more
| andrewstuart2 wrote:
| Objectively, I'm not sure we can reliably say any longer,
| given how much pressure has been put on formerly objective
| reporting agencies to conform to this administration's
| narrative.
| micromacrofoot wrote:
| we can, there's a specific definition that hadn't been met
| yet
| rvz wrote:
| We were already in one following the tech correction since Nov
| 2021. [0]
|
| The problem here is some waited for too long to be told we are
| _now_ in a _recession_ , then some politicians tried to
| redefine it.
|
| But that is nothing compared to what will happen in the next 5
| - 10 years. Nothing goes up forever. The only hint is that we
| need to prepare before 2030.
|
| [0] https://news.ycombinator.com/item?id=29508238
| anonymars wrote:
| Not for nothing--I'm no optimist either--but, by what
| measure? I see at most one quarter of negative GDP[0]. The US
| market is up at least 50% since then.
|
| [0] https://fred.stlouisfed.org/graph/?g=1OmuJ
| newsoftheday wrote:
| Gemini, ChatGPT, Claude and Grok all said no, we're not in a
| recession just now when I asked them.
| newsoftheday wrote:
| Gemini, ChatGPT, Claude and Grok all said no, we're not in a
| recession just now when I asked them.
| monkeydust wrote:
| Any evidence if this is global trend in developed countries?
| nemomarx wrote:
| All of the examples in the article seem to be the us, so I
| think they're only looking at local trends.
|
| Are other developed countries firing people in the same way rn?
| potato3732842 wrote:
| The illustration is misleading because it forces things into
| three buckets, two of which are colored to indicate "not good".
| But still, that bottom right corner of the graph is telling.
|
| Also pretty disgusting to me that healthcare is "growing faster
| than normal" across the board. You'd think it'd be "growing the
| normal rate" at least somewhere. It's not like population is
| growing faster than normal across the board. Isn't 20% of the GDP
| enough for an industry that's fundamentally a cost center of
| society? Wars have been fought over less.
| bell-cot wrote:
| Healthcare is a non-negotiable way to extract money from
| people. And the industry is swimming in opaque complexities,
| IP, monopolies, monopsonies, and sweetheart regulation. Why the
| h*ll should they limit themselves to a mere 20%?
| bluGill wrote:
| The large baby boomer generation is getting old, and thus their
| costs will go up just by nature of old people needing more.
| They are also realizing that health is the largest factor in
| how long they will live (not to mention that they likely
| started smoking before people realized how harmful it was -
| most have long quit but with unknown damage done. There are
| other choices that they often made that are now questionable)
|
| Which is to say I expect spending to go up just for demographic
| reasons of large numbers of people starting to care. Don't
| confuse this for thinking all is well with health care costs.
| doctorpangloss wrote:
| What's the maximum price you'd pay for a cure to a rare, fatal
| pediatric disease?
|
| Answer this question, and you're on the journey to the solution
| to the problem you are talking about. Tell me some BS why the
| question doesn't matter or is wrong or whatever, and discover
| why "Dunning Kruger" is at least part of the answer.
| potato3732842 wrote:
| >Answer this question, and you're on the journey to the
| solution to the problem you are talking about. Tell me some
| BS why the question doesn't matter or is wrong or whatever,
| and discover why "Dunning Kruger" is at least part of the
| answer.
|
| I posit that the people who hold an ideology, moral compass,
| world view, or whatever else you want to call it, that
| permits the question to even be framed in this way are a root
| problem exacerbating many other problems in society,
| healthcare likely being one.
|
| I don't know what the "solution" is but the fact that ~1:5
| dollars in this country is spent on maintenance of the human
| body is just wild and likely unsustainable or indicative of
| some gross error in how we measure such things.
| Spivak wrote:
| From experience from my peers getting pregnant it's the cost
| of a "selective reduction" (which can be 1 to 0). Newly
| pregnant friends are spending $$$ on tests in utero to weed
| out children with such things.
|
| You're free to downvote, it won't make it less true. Genetic
| testing is all the rage in my social circle. No parent want's
| "dies basically immediately after birth" disease which is a
| surprising about of genetic conditions and way more people
| than I expected were silent carriers of at least one.
| doctorpangloss wrote:
| well, you didn't answer the question, but it sounds like
| you are saying $40,000? how much do you think Orchid costs?
| do you think it even works?
|
| $40,000 cap would exclude all the therapeutics targeting
| rare disease being developed today. not just pediatric.
| all. it would exclude tirzepatide, which costs $250,000 to
| $400,000 for most people. if you want to cure obesity. and
| by the way, congress expressly banned paying for all weight
| loss treatments from medicare.
|
| > Newly pregnant friends are spending $$$ on tests in utero
| to weed out children with such things.
|
| do you think pregnancies at age 40 compared to pregnancies
| at age 20 are more expensive, or less expensive? define
| expensive, yes? and what price should the government pay?
| should it pay 40 year old mothers different than 20 year
| old mothers?
|
| it's too bad that i'm being downvoted, since you're
| engaging with the question and hopefully it is really
| illuminating why there are no easy answers to capping
| healthcare costs. it starts with people, especially people
| who think of themselves as being very smart, being unable
| to specify a max price they are willing to pay, which is
| conceding that a market-based solution can exist but be
| very deeply flawed.
| Spivak wrote:
| Because I don't think there is a max price. Like of
| course there is in practice case by case because
| individuals don't have infinite money but nobody wants to
| be told "sorry, we can treat your condition but we're not
| going to because you're not valuable enough to society to
| get it." The episode Critical Care in Voyager muses on
| what such a system looks like formalized and it's awful.
|
| And I think what makes it so that we're resistant to caps
| is because it's not just rare diseases you could write
| off as unlikely to ever get that are ruinously expensive
| and it's likely that in everyone's social sphere they
| know multiple people personally who've had "blown out
| their out of pocket max by factors of 5-10x" medical
| issues. It's a this really can happen to you thing.
|
| So I think if your goal is to reduce healthcare costs on
| a nation scale your only option is make it so your people
| develop health problems less and tackle the smaller but
| much much much more frequent expenses. Things like ending
| the caps on the number of doctors, giving nurse
| practitioners full prescribing rights, moving more
| medications OTC, ending drug patent loopholes or for
| critical medications or "buying out" the patient so it
| can be immediately be made generic, adding more
| restrictions to testing so doctors have to actually think
| before ordering every test under the sun because it's not
| their money, massively reducing the regulations on
| medical devices, I could go on forever.
|
| Stupid unnecessary expense times your population is way
| more money than the treatment for some rare disease.
| jancsika wrote:
| I think you're misrepresenting "Dunning Kruger." It only
| predicts that the subset of your respondents _already_ known
| to be low ability in the domain of health care economics will
| end up inflating their assessment of their own ability in the
| same domain. (Perhaps also inverted for high ability
| respondents.)
|
| You're claiming to predict that-- for particular branch of
| response types-- _all_ respondents will be low ability. There
| are a lot of ways I would characterize that claim, but none
| of them would be "Dunning Kruger."
|
| In fact, my gut tells me that some significant number of
| flame wars I've read over the years were due to this confused
| heuristic.
| trollbridge wrote:
| An aging population combined with people generally being a lot
| less healthy (eg look at obesity or diabetes rates) means we
| either let people die off, or else spend more and more on
| healthcare.
| jerlam wrote:
| The elderly are on Medicare, and health care providers know
| they can treat much more aggressively when the government is
| picking up the tab. Despite the fact that in a purely economic
| sense, it is more important that children and young adults get
| health care.
|
| When I went to the doctor about fatigue, the advice given to me
| was to stop exercising and take a break.
|
| When my father went to the doctor about fatigue, they gave him
| a full blood panel and scheduled a cardiologist and respiratory
| therapist visit.
| newsoftheday wrote:
| >The elderly are on Medicare, and health care providers know
| they can treat much more aggressively when the government is
| picking up the tab.
|
| People should not make the unqualified statement that
| Medicare is free, which is what "the government is picking up
| the tab" sounds like. Medicare isn't free. Some people, not
| all, can qualify for free Part A but Parts B, C and D have
| premiums no matter what.
| mcdonje wrote:
| But will lower demand coupled with still high interest rates
| actually lead to reduced housing prices?
| etchalon wrote:
| It has in several cities, including Austin, where I live.
| ortusdux wrote:
| Zillow publishes some interesting data:
|
| https://www.zillow.com/home-values/10221/austin-tx/
|
| https://www.zillow.com/home-values/102001/united-states/
| Workaccount2 wrote:
| What's fascinating to see is that around me the wealthy
| towns are seeing 6-7% annual appreciation whereas the lower
| middle class towns are in the 2-3% range.
|
| K-shaped economy and all that I suppose.
| taeric wrote:
| Ish? Look into towns that didn't have a high reliance on
| tech. In particular, look for ones that didn't ride the
| rollercoaster of really high wages that a lot of tech
| drove and is now flattening off.
|
| Looks like shipping is also an industry that you probably
| don't want to track on this search. Other than that,
| places that saw modest wage growth saw similarly modest
| housing cost growth. And haven't seen it fall back, yet.
| TrainedMonkey wrote:
| I feel like 50% of that is explained by the luxury housing
| build out bubble in Austin specifically.
| etchalon wrote:
| We just overbuilt everything. Condos, houses, etc. There's
| a lot of inventory no matter what type of housing you're
| looking for.
| cantaloupe wrote:
| The academic consensus is that there is a housing
| shortage, not a surplus. Perhaps there is a local surplus
| in undesirable areas, but that isn't true in cities or
| nationally.
|
| https://www.brookings.edu/articles/make-it-count-
| measuring-o...
| nemomarx wrote:
| Austin and Texas in general have less housing
| restrictions than other places wrt zoning and regulation,
| so they could plausibly have a surplus. You can only
| really speak locally about any of this because location
| determines the market
| qball wrote:
| No, you just happened to build appropriately because a
| certain subfaction of the population weren't able to pass
| the typical laws that would stop building.
|
| The housing shortage was created by regulation and it's
| foolish or selfish to pretend otherwise.
|
| Austin is unique in that most of the harmful self-serving
| conservatism-as-in-block-and-deny-all-development that
| city people usually to do is constrained by the rest of
| the state, and as an obvious result arguably has the
| highest standard of living in the entire world.
| awesome_dude wrote:
| kind of.. and kind of not
|
| regulation /tends/ to be introduced because builders are
| misbehaving (bad materials, bad workmanship, building in
| flood zones, etc), but the bigger problem is NIMBY who
| then use those laws to prevent other people building in
| "their" neighbourhood
| greenie_beans wrote:
| it's the market dynamics that create under building, not
| regulations. if regulations are the problem, then how
| were builders able to build record number housing starts
| leading up the GFC? and after the crash, housing starts
| dramatically lowered. were there new regulations
| introduced during that time period?
| etchalon wrote:
| That's fair. "Overbuilt" was probably the wrong term.
|
| But yeah, we built a LOT of housing and that means buyers
| and renters have a lot of choice.
|
| It's hard to argue that's a bad thing unless you're a
| property owner who's upset their house didn't appreciate
| 20% in 5 years.
| nwah1 wrote:
| >It's hard to argue that's a bad thing unless you're a
| property owner who's upset their house didn't appreciate
| 20% in 5 years.
|
| I want money for nothin', and chicks for free
| QuercusMax wrote:
| highest standard of living unless you're a woman or a
| trans person, or a person of color, you mean. I'm sure
| living in a repressive dictatorship is awesome if you're
| a rich member of the in-group.
| burnt-resistor wrote:
| Moved out of ATX to somewhere around hill country last year.
| There were just too many boring, uncool, rich bozos moving
| in, and I couldn't take it anymore.
| dr_kretyn wrote:
| Talking from the Vancouver perspective where we have a similar
| situation - yes, house prices are going down. People list
| houses with the same price as 3-4 years ago but most close
| below the asking price.
| ekjhgkejhgk wrote:
| > But will lower demand coupled with still high interest rates
| actually lead to reduced housing prices?
|
| One theory says that either lower employement causes lower
| demand and therefore lower interest rates OR lower employement
| causes the FED to lower interest rates to stimulate spending,
| and in EITHER case the response to your premise of "low
| employement + high interest rates" should be "interest rates
| will come down", and separately "low employment implies low
| demand implies house prices will come down".
| bluGill wrote:
| Somewhat, but remember that house prices are sticky. If I can't
| sell my house and get into one with a similar value (both price
| and features) with near net zero change in my debt and payments
| I'm likely to stay put. Of course once I decide to move I'll be
| looking at cheaper and more expensive places, but if I can't
| break even on a like for like move why would I move? I'll just
| ride this market out for another 10 years. (note too that my
| mortgage is less than 3% - one more reason moving anytime soon
| would be a terrible thing for my life)
|
| If my house is worth less than what I owe then moving (selling
| short) can make sense.
|
| Houses are not just an investment for most people. There are
| investment factors, but they are also the place you live. Thus
| most people cannot just sell or not - they also have to
| consider where will they live next if they sell. Even if I knew
| exactly where the bottom would be odds are I'd still not sell
| because I don't have options to live elsewhere.
| toomuchtodo wrote:
| ~4M homes transacted in 2025. Price levels will decline over
| time, it's just who has to sell first. Life/forced sales
| (divorce, death, relo, downsize for costs, etc) are up first
| vs irrational sellers pining for historical price levels.
| Foreclosures are rising (especially in Florida, taxes and
| insurance going up), but not materially imho (yet? tbd based
| on how the economy holds up, all real estate is local).
|
| _Delistings Jump 28% as Sellers Pull Homes Off Market Rather
| Than Settle For Low Prices_ -
| https://www.redfin.com/news/delistings-jump-sellers-pull-
| hom... - November 25th, 2025
|
| _Foreclosures Rise for 8th Straight Month--These States Have
| the Worst Rates_ -
| https://www.realtor.com/news/trends/foreclosure-increase-
| att... - November 14th, 2025
|
| _Pending Home Sales Slip As Would-Be Buyers Wait For Lower
| Rates and Economic Clarity_ -
| https://www.redfin.com/news/housing-market-update-pending-
| sa... - November 13th, 2025
|
| (real estate market participant)
| bluGill wrote:
| Of course there are always people who need to sell for
| whatever reason. There are a large number of people not in
| the market who otherwise would be, but that doesn't mean
| nobody is in the market.
| carlosjobim wrote:
| > whatever reason
|
| They died. That's why some people aren't in the market:
| They are deceased. And new people enter the market
| because they have been born.
| bluGill wrote:
| That is one reason. Others are they got a job in a
| different city. Their health declined and so they can't
| live at home. They got married and don't need two houses.
| If you cannot think of a half a dozen others in the next
| 10 minutes either you didn't try or your need to practice
| creative thinking.
|
| The reasons are not important for this discussion though
| - all we need to know is some people have other pressures
| such that the one I listed isn't compelling to them.
| fred_is_fred wrote:
| > If my house is worth less than what I owe then moving
| (selling short) can make sense.
|
| I believe this varies by state but I thought in some states
| the lender can come after you for the difference and in
| others you can just walk away (albeit with a credit ding).
| toomuchtodo wrote:
| https://en.wikipedia.org/wiki/Nonrecourse_debt
|
| https://www.financialsamurai.com/non-recourse-states-walk-
| aw...
|
| (have walked away from underwater fha mortgage from 2008
| gfc in a recourse state, ama)
| KerrAvon wrote:
| Do note that, even if the math works out such that the bank
| doesn't actually lose money, a short sale remains on your
| credit history for the subsequent seven years, which makes it
| very difficult to buy another house during that period. It's
| not something you want to do if you can avoid it.
| bluGill wrote:
| I said CAN not will be worth it. Details of your particular
| situation matter, for some they should hang on while for
| others the credit hit is too small to matter. You need
| accountants and lawyers to advise you based on your exactly
| situation not internet commenters.
| carlosjobim wrote:
| People moving isn't driving the real estate market. It is
| people dying or being born. Unfortunately you cannot bring
| real estate and other investments like your retirement
| entitlements with you when you pass away from this life, so
| something will happen to your house.
| francisofascii wrote:
| There is also "Return to Office" polices that may be buoying
| housing prices near the urban core.
| duped wrote:
| I'm seeing homes in my neighborhood sit on the market for 3-4
| months before dropping prices and finally selling, about 20-25%
| off the original listing.
| burnt-resistor wrote:
| Houses here are sitting on and off for 6 months at a time
| without closing. The market has all of the energy of a banana
| slug.
| matsemann wrote:
| What we've seen in Oslo, Norway, is mostly that the market
| slows down. Those that get lower offers than what it previously
| was "worth" don't sell. So in the prices graphs it's mostly
| flat, but then with lower sales total. So it kinda "hides" that
| things are worth less as it's no transaction. And people don't
| dare buying before selling, so lead times are quite long.
|
| And then they stop building new stuff while prices are low, so
| demand will keep prices stable, and when the interest gets
| lower again prices will probably skyrocket since it's not been
| built enough in the meantime.
| burnt-resistor wrote:
| For more competitive markets, it seems to largely depend on if
| foreign and out-of-state rich buyers are still interested in
| buying in an area. The fairly-to-ultra-rich ~5% are driving
| prices and demand of almost everything in these times.
| carlosjobim wrote:
| Real estate owners will rather let their buildings rot to zero
| value than reduce their prices. They have juicy government
| bailouts coming, and social security and pensions to pay for
| their upkeep. They don't need the money. It was just an
| investment to get rich without having to do anything, and if it
| doesn't work, they'll let it rot because they deserve their
| massive return god damn it!
| georgeburdell wrote:
| Anecdotally, in my corner of the Silicon Valley, I've been
| looking to trade up homes from my 7/10 district to a nearby
| 10/10. Over the last year, I've seen the comparable properties in
| 10/10's rise about 10%, while my 7/10 has gone down about 5%.
| Both areas are very short commutes to high tech.
| varenc wrote:
| Talked to a real estate agent recently and she mentioned a
| similar trend in the bay area.
|
| "Luxury homes", $3M+, are hot right now with prices risings.
| Whereas lower cost non-luxury homes are seeing less growth.
| It's a weird world.
| nemomarx wrote:
| K shaped economy I guess? More and more spending is driven by
| the top, so maybe housing that aims to capture that still
| sells fast but more normal housing struggles
| blackjack_ wrote:
| Things are visibly cooling up here in Marin, houses are
| actually sitting on the market (even just at the end of last
| year houses were generally scheduling offer dates and picking
| the best one). Some of this is just seasonal cooling, so I'm
| wary to draw any larger conclusions... but I'm seeing a lot
| lot more `for sale` signs than I'm used to.
| jandrese wrote:
| More evidence of the hollowing out of the middle class.
| harmmonica wrote:
| A drop in housing prices might be the only silver lining if an
| actual recession hits (whether the official statistics will
| actually admit to a recession is debatable of course).
|
| That said, even if housing prices drop materially and eventually
| bottom it will provide little opportunity for "normal" folks to
| buy in if they're jobless. Will be interesting to see if Fed
| interest rate cuts translate to mortgage rate cuts, and whether
| those rate cuts lessen any price drops.
|
| I've said this before on here, but the historical price-to-income
| for housing has been something like 4x. Today it's 7x (that is as
| insane as it sounds). A long way to revert to the mean unless you
| really think "this time is different."
| mcny wrote:
| What I am worried about is won't building new homes slow down
| to a crawl or stop completely if the r word is confirmed?
| jfghi wrote:
| I think with the amount of corporations and existing
| homeowners buying homes that the demand is strong enough to
| keep prices high no matter what happens. There are billions
| of dollars set aside to gobble up homes in the event of a
| price drop. In my area, 20 percent of homes are owned by
| investors and realtors delist homes that don't sell as
| opposed to drop price.
| phantasmish wrote:
| > In my area, 20 percent of homes are owned by investors
| and realtors delist homes that don't sell as opposed to
| drop price.
|
| This has been so weird to see over the last couple dips.
|
| In the '08 crash, banks were sitting on houses that were
| developing _mold issues_ because they had been sitting
| vacant so long. These houses were getting more damaged and
| less desirable by the day, and before long would require
| hundreds of thousands of dollars to fix (up from the low-
| tens already evident) but they still preferred to sit on
| them. They weren't listed, or _were_ listed but at too-high
| prices and they were just ignoring offers, not even
| responding.
|
| Then you look at "depressed" housing prices that are _still
| way over historic norms_ , so you'd think builders would
| keep going... but no, they totally halt all work, no new
| houses until prices are heading up again.
|
| Something's super messed-up about the housing market in
| ways that it wasn't in the last millennium. Recessions
| don't even fix it, they just make everything pause.
| HPsquared wrote:
| On the other hand, it'll get cheaper to build new houses as
| material and labour costs should fall. Might be hard to get
| finance though.
| jandrese wrote:
| Labor costs are unlikely to fall. The cost of living has
| been on an upward trend that shows no sign of stopping. The
| federal government waging a campaign of terror against the
| demographic that most house builders employ is certainly
| not helping either.
| rockskon wrote:
| It's 7x these days largely due to the 0% interest rate
| environment we had for so long.
| HPsquared wrote:
| I wonder what it is in "monthly cost as a fraction of monthly
| income".
| al_borland wrote:
| Housing prices dropping aren't so good for those who own homes.
| It is also likely there will be a feeding frenzy of investors
| snatching up homes. I had a hard time buying a few years ago,
| because investors kept out-bidding me with all-cash offers. I
| had to raise my price target to move outside of their impulse
| buy range, which I was not too happy about.
| jeremyjh wrote:
| So lower prices mean higher prices?
| skybrian wrote:
| How do you know they're investors?
| tossandthrow wrote:
| The dynamic here is that investors accept 3% return for
| housing because there are no good alternatives.
|
| The expected return is considerably higher now, this should
| mean that houses should be traded at PR at around 20 again
| (as opposed to upwards of 30 when there was no better
| investments to be made).
|
| Investors will likely not be an issue as long as we don't go
| into zirp again.
| pavel_lishin wrote:
| > _Housing prices dropping aren't so good for those who own
| homes._
|
| Isn't it only bad news for people who are selling their
| homes?
| carlosjobim wrote:
| You can use your real estate as collateral if you own it.
| To buy nice cars, fancy vacations, etc etc. And you want
| the real estate value to increase as much as possible. Even
| if that means destroying your nation forever.
| pavel_lishin wrote:
| ... people take out loans to buy cars and go on vacation,
| using their house as collateral?
| fragmede wrote:
| I would personally advise against that, but HELCs are a
| popular financial vehicle in order to do exactly that.
| carlosjobim wrote:
| Yes, the economy of the entire industrialized world runs
| on this.
|
| People borrow money against their house to buy a car or a
| boat because rates are much better. The bank tells them
| to borrow a few ten thousands extra while they are at it,
| since the rate is so good. Why don't you take a vacation
| or get that new thing you wanted to buy?
|
| From where do you think everybody has so much money to
| spend, while you are working full time and have nothing?
| It's not only credit cards...
| jandrese wrote:
| > Housing prices dropping aren't so good for those who own
| homes.
|
| As housing prices are tied to the property tax it is a good
| thing for people who are not planning to sell anytime soon.
| Remember a home is a place you live, not an investment.
| People who treat homes as investments cause a lot of problems
| for people who just want to live somewhere that isn't
| propping up some middleman landlord.
| standardUser wrote:
| Desirable metros seem to have very sticky prices. San
| Francisco, where I lived for 15 years, turned into a grotesque
| caricature of what it once was, but prices barely budged (and
| for most of that transition, they surged wildly). Sure, it's no
| longer the single most expensive rental market in the country,
| but it's still one of the highest despite quality of life
| degrading _massively_ and even a big decline in population.
| jacquesm wrote:
| Be very careful what you wish for. That's not much of a silver
| lining.
| shuckles wrote:
| People say this a lot, but it makes no sense to me. A recession
| comes with lower incomes and wealth for everyone, so
| affordability doesn't change for the average person. It only
| increases it for those who had a short position in their asset
| allocation, but that's just investment outperformance which you
| can have even without a recession.
| harmmonica wrote:
| You're generally right except it's not true for everyone.
| Every recession that hits a lot of folks just keep their jobs
| and their salaries. Maybe their stock portfolios (for the few
| who have those outside of 401k's) take a hit. But the key is
| that if there's a real estate downturn, almost every single
| home (house, condo and even land) takes a hit and so you end
| up with a situation where all the inventory drops in price,
| but not all the eligible buyers "drop in price" (i.e., not
| all eligible buyers suffer a downturn and so, net, you
| actually get more people into homes).
|
| The key of course is that the downturn isn't so massive
| (hello 2008!), where the blood flows so freely that the
| layoffs/foreclosures/etc. overwhelm the eligible buyer pool
| in absolute numbers. That can for sure happen, but is
| atypical historically.
| shuckles wrote:
| You've just listed a set of specific circumstances under
| which some number of people might find housing more
| affordable, but that's a lot more like "investment
| outperformance" driven affordability than "broad based
| housing price decrease" affordability. That can happen even
| without a recession. A small number of people could've
| found Bay Area houses more affordable in the last decade if
| they were HODLing some 10x stock.
| harmmonica wrote:
| FWIW I think I just listed a set of circumstances that
| happen every time there is a drop in housing prices
| historically, at least going back to the 90's savings and
| loan crisis. I'll tell you when people found Bay Area
| houses more affordable? 2009-2012. And during that time
| the unemployment rate was at roughly 10 or 12% (had to
| look it up just now but knew it was around there).
| Housing prices during that same time? Dropped as low as
| 40-50% in some parts of the Bay (best case they were down
| 20%+). 10x stock needed? No. A job? Yes. You can repeat
| the exercise for the start of Covid, but the timeline for
| the drop in prices, and the % drop, was muted in
| comparison to the housing crisis. Same for S&L crisis.
| Dotcom bust too, though, again, housing prices didn't
| crater like the housing crisis.
| francisofascii wrote:
| The post doesn't have housing data to back up the claim, but the
| job growth by city is interesting. HCOL cities like DC and SF in
| the red, as you would expect. Government jobs down in DC is
| expected, but mostly green in other cities? What is Philly and
| New York doing right?
| trashface wrote:
| The article notes that Philly and also NY underperformed in
| last few years so really they are catching up to baseline. As a
| resident of the philly suburbs this matches my lived experience
| - there has been something of a jobs bubble (at least for some
| demographics, in some industries) since covid ended but for the
| decade before that the areas was economically stagnant.
| lvl155 wrote:
| Boston is seeing some headwind especially from slowdown in
| biotech, the main driver of growth over the past decade or so.
| Rents are also down. However, worth noting supply is still
| constrained especially if you exclude replacement-ready homes.
| stego-tech wrote:
| Can confirm, this is where I've spent four years trying to buy
| a starter (2BR/2BA) home in on a single income. The biggest
| problem in older markets is that most housing stock is of
| appalling quality, requiring another five to six figures of
| work to get into a modern, habitable shape - unless you do the
| work yourself, which most can't while they also hold down a FTE
| gig and deal with the return of urban commuting.
|
| It's _bad_.
| phantasmish wrote:
| A lot of lower-end housing spends some years in the hands of
| people who can't afford to keep up maintenance, and/or are
| too old to keep up with it well (... or to keep up with
| cleaning). As a result, it's all but ruined by the time
| someone else gets a crack at it.
| stego-tech wrote:
| Yep, and a lifetime spent moving every few years (and my
| obsession for details and desire to understand how
| everything works) means that I can see the _chasm_ between
| what properties are actually worth versus what folks are
| asking for. I've seen some really pricey nightmares these
| past several years ($650k for a 1400sqft home with knob-
| and-tube electrical wiring and an honest-to-god fire bucket
| in the basement next to the oil heater!), and I cannot
| afford to take such extreme risks on the most expensive
| purchase I'll likely ever make in my life.
|
| It _sucks_.
| tayo42 wrote:
| People get pissy about flippers but there is some scary
| stuff out there I don't think anyone really wants to deal
| with
| dashundchen wrote:
| A lot of flippers aren't dealing with scary stuff like
| foundations or structure, that's risky and expensive.
| It's cheap to throw up some new drywall and vinyl floors
| to make it look renovated though.
| stego-tech wrote:
| We developed nicknames for bad flip jobs after viewing so
| many:
|
| "Spray Foam Specials" - gobs of sprayfoam insulation and
| a fresh coat of paint.
|
| "Gap Properties" - because who needs floorboards to
| actually meet?
|
| "Skatepark Schemes" - for when the floors are so bowed
| you can do lip tricks at the room edges
|
| "Flashpoint Fixers" - surface-level flip jobs that kept
| the knob-and-tube wiring alongside newer Romex
|
| "Oil Derricks" - any home with an oil tank on a
| foundation of compacted earth or otherwise lacking a
| groundwater barrier
| kubectl_h wrote:
| I wish I could set up a filter in Zillow that
| automatically excluded homes that have gray engineered
| flooring, which flippers seem to love for some reason.
| burnt-resistor wrote:
| Find a run-down structure not surrounded by derelicts on land
| that's otherwise favorable. 1 wall remodel. A modest
| structure costs roughly around $250k if built by someone
| else, vaguely divide that in half if DIY.
| balderdash wrote:
| yeah for some reason there seems to be a pricing disconnect
| on many homes, the discount on home that needs a lot of work
| seems to be less than the current cost to fix it (especially
| when taking into account labor shortages and tariffs on
| materials)
| stevenwoo wrote:
| I sympathize and was in the same situation albeit a much
| easier market in hindsight. I came to Bay Area in 1999 and
| after finally facing the reality of the market after a couple
| of years, bit the bullet and bought something. The prices
| were/are so outrageous compared to my former residence in
| Austin the sticker shock and hyper competitive real estate
| market at the low end - every SFH I could comfortably afford
| was going to require significant amount of work to make
| palatable to someone who did not want the inside aesthetic of
| the 1950-1970s and still each had multiple bids, with cash
| bids above asking with no inspection always winning, I
| imagine this has only gotten worse at entry level with the
| elevation in total compensation for certain fields.
| ghc wrote:
| Yep. Recently tried to sell my 2BR/2BA in Boston. Exactly 2
| people visited over 3 months and several open houses and price
| cuts. Realtor said it's the same across the board for 2BR/2BA
| because the pool of entry-level buyers dried up with layoffs.
|
| After I switched it over to a rental listing I was able to rent
| it out within 3 days at a significant profit. Another unit in
| my building rented similarly fast at a similar price. I know
| it's just anecdata, but it doesn't feel like the rental market
| is cooling down at all.
| greenie_beans wrote:
| nobody to buy at your asking price so you take the house off
| the market rather than match the market expectations, thereby
| increasing scarcity for potential buyers at a lower price who
| are instead forced to rent due to market dynamics
| 11101010001100 wrote:
| Yes, I hold, sell and by stock the same way. Either it is a
| market, or it isn't.
| greenie_beans wrote:
| stock is not housing. i need housing. i don't need stock.
| iaw wrote:
| This is a weird take. I get the desire to house people
| but someone choosing to rent rather than sell a home they
| own is not the crux of the issue. When there are
| corporations keeping swaths of housing empty to raise
| rent rates the real issue is market manipulation not
| small participants.
| femiagbabiaka wrote:
| The expectation that housing is an investment that should
| perform like stock is the entire problem IMO.
| stego-tech wrote:
| Can confirm via my own experiences. Had a job in a SV firm, and
| paid _just barely enough_ to try and get on the housing ladder.
| Four years and a 40-60% price increase later, and I got laid off
| without managing to successfully buy a home.
|
| Since the layoffs, I've taken a sizable paycut (~$75k TC) to make
| ends meet with whatever I could find, but kept a pulse on the
| market in case things turned around. Locally, rents have gone
| down by ~$100-$500 a month (depending on when you renew) with one
| to two months free rent, while home prices have finally stopped
| rising. Homes are staying on markets longer, and bidding wars
| have dried up. I get about one to three price cut messages a day
| from Redfin, though nothing in my area or price range post salary
| cut.
|
| Unfortunately, I don't expect this trend to continue. My landlord
| just introduced a new RealPage-alike to keep rents high, local
| developers have put a hold on new housing construction as
| resources get consumed for AI datacenters, and the same old red
| tape blocks meaningful progress in addressing availability gaps.
| The only real bright spot is that renters are pushing for
| statewide rent caps and controls with better progress than ever
| before, so there might be some relief in sight next election.
|
| It's bad out there, ya'll.
| 4fterd4rk wrote:
| You say rents are going down... but you want rent control?
| That's one way to ensure rents will never, ever go down. Every
| landlord will charge the statutory maximum.
| Hacktrick wrote:
| >RealPage
|
| This monopolistic pricing is a massive part of the issue.
| Hopefully the case the DOJ brought against them is
| progressing well. They've essentially created a cartel of
| landlords trying to squeeze you for every single penny.
| jihadjihad wrote:
| > Hopefully the case the DOJ brought against them is
| progressing well
|
| They reached a settlement with the DOJ last week [0].
|
| 0: https://www.realpage.com/news/realpage-reaches-
| settlement-wi...
| vel0city wrote:
| The case concluded with a settlement that RealPage would no
| longer share data between competitive landlords.
|
| https://www.justice.gov/opa/pr/justice-department-
| requires-r...
| cjbgkagh wrote:
| In theory that sounds like an undermining of their core
| value proposition, I think in practice it'll be less
| effective than so called 'Chinese walls'
| vel0city wrote:
| I don't doubt it. The actual effects of this are yet to
| be proven either way.
| Groxx wrote:
| As opposed to now, where they charge the maximum they can get
| away with, _while also_ colluding with each other to raise
| prices? Yes.
| Tiktaalik wrote:
| Vancouver has rent control and rents are going down.
|
| Though I think the likely dynamic that you're seeing here is
| rent growth of new build apartments is stalling and
| reversing, and on renewal with new tenants rents are being
| revised downward as there is more competition.
|
| https://www.ctvnews.ca/vancouver/article/rent-prices-
| falling...
|
| I expect that amongst apartments with long term tenants rents
| are still creeping upward. But that's fine. The point of rent
| control is to smooth out volatility. Rents can still go up,
| but the goal is to avoid sudden 150% increases etc.
| BJones12 wrote:
| > The point of rent control is to smooth out volatility.
| Rents can still go up, but the goal is to avoid sudden 150%
| increases etc.
|
| Is it? I mostly see rent control maximum increases below
| the inflation rate, suggesting a different goal (appealing
| to voters?). If it were just to eliminate extreme
| volatility I think we'd see more 5/10/20% increases and
| less 1/2/3% increases.
| gopher_space wrote:
| As opposed to the status quo where rents never ever go down
| and landlords charge the literal maximum?
| gbriel wrote:
| Rent control is not a great solution long term since it reduces
| the incentive to build more housing which is the only real fix.
| It ends up making the problem worse. I could see in times of
| economic downturns, a temporary rent control that automatically
| expires to help people figure out their situation short term
| (moving is expensive).
| phantasmish wrote:
| If house prices and rent being this much higher than they
| were in, say, 2000, relative to wages, wasn't enough to
| trigger an enormous housing construction boom, I don't think
| further-increasing rent or house prices are likely to do much
| good. Something about that "signal" is already badly
| malfunctioning.
| crooked-v wrote:
| The lack of construction is mostly to do with most major US
| cities just not allowing enough construction. You can see
| the contrast with the handful of places like Austin that
| _do_ allow construction, where rents have consistently
| dropped year-to-year even though the population has
| increased significantly.
| reactordev wrote:
| This. It's NIMBY politics at the local level. Go to your
| county/city board meetings and ask for plans.
| epistasis wrote:
| The pricing signal malfunctions when homeowners and
| landowners control land use to such a degree that
| regulatory constriction stops housing. Usually this is
| zoning as the primary blocker, but there can be other
| blockers too.
|
| One of the problems with rent control is that it pushes the
| class politics so that renters with housing act more like
| landowners than they do new tenants, and they conspire to
| also block housing. People are change averse, even if they
| don't mind the change after they see it; before the change
| it's a big threat. This hurts any tenant that needs to move
| due to things such as becoming an adult, finding a new job,
| starting a family, getting a divorce or ending a
| relationship, etc.
|
| Rent control is great as a tenant protection to prevent
| evictions via rent increases, but it is only a short term
| protection for tenants otherwise, and can hurt tenants
| greatly if there's not enough building.
| Hammershaft wrote:
| There's good evidence it's mostly zoning and permitting.
| You might be shocked if you look at the SFH zoning in your
| city when you realize how much the municipal gov has just
| banned denser housing development.
| whatshisface wrote:
| If the price without collusion is $X and the monopoly pricing
| behavior raises it to $(X+1), you can cap it at $X without
| causing any problems.
| zeroonetwothree wrote:
| Housing is obviously not a monopoly.
| orochimaaru wrote:
| RealPage is gaming rents against tenants. It's artificial
| rent inflation by algorithms. I agree on rent control. But
| unless realpage is controlled and regulated rent control is
| the only option.
| crooked-v wrote:
| And for some hard data, here's a meta-study on the subject: h
| ttps://www.sciencedirect.com/science/article/pii/S105113772..
| .
|
| > [A]ccording to the studies examined here, as a rule, rent
| control leads to higher rents for uncontrolled dwellings. The
| imposition of rent ceilings amplifies the shortage of
| housing. Therefore, the waiting queues become longer and
| would-be tenants must spend more time looking for a dwelling.
| If they are impatient or have no place to stay (e.g., in the
| houses of their friends or relatives) while looking for their
| own dwelling, they turn to the segment that is not subject to
| regulations. The demand for unregulated housing increases and
| so do the rents.
| Tiktaalik wrote:
| This is the economist theoretical consensus justification
| though in real life tbh I dunno if I've noticed any real
| difference when looking at housing development patterns
| across Canada where there are many jurisdictions with rent
| control, many without, and many with some sort of blend (ie.
| no rent control on new builds).
|
| If there is some incentive toward development in non-rent
| control jurisdictions I suspect it's strongly dominated by
| other factors.
|
| (ie. Montreal probably has the most restrictive rent control
| in Canada but it's also seeing the strongest apartment
| development growth)
| shuckles wrote:
| This comment just indicates the difficulty of making
| accurate conclusions based on casual analysis like you're
| doing.
| doctorpangloss wrote:
| haha i misread casual as causal, but i guess, here are
| the "accurate conclusions" you are looking for, that is
| to say, what does rent control cause, as opposed to the
| vibes and correlations people are talking about?
|
| it's the "credibility revolution" and someone has won a
| nobel prize for it.
|
| rent control _causes_ limited mobility (read:
| displacement out of town) by 20 percent; it _causes_
| reduced rental housing supply by 15 percent:
|
| https://www.aeaweb.org/articles?id=10.1257/aer.20181289
|
| rent control _causes_ reduced property values:
|
| https://economics.mit.edu/sites/default/files/publication
| s/h...
| shuckles wrote:
| Did you write an entire comment by misreading "casual",
| the word I used, with "causal"? Otherwise, I have no idea
| how your reply relates to mine, as I didn't make any
| claims about the existence of such research.
| ambicapter wrote:
| You called his analysis "casual" so he gave you in-depth
| research? Otherwise, what was the purpose of calling him
| casual? Just drive-by insults?
| shuckles wrote:
| Casual is a perfectly reasonable descriptor of economic
| conclusions based on vibes and anecdotes about apartment
| building in Montreal. I don't think it's reasonable to
| read it as an insult.
| antisthenes wrote:
| You don't need a study to tell you that if you make
| things more difficult and worse for landlords, the
| housing supply will decrease.
|
| Courts actually need to do their jobs here for an optimal
| solution - e.g. it should be easy to punish shitty
| landlords AND easy to kick out shitty tenants.
|
| It shouldn't take a 1+ year wait (as during COVID) to get
| a landlord-tenant court date to resolve issues.
|
| The housing issue is multi-faceted however, so that's
| only 1 piece of the puzzle. But thanks to NIMBYs and
| building code overreach, it's literally impossible to
| build affordable housing that would rent at its own
| depreciation schedule.
| Filligree wrote:
| People are able to move around, to some degree, so housing
| prices are a function of supply across most of the nation.
| Or at least the desirable portions.
|
| Rent control on the other hand has mostly local effects.
|
| Which means, rent control can push prices down and keep
| them down. There is indeed a supply reduction, and prices
| on average will go up--but not in the rent controlled area.
|
| It's still a poor idea, but it requires centralised
| planning to avoid.
| aerhardt wrote:
| I've kept hearing for a couple of years that Canada has an
| outrageous housing shortage, though?
| Hammershaft wrote:
| Canada is a basket case for housing development but the
| only bright spots for outpacing demand with housing are
| Albertan cities with no rent control like Calgary and
| Edmonton.
|
| Edmonton recently outpaced Toronto in housing development
| on an absolute basis with much lower housing prices and
| less than 1/5th the population!
| bryanlarsen wrote:
| Edmonton housing prices have gone up in 2025, Toronto's
| have declined. Alberta's population is growing, Ontario's
| is shrinking.
|
| Those are the two factors explaining the housing starts,
| not the ineffectual rent control that exists in Ontario.
| Hammershaft wrote:
| I think you're neglecting that most of Toronto is
| restrictively zoned for SFHs while Edmonton is upzoned
| across the city for 8-plexes at a minimum.
|
| Toronto has a cumbersome permitting process that runs
| from months to years, while Edmonton's process is mostly
| automated and grants permits within weeks.
|
| Regardless, the other relevant factor here is the actual
| price of housing, which is substantially higher in
| Toronto... and yet Toronto struggles (by design) to build
| anything.
| qball wrote:
| The regulatory environment in Alberta is such that it
| permits housing to be built, and it does.
|
| The same cannot be said of Toronto (or everywhere else in
| the nation that isn't the Prairies for similar reasons),
| for landed interests and the bureaucracy and corruption
| that comes with them are a lot more entrenched in that
| area.
| directevolve wrote:
| > Montreal probably has the most restrictive rent control
| in Canada but it's also seeing the strongest apartment
| development growth
|
| A wonderful city like Montreal can drive enough demand for
| housing to overcome red tape, and still be building far far
| less than what would satisfy demand. A less attribute city
| with lower demand for housing may build less due to lower
| demand, despite having less red tape.
|
| Trust the economists on this one.
| wenc wrote:
| I lived in downtown Montreal and it could just be me but
| the housing stock was not of the highest quality compared
| to most other places in Canada. Montreal as a whole feels
| rundown (I say this as a former Montrealer who's lived in
| many places since). Cheap rent though.
| ryanmcbride wrote:
| You're making quite a few assumptions
| bcrosby95 wrote:
| In SF rent control only applies to buildings that are like
| 40-50+ years old. Yet people still complain as if it stops
| new housing. If you combine this with the idea that rent
| control raises prices for everyone else, you'd think people
| would be knocking down the doors to build: artificially high
| rents for decades.
| shuckles wrote:
| Rent control absolutely causes a reduction in supply:
| there's a reason rent controlled buildings have apartments
| in poor condition that owners do not renovate (so a
| reduction in quality supplied) and many are held off market
| or converted to owner occupancy through condos and TICs (so
| a reduction in quantity supplied). Not to mention the units
| underused by long term tenants who maintain them as
| secondary residences.
| TuringNYC wrote:
| >> If this - "High-income job losses are cooling housing
| demand" is true, doesn't this mean UBI would never work?
|
| I've even see a rent controlled apartment in manhattan
| being used as a _storage unit_ !!!
| shuckles wrote:
| Central to the challenge of UBI and housing costs is the
| law of rent. UBI could work if all its redistribution was
| not immediately captured by landowners. There are ways to
| make that possible.
|
| Rent controlled apartments being held by tenants no
| longer using them as primary residences is pretty common.
| A famous case of this was Cleve Jones in San Francisco
| who tried to make it a huge political deal when his
| landlord raised his rent to market because he was 1.
| living in Guerneville full time and 2. subletting the
| apartment. The media environment is one where it's ok for
| a master tenant to be a de facto landlord and make money
| on real estate, as long as it's not the landowner
| themselves!
| bcrosby95 wrote:
| Yes but it builds into my argument - it does not counter
| it. Reduced supply... increases rent. I'm saying
| "increased rents + rent control not applying = more
| people should want to build". And the person I'm replying
| to said rent control makes people not want to build.
| epistasis wrote:
| Rent control also switches the class politics, as people
| who are paying far below market rate for housing become
| like landlords and homeowners: getting free imputed rent.
|
| People have been knocking down doors to build in SF for
| decades, but do not because regulatory capture by
| homeowners, landlords, and those with below-market rents
| are happy to keep out new people.
|
| Where and when housing gets built in the US is not merely a
| market driven decision: you also need to get local
| permission to build.
| Spartan-S63 wrote:
| I find that rent control is a good idea in theory, but leads
| to a lot of deadweight loss. As a former renter, what I
| really wanted was a predictable cap on rent increases. For
| folks who are long-term renters, without controls and
| predictability, their only option would be to move every few
| years, which is incredibly disruptive.
|
| From my understanding, European countries tend to have
| restrictions on what lease renewals can look like and with
| declining home ownership (and ownership being priced out for
| many), I think we should look at European models for real
| solutions to our housing crisis.
| standardUser wrote:
| This is an important distinction. Most "rent control" laws
| are intended to be "rent stabilization" not outright price
| fixing. Their goal is to prevent insane swings in rent
| happening _too quickly_ , which disrupts families and local
| economies (and even infrastructure development).
|
| But the worst/most aggressively laws are always used as the
| examples, skewing the conversation to edge cases and
| ignoring the fact that these laws can and do take hundreds
| of different forms.
| torginus wrote:
| Price fixing isn't so bad either - if apt prices stay
| predictable, you can plane ahead financially without
| being forced to buy an apartment or house.
| Hammershaft wrote:
| Rent control is not good in theory, it's the most
| universally hated policy among economists because it has so
| many horrible unintended effects on housing development and
| maintenance.
| archagon wrote:
| That's because it's not an economic policy but a
| humanistic one. Stable housing should be a right. If rent
| control was the default, then obviously no renter would
| vote for arbitrary rent increases in exchange for maybe,
| someday in the future, rent going down due to increased
| housing supply.
| standardUser wrote:
| > Rent control is not a great solution long term since it
| reduces the incentive to build more
|
| It is exceptionally rare for new construction to be subject
| to rent control laws, unless they utilize special tax breaks
| or government subsidies. It does nothing more than slightly
| inconvenience the investor class, who usually aren't thinking
| past 15-20 years anyway, when rent control laws might
| theoretically impact their investment.
| mistersquid wrote:
| > Rent control is not a great solution long term since it
| reduces the incentive to build more housing which is the only
| real fix.
|
| In California (and SF in particular) rent control applies to
| housing older than 15 years and owned by corporate entities.
|
| How does rent control applied as it is in California
| disincentivize building? I would think that building would be
| incentivized by rent control because newer housing stock
| would be exempt from rent control.
| nxm wrote:
| Long term they wouldn't be, and hence lower ROI and
| therefore disincentivized
| stego-tech wrote:
| Populist rent control is an excellent motivator to get
| counter-parties to the table to discuss productive
| alternatives in a market where no outside pressure currently
| exists.
|
| There is no silver bullet solution. Rent control can be a big
| part of that solution, but what's ultimately needed are a
| combination of policies that disincentivize the hoarding of
| housing as an asset class, promote home ownership itself for
| stability and community rather than fiscal nest egg, mandate
| denser housing in areas served by mass transit, tax land
| properly by removing caps on yearly increases, protect
| renters from unnecessary evictions (lack of renewals, no-
| fault evictions, etc), removing zoning laws on residential
| and commercial space (essentially reducing zoning laws to
| industrial vs non-industrial) to speed up approvals for
| construction, and get the government more active in meeting
| the needs of its populace through public housing programs
| (like Singapore does).
|
| It's highly complex and nuanced. I've long since stopped
| entertaining smug clapbacks from armchair economists who
| aren't involved in the boots-on-the-ground issues at hand,
| and you shouldn't parrot them around for them.
| crooked-v wrote:
| It's not actually that complex, as can be seen in Austin:
| just actually build enough and prices will go down even as
| population numbers go up. Most US cities have just spent
| decades doing absolutely everything except actually allow
| housing to be built.
| stego-tech wrote:
| All things being equal - commuting times, service access,
| property availability, environmental impacts, education
| quality, economic stability - then yes, the solution is
| "easy" in that we "just need to build more housing".
|
| Once any of those multitude of variables _aren't_ equal,
| however, the market can and will exploit it. This is the
| reason why the housing crisis is global, but the
| solutions are variable. In New England for instance,
| there's a _glut_ of available property currently being
| hoarded and vacant as an investment hedge, because we
| have no more land to expand onto. Combined with vacant
| towns that were former industrial hubs, and there's an
| awful lot of available real estate to be clawed back for
| better use - except markets have been tailored to
| specifically promote a hoard-and-hedge strategy that
| harms the working classes (renters and homeowners both),
| and keeps depressed communities from rebounding. Remote
| work had a real shot of revitalizing those towns and
| shattering the vice grip of Capital on land or housing
| through the relocation of workers to cheaper markets, but
| the RTO mandate essentially amplified existing crises
| that much more and robbed them of the chance to rebound.
|
| So no, it's not as easy as building more housing, it's
| also about ensuring those who need housing get access to
| it first, rather than those who simply seek to extract
| rent or hold it as an investment hedge.
|
| Again, _there's no silver bullet to this problem_.
| crooked-v wrote:
| New England has vacancy rates noticeably under the
| national average (https://www.huduser.gov/portal/periodic
| als/USHMC/reg//NewEng...). There's no 'glut' being
| 'hoarded'.
| bpt3 wrote:
| I think creating a permanent world peace would be easier
| than convincing progressives to give up their tired,
| inaccurate housing market tropes.
|
| It is impossible to have a constructive conversation with
| people who refuse to accept basic facts, and I don't
| think they have any idea how counterproductive it is.
| creato wrote:
| > Populist rent control is an excellent motivator to get
| counter-parties to the table to discuss productive
| alternatives in a market where no outside pressure
| currently exists.
|
| This makes no sense, the battle is ultimately between
| renters and owners of low density housing. Those owners
| don't care about rent control, they only care about zoning
| disallowing construction of new rentals. If anything,
| they're probably happy to see rent control if it means the
| pressure on cities to upzone is removed.
| robbiewxyz wrote:
| So you may mean well but a comment repeating the (debatable)
| negative impacts of rent control really comes off as silly in
| a thread about the realpage cartel (price fixing is worse
| than rent control in every way) and hopes of home ownership
| (demand for primary i.e. non-investment homes is unaffected
| or increased by rent control).
| Spooky23 wrote:
| We're already not building housing.
|
| The benefit of rent control would be turning up the pain on
| the PE people and driving them out of the market.
| debbiedowner wrote:
| Why do you say rent control reduces the incentive to build
| more housing?
|
| To me it seems the opposite: Rent control means supply goes
| down, so available building & land prices go up. These prices
| going up means an opportunity for builders who are good
| businessmen because they are going to make a margin on their
| investment, the bigger the investment the bigger upside.
|
| Another intuition is with rent control it's hard to extract
| new value from an old building, so that also incentivizes
| tearing it down and squeezing more units into the land.
|
| In SF, rent control exists on all buildings built before
| 1979. It appears to me that people who prioritize new builds
| pay a huge premium for them. I think this particular rule
| also incentivizes tearing pre 1979 structures down, vs the no
| rent control newer buildings can continue to have growth in
| the value extracted from them.
| bpt3 wrote:
| It reduces the incentive to build because it reduces the
| ROI on a new build and reduces the control the owner has
| over the property (places with rent control are notoriously
| tenant-friendly, meaning the risk of taking 12+ months to
| evict a tenant has to be priced into the project as well).
| torginus wrote:
| The cost of building housing is generally labor + materials +
| land, of which the first 2 are generally don't have runaway
| costs as they are not an investment category.
|
| Land is something the government can help with if they choose
| to do so.
|
| The rent is tied to the price of the apt, and since housing
| has become and investment category, has increased
| exponentially.
|
| By controlling rent, you control real estate prices as well,
| as investors will find it a less attractive asset.
|
| In a free market economy, the cost of things should be
| controlled by a market equilibrium, so building shouldn't
| cost more to buy than it is profitable to build tem.
|
| But supply is often restricted by artificial means, meaning
| prices go up, that's where rent control comes in.
|
| Two wrongs don't make a right, but saying not having rent
| control while clamping down on construction isn't true to the
| spirit of the free market.
| zeroonetwothree wrote:
| Rent control will reduce supply even more. It's piling on
| another wrong.
| getnormality wrote:
| I used to agree with this, but nowadays it seems that the
| factors constricting housing supply are in many places
| related to zoning and regulation, not the ability for
| developers to make a profit, so rent control might have much
| less downside than economists have conventionally assumed.
|
| EDIT: I am seeing a nephew comment that says rent control
| could make NIMBY politics even worse because it makes
| renters' interests more like homeowners'. Hadn't thought of
| that.
| lisbbb wrote:
| I cringe every time some youngster suggests we go down the
| socialist/communist path because none of them have any
| real-life experience with how bad Eastern Europe was!
| Here's a hint: It's was fucking beyond belief horrible--
| everyone was poor, there was nothing to buy in the stores,
| and people spent most of their free time drinking
| themselves to death.
| rybosworld wrote:
| I cringe any time someone points to a failure in an
| unimaginably different circumstance as evidence for why
| something won't work here.
|
| Some people get bit by a dog and are afraid of dogs their
| whole lives. It's irrational.
|
| Also, socialism and communism are not synonyms.
| tremon wrote:
| Rental income should not be the primary reason for housing to
| be built in the first place, so I don't buy that argument.
| The primary reason to build housing should be demand for home
| ownership. The volume of housing that ends up on the rental
| market should only be a small fraction of the total volume.
|
| Instead of rent control, I propose a forced buy-out model: if
| the current tenant can manage to buy the home they're
| currently living in, the landlord is not allowed to refuse
| the sale. And banks are not allowed to deny such a mortgage
| if the monthly installments amount to less than the current
| rent.
| bpt3 wrote:
| Again, you are just discouraging people from building more
| homes. People like to create financial Rube Goldberg
| machines to address high housing prices, but the solution
| is simple: Add supply.
|
| Now adding more supply is not trivial in many cases, but at
| least people can work on the correct problem to solve once
| it's identified.
| archagon wrote:
| Idealistic solutions will not gain traction when they
| fail to address the pain that people are feeling _today_.
| rybosworld wrote:
| The talking point of "Rent control = bad" has always been
| disingenuous because it's parroted most often by the people
| who will be hurt from it the most (landlords). Home supply is
| already artificially constrained, regardless of rent control.
| Mostly because wealthy landlords form cartels to prevent new
| housing in major metro areas.
|
| Rent control is just one tool that can be used to regulate
| housing, and it works in conjunction with other tools (e.g.
| rent control exceptions for new construction).
|
| The U.S. already has an excessively de-regulated housing
| market, and it clearly has not worked for most people. Anyone
| that says regulation is bad here is almost certainly
| protecting their self interests.
| zeroonetwothree wrote:
| Rent control is fundamentally unfair and socially
| undesirable. We should encourage labor mobility, not
| discourage it.
|
| CA has a similar issue with prop 13 for housing which I
| also oppose.
|
| Also it's silly to say the US housings market doesn't work
| for "most people" considering the home ownership rate is
| above 60%
| archagon wrote:
| "Labor mobility" sure is a nice way to say "kick people
| out of their homes and separate them from their
| community."
| archagon wrote:
| Personally, I believe that housing security should be a
| right, and it's just not possible to have that when your rent
| can spike arbitrarily in the future for reasons outside your
| control. Young people with no local connections and limited
| belongings might be able to move every few years, but it's
| downright traumatic for older people. Based on my lived
| experience, I will always vote for rent control while
| simultaneously pushing for more housing. The economic
| arguments against it are almost irrelevant.
| JoshTriplett wrote:
| > My landlord just introduced a new RealPage-alike to keep
| rents high
|
| You should get in touch with your state AG, and point to the
| precedent for this being considered illegal.
| yieldcrv wrote:
| RealPage just settled with the feds, and that settlement only
| includes data collection to determine if its collusion in the
| future
|
| So I would say anyone in the present is out of luck here
| balderdash wrote:
| I'm not advocating for gutting renter's rights, but anecdotally
| having lived in 6 states, and adjusting for general costs of
| living it was easier to rent, and rents were cheaper in states
| that were less renter friendly than states that were very
| renter friendly. As a renter in the central time zone, first
| months rent, a month's rent security deposit and a credit check
| and i was handed the keys vs. renting in NYC you'd think i was
| buying the home with level of financial scrutiny.
|
| I suppose this is just a long winded way of saying that there
| appears to be a ton of friction and cost by renter friendly
| polices that are ultimately passed on to renters rather than
| owners.
|
| As an aside I'd also say that renter friendly policies were
| also highly correlated with higher regulations around
| zoning/building so this may account for a meaningful portion of
| the above.
| bpt3 wrote:
| I said this elsewhere, but I would anecdotally agree as a
| landlord.
|
| Everyone is paying for the costs to evict a non-paying tenant
| in jurisdictions where it can take 12+ months to regain
| control of a unit.
|
| More friction = more costs, and more regulation = more
| friction.
|
| I'm not advocating for gutting renter's rights either, but
| it's not a coincidence that the places with the highest rents
| also have the most protections for renters.
| jacquesm wrote:
| Crashing the economy is of course going to have knock on effects.
| I don't think anybody should be surprised by this?
|
| Housing is essentially a bottomless pit when the economy is good,
| it can sink any amount of money because it is an absolute
| necessity. So when people have money they'll use it to bid
| against each other for a scarce resource. But when the economy
| pauses or even starts to shrink then that surplus evaporates and
| one of the first indicators that this is happening is the demand
| for housing. Usually the result will be some price adjustments
| and after that it is business as usual. But if the cuts go deeper
| then there may be more substantial effects.
|
| The only thing that is holding the US economy afloat right now is
| the fact that there are still a couple of levers of power that
| Trump hasn't gotten his fingers on. When and if that happens I
| fully expect things to go into freefall.
| dboreham wrote:
| Having been shafted in three housing boom cycles, I'm somewhat
| eagerly awaiting the crash this time so I can buy something at
| a discount.
| jacquesm wrote:
| That's one way of looking at it. In a crisis when you're on
| the buying side it can benefit you, but there will always be
| someone holding the bag on the other side of that deal.
| bravetraveler wrote:
| I've had a high-income job _(career?)_ for two decades... and
| while I 'd love a house, the realized demand is zero. The thumb
| remains. Case in point, the RTO fad. No certainty. I know at
| least _three_ executives who were forced to move after _building_
| new homes.
| phendrenad2 wrote:
| Executives forced to move after building a house. That really
| shows how desperate companies are to keep the lights on. Nobody
| pisses off the execs... unless the companies have ceased to
| operate normally as businesses, and are now hollow shells
| propping up an illusory stock market.
| bravetraveler wrote:
| Desperate for lights, petty punishment, hard to tell. Point
| being... keeping options open has rarely done poorly. Doesn't
| feel like the time to commit. Not convinced it ever will.
|
| _edit:_ I hear someone now, _" If that happens to you, sell
| the house!"_... I'd like to stick with _one_ career, thanks.
| claudiulodro wrote:
| I did it the other direction -- I bought a relatively cheap
| house, and if the winds of change come, I would rather get
| a different career than location! Two different equally
| valid perspectives IMO, as long as you're not dependent on
| having a particular career in order to make your house
| payments.
| narcindin wrote:
| Sad to see Healthcare and government employment growth outpace
| everything else. If we're all nurses or regulators who will build
| our country?
| phantasmish wrote:
| Healthcare employment's guaranteed to keep rising until they've
| soaked up all the would-be inheritance from the Boomers.
|
| Millennials are a large cohort, too, so it may stay steadily
| high for a good long while after that, after perhaps a small
| dip for X. Depends how much money they have for the healthcare
| sector to scoop up. Savings-at-same-age has been really bad for
| them relative to boomers, so we'll see. May see healthcare
| employment shrink even as need (sans the dollars to back it up)
| grows, next time a demographic "lump" gets old.
| baiwl wrote:
| Welcome to Europe. As an example, in Spain, there are 500K more
| people living off the government than working in the private
| sector:
| https://theobjective.com/economia/macroeconomia/2024-09-16/a...
| nitwit005 wrote:
| The general trend of government employment hasn't been all that
| exciting: https://www.pewresearch.org/short-
| reads/2025/01/07/what-the-...
|
| But, yes, the plan does seem to be that we all go broke
| attempting to get health care.
| mvkel wrote:
| There's an interesting housing arbitrage happening right now.
| Townhomes are still selling for over asking, but single family
| homes -- ones that older, middle-management types would live in
| -- aren't receiving competitive bids.
| etrautmann wrote:
| what location?
| websiteapi wrote:
| If this - "High-income job losses are cooling housing demand" is
| true, doesn't this mean UBI would never work?
| nilamo wrote:
| I don't see how one follows the other.
|
| On the one hand, less high earning employees seems to logically
| indicate that large purchases would also go down.
|
| And on the other hand, a program to give everyone a little
| eating money would never have been able to pay for a house,
| anyway.
| TuringNYC wrote:
| >> If this - "High-income job losses are cooling housing
| demand" is true, doesn't this mean UBI would never work?
|
| If UBI were national, it would work beautifully, because
| depending on the UBI amount, it could allow people to finally
| untether geographically. You could spur a rebalancing of
| irrational demand in HCOL cities due to jobs away from HCOL to
| LCOL
| spike021 wrote:
| I'm teetering on the edge of being able to afford a small condo
| (a small SFH would be nice but not as much supply) in the Bay
| Area (SF).
|
| However, I keep thinking about how someone I know was laid off
| last year only two months after buying their first home.
|
| I'm a SWE making OK money here but not FAANG/unicorn-level, so
| it's tough to imagine buying and then being on the hook for a
| mortgage without a job even with some savings.
| klysm wrote:
| You could probably afford some really nice property not in the
| bay area then.
| TuringNYC wrote:
| >> You could probably afford some really nice property not in
| the bay area then.
|
| Sure, but doesn't really help if the job is in the Bay Area.
| spike021 wrote:
| My job is no longer remote and I do enjoy my neighborhood.
| OptionOfT wrote:
| I was laid off 35 days after closing.
|
| Absolute hell. Now, thankfully we didn't over-extend, and live
| by the at-least-6-months-of-savings.
|
| We made it through, but just writing this down makes my heart
| rate spike.
| spike021 wrote:
| exactly what I'm afraid of! Glad to hear you made it through.
| harmmonica wrote:
| I hate to repeat this old adage, but in case it helps to see it
| here: if you've been wanting to buy something, and you see
| yourself staying in the area and the place itself for many
| years, and you have some savings buffer if things go south,
| then buy. Don't do it because you want to magically have paper
| equity gains in the next 12 months. Do it because you like the
| place you're looking at, the neighborhood it's in, and because
| you have enough funds in place to get through a downturn if a
| layoff happened.
|
| Of course I say all of that and it's good to know what could
| happen if a terrible downturn does happen like in 2008 (even
| the nicest Bay Area hoods prices dropped 25%+).
|
| Last thing, single family houses, especially in the Bay Area,
| are typically more insulated from price drops (insulated not
| immune). If you can afford a small single family then it might
| be worth it, especially if there's expansion potential (either
| for yourself or the next buyer if you decide to move on). And
| even better if there are some cosmetic problems that are
| tractable because let's say you do get laid off there's nothing
| like building some sweat equity in the downtime.
|
| Just my two cents having gone through similar in the past.
| deadbabe wrote:
| So what you're saying is, if you want a condo, just wait,
| because a price drop soon means your money will go a lot
| further. If you want a SFH, buy now, price drop will be
| small.
| harmmonica wrote:
| Not quite what I was saying, but now that you've put that
| so succinctly, if it were me, knowing the Bay Area and
| what's happening in tech/AI at the moment, I would hold off
| on the condo. The single family with some grit I'd probably
| say have at it assuming the most important part of what I
| said holds true: it's not for equity upside, it's because
| you want to own that place, and in that location because
| that's where you will be happy living.
|
| If someone reads this thread once there's been another
| 2008-level reckoning in 2026 I'm not surprised the
| reckoning occurred.
| kakacik wrote:
| FOMO is a powerful emotion, but like all emotions its a bad
| idea to make it a primary decision maker for any important
| matters.
|
| Reading all this from distant Europe, its interesting (and
| logical) how in US the swings in prices are so extreme in
| both directions. In fact, most things in any regard are way
| more extreme in US compared to Europe. May be good for the
| lucky ones but long term stability or dependability this
| ain't.
| harmmonica wrote:
| If you're taking what I said as FOMO I didn't intend it
| that way. The opposite in fact unless your sentiment is
| that anyone who wants to buy and live in property in the US
| is solely doing so because of FOMO. If you're saying that
| then that's a tautology and so how can I argue with it?
|
| But if that's not what you meant then there are few things
| we as people can do for "stability and dependability" that
| better accomplish those goals than owning property that you
| actually _want to live in._ Most importantly it puts a
| permanent roof over your head, which we all need in some
| way, shape or form to survive (no exaggeration there I don
| 't think). And it makes the cost of that necessity
| predictable, especially in California where property taxes
| are almost perfectly-predictable. It pretty much de-risks
| the largest expense most people will have in their
| lifetimes. That's not to say that you don't lose something
| in the proposition, but calling that FOMO seems inaccurate.
| aprilthird2021 wrote:
| I waited till I had the whole sale price in cash then bought,
| it's reduced my layoff anxiety 1000% and I'm sure it's not the
| savviest financial choice, but I'm happy with the security of
| knowing I can stay here for a long time no matter what
| DontchaKnowit wrote:
| Most people will never be able accomplish this because home
| prices increase so much. And meanwhile you have to live
| somewhere, and all the rent money is money you dont get to
| save or put towards home equity
| LikeBeans wrote:
| It depends on the appreciation and in turn the property
| taxes. I own my house outright. Completely paid off. But the
| increases in property taxes is forcing us to sell and move,
| likely in the next 5 years. Too bad, love the neighborhood
| and the area.
| ramesh31 wrote:
| >it's tough to imagine buying and then being on the hook for a
| mortgage without a job even with some savings
|
| Key thing to remember here is that you always have to live
| somewhere, even if you're laid off. Unless you're ready to head
| out to BFE to save a few hundred bucks on rent, it doesn't get
| much better than owning in that situation. Plus you could
| potentially have equity to tap, get a hardship forbearance, or
| worst case scenario foreclosures take _much_ longer than
| evictions. This was the lesson COVID era taught me; if you 're
| losing your home it's considered a tragedy, and there are tons
| of resources to help you. But if you're being evicted from an
| apartment it's considered a personal moral failure, and you're
| treated like a criminal.
| tt2q345 wrote:
| }}}} I'm teetering on the edge of being able to afford a small
| condo (a small SFH would be nice but not as much supply) in the
| Bay Area (SF).
|
| Posting this anon. At our last office, executives purposefully
| encouraged home ownership because it made people desperate,
| risk-avoiding, and easier to control.
| phendrenad2 wrote:
| How do executives encourage home ownership? Slip a little
| zillow ad into the all-hands?
| davey48016 wrote:
| Every boss I've ever had has slipped a little life advice
| into our one on ones.
| spike021 wrote:
| my last boss said i needed more work-life balance because
| i would take my dog on a walk once during the workday. as
| in, i wasn't giving work enough of my time.
| davey48016 wrote:
| I've gotten everything from unsolicited relationship
| advice to unsolicited nutrition advice. Some of it was
| actually pretty good advice.
| balderdash wrote:
| its not easy to do, but being able to afford a year+ of
| mortgage payments and living expenses is pretty important to
| your peace of mind.
| spike021 wrote:
| I think if I found the right place I could maybe do 6+ months
| expenses. Still cuts it real close for me.
| mwkaufma wrote:
| Stating a 20-year trend like it's a new development :P
| throwaway_0a3we wrote:
| We (me and my spouse) made an offer for a small condo and then
| next week company started the layoffs. Luckily we were not in
| that position where we spent all our savings and ended up in a
| position where paying mortgage would have been a huge challenge.
| It's been a year, have a job but uncertainity is very high.
| Loosing a job now means finding the next one is not very easy and
| no certainity that it can be a matter of month or two. We made a
| decision that since we have enough to pay for the downpayment and
| enough to pay a year of mortgage, we would not go and buy a house
| in Southern California. It is better to live in rented property
| but not safe to be in a position where you loose the property.
| lunarcave wrote:
| From the article:
|
| > The Bay Area continues to lose jobs across high-income sectors
| (-0.4% YOY), driving modest overall employment declines. These
| job losses have slowed compared to a year ago but remain negative
| YOY. Despite generating substantial spending and wealth, the AI-
| driven tech boom hasn't added meaningful employment to the
| region.
| pfisherman wrote:
| That is because there has been an absolute massacre in biotech
| in the bay area. Between tariffs (higher COGS), chaos at the
| FDA, cuts to NIH funding for basic and translational research,
| and competition from China biotech ventures are getting
| squeezed from both ends.
| class3shock wrote:
| The current housing costs (price + interest rate) just seem so
| out of line with the average household income it boggles my mind
| it hasn't cooled alot more already.
|
| At $84k average household income, assuming 1/3 going to a
| mortgage would give you $2.3k a month to work with. At 6%
| interest rate, assuming 20% down payment of $70k, you can just
| manage a $350k home and that is ignoring taxes, not adding other
| closing costs, not considering utilities, assuming an interest
| rate on the lower side and assuming a 20% deposit.
|
| Add tax and that gives you around $1.7k to work with. Assume only
| putting down 10% and adding in $400 a month to cover utilities
| then you can manage around $175k home. That rules out buying a
| house in alot of the US.
|
| And yes, households in more expensive areas make more but if you
| are buying the average house, that costs $410k you need to be
| making like double the national average income to stick to the
| 1/3 rule. How many households are earning $170k where houses are
| $410k?
|
| Are people just devoting 50%+ of their income to housing?
| Everyone buying a house with the help of mom and dad? I just
| really don't get it.
| ninininino wrote:
| Look up the median age of a home buyer in 2025:
|
| It's 59 years old lol.
|
| Boomers and institutional money are doing the home buying.
|
| https://www.apolloacademy.com/median-age-of-all-us-homebuyer...
|
| In 2009 the same chart shows that the median age was 39.
|
| In the early 80s it was early 30s.
|
| Look at congress, we live in a boomer gerontocracy. Not every
| boomer is wealthy and powerful, but the majority of people who
| are wealthy and powerful are either descendants of
| elites/wealthy, boomers, or a very small fraction of younger
| tech/finance/business owners.
|
| The good news is - assuming there's not a big change in
| immigration rates - if you can rent cheaply enough for 10-20
| years the boomers will start dying in sufficient numbers that
| if there is somehow no reversion on home prices in the mean
| time there should be insufficient buyers at that point and
| prices will eventually fall.
| dragonwriter wrote:
| 59 year olds were born in 1966, so the average homebuyer is
| from Gen X, not a Boomer.
| rpcope1 wrote:
| I wonder if the distribution of ages for home buyers is not
| a normal distribution and maybe the median and standard
| deviations might tell us something more here. Regardless
| it's concerning that the average and likely median age has
| shot up that much.
| dragonwriter wrote:
| Well, since 1980, the median age in the population has
| also increased by about a decade, which is a significant
| (but not a majority) contributor to this.
| motbus3 wrote:
| I'm sure Ol' John is no player when we compare how much
| investment funds have being pushing to buy homes. Around
| here, you can't even bid for a small apartment. They get
| sold to the folks before they start. Paying flat taxes on
| hundreds of properties doesnt make sense. They don't
| contribute to generate more jobs. They just replace the
| buyer and charge extra money that could have be reverted to
| other expenses that would create a healthier economy by
| diversity.
| ramesh31 wrote:
| >"if you can rent cheaply enough for 10-20 years the boomers
| will start dying in sufficient numbers that if there is
| somehow no reversion on home prices in the mean time there
| should be insufficient buyers at that point and prices will
| eventually fall"
|
| But that "10-20 years" is your life, and there's no getting
| it back. Millennials (the largest generation in US history)
| have entered into our prime family starting age, and the fact
| that most are priced out of the housing market right now and
| stuck renting apartments is a complete tragedy. At a 90th
| percentile income, I can _just barely_ be able to afford a
| home and provide for a family of 3-4 like our parents and
| grandparents did on a highschool education with no higher
| skills.
| rpcope1 wrote:
| Yeah, it definitely feels like the TFR crisis where the
| actual problems won't show up until it's too late and we're
| basically turbofucked.
| brailsafe wrote:
| > most are priced out of the housing market right now and
| stuck renting apartments is a complete tragedy
|
| It absolutely is, but as one of those myself, I just refuse
| to even attempt to pay their prices and will make the best
| of life while renting and doing other things, not having
| kids, not owning property unless the ratio changes
| dramatically. Owning at most a tiny condo for half a
| million where I live, or moving to the boonies to own
| marginally more for less is simply not appealing to me, it
| doesn't unlock anything but a vague sense of security and a
| shit ton of liability. I hope more people choose the same
| until the working age tranch of purchasing power isn't as
| available as they'd like and prices have to drop. It's a
| major issue, but maybe I should be thankful I never adopted
| the boomer/genx dreams of owning a place and having a
| family or whatever. It's something I'm morbidly watching
| from the sidelines for now (in my early-mid thirties), but
| there are no circumstances except a miracle side hustle
| that could create the circumstances for me to actually
| pursue a mortgage on a place in my city.
| ramesh31 wrote:
| >"I hope more people choose the same until the working
| age tranch of purchasing power isn't as available as
| they'd like and prices have to drop."
|
| You just have to remember and keep in mind that the game
| is rigged. Housing is far from being a completely free
| market in this country. The structural political forces
| entrenched in maintaining home prices is second to none,
| from the top federal level all the way down to city
| councils, in a completely bipartisan way. The crisis of
| '08 was a generational event that we're not likely to see
| again in our lifetimes. Flattening and dips for sure, but
| a crash will not be allowed to happen; they'll just print
| enough to fix it, and leave the burden of inflation to
| anyone not owning assets.
| collinmcnulty wrote:
| This might be a bit of talking past one another. The rent
| vs buy argument should be comparing similar housing, but
| your comment bakes in the assumption that
| renting=apartment. That may be true for your area, just
| wanted to point out the dissonance.
| lisbbb wrote:
| Starting? The Millenials are in their 40s! You'd better be
| well into raising kids by your 40s.
| zeroonetwothree wrote:
| I doubt your parents instantly bought a house as unskilled
| workers at age 18. Maybe in a very few ultra cheap housing
| markets that would have been possible.
|
| For example in 1980 in SF the median home was $130k and the
| median household income was $16k. Today it's $1240k and
| $141k. So yes it's less affordable but it's hardly a
| massive difference as you imply.
| zeroonetwothree wrote:
| This is all home buyers not first time home buyers. So it's
| not clear what we can conclude. It could be that more
| retirees are buying a house to retire to rather than renting.
|
| I imagine age of first time home buyers has also gone up but
| there's no way it's that high.
| darth_avocado wrote:
| First time home buyers is up to 40. Not as bad as 59 but
| not great either.
|
| https://www.nar.realtor/newsroom/first-time-home-buyer-
| share...
| nitwit005 wrote:
| > The good news is - assuming there's not a big change in
| immigration rates
|
| There has been a big change in projected immigration rates:
| https://www.cbo.gov/publication/61735
| ethbr1 wrote:
| That looks great, for everyone who knows how the US is
| funded.
| lisbbb wrote:
| 59 is really early Gen-X. The Boomers are all in their 60s
| and 70s now. They're downsizing.
| sharpy wrote:
| Probably a lot of private equity buying up homes to generate
| rental income? Usually, I am more pro market, but I think there
| needs to be some regulations on this. Although if you are an
| existing homeowner with low interest rate locked in, you
| probably want more private equity investments to drive up your
| property value...
| bojangleslover wrote:
| This myth needs to die. PE does not own that many homes.
| There was a small period in early COVID where interest rates
| were lower than cap rates. During this time PE, along with
| the investment market in general, invested in real estate
| including SFRs. That is no longer the case. It's a great
| boogeyman but trust me, having worked in the industry,
| institutional investors own less than 5% of SFRs.
|
| Real estate investing in general went bananas during COVID
| (plenty of non-PE buyers as well) because it's one of the
| only ways the average citizen can access that amount of
| leverage.
| impossiblefork wrote:
| They might not own that many, but in 2025 it was 1/3 of the
| sold residencies.
|
| You only need a little bit of extra demand to have an
| enormous effect on prices.
| loglog wrote:
| "Private equity generating rental income" is a lie fed you by
| the rich lobby. The real reason (everywhere in US and Europe)
| is zoning, which is a subsidy to the owners of existing
| buildings at the cost of everyone else.
| ambicapter wrote:
| And who owns those buildings?
| SubmarineClub wrote:
| Most old NIMBYs of past generations who already got
| theirs.
| pessimizer wrote:
| > The real reason (everywhere in US and Europe) is zoning
|
| This is a lie fed to you by the rich lobby. Destroying
| zoning would launch the value of the land current owners
| have into the stratosphere.
| prescriptivist wrote:
| There's something fundamentally strange about how prices have
| spiked and inventory has tightened since Covid. Where I live
| in rural New England, prices are up 50-100% in five years.
| And this is on pretty poor quality homes. Yes, low interest
| rates led to a surge in buying and bidding wars that spiked
| the baseline, but when people say "the real problem is there
| isn't enough housing" that feels incomplete to me. Of course
| supply has been an issue for a while, but home prices nearly
| doubling in five years doesn't look like a normal supply
| story -- it's not as if we suddenly created 20-50% more
| qualified buyers in that time. I guess the lack of churn,
| with people hanging onto those sweet 3% mortgages much longer
| than usual, is probably part of it. But I really don't have
| an answer for the current state of home buying. I make great
| money but if I was to buy a house the quality of the house I
| got in 2018 with the same % down payment I would be looking
| at over 40% of my take home going to a mortgage, PMI and
| taxes.
| nradov wrote:
| Prices spiked in large part because the government printed
| an enormous number of dollars since 2020, thus triggering
| asset price inflation.
|
| https://fred.stlouisfed.org/series/M2SL
| munificent wrote:
| _> it 's not as if we suddenly created 20-50% more
| qualified buyers in that time._
|
| We don't _create_ buyers quickly, but mobility means that a
| large number of buyers can show up in one concentrated area
| much more quickly than housing can adapt.
|
| One piece of the US real estate puzzle is that automation
| and outsourced killed agriculture and manufacturing jobs.
| Those are the kinds of jobs that have some natural
| incentive to be spread across the US. Ag, because farms
| literally take up a lot of space and are spread out, and
| manufacturing because factories tend to be close to raw
| materials, ports, or other local resources.
|
| When you get rid of those jobs and replace them with
| information work, you create a feedback loop with no
| dampening in it. People want to go where the most jobs are,
| so they move to the cities. Businesses want to open where
| the most workers are, so they start companies in cities.
|
| The next thing you know, all the small towns are filled
| with dirt cheap empty houses because there are no jobs.
| Meanwhile, every metro area is bursting at the seams.
| jrowen wrote:
| This makes some sense to me. The solution to housing
| often put forth is to build more affordable housing. In
| the context of people wanting to move toward cities where
| jobs are this makes sense.
|
| But it seems like there is a larger problem of just
| having tons of housing inventory that is out of reach or
| untenable to most people. What are the more basic numbers
| of how many units exist in the country vs. how many
| people there are? How many second, third, investment,
| vacation units are there, how many sit empty most of the
| time? (I'm mostly not talking about true "country"/vanity
| houses far away from economic centers that will always
| only be accessible to the rich)
|
| It seems to me that rather than just "build build build"
| we could do a lot to reconfigure the existing supply to
| make it fit the people better? Why is there so much
| "unaffordable" stock out there and continuing to be
| built? It kinda feels like the affordable housing issue
| is just a red herring for the larger wealth inequality
| issue.
| munificent wrote:
| _> we could do a lot to reconfigure the existing supply
| to make it fit the people better?_
|
| The problem is that housing and infrastructure is, you
| know, _actual giant physical objects_. It takes a year of
| planning and millions of dollars to move a road. You can
| 't tear down a block of single family homes and put a
| denser apartment building in there until everyone living
| in them sells. You need to run sewer, power, and roads to
| make a new neighborhood, and even then you will still
| have to deal with the impact to nearby schools, traffic,
| hospitals, etc.
|
| Making places for people to live is, like, many orders of
| magnitude more effortful than anything we do in the
| software world.
|
| _> It kinda feels like the affordable housing issue is
| just a red herring for the larger wealth inequality
| issue._
|
| Yes, this is certainly another piece of the puzzle. For
| every 100 people who can't afford a thing, there's still
| 1 rich person who can, and increasingly, rich people are
| the primary source of profit for businesses. So
| businesses target them more and more and we end up in
| today's world where it seems like "no one can afford
| what's being sold".
|
| It's because unless you're one of the wealthy minority,
| you're simply not a market participant at all.
|
| Related:
| https://www.nytimes.com/2025/08/28/opinion/disney-world-
| econ...
| prescriptivist wrote:
| Unless there is not something I am seeing, people aren't
| racing to move to rural New England. Maybe it's retirees,
| red to blue state migrations, or remote workers. But I
| haven't seen a ton of evidence of that. People didn't
| really migrate out here before covid and I don't think
| enough people have to justify the rise in prices.
|
| Personally I think people that otherwise would be selling
| are sitting on their homes because of the interest rates
| and this is causing a strange feedback loop of low
| turnover causing low supply which in turn causes new
| buyers to accept the prices (probably with a hope that
| interest rates will come down and they can re-fi in the
| years to come). I also think a non-trivial number of
| houses that on the market due to the owners passing or
| going into retirement homes are sitting there on the
| market because prices are so high but the only money the
| family is out is taxes. Or they are being turned into
| rental units, since rental prices are out of whack in
| these areas too.
|
| My point I guess is where I live we haven't seen a big
| influx of population (probably the opposite) or
| significant job or wage growth to make sense of the
| increase in housing prices. I guess at the end of the day
| people are just stretching themselves further and sending
| more money to the banks in the form of interest to get
| into homes that were literally half the price in 2019.
| Strange times.
| JoeOfTexas wrote:
| Internet + Natural Gas + Light + Water + Home Insurance + Auto
| Insurance + Property Tax + Phone + Home Security + Car Gas +
| Credit Cards
|
| A $350k mortgage with bills, is expensive. Will eat up a whole
| check if you don't make more than $140k/year.
| motbus3 wrote:
| You'll own nothing. And you will be happy (using pills and
| medicines)
|
| They were quite serious about destroying society as-is.
| Nobody took them serious
| Etheryte wrote:
| Who is "they" in this context?
| phendrenad2 wrote:
| It's a big club and you ain't in it.
| johnny-g-tyler wrote:
| You know who
| matthewrobertso wrote:
| The World Economic Forum is famous for saying people will
| own nothing by 2030 and be happy. https://en.wikipedia.or
| g/wiki/You%27ll_own_nothing_and_be_ha...
| klipklop wrote:
| You are getting down voted, but it's true. They (WEF-types
| during their meetings you can watch on youtube) telegraphed
| it during/soon after the entire Covid lock downs that they
| intended to make large structural changes to society and
| the concept of ownership. They didn't make this secret or
| anything. Heck some sold books on the subject.
|
| Most of what the WEF discusses is how to gain more
| technocratic control over democracy. You know, for the
| benefit of everyone...
| charlie0 wrote:
| Credit cards aren't a fixed cost. Spend less.
| tenacious_tuna wrote:
| What a helpful take in a CoL crisis.
| bpt3 wrote:
| Everything is a crisis if you can't control your
| impulses.
| CursedSilicon wrote:
| I suppose it's easier to blame ones self than to critique
| capitalism
| browningstreet wrote:
| The addition of credit cards to that line does little to
| spoil the point they were making.
| darth_avocado wrote:
| Brother lately I've only been putting groceries on credit
| cards and you're right, they're not a fixed cost. They're a
| variable cost that just keeps going up.
| klipklop wrote:
| I wonder if in classic HN fashion somebody will suggest
| to stop eating...
| michaelt wrote:
| [1] tells me a $350k mortgage with a 10% deposit, paid off
| over 15 years, costs $2,585 per month. That's $31k a year.
|
| That kind of income with that kind of house price should be
| pretty comfortable, given you don't mention supporting a
| family. If your non-housing bills are costing $109k a year,
| there's a good chance you could reign in your lifestyle
| choices.
|
| [1] https://www.bankofamerica.com/mortgage/mortgage-rates/
| xhkkffbf wrote:
| When many people talk about a salary of $140k, they're
| using pre-tax numbers. $140k can easily shrink to $90k,
| $80k or even $70k after tax.
| bdcravens wrote:
| While $84k is the average household income in the US, the
| average among home owners is a bit higher, around $100k-$120k.
| Also, very high prices really skew averages. Many "starter
| homes" are closer to $200k. I bought new 3 years ago, and the
| rent home I lived in prior, which was in an older middle class
| neighborhood in a Houston suburb, sold for $224k (and this
| included some basic renovations like new flooring)
| ashtonianthedev wrote:
| Just want to comment, I think if you were to overlay where
| people work vs live, most people probably do not have
| reasonable access to housing @ 225k.
|
| Also I think much of this problem is zoning, which
| coincidentally Houston has none and has some of the lowest
| housing costs in the nation, especially for a city of its
| size.
|
| I suspect much of the housing crisis on the west coast is
| because of poor zoning laws and could be fixed with a stroke
| of a pen, at the expense of the local housing market value.
| ethbr1 wrote:
| On the location vs price front, I think that's a bit of a
| red herring.
|
| Because people generally want to live close to their jobs.
|
| If cities have a lot of demand, it's partly because they
| have a lot of jobs, which means that the price of housing
| in cities relative to income is still an important metric.
|
| Viewed by holding more of those things constant, the urban
| medianHousePrice : medianIncome is how much of people's
| lives we're requiring they dedicate in order to have a roof
| over their heads.
| jghn wrote:
| We should be using medians, not means for bot hate income and
| house prices.
| zeroonetwothree wrote:
| The average homeowner household makes more than the average.
| Many people are not homeowners.
|
| For example if you are 22 and just started your first job you
| are included in the statistics but I think we wouldn't really
| expect it to be affordable to become a homeowner (nor would it
| be desirable from a labor mobility standpoint).
|
| And many people prefer renting somewhere like Manhattan to
| buying in Topeka. So it doesn't make sense to assume everyone
| wants to buy a house. I know several millionaires that rent.
|
| It would be better to compare overall cost of housing to
| income.
| darth_avocado wrote:
| > assuming 1/3 going to a mortgage would give you $2.3k a month
| to work with
|
| That's the problem right there. Even if you're locked in on the
| historically low sub 3% mortgages, there is a chance you're
| spending more than 1/3 of your income on housing. People with
| higher rates and people who are renting, spend a lot more than
| 1/3 of their income on housing.
|
| I know finance influencers and older generations keep talking
| about 1/3 income on housing, but that hasn't been a thing for a
| while now. Even before the pandemic surge in housing costs, 1/3
| on housing was dream in most cities across the country.
| FireBeyond wrote:
| Sure but also I believe that the upper limit for most
| mortgage servicers is around 41, maybe 43% (one of those two,
| cannot remember which, or at least it was 4y ago).
| darth_avocado wrote:
| There's no limits per se. 43% is what they "prefer". More
| recently with the low demand for mortgages, that number is
| more flexible. And all of this is on Gross Income and not
| net. So you could in theory be spending more than 50% of
| your net income on mortgage alone. If you want to consider
| "housing" costs, the number would be lot higher.
| averageRoyalty wrote:
| $1700 per month pays off a $350k loan in 17 years, does it not?
| That's assuming that the household income stays static over
| that time.
|
| That is very reasonable. In Australia, 35 year mortgages are
| normal, and 25-30 year mortgages were normal 20 years ago. Why
| would your household income need to be 1/4 of the cost of the
| house to make it work?
| zdragnar wrote:
| The payment is set up such that the interest is amortized
| over the life of the loan, so your earliest payments are
| almost all going to interest and the latest payments are
| mostly the principle.
|
| This looks like a standard 30 year loan. If 100% of the 1700
| went to principle and the was no interest then yeah, your 17
| years works out, but then the bank makes no money.
| c22 wrote:
| Do mortgages in Australia not have interest?
| jlokier wrote:
| _> $1700 per month pays off a $350k loan in 17 years, does it
| not?_
|
| No, it does not. You forgot the interest. Let's call it 6%,
| close to the current US average.
|
| The interest by itself comes to more than $1700 a month!
|
| Paying $1700 per month, you'll _never_ pay off $350k, even
| with a 1000 year mortgage.
|
| To pay in 17 years, you'd need to pay $2741 (plus fees) per
| month. Most of that will be interest at first, but it tapers
| down. If you want to start out not paying mostly interest,
| you'll need to pay at least $3500 (plus fees) per month.
| klipklop wrote:
| It's scary that you even have to explain this to another
| adult.
| ethbr1 wrote:
| Yes and no. A lot of people have gaps in their financial
| education.
|
| That said, mortgages aren't rocket science.
|
| 1. Assume at the end of the day you want the homeowner to
| be paying a stable monthly amount*.
|
| 2. In order to get there, you have {loan term}, {interest
| rate}, and {loan amount} as primary variables.
|
| 3. Assuming {loan term} and {interest rate} are constant
| (in a given mortgage market, at a given time), that
| leaves {loan amount} as the only variable.
|
| So how do you get a constant monthly payment for a
| variety of {loan amounts}?
|
| 4. You add up all the interest that would be owed over
| the entire {loan term}, using {interest rate}, then
| divide each monthly payment into some proportion of
| {interest payment} and {principle payment}.
|
| 5. You also front-weight the interest payments, because
| at that time there's more outstanding total loan (versus
| at the end of the loan term, when only a little principle
| remains to be paid back).* *
|
| Not super complicated. Yes, there's compound math, but
| conceptually simple.
|
| * For some definition of stable, even if it readjusts on
| some schedule
|
| * * Point in time interest pricing like this also makes
| future recalculation for over/underpayments easier, as
| you're essentially trued-up on interest payments at all
| times
| mikestew wrote:
| _...to stick to the 1 /3 rule._
|
| When did _that_ become the rule? Why, back in my day, 25% was
| the max amount recommended to spend on housing. Though that was
| also back when no one would even _think_ of taking out a 72
| month car loan. Maybe one of those new 60 month loans, if you
| just don 't have the money, otherwise stick to 36 months.
|
| And like you, I just don't get it. 1/3 on the house, whatever
| percentage comes out for the $40K car @ 72 months (granted, one
| doesn't need to buy new), where's this money coming from? We
| live in Redmond (WA), and I'm at a loss as to how there are so
| many newer Teslas parked in >$1MM houses. C'mon, there's only
| so many of those $500K total comp jobs to go around.
| lisbbb wrote:
| New car prices are now simply outrageous. Auto makers need to
| start ditching features and get their unit costs back down.
| omosubi wrote:
| what features in entry level cars do you suggest they get
| rid of?
| ethbr1 wrote:
| Ultrasonics, eye monitors, electronic locks, self-
| contained infotainment systems (just a screen and the
| interfaces for a phone would be fine), lane keeping,
| auto-braking
| joestrouth1 wrote:
| Before my time but HUD upped the rent cap on
| affordable/public housing to 30% of income in 1980. Even
| 1/3rd's a stretch for most folks in most places in the US. A
| 25% rule of thumb isn't much use if folks can't find housing
| that meets the bar.
| crooked-v wrote:
| Housing costs in the US can be out of line with average income
| because _there isn 't enough housing_. Sellers only have to
| compete for the top X% of incomes.
| burnt-resistor wrote:
| My parents and grandparents were decidedly blue-collar and new
| middle class from the late 60's to mid 90's, and my grandfather,
| a mechanic, bought a new home on the Los Gatos border using the
| GI bill. It requires an income of about 600k USD to afford to buy
| housing where I grew up. I'm basically solid _lower_ class in the
| southwest corner of the Texas Triangle now.
|
| The main problems, as I see them, are the protectionist
| limitations on new supply, unfair importation of immense
| overseas' and out-of-state wealthy individuals' wealth causing
| gentrification, and the absurd inequality of wages into extreme
| power law distribution by the cheapening and decline of labor due
| to under-restrained capitalism.
| pessimizer wrote:
| Shame we can't lower prices because people who "buy" things are
| leveraged out of their minds. Sounds like a pretty stupid way to
| do things.
| lisbbb wrote:
| I hate it when Trump or whoever touts all the jobs created
| because I'm sure most of those jobs are of the low-wage variety
| and aren't really helping anyone. It doesn't matter if a bunch of
| part-time, crap jobs get created while high paying roles are
| headed to India or just disappearing.
|
| The government does nothing but lie to our faces.
|
| As far as housing goes, if we do managed to deport 20 million
| non-citizens, that should at least help some. Oh yeah, yeah, it's
| so inhumane to disinvite all those folks whom the NGOs and mega-
| church charities took advantage of and trafficked here. Every one
| of those people had dollar signs on their backs for someone else.
| Now we have an affordability crisis caused by government fiat
| printing and these never-ending scams moving people around the
| globe. Good times.
| m463 wrote:
| 403 forbidden
|
| why am I getting more "403 forbidden" responses from websites as
| time goes on? at some point "website protection" stops adblocking
| users.
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