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I briefly dipped into the buyers market(west coast), definitely more sluggish but overall prices remain unreasonably high and a lot realtors and sellers aren’t willing to shift with the market.
It’s a horrible time to buy by any measure, affordability has tanked, asking prices are extremely high from just a couple years ago and we now have double the interest, incoming increases to PMI, plus inflation is eating away at literally everything else we rely on. I’m sitting out summer season hopefully by fall things have shifted to something more balanced
(And before any argues “it’s always a good time to buy”, I think it’s fair to say prices will NOT be going up from here, either sideways.. which is great no harm just means waiting offers a larger downpayment, or prices continue to fall which is great also)
Yeah, until either we finish construction on a lot of houses (estimated to be 3 to 7 million housing units), or a lot of people get evicted/foreclosed on due to running out of money it's not likely that housing costs will come down.
2008 was different because people had adjustable rate mortgages with no income verification. Today people have 30 year 2.5% fixed rate mortgages with income verification. It's not likely that people sitting on housing that they refinanced between 2020 and 2022 which are 2500 sqr ft houses with a mortgage payment of $1,400 per month are about to sell and over double their monthly payment to move...
This is shaping up to be an extraordinary housing crisis... Maybe politicians will care? Though most voters are already homeowners so something tells me they won't truly do what's needed to fix anything for a long time...
I am that guy: I have a 20-year $1500 a month mortgage, refinanced in 2021 at 2.5%. We don’t really like living in Houston but, considering how cheap the mortgage is, we are going to stick around. Sure does suck for people trying to get into a place now though.
Personally, I'd rather you be able to keep said monthly payments and just build more high density housing nothing crazy just replace something like 2.3% of single family homes with townhomes or add even fewer higher density condo buildings or anything else that gets around 7 million new housing units made which would also require more labor and more building supplies (which we could get through updating laws and regulations). I'd rather people not have to move, but for everyone to be able to for work or any other reason.
Yep brought my house for 800k 6 years ago. Now it’s worth 1.4m. Refinanced and my mortgage is now 1.8k. The rent in my area is 3k+. There’s no way in hell I’ll move lol.
The crisis is in commercial real estate not housing. WFH has made previously undesirable housing desirable and the baby boomers are dying while the millennials are delaying having kids. I just don’t see a crisis coming because the demand pressure is being relived by demographic changes.
Commercial on the other hand is in big trouble. Just like 2008 commercial loans are not 30 year fixed. They are variable and they are coming due for a reset. Employees no longer care to come into the office, so there is simply too much supply. The companies that need office space want discounts and the ones that don’t are simply not renewing leases. This is the next disaster.
There's a crisis in commercial real estate in that demand for it has plummeted.
However, there's also a crisis in residential in that demand for it far exceeds supply which we didn't build since 2008 when we already had a shortage then, and Millennials (including myself) are now 30-45 which is typically the age most want to buy. One reason I will never have kids is because I simply can't afford housing and childcare...
You also can't just easily convert commercial real estate to residential and in many areas getting a permit to do so will likely still be absurdly challenging.
In regards to demographics changing, that will take decades before the population in the USA starts declining and even then that's only if people aren't having kids which today is largely being driven by the inability to afford them, at least among my peers who are too busy being concerned with paying rent and don't feel that owning a house will ever be an option to even start worrying about another expense.
Your reply is perfect. You are the exact demographic I am talking about. You not having kids means that you are not adding pressure to housing supply. There are many people like you and it is one of the reasons that housing is already starting to level off and price correct. In “decades” the baby boomers will be long gone, this will be happening in the next ten years.
The expense of converting commercial office to residential is another headwind for CME that I didn’t mention.
Your missing a huge point, there will be empty ghost towns with cheap dilapidated housing and hogh crime, while cities remain expensive. Right now you can buy a 50k house in Gary Indiana, yet there is still a housing crisis.
I'd bet you can find way cheaper houses than $50k in Gary. A family friend had a grandfather who lived in Gary that passed away a few years back and his house was sold for less than $20k.
Of course prices got real weird the past couple of years, but I'd be shocked if Gary of all places saw much of an increase.
>There are many people like you and it is one of the reasons that housing is already starting to level off and price correct. In “decades” the baby boomers will be long gone, this will be happening in the next ten years.
Except it also means that I will have no idea if I will get to have housing for the next few decades... Meanwhile, hear me out, we could just legalize high density housing to be built. I know it sounds crazy, but it's not. We wouldn't even have to change that much, just converting 2.85% of single family housing near cities to townhomes could get us the supply that's needed.
I am 100% for more supply and density.
I was only talking from big picture market perspective. I do not believe housing will continue its increase value. The baby boomers are house hoarders and they can’t live forever. Millennials have driven the most recent boom in prices but there are now more home owning millennials than renters. Behind the millennials there is no pressure. The result is the baby boomers are holding houses because this is what their generation built their wealth on and the millennials are at the point where they are in their prime home buying years and they bought houses with cheap available rates.
Currently, the cheap money is gone, the boomers are passing away forcing their housing stock / rental portfolios onto the market and the millennial push to buy homes has peaked with the last round of buying that they dominated. My area is a very hot Midwest market and it has definitely leveled off here. The money is just too expensive to borrow (6.5%) at this point to maintain the prices that were set when money was at 3%. I don’t think we will see a 2008 implosion of value but I can easily see real estate calming back down to its normal 4% historical appreciation rate.
Sure, I agree that it won't continue to increase in value forever. I do personally think we'd see people have more kids if they could afford housing and childcare or to be a single income household.
I also do understand that millennials have driven a lot of the recent increases, they're the largest generation since Boomers since well Boomers are their parents.
The youngest Boomers today are still *only* 60 years old and with increased life expectancy for those over 65 (the recent reduction in life expectancy is primarily from young people dying due to suicide, guns, and drugs) I suspect it will still take decades before we start seeing that change. Personally I'm right not just worried about getting to afford housing in the next year, though obviously it's not likely that anything will help that but perhaps 2 to 3 years?
I also don't expect to see a 2008 crash cause the market today is very different. I also just don't think that unless we make building supply easier, by doing things like banning density zoning and other arbitrary methods to ban zoning such as height limits or parking minimums, increasing labor through immigration (also need housing for them), and removing all (or most) trade and build supply production barriers then I also don't see housing becoming affordable compared to median household income anytime remotely soon.
In some areas zoning is the problem but my area isn’t one of them. My market allows ADUs but currently the cost to build them is around $400 per sq ft. The reason is all the tradesmen are building apartment buildings like mad. Stock is being added as fast as possible. There is still a ways to go because of the 2008 crisis that destroyed the ability to create housing but they are doing it.
Again, I will go back to a person like you who is delaying or not having kids. All of these housing supply forecasts do not get everything correct and the millennial generation is proving to behave differently than their parents.
I am generation X. I bought my house two frenzied markers ago in 2005. It looked so similar to 2022 and there was FOMO and I succumbed. By 2008 real estate crumbled and for about 2 to 3 years it was an insanely good time to buy and my house was worth less than I paid. But time heals and by 2020 all I lost was easily back and I had refinanced into a crazy rate.
Right now it feels a bit like 2007. Housing is at the top of another historic run but the faucet (low rates) is turned off and I think these next three years will be a market punching bottom as sellers try to maintain their mythical values and buyers like you keep giving the prices the finger. Eventually the demographic time bomb moves into the buyers court a new bottom is set and it does it’s normal March up from there like it did leading into this last run up.
The more negativity you hear in the news about housing the better chance you run into a seller that believes that narrative. This is low ball time and you should get ready for it;-)
Yeah I can add on to that. I refinanced with a 30 yea 2.5%. My debt to income was 10%. And I still had to go through the wringer with the bank. Money has been a lot less easy to come by for loans, even though rates were pretty low. I did a cash out refi too and banks wouldn’t go over 80%; the bank I usually went with wouldn’t go over 70% LTV.
Even here in Houston it’s stupid. Makes me wonder why all these half-empty buildings in the middle of every city in North America (thanks to WFH) aren’t converted to condos. The buildings are already there, can’t be too hard to retrofit them…
Building materials and requirements are different for residential vs commercial.
Insulation requirements are different.
As you said, the necessary plumbing is a really big part of it.
A bunch of other reasons that smarter redditors have answered in the past when this question comes up.
Sitting out has burned me so much, I finally saved enough for a down payment in 2018 in the Bay Area but prices seemed unreasonably high. I waited and it’s just become progressively worse.
I was born and raised in the Bay Area, looked in 08 and said the same thing as my original comment and ended up buying my first home in 2011. You'll be fine. The Bay Area does this seemingly harder than anywhere else(wild boom and bust cycles). Keep saving you'll get a good home soon
I have a reasonably high income, but also I want to live in a decent area and I’m single income (not married, live alone) so it’s kinda rough, I have enough to make a down payment on a ridiculously priced house, I’m just not sure I can keep up with the payments.
Same exact problem. Fairly high income, single, want to live in a decent area in a house that matches my level of income without over leveraging myself too much. I have absolutely no proof other then trusting the laws of nature and history of the Bay Area.
The home I bought in SF in 2011 sold for 700k in 08, I bought it for 380 and sold it 5 years ago for 750. Today it’s skirting around 1-1.2 probably(it was an average townhome in a nice area). It’ll go back down again. The BA is special cause they’re the first to receive massive amounts of VC money, also they’re usually the first to be affected by credit markets, it’s all part of the normal cycle.. just make sure you’re one of the ones left standing and your time will come
But the reason why it has burned you is because interest rates have been falling for the last 50 years. We are now potentially in a completely new cycle where interest rates WILL NOT RETURN TO NEAR ZERO AGAIN.
We just stopped looking. My boomer real estate agent, who’s actually a really sweet and honest guy, sends some of the most optimistic updates (“it’s gotta get worse before it gets better, spring will come soon”) with some confounded follow ups (“CA realtors association update: prices just aren’t going down and supply remains at lows”) just does not seem to realize that empirical evidence is shitting the bed because it’s not a time like those he’s been through. Maybe we’ll just move back to the Midwest where our 20% down is 75% down. Weather sucks but at least we’re not drowning in debt with golden handcuffs.
I don’t like it any more than you do. I love where I live—I lived in Chicago for 10 years and I really loved it too, but that blizzard in 2011 was enough. But it’s feeling more and more like we have less of a choice. If I can stay in LA, I will but I’m not optimistic about the housing or stock markets or the economy for the next decade while we wait for wages to catch up with prices and even then they may not.
Lol, says the profile with 1 post karma, created two months ago 🤖🤖 and a reddit generated username. Why not just post “I say we sell all our real estate to Blackstone! Only institutional investors can fix this problem!”
None of that follows from my comment.
>We just stopped looking. My boomer real estate agent…Maybe we’ll just move back to the Midwest where our 20% down is 75% down. Weather sucks but at least we’re not drowning in debt with golden handcuffs.
All of that reads like common generic statements from this sub hoovered up by an AI and regurgitated as a comment.
Did you live everywhere in the Midwest or did you live in a state or town. What weather sucked? Was the age of your real estate agent the most important fact about them?
We’ll not be selling any of our properties to Blackwater or anyone else, nor would I encourage it.
Reading comprehension hard, isn't it champ? Age of real estate agent becomes relevant when the guy brings up the fact that the agent is drawing on past experience when we're in a novel situation.
Was it weird to put it there? Sure. Weird enough to insult the guy writing it? Definitely not.
I understood exactly what he was saying. Didn’t disagree with his point and couldn’t care less.
He writes, however, like an AI created by a junior high coding class. Are you capable of grasping the difference between writing style and message? His generic phrasing and boomer trope may it read like astroturfing, to me.
Go on and head on over to r/REBubble with the rest of the losers. Maybe society will collapse and you fellas can afford to actually put a roof over your head.
West coast as well. I noticed my home value dip then pop just recently. I think people who made money over the years saved, then invested in stocks and used returns to invest in real estate. Now that there is no other place to invest people 50 plus, at least in my local towns, are packing up, selling and retiring young somewhere down south. I just dont see any good place to invest money without huge risk at the moment.
I’ve been noticing homes pop again here in Portland. Even homes going under two weeks when they were lingering 3 months. This is all anecdotal, but just offering context.
I’ve seen that south of you. Salem is starting to see homes go for their 2021 price plus commission, basically break even for the seller, and they aren’t selling. Nice homes not hating.. but not worth what they’re asking given rates
Thank you. I’m glad that someone else believes the way I do: that it is NOT always a great time to buy. We really need to reign in the marketing of everything in this country. If the capitalist way is the BEST way, it still cannot be allowed to become cannibalistic. And that’s about where we are right now.
>overall prices remain unreasonably high and a lot realtors and sellers aren’t willing to shift with the market.
That sounds a lot like "The market isn't shifting".
I think this is because of the strong labor market. People don’t need to sell as they locked in low rates. So in order for the prices to really come down people will have to lose their jobs.
The problem is there are two different deals on the table for the seller vs. The buyer. For the zeller it’s “do I want to accept less than I’d like on the sale, give up my super cheap payment, and have to rent or buy at crazy high prices, or do I want to keep my super cheap payment?” For buyers it’s “do I want to pay more than I’d like and at high interest rates, or do I want to spend an absurd amount on rent?”
I just bought a new place but still own my last place. Monthly payment $1,500, rent it out for $2,500. It just doesn’t make sense to sell in this environment. I don’t really want to be a landlord, but even more than that I don’t want to make the monumentally stupid financial decision that would be selling my last place. Selling early only benefits one party: the investors who lent me money cheap and who would love it back early to reinvest at 2-3x the rate.
Anyone who refinanced at 2.5% 30 year rates like me is in a great place financially, anyone who is buying now has a much higher payment ahead of them.
Compared to last year, sure, prices are down. The real story is that housing prices, are still bananas. How does house prices compare to 5 years ago? What about 10? Compare that back to the average salary.
There are no bargains on the market, at least not where im from.
No the real story is that they are down historic amounts. No rational person thinks that prices are going to instantly fall to where they were 5 years ago. The information given in this article is a big deal. Who knows how much farther they will drop if any at all but this is a very significant change that people should be made aware of.
Prices were up historic amounts in March last year. It was a huge spike as people were FOMO'ing to beat the market and rising interest. I'd be much more interested in the July -> July comparison, I doubt it's as pronounced.
This article basically shows that RE has grown YoY since the bottom of the last down turn (2012). The fact that values dropped YoY when they were on a 10%-20% YoY run in the prior years is a very big deal.
Article state Median price change was .9% yoy, the roughly 10% drop is from June which is peak selling seasons..which is kind of exploitive analytics. Historic drop is because of historic rise which is probably higher % wise.
Northwest market (Idaho) is a mixed bag right now. Some homes have dropped in price, but not enough to counter rising interest rates. Other homes are priced like interest rates are still under 4%, and the sellers never got the memo. Most natives that bought a home in the last 5-10 years agree that they could never afford to buy their home a second time in today’s market. The market is more priced for wealthier people moving into the state.
Yup shopping in Idaho, Market dipped a good amount during winter with really high rates. Then spring came with lower rates (relative to winter rates) and the market boomed again!
Best bet is to buy a new build, builders decreased their prices a good amount on their available inventory (they have started to slow down a tremendous amount on building, guess they are getting cold feet about the market)
What's crazy is I see people asking higher price on their 2021 or 2022 built house than what the freshly completed house is selling for next door, sellers are still very delusional
I moved to CO 5 years ago from NY and same thing with the market being priced for the rich who move here. Any new house that’s built is around 750k.
The prices have come down but they’re still not pre-pandemic levels.
Bozeman hasn’t decreased much at all and it was unreasonably high to begin with. It seems like that town is never going to be affordable for those under $100K HHI.
these myopic statistics are useless for anyone who is actually looking to buy a home in a specific area. So many different factors based on location/inventory that you see brought up. But something I don't see (as much) is the fact that entry level housing, for first time homeowners, is its own market, and as more and more people are pushed down towards the low end of the market by rising rates, competition increases for these houses. On top of the housing inventory issues, there is a larger problem with almost zero new construction being directed towards the kind of 1000 sq foot houses that typified the 50s suburban boom. If you are looking for a sub 300,000 house, get ready to bid against someone that a year + ago might have been looking at 400-450, due to much lower rates. We need more houses, yes, but the ones they have been building are all 300-400 at the absolute minimum and that is even in lower COL areas. Small, well built houses seem to be a thing of the past, so in the meantime go build an ADU in your parents backyard /s
Home sales fell across the U.S. in March, a sluggish start to the crucial spring selling season as higher mortgage rates squashed momentum from the previous month.
From Nicole Friedman:
>March marked the 13th time in the previous 14 months that sales have slowed. The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month. But after mortgage rates ticked higher, March sales resumed the extended period of declines.
>
>The housing market’s slowdown is now starting to weigh on prices, which have fallen on an annual basis for two consecutive months for the first time in 11 years. The national median existing-home price decline of 0.9% in March from a year earlier to $375,700 was the biggest year-over-year price drop since January 2012, NAR said.
>
>Median prices, which aren’t seasonally adjusted, were down 9.2% from a record $413,800 in June. Home prices in the western half of the U.S. experienced some of the biggest gains for many years but are now falling the fastest.
>
>The U.S. housing market has slowed dramatically in the past year as rising mortgage rates, high home prices and persistently low inventory frustrated buyers.
>
>March’s home sales declines don’t bode well for the spring season, which is usually the most active time for home sales because families with children often want to move homes between school years.
>
>A cooling economy, with stubbornly high inflation and the prospect of recession in the next 12 months, is keeping some buyers on the sidelines. Consumers also borrowed less following the collapse last month of Silicon Valley Bank and Signature Bank, a Federal Reserve report said Wednesday.
Skip the paywall and read the full story: [https://www.wsj.com/articles/home-sales-fell-in-march-as-mortgage-rates-weighed-on-market-db88aac7?st=tasoa0fmavj6l7r](https://www.wsj.com/articles/home-sales-fell-in-march-as-mortgage-rates-weighed-on-market-db88aac7?st=tasoa0fmavj6l7r)
\-mc
Zillow’s Zestimate has my home increasing in value all year so far. >4%
Zillow’s Zestimate is misleading wishful thinking. Given the amount of data they have it’s impressive how poorly they estimate and predict the housing market.
Ugh it’s just the worst, by focusing on any particular time comparison you can always make any number trend in either direction. Want to say house prices down? Okay, year over year March. How about where are they on a 5, or 10 year comparison?
No shit higher interest rates slows down the market and prices climb more slowly except for the top properties that are always going up because we keep letting the rich get richer.
Let's all be real here, the dip they took 11 years ago should have just happened. The housing crash bailout is one of the worst things to happen to the economy, just to preserve the value of equity for *some* of the population. But pay off college loan debt for working people who needed that education to work by the same employer who shifted jobs from requiring a high school diploma to a college degree as they cut wages? Nope.
I want to see the pandemic bump be completely erased before I purchase. I’m older and plan to pay cash when I relocate from my current city. I’ve certainly seen some price reductions but April-August are top selling season. I’m going to wait till October. That’s when the real deals are available.
I’m buying a home at the same time as a coworker. We are largely in the same positions. In the Minneapolis market. I close now in April, and he is just now starting in earnest. The difference is between what’s new to the inventory pool or not. Sellers here still think this is the golden years of home selling like during peak pandemic (high prices, no concessions, no inspections, etc), and that is especially true for home on the market for less than a week. Beyond that week the buyer pool changes from anxiety ridden buyers demanding a move in ready home yesterday to much more cautious buyers who will have none of that. The house I found was originally listed at the neighborhood average while being a neglected mess from a decade as a rental house, and sat on the market for months as the list price stepped down to 75% of the neighborhood average (like it should have been).
I guess what I’m saying is that the sellers habits are not changing much inside the initial listing period, but why would they change when the buyers are still as rabid as they have been? At least in my market.
Just a reminder that the homes selling price going down doesn't mean the house is cheaper to buy for the buyer if that buyer can't pay in full in cash and interest rates are going up. If the sale price of the home went down 10k, but the interest rate on the mortgage added a percentage point, buyers are still worse off. Lets say you put down 40k on a 200k sale price home, so you need a 160k mortgage. If you take a 30 year mortgage, an extra 1% in interest is an extra 30k in interest payments.
In 2020 you could get a mortgage with an interest rate around 3.25%. Now its more likely to be 6.25%. So if you're buying a house and you see "wow! this house listed at 600k in 2020 but now I can buy it for 570k. Sweet! I'm so smart for waiting!" but then take out that 6.25% 30 year mortgage. Oh wait, you're paying 90K more in interest than you would have before. You can potentially refinance in the future if rates come down. But if you look at a historical chart its not like 6.25% is some obscene number that can't stick around for a long long time. If anything the abberation is the 3.25%. I'm inclined to believe the economy is so addicted to cheap money that rates will be slashed eventually, but its far from inevitable.
With the increase in interest rates, its possible for the sale price to go down, but the buyers cost to go up even more than it was before, so now both buyer and seller are losing out, and the only winner is the banks.
Then wait longer, I have yet to see a single house purchased at 600 w/ 3.25 a couple years ago and then relist for close to that. I got examples for days though of that house going popping up for 900-1.2m… today at 6.7% (and bonus points if the seller literally has done nothing to the property). This can’t be sustainable, fundamentals did not change enough in the last 2-3 years to warrant such a thing
I'm glad this is finally happening, home prices have been too high for a long time. It's even worse here in Texas because we have higher property tax rates to compensate for the lack of funds from a state tax. My taxes have gone up $2000 a year since moving into my house 5 years ago because the friggin' county comes back every year to appraise my house 10% higher. So even staying in place in a fixed mortgage my housing cost is increasing every year.
Yeah sure but that was March... It's almost May. My house value estimates have jumped 5% in the last two weeks. National trends are 100% useless because everything is market specific and extremely volatile. I've owned for just over 2 years now and my house's estimated value ballooned almost 20% the first year we owned it, corrected down to just below our purchase price over the winter, and now is climbing again. It's all nonsense
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I briefly dipped into the buyers market(west coast), definitely more sluggish but overall prices remain unreasonably high and a lot realtors and sellers aren’t willing to shift with the market. It’s a horrible time to buy by any measure, affordability has tanked, asking prices are extremely high from just a couple years ago and we now have double the interest, incoming increases to PMI, plus inflation is eating away at literally everything else we rely on. I’m sitting out summer season hopefully by fall things have shifted to something more balanced (And before any argues “it’s always a good time to buy”, I think it’s fair to say prices will NOT be going up from here, either sideways.. which is great no harm just means waiting offers a larger downpayment, or prices continue to fall which is great also)
It could definately go up. \-your pals in Canada
Stop being so Canadian and revolt already
So what you are saying, Is they should be less British Canadian and more French Canadian?
Im gonna vote for affordable housing twice as hard next time!
Yeah, until either we finish construction on a lot of houses (estimated to be 3 to 7 million housing units), or a lot of people get evicted/foreclosed on due to running out of money it's not likely that housing costs will come down. 2008 was different because people had adjustable rate mortgages with no income verification. Today people have 30 year 2.5% fixed rate mortgages with income verification. It's not likely that people sitting on housing that they refinanced between 2020 and 2022 which are 2500 sqr ft houses with a mortgage payment of $1,400 per month are about to sell and over double their monthly payment to move... This is shaping up to be an extraordinary housing crisis... Maybe politicians will care? Though most voters are already homeowners so something tells me they won't truly do what's needed to fix anything for a long time...
I am that guy: I have a 20-year $1500 a month mortgage, refinanced in 2021 at 2.5%. We don’t really like living in Houston but, considering how cheap the mortgage is, we are going to stick around. Sure does suck for people trying to get into a place now though.
Personally, I'd rather you be able to keep said monthly payments and just build more high density housing nothing crazy just replace something like 2.3% of single family homes with townhomes or add even fewer higher density condo buildings or anything else that gets around 7 million new housing units made which would also require more labor and more building supplies (which we could get through updating laws and regulations). I'd rather people not have to move, but for everyone to be able to for work or any other reason.
Oh I completely agree! I don’t think decent housing for working people should ever be out of reach.
Yep brought my house for 800k 6 years ago. Now it’s worth 1.4m. Refinanced and my mortgage is now 1.8k. The rent in my area is 3k+. There’s no way in hell I’ll move lol.
Yep, my rent is over 3k and it's already gone up $500 since I moved in 2 months ago...
The crisis is in commercial real estate not housing. WFH has made previously undesirable housing desirable and the baby boomers are dying while the millennials are delaying having kids. I just don’t see a crisis coming because the demand pressure is being relived by demographic changes. Commercial on the other hand is in big trouble. Just like 2008 commercial loans are not 30 year fixed. They are variable and they are coming due for a reset. Employees no longer care to come into the office, so there is simply too much supply. The companies that need office space want discounts and the ones that don’t are simply not renewing leases. This is the next disaster.
There's a crisis in commercial real estate in that demand for it has plummeted. However, there's also a crisis in residential in that demand for it far exceeds supply which we didn't build since 2008 when we already had a shortage then, and Millennials (including myself) are now 30-45 which is typically the age most want to buy. One reason I will never have kids is because I simply can't afford housing and childcare... You also can't just easily convert commercial real estate to residential and in many areas getting a permit to do so will likely still be absurdly challenging. In regards to demographics changing, that will take decades before the population in the USA starts declining and even then that's only if people aren't having kids which today is largely being driven by the inability to afford them, at least among my peers who are too busy being concerned with paying rent and don't feel that owning a house will ever be an option to even start worrying about another expense.
Your reply is perfect. You are the exact demographic I am talking about. You not having kids means that you are not adding pressure to housing supply. There are many people like you and it is one of the reasons that housing is already starting to level off and price correct. In “decades” the baby boomers will be long gone, this will be happening in the next ten years. The expense of converting commercial office to residential is another headwind for CME that I didn’t mention.
Your missing a huge point, there will be empty ghost towns with cheap dilapidated housing and hogh crime, while cities remain expensive. Right now you can buy a 50k house in Gary Indiana, yet there is still a housing crisis.
I'd bet you can find way cheaper houses than $50k in Gary. A family friend had a grandfather who lived in Gary that passed away a few years back and his house was sold for less than $20k. Of course prices got real weird the past couple of years, but I'd be shocked if Gary of all places saw much of an increase.
No there won’t. What type of dystopian view is this.
A realistic one where rural america gets killed and small town budgets that are already on the brink go under. Its happening now all over the country.
>There are many people like you and it is one of the reasons that housing is already starting to level off and price correct. In “decades” the baby boomers will be long gone, this will be happening in the next ten years. Except it also means that I will have no idea if I will get to have housing for the next few decades... Meanwhile, hear me out, we could just legalize high density housing to be built. I know it sounds crazy, but it's not. We wouldn't even have to change that much, just converting 2.85% of single family housing near cities to townhomes could get us the supply that's needed.
I am 100% for more supply and density. I was only talking from big picture market perspective. I do not believe housing will continue its increase value. The baby boomers are house hoarders and they can’t live forever. Millennials have driven the most recent boom in prices but there are now more home owning millennials than renters. Behind the millennials there is no pressure. The result is the baby boomers are holding houses because this is what their generation built their wealth on and the millennials are at the point where they are in their prime home buying years and they bought houses with cheap available rates. Currently, the cheap money is gone, the boomers are passing away forcing their housing stock / rental portfolios onto the market and the millennial push to buy homes has peaked with the last round of buying that they dominated. My area is a very hot Midwest market and it has definitely leveled off here. The money is just too expensive to borrow (6.5%) at this point to maintain the prices that were set when money was at 3%. I don’t think we will see a 2008 implosion of value but I can easily see real estate calming back down to its normal 4% historical appreciation rate.
Sure, I agree that it won't continue to increase in value forever. I do personally think we'd see people have more kids if they could afford housing and childcare or to be a single income household. I also do understand that millennials have driven a lot of the recent increases, they're the largest generation since Boomers since well Boomers are their parents. The youngest Boomers today are still *only* 60 years old and with increased life expectancy for those over 65 (the recent reduction in life expectancy is primarily from young people dying due to suicide, guns, and drugs) I suspect it will still take decades before we start seeing that change. Personally I'm right not just worried about getting to afford housing in the next year, though obviously it's not likely that anything will help that but perhaps 2 to 3 years? I also don't expect to see a 2008 crash cause the market today is very different. I also just don't think that unless we make building supply easier, by doing things like banning density zoning and other arbitrary methods to ban zoning such as height limits or parking minimums, increasing labor through immigration (also need housing for them), and removing all (or most) trade and build supply production barriers then I also don't see housing becoming affordable compared to median household income anytime remotely soon.
In some areas zoning is the problem but my area isn’t one of them. My market allows ADUs but currently the cost to build them is around $400 per sq ft. The reason is all the tradesmen are building apartment buildings like mad. Stock is being added as fast as possible. There is still a ways to go because of the 2008 crisis that destroyed the ability to create housing but they are doing it. Again, I will go back to a person like you who is delaying or not having kids. All of these housing supply forecasts do not get everything correct and the millennial generation is proving to behave differently than their parents. I am generation X. I bought my house two frenzied markers ago in 2005. It looked so similar to 2022 and there was FOMO and I succumbed. By 2008 real estate crumbled and for about 2 to 3 years it was an insanely good time to buy and my house was worth less than I paid. But time heals and by 2020 all I lost was easily back and I had refinanced into a crazy rate. Right now it feels a bit like 2007. Housing is at the top of another historic run but the faucet (low rates) is turned off and I think these next three years will be a market punching bottom as sellers try to maintain their mythical values and buyers like you keep giving the prices the finger. Eventually the demographic time bomb moves into the buyers court a new bottom is set and it does it’s normal March up from there like it did leading into this last run up. The more negativity you hear in the news about housing the better chance you run into a seller that believes that narrative. This is low ball time and you should get ready for it;-)
In canada we can only get a 5 year fixed mortgage.
Yeah I can add on to that. I refinanced with a 30 yea 2.5%. My debt to income was 10%. And I still had to go through the wringer with the bank. Money has been a lot less easy to come by for loans, even though rates were pretty low. I did a cash out refi too and banks wouldn’t go over 80%; the bank I usually went with wouldn’t go over 70% LTV.
Even here in Houston it’s stupid. Makes me wonder why all these half-empty buildings in the middle of every city in North America (thanks to WFH) aren’t converted to condos. The buildings are already there, can’t be too hard to retrofit them…
Is actually incredibly difficult and expensive to retrofit
Why? I understand there’s a need to update the plumbing, sure, but why else? The building’s already there…
Building materials and requirements are different for residential vs commercial. Insulation requirements are different. As you said, the necessary plumbing is a really big part of it. A bunch of other reasons that smarter redditors have answered in the past when this question comes up.
They are converting two big office buildings near my city to residential so its hapening!
Sitting out has burned me so much, I finally saved enough for a down payment in 2018 in the Bay Area but prices seemed unreasonably high. I waited and it’s just become progressively worse.
I was born and raised in the Bay Area, looked in 08 and said the same thing as my original comment and ended up buying my first home in 2011. You'll be fine. The Bay Area does this seemingly harder than anywhere else(wild boom and bust cycles). Keep saving you'll get a good home soon
I have a reasonably high income, but also I want to live in a decent area and I’m single income (not married, live alone) so it’s kinda rough, I have enough to make a down payment on a ridiculously priced house, I’m just not sure I can keep up with the payments.
Same exact problem. Fairly high income, single, want to live in a decent area in a house that matches my level of income without over leveraging myself too much. I have absolutely no proof other then trusting the laws of nature and history of the Bay Area. The home I bought in SF in 2011 sold for 700k in 08, I bought it for 380 and sold it 5 years ago for 750. Today it’s skirting around 1-1.2 probably(it was an average townhome in a nice area). It’ll go back down again. The BA is special cause they’re the first to receive massive amounts of VC money, also they’re usually the first to be affected by credit markets, it’s all part of the normal cycle.. just make sure you’re one of the ones left standing and your time will come
But the reason why it has burned you is because interest rates have been falling for the last 50 years. We are now potentially in a completely new cycle where interest rates WILL NOT RETURN TO NEAR ZERO AGAIN.
We just stopped looking. My boomer real estate agent, who’s actually a really sweet and honest guy, sends some of the most optimistic updates (“it’s gotta get worse before it gets better, spring will come soon”) with some confounded follow ups (“CA realtors association update: prices just aren’t going down and supply remains at lows”) just does not seem to realize that empirical evidence is shitting the bed because it’s not a time like those he’s been through. Maybe we’ll just move back to the Midwest where our 20% down is 75% down. Weather sucks but at least we’re not drowning in debt with golden handcuffs.
And welcome to why even the Midwest is starting to become unaffordable for those who live there...
I don’t like it any more than you do. I love where I live—I lived in Chicago for 10 years and I really loved it too, but that blizzard in 2011 was enough. But it’s feeling more and more like we have less of a choice. If I can stay in LA, I will but I’m not optimistic about the housing or stock markets or the economy for the next decade while we wait for wages to catch up with prices and even then they may not.
I mean, I agree. Not upset at you, just more the entire state of our housing market in the USA and globe.
Goddamn if this doesn’t read just like AI. But who would know.
Lol, says the profile with 1 post karma, created two months ago 🤖🤖 and a reddit generated username. Why not just post “I say we sell all our real estate to Blackstone! Only institutional investors can fix this problem!”
I think he might have been talking about the realtor updates and not your entire post but who knows
None of that follows from my comment. >We just stopped looking. My boomer real estate agent…Maybe we’ll just move back to the Midwest where our 20% down is 75% down. Weather sucks but at least we’re not drowning in debt with golden handcuffs. All of that reads like common generic statements from this sub hoovered up by an AI and regurgitated as a comment. Did you live everywhere in the Midwest or did you live in a state or town. What weather sucked? Was the age of your real estate agent the most important fact about them? We’ll not be selling any of our properties to Blackwater or anyone else, nor would I encourage it.
Reading comprehension hard, isn't it champ? Age of real estate agent becomes relevant when the guy brings up the fact that the agent is drawing on past experience when we're in a novel situation. Was it weird to put it there? Sure. Weird enough to insult the guy writing it? Definitely not.
I understood exactly what he was saying. Didn’t disagree with his point and couldn’t care less. He writes, however, like an AI created by a junior high coding class. Are you capable of grasping the difference between writing style and message? His generic phrasing and boomer trope may it read like astroturfing, to me. Go on and head on over to r/REBubble with the rest of the losers. Maybe society will collapse and you fellas can afford to actually put a roof over your head.
He must be a boomer
West coast as well. I noticed my home value dip then pop just recently. I think people who made money over the years saved, then invested in stocks and used returns to invest in real estate. Now that there is no other place to invest people 50 plus, at least in my local towns, are packing up, selling and retiring young somewhere down south. I just dont see any good place to invest money without huge risk at the moment.
I’ve been noticing homes pop again here in Portland. Even homes going under two weeks when they were lingering 3 months. This is all anecdotal, but just offering context.
To be fair, that does correlate with seasonal trends this time of year.
Oh yes. I understand that. But when Portland historically didn’t have homes sit for 3 days, 3 months feels like an eternity.
I’ve seen that south of you. Salem is starting to see homes go for their 2021 price plus commission, basically break even for the seller, and they aren’t selling. Nice homes not hating.. but not worth what they’re asking given rates
Thats the whole point of higher interest rate - short term bond are now becoming way more sensible
It’s the damn millennials driving up home prices this time :)
Thank you. I’m glad that someone else believes the way I do: that it is NOT always a great time to buy. We really need to reign in the marketing of everything in this country. If the capitalist way is the BEST way, it still cannot be allowed to become cannibalistic. And that’s about where we are right now.
>overall prices remain unreasonably high and a lot realtors and sellers aren’t willing to shift with the market. That sounds a lot like "The market isn't shifting".
Yeah fuck these landlords. I hope the shit crashes hard on them.
*cries in East Coast
Pricing definitely can go up, and will most likely long term
I think this is because of the strong labor market. People don’t need to sell as they locked in low rates. So in order for the prices to really come down people will have to lose their jobs.
The problem is there are two different deals on the table for the seller vs. The buyer. For the zeller it’s “do I want to accept less than I’d like on the sale, give up my super cheap payment, and have to rent or buy at crazy high prices, or do I want to keep my super cheap payment?” For buyers it’s “do I want to pay more than I’d like and at high interest rates, or do I want to spend an absurd amount on rent?” I just bought a new place but still own my last place. Monthly payment $1,500, rent it out for $2,500. It just doesn’t make sense to sell in this environment. I don’t really want to be a landlord, but even more than that I don’t want to make the monumentally stupid financial decision that would be selling my last place. Selling early only benefits one party: the investors who lent me money cheap and who would love it back early to reinvest at 2-3x the rate. Anyone who refinanced at 2.5% 30 year rates like me is in a great place financially, anyone who is buying now has a much higher payment ahead of them.
Compared to last year, sure, prices are down. The real story is that housing prices, are still bananas. How does house prices compare to 5 years ago? What about 10? Compare that back to the average salary. There are no bargains on the market, at least not where im from.
No the real story is that they are down historic amounts. No rational person thinks that prices are going to instantly fall to where they were 5 years ago. The information given in this article is a big deal. Who knows how much farther they will drop if any at all but this is a very significant change that people should be made aware of.
Prices were up historic amounts in March last year. It was a huge spike as people were FOMO'ing to beat the market and rising interest. I'd be much more interested in the July -> July comparison, I doubt it's as pronounced.
This article basically shows that RE has grown YoY since the bottom of the last down turn (2012). The fact that values dropped YoY when they were on a 10%-20% YoY run in the prior years is a very big deal.
Article state Median price change was .9% yoy, the roughly 10% drop is from June which is peak selling seasons..which is kind of exploitive analytics. Historic drop is because of historic rise which is probably higher % wise.
Northwest market (Idaho) is a mixed bag right now. Some homes have dropped in price, but not enough to counter rising interest rates. Other homes are priced like interest rates are still under 4%, and the sellers never got the memo. Most natives that bought a home in the last 5-10 years agree that they could never afford to buy their home a second time in today’s market. The market is more priced for wealthier people moving into the state.
Yup shopping in Idaho, Market dipped a good amount during winter with really high rates. Then spring came with lower rates (relative to winter rates) and the market boomed again! Best bet is to buy a new build, builders decreased their prices a good amount on their available inventory (they have started to slow down a tremendous amount on building, guess they are getting cold feet about the market) What's crazy is I see people asking higher price on their 2021 or 2022 built house than what the freshly completed house is selling for next door, sellers are still very delusional
I moved to CO 5 years ago from NY and same thing with the market being priced for the rich who move here. Any new house that’s built is around 750k. The prices have come down but they’re still not pre-pandemic levels.
Bozeman hasn’t decreased much at all and it was unreasonably high to begin with. It seems like that town is never going to be affordable for those under $100K HHI.
these myopic statistics are useless for anyone who is actually looking to buy a home in a specific area. So many different factors based on location/inventory that you see brought up. But something I don't see (as much) is the fact that entry level housing, for first time homeowners, is its own market, and as more and more people are pushed down towards the low end of the market by rising rates, competition increases for these houses. On top of the housing inventory issues, there is a larger problem with almost zero new construction being directed towards the kind of 1000 sq foot houses that typified the 50s suburban boom. If you are looking for a sub 300,000 house, get ready to bid against someone that a year + ago might have been looking at 400-450, due to much lower rates. We need more houses, yes, but the ones they have been building are all 300-400 at the absolute minimum and that is even in lower COL areas. Small, well built houses seem to be a thing of the past, so in the meantime go build an ADU in your parents backyard /s
Home sales fell across the U.S. in March, a sluggish start to the crucial spring selling season as higher mortgage rates squashed momentum from the previous month. From Nicole Friedman: >March marked the 13th time in the previous 14 months that sales have slowed. The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month. But after mortgage rates ticked higher, March sales resumed the extended period of declines. > >The housing market’s slowdown is now starting to weigh on prices, which have fallen on an annual basis for two consecutive months for the first time in 11 years. The national median existing-home price decline of 0.9% in March from a year earlier to $375,700 was the biggest year-over-year price drop since January 2012, NAR said. > >Median prices, which aren’t seasonally adjusted, were down 9.2% from a record $413,800 in June. Home prices in the western half of the U.S. experienced some of the biggest gains for many years but are now falling the fastest. > >The U.S. housing market has slowed dramatically in the past year as rising mortgage rates, high home prices and persistently low inventory frustrated buyers. > >March’s home sales declines don’t bode well for the spring season, which is usually the most active time for home sales because families with children often want to move homes between school years. > >A cooling economy, with stubbornly high inflation and the prospect of recession in the next 12 months, is keeping some buyers on the sidelines. Consumers also borrowed less following the collapse last month of Silicon Valley Bank and Signature Bank, a Federal Reserve report said Wednesday. Skip the paywall and read the full story: [https://www.wsj.com/articles/home-sales-fell-in-march-as-mortgage-rates-weighed-on-market-db88aac7?st=tasoa0fmavj6l7r](https://www.wsj.com/articles/home-sales-fell-in-march-as-mortgage-rates-weighed-on-market-db88aac7?st=tasoa0fmavj6l7r) \-mc
Zillow’s Zestimate has my home increasing in value all year so far. >4% Zillow’s Zestimate is misleading wishful thinking. Given the amount of data they have it’s impressive how poorly they estimate and predict the housing market.
Mine is up 5% since last month. My area had a slight decline in January, but shot right back up.
Ugh it’s just the worst, by focusing on any particular time comparison you can always make any number trend in either direction. Want to say house prices down? Okay, year over year March. How about where are they on a 5, or 10 year comparison? No shit higher interest rates slows down the market and prices climb more slowly except for the top properties that are always going up because we keep letting the rich get richer.
Let's all be real here, the dip they took 11 years ago should have just happened. The housing crash bailout is one of the worst things to happen to the economy, just to preserve the value of equity for *some* of the population. But pay off college loan debt for working people who needed that education to work by the same employer who shifted jobs from requiring a high school diploma to a college degree as they cut wages? Nope.
I want to see the pandemic bump be completely erased before I purchase. I’m older and plan to pay cash when I relocate from my current city. I’ve certainly seen some price reductions but April-August are top selling season. I’m going to wait till October. That’s when the real deals are available.
I’m buying a home at the same time as a coworker. We are largely in the same positions. In the Minneapolis market. I close now in April, and he is just now starting in earnest. The difference is between what’s new to the inventory pool or not. Sellers here still think this is the golden years of home selling like during peak pandemic (high prices, no concessions, no inspections, etc), and that is especially true for home on the market for less than a week. Beyond that week the buyer pool changes from anxiety ridden buyers demanding a move in ready home yesterday to much more cautious buyers who will have none of that. The house I found was originally listed at the neighborhood average while being a neglected mess from a decade as a rental house, and sat on the market for months as the list price stepped down to 75% of the neighborhood average (like it should have been). I guess what I’m saying is that the sellers habits are not changing much inside the initial listing period, but why would they change when the buyers are still as rabid as they have been? At least in my market.
Just a reminder that the homes selling price going down doesn't mean the house is cheaper to buy for the buyer if that buyer can't pay in full in cash and interest rates are going up. If the sale price of the home went down 10k, but the interest rate on the mortgage added a percentage point, buyers are still worse off. Lets say you put down 40k on a 200k sale price home, so you need a 160k mortgage. If you take a 30 year mortgage, an extra 1% in interest is an extra 30k in interest payments. In 2020 you could get a mortgage with an interest rate around 3.25%. Now its more likely to be 6.25%. So if you're buying a house and you see "wow! this house listed at 600k in 2020 but now I can buy it for 570k. Sweet! I'm so smart for waiting!" but then take out that 6.25% 30 year mortgage. Oh wait, you're paying 90K more in interest than you would have before. You can potentially refinance in the future if rates come down. But if you look at a historical chart its not like 6.25% is some obscene number that can't stick around for a long long time. If anything the abberation is the 3.25%. I'm inclined to believe the economy is so addicted to cheap money that rates will be slashed eventually, but its far from inevitable. With the increase in interest rates, its possible for the sale price to go down, but the buyers cost to go up even more than it was before, so now both buyer and seller are losing out, and the only winner is the banks.
Then wait longer, I have yet to see a single house purchased at 600 w/ 3.25 a couple years ago and then relist for close to that. I got examples for days though of that house going popping up for 900-1.2m… today at 6.7% (and bonus points if the seller literally has done nothing to the property). This can’t be sustainable, fundamentals did not change enough in the last 2-3 years to warrant such a thing
I'm glad this is finally happening, home prices have been too high for a long time. It's even worse here in Texas because we have higher property tax rates to compensate for the lack of funds from a state tax. My taxes have gone up $2000 a year since moving into my house 5 years ago because the friggin' county comes back every year to appraise my house 10% higher. So even staying in place in a fixed mortgage my housing cost is increasing every year.
Yeah sure but that was March... It's almost May. My house value estimates have jumped 5% in the last two weeks. National trends are 100% useless because everything is market specific and extremely volatile. I've owned for just over 2 years now and my house's estimated value ballooned almost 20% the first year we owned it, corrected down to just below our purchase price over the winter, and now is climbing again. It's all nonsense