This situation has turned into a real cock for so many people.
The place I got my mortgage through sends out emails regularly with updates on my home value, current rates, and other assorted stuff. I originally bought this house at the tail end of 2020. It’s not the best house around, still needs work, but it had the room we needed, was in our budget (220), and the payment was low because the rate was great (2.75). Our original plan was stay here a bit, get rid of some debt, and then maybe try to find what we’d like to be our forever home, wherever that may be (we’re 44).
That idea went south in a hurry. What once probably wouldn’t have been worth sinking extra money into to fix, may now be the only choice. The aforementioned newsletter has a section where it shows what you could “save” at current rates by refinancing or taking cash out. The most recent one said I could “save” -$213400, meaning if we refinanced to take cash out to fix things up right now, it would cost us the entire price of the home yet again, on top of what the home and interest will already cost. Where a home in the 400’s was achievable before, our home in the 200s would nearly not be now.
I feel terrible for people having to try to achieve home ownership at this point, or probably for the rest of the decade. On the one hand, I understand how fortunate I am to have gotten in when I did, and to have a home period; on the other, like many, I’m now essentially trapped, which has the ripple effect of keeping both rates and prices high because most people aren’t going to trade a sub-3% mortgage for 7%+, assuming they can even find a place to go at this point.
Add in corporations branching out into a new area to do their level best to eliminate the concept of ownership for the majority of people, and politicians focusing on the more serious global issues like who goes in which bathroom, and my hope for the future couldn’t be squashed any further if you put it in a hydraulic press.
Real estate will crash, eventually. Hard to predict exactly when and why, but if history is any guide, a market crash eventually is practically inevitable. It could conceivably happen relatively quickly for any number of reasons, but crash it will.
That doesn’t necessarily mean it will become readily affordable - when real estate goes south, a lot of other stuff will be crashing with it. History books are full of monumental calamity. There’s no reason to expect that to change.
This time is different. The new business model isn’t selling homes - it’s single family rental.
I coordinate all development projects in one of the fastest-growing cities in the county, and 100% of new single-family projects proposed since 2021 have been build-for-rent.
Why sell someone a house when you can rent it to them forever AND increase the price every year.
Practically all housing development is financed with borrowed money against the property. Given the build-to rent model, the party at the end of the cashflow stream relies on rent checks being paid every month to remain solvent. When the rents stop being collected, at some critical point, some loan that is reliant upon that rental stream will default. When that happens, the properties are called in by the borrower and auctioned off at foreclosure.
Now yes, the major lenders, developers and speculators will spread their risk as much as possible by diversifying their portfolios and try not to be caught short by a problem in any specific market. But when there is a some kind of macroeconomic shock, ALL the markets will suddenly contract and be flooded with foreclosed properties and other rapidly depreciating assets. That’s more-or-less what happened in 2007. Massive liquidity injections and historically low interest rates supposedly saved us from a prolonged financial catastrophe then - but there were still a LOT of foreclosures. I also think we are still seeing that situation playing out today. Current housing markets are unsustainable in a climate of higher interest rates. This will all come crashing down, probably sooner than most people expect. When it happens, it happens fast - and of course the reasons will seem obvious with hindsight.
By the way, perhaps you’re being ironic - “This time is different” is the defining catchphrase when looking at historical financial crashes: https://www.economist.com/media/pdf/this-time-is-different-reinhart-e.pdf
The housing market isn’t going to crash. New homes aren’t going to flood the market and demand for homes will not fall. As long as we have a growing population the price of homes will also increase.
Yes, there is finite supply and ever-growing demand, however the price of real estate ultimately reflects both the buyer and lender’s confidence that the mortgage payment will be met. This can be affected not only by interest rates but by labor market conditions and other factors.
If there is a sudden surge in interest rates in response to some kind of inflationary shock, or the credit market becomes suddenly much more restrictive in terms of lending standards, then housing prices will most certainly fall, simply because the pool of potential buyers at a given price level is smaller.
When pressures on the housing market are coupled with leveraged loans on variable rates going upside down, people will begin dumping their real estate investments. These factors compound to cause a sharp reduction in price. In 2007-8 metro home prices declined up to 50% from their earlier peaks - but seem to have increased about 200% since the bottom, roughly, to where they are today That’s quite a considerable appreciation and seems unlikely to be sustained. Maybe I’m wrong - we’re just shooting the shit on Lemmy - but looking at what’s happened before, real estate seems overheated - but it may well keep on boiling for all I know.
And corporations will be right there to buy it all up and further make it worse.
It should be fucking illegal for corporations to own single-family homes, full stop.
Can’t people just, you know, build a home? People were capable of that previously, right? Or do you define a home as 2-story building with a basement, a standard outfit and quantity of utilities, set so-and-so far back from a road with a bit of lawn, with a certain acceptable set of roof options, a tasteful material selection and paint job, attractive siding, etc., etc.
What about mud huts with corrugated roofs for the American people? Maybe even connected to electricity, internet, and water + sewage.
Sure. Depends on your situation, if you need to be in a particular place, or whatever else.
For my own situation, I would need to go really rural. Homes being built 20-30 minutes more rural than where I am are priced higher than my current home. I could move further out and build, but the tradeoff is construction not being a ton cheaper, and extending commutes to 1.5 hours each direction. I take care of my elderly mother, so fast access to medical services is also important.
I’d actually love to be more rural myself, I’m just stuck in a situation where getting everyone what they need dictates a certain radius, barring picking everyone up and migrating elsewhere entirely.
Sure… if you can procure the land, obtain all of the building permits that the city or county you’re building in requires, then build the house to code including passing inspection. There may even be municipality requirements. Like a minimum/maximum square footage, property set backs, easement rights, all kinds of things. Builders know all these things and can get permits pushed through because they’re applying for the same ones over and over without much deviation once they have set Floorplan. Doing all of that yourself, or trying to subcontract it out is a very large task and not easy by any means.
A lot of what you just listed are unnecessary homelessness-enforcement tools you couldn’t conceive of parting with.
Allowing a person to build themselves primitive shelter is offensive to you, to your friends, and to your family. A dangerous eyesore is what that sounds like to you. You have no intention to vote to allow it, and you have no interest in entertaining any kind of empathy for the caveman with tied hands.
Shelter is formalized, and you have no intention of dropping the formalities. You’d rather hire men to chase tent-dwellers around.
