I wish more people shared the sentiment of just wanting a home and not an investment. I don’t care how much my house goes up or down in speculative value.
Then, rent? It’s actually cheaper to rent a home than buy it these days in most cases. You also don’t need to spend money on upgrades and repairs.
Edit: the downvotes and general backlash against this comment likely all come from folks who don’t own a home and don’t really know the stakes because they haven’t been in a position to consider them. It’s mob mentality. Around me a house is a $10k/monthly payment, renting is $5k. Renting is a no brainer, especially considering that you don’t need to make repairs. The $10k/month is the minimum you’ll pay. Need a new HVAC? 20k. Need a new roof? 40k. Need to remodel an outdated part of the house? 10-60k. Garage door spring broke? $350. Plumber fixed a leak? $500. Need an exterminator to kill some rodents? $150. Tree removal to take down a dangerous tree? $3k. These are all costs that you’ll eventually need to pay as an owner. Given this and the fact that being a landlord involves taking a financial risk on a tenant, buying should be cheaper than renting. If you think of being a landlord like running a business, you’ll quickly realize that no business would operate at a loss willingly for long. Well, when renting is cheaper than buying, that’s essentially what is happening. The market is such that buyers are paying a premium for an asset they can’t get much of a return on, so you’re better off renting. This was actually one of the indicators that predictors of the 2008 housing crash looked at. But, go ahead, tell me I’m an idiot. Follow the mob. Recite platitudes. Don’t think critically or evaluate the nuance in things, it’s your money, not mine.
No. I want the freedom of changing my house to my exact liking and renting doesn’t allow for that. Furthermore if I’m renting, then I’m paying for someone else’s speculative property.
Prices around me are insane. It’s twice the monthly payment to buy than to rent. And, that’s before spending on repairs and upgrades. This means most people are not buying to speculate because there is very little upside and no way to cover the monthly costs by finding a renter.
It’s rarely cheaper to rent when you factor in that you’ll never own the asset.
This is moronic advice.
I’d rather own my home and not worry about some asswipe jacking up rent.
If you rent every cent that goes towards rent is paying someone else’s mortgage and you’ll never see that money again.
If my home value goes down I still have equity. I can sell and regain at least some of that money instead of flushing all of it down the toilet.
Rent is skyrocketing right now. My mortgage is still the same. If I were renting I’d be much worse off.
You’re making several assumptions in your comment.
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Like a landlord can raise rent infinitely at will. This is not true. Renting is a market. It’s why renting is cheaper than buying right now. Don’t you think the people buying right now with high prices and high interest rates would like to know they can rent their property for the same price as their monthly costs? Yes. Then why don’t they? Because the rental market is a market. They might try to charge a tenant the $5k/month they’re paying for their mortgage + tax + insurance, but if the going rate is $2.5k, there is no way they can raise rent to that level. Also, depending on where you live, your monthly payment can be very much dependent on property taxes. It may not be the landlord raising your monthly payment, instead it will be the local government. All that increase in equity on your home just becomes extra money every year that you’ll shell out to the city or county.
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If you rent, you’re basically paying to live in a house as a service. You have almost zero risk. Your monthly payment is locked in for 12 months. If anything needs repair, you aren’t on the hook. How awesome! That $40k roof replacement? Not your problem. Random $1k furnace repair? $500 plumbing bill? $350 garage door spring replacement? $1500 termite tenting bill? $100 rodent extermination bill. None of your problems! Renting is fixed cost, low stress, and pretty much risk free. If you’re an owner, all those bills are your problem and it’s also money that you aren’t going to see again. All properties will eventually have these costs.
If your home value goes down, I still have equity. I can sell and regain at least some of that money…
Not necessarily. The moment you buy a property you are underwater on selling fees. Even if you turned around and immediately resold the property for the same price you bought it for, you’re going to lose 5-8% on selling costs. Also, home values don’t always go up all the time. You might have to wait years before you can sell the property for more than a loss. This means you really can’t leave or get out of the property unless you’re willing to take a loss. If you’re a renter, you can pack up as soon as your lease ends and wash your hands of the place.
Also, remember your monthly payment includes taxes and interest. That’s money you won’t get back. Depending on your rate, you’ll likely pay 2-3x the value of your house in interest over a 30 year mortgage. That means even if you sell the property for 2-3x what you bought it for, you’re just breaking even. That doesn’t include the annual tax you’re paying the city or county, or repairs and maintenance.
So, when renting is half the price of buying (which it is around me), you’re better off renting. Buying should be cheaper than renting given all the risks and extra costs I cited above. In a normal market, that would be the case. When it’s not that way, be suspicious.
The problem with a collapse in house prices is that it normally comes with a collapse in everyone’s personal finances.
If you can’t afford before a crash, there’s a very good chance you won’t be able to afford after a crash either.
The only thing that will bring house prices down is building a fuckload more houses, and building them in places that people actually want to live.
The reason houses are expensive is because investment firms are buying them up with cash.
There are entire neighborhoods owned by investment firms. A lot of these homes are empty and are just used to prop up housing costs.
The issue isn’t supply, it’s policy. The issue is reckless monetary policy combined with banks/investment firms controlling the market.
If you want cheaper housing building more isn’t the answer. The real answer is banning corporations from owning homes.
I’ve seen the idea thrown about to tax houses higher the more a single entity owns. IDK about the feasibility of that plan, but we need to do something. I feel like it would never happen, though, because rich people and, by extension, lawmakers own multiple homes and they wouldn’t want to lose money.
Taxes don’t mean shit to the wealthy. They will find a loophole to exploit and end up never paying taxes.
Even still if they had to pay more taxes it’s nothing to them. They are swimming in money. It’s not even about the money at this point. They want to undercut the poor so the poor stay poor.
Just to add to this, it’s not just investment firms. I do title searches for a living and a lot of them are also bought by trusts and IRAs by people living in more well-off areas. It’s basically a retirement plan for them. That should be included in the ban. There basically should be a ban on buying homes you don’t plan on living in or doing significant rehabilitation work to (and with that second stipulation, we should actually inspect and ensure that the house flippers are actually doing much needed work to make the house liveable, not just slapping new paint on the bricks and installing faux shutters to the outside for a quick flip).
No that won’t fix it. Not completely anyway. All houses are being bought up by international multi billion dollar investment firms who then proceed to rent out those houses for more than they’re worth, driving up rent prices. Here in Vancouver, Canada, rent prices are beyond ridiculous, and have nothing to-do with what the units are actually worth. If you want to stop that, prohibit companies from owning houses, dead stop. Increase taxes on second, third, and fourth houses exponentially, making it only interesting for a single person to have one, maaaaybe two houses.
With that, houses will become eligible to buy again at normal prices
There was a great video years ago that detailed what would happen if house prices were to rise, fall, or stay stagnant.
You’re right, if they were to crash, we’d all be a lot poorer, but there would also be a lot of (still) cash-rich people that would happily buy up all the cheap stock, and we’d be in an even worse position than before. We’d build more houses, but we’d ultimately create new billionaires, and given the low quality of some new builds, probably a two-timer system of ownership where the poors get the new houses on flood lands/with dodgy cladding, and the rich live in good builds.
The best thing to happen overall is a price cap per-area, dropping by a percent every year or two, with subsidies on sustainable renting (low rent fees, buildings being up to code, etc). The landlords that use their property as investments will bail right away, renters will see the market switch to their favour, and through legislation you could probably push rent-to-sell options for those that maintain homes and want to release over several years.
More homes need to be built, but that also means more infrastructure, and building all of this without selling those houses to the highest bidder. That all takes time, at a time where there are a lot of cash-rich people that would love more investment.
Unfortunately, “investors” are buying up properties as fast as they hit the market. The collapse isn’t for a while.
Using your comment to add: never forget Jeff Bezos is now in the game of buying up single family homes to rent out…Try to push your local government to make this shit illegal.
A people can never revolt if they’re too busy, stressed, uneducated and financially weighed down. Whether you believe in the Four Turnings or not, just imagine if you had enough money to accelerate such events, just for profit, just to strengthen your control…
Eat the rich.
Yet another piece of evidence that “xennial” is a real thing. I was born in 1978 and I’m hoping for a collapse in real estate values. I just want a place where I can spend time making it comfortable without the constant awareness that I’ll have to move eventually.
I was born in 86 and I’ve resigned myself to never owning a house because it’s basically impossible unless I want to live in the middle of nowhere or I completely change careers. Four jobs isn’t enough for a house anymore.
I’m hoping for a collapse in real estate
It’s not going to happen. The last crash was 2008. Prices went down 30% which didn’t come close to offsetting the increases from the previous run up.
https://dqydj.com/historical-home-prices/
At best there might be a long term oversupply from boomers dying. That would put long term pressure to lower prices. So if you wait 25 years you could have a house priced at what a house was 5 years ago.
Millennial here, bought a house in late 2022, process were not low, but interest was (this was right before all the inflation nonsense that’s plagued the market in the past year or so). Locked in for 3 years.
I don’t care if my overpriced home drops in value. The value we get from owning it is the only thing we care about, and we have no intention of leaving or selling it. So I’m in support of a big crash; unfortunately unless something serious happens I’m not sure that we’ll get a crash.
Every time something inexpensive hits the market it’s snatched up by some investor or something; so the only homes left for normal buyers are overpriced. The businesses that are buying these properties are creating an artificial scarcity and leaving homes empty until they can either rent them for more than they’re worth, or sell it at an incredible markup.
I can see this in action in the neighborhood I live in now. Two new homes were built and they’re up for sale. Naturally I was curious. They both have less floor space, fewer bedrooms, and overall they’re not nearly as valuable, but the market price that’s listed for them is more than double the price we paid for our home less than a block away.
The stupid thing is that they’ll eventually sell probably at that price or something close to it. My home’s value will probably go up by proxy, but honestly, I could not possibly care less. The whole thing is stupid, and unreasonable for normal buyers. They’re modest homes; new, sure, but not special. There’s nothing notably better or variable about the houses. They just cost more.
I’m angry about it. I want families to be able to buy a home. The amount we paid was more than we would normally have been able to afford. We pooled our finances to afford the mortgage, and we’re still struggling to find a balance so that we don’t financially sink trying to afford it. Our situation aside, it should be easier. Others should be able to do it without having to pool resources with others to make it work.
I am also a millennial but fortunately I was able to buy at a decent interest and a decent price. 3 months after I bought my house interest rates skyrocket and so did the value of the house. It’s not the best house but it’s perfect for me. It’s kind of run down and my mom hates it but it’s home. My mom says I should sell it now that it’s worth more but then I asked her where am I going to be able to find a house this cheap anymore? I absolutely hated renting and I’m not a fan of landlords. It does upset me that these large companies are buying up all these properties. Businesses should not own residential homes. PERIOD. I also think the government needs to far more strict on landlords. I was fortunate to have a decent landlord for the 13 years I rented but I’ve heard all the horror stories.
I don’t care if my overpriced home drops in value.
If you have a mortgage, the bank cares. And if the bank cares, it can make you care.
As long as I’m paying my mortgage on time, I can’t possibly imagine that it would be relevant to them to do anything about it.
The only reason the bank cares is because they have a lien on the property for the mortgage which would only be a problem if we defaulted on our payments.
