Housing prices

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doodle
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Housing prices

Post by doodle » Tue Sep 29, 2020 7:59 am

Housing is another area that has gone completely bonkers again. Somehow I think the banks are partly to blame. Credit and lending seem to drive up prices on everything...cars, college tuition. This graph from UK but my guess is same applies to United States.

Whether it's rising tuition costs, housing costs, healthcare costs..I don't buy into picture that our system is really functioning well.
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doodle
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Re: Housing prices

Post by doodle » Tue Sep 29, 2020 12:44 pm

How does one explain the graph then where housing stock and population seem to be in lockstep while prices have gone bananas? It seems like housing has caught a speculative bubble again. Frankly, I think our system of credit is partly to blame. Being able to stretch payments out over 30 to 50 years is not only extremely profitable for banks but it allows prices to increase tremendously....in the same way that student loans allowed colleges to jack up tuition prices. There is no incentive to hold down costs if people are willing to become debt slaves and banks are given the ability to create loans at whim. All of this strikes me as unsustainable. The complexity of our financial system seems to be an unfolding disaster.
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Re: Housing prices

Post by Xan » Tue Sep 29, 2020 12:51 pm

doodle wrote:
Tue Sep 29, 2020 12:44 pm
How does one explain the graph then where housing stock and population seem to be in lockstep while prices have gone bananas? It seems like housing has caught a speculative bubble again. Frankly, I think our system of credit is partly to blame. Being able to stretch payments out over 30 to 50 years is not only extremely profitable for banks but it allows prices to increase tremendously....in the same way that student loans allowed colleges to jack up tuition prices. There is no incentive to hold down costs if people are willing to become debt slaves and banks are given the ability to create loans at whim. All of this strikes me as unsustainable. The complexity of our financial system seems to be an unfolding disaster.
Here I'm in complete agreement with you, doodle. The financialization of everything is a major problem.
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Re: Housing prices

Post by Tortoise » Tue Sep 29, 2020 1:03 pm

What are the units of the vertical axis, and why are population and housing supply plotted against the same vertical axis as housing prices and lending secured on dwellings? All four of those things aren't measured in units of money.
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Re: Housing prices

Post by WiseOne » Tue Sep 29, 2020 1:05 pm

Depends where you are....

People are fleeing big cities in droves. They're scared of COVID and think they are safer in a house in the suburbs than in a city apartment or neighborhood. Plus they're tired of being faced with COVID lockdowns, mask mandates etc the moment they walk out their front door. The crime spike, riots, and anticipated tax increases may also be a factor. So are super low interest rates. It's all about supply and demand, Doodle. Houses in my mom's neighborhood in NJ are being snapped up in a matter of days, usually with some pretty stiff bidding wars.

No tech I'm still not considering leaving myself. I think taking the long view is the way to go. Eventually this will all be in the rearview mirror and people will come back to the cities. Even if mayors like DeBlasio continue their destructive rampages, the damage won't be permanent. In a way I hope he does so, because it will make it that much more likely that the next mayor will be Republican. It happened before when Rudy Giuliani was elected, and it'll be that much easier this time around because the recipe book for pleasant, safe cities has already been written. There's no need to let things get as far out of hand as they did in the 1970s/early 80s.
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Re: Housing prices

Post by Kriegsspiel » Tue Sep 29, 2020 4:53 pm

tomfoolery wrote:
Tue Sep 29, 2020 1:20 pm
3, government offers VA and FHA programs with 0% to 3% down payment and the rest is guaranteed by government if homeowner defaults. This means more unqualified people can buy homes which drives up demand since demand isn’t just based in desire but also ability to buy, which these govt programs allow.
Your other points may be good, but you're wrong about VA loans (well, maybe wrong to lump them in with FHA loans). The government doesn't guarantee the whole loan to the lender. VA borrowers are generally more qualified, not less, because of the VA loan lending criteria. So your last sentence is wrong because it would imply that the VA borrowers are the unqualified people, when a quick search would have shown that VA loans have the lowest foreclosure rate of all (again, the lending criteria). I'm sure there are unqualified people who are able to access the mortgage markets and drive up housing costs unnaturally, but it's not the VA borrowers.
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Re: Housing prices

Post by Kriegsspiel » Tue Sep 29, 2020 5:43 pm

tomfoolery wrote:
Tue Sep 29, 2020 5:15 pm
You're the second person to tell me that this week. The reason I am skeptical of this is that if these people were more qualified and thus safer bets, why does the government need to be involved in the lending process? Wouldn't banks be thrilled to lend to super qualified people that are less likely to default?
I believe that back when the VA loan program was initiated, mortgages were harder to get and had worse terms than they do nowadays (for instance, high down payments & balloon payments), so it was a bigger perk of military service than it is today, though it still has some nice features. Today, people who qualify for a VA loan also qualify for other loans. I'm not sure if that was the case back in the beginning, but the government isn't operating a program that allows unqualified military people to crowd into the market.
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Re: Housing prices

Post by I Shrugged » Tue Sep 29, 2020 6:17 pm

I know a young married couple, one of them just got a high paying professional job, the other has a very ordinary job. They have only been renters but have good credit. They are buying a house just under $400k, and got a 30 year mortgage at 2.75%.
Holy crap. I remember when... oh never mind.

I told them to ignore all of the advice to pay extra or early. In a few years I think that mortgage will seem like stealing.
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Re: Housing prices

Post by I Shrugged » Tue Sep 29, 2020 6:19 pm

I agree with doodle and Xan. Financialization is really what is creating the huge wealth gap too.

People with the means can borrow money for nothing and put it to work. The hedge funds and banksters have a license to deal.
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Re: Housing prices

Post by doodle » Tue Sep 29, 2020 6:48 pm

It's just obnoxious that a basic necessity of life is being turned into an investment vehicle. I can't fathom how anyone comes to terms with plunking down more than a half million dollars for a crapshack somewhere...then again I can't understand how people spend 60k for a pickup truck either. In both cases financing is driving these price increases. It really sucks for people who have taken the responsible route of saving and spending within their means. How do skyrocketing housing prices benefits society anyways? Why don't we just drive speculative price increases into food and clothing as well..wouldnt that be great :o .
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Re: Housing prices

Post by Kriegsspiel » Tue Sep 29, 2020 9:26 pm

doodle wrote:
Tue Sep 29, 2020 6:48 pm
It's just obnoxious that a basic necessity of life is being turned into an investment vehicle.
It's been the case since we stopped being nomadic hunter gatherers, so no biggie there.
I can't fathom how anyone comes to terms with plunking down more than a half million dollars for a crapshack somewhere...then again I can't understand how people spend 60k for a pickup truck either.
Hey, YOU'RE the one who decided you liked living out West during your walkabout ;D That's where you buy crapshacks for $500k. You know you can get a great house for like $50,000 or $60,000 in a lot of the country.
In both cases financing is driving these price increases. It really sucks for people who have taken the responsible route of saving and spending within their means. How do skyrocketing housing prices benefits society anyways? Why don't we just drive speculative price increases into food and clothing as well..wouldnt that be great :o .
I agree with you there. Well, except for the part about it sucking for those of us who saved up and paid cash; I don't feel like I got a raw deal at all. Unless really desirable places put in controls on who can buy real estate (like New Zealand has done), people are going to bid up those prices on a global level.
You there, Ephialtes. May you live forever.
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Re: Housing prices

Post by doodle » Tue Sep 29, 2020 9:30 pm

Kriegsspiel wrote:
Tue Sep 29, 2020 9:26 pm
doodle wrote:
Tue Sep 29, 2020 6:48 pm
It's just obnoxious that a basic necessity of life is being turned into an investment vehicle.
It's been the case since we stopped being nomadic hunter gatherers, so no biggie there.
I can't fathom how anyone comes to terms with plunking down more than a half million dollars for a crapshack somewhere...then again I can't understand how people spend 60k for a pickup truck either.
Hey, YOU'RE the one who decided you liked living out West during your walkabout ;D That's where you buy crapshacks for $500k. You know you can get a great house for like $50,000 or $60,000 in a lot of the country.
In both cases financing is driving these price increases. It really sucks for people who have taken the responsible route of saving and spending within their means. How do skyrocketing housing prices benefits society anyways? Why don't we just drive speculative price increases into food and clothing as well..wouldnt that be great :o .
I agree with you there. Well, except for the part about it sucking for those of us who saved up and paid cash; I don't feel like I got a raw deal at all. Unless really desirable places put in controls on who can buy real estate (like New Zealand has done), people are going to bid up those prices on a global level.
Yeah after the fires this summer I've reconsidered options. Am looking farther east around great lakes.
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Re: Housing prices

Post by Kriegsspiel » Tue Sep 29, 2020 9:43 pm

doodle wrote:
Tue Sep 29, 2020 9:30 pm

Yeah after the fires this summer I've reconsidered options. Am looking farther east around great lakes.
Yea that's what I was thinking. I mean, you can buy cheap property down South, but goddamn it's like living in a sauna half the year. Mark might like it but I hated it. #RustBeltFTW
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Re: Housing prices

Post by doodle » Tue Sep 29, 2020 9:58 pm

Yeah I'm bullish on the rust belt. I think climate change migration is going to be a thing. Will be exploring Michigan and northeast next spring, and after watching this debate am considering Canada as well. :P
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Re: Housing prices

Post by Mark Leavy » Tue Sep 29, 2020 10:36 pm

doodle wrote:
Tue Sep 29, 2020 9:58 pm
Yeah I'm bullish on the rust belt. I think climate change migration is going to be a thing. Will be exploring Michigan and northeast next spring, and after watching this debate am considering Canada as well. :P
doodle, I've been driving all over the country this year.
If you're not already financially independent, you don't want to live in the rust belt.

It's beautiful country and the people are great. But it is a long ways from recovering.
But... I do recommend visiting. Well worth it.

Mark
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Re: Housing prices

Post by doodle » Wed Sep 30, 2020 9:28 am

MangoMan wrote:
Wed Sep 30, 2020 6:47 am
doodle wrote:
Tue Sep 29, 2020 9:30 pm


Yeah after the fires this summer I've reconsidered options. Am looking farther east around great lakes.
Pro tip: Not IL
Yeah parents recently drove back from a visit out west here and had good things to say about every state except that one.
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Re: Housing prices

Post by doodle » Wed Sep 30, 2020 9:31 am

Anyone spent anytime in the upper peninsula of Michigan or far northern reaches of northeast? Any areas stand out as affordable with decent job market? Vermont seems pretty cool in that everything is in such close proximity...big cities, small cities, rural countryside, ocean, mountains.
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Re: Housing prices

Post by flyingpylon » Wed Sep 30, 2020 10:29 am

doodle wrote:
Wed Sep 30, 2020 9:31 am
Anyone spent anytime in the upper peninsula of Michigan or far northern reaches of northeast? Any areas stand out as affordable with decent job market? Vermont seems pretty cool in that everything is in such close proximity...big cities, small cities, rural countryside, ocean, mountains.
I was raised in VT, left after college, and still have family there. I joke that it's a nice place to be from. What you say about proximity is true, but the job market has sucked for a very long time. It's just too small to generate a whole lot of economic activity. The people that seem to fare the best are the ones that are either financially independent, have traveling consulting gigs, work remotely for out-of-state employers, or highly value quality of life over income. Housing there seems expensive to me but probably would not seem that way to someone coming from California, though salaries may or may not compensate for the difference.
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Re: Housing prices

Post by Mountaineer » Wed Sep 30, 2020 11:01 am

doodle wrote:
Wed Sep 30, 2020 9:31 am
Anyone spent anytime in the upper peninsula of Michigan or far northern reaches of northeast? Any areas stand out as affordable with decent job market? Vermont seems pretty cool in that everything is in such close proximity...big cities, small cities, rural countryside, ocean, mountains.
My son lived in southern VT for a few years. He said they had summer, winter, and a long mud season. :) Be sure you like the weather of wherever you are thinking about.
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Re: Housing prices

Post by pp4me » Wed Sep 30, 2020 12:07 pm

We bought our house in 2006 right at the peak of the housing bubble only to see the value drop more than 50% at the lowest point. So I'm glad to see home prices increasing again. After 14 years the appraised value of our home is now only 19k more than we paid for it.

I'm now in the process of refinancing @ 3% and resetting the loan to 30 years making the monthly payment less than half of what I can rent the house for. I could have paid off the mortgage entirely but that doesn't make one bit of sense to me with these interest rates. My lowest rate LTT is 3.5%.
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Re: Housing prices

Post by I Shrugged » Wed Sep 30, 2020 6:37 pm

Da UP is remote. One guy I met up there told me that everyone who moves there is running from something. Like Alaska I guess.
It snows a lot. There is snow on the ground basically from Thanksgiving to Easter. It gets real cold at times. It's a great place to visit, though.
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Re: Housing prices

Post by doodle » Wed Sep 30, 2020 11:57 pm

tomfoolery wrote:
Wed Sep 30, 2020 11:44 pm
pp4me wrote:
Wed Sep 30, 2020 12:07 pm
We bought our house in 2006 right at the peak of the housing bubble only to see the value drop more than 50% at the lowest point. So I'm glad to see home prices increasing again. After 14 years the appraised value of our home is now only 19k more than we paid for it.

I'm now in the process of refinancing @ 3% and resetting the loan to 30 years making the monthly payment less than half of what I can rent the house for. I could have paid off the mortgage entirely but that doesn't make one bit of sense to me with these interest rates. My lowest rate LTT is 3.5%.
What good does it do you for your house value to increase? If you sell it, presumably you'd be buying another house, which would equally have raised in price similarly to your house. Or you'd be renting, which would have also increased due to overall housing market increase. Also now the city can raise your property taxes which are based on a percentage of home value.

Exactly, this obsession with increasing home prices is pure stupidity. I can't figure out why anyone (including homeowners) thinks this is beneficial....unless housing is merely an investment vehicle (which I have some issues with considering it is a necessity of life). If people want to invest in houses I feel they should have to pay at least the same tax rate that one does for other collectibles like gold at the time of sale...
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Re: Housing prices

Post by pp4me » Thu Oct 01, 2020 10:51 am

tomfoolery wrote:
Wed Sep 30, 2020 11:44 pm
pp4me wrote:
Wed Sep 30, 2020 12:07 pm
We bought our house in 2006 right at the peak of the housing bubble only to see the value drop more than 50% at the lowest point. So I'm glad to see home prices increasing again. After 14 years the appraised value of our home is now only 19k more than we paid for it.

I'm now in the process of refinancing @ 3% and resetting the loan to 30 years making the monthly payment less than half of what I can rent the house for. I could have paid off the mortgage entirely but that doesn't make one bit of sense to me with these interest rates. My lowest rate LTT is 3.5%.
What good does it do you for your house value to increase?
1. It makes my net worth statement look better.
2. It gave me enough equity to allow me to refinance.
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Re: Housing prices

Post by doodle » Thu Oct 01, 2020 12:13 pm

pp4me wrote:
Thu Oct 01, 2020 10:51 am
tomfoolery wrote:
Wed Sep 30, 2020 11:44 pm
pp4me wrote:
Wed Sep 30, 2020 12:07 pm
We bought our house in 2006 right at the peak of the housing bubble only to see the value drop more than 50% at the lowest point. So I'm glad to see home prices increasing again. After 14 years the appraised value of our home is now only 19k more than we paid for it.

I'm now in the process of refinancing @ 3% and resetting the loan to 30 years making the monthly payment less than half of what I can rent the house for. I could have paid off the mortgage entirely but that doesn't make one bit of sense to me with these interest rates. My lowest rate LTT is 3.5%.
What good does it do you for your house value to increase?
1. It makes my net worth statement look better.
2. It gave me enough equity to allow me to refinance.
1. Yes, but not liquid net worth. And because housing is a necessity of life no matter what that money will always be tied up. Seems like cheaper housing would allow for more liquid assets..which are beneficial. I don't see the benefit to having two million dollars tied up in a place to sleep.

2. Wouldnt it be easier to take a larger equity stake from get go if housing was more reasonable?

Granted, there are affordable areas of the country still. A lot of these complaints I'm making are rectified by moving to a different area of country.
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Re: Housing prices

Post by Tortoise » Thu Oct 01, 2020 12:25 pm

tomfoolery wrote:
Wed Sep 30, 2020 11:44 pm
What good does it do you for your house value to increase? If you sell it, presumably you'd be buying another house, which would equally have raised in price similarly to your house. Or you'd be renting, which would have also increased due to overall housing market increase.
That's true, but with higher home prices, the absolute dollar difference between a big house and a small house will be larger. So retirees who "downsize" by selling a big house, purchasing a smaller house, and pocketing the difference will tend to benefit more as home prices rise since more money ends up in their pocket after downsizing.

Overall, rapidly rising home prices seem to benefit several groups (e.g., banks, realtors, and existing homeowners who will eventually "downsize") largely at the expense of first-time homebuyers.
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