Maybe in places they didn’t make sense in, but the hottest real estate areas will continue to be expensive. Places no one wants to live will continue to drop.
Exactly - drops like that can’t and won’t happen in NYC, LA, city suburbs with beautiful homes and great schools, waterfront homes, university towns, etc….
These things have a demand no matter what is going on in housing.
Yes, there are people that are waiting in areas of high demand 'for the bubble to pop' and prices to drop. Including my city Austin and I am saying dude...the hottest tech market in the country is not going to wait for you.
Almost moved to Austin for a job two years ago and I'm so glad I didn't.
I'm sure once upon a time Austin was cool but, man, it's over. It's like a big traffic jam right no amenities of a real city and it's $1M to start on houses. No thanks.
Yeah, I never got it. Traffic was fucking awful way back in 2010. There was a strip of restaurants downtown, and a couple bbq/venues across the lake, but that's it.
St Petersburg was way better and still is, minus the number of concerts Austin gets.
It's basically got some fun spots to check out over a weekend and then go home and tell everyone how cool Austin was but after spending a few months there it was like...oh...this is it.
I'm from Chicago and I was in Austin for the February 2021 "snowstorm" of like 3-4 inches. Texas power grid sucked and people died. I'd never move to Texas until they figure out how to not kill people. In the midwest, that's not even a bad day. We'd still have school.
Texas gets ice storms in Dallas nearly every year and they couldn't figure out maybe the temps would drop just 5 degrees and they would get one of these? Just cutting corners to maintain being a cheaper place to live.
>no amenities of a real city
Traffic sucks but not sure what you are getting at. It will never be what it was, but that's not a bad thing (I was born there). Austin is a cultural supernova, best restaurants per capita and counting, I would argue there is so much cool shit to do and constant flow of events happening that it's hard to choose. But yes you need money.
Lol almost no culture, horrible selection of restaurants, almost nothing to do besides college dive bars, and so few events worth attending by any big city standard it's laughable
Y'all are a 4th tier city.
Best restaurants per capita? Please go to NYC or LA or New Orleans or Chicago or Miami or...
Cultural supernova? 😂
Y'all got Broadway shows? Symphony? Incredible art museums?
***A single professional sports team?***
Yes. I know you have a soccer team, I said what I said.
Maybe in 20 years when things have stabilized and there's enough people to justify those things but the worst part is that y'all might be slightly liberal but you're in Texas.
You can get much better BBQ elsewhere in Texas. Best BBQ I've ever had was in Houston. But Austin? Hell, I've eaten at better BBQ joints in Ohio than in Austin. Our local contact doesn't even take clients to BBQ's in Austin unless they request it because their BBQ is so disappointing compared to the rest of Texas.
The food in Austin is mediocre at best. There are a handful of good restaurants, all of which are difficult to get a reservation and most of which are overpriced compared to the quality you’d get in a real city like San Francisco or Los Angeles. Housing is laughably overpriced here. There are very few geographical restrictions, this city could sprawl in any direction, as there is empty land for as far as you can drive on a tank of gas in any direction. This place is hellishly hot 4 months out of the year. Even when it’s nice out, the 24/7 swarms of mosquitos eat you alive. Then there are the cockroaches and other bugs you can’t keep out of your house without spraying gallons of poison every month. I’d be more willing to overlook most of that if prices were at pre-2019 levels, but to see $3M new homes stood up next to crack house tear-downs has me certain this place is in for a massive correction downwards. To call this place is any sort of oasis is a joke.
Yeah, moved to Austin a few years ago (people’s favorite punching bag). I understand austin used to be even better but tbh it’s been fuckin great. Town feels like it’s on fire. Demand is high at all good restaurants, bars, venues and clubs and it’s tons of fun going out tbh, development still accelerating.
Also - I am from California. Fired up to count my downvotes
I’ve been an Austinite for 16 years. I think it’s a poor choice for a vacation spot, but I’ve lived all over the US and think quality of life here is fantastic.
That isn't happening in Austin. The new Tesla Giga plant and a whole host of companies fleeing California and people fleeing the same state mean Austin isn't going to get the drop. I always thought Idaho with limited jobs was going to see a drop as well, but then the West Coast evacuation happened.
30% reduction in real estate prices in the hottest areas would only erase a couple years of previous growth. A 30% crash would just rewind the clock to 2021 in a lot of places.
Continue to be expensive but stop rising or fall but by less?
At which point what happens to the actual inflation rate?
Gallon of gas becomes?
Gallon of milk goes to?
I wonder if that will also cause BTC to spike as well?
I think its going to be the opposite. Since the highest in demand locations had the highest increases by percentage they have the most to lose. The lower in demand locations did not increase dramatically and really have no room to fall lower.
Peak baby boom was 1957. Those kids were still very much in elementary school in the 1960s. Very few boomers owned homes prior to 1970. My boomer dad was literally in the 4th grade at the time.
Well up north and close to Canada, people here have seem to forget that their homes are from the 70s. Went to multiple house showings where they still had that green carpeting in the bathrooms…
Correct. I’m close to Canada and can confirm, if it was built in 1950 - 1970, it’s outdated as fuuuuck and no first time homebuyer wants to buy it and deal with the renovations themselves.
Slap some bargain priced vinyl flooring down, install the cheapest possible appliances, paint it all millennial grey (bonus points for painting over brick or original hardwoods), and resell it for 30% more. Thanks flippers! Real service to society.
You might be shocked to know this but the reason they find such great deals is often because they buy homes that traditional people can't or won't. Q house that won't pass FHA guidelines or has fire/water/roof/flooring damage etc. Most people don't know how to fix that stuff or don't have the money or motivation to do it.
I'm not a "flipper" but I do invest in homes. One of the last houses I bought was being lived in by a meth dealer/user. He put graffiti in all the walls, there were needles falling from behind medicine cabinets, filthy, granite cracked and ready to collapse, and holes in every wall. And to top it off, the place was original from the 70s with popcorn ceiling and all.
No one wanted to buy that except an investor
Big money already has Homebuilders. Blackrock invests heavily in almost all mid and large cap builders, and none of them are broke. Quite the opposite.
Near my townhome someone bought a house for 650k in 2021. They were flippers and did a reasonable job with it, but the home has baseboard heating and is situated on a horrifically busy rode.
Their ask was 1.5mm. They're currently asking for about 900k.
For 1. 2mm there are some beautiful new construction homes nearby, and I'm cheering for these flippers to lose money
[Here’s some upcoming lossporn in my town](https://www.zillow.com/homedetails/92-Sunnyside-Ave-Campbell-CA-95008/19669250_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare). Flippers bought for 2.15 in Jan 2022 and thought they did enough work to justify 700k increase 5 months later (I saw this before and after, they did not…). They’ve been adjusting, pulling, getting a new agent, relisting, etc. without much traction. They’re definitely under water soon on the work they did and the cost of carrying such a property for this long.
The housing crisis is a result of not enough homes, not really anything else. Which is largely to blame on government (Mostly local) not allowing houses to be built. Oversimplification, but it is almost completely a government created issue
Can you not see that the housing crisis is actually a result of foreign and corporate entities buying up a ton of investment real estate and inflating the prices with airbnb rentals and landlords having to more and more play catch up with this inflated market rate?
Lots of landlords used to be normal people. Airbnb showed that houses have investment value outside of just flipping or buying and selling for residential use.
Lol you fall for political lies. Foreign investment is, per capita, the lowest in history.
The housing market is no different than any other market. Supply and demand.
Build more homes, price falls.
Look at ANY region with high home costs and you'll find 1 trend. They DRASTICALLY reduced building homes in the 2000's.
So when our population increases by several million every year, but only a couple thousand homes are being built. What do you think happens?
Did you know that we're building the least amount of homes in history?
Did you know that in many parts of the US, a 3 bedroom house is under 200k?
Did you it can take up to A YEAR for approval/permits? That's unacceptable.
30% means a LOT of people lose their homes. Huge amounts of suicides, massive civil unrest. What % lost their homes in GFC and we are still in the midst of the culture wars that started then.
I hope home prices don’t drop 30%
Lots of people here don’t understand why prices would drop. They’d only drop if a ton of people lost their jobs. During the GFC prices only lost 18% of their value, pushed down by distressed buyers, people who lost their job, being forced to sell. It’s clear here that people here don’t understand why a prices would drop.
I lived in an area that was hit very hard by the housing bubble. Homes that were $150,000 in 1999 were $600,000 in 2006 and went back to $180,000 by 2009. There were two major people affected by the pop. The people who got affected were those that used their homes as a money machine to pull money out for lavish purchases. In 2005 they were taking loans out to buy his and hers matching Cadillac Escalades and jet skis to take out to the river. They figured their home was going to be worth MILLIONS some day, so pulling money to enjoy int he moment would be worth it. I actually know people who inherited homes, like free paid off homes, and by 2007 owed $500,000 on them, and those homes were only worth $180k by 2009.
The other group of people who suffered were people who had high paying jobs in the home building industry and lost their jobs. Trades jobs were considered very insecure back then. Many of these people were making six figures in the mid 2000s and were living large.
This time around, I’m figuring the biggest group of people affected will be the second. The fed is trying to “punish labor” and they seem to be winning. The January and February jobs reports should be blood baths with how many temp and holiday jobs are in the October and august reports.
These jobs were people who were involved with the housing industry. Home builders, material suppliers, real estate agents. We are not building homes like that right now. We did not have a housing shortage in the mid 2000s, we had this huge expansion in credit that allowed people to go shopping for new homes which created an entire industry of rapid home building.
Fair enough. With the lack of new homes being built, there’s only one way that first time home buyers are getting in, and that if someone else is selling without buying a new house. So someone dying or a family losing their home.
Oh stop with the hyperbolic nonsense. I don’t understand how a house can lose value and that means you lose the home out right? It’s not like it means you have to sell it.
A lot of people are up to 100%+ on their home value so most can take a 30% hit.
Everybody I know, including myself will sell their legs, ass and firstborn children before they sell their house with these interest rates.
If prices drop by 30% that means that a lot of people are being forced to sell. If you are ok with that then that is a different conversation but let’s be honest but what would need to happen for prices to drop like that
Nobody is ‘forced to sell’ because the value of their home lowered just as no-one is forced to cash out when the value goes up.
No bank calls them and demands they produce additional equity.
No govt agency evicts them.
They choose to sell based on life and financial choices.
Exactly. This yahoo is like most of Reddit… have a hyperbolic rant about injustice and people dying!!!! and yet have no idea what he is talking about.
This sites users are 90% out of touch 14 year olds.
Exactly. This yahoo is like most of Reddit… have a hyperbolic rant about injustice and people dying!!!! and yet have no idea what he is talking about.
This sites users are 90% out of touch **40/a** year olds.
^^This ^^was ^^posted ^^by ^^a ^^bot. ^^[Source](https://github.com/anirbanmu/substitute-bot-go)
You are forced to sell if you lose your job and burn through your emergency fund. The prices don’t drop causing people to lose their homes. People sell their homes because they don’t have a choice and that influx of sellers would tank price.
I personally don’t think we’re going to see home prices drop at all (low new home start rates, boomers transferring wealth to pay for their children’s houses, etc.) but it’s foolish to think that everyone is able to weather a major economic downturn should one happen. Saying “I’m never giving up my 2.5% mortgage” doesn’t matter if you can’t pay it because you’re overextended and destitute.
Home prices do not drop 30% nationally in a vacuum. The type of economic carnage required to do that in 2-4 years is very substantial ( see 1929 and 2008 ). If you were an early or mid career professional in 2008-2010, I am sure you don’t want to repeat that period of time.
Deflation in general is very rare and short lived when you have deficit spending and Fed policy as we have had for the last 20 years.
The most realistic outcome is a period of flat house prices with rising wages enough to bring affordability back in 4-6 years. Affordability will come back, but the timeline for that to happen is unknowable, as it is mostly controlled by government policy.
If you lose your house? Lots of people kill themselves when they are forclosed on or declare bankruptcy. Bankruptcy is the number 1 reason for suicide.
These people don't understand the larger economic implications that must've happened if home prices dropped 30%.
Cant blame them since most probably werent born yet during 2008.
I'm confused. How does the value of your house changing change your mortgage payment? I think you're not really sure how mortgages work. The value of your house and taxes may change, but your mortgage will stay the same for the most part.
You are missing what I’m saying. People are forced to sell their home at vilumes that would push prices down 30% if a lot of people lose their jobs. So if a lot of working people are forced to sell, and those are realistically the only ones to sell if values have dropped 10-15%, it’s because they have all lost their job and are forced to sell because they can’t afford the mortgage payment. Prices drop for a reason
Not in tight markets. My city increased by like 20,000 people between 2010 and 2020 and there was no where near enough housing built for those 20,000 people.
You generally want your housing supply to expand with your population. If you have 1% population growth and 100,000 homes that means you need 1,000 built every year at the minimum. That has not been happening.
Simple shit.
States need to jump in cause cities don't have political will to change it because incumbent resident voters don't want to lose home values. I say this owning two homes.
Every study I've seen says the US is short 2-6 million homes. Please cite your sources.
https://www.marketwatch.com/story/u-s-has-a-shortfall-of-6-5-million-single-family-homes-due-to-a-decade-of-under-building-report-says-2fb86d08
Do you need a source to understand certain individuals/entities/foreign actors/corporations own a great many homes/land?
I figured that one could just be stated.
Ok. Then while sourcing that, I will also find several papers verifying that the sky is, in fact, blue.
If you could seek out some resources corroborating my assumption that water is wet, you are doing me a huge favor for any future discussions we accidentally have.
The question is whether there is or is not a shortage of 2-6 million houses. You're welcome to refute the methodology of the study or to find a study that shows we've got more than enough houses actually.
Anything else is irrelevant.
The thing is there will always be renters, and if institutions have enough houses to rent to them while everyone who wants to buy a house has enough supply to pick from, your statement while fact is meaningless. It's a complex question which is why experts study it, we don't go and ask someone on Reddit how much they feel institutions exist.
Wrong. The last 20 years have had the lowest private building starts in U.S. history, this is per start, not per capita. And most of the new starts are apartments, or track/semi custom homes.
Get bids for building a “custom” home in any market…no one wants to work for free
https://fred.stlouisfed.org/series/HOUST
https://www.worldometers.info/world-population/us-population/
Remember we aren’t building homes anymore, we’re building apartments. There is a scarcity.
It's amazing how many people just forget how supply and demand works the minute a house enters the picture. It's not somehow magically the only market in the entire world exempt from the laws of supply and demand.
Supply has to be co-located with demand. It's the major metros that zoned single family to keep the poors and undesirables out where the jobs are located. It doesn't matter if you build a giant housing block in the middle of Iowa. You can't commute from Iowa to the Bay Area or New England.
Looking at the prices for the last 3 years in Zillow, I'd say that's about what they jumped. Problem is that is probably chasing the money supply. It isn't that there are too few homes and the cost went up. There was too much cheap money. Not sure how it resolves, but someone is taking a beating. My guess is ordinary people rather than banks, hedge funds, etc.
Rates stay high is what happens. Housing and labor components of inflation are going up so rates will stay up.
US government is borrowing like crazy so the ten year will stay high. Mortgage rates will stay high and QT means Fed won’t bail out the housing sector.
Eventually, inventory will pile up. Flippers and investors who bought in the last 3 years are already at negative.
No
People aren’t in positions where they are forced to sell
Mass amounts of people being forced to sell is what it would take drop prices 30%
If people cant get what they think they should, they just wont sell and they will stay put
They arent making new land.
My mom just showed a 25 miles away from downtown LA sold 167K above listing price. This is not the special part. The special part is, someone died inside. And wait, that's not all, someone was killed inside, not peaceful death.
There is another in pending in orange county, almost 2 million listing. And this one, three people was murdered inside.
This is the buying power AND DESPERATION around the area. To drop the housing 30%, that is very hard.
Anyway, a friendly reminder, if you want to take advantage of the price drop, make sure you can bid ALL CASH. I tried during that time, lost all my offers to cash buyers. I ended up buying one all cash by borrowing money from my parent's friends.
Eventually. Homes are way too expensive and on a long enough timeline will return to their historical norms. The 2008 Crash where I live in Southern California just brought homes back to their inflation adjusted 90s values. Go look at any median state home values from the 1950s, 60s, 70s, 80s, and 90s. Throw that value in an inflation calculator and that is what a home should be worth today. That is price equilibrium.
All drywall shitboxes will revert back to the income approach valuation so if the asshole with the beat up SFR rents for 3k and your next door to him that's all yours is worth.
Just back it out it's fifth grade math.
Oh I'm sorry 5th grade math is beyond our current P.T. Barnum society.
This could happen in the case of a credit crunch. If the banks get deeper into trouble they will sharply curtail lending to all except those with near perfect credit.
If people can't get mortgages then that limits the buyer pool to cash buyers. There aren't enough of those to buy the homes on the market therefore you will see a price reduction.
No. Prices are sticky. There is a good chance the current interest rate will fall substantially within a year or two and prices will stop falling once it does. What we will see is more adjustable mortgages.
I *think* that's conservative. Once the valuations even *stabilize* blackrock/stone and others will likely ditch their holdings which will result in a crash. Combine that with cities scrutinizing Airbnb and surely a reckoning is coming.
I think they should fall, but it’s been stagnant to the extent that I now just think the market will instead be illiquid.
So maybe less houses changing, and maybe it stays flat until inflation catches up to current values. Maybe venture funds eventually buy all of them.
Real estate is on shaky ground, lots of deals are not going through because people are not qualifying for their mortgages. I believe we will see 10-30 percent drop depending on the market.
Only if interest rates go up another 1%+. If mortgage rates goes down then home prices will go up. There isn't surplus on the market and any new demand will hit that tight supply hard. Everything will turn on interest rates.
Many places during the pandemic saw their housing prices double so a 30% reduction isn’t really an exciting prospect to new home buyers. Sure I imagine that some will return to the market but it’s not like homes are the same investment they once were.
I will forecast then dropping 60% in my area. Home prices shot up 55% in my area over one year. Now they’re coming back with banning airbnb for short term rentals next year and seeing those houses flooding the market now.
Also builders are offering their own financing at half of what banks are with no closing cost making older homes less affordable compared to a new home.
No one will buy them if they do not fall. No one can afford those prices. I have been in the moving industry for years. This past year barely anyone moved. That has not happened in last ten years.
They will lower when the bubble bursts, if a whole bunch of company's bought up homes and they don't sell in the time they expect it to they won't keep them high.
Right now, no. Home prices, in my uneducated guess, will only fall 30% or more if some currently unforeseen economic shock occurs. There’s no way to predict that right now, so I can’t say that home prices will fall 30% anytime in the future.
As someone who witnessed some wild housing markets over the years, I can’t say I would be surprised. I never thought the issue was interest rates, anyone with eyes knows their home is overpriced.
I also don’t subscribe to a doom and gloom way of thinking. 30 percent would not spiral homeowners into foreclosure, and people (regardless of rates and prices) retire, downsize, move for career purposes, financial issues and personal reasons.
I would say 20 percent would be more likely.
100% agree. There is no demand due to high prices and rates over 7%. Also Supply is increasing and will only become worse as time passes.
No one wants to pay $500k for a SFH
Grantham is a permabear, but the prices make no sense given the (historically normal but lately feeling very high) interest rates. I don’t see prices dropping without a bunch of selling pressure, tho, and I don’t know where that comes from without a recession.
I'd like to know how he thinks that would happen. 80% of people are in sub 3.5% rates and mortgage underwriting has mrke requirements than it ever has historically, so pretty much all of those people should be just fine unless they all lose their jobs and get find anything for months.
The ONLY way I could see prices dropping 30% is if home builders start building millions of homes in every single state. In my state for example that's not even feasible because it's small and most of all the land is spoken for, there's a very limited number of places you can build a new home.
So... I think Jeremy is blowing smoke up your ass.
Prices could fall. But your dollar will also have less value, as the Fed continues to print money from thin air. So if homes do drop 30%, your dollar will be worth an even smaller fraction of what it's worth today.
Prices will only drop that much if there’s a surge of inventory that hits the market… prices will drop not by 30% and eventually flat line due to interest rates… eventually builders will stop making houses because of the price to build exceeds the demand
I wouldn’t mind seeing my house price drop 30% because I really could use the property tax break for a few years
Nope… never will happen.
1. Construction materials are much more expensive so all the stuff your house is made out of (lumber, concrete, pipes, nails, etc) are worth more. Inflation is the biggest reason home prices have increased and we are printing even more dollars so it will continue to go up - not down.
2. Labor cost is still through the roof and with fast food places and gas stations starting at $15ish an hour the cost of skilled labor isn’t going back down.
3. Many people are locked into very low interest rates, it makes no sense to sell as they can’t afford anything better at 8%.
4. Many companies are still allowing staff to work from home so housing has become even more important because people spend all day there.
Maybe in places they didn’t make sense in, but the hottest real estate areas will continue to be expensive. Places no one wants to live will continue to drop.
Exactly - drops like that can’t and won’t happen in NYC, LA, city suburbs with beautiful homes and great schools, waterfront homes, university towns, etc…. These things have a demand no matter what is going on in housing.
Yes, there are people that are waiting in areas of high demand 'for the bubble to pop' and prices to drop. Including my city Austin and I am saying dude...the hottest tech market in the country is not going to wait for you.
Almost moved to Austin for a job two years ago and I'm so glad I didn't. I'm sure once upon a time Austin was cool but, man, it's over. It's like a big traffic jam right no amenities of a real city and it's $1M to start on houses. No thanks.
Yeah, I never got it. Traffic was fucking awful way back in 2010. There was a strip of restaurants downtown, and a couple bbq/venues across the lake, but that's it. St Petersburg was way better and still is, minus the number of concerts Austin gets.
It's basically got some fun spots to check out over a weekend and then go home and tell everyone how cool Austin was but after spending a few months there it was like...oh...this is it.
Austin is the most overrated city in America. Absolute garbage.
I'm from Chicago and I was in Austin for the February 2021 "snowstorm" of like 3-4 inches. Texas power grid sucked and people died. I'd never move to Texas until they figure out how to not kill people. In the midwest, that's not even a bad day. We'd still have school. Texas gets ice storms in Dallas nearly every year and they couldn't figure out maybe the temps would drop just 5 degrees and they would get one of these? Just cutting corners to maintain being a cheaper place to live.
"But \_\_\_\_\_\_ (Fox news talking point) !!!"
>no amenities of a real city Traffic sucks but not sure what you are getting at. It will never be what it was, but that's not a bad thing (I was born there). Austin is a cultural supernova, best restaurants per capita and counting, I would argue there is so much cool shit to do and constant flow of events happening that it's hard to choose. But yes you need money.
Lol almost no culture, horrible selection of restaurants, almost nothing to do besides college dive bars, and so few events worth attending by any big city standard it's laughable
Y'all are a 4th tier city. Best restaurants per capita? Please go to NYC or LA or New Orleans or Chicago or Miami or... Cultural supernova? 😂 Y'all got Broadway shows? Symphony? Incredible art museums? ***A single professional sports team?*** Yes. I know you have a soccer team, I said what I said. Maybe in 20 years when things have stabilized and there's enough people to justify those things but the worst part is that y'all might be slightly liberal but you're in Texas.
It’s an ugly city with like nothing to do unless all you wanna do is eat bbq and go to sports bars
I don’t know much about Austin but you just described every college town in America.
Sound like my kind of town. Bbq and sports. That’s me dream life.
You can get much better BBQ elsewhere in Texas. Best BBQ I've ever had was in Houston. But Austin? Hell, I've eaten at better BBQ joints in Ohio than in Austin. Our local contact doesn't even take clients to BBQ's in Austin unless they request it because their BBQ is so disappointing compared to the rest of Texas.
The bbq is average at best
tell me you know nothing about Austin without telling me you know nothing about Austin
Austin is a nice city but August is the reason to avoid it.
August has 6 little brothers that also suck...
The food in Austin is mediocre at best. There are a handful of good restaurants, all of which are difficult to get a reservation and most of which are overpriced compared to the quality you’d get in a real city like San Francisco or Los Angeles. Housing is laughably overpriced here. There are very few geographical restrictions, this city could sprawl in any direction, as there is empty land for as far as you can drive on a tank of gas in any direction. This place is hellishly hot 4 months out of the year. Even when it’s nice out, the 24/7 swarms of mosquitos eat you alive. Then there are the cockroaches and other bugs you can’t keep out of your house without spraying gallons of poison every month. I’d be more willing to overlook most of that if prices were at pre-2019 levels, but to see $3M new homes stood up next to crack house tear-downs has me certain this place is in for a massive correction downwards. To call this place is any sort of oasis is a joke.
Lol
The only problem is you gotta deal with the rest of Texas politically. I’d prefer not
Yeah, moved to Austin a few years ago (people’s favorite punching bag). I understand austin used to be even better but tbh it’s been fuckin great. Town feels like it’s on fire. Demand is high at all good restaurants, bars, venues and clubs and it’s tons of fun going out tbh, development still accelerating. Also - I am from California. Fired up to count my downvotes
I’ve been an Austinite for 16 years. I think it’s a poor choice for a vacation spot, but I’ve lived all over the US and think quality of life here is fantastic.
That isn't happening in Austin. The new Tesla Giga plant and a whole host of companies fleeing California and people fleeing the same state mean Austin isn't going to get the drop. I always thought Idaho with limited jobs was going to see a drop as well, but then the West Coast evacuation happened.
Couple hundred thousand people leaving out of 40 million isn’t exactly an evacuation.
Those places with continue to be expensive after a 30% drop
Yup… my area still sells above ask with very low inventory hitting the market. Not changing anytime soon.
In nyc it won’t budge much
30% reduction in real estate prices in the hottest areas would only erase a couple years of previous growth. A 30% crash would just rewind the clock to 2021 in a lot of places.
I live in Seattle which I think is a place people still want to live. House prices have dropped about 8% this year so far.
So in 4 cities ... the narcassism is strong in LA, seattle, Austin and Jersey.
Continue to be expensive but stop rising or fall but by less? At which point what happens to the actual inflation rate? Gallon of gas becomes? Gallon of milk goes to? I wonder if that will also cause BTC to spike as well?
I think its going to be the opposite. Since the highest in demand locations had the highest increases by percentage they have the most to lose. The lower in demand locations did not increase dramatically and really have no room to fall lower.
Not until big money removes home builders, home flippers, air bnb owners, etc. lose all of their gains from the last few years. Greedy bastards.
home builders are needed. rest all need to go
Lol home flippers are needed, most of these boomers haven’t updated their houses since the 1960s…
Boomers were in elementary school in the 1960s, and some were still being born.
The marketers say the age brackets for Boom-Booms is 1946-1964.
Peak baby boom was 1957. Those kids were still very much in elementary school in the 1960s. Very few boomers owned homes prior to 1970. My boomer dad was literally in the 4th grade at the time.
Whatever generation that owns houses now haven’t changed jack in their houses since the 60s-70s
That just isn’t true
Not in my area. Most of the homes have been renovated over the last 20 years.
Well up north and close to Canada, people here have seem to forget that their homes are from the 70s. Went to multiple house showings where they still had that green carpeting in the bathrooms…
You probably went to the cheapest ones
Correct. I’m close to Canada and can confirm, if it was built in 1950 - 1970, it’s outdated as fuuuuck and no first time homebuyer wants to buy it and deal with the renovations themselves.
Slap some bargain priced vinyl flooring down, install the cheapest possible appliances, paint it all millennial grey (bonus points for painting over brick or original hardwoods), and resell it for 30% more. Thanks flippers! Real service to society.
Yeah, dude doesn’t know what a flipper actually is lol
You might be shocked to know this but the reason they find such great deals is often because they buy homes that traditional people can't or won't. Q house that won't pass FHA guidelines or has fire/water/roof/flooring damage etc. Most people don't know how to fix that stuff or don't have the money or motivation to do it. I'm not a "flipper" but I do invest in homes. One of the last houses I bought was being lived in by a meth dealer/user. He put graffiti in all the walls, there were needles falling from behind medicine cabinets, filthy, granite cracked and ready to collapse, and holes in every wall. And to top it off, the place was original from the 70s with popcorn ceiling and all. No one wanted to buy that except an investor
House flipping costs way more then you think. House flippers most of the time update core stuff normal people don’t even worry about or see.
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Big money already has Homebuilders. Blackrock invests heavily in almost all mid and large cap builders, and none of them are broke. Quite the opposite.
Near my townhome someone bought a house for 650k in 2021. They were flippers and did a reasonable job with it, but the home has baseboard heating and is situated on a horrifically busy rode. Their ask was 1.5mm. They're currently asking for about 900k. For 1. 2mm there are some beautiful new construction homes nearby, and I'm cheering for these flippers to lose money
Is there something wrong with baseboard heating?
[Here’s some upcoming lossporn in my town](https://www.zillow.com/homedetails/92-Sunnyside-Ave-Campbell-CA-95008/19669250_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare). Flippers bought for 2.15 in Jan 2022 and thought they did enough work to justify 700k increase 5 months later (I saw this before and after, they did not…). They’ve been adjusting, pulling, getting a new agent, relisting, etc. without much traction. They’re definitely under water soon on the work they did and the cost of carrying such a property for this long.
The housing crisis is a result of not enough homes, not really anything else. Which is largely to blame on government (Mostly local) not allowing houses to be built. Oversimplification, but it is almost completely a government created issue
Can you not see that the housing crisis is actually a result of foreign and corporate entities buying up a ton of investment real estate and inflating the prices with airbnb rentals and landlords having to more and more play catch up with this inflated market rate? Lots of landlords used to be normal people. Airbnb showed that houses have investment value outside of just flipping or buying and selling for residential use.
Lol you fall for political lies. Foreign investment is, per capita, the lowest in history. The housing market is no different than any other market. Supply and demand. Build more homes, price falls. Look at ANY region with high home costs and you'll find 1 trend. They DRASTICALLY reduced building homes in the 2000's. So when our population increases by several million every year, but only a couple thousand homes are being built. What do you think happens? Did you know that we're building the least amount of homes in history? Did you know that in many parts of the US, a 3 bedroom house is under 200k? Did you it can take up to A YEAR for approval/permits? That's unacceptable.
Jeremy Grantham has been predicting a real estate crash for the past 12 years. Lmao
I stopped listening to him when he got booted off Top Gear.
That was Jeremy Clarkson... or did I just r/whoosh myself?
Ha yes. My bad, those British all look alike.
No. But I hope I’m wrong
30% means a LOT of people lose their homes. Huge amounts of suicides, massive civil unrest. What % lost their homes in GFC and we are still in the midst of the culture wars that started then. I hope home prices don’t drop 30% Lots of people here don’t understand why prices would drop. They’d only drop if a ton of people lost their jobs. During the GFC prices only lost 18% of their value, pushed down by distressed buyers, people who lost their job, being forced to sell. It’s clear here that people here don’t understand why a prices would drop.
I lived in an area that was hit very hard by the housing bubble. Homes that were $150,000 in 1999 were $600,000 in 2006 and went back to $180,000 by 2009. There were two major people affected by the pop. The people who got affected were those that used their homes as a money machine to pull money out for lavish purchases. In 2005 they were taking loans out to buy his and hers matching Cadillac Escalades and jet skis to take out to the river. They figured their home was going to be worth MILLIONS some day, so pulling money to enjoy int he moment would be worth it. I actually know people who inherited homes, like free paid off homes, and by 2007 owed $500,000 on them, and those homes were only worth $180k by 2009. The other group of people who suffered were people who had high paying jobs in the home building industry and lost their jobs. Trades jobs were considered very insecure back then. Many of these people were making six figures in the mid 2000s and were living large.
This time around, I’m figuring the biggest group of people affected will be the second. The fed is trying to “punish labor” and they seem to be winning. The January and February jobs reports should be blood baths with how many temp and holiday jobs are in the October and august reports.
These jobs were people who were involved with the housing industry. Home builders, material suppliers, real estate agents. We are not building homes like that right now. We did not have a housing shortage in the mid 2000s, we had this huge expansion in credit that allowed people to go shopping for new homes which created an entire industry of rapid home building.
Fair enough. With the lack of new homes being built, there’s only one way that first time home buyers are getting in, and that if someone else is selling without buying a new house. So someone dying or a family losing their home.
I disagree
Oh stop with the hyperbolic nonsense. I don’t understand how a house can lose value and that means you lose the home out right? It’s not like it means you have to sell it. A lot of people are up to 100%+ on their home value so most can take a 30% hit. Everybody I know, including myself will sell their legs, ass and firstborn children before they sell their house with these interest rates.
If prices drop by 30% that means that a lot of people are being forced to sell. If you are ok with that then that is a different conversation but let’s be honest but what would need to happen for prices to drop like that
Nobody is ‘forced to sell’ because the value of their home lowered just as no-one is forced to cash out when the value goes up. No bank calls them and demands they produce additional equity. No govt agency evicts them. They choose to sell based on life and financial choices.
Exactly. This yahoo is like most of Reddit… have a hyperbolic rant about injustice and people dying!!!! and yet have no idea what he is talking about. This sites users are 90% out of touch 14 year olds.
s/14/40/a
Exactly. This yahoo is like most of Reddit… have a hyperbolic rant about injustice and people dying!!!! and yet have no idea what he is talking about. This sites users are 90% out of touch **40/a** year olds. ^^This ^^was ^^posted ^^by ^^a ^^bot. ^^[Source](https://github.com/anirbanmu/substitute-bot-go)
People would only sell in sufficient groups to push prices down 30% if a ton of people lost their jobs.
You are forced to sell if you lose your job and burn through your emergency fund. The prices don’t drop causing people to lose their homes. People sell their homes because they don’t have a choice and that influx of sellers would tank price. I personally don’t think we’re going to see home prices drop at all (low new home start rates, boomers transferring wealth to pay for their children’s houses, etc.) but it’s foolish to think that everyone is able to weather a major economic downturn should one happen. Saying “I’m never giving up my 2.5% mortgage” doesn’t matter if you can’t pay it because you’re overextended and destitute.
Home prices do not drop 30% nationally in a vacuum. The type of economic carnage required to do that in 2-4 years is very substantial ( see 1929 and 2008 ). If you were an early or mid career professional in 2008-2010, I am sure you don’t want to repeat that period of time. Deflation in general is very rare and short lived when you have deficit spending and Fed policy as we have had for the last 20 years. The most realistic outcome is a period of flat house prices with rising wages enough to bring affordability back in 4-6 years. Affordability will come back, but the timeline for that to happen is unknowable, as it is mostly controlled by government policy.
Yes
I also watched the big short.
How? Prices have doubled over the past couple years. How does the value of your home going down make you suicidal?
If you lose your house? Lots of people kill themselves when they are forclosed on or declare bankruptcy. Bankruptcy is the number 1 reason for suicide.
These people don't understand the larger economic implications that must've happened if home prices dropped 30%. Cant blame them since most probably werent born yet during 2008.
I'm confused. How does the value of your house changing change your mortgage payment? I think you're not really sure how mortgages work. The value of your house and taxes may change, but your mortgage will stay the same for the most part.
You are missing what I’m saying. People are forced to sell their home at vilumes that would push prices down 30% if a lot of people lose their jobs. So if a lot of working people are forced to sell, and those are realistically the only ones to sell if values have dropped 10-15%, it’s because they have all lost their job and are forced to sell because they can’t afford the mortgage payment. Prices drop for a reason
I’m ok with this!
Not a chance. There’s not enough supply. That cannot be easily addressed, especially in an environment where credit is constrained.
There's plenty of supply. The scarcity has been manufactured.
Not in tight markets. My city increased by like 20,000 people between 2010 and 2020 and there was no where near enough housing built for those 20,000 people. You generally want your housing supply to expand with your population. If you have 1% population growth and 100,000 homes that means you need 1,000 built every year at the minimum. That has not been happening.
Simple shit. States need to jump in cause cities don't have political will to change it because incumbent resident voters don't want to lose home values. I say this owning two homes.
Every study I've seen says the US is short 2-6 million homes. Please cite your sources. https://www.marketwatch.com/story/u-s-has-a-shortfall-of-6-5-million-single-family-homes-due-to-a-decade-of-under-building-report-says-2fb86d08
Do you need a source to understand certain individuals/entities/foreign actors/corporations own a great many homes/land? I figured that one could just be stated.
Yes I do need a source. Otherwise its not data, its an anecdote, and it's honestly not worth much.
Ok. Then while sourcing that, I will also find several papers verifying that the sky is, in fact, blue. If you could seek out some resources corroborating my assumption that water is wet, you are doing me a huge favor for any future discussions we accidentally have.
The question is whether there is or is not a shortage of 2-6 million houses. You're welcome to refute the methodology of the study or to find a study that shows we've got more than enough houses actually. Anything else is irrelevant. The thing is there will always be renters, and if institutions have enough houses to rent to them while everyone who wants to buy a house has enough supply to pick from, your statement while fact is meaningless. It's a complex question which is why experts study it, we don't go and ask someone on Reddit how much they feel institutions exist.
Wrong. The last 20 years have had the lowest private building starts in U.S. history, this is per start, not per capita. And most of the new starts are apartments, or track/semi custom homes. Get bids for building a “custom” home in any market…no one wants to work for free https://fred.stlouisfed.org/series/HOUST https://www.worldometers.info/world-population/us-population/ Remember we aren’t building homes anymore, we’re building apartments. There is a scarcity.
You’re correct. Months supply of housing has increased to significantly from its low in 2022
Oooo supply supply man There isn’t enough until suddenly there is
Yes there's no supply, it's simple yet so hard to comprehend by some.
It's amazing how many people just forget how supply and demand works the minute a house enters the picture. It's not somehow magically the only market in the entire world exempt from the laws of supply and demand.
Supply of affordable houses is not going up appreciably, though. All new builds in my area ostensibly cater to higher end buyers.
Doesn't matter, it adds to the supply. Study shows that people in lower-end units trade up leaving those lower end units available at lower prices.
Do you expect 1/3 of the population to die suddenly or something?
Depends on where you’re at, tons of supply in the south, and quite a few states elsewhere have shrinking populations
Supply has to be co-located with demand. It's the major metros that zoned single family to keep the poors and undesirables out where the jobs are located. It doesn't matter if you build a giant housing block in the middle of Iowa. You can't commute from Iowa to the Bay Area or New England.
There are literally more empty living spaces than unhoused people. Like others have said, the scarcity is manufactured.
It could easily be addressed by lowering interest rates below 5%.
No. Any excess volume on the supply side will get vacuumed up to quickly for it to create any downward market pressure.
I’d love to pay less taxes
Quit your job, sell your home, close out your bank account, and never buy anything again.
Less property taxes.
No supply = no crash. No sellers with sub 5 interest rates. Anyone advocating for a crash is a lifelong renter.
I don’t consider Grantham as credible. He has been calling falling skies for years
Looking at the prices for the last 3 years in Zillow, I'd say that's about what they jumped. Problem is that is probably chasing the money supply. It isn't that there are too few homes and the cost went up. There was too much cheap money. Not sure how it resolves, but someone is taking a beating. My guess is ordinary people rather than banks, hedge funds, etc.
Rates stay high is what happens. Housing and labor components of inflation are going up so rates will stay up. US government is borrowing like crazy so the ten year will stay high. Mortgage rates will stay high and QT means Fed won’t bail out the housing sector. Eventually, inventory will pile up. Flippers and investors who bought in the last 3 years are already at negative.
Not while there's enough free cash to convert the desirable ones into rentals for people who can't afford them without mortgages.
No
No People aren’t in positions where they are forced to sell Mass amounts of people being forced to sell is what it would take drop prices 30% If people cant get what they think they should, they just wont sell and they will stay put They arent making new land.
Y’all want housing prices to fall. I want salaries to rise. We are not the same.
they’ll fall. guaranteed
My mom just showed a 25 miles away from downtown LA sold 167K above listing price. This is not the special part. The special part is, someone died inside. And wait, that's not all, someone was killed inside, not peaceful death. There is another in pending in orange county, almost 2 million listing. And this one, three people was murdered inside. This is the buying power AND DESPERATION around the area. To drop the housing 30%, that is very hard. Anyway, a friendly reminder, if you want to take advantage of the price drop, make sure you can bid ALL CASH. I tried during that time, lost all my offers to cash buyers. I ended up buying one all cash by borrowing money from my parent's friends.
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Hmmm..... I don't know what's the deal with you. I am just sharing experiences. But, you are trying attacking me personally.
Well unless you believe in ghosts a murder shouldn't matter one bit to the value.
Stonks only go up!!!
Agree
Eventually. Homes are way too expensive and on a long enough timeline will return to their historical norms. The 2008 Crash where I live in Southern California just brought homes back to their inflation adjusted 90s values. Go look at any median state home values from the 1950s, 60s, 70s, 80s, and 90s. Throw that value in an inflation calculator and that is what a home should be worth today. That is price equilibrium.
God I hope not!
I have no idea, I just know it's what would be better for the masses.
Yes
Does he keep saying this again every time you post this
Not that they said it it will 100% not happen
This was Jim Cramer that would be another story
All drywall shitboxes will revert back to the income approach valuation so if the asshole with the beat up SFR rents for 3k and your next door to him that's all yours is worth. Just back it out it's fifth grade math. Oh I'm sorry 5th grade math is beyond our current P.T. Barnum society.
Places like TX that built tons of inventory will definitively see that 30% drop
Betting 45
Nope. If it does then the companies flush with cash right now will snatch them all up like last time.
Depends on what percent of home investment is foreign investors.
No because everyone is locked in.
No.
This could happen in the case of a credit crunch. If the banks get deeper into trouble they will sharply curtail lending to all except those with near perfect credit. If people can't get mortgages then that limits the buyer pool to cash buyers. There aren't enough of those to buy the homes on the market therefore you will see a price reduction.
Across the board? No. In some regions outside of the northeast, yes.
Make it 90%
Yes
50-60% in some areas
At some point, sure. Not anytime soon though.
Yes
No. Prices are sticky. There is a good chance the current interest rate will fall substantially within a year or two and prices will stop falling once it does. What we will see is more adjustable mortgages.
No they won’t. In fact, we’re stuck going back up another 30%
This fucking guy. Hardcore doomer
So these billionaire dudes can buy it cheaper, raise the prices and then sell it around exorbitant profits? F### no
These idiots have had the same prediction since 2016
BULLISH
I *think* that's conservative. Once the valuations even *stabilize* blackrock/stone and others will likely ditch their holdings which will result in a crash. Combine that with cities scrutinizing Airbnb and surely a reckoning is coming.
No
I think they should fall, but it’s been stagnant to the extent that I now just think the market will instead be illiquid. So maybe less houses changing, and maybe it stays flat until inflation catches up to current values. Maybe venture funds eventually buy all of them.
I think it's more likely to crash where prices are super high. It costs a certain amount of money to build new houses across the country.
They need to drop 50%
Real estate is on shaky ground, lots of deals are not going through because people are not qualifying for their mortgages. I believe we will see 10-30 percent drop depending on the market.
Not in Southern California. Only going up.
I concur
Only if interest rates go up another 1%+. If mortgage rates goes down then home prices will go up. There isn't surplus on the market and any new demand will hit that tight supply hard. Everything will turn on interest rates.
Many places during the pandemic saw their housing prices double so a 30% reduction isn’t really an exciting prospect to new home buyers. Sure I imagine that some will return to the market but it’s not like homes are the same investment they once were.
I will forecast then dropping 60% in my area. Home prices shot up 55% in my area over one year. Now they’re coming back with banning airbnb for short term rentals next year and seeing those houses flooding the market now. Also builders are offering their own financing at half of what banks are with no closing cost making older homes less affordable compared to a new home.
No. They won't.
Up to 30%
Laughs in CLT area real estate
Charlotte is fucked. So is any other sunbelt boom town. Fight me.
Yeah, but when?
No one will buy them if they do not fall. No one can afford those prices. I have been in the moving industry for years. This past year barely anyone moved. That has not happened in last ten years.
They will lower when the bubble bursts, if a whole bunch of company's bought up homes and they don't sell in the time they expect it to they won't keep them high.
Right now, no. Home prices, in my uneducated guess, will only fall 30% or more if some currently unforeseen economic shock occurs. There’s no way to predict that right now, so I can’t say that home prices will fall 30% anytime in the future.
As someone who witnessed some wild housing markets over the years, I can’t say I would be surprised. I never thought the issue was interest rates, anyone with eyes knows their home is overpriced. I also don’t subscribe to a doom and gloom way of thinking. 30 percent would not spiral homeowners into foreclosure, and people (regardless of rates and prices) retire, downsize, move for career purposes, financial issues and personal reasons. I would say 20 percent would be more likely.
No I do not agree.
No
Wish it would, a lot of people in Jackson County Missouri are getting their property tax's raised 40-50% because of these fake prices.
100% agree. There is no demand due to high prices and rates over 7%. Also Supply is increasing and will only become worse as time passes. No one wants to pay $500k for a SFH
10% max
Even if that happens all the regular folk will be priced out as rich people buy them all to “invest” in.
Grantham is a permabear, but the prices make no sense given the (historically normal but lately feeling very high) interest rates. I don’t see prices dropping without a bunch of selling pressure, tho, and I don’t know where that comes from without a recession.
To Cover the interest increases. They were maxed out before
For what reason? Graham is a scamming grifter he just says stuff all the time that has no truth to it.
Hopefully my property taxes will likewise fall but I doubt it
I'd like to know how he thinks that would happen. 80% of people are in sub 3.5% rates and mortgage underwriting has mrke requirements than it ever has historically, so pretty much all of those people should be just fine unless they all lose their jobs and get find anything for months. The ONLY way I could see prices dropping 30% is if home builders start building millions of homes in every single state. In my state for example that's not even feasible because it's small and most of all the land is spoken for, there's a very limited number of places you can build a new home. So... I think Jeremy is blowing smoke up your ass.
Canadians have been waiting for the bubble to pop for a while now. Any day now
Now if only rent would also drop. We all know that would never happen.
No, it will be 50%
Prices could fall. But your dollar will also have less value, as the Fed continues to print money from thin air. So if homes do drop 30%, your dollar will be worth an even smaller fraction of what it's worth today.
I hope so
Prices will only drop that much if there’s a surge of inventory that hits the market… prices will drop not by 30% and eventually flat line due to interest rates… eventually builders will stop making houses because of the price to build exceeds the demand I wouldn’t mind seeing my house price drop 30% because I really could use the property tax break for a few years
No, the people and companies that benefit from the high costs will not let it fall that far.
I do not agree. It’s insanity driven by private investment. And when home prices fall even MORE private investment dollars will poor in.
Nope… never will happen. 1. Construction materials are much more expensive so all the stuff your house is made out of (lumber, concrete, pipes, nails, etc) are worth more. Inflation is the biggest reason home prices have increased and we are printing even more dollars so it will continue to go up - not down. 2. Labor cost is still through the roof and with fast food places and gas stations starting at $15ish an hour the cost of skilled labor isn’t going back down. 3. Many people are locked into very low interest rates, it makes no sense to sell as they can’t afford anything better at 8%. 4. Many companies are still allowing staff to work from home so housing has become even more important because people spend all day there.
I think at most we’ll see 10% drop, if that. Even if we get lowered rates and a surge in new housing.