Anonymous wrote:Arlington wasn't as desirable place to live back then. It became more popular in the late 90's.

I moved to Clarendon in 2003 and it was not great back then. None of the apartments between Fillmore and the metro had been built. There was a yard sale space where Cheesecake Factory is.

Anonymous wrote:So out of curiosity, I checked and my childhood home in a pretty depressed town in the NE -- my parents sold for $103,000 in 1981 and it is now zillow estimate at $575,000 (no idea if that's realistic since it hasn't been sold in 44 years). That's way above inflation, even for a depressed area, over those 44 years.

As another data point, I checked the starter house we bought in PG County in 2003 -- that one is slightly closer to inflation -- zillow is a smidge above where inflation would put our 2003
price. I think the 2008-2009 market crash really impacted some areas (like Prince George's County), so for people that bought in the early 2000's, that's a factor.

In general, we had a super crazy economic system for the past decade or so that really impacted real estate negatively. The combination of sustained high stock market returns plus incredibly low interest rates meant that people were willing to dump a ton of money into real estate, resulting in bidding wars, etc. etc. I think it's likely another bubble, and prices will crash. When I look at our finances, I mentally discount our home equity by about 50% -- I don't really trust it will be there when we eventually want to sell.

The inflation adjusted price for that house (purchased in 1981) today would be 380k, but interest rates were around 15% in 1981. The monthly loan payment with 20% down at 1981 inflation adjusted prices and rates would be $3,844. The monthly loan payment with on this house today with a 7% interest rate and 13% downpayment (same downpayment amount adjusted for inflation in 1981) is $3,327/month. This house is actually more affordable to buy (with a mortgage) than it was in 1981 even though the inflation adjusted price is higher.

At some point boomers will sell. What will happen to the housing market in 2040? There is going to be a big supply. And if you add declining immigration and a challenging economic environment (lower white collar jobs creation, big debt to GDP ratio, less appetite for us treasuries etc) I'm not sure home prices will keep booming.

The other issue is that many of us have too much share of our wealth in real estate. The extreme capitalization of the housing market will really hurt us in the future

Again, its supply and demand. It's not just inflation (which is part of the calculation).

The US population grew by approx 58 million since 2000. There is not new land in most built up areas which is most metros. The only thing to do is 1) build denser or 2) build out. Around here, option 1 is not likely so that is why the new neighborhoods are in places like Aldie.

As another data point, I just looked at my current house, bought in 2011, and the zillow price exactly matches the inflation over the past 14 years compared to where we bought it. That may be unusual but suggests that a lot of the real estate inflation issues arose prior to the past 15 years.

I'd be interested in seeing a more nuanced economic analysis of this.

So out of curiosity, I checked and my childhood home in a pretty depressed town in the NE -- my parents sold for $103,000 in 1981 and it is now zillow estimate at $575,000 (no idea if that's realistic since it hasn't been sold in 44 years). That's way above inflation, even for a depressed area, over those 44 years.

As another data point, I checked the starter house we bought in PG County in 2003 -- that one is slightly closer to inflation -- zillow is a smidge above where inflation would put our 2003 price. I think the 2008-2009 market crash really impacted some areas (like Prince George's County), so for people that bought in the early 2000's, that's a factor.

In general, we had a super crazy economic system for the past decade or so that really impacted real estate negatively. The combination of sustained high stock market returns plus incredibly low interest rates meant that people were willing to dump a ton of money into real estate, resulting in bidding wars, etc. etc. I think it's likely another bubble, and prices will crash. When I look at our finances, I mentally discount our home equity by about 50% -- I don't really trust it will be there when we eventually want to sell.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:https://www.redfin.com/VA/Arlington/1028-N-Frederick-St-22205/home/11237727

Sold for $52,500 in 1976. Its inflation adjusted price should be $297,309, but instead it’s on the market for almost three times that.

Just posting this for the benefit of Boomers who contend that they paid 12% interest on their mortgages and don’t see what the issue is.

College prices are the same (I remember thinking when eldest was born that they'd fix that before he got to college , nope, kid just graduated, and it was over $90k per year). Not everything follows inflation rates, including the cost of housing and college

Right, so the two things that are most closely linked to upward mobility in the US (home ownership and higher education) are increasingly out of reach for working class and LMC Americans (and obviously anyone living below the poverty line).

But you can buy a flat screen TV for $150!

College is free if poor. No change in price since 1976. I am a boomer and went to college in 1980. At time my FASFA was showing ZERO family income and my Moms net worth negative $20,000. So on FASFA showing double zero. Zero income and Zero assets. I went in state to school and was free. It still is free. The only difference is for parents who can afford it like me. We pay through the nose for college. I paid a fortune for my three kids college. Full price. But why not I have the money. Back in 1976 we subsidized rich people. Did you now CUNY schools in 1976. City University of New York charged zero tuition? I could have been an investment banker on Wall Street and lived on Park ave and sent my kid to Baruch for free. Today the vast majority of Baruch goes free through financial aid but rich people pay full price. And the SUNY systems in NYC did not raise tuition at all pretty much in the 1970s. It was heavy tax payer subsidzed. That was unfair as the working class subsidzed the college kids of rich parents. Today SUNY schools are still zero tuition for famlies under $120,000. But the days of my roomater at a SUNY school Dad driving a Jaguar and living in Westchester getting heavily subsidized tuition are over.

Anonymous wrote:It's mostly boomers just hoarding homes to become landlords. The median age of all homebuyers is now 56, up from 31 in 1981.

The great boomer die off is going to be one of the most volatile real estate collapses the world will see.

That is more of a Gen X and Millennial thing. Boomers are born 1946 to 1964 so are 61-79 years old. Most old folks on my block have one home they lived in forever. The GenX and Millenials have the most rentals. They were old enough in 2009-2020 period when homes were cheap to snap them all up but young enough to manage them and young enough to buy them and still be alive at end of 30 year mortgage.

A lot of Boomers I know got burnt hard in real estate. They bought trade up houses in Spring 2003-2008 or retirement or second homes in Florida and saw the price collapse.

Gen Z has it worst. They were far far too young to buy pre 2020 when homes cheap and far to young to even buy in 2020/2021 when rates were cheap. Now they are nearing buying age and both homes and mortgage rates are unaffordable.

Anonymous wrote:

Anonymous wrote:https://www.redfin.com/VA/Arlington/1028-N-Frederick-St-22205/home/11237727

Sold for $52,500 in 1976. Its inflation adjusted price should be $297,309, but instead it’s on the market for almost three times that.

Just posting this for the benefit of Boomers who contend that they paid 12% interest on their mortgages and don’t see what the issue is.

College prices are the same (I remember thinking when eldest was born that they'd fix that before he got to college , nope, kid just graduated, and it was over $90k per year). Not everything follows inflation rates, including the cost of housing and college

Right, so the two things that are most closely linked to upward mobility in the US (home ownership and higher education) are increasingly out of reach for working class and LMC Americans (and obviously anyone living below the poverty line).

But you can buy a flat screen TV for $150!

It's mostly boomers just hoarding homes to become landlords. The median age of all homebuyers is now 56, up from 31 in 1981.

The great boomer die off is going to be one of the most volatile real estate collapses the world will see.

Anonymous wrote:https://www.redfin.com/VA/Arlington/1028-N-Frederick-St-22205/home/11237727

Sold for $52,500 in 1976. Its inflation adjusted price should be $297,309, but instead it’s on the market for almost three times that.

Just posting this for the benefit of Boomers who contend that they paid 12% interest on their mortgages and don’t see what the issue is.

College prices are the same (I remember thinking when eldest was born that they'd fix that before he got to college , nope, kid just graduated, and it was over $90k per year). Not everything follows inflation rates, including the cost of housing and college