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re: Cost to buy = $2,700/month. Cost to rent = $1,850/month
Posted on 5/24/23 at 11:54 am to stout
Posted on 5/24/23 at 11:54 am to stout
quote:
Been in RE since 2001. I know but again you guys are comparing apples to oranges. Wage growth has failed to keep up with house price appreciation by large gaps. That ground will not be made up overnight.
You're absolutely right about wages remaining flat while housing prices skyrocketed. So how was that even possible? Cheap money, that's how. Banks giving out ridiculous loans to people who have no hope of ever repaying them. They could only do that because of securitization meaning they weren't on the hook for mortgage defaults any more either.
All that is going to change. Thank God. It was always unsustainable. Yeah it's going to hurt a whole bunch of people who paid 2x-3x more for their houses than they're actually worth but that's the risk those people took for believing a house is an "investment" and "houses only go up in value". Shoud've happened 15 years ago, now it's going to be much, much worse. About time.
1
Posted on 5/24/23 at 11:55 am to lsu13lsu
quote:
But boy have we heard this a million times since 2007/2008
Yeah and the fed kept pumping up the money supply to create inflation to combat that deflation. This happened until Covid ramped it up to the extreme (a huge Trump bill and huge Biden bill, along with all of the other spending in 2020 by Trump's admin). Now we have the worst inflation in quite a while and it's pushing us to the brink of another collapse (residential real estate, commercial real estate, banking, etc.)
Posted on 5/24/23 at 11:55 am to Swagga
quote:
It seems like it has slowed in the New Orleans metro but the prices are still insanely high.
I’m curious if places that are seeing a correction are mountain towns and places like Boise. People flocked there during COVID and as they’re being called back into the office are having to sell.
That’s the only markets I can see having real corrections right now.
Prices are still up here in Louisville but I’ve noticed houses are sitting on the market a little longer depending on price.
Posted on 5/24/23 at 11:56 am to SlowFlowPro
quote:
a huge Trump bill
Posted on 5/24/23 at 11:56 am to Supermoto Tiger
quote:
The difference between 3% and 7% for 400K is aprox 800-900/month. The reality is that historically 6% rates are the norm. 3% rates are extremely abnormal.
You're right, but that 400K used to buy a LOT more house in the past.
We joke about baws with 60-month truck leases, I wonder if the 40-year mortgage is in our future?
Posted on 5/24/23 at 11:58 am to 94LSU
quote:
now it's going to be much, much worse
I thought that too the past few years but now I really do think we see a correction more akin to a bump in the road and things keep chugging along.
That is bad for affordability obviously and not ideal but I don't think anyone is serious about taking the hits now for the good of the market and younger generations in the future so they will never raise rates as high as they need to in order to force the sizeable correction that is needed. If the Fed was serious about inflation then rates would have been raised much higher and much faster the past few years.
Posted on 5/24/23 at 11:58 am to BluegrassBelle
quote:
Prices are still up here in Louisville but I’ve noticed houses are sitting on the market a little longer depending on price.
Houses are definitely sitting longer here and having to slash prices.
Like LINK slashed $25.5k in 2.5 months. That's in the new/elite country club here, too. One of the most desirable areas.
Posted on 5/24/23 at 11:59 am to fallguy_1978
quote:
Runaway government spending has been a problem since W and both parties are guilty of it. They just disagree on what to run up more debt on.
Yes, government picking winners but the debt keeps rising
Posted on 5/24/23 at 11:59 am to Bunsbert Montcroff
Posted on 5/24/23 at 12:00 pm to BluegrassBelle
quote:
Prices are still up here in Louisville but I’ve noticed houses are sitting on the market a little longer depending on price.
Yup exact same thing in the NOLA metro area.
Posted on 5/24/23 at 12:00 pm to OleVaught14
quote:
he issue is most people can't afford to anymore. The median family income in the US is just under $71k.
Take the 2.5 income for a mortgage rule - the median US family can afford a mortgage of 177k. 20% gets you to a home value of 212k.
There's not many places in the US where you can afford a family home for 212k. So, if people want to afford a home they essentially have to spend above their means.
Save more money for a bigger down payment. A house can be a blessing or a curse.
Never, never, intentionally allow the bank to give you a mortgage above your means.
Posted on 5/24/23 at 12:01 pm to SlowFlowPro
quote:
That's in the new/elite country club here, too. One of the most desirable areas.
That house was never worth over $200 per sq ft as they were asking.
I just bought a house to flip that will sell in that range. Not in the same part of town but it will be in the $165 per sq ft range and is only 12 years old. That house you linked was overpriced from the jump.
Posted on 5/24/23 at 12:03 pm to Supermoto Tiger
quote:
Save more money for a bigger down payment. A house can be a blessing or a curse.
Its just harder for younger types with inflation raging.
Posted on 5/24/23 at 12:05 pm to tigersmanager
quote:
wrong
Oh, I guess I missed the part where republicans didn't add trillions of dollars to the national debt
Posted on 5/24/23 at 12:06 pm to SuperSaint
quote:
New houses didn't have the code standards we do now. Houses can only get so cheap when codes force additional costs.
people completely ignore or ignorant to this when thinking of housing prices.
Additionally, I don't see people willing to start as small as we did in the 80s. Back them, we and all our friends were buying 1300-1500 square foot homes that were 20 plus years old. Many of those buying homes today are paying much more because of the size of the homes and the amenities.
Posted on 5/24/23 at 12:06 pm to stout
Still waiting for the bubble to pop - no way am I buying with prices and rates the way they are. Got the money ready to go but I'll gladly wait.
Posted on 5/24/23 at 12:08 pm to Supermoto Tiger
quote:
Never, never, intentionally allow the bank to give you a mortgage above your means.
I'm not saying it's the smart thing to do. But I do see why people stretch their mortgage/housing budget beyond what they probably should. And it's not just to "keep up with the Joneses" but they need to in order to get a decent house in a decent neighborhood
Posted on 5/24/23 at 12:09 pm to LaLadyinTx
quote:
Back them, we and all our friends were buying 1300-1500 square foot homes that were 20 plus years old.
For all intents and purposes, these don't exist today.
If they do, it's in a terrible area of town and a potentially big loss.
This post was edited on 5/24/23 at 12:11 pm
Posted on 5/24/23 at 12:10 pm to LaLadyinTx
quote:
. Back them, we and all our friends were buying 1300-1500 square foot homes
The cost of land and development doesn't really allow for developers to do much in the size range anymore. I built a 14-lot subdivision prior to 2008 where I built 1400 sq ft homes. No way would that be possible today and be as profitable as it was then. Codes concerning roads, drainage, etc have all raised the cost of development.
quote:
that were 20 plus years old.
Gentrification is great and could solve a lot of affordability issues but someone has to get the ball rolling and not many people want to risk being the guinea pig.
This post was edited on 5/24/23 at 1:42 pm
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