I think the bubble is popping.

[Anonymous]

Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is it still popping? It's been a couple months now. Will it pop in March of next year? What about June?

We don't know how far the Fed can kick the can down the road. The PP is right, it's not just a real estate bubble, it's an everything bubble and who knows how it will play out. It's sort of like climate change where everyone knows its coming, the signs are all there but it's not til its having effects that everyone is like "oh". I'm staying in my starter home for now, there's just no way I want to be owing huge amounts of money with the unknown that is approaching. Some people on this board are taking huge jumbo loans for homes we all agree are overpriced for what they are. Good luck to all of you when we see how this plays out, Biden will try to kick it to the next admin if he can keep it going that long.

Prices are determined by willingness to pay in the market. If "we all" agreed that they were overpriced, then the prices wouldn't be what they are. So clearly we don't all agree.

You haven't articulated this, but I think you have in your mind a situation where high inflation forces the Fed to raise the interest rate it charges banks and take other steps to cool the economy, leading to a crash in asset prices. Then you should also know that there's a very good reason why most economists haven't expressed much concern about inflation--it's still being driven by only a small number of goods with unique supply issues. If you take a look at this chart from the Cleveland Fed, you can see that prices for the median good in the CPI basket are actually increasing *more slowly* than they were before the pandemic. This suggests that inflation is not being driven by labor shortages or other broad-based issues that would have the potential to accelerate and require intervention.

https://www.clevelandfed.org/our-research/indicators-and-data/median-cpi.aspx

Low interest rates make housing "affordable" and equity investments unavoidable. Wait until the rates increase.

People have been posting this since 2010. Just keep waiting. It might even happen in our lifetimes. Or you might die before it happens.

I guess you haven't seen what's happened in the last 2 years which is entirely new and unique. Just keep closing your eyes and hoping we continue on this path. Sure, I hope we do too!

Low interest rates are neither new nor unique. They're the norm for the country. The abnormal thing happened when we had high interest rates. That was a couple decades in the recent past that diverted from the previous 200 year history of our country. Just because some boomers lived through the 70's during their formative years and think that makes high interest rates normal doesn't make it true.

[Anonymous]

Anonymous wrote:Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

Maybe. But I tell you what the tax assessor is going to kill us all with new assessed values next year

[Anonymous]

Anonymous wrote:Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

How so? Last winter was, what, 10 months ago? So they've been enjoying life in their nice house for 10 months. What does it cost to rent something for 10 months? $20,000 to $40,000? And life is too short to live in an unhappy abode for upwards of a year of life.

And I don't see any home values going down. I see some asking prices getting trimmed, which is not the same.

[Anonymous]

Anonymous wrote:Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

What's your search area?

In our search area, the inventory has been ultra low for 12 months and prices continue to rise.

It's amazing that so many people here think their own personal experience applies to everyone else. The market has not significantly cooled at all.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

How so? Last winter was, what, 10 months ago? So they've been enjoying life in their nice house for 10 months. What does it cost to rent something for 10 months? $20,000 to $40,000? And life is too short to live in an unhappy abode for upwards of a year of life.

And I don't see any home values going down. I see some asking prices getting trimmed, which is not the same.

Plus you paid down equity over the last 10 months. I don't think a lot of the people waiting for the supposed crash to hit understand what happens when you pay your loan. I mean, they do logically but not really because if you wait for a crash for five years, you pay rent for five years. If you buy, you pay down some principal with each payment for five years and you've gone from a loan of 80% of your home value (assuming 20% down) to 70% because you paid down 10% of your house's price in those first five years. This doesn't even include any possible appreciation from "the bubble". Point being, you live in your house five years and there has to be a decline in prices greater than 30% to be underwater and if that happens, you just keep making payments and wait for the market to bounce back and eventually your payments will pay down the equity on the loan and the market will correct and you will no longer be underwater any longer. People just can't get past that time line number. You should buy when it's right for you. Timing the market in hopes of either a crash or a great appreciation in the next year or two is a doomed prospect.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

How so? Last winter was, what, 10 months ago? So they've been enjoying life in their nice house for 10 months. What does it cost to rent something for 10 months? $20,000 to $40,000? And life is too short to live in an unhappy abode for upwards of a year of life.

And I don't see any home values going down. I see some asking prices getting trimmed, which is not the same.

Plus you paid down equity over the last 10 months. I don't think a lot of the people waiting for the supposed crash to hit understand what happens when you pay your loan. I mean, they do logically but not really because if you wait for a crash for five years, you pay rent for five years. If you buy, you pay down some principal with each payment for five years and you've gone from a loan of 80% of your home value (assuming 20% down) to 70% because you paid down 10% of your house's price in those first five years. This doesn't even include any possible appreciation from "the bubble". Point being, you live in your house five years and there has to be a decline in prices greater than 30% to be underwater and if that happens, you just keep making payments and wait for the market to bounce back and eventually your payments will pay down the equity on the loan and the market will correct and you will no longer be underwater any longer. People just can't get past that top line number. You should buy when it's right for you. Timing the market in hopes of either a crash or a great appreciation in the next year or two is a doomed prospect.

Top line number: the price.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Market has significantly cooled. There are almost double the number of houses in overall inventory now in our search area as compared to early summer/spring. Prices keep dropping. Many, many people vaaaaaaastly overpaid horrifically last winter and early spring this year. I see sooooo many better homes now compared to ones I remember before that actually went for higher prices.

How so? Last winter was, what, 10 months ago? So they've been enjoying life in their nice house for 10 months. What does it cost to rent something for 10 months? $20,000 to $40,000? And life is too short to live in an unhappy abode for upwards of a year of life.

And I don't see any home values going down. I see some asking prices getting trimmed, which is not the same.

Plus you paid down equity over the last 10 months. I don't think a lot of the people waiting for the supposed crash to hit understand what happens when you pay your loan. I mean, they do logically but not really because if you wait for a crash for five years, you pay rent for five years. If you buy, you pay down some principal with each payment for five years and you've gone from a loan of 80% of your home value (assuming 20% down) to 70% because you paid down 10% of your house's price in those first five years. This doesn't even include any possible appreciation from "the bubble". Point being, you live in your house five years and there has to be a decline in prices greater than 30% to be underwater and if that happens, you just keep making payments and wait for the market to bounce back and eventually your payments will pay down the equity on the loan and the market will correct and you will no longer be underwater any longer. People just can't get past that top line number. You should buy when it's right for you. Timing the market in hopes of either a crash or a great appreciation in the next year or two is a doomed prospect.

Top line number: the price.

The latest data from the Case Shiller index, which is the best source of data on prices because it aims to actually compare prices for similar properties, is from July (a month after OP posted) and it just shows more appreciation. I see houses that sit, that have price reductions, and maybe don't sell for as much as another house sold, and there is always a reason. The house that is sitting and was reduced is on a main road, has a sh$tty kitchen, etc., all things that were not true of the comp but the sellers thought they could get the same price. Also, there is natural seasonal variation, no it's not as crazy as the spring, it might take two weeks instead of two days to sell a house, that doesn't mean that there's a bubble or that it popped.

[Anonymous]

Lots of frenzied folks bought crappy homes last year and during the first half of this year (let's not forget how many folks waived inspection). Now you are saying these same crappy homes aren't selling so they are outliers and not evidence the market is slowing down. Make it make sense.

[Anonymous]

Real estate prices only go up. Stonks value only go up. Interest rates will always be low. There's no bubble, and if there is a bubble, it will not pop. ZIRP doesn't exist. The FRB isn't propping up the housing market buy buying MBS. Nothing you see is real.

[Anonymous]

Oh, we're most definitely in a housing (and others) bubble, not withstanding all this drivel from current owners.

Is it popping yet? Well, that's somewhat debatable, but what's not debatable is that it will pop. And very soon, if it hasn't started already.

All this talk from people that, if you wait for xx amount of time, you're just throwing money away on rent is just that. Talk. Rent vs Own math is very very heavily skewed towards renting right now and that is always the sign of a bubble top. I can rent a house in prime time locations across the country for way less than it'll cost to buy the same house. I can do that, live in the same exact house as the owners, and invest the difference. But wait!! You won't build "equity" and you're throwing money away on rent!

No I'm not. A house is an asset just like stocks, bonds, fine art, whatever, except it has a very high carrying cost. One of the worst investments. If you can buy it at a price where the rent/buy ratio works, THEN it is a good investment, because you can generate positive cash flow, just like buying a business. Do you see Warren Buffett going out and buying mansions right now, even though he could buy quite a few and not even notice the difference in his account? No. Do you see real estate "investors" buying up houses right now, because apparently they are such a great deal and will continue going up? No. Sam Zeil, one of the most successful RE investors is liquidating his RE portfolio. So is Apollo. So is Blackrock, to a certain degree. When these investors can't buy properties at a price where it will generate a positive cash flow, they know it's time to sell.

And you guys...buy buy buy.

I'm an RE investor as well, and I'm liquidating my properties in several states as we speak. There is no way my cash flow (and all my properties are positive cash flow) will generate these kinds of returns without waiting for many decades. There are many many more ways to make money/counter inflation than betting on continued RE appreciation. That ship sailed with the end of COVID.

Merck just did a very successful trial of an oral COVID treatment. This time next year, nobody's gonna be worried that they are gonna die of COVID (not that they are now, except for some weirdos). Your guess is as good as mine as to what that will do to RE prices.

[Anonymous]

Anonymous wrote:Oh, we're most definitely in a housing (and others) bubble, not withstanding all this drivel from current owners.

Is it popping yet? Well, that's somewhat debatable, but what's not debatable is that it will pop. And very soon, if it hasn't started already.

All this talk from people that, if you wait for xx amount of time, you're just throwing money away on rent is just that. Talk. Rent vs Own math is very very heavily skewed towards renting right now and that is always the sign of a bubble top. I can rent a house in prime time locations across the country for way less than it'll cost to buy the same house. I can do that, live in the same exact house as the owners, and invest the difference. But wait!! You won't build "equity" and you're throwing money away on rent!

No I'm not. A house is an asset just like stocks, bonds, fine art, whatever, except it has a very high carrying cost. One of the worst investments. If you can buy it at a price where the rent/buy ratio works, THEN it is a good investment, because you can generate positive cash flow, just like buying a business. Do you see Warren Buffett going out and buying mansions right now, even though he could buy quite a few and not even notice the difference in his account? No. Do you see real estate "investors" buying up houses right now, because apparently they are such a great deal and will continue going up? No. Sam Zeil, one of the most successful RE investors is liquidating his RE portfolio. So is Apollo. So is Blackrock, to a certain degree. When these investors can't buy properties at a price where it will generate a positive cash flow, they know it's time to sell.

And you guys...buy buy buy.

I'm an RE investor as well, and I'm liquidating my properties in several states as we speak. There is no way my cash flow (and all my properties are positive cash flow) will generate these kinds of returns without waiting for many decades. There are many many more ways to make money/counter inflation than betting on continued RE appreciation. That ship sailed with the end of COVID.

Merck just did a very successful trial of an oral COVID treatment. This time next year, nobody's gonna be worried that they are gonna die of COVID (not that they are now, except for some weirdos). Your guess is as good as mine as to what that will do to RE prices.

Most people here are talking about buying their own homes, not investment properties. We bought in August and no regrets. LOVE our neighborhood. House has so much more space than our apt that cost a couple hundred less and everything is just nicer. Our neighbors are absolutely lovely. Moving was awful though and we won't do it again until we absolutely have to. Which means we will be here a while. So yeah, if it was just a question of where do we put $2500 a month? Sure maybe stocks are better. But we need a place to live and it's either $2300 in rent that will increase every year for an apt or $2600 PITI plus maintenance for a much bigger house in the neighborhood where we want our child to go to school and grow up and have a stable life.

[Anonymous]

If there is a bubble, it is slight. Too few houses were built following the 2007 bust, and production isn’t ramping up due to cost. We may plateau for several years though, since this has been a significant run-up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Oh, we're most definitely in a housing (and others) bubble, not withstanding all this drivel from current owners.

Is it popping yet? Well, that's somewhat debatable, but what's not debatable is that it will pop. And very soon, if it hasn't started already.

All this talk from people that, if you wait for xx amount of time, you're just throwing money away on rent is just that. Talk. Rent vs Own math is very very heavily skewed towards renting right now and that is always the sign of a bubble top. I can rent a house in prime time locations across the country for way less than it'll cost to buy the same house. I can do that, live in the same exact house as the owners, and invest the difference. But wait!! You won't build "equity" and you're throwing money away on rent!

No I'm not. A house is an asset just like stocks, bonds, fine art, whatever, except it has a very high carrying cost. One of the worst investments. If you can buy it at a price where the rent/buy ratio works, THEN it is a good investment, because you can generate positive cash flow, just like buying a business. Do you see Warren Buffett going out and buying mansions right now, even though he could buy quite a few and not even notice the difference in his account? No. Do you see real estate "investors" buying up houses right now, because apparently they are such a great deal and will continue going up? No. Sam Zeil, one of the most successful RE investors is liquidating his RE portfolio. So is Apollo. So is Blackrock, to a certain degree. When these investors can't buy properties at a price where it will generate a positive cash flow, they know it's time to sell.

And you guys...buy buy buy.

I'm an RE investor as well, and I'm liquidating my properties in several states as we speak. There is no way my cash flow (and all my properties are positive cash flow) will generate these kinds of returns without waiting for many decades. There are many many more ways to make money/counter inflation than betting on continued RE appreciation. That ship sailed with the end of COVID.

Merck just did a very successful trial of an oral COVID treatment. This time next year, nobody's gonna be worried that they are gonna die of COVID (not that they are now, except for some weirdos). Your guess is as good as mine as to what that will do to RE prices.

Most people here are talking about buying their own homes, not investment properties. We bought in August and no regrets. LOVE our neighborhood. House has so much more space than our apt that cost a couple hundred less and everything is just nicer. Our neighbors are absolutely lovely. Moving was awful though and we won't do it again until we absolutely have to. Which means we will be here a while. So yeah, if it was just a question of where do we put $2500 a month? Sure maybe stocks are better. But we need a place to live and it's either $2300 in rent that will increase every year for an apt or $2600 PITI plus maintenance for a much bigger house in the neighborhood where we want our child to go to school and grow up and have a stable life.

You're missing the point.

Just because you bought it when you did, and that you're ok with it, doesn't imply that asset valuations are not elevated. And I repeat, you can consider it "home" or whatever, it is still an asset and is and was, always valued like an asset.

Hint: Why do you think they are not building millions more homes as we speak? Because...commodity prices are elevated as well. Lumber has come down to pre-pandemic levels, but there several other commodities and supply chain issues that are still relevant. That is causing RE prices to levitate. But that won't last. Never has, never will. Commodities will come down, either willingly or due to an "event". Supply chain issues will be resolved one or another. Our country cannot survive if we don't solve this. So if we have to go to a war footing or an actual war, to solve this, we will.

[Anonymous]

I'll leave this here as well.

How Can Houses Be Unaffordable And Booming?