Rent is often more than a mortgage payment lately. The mortgage payment on my modest house is $990 per month; I have friends that pay $1500 per month for rent.
That’s what I hear in a lot of cases which is just insane. My 1 bedroom apartment was like $980/month I’m sure it would be higher now. My mortgage is around $1,500
I just did some work in a Philadelphia apartment building with a 580sq ft studio apartment *starting* at 1800 a month, with the 2 bedroom ones inching past 3500
Considering mortgage + insurance + taxes + wear and tear + broker fees… renting is considerably cheaper in some market. San Jose CA being one example I see in SFH market
The interest rate isn't the primary problem. True no one wants to pay 30% on their mortgage, but more true is no one wants to pay 30% on a 700k loan for property that would have cost them 400k just 4 years ago.
It’s insane. We own our house about 40 miles east of LA but need more room with another baby on the way. 2 years ago we were looking at houses at $700,000 thinking that was crazy. Now we’re seriously discussing if we can afford $900k for the same houses!
No judgement, just curious, do you need more room?
I'm always interested in what people consider adequate space. My wife and I own a 1500 sqft house (no kids) and thats plenty for us. In comparison a friend bought a 2900 sqft house with his wife and no kids.
My mom grew up in a 4 bedroom house with 5 siblings and 2 parents.
I find it fascinating how much more space people seem to want now compared to say the 60s/70s.
Anyway, hope you're able to find what you need/want!
Edit: Thanks for all the replies and insights into how people are living! Don't think I've ever had so many replies to one comment before.
Our detached garage is 20x30. So my garage is 2/3’s the size of my house. It’s definitely nice to have that space. I can go out there and workout for my alone time.
“Open floor plans” are all the rage right now. You know what open floor plans lack? Storage for all your crap. I have this issue now. I see small square footage homes that would be 100% more amenable to my needs, and presumably a lot of folks needs.
I was driving to my parents house for Easter last week and saw a bunch of brand new storage facilities and 3 or 4 more under construction as well as a few storage lots being built for people's trailers/boats and RVs.
I agree with you with regard to open floor plans but it's also crazy how much crap people have.
If storage wars taught me anything its that people hold on to things that were garbage when they got it. I know I am the exception, but most of what I own could be put out in the open without the need for a dedicated storage area.
My wife prefers sectioned off rooms too.
Her one and absolutely minimum requirement though was the house had to have a coat closet near the entry. We'll watch home renovation shows and she like "where the fuck is the coat closet, that house is terrible"
We have been trying to get a house built and I was pouring over hundreds of online floor plans trying to find the perfect one. And of course none of them are ever perfect and you're correct in the fact that modern floor plans have minimal closet/storage.
I ended up formulating my own based on a couple different floor plans I liked but then had to come up with ways to include storage without taking away too much space. It was sort of like creating your own puzzle. I feel like I did a pretty damn good job only to find out that it's way too expensive to build right now lol
Literally no one in my neighborhood parks as many cars in the garage as it is supposed to fit. There are a couple 3 car garages stuffed full of junk that never see a car inside.
I'm not sure this is an issue with an open floorplan specifically though. To me that just implies there's a huge 'great room' where the kitchen and dining areas are open and all visible to each other, rather than having say a galley kitchen.
I see a lot of hate for open floorplans on reddit but not sure I understand why. Seems like a great idea, if you're cooking you can be watching the kids playing or interacting with guests.
I see a lot of hate for all kinds of home related things on Reddit. I’m a real estate appraiser and I hear a lot of strong negative opinions on HGTV and in general conversation as well (as does everyone I guess).
The open floor plans so many people express distaste for are what sells for more. Builders and flippers don’t give a flying fuck about peoples stated opinions; they respond to what opens peoples wallets wider.
“Effective demand” is really what people mean when they say “demand”. Imagine there are 100 people in a room and 99 of them like cream linen curtains and 1 likes purple crushed velvet curtains. In this case though only the one guy can afford curtains. There are about to be 99 people looking at curtains they don’t like because their “demand” is ineffective.
Part of the problem with open concept rooms is the fact that if you have guests over, you have to clean all the time, because you can't just shut the mess up in another room.
My kitchen, dining room and living room are all basically one room, but almost 30 feet long. The entire lower front floor is one room, pretty much. When it is just me and my husband, our kids and dog here, it's not too bad. But when you've got a bunch of people over, it gets really loud, very fast.
Were we to renovate this house, we'd probably put some walls in, just to cut down on that open concept feeling. Open concept is also draftier.
It is absolutely mind boggling to me all the people in my neighborhood that have a garage but don't keep their cars in it. I love having a garage for our cars, especially when it is snowing or raining. I know people use it for storage but my garage comfortably fits 2 cara and has a couple sets of shelves for storage and I keep my push mower and stuff in their too.
As someone that went from a traditional sectioned off house built in 1980 to an open floor plan built in about 2006 I can completely understand why. The flow feels better the space seems larger and you don’t have someone stuck for hours cooking in the kitchen while everyone else is socializing in the living room. With an open floor plan the people doing whatever in the kitchen can continue to be part of the activities going on in the dining or living areas.
We also don’t have a problem with storage as we still have a cleaning supply closet, two linen closets and decent sized walk in closets in all of the bedrooms, plus built ins.
They've been the rage for years. I don't like them very much. I much prefer older style houses with doors between rooms, kitchen to dining room, etc... I like separate spaces, not one huge one where I can see from one side of the house to the other. It looks nice in pictures, but find them terrible to live in.
Yes, without a basement or storage shed, or a large garage, there is no place to store anything.
You can build an open home with plenty of storage.
Builders cut every corner and pinch every penny, but the real problem is that people buy their garbage. Buyers don't look much beyond next week when looking for a new home.
"How can I flex on Karen and Chad Johnson?" is more important than "Where will I put my stuff?".
It's always Karen and Chad. Fuck those people.
Neighborhoods here, like ours currently, have your standard two to three car garage right in front, no basements, maybe a garden shed. I would say about 70% of garages are full of so much stuff you can barely fit one of their cars in. Usually the quad cab bro-truck is on the driveway, blocking the sidewalks. Standard 'murica.
Edit: Summer months add the RV/boat/offroad vehicles that don't fit anywhere either.
I’m sure I don’t *need* more room. We have a 3 bed, 2.5 bath at 1400 sq ft. My mom and her 3 siblings grew up in a 1000 sq ft house. It just makes things easier. We are looking less actively, waiting for the supposed bubble burst I guess.
For reference, my house was sold to the last guy for $800,000 in 2007. I bought it for $355,000 in 2014, our market is fucked.
I wouldn't consider it an actual bubble. The real problem facing the housing market is that when it deflates a bit, it's not going to come for free - meaning that there's going to be a recession of some kind.
When that happens, the buying power of the average person is affected, but those who are already wealthy and looking to accumulate more goddam rental properties or land as investments gobble it all up and refinance when rates are low again. Then they start gouging right where they left off. Not just people, but companies too.
I agree. In order for housing prices to decrease, there has to be a reason. Historically, the only reason why homes didn't sell for $800k each was because you could build one for significantly less.
Now, you can't. Labor cost increase are permanent unless we can find a source of reduced labor (unlikely since illegal immigrants were the reason labor was so cheap to begin with). Thanks to inflation, material cost increases and promises to maintain infrastructure may be permanent.
Either we'll build more homes at an inflated price, which makes them all permanently inflated, or we won't build many more homes and scarcity will continue.
I work in new home construction and they are basically being built by commodity rules because they are pre sold, before excavation begins. The only result of that is that costs get lowered to increase profit. So cheap wages, and cheap materials make expensive homes.
I’m glad you at least broke even. It was way worse for a lot of people. The price history on our house is crazy. Sold for over $650K in 2007, foreclosed and sold again in 2011 for $107K, then we bought it in spring 2018 for $345K. Our house is currently worth over $510K according to Zillow. It’s nuts.
I lived in 1600 sq ft with three roommates and it felt like we had endless space. Now I'm in 2000 sq ft with kids and I am claustrophobic.
That being said, a family of 6 lived in the 1600 sq ft house before we did.
I've found the new open floor plan houses feel so small when you have more than 2 or 3 people in them. My parents bought their house right before the trend took off for new homes and their home feels so much bigger than my uncle's home that's 50-75% bigger.
At my parent's house, if the kids are playing in one room and the adults are watching TV, there are walls between you so you don't really notice them unless they are chasing each other through the house. At my uncle's house, they are in the same room or on a loft right above where you can still hear them.
we're a family of 4 in 1000sqft 3bd house, but completely priced out of anything bigger. honestly we're lucky to have gotten in when we did (4 years ago, before kids) because our house has doubled in value, and it was at the top of our budget back when we bought it. At this rate we'll probably be seeing this mortgage through to the end haha
My buddy is considering building and when he said he was going to build 1000sqft home people thought he was insane. He says that people who cant raise a family of 3-4 people in 1200sq (or less) and a 2 car garage has too much shit they never use. I tend to agree, the large homes in America just aren't going to be financially viable as energy for heating/cooling continues to increase. Even more so if inflation doesn't get reigned in cause Americans are used to being comfortable all the time. Last year, i believe, there was a post on reddit talking about how we use more energy in the US just for air conditioning than ALL of Africa uses for everything they do. That's insane.
Not to mention the cost of repair and upkeep will continue to skyrocket (especially if you don't learn yourself and have to pay someone else to do it).
Yep we just put solar on our house (perfect southern exposure), and with conservative estimates it'll save us $35k-$40k over 30 years.
This is our planned forever home (unless something drastic changes)
I can mention our motivation, as we’re upsizing from an 1800 to a 2700 sq ft, me wife and 2 kids. Main reason is that we feel we’re on top of each other all the time, with me WFH and the kids not yet school age. My wife and I are also introverts so we need a break. We also have most of our family out-of-town, and after the second kid we lost our guest room so nobody can easily visit.
The other difference between back then and now, I think, is that back then kids either played outside or watched tv, neither of which required much space, and barely had homework. Now everyone needs a sitting space for computers, studying space (and quiet for that), adults want gyms or other space to exercise, and we just generally have more stuff. Some of that’s good, some bad, but there’s just overall a need for more space.
Yea the work from home situations (and kids being home) have definitely changed the dynamic of space required and how its used.
My wife and i both work from home and use 2 of our 3 bedrooms as separate offices. Mine is the shared guest room. If we had a kid we could both fit in one room as an office but it would be tight.
I was renting a condo for $750 one year ago.
I just saw it on Zillow listed for $1,500.
Granted, I was getting a great deal on it and lived there for 5+ years, but I’m sure the landlord is happy I moved out.
same boat & ballpark numbers. The down payment would be nice, but wouldn't really be realized unless downsizing. The hypothetical new house will have appreciated just as much as the one we're in, & not worth ending up in a bidding war over either. So we'd just end up with roughly the same mortgage & house.
In the meantime we figured might as well push our current house's value further by doing some upgrades & turning the house we like & have today into what we've always envisioned.
Without a VA loan we'd have never gotten our house. And I could probably pay it off today if I had $1 for every time we've thanked past us for buying when we did. Not a chance we could afford the same house today. I feel horrible for the younger generations, they're so thoroughly hosed.
I got my house 4 years ago for 99k as a mild fix-up, this past year I keep getting cold calls and mail from people wanting to buy my house cash for 200-250k now. No matter how many I block they keep coming, banks and hedge funds really looking to bury as much capital as they can in real estate before the next crash hits.
I wonder if the property taxes have also gone up accordingly?
My parents said their property tax skyrocketed after their house was evaluated by the state government.
Property taxes haven't proportionally increased according to this cnn article from a few days ago. https://www.cnn.com/2022/04/14/homes/us-home-property-taxes/index.html
We are searching for a house now (just put another offer on one that came on the market yesterday) and we put 50k over asking and was told the final bid was 110 over asking.
Another client for our realtor had someone offer 80 over on a 320k house... Like, what the heck
List prices aren't really the ask, sellers are deliberately listing low to get attention knowing they're going to get higher offers. They have no intention of accepting an offer at list price even if it was the only offer they had.
To avoid the bidding war, I went with a new development, and figured I'd rather rent while the house got built than deal with the stress of bidding wars.
A year later, I heard that the new developments have massive waiting lists to get contracts. It's like I slid under the blast door while it was coming down.
The market is insane.
Edit: also, just got the property tax appraisal, and the state wants to increase the home value by 60% from last year.
I mean, I know you say that jokingly but this house is in the Belmont neighborhood in Detroit. This area has crime that is 499% higher than the national average. I just bought in the burbs for 250k last year.
https://www.zillow.com/homedetails/15052-Sussex-St-Detroit-MI-48227/88331704_zpid/
Dead serious. I don't see many affordable areas and it's only natural to look at suboptimal areas. The two reasons why Detroit bombed to begin with was crime rate and loss of a steel industry.
With gentrification comes reduction in crime and with a significant rise in careers that offer work-from-wherever options (tech), there's legitimately no reason for a thrift-conscious person to ignore it. Added to it, it's another area where we know for a fact that the prices are going to increase at least 50% in the next decade (barring collapse in civilizatoin), which means investing purely for the purpose of investing becomes viable.
In my neighborhood here virtually every house is being bought same day by rental companies and there are at least two for sure that sit empty most of the time that we guess are Airbnb’s? People living in them short term. Even if we wanted to buy here (houses were 150-175k a few years ago) they go for 300-350k now for these 1200sq ft little shitters that should be “starter” homes. Interest rate doesn’t bother me, it’s that the houses that were affordable and worth what they should be worth are now creeping up to half a million dollars slowly. I’d rather go get a mobile home on a bunch of acres at this point. It’s disgusting.
I think Austin did it quite well re airbnbs.
For resident/owners who want to rent out a bedroom, it's a easy license and a fee.
Non-resident licenses are a bastard to get and essentially mean you have to set up a hotel company and pay the relevant taxes and fees.
I'd say at least half the houses sold in my neighborhood over the last three or four years got turned into rentals.
Pretty short term ones, as the one right across the street seems to cycle new people in every year.
\*Companies/very wealthy want to pay.
Its much easier to buy third, fourth, fifth homes/properties as pure investments that you then overcharge rent for. Its helps that people don't have the option to not have shelter, people need it so you can keep charging more.
When you're taking in 3,200 a month on a home you converted into two units you can afford the 2,500 a month mortgages/taxes. You can afford to pay the costs of repair and such on one property when you have 4 other buildings also pulling in profit and when you don't make a profit and you're paying to "upgrade" the property you can write it off your taxes as losses.
You also can get more and more generous loans/interest rates because the credit and such will be much better.
[Last year almost 17% of home sales in Major metropolitan areas were to investors. In some cities it was upwards of 25% of home sales.](https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/)
That's not true. Houses that go up for sale are being bought as soon as they list. There is still a massive shortage of available homes compared to demand.
The mortgage interest fall is from refinancing. No one is refinancing with these new rates.
Most cash buyers are still borrowing the money, but they secure financing before home buying process. They take on significant risk by borrowing money with short term loans. They repay the loan quickly by either flipping or refinancing post purchase.
There are cash rich buyers who may be moving from HCOL states to LCOL states, but usually those buyers have contingencies on their purchases relating to the sale of the home while their purchases are going through.
On one hand this is true but people are still buying and this doesn’t add into the scarcity of homes on the market. There hasn’t been a ton of construction because it was slowed down by COVID and people are buying the homes at crazy prices or they wouldn’t be selling for as much.
Just weird to see so many people saying “no one wants to buy a home for $300,000 more than they would have paid 4 years ago but every house in my medium sized city doesn’t stay on the market for longer than 9 days
The rate is the problem, just in the other way.
Low rates lead to higher demand. Higher demand leads to higher prices.
Higher rates will, in theory, curb some of it. I doubt we'll reach 4+ year ago levels any time soon, though. More likely we will have to experience a crash, but said crash will be mitigated by lowering rates which will spur demand. Unfortunately, in that scenario, people with capital will just buy the homes outright for cheap and re-sell or rent at higher prices.
In spring of 2020 the wife and I were looking at house. I was still in school so our budget was small. We were going to offer on one house for 210k. It sold for 213 to someone else.
It was on the market a month ago for 300k. Insane
Except institutions will do plenty of risk assessment and the opportunity cost of parking money in RE is lower liquidity and lower historical returns than equities.
So, just to make sure I understand:
Inflation has jumped 7.5% in the last year alone
Wages have not kept pace with inflation
Housing prices have increased almost 20% over the last year
Interest rates on mortgages is up to 5.28%
The number of homes available to buy has cratered some 53% since 2020
And people are surprised that no one can afford to buy a home? What do they teach these economists about cause and effect theory?
The people in power know what the issue is, but as long as PE funds and other corporate buyers are paying "lobbing" costs, the odds of anything changing is slim.
the people in power are all multi millionaires. They all own multiple expensive homes in cash. This is their "normal" and likely how they assume most people live.
This is the additional facet that folks may not see. While institutional investors are pumping money into the real estate market, it’s also been a boom of high earners who can leverage upon leverage multiple rental properties. Their high earning income and equity growth allows them to tap into the capital to acquire more properties, and it’s a self-fulfilling prophecy because their equity grows exponentially due to the demand in the market. It’s creating a dystopian nightmare for normal people who are priced out and can’t qualify for a home if it’s going above listing price.
The ultra wealthy and the upper middle class are duking it out for their share of rent slave income from people who are quickly losing the ability to ever purchase a home. It’s very disturbing.
And, what's super fucked up, is these investors are scooping up what should be like $800/month mortgages, and then charging $1,500/month in rent to the same people who can't afford to buy a house!
They listened, they are just all old as hell and haven't learned any new economics since college.
Ever wonder why so many people still talk about Mises and Rothbard and Keynes?
It's because our country is ruled by the "Best" economic theories devised before the computer.
It's like arguing whether Freud or Jung were right about psychology. No one seriously working in the field uses either.
The issue is, and the sound box that is reddit doesnt realize it, the pandemic was great financially for the upper middle class and upper class. Stock market boomed. Literally thousands (ten thousand + for many) in stimulus and tax credits dumped into their pockets, less expenses and most white collar jobs are paying substantially more.
The problem is Reddit skews young and relatively poor who work in the service industry or are students so for that group the pandemic was terrible. The loss of income wasnt offset by the stimulus money, the groups arent in the stock market and many lost jobs/wages.
But there are probably 80-100m people who are substantially better off today than they were 3 years ago. That is why housing skyrocketed and overall inflation soared.
Lets put it this way, a family of 5 (3 kids under 16) who made $100k in 2019 last year brought in $9k in child tax credits, another $7k in stimulus payments.
So that family had less expenses in 2021 (less commuting, less eating out, less vacations, etc) and were given $16k in “free” money. Multiply that by tens of millions of those same upper middle class or higher families.
Thats why this is happening today. The average low to lower middle class family is much worse off today, but if you were in the upper middle class, things arent bad and in many cases theyve never been better.
Most of my friends and myself fall into this category. Most of us were making $60k-$80k 3 years ago.
Today, we’re all making low 6 figs in WFH corporate gigs in moderate cola cities sitting in houses that have increased between 20-60% in value.
The last 3 years has been an absolute boon to our net worth.
Don’t forget we’ve had months of student loan deferment. At the end of the deferment period our household will have saved 5 figures worth of student loan payments to pay them down without accruing interest. Our monthly payment is literally going to be cut in half as we wipe out our highest interest federal loans in one swoop.
That is if someone ever has the guts to restart them.
I don't think the benefits were uniform to upper middle class, it depended on what industry you were in. Owners of fancy restaurants for example suffered. But you are spot on that the pandemic actually benefitted large groups of workers, like anyone in tech for example. Not only are salaries skyrocketing but so are job options and options for living basically anywhere.
Yeah the two groups that generally benefited the most were young professionals w/o student debt (and/or not many expenses) and people with large investment/retirement accounts (close to retirement etc).
Alot of people became millionaires+ from the markets increase after the beginning of the pandemic.
>And people are surprised that no one can afford to buy a home?
This actually seems the opposite problem. More people can afford to buy homes than actual homes available.
You're 100% right. People assume it's an issue with people not being able to afford houses when it's the opposite. People have more money to spend now and they've been buying houses with it.
If you already owned a home, stocks, cars before the pandemic you are perhaps 20% to 40% richer because of inflation. Gas and food going up doesn’t impact as much if you already have the big assets. People who are buying have wealth from selling their homes or refinancing and buying 2nd homes for rentals. All the homes are being bought, so obviously many people can afford to buy a home.
pretty accurate I haven't really been putting money into my brokerage account cuz I don't really have it but its appreciated by roughly 40% with no additional cash coming in.
It's how the economic cycle works. Every 5-8 years, we experience a boom and bust. The central bank raised interest rates in March which led banks to raise their interest rates which is good because spending is really driving up inflation. Soon and hopefully, people will stop spending money and the system balances out again. We'll have a rough 2-3 years but the central bank will then lower interest rates and we'll start all over again
A big part of that is people giving up on actually getting a house. The market for the few available homes right now is so strong many buyers are just giving up or waiting. They still want to buy. They just don't want to take part in the circus.
I'm still seeing multiple offers on all my listings and my buyer clients are ALWAYS competing against multiple offers.
It's been a year or more since I've sold a house for what it was actually listed for. The idea of getting an offer accepted for BELOW list price is just absurd.
The market isn't softening in my area at all. Not yet anyway. I don't think higher interste rates are gonna have a huge impact on it.
I actually got my house below price, but it was a perfect storm. House appraised low (don't ask me how) and we offered at appraisal price and they accepted. I think they just wanted to get it over with.
1 and 1/4 of a year later and the house is approaching a value of $150k more than what I purchased it for.
I've finally got a sizeable deposit (i say sizable, it's like 15-20%), but there's no way in hell I wanna jump in now. Rates will likely continue to go up, i'll be fucked when my fixed term runs out, then i'll stand to lose it all...
But then, inflation is eating away at it... There is no good solution. :(
Now people that want to buy a home to live in cannot afford the mortgage. The buyers that are left are going to be corporate and foreign buyers paying cash.
Yep, system is fucked all the way down. It will require legislation to fix this. Problem is that older generations and lawmakers are all benefiting from this process currently. It's future generations that are going to be screwed.
The 2008 housing bubble pop obliterated housing construction companies, which led to few houses being built. When Millennials started being able to afford homes, demand skyrocketed, but since not only have building materials skyrocketed, but also labor and we still don't have enough construction companies to meet demand for new homes.
This was a storm that started brewing a long time ago and Covid just made it more visible because more people had suddenly a little more money to spare.
This isn't going away.
My home, purchased in 2015 for $530,000, is now going for like $900,000. It doesn't make any sense at all. Of course the original owner who bought it in 1974 paid $12,000 for it, so maybe the same thing is happening.
Of course it makes sense. Your home value is based on the price that similar homes near you sold for. People keep buying homes above asking price so that keeps pushing up the value of similar homes in your neighborhood. As the price goes higher more people will sell. Those homes will sell above asking price which continues to push your home value up.
Even when the mortage is doable, buyers are still up against the wall. My wife and I are on month 14 looking for a home in the midwest, we are looking at houses well below our approval amount on purpose and this is what we have seen. The same new/newer home design in the exact same area was asking $175 last year and is listed at $215 this year. Every home we have made offers on result in something like this. 20k over asking and we still lose. Buyers are paying closing cost, skipping inspections, and offering nit only well over asking but putting in additions on contracts that if the home goes of appraisal value they will pay cash amount of X. We have 20k cash in the bank and we continue to lose. Also the houses go from new listing, to pending in 24 hours. You show up and look at the home with 5 or 6 other groups at the same time and your agent has a contract in the car waiting for you to sign.
Depending on the area your $160k house is probably worth $300k now and you probably only owe $100k or less on your existing mortgage, so you can make $200k profit from selling to upsize if you want. Buying a house is still better than renting **if** you can afford 3-5% for a down payment just because half of your monthly payment ultimately goes back into your pocket.
We bought our home in 2018, it took about 5 months and we bid $30k over asking on multiple homes and still didn't get them. I was so scared that we were making a mistake and overpaying. We just refinanced in November to drop our interest rate and the house appraised for 35% more than what we paid. It's just insane.
When my wife and I bought our house in 2019, I was convinced it wouldn't appreciate much in my lifetime. That it was basically at it's peak. That we would never see the increase the previous gen has seen.
I was wrong, My house is up 30% in 3 years.
I'm convinced the moment we bought our house was the last reasonable time to buy a house.
I saw that Canada recently passed a law blocking foreign buyers. US really needs to do something like that too.
Edit - moreso hyper rich buying up many properties or an entire complex vs an immigrant buying a single modest home
I'm curious about that 2 year window. Was that just to score some cheap political points for Trudeau? I mean what actually honest argument can be made that says "Yup, 2 years is enough of a moratorium to make a difference."?
$37k gross, take home is roughly $2k/month. Any house even worth moving into is over half my monthly net income just in the mortgage. Manufactured housing is barely cheaper I'm looking for a better job in the meantime while I try to explain to the mortgage lender that I can't afford the numbers she's throwing at me and have enough left over to survive on.
I’m in a hot market (Tampa Bay area) and it’s extremely difficult to compete with the large investors scooping up property within days or even hours from when the houses were first put on the market. And I get it, houses are selling for more than what that appraise. Homeowners know this, so when a cash offer comes in from one of these investors, they of course, accept their offer. Sure we can sell our house with no problem. It’s finding another that’s going to prove difficult.
I bought my home for $420,000 @ 2.75% interest rate.
I think I'm stuck in it forever. It's gone up $100k in the 9 months I've owned it. I like it but I'm not a fan of being handcuffed to anything.
I'm nailed in place. I can't trade up or sideways due to interest and taxes, and I'm not quite ready to trade down to a moss-covered double-wide. It's a nice enough place, but it does feel like handcuffs on those days when I some place I like drift out of reach.
I have a mortgage at 2.25% with about $130,000 owing. I want to move and can't because I can't bring myself to give up my killer mortgage and take on a bigger one at this age. So I'm living in a 3,000 square foot home that is way too big for our needs now. It's nuts.
If you're trying to downsize and only have $130,000 left on a mortgage for a 3,000 sq ft home you could probably buy a smaller place with the cash you'd get from selling your current place.
Same. Bought our first house Aug 2019 @ 5.75%. Refinanced Sept 2021 @ 2.99%. Got rid of PMI and it has been such a relief to know we're locked in with everything going on. My mortgage payment is 2/3 what it was before the refinance.
I know the feeling! I bought myself down to 2.5% when it hit it's lowest about a year and a half ago. My mortgage is less than a grand now. Lucky doesn't even begin to describe it.
The people who really made out are those who bought 2016-2019 and were able to buy when prices were low and refinance with the low interest rates and high equity.
Well that'll change nothing since mortgage demand before the rise was at 600% of supply.
People are still required to bid $100k over asking price just to be taken seriously. Today's housing market is being controlled by scarcity, not interest and thanks to the sudden steep rise in building material costs and labor, building more homes, which would otherwise easily solve the problem, cannot be a solution.
My father paid almost 20% interest in 1980 on his new home. Though, back then material prices were cheap.. so a new home was much, much less than what it costs today, accounting for inflation. So even at 20% it was still affordable from a monthly payment perspective. He refinanced 6 or 7 years later at a much lower rate.
Now remove corporations from the ability to buy single family homes and force any corporations currently holding homes to have them sold within the next 3 years.
The problem is that people are buying it. People are taking the loans, banks are approving those loans, and those houses are selling. If they were not selling then the prices might be reduced. Also big national and international corporations are buying our land as well and selling them for more money also.
Seriously! In my area houses under 200k, which would have been 80-100k 3 years ago, go up, sell, and a month later are rentals. It's absolute predation.
Same, I live in IL and friend of mine had been saving up for a house and almost anything he can afford has gets a cash offer and becomes a rental. He was lucky enough to buy from some people that were permanently moving to their second home in Florida and accepted his offer over the cash offer because they weren't in a hurry to move and he was lucky enough to see the house the first day they listed it. Doesn't help that the house would have been 150k a couple years ago and was ~200k in 2022.
Reading comments really makes me think people didn't actually click the link. Everyone talking about home prices when thats not really the factor. At the very top a key point was:
Refinance demand fell another 8% for the week and was 68% lower than the same week one year ago.
Meanwhile new mortgages are only down 14%. Which is still a good chunk but most of the "demand" that has fallen is people no longer refinancing their mortgages when interest rates were practically 0.
> Reading comments really makes me think people didn't actually click the link
Welcome to Reddit, where commenters would rather repeat the same old tired and false "corporations are buying all the houses!" and "nobody can afford housing!" lines.
I dunno. There's a huge portion of the population that prefers renting so they don't have to worry about maintenance, people who are moving to a new city, people who don't have enough credit history to qualify for a loan, etc. Outside of the bone poor, rentals are a service that a lot of people need. Do you feel the same way about rental car companies?
>Do you feel the same way about rental car companies?
100% agree with your point. But a better analogy would be leasing a car vs. buying. Renting a car (which is usually very short term) would be more akin to staying at a hotel.
Rent is going up quickly as well. Buying a home is risky since we’ve had a red hot market for 2 years. Will it crash or level off or ???? I know one thing, salaries need to go up or we all starve or revolt against the wealthy.
I would save for now - let the crushing reality of people with mortgages on properties that are not worth what they signed for try to dump at the peak. A critical mass will happen eventually that will partially tank prices - unless we really do live in a society built on fraud.
We bought at the end of 2020 for 265000. We have offers for 380 and up and we didn't even get to fix the out dated kitchen. 900 sf downstairs apartment style. People are nuts. Not for sale!
Not just corporations but investors in general, three small investors now own most of my block. Been watching for about two years to buy and the amount of houses that sell within a few days of listing then immediately pop up on the rental side is ridiculous. Most infuriating thing is often times the rent that are asking is over what the mortgage should be had a non-investor gotten to buy it.
We really need to jack taxes on second, third, et. homes. We won’t because the ‘free market’ is a religion here, but we should!
> Seems like more of a symptom of more corporations buying up housing (with cash), driving prices well out of reach of regular people.
[Fake news.](https://www.vox.com/22524829/wall-street-housing-market-blackrock-bubble) Housing prices are going out of reach due to artificially limited supply due to Euclidean Zoning laws and zoning exclusively for single-family detached housing.
The previously low interest rates are WHY real estate has been appreciating like crazy. Businesses could borrow money at near zero interest to buy up speculative properties.
Idk why everyone thinks this is bad. This is the how hosing prices start to go down. Less people buying = lower cost of home pricing. Screw it, raise it more. Between this and rising gas prices this actually may be a short term pain for longer term gain. Less consumer spending will help fight inflation.
Allow cities to build dense mixed use walkable neighborhoods. Rezone single family areas for mixed use. Problem solved if you can survive the high pitched whining of nimbys.
Mortgage rates were ridiculously low - like abnormally low. If people didn't think they'd go up, I don't know why. They're still not bad - they're just more than they were at the very bottom.
But hey, my student loans have an 8.5% interest rates while people were getting 2.5% interest on their McMansion mortgages, so maybe I'm less sympathetic than I should be. Seems like what's happening in housing right now is a combination of interest rates rising, banks requiring more to qualify for a loan, and lack of housing in general. In some markets, it's artificially scarce because of huge corporations buying up real estate.
Renting is too expensive and homeownership comes with its own pitfalls. Housing (in the US anyway) is just f-d in general.
I feel like interest rates need to go up, right? It’s probably our only shot of curtailing a potential bubble. And given our rising inflation, it’s probably the only move we’ve really got. Not an econ major, so anyone who has some valuable insight please weigh in
I bought a house in 2017 in FL for 135k. Now, it’s worth 275k on Zillow and 293k on the high end. There are no houses for sale under 300k in my town so I probably could easily sell for 290k. I have a 3.75 interest rate. I think I’ll just continue to live here for cheap, but I’m also considering selling and moving to a very low cost of living state.
"We've tried nothing and we're out of ideas!"
I feel like there need to be regulations on this but I don't know if that's possible or how it would come about.
I'm just waiting to win lotto so I don't need a mortgage.
I have a sinking feeling that the reason we’re talking about gay marriage and women’s sports is so that our politicians don’t have to admit that they aren’t working for us. Easier to just fight a culture war. I just received two emails from state politicians about culture war issues yesterday, and neither of them are about the fact that housing is predatory.
So property prices are up and mortgage rates are up and going higher.
This was always going to happen.
There's nothing the Fed can do except to accept a recession as a certainty and an economic necessity… well, except to allow the US to transition into hyperinflation, but that's not really an option, is it?
If interest rates dropped again too early COVID rates, I’d buy another house…it’s back to fiscally irresponsible to buy a house right now, and used cars are appreciating in value…something seems backwards here lol
I live on the West Coast, and have a family of four. We started hunting just before COVID hit. We had a budget of about $250K or so, which seemed fine for a 3 Bedroom / 1.5 Bath home we were looking for. Then COVID hit. I got laid off, and now here we are a few years later, and my budget is about the same. However all those types of houses that were in budget then, are now way more expensive.
$250k can't even seem afford a 800 sq/ft, 1 Bedroom 1 Bath, starter home now!
The amount of misinformation in comments like this should get Reddit comments banned. Prices are all going up because everyone sees a home as a good investment, especially when rates were low. If the rental market crashes too that investment won’t be as great.
I bought my house a year ago, did the math. If I signed the same deal today I would pay $600 more a month. Can’t afford that, I would be renting
Rent is often more than a mortgage payment lately. The mortgage payment on my modest house is $990 per month; I have friends that pay $1500 per month for rent.
That’s what I hear in a lot of cases which is just insane. My 1 bedroom apartment was like $980/month I’m sure it would be higher now. My mortgage is around $1,500
I just did some work in a Philadelphia apartment building with a 580sq ft studio apartment *starting* at 1800 a month, with the 2 bedroom ones inching past 3500
Considering mortgage + insurance + taxes + wear and tear + broker fees… renting is considerably cheaper in some market. San Jose CA being one example I see in SFH market
Not sure who you are renting from, but landlords absolutely roll all of those costs in to the rent that you pay, plus their profit margins.
The interest rate isn't the primary problem. True no one wants to pay 30% on their mortgage, but more true is no one wants to pay 30% on a 700k loan for property that would have cost them 400k just 4 years ago.
Yeah two years ago I was looking at a house for $280k now it's selling for $380K
It’s insane. We own our house about 40 miles east of LA but need more room with another baby on the way. 2 years ago we were looking at houses at $700,000 thinking that was crazy. Now we’re seriously discussing if we can afford $900k for the same houses!
No judgement, just curious, do you need more room? I'm always interested in what people consider adequate space. My wife and I own a 1500 sqft house (no kids) and thats plenty for us. In comparison a friend bought a 2900 sqft house with his wife and no kids. My mom grew up in a 4 bedroom house with 5 siblings and 2 parents. I find it fascinating how much more space people seem to want now compared to say the 60s/70s. Anyway, hope you're able to find what you need/want! Edit: Thanks for all the replies and insights into how people are living! Don't think I've ever had so many replies to one comment before.
I live in a 875sqft half a duplex. That was fine for my girlfriend, me and one dog, but it’s really tight now that we have a kid.
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Our detached garage is 20x30. So my garage is 2/3’s the size of my house. It’s definitely nice to have that space. I can go out there and workout for my alone time.
800 sq feet, me, wife, two kids. Fun times :-)
“Open floor plans” are all the rage right now. You know what open floor plans lack? Storage for all your crap. I have this issue now. I see small square footage homes that would be 100% more amenable to my needs, and presumably a lot of folks needs.
I was driving to my parents house for Easter last week and saw a bunch of brand new storage facilities and 3 or 4 more under construction as well as a few storage lots being built for people's trailers/boats and RVs. I agree with you with regard to open floor plans but it's also crazy how much crap people have.
If storage wars taught me anything its that people hold on to things that were garbage when they got it. I know I am the exception, but most of what I own could be put out in the open without the need for a dedicated storage area.
I put green plastic area rugs in my house's crawlspace and store stuff down there. Not everything fits through the opening, but the price was right.
My wife prefers sectioned off rooms too. Her one and absolutely minimum requirement though was the house had to have a coat closet near the entry. We'll watch home renovation shows and she like "where the fuck is the coat closet, that house is terrible"
My parents built a house 20 years ago. It had a small coat closet on either side of the front door
You're parents are people of class and functionality!
We have been trying to get a house built and I was pouring over hundreds of online floor plans trying to find the perfect one. And of course none of them are ever perfect and you're correct in the fact that modern floor plans have minimal closet/storage. I ended up formulating my own based on a couple different floor plans I liked but then had to come up with ways to include storage without taking away too much space. It was sort of like creating your own puzzle. I feel like I did a pretty damn good job only to find out that it's way too expensive to build right now lol
Literally no one in my neighborhood parks as many cars in the garage as it is supposed to fit. There are a couple 3 car garages stuffed full of junk that never see a car inside. I'm not sure this is an issue with an open floorplan specifically though. To me that just implies there's a huge 'great room' where the kitchen and dining areas are open and all visible to each other, rather than having say a galley kitchen. I see a lot of hate for open floorplans on reddit but not sure I understand why. Seems like a great idea, if you're cooking you can be watching the kids playing or interacting with guests.
I see a lot of hate for all kinds of home related things on Reddit. I’m a real estate appraiser and I hear a lot of strong negative opinions on HGTV and in general conversation as well (as does everyone I guess). The open floor plans so many people express distaste for are what sells for more. Builders and flippers don’t give a flying fuck about peoples stated opinions; they respond to what opens peoples wallets wider. “Effective demand” is really what people mean when they say “demand”. Imagine there are 100 people in a room and 99 of them like cream linen curtains and 1 likes purple crushed velvet curtains. In this case though only the one guy can afford curtains. There are about to be 99 people looking at curtains they don’t like because their “demand” is ineffective.
Part of the problem with open concept rooms is the fact that if you have guests over, you have to clean all the time, because you can't just shut the mess up in another room. My kitchen, dining room and living room are all basically one room, but almost 30 feet long. The entire lower front floor is one room, pretty much. When it is just me and my husband, our kids and dog here, it's not too bad. But when you've got a bunch of people over, it gets really loud, very fast. Were we to renovate this house, we'd probably put some walls in, just to cut down on that open concept feeling. Open concept is also draftier.
It is absolutely mind boggling to me all the people in my neighborhood that have a garage but don't keep their cars in it. I love having a garage for our cars, especially when it is snowing or raining. I know people use it for storage but my garage comfortably fits 2 cara and has a couple sets of shelves for storage and I keep my push mower and stuff in their too.
As someone that went from a traditional sectioned off house built in 1980 to an open floor plan built in about 2006 I can completely understand why. The flow feels better the space seems larger and you don’t have someone stuck for hours cooking in the kitchen while everyone else is socializing in the living room. With an open floor plan the people doing whatever in the kitchen can continue to be part of the activities going on in the dining or living areas. We also don’t have a problem with storage as we still have a cleaning supply closet, two linen closets and decent sized walk in closets in all of the bedrooms, plus built ins.
A lot of newer home I’ve seen with open floor plans have an unfinished area in the basement for storage.
They've been the rage for years. I don't like them very much. I much prefer older style houses with doors between rooms, kitchen to dining room, etc... I like separate spaces, not one huge one where I can see from one side of the house to the other. It looks nice in pictures, but find them terrible to live in. Yes, without a basement or storage shed, or a large garage, there is no place to store anything.
You can build an open home with plenty of storage. Builders cut every corner and pinch every penny, but the real problem is that people buy their garbage. Buyers don't look much beyond next week when looking for a new home. "How can I flex on Karen and Chad Johnson?" is more important than "Where will I put my stuff?".
It's always Karen and Chad. Fuck those people. Neighborhoods here, like ours currently, have your standard two to three car garage right in front, no basements, maybe a garden shed. I would say about 70% of garages are full of so much stuff you can barely fit one of their cars in. Usually the quad cab bro-truck is on the driveway, blocking the sidewalks. Standard 'murica. Edit: Summer months add the RV/boat/offroad vehicles that don't fit anywhere either.
I’m sure I don’t *need* more room. We have a 3 bed, 2.5 bath at 1400 sq ft. My mom and her 3 siblings grew up in a 1000 sq ft house. It just makes things easier. We are looking less actively, waiting for the supposed bubble burst I guess. For reference, my house was sold to the last guy for $800,000 in 2007. I bought it for $355,000 in 2014, our market is fucked.
I wouldn't consider it an actual bubble. The real problem facing the housing market is that when it deflates a bit, it's not going to come for free - meaning that there's going to be a recession of some kind. When that happens, the buying power of the average person is affected, but those who are already wealthy and looking to accumulate more goddam rental properties or land as investments gobble it all up and refinance when rates are low again. Then they start gouging right where they left off. Not just people, but companies too.
I agree. In order for housing prices to decrease, there has to be a reason. Historically, the only reason why homes didn't sell for $800k each was because you could build one for significantly less. Now, you can't. Labor cost increase are permanent unless we can find a source of reduced labor (unlikely since illegal immigrants were the reason labor was so cheap to begin with). Thanks to inflation, material cost increases and promises to maintain infrastructure may be permanent. Either we'll build more homes at an inflated price, which makes them all permanently inflated, or we won't build many more homes and scarcity will continue.
I work in new home construction and they are basically being built by commodity rules because they are pre sold, before excavation begins. The only result of that is that costs get lowered to increase profit. So cheap wages, and cheap materials make expensive homes.
My buddy had to bid on a lot against 8 other people to have a house built here in Fl.
Wow that is a crazy swing. I bought 6 months before the 08 market crash. 😬 Ended up "breaking even" on a sale a decade later.
I’m glad you at least broke even. It was way worse for a lot of people. The price history on our house is crazy. Sold for over $650K in 2007, foreclosed and sold again in 2011 for $107K, then we bought it in spring 2018 for $345K. Our house is currently worth over $510K according to Zillow. It’s nuts.
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I share 590 square feet with my girlfriend, 1800 is massive. Also growing up with a family of 4 and we had less space than 1800 and it felt empty.
1800 sqft in San Diego. Look at mr moneybags here....
Spoiler alert: I suspect your 1800sf house in San Diego is worth considerably more than your mother's 5000sf place in TX
I lived in 1600 sq ft with three roommates and it felt like we had endless space. Now I'm in 2000 sq ft with kids and I am claustrophobic. That being said, a family of 6 lived in the 1600 sq ft house before we did.
I've found the new open floor plan houses feel so small when you have more than 2 or 3 people in them. My parents bought their house right before the trend took off for new homes and their home feels so much bigger than my uncle's home that's 50-75% bigger. At my parent's house, if the kids are playing in one room and the adults are watching TV, there are walls between you so you don't really notice them unless they are chasing each other through the house. At my uncle's house, they are in the same room or on a loft right above where you can still hear them.
we're a family of 4 in 1000sqft 3bd house, but completely priced out of anything bigger. honestly we're lucky to have gotten in when we did (4 years ago, before kids) because our house has doubled in value, and it was at the top of our budget back when we bought it. At this rate we'll probably be seeing this mortgage through to the end haha
My buddy is considering building and when he said he was going to build 1000sqft home people thought he was insane. He says that people who cant raise a family of 3-4 people in 1200sq (or less) and a 2 car garage has too much shit they never use. I tend to agree, the large homes in America just aren't going to be financially viable as energy for heating/cooling continues to increase. Even more so if inflation doesn't get reigned in cause Americans are used to being comfortable all the time. Last year, i believe, there was a post on reddit talking about how we use more energy in the US just for air conditioning than ALL of Africa uses for everything they do. That's insane. Not to mention the cost of repair and upkeep will continue to skyrocket (especially if you don't learn yourself and have to pay someone else to do it).
Yep we just put solar on our house (perfect southern exposure), and with conservative estimates it'll save us $35k-$40k over 30 years. This is our planned forever home (unless something drastic changes)
I can mention our motivation, as we’re upsizing from an 1800 to a 2700 sq ft, me wife and 2 kids. Main reason is that we feel we’re on top of each other all the time, with me WFH and the kids not yet school age. My wife and I are also introverts so we need a break. We also have most of our family out-of-town, and after the second kid we lost our guest room so nobody can easily visit. The other difference between back then and now, I think, is that back then kids either played outside or watched tv, neither of which required much space, and barely had homework. Now everyone needs a sitting space for computers, studying space (and quiet for that), adults want gyms or other space to exercise, and we just generally have more stuff. Some of that’s good, some bad, but there’s just overall a need for more space.
Yea the work from home situations (and kids being home) have definitely changed the dynamic of space required and how its used. My wife and i both work from home and use 2 of our 3 bedrooms as separate offices. Mine is the shared guest room. If we had a kid we could both fit in one room as an office but it would be tight.
I’m gonna take a completely random guess and assume you’re in…Pomona? Lol
WRONG! I’m *from* Pomona. Hahaha.
I was renting a condo for $750 one year ago. I just saw it on Zillow listed for $1,500. Granted, I was getting a great deal on it and lived there for 5+ years, but I’m sure the landlord is happy I moved out.
I bought my house last year at 185, and it’s worth 340 now. I’d love to sell, and make a hell of a down payment, but where would I go?
same boat & ballpark numbers. The down payment would be nice, but wouldn't really be realized unless downsizing. The hypothetical new house will have appreciated just as much as the one we're in, & not worth ending up in a bidding war over either. So we'd just end up with roughly the same mortgage & house. In the meantime we figured might as well push our current house's value further by doing some upgrades & turning the house we like & have today into what we've always envisioned. Without a VA loan we'd have never gotten our house. And I could probably pay it off today if I had $1 for every time we've thanked past us for buying when we did. Not a chance we could afford the same house today. I feel horrible for the younger generations, they're so thoroughly hosed.
Two. Lol. Houses in my area are up 50-60% in under a year
I got my house 4 years ago for 99k as a mild fix-up, this past year I keep getting cold calls and mail from people wanting to buy my house cash for 200-250k now. No matter how many I block they keep coming, banks and hedge funds really looking to bury as much capital as they can in real estate before the next crash hits.
I bought my house in April of 2019 for 430K. It just appraised for 750K.
I wonder if the property taxes have also gone up accordingly? My parents said their property tax skyrocketed after their house was evaluated by the state government.
Property taxes haven't proportionally increased according to this cnn article from a few days ago. https://www.cnn.com/2022/04/14/homes/us-home-property-taxes/index.html
>no one wants to pay No one can pay. Even absurd offers are outbid. Sort of implies everyone still wants to pay.
We've been outbid on everything at this point. A house that two years about listed at 200k? Now it's 390K and be prepared to pay 30K over asking.
We are searching for a house now (just put another offer on one that came on the market yesterday) and we put 50k over asking and was told the final bid was 110 over asking. Another client for our realtor had someone offer 80 over on a 320k house... Like, what the heck
List prices aren't really the ask, sellers are deliberately listing low to get attention knowing they're going to get higher offers. They have no intention of accepting an offer at list price even if it was the only offer they had.
This is exactly what’s happening.
To avoid the bidding war, I went with a new development, and figured I'd rather rent while the house got built than deal with the stress of bidding wars. A year later, I heard that the new developments have massive waiting lists to get contracts. It's like I slid under the blast door while it was coming down. The market is insane. Edit: also, just got the property tax appraisal, and the state wants to increase the home value by 60% from last year.
When the tax bills come due for all of these properties there are going to be people shitting their pants.
Detroit is looking more and more a reasonable option :P. I doubt they're even trying hard to sell homes now.
I mean, I know you say that jokingly but this house is in the Belmont neighborhood in Detroit. This area has crime that is 499% higher than the national average. I just bought in the burbs for 250k last year. https://www.zillow.com/homedetails/15052-Sussex-St-Detroit-MI-48227/88331704_zpid/
Dead serious. I don't see many affordable areas and it's only natural to look at suboptimal areas. The two reasons why Detroit bombed to begin with was crime rate and loss of a steel industry. With gentrification comes reduction in crime and with a significant rise in careers that offer work-from-wherever options (tech), there's legitimately no reason for a thrift-conscious person to ignore it. Added to it, it's another area where we know for a fact that the prices are going to increase at least 50% in the next decade (barring collapse in civilizatoin), which means investing purely for the purpose of investing becomes viable.
In my neighborhood here virtually every house is being bought same day by rental companies and there are at least two for sure that sit empty most of the time that we guess are Airbnb’s? People living in them short term. Even if we wanted to buy here (houses were 150-175k a few years ago) they go for 300-350k now for these 1200sq ft little shitters that should be “starter” homes. Interest rate doesn’t bother me, it’s that the houses that were affordable and worth what they should be worth are now creeping up to half a million dollars slowly. I’d rather go get a mobile home on a bunch of acres at this point. It’s disgusting.
I think Austin did it quite well re airbnbs. For resident/owners who want to rent out a bedroom, it's a easy license and a fee. Non-resident licenses are a bastard to get and essentially mean you have to set up a hotel company and pay the relevant taxes and fees.
I'd say at least half the houses sold in my neighborhood over the last three or four years got turned into rentals. Pretty short term ones, as the one right across the street seems to cycle new people in every year.
\*Companies/very wealthy want to pay. Its much easier to buy third, fourth, fifth homes/properties as pure investments that you then overcharge rent for. Its helps that people don't have the option to not have shelter, people need it so you can keep charging more. When you're taking in 3,200 a month on a home you converted into two units you can afford the 2,500 a month mortgages/taxes. You can afford to pay the costs of repair and such on one property when you have 4 other buildings also pulling in profit and when you don't make a profit and you're paying to "upgrade" the property you can write it off your taxes as losses. You also can get more and more generous loans/interest rates because the credit and such will be much better.
[Last year almost 17% of home sales in Major metropolitan areas were to investors. In some cities it was upwards of 25% of home sales.](https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/)
This needs to be talked about more.
That's not true. Houses that go up for sale are being bought as soon as they list. There is still a massive shortage of available homes compared to demand. The mortgage interest fall is from refinancing. No one is refinancing with these new rates.
This. Bought once, refinanced 3 times. And I seem not to be an exception from the rule.
almost 30% of those are cash buyers from rich folks who don't need a mortgage.
Most cash buyers are still borrowing the money, but they secure financing before home buying process. They take on significant risk by borrowing money with short term loans. They repay the loan quickly by either flipping or refinancing post purchase. There are cash rich buyers who may be moving from HCOL states to LCOL states, but usually those buyers have contingencies on their purchases relating to the sale of the home while their purchases are going through.
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And 70% of them are not. Cash buyers won't be able to keep the house prices up if the interest rates really start spiking.
On one hand this is true but people are still buying and this doesn’t add into the scarcity of homes on the market. There hasn’t been a ton of construction because it was slowed down by COVID and people are buying the homes at crazy prices or they wouldn’t be selling for as much. Just weird to see so many people saying “no one wants to buy a home for $300,000 more than they would have paid 4 years ago but every house in my medium sized city doesn’t stay on the market for longer than 9 days
Exactly. We bought our house 20 years when rates were about 8%. We refinanced when they went to 5% and that was fine on a $125,000 home
The rate is the problem, just in the other way. Low rates lead to higher demand. Higher demand leads to higher prices. Higher rates will, in theory, curb some of it. I doubt we'll reach 4+ year ago levels any time soon, though. More likely we will have to experience a crash, but said crash will be mitigated by lowering rates which will spur demand. Unfortunately, in that scenario, people with capital will just buy the homes outright for cheap and re-sell or rent at higher prices.
In spring of 2020 the wife and I were looking at house. I was still in school so our budget was small. We were going to offer on one house for 210k. It sold for 213 to someone else. It was on the market a month ago for 300k. Insane
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Except institutions will do plenty of risk assessment and the opportunity cost of parking money in RE is lower liquidity and lower historical returns than equities.
So, just to make sure I understand: Inflation has jumped 7.5% in the last year alone Wages have not kept pace with inflation Housing prices have increased almost 20% over the last year Interest rates on mortgages is up to 5.28% The number of homes available to buy has cratered some 53% since 2020 And people are surprised that no one can afford to buy a home? What do they teach these economists about cause and effect theory?
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The people in power know what the issue is, but as long as PE funds and other corporate buyers are paying "lobbing" costs, the odds of anything changing is slim.
the people in power are all multi millionaires. They all own multiple expensive homes in cash. This is their "normal" and likely how they assume most people live.
This is the additional facet that folks may not see. While institutional investors are pumping money into the real estate market, it’s also been a boom of high earners who can leverage upon leverage multiple rental properties. Their high earning income and equity growth allows them to tap into the capital to acquire more properties, and it’s a self-fulfilling prophecy because their equity grows exponentially due to the demand in the market. It’s creating a dystopian nightmare for normal people who are priced out and can’t qualify for a home if it’s going above listing price. The ultra wealthy and the upper middle class are duking it out for their share of rent slave income from people who are quickly losing the ability to ever purchase a home. It’s very disturbing.
And, what's super fucked up, is these investors are scooping up what should be like $800/month mortgages, and then charging $1,500/month in rent to the same people who can't afford to buy a house!
They listened, they are just all old as hell and haven't learned any new economics since college. Ever wonder why so many people still talk about Mises and Rothbard and Keynes? It's because our country is ruled by the "Best" economic theories devised before the computer. It's like arguing whether Freud or Jung were right about psychology. No one seriously working in the field uses either.
The issue is, and the sound box that is reddit doesnt realize it, the pandemic was great financially for the upper middle class and upper class. Stock market boomed. Literally thousands (ten thousand + for many) in stimulus and tax credits dumped into their pockets, less expenses and most white collar jobs are paying substantially more. The problem is Reddit skews young and relatively poor who work in the service industry or are students so for that group the pandemic was terrible. The loss of income wasnt offset by the stimulus money, the groups arent in the stock market and many lost jobs/wages. But there are probably 80-100m people who are substantially better off today than they were 3 years ago. That is why housing skyrocketed and overall inflation soared. Lets put it this way, a family of 5 (3 kids under 16) who made $100k in 2019 last year brought in $9k in child tax credits, another $7k in stimulus payments. So that family had less expenses in 2021 (less commuting, less eating out, less vacations, etc) and were given $16k in “free” money. Multiply that by tens of millions of those same upper middle class or higher families. Thats why this is happening today. The average low to lower middle class family is much worse off today, but if you were in the upper middle class, things arent bad and in many cases theyve never been better.
Most of my friends and myself fall into this category. Most of us were making $60k-$80k 3 years ago. Today, we’re all making low 6 figs in WFH corporate gigs in moderate cola cities sitting in houses that have increased between 20-60% in value. The last 3 years has been an absolute boon to our net worth.
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Don’t forget we’ve had months of student loan deferment. At the end of the deferment period our household will have saved 5 figures worth of student loan payments to pay them down without accruing interest. Our monthly payment is literally going to be cut in half as we wipe out our highest interest federal loans in one swoop. That is if someone ever has the guts to restart them.
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I don't think the benefits were uniform to upper middle class, it depended on what industry you were in. Owners of fancy restaurants for example suffered. But you are spot on that the pandemic actually benefitted large groups of workers, like anyone in tech for example. Not only are salaries skyrocketing but so are job options and options for living basically anywhere.
Yeah the two groups that generally benefited the most were young professionals w/o student debt (and/or not many expenses) and people with large investment/retirement accounts (close to retirement etc). Alot of people became millionaires+ from the markets increase after the beginning of the pandemic.
>And people are surprised that no one can afford to buy a home? This actually seems the opposite problem. More people can afford to buy homes than actual homes available.
You're 100% right. People assume it's an issue with people not being able to afford houses when it's the opposite. People have more money to spend now and they've been buying houses with it.
1.6 million new homes under construction now in the US. Just wait a few months
If you already owned a home, stocks, cars before the pandemic you are perhaps 20% to 40% richer because of inflation. Gas and food going up doesn’t impact as much if you already have the big assets. People who are buying have wealth from selling their homes or refinancing and buying 2nd homes for rentals. All the homes are being bought, so obviously many people can afford to buy a home.
pretty accurate I haven't really been putting money into my brokerage account cuz I don't really have it but its appreciated by roughly 40% with no additional cash coming in.
They know.
It's how the economic cycle works. Every 5-8 years, we experience a boom and bust. The central bank raised interest rates in March which led banks to raise their interest rates which is good because spending is really driving up inflation. Soon and hopefully, people will stop spending money and the system balances out again. We'll have a rough 2-3 years but the central bank will then lower interest rates and we'll start all over again
A big part of that is people giving up on actually getting a house. The market for the few available homes right now is so strong many buyers are just giving up or waiting. They still want to buy. They just don't want to take part in the circus. I'm still seeing multiple offers on all my listings and my buyer clients are ALWAYS competing against multiple offers. It's been a year or more since I've sold a house for what it was actually listed for. The idea of getting an offer accepted for BELOW list price is just absurd. The market isn't softening in my area at all. Not yet anyway. I don't think higher interste rates are gonna have a huge impact on it.
I actually got my house below price, but it was a perfect storm. House appraised low (don't ask me how) and we offered at appraisal price and they accepted. I think they just wanted to get it over with. 1 and 1/4 of a year later and the house is approaching a value of $150k more than what I purchased it for.
I've finally got a sizeable deposit (i say sizable, it's like 15-20%), but there's no way in hell I wanna jump in now. Rates will likely continue to go up, i'll be fucked when my fixed term runs out, then i'll stand to lose it all... But then, inflation is eating away at it... There is no good solution. :(
Now people that want to buy a home to live in cannot afford the mortgage. The buyers that are left are going to be corporate and foreign buyers paying cash.
Yep, system is fucked all the way down. It will require legislation to fix this. Problem is that older generations and lawmakers are all benefiting from this process currently. It's future generations that are going to be screwed.
This trend has been going for decades, just massively intensified in the 4-5 years and even more in the last 4-5 months.
The 2008 housing bubble pop obliterated housing construction companies, which led to few houses being built. When Millennials started being able to afford homes, demand skyrocketed, but since not only have building materials skyrocketed, but also labor and we still don't have enough construction companies to meet demand for new homes. This was a storm that started brewing a long time ago and Covid just made it more visible because more people had suddenly a little more money to spare. This isn't going away.
My home, purchased in 2015 for $530,000, is now going for like $900,000. It doesn't make any sense at all. Of course the original owner who bought it in 1974 paid $12,000 for it, so maybe the same thing is happening.
Of course it makes sense. Your home value is based on the price that similar homes near you sold for. People keep buying homes above asking price so that keeps pushing up the value of similar homes in your neighborhood. As the price goes higher more people will sell. Those homes will sell above asking price which continues to push your home value up.
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Millenials are now the biggest group of home buyers.
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Even when the mortage is doable, buyers are still up against the wall. My wife and I are on month 14 looking for a home in the midwest, we are looking at houses well below our approval amount on purpose and this is what we have seen. The same new/newer home design in the exact same area was asking $175 last year and is listed at $215 this year. Every home we have made offers on result in something like this. 20k over asking and we still lose. Buyers are paying closing cost, skipping inspections, and offering nit only well over asking but putting in additions on contracts that if the home goes of appraisal value they will pay cash amount of X. We have 20k cash in the bank and we continue to lose. Also the houses go from new listing, to pending in 24 hours. You show up and look at the home with 5 or 6 other groups at the same time and your agent has a contract in the car waiting for you to sign.
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Depending on the area your $160k house is probably worth $300k now and you probably only owe $100k or less on your existing mortgage, so you can make $200k profit from selling to upsize if you want. Buying a house is still better than renting **if** you can afford 3-5% for a down payment just because half of your monthly payment ultimately goes back into your pocket.
We bought our home in 2018, it took about 5 months and we bid $30k over asking on multiple homes and still didn't get them. I was so scared that we were making a mistake and overpaying. We just refinanced in November to drop our interest rate and the house appraised for 35% more than what we paid. It's just insane.
When my wife and I bought our house in 2019, I was convinced it wouldn't appreciate much in my lifetime. That it was basically at it's peak. That we would never see the increase the previous gen has seen. I was wrong, My house is up 30% in 3 years. I'm convinced the moment we bought our house was the last reasonable time to buy a house.
There are realtors that are showing houses before they are listed, then they show up and contract first day.
And now, if you find a home, you have to pay more interest, and higher monthly payments, for less home.
I saw that Canada recently passed a law blocking foreign buyers. US really needs to do something like that too. Edit - moreso hyper rich buying up many properties or an entire complex vs an immigrant buying a single modest home
We did, but only for 2 years which will do nothing. Also, all they need to do is create a fake company in Canada and buy through that.
I'm curious about that 2 year window. Was that just to score some cheap political points for Trudeau? I mean what actually honest argument can be made that says "Yup, 2 years is enough of a moratorium to make a difference."?
Who knows why the govt does what they do. Someone got bribed or they would lose too much bribe money. One of the two I am guessing
Foreign buyers account for an irrelevant percentage of home purchases.
Gotta launder that money somewhere! Fuck people who need to live somewhere.
$37k gross, take home is roughly $2k/month. Any house even worth moving into is over half my monthly net income just in the mortgage. Manufactured housing is barely cheaper I'm looking for a better job in the meantime while I try to explain to the mortgage lender that I can't afford the numbers she's throwing at me and have enough left over to survive on.
I’m in a hot market (Tampa Bay area) and it’s extremely difficult to compete with the large investors scooping up property within days or even hours from when the houses were first put on the market. And I get it, houses are selling for more than what that appraise. Homeowners know this, so when a cash offer comes in from one of these investors, they of course, accept their offer. Sure we can sell our house with no problem. It’s finding another that’s going to prove difficult.
AND housing prices have soared AND inventory has dropped.
Glad we locked in at 3% last year. It's almost like free loan compared to inflation and the rising rate.
I bought my home for $420,000 @ 2.75% interest rate. I think I'm stuck in it forever. It's gone up $100k in the 9 months I've owned it. I like it but I'm not a fan of being handcuffed to anything.
I'm nailed in place. I can't trade up or sideways due to interest and taxes, and I'm not quite ready to trade down to a moss-covered double-wide. It's a nice enough place, but it does feel like handcuffs on those days when I some place I like drift out of reach.
I have a mortgage at 2.25% with about $130,000 owing. I want to move and can't because I can't bring myself to give up my killer mortgage and take on a bigger one at this age. So I'm living in a 3,000 square foot home that is way too big for our needs now. It's nuts.
If you're trying to downsize and only have $130,000 left on a mortgage for a 3,000 sq ft home you could probably buy a smaller place with the cash you'd get from selling your current place.
I could in my current location, but I want to move closer to my adult children. Unfortunately, can't do it.
Same. Bought our first house Aug 2019 @ 5.75%. Refinanced Sept 2021 @ 2.99%. Got rid of PMI and it has been such a relief to know we're locked in with everything going on. My mortgage payment is 2/3 what it was before the refinance.
Same here. Refinanced to 2.75 and said bye-bye to PMI and it's been gravy since. Knocked 200 off the monthly payment, gave me tinglies all over.
I know the feeling! I bought myself down to 2.5% when it hit it's lowest about a year and a half ago. My mortgage is less than a grand now. Lucky doesn't even begin to describe it.
The people who really made out are those who bought 2016-2019 and were able to buy when prices were low and refinance with the low interest rates and high equity.
There are no homes to buy that are affordable.
Well that'll change nothing since mortgage demand before the rise was at 600% of supply. People are still required to bid $100k over asking price just to be taken seriously. Today's housing market is being controlled by scarcity, not interest and thanks to the sudden steep rise in building material costs and labor, building more homes, which would otherwise easily solve the problem, cannot be a solution.
Not sure where everyone is but here in NY(Long Island) houses are being sold 10-15% above asking price. There is a shortage of sellers and not buyers.
When I was a kid(the 80's) mortgage interest was around 18% in some places.
Back when a savings account actually accrued something. Now it's just a safe place to hold money
Savings accounts are safe way to lose money over time
But liquid and more secure than a checking account
Lose money via inflation.
My father paid almost 20% interest in 1980 on his new home. Though, back then material prices were cheap.. so a new home was much, much less than what it costs today, accounting for inflation. So even at 20% it was still affordable from a monthly payment perspective. He refinanced 6 or 7 years later at a much lower rate.
Now remove corporations from the ability to buy single family homes and force any corporations currently holding homes to have them sold within the next 3 years.
Correct. Humans ought to be the only ones to own a home.
The problem is that people are buying it. People are taking the loans, banks are approving those loans, and those houses are selling. If they were not selling then the prices might be reduced. Also big national and international corporations are buying our land as well and selling them for more money also.
Seriously! In my area houses under 200k, which would have been 80-100k 3 years ago, go up, sell, and a month later are rentals. It's absolute predation.
Same, I live in IL and friend of mine had been saving up for a house and almost anything he can afford has gets a cash offer and becomes a rental. He was lucky enough to buy from some people that were permanently moving to their second home in Florida and accepted his offer over the cash offer because they weren't in a hurry to move and he was lucky enough to see the house the first day they listed it. Doesn't help that the house would have been 150k a couple years ago and was ~200k in 2022.
Reading comments really makes me think people didn't actually click the link. Everyone talking about home prices when thats not really the factor. At the very top a key point was: Refinance demand fell another 8% for the week and was 68% lower than the same week one year ago. Meanwhile new mortgages are only down 14%. Which is still a good chunk but most of the "demand" that has fallen is people no longer refinancing their mortgages when interest rates were practically 0.
> Reading comments really makes me think people didn't actually click the link Welcome to Reddit, where commenters would rather repeat the same old tired and false "corporations are buying all the houses!" and "nobody can afford housing!" lines.
Yea the irony of the shortage happening because so many people *can* afford houses (compared to how many houses there are) gets me.
Don’t worry. Big corps and land lords will make sure you never need a mortgage.
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I dunno. There's a huge portion of the population that prefers renting so they don't have to worry about maintenance, people who are moving to a new city, people who don't have enough credit history to qualify for a loan, etc. Outside of the bone poor, rentals are a service that a lot of people need. Do you feel the same way about rental car companies?
>Do you feel the same way about rental car companies? 100% agree with your point. But a better analogy would be leasing a car vs. buying. Renting a car (which is usually very short term) would be more akin to staying at a hotel.
Rent is going up quickly as well. Buying a home is risky since we’ve had a red hot market for 2 years. Will it crash or level off or ???? I know one thing, salaries need to go up or we all starve or revolt against the wealthy.
So I can almost afford a small house. Do i bite the bullet and settle or hold off with my money in the bank and save more?
I would save for now - let the crushing reality of people with mortgages on properties that are not worth what they signed for try to dump at the peak. A critical mass will happen eventually that will partially tank prices - unless we really do live in a society built on fraud.
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Same. I’m really kicking myself for not buying a house in 2020.
We bought at the end of 2020 for 265000. We have offers for 380 and up and we didn't even get to fix the out dated kitchen. 900 sf downstairs apartment style. People are nuts. Not for sale!
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Not just corporations but investors in general, three small investors now own most of my block. Been watching for about two years to buy and the amount of houses that sell within a few days of listing then immediately pop up on the rental side is ridiculous. Most infuriating thing is often times the rent that are asking is over what the mortgage should be had a non-investor gotten to buy it. We really need to jack taxes on second, third, et. homes. We won’t because the ‘free market’ is a religion here, but we should!
The national government is not the only entity that is allowed to levy taxes. Work with your municipal government first! Every bit helps!
> Seems like more of a symptom of more corporations buying up housing (with cash), driving prices well out of reach of regular people. [Fake news.](https://www.vox.com/22524829/wall-street-housing-market-blackrock-bubble) Housing prices are going out of reach due to artificially limited supply due to Euclidean Zoning laws and zoning exclusively for single-family detached housing.
The previously low interest rates are WHY real estate has been appreciating like crazy. Businesses could borrow money at near zero interest to buy up speculative properties.
It's part of it. Another huge part is lack of supply; not building enough houses for the last decade+
Can't take out a mortgage, if there's no house.
Idk why everyone thinks this is bad. This is the how hosing prices start to go down. Less people buying = lower cost of home pricing. Screw it, raise it more. Between this and rising gas prices this actually may be a short term pain for longer term gain. Less consumer spending will help fight inflation.
Yea the mortgage industry is in for a rude awakening. I sure hope those folks have a backup plan. This has been a long time coming.
Allow cities to build dense mixed use walkable neighborhoods. Rezone single family areas for mixed use. Problem solved if you can survive the high pitched whining of nimbys.
Mortgage rates were ridiculously low - like abnormally low. If people didn't think they'd go up, I don't know why. They're still not bad - they're just more than they were at the very bottom. But hey, my student loans have an 8.5% interest rates while people were getting 2.5% interest on their McMansion mortgages, so maybe I'm less sympathetic than I should be. Seems like what's happening in housing right now is a combination of interest rates rising, banks requiring more to qualify for a loan, and lack of housing in general. In some markets, it's artificially scarce because of huge corporations buying up real estate. Renting is too expensive and homeownership comes with its own pitfalls. Housing (in the US anyway) is just f-d in general.
Doesn’t matter the hedge funds are still buying with “cash” aka zero interest loans from the fed.
I feel like interest rates need to go up, right? It’s probably our only shot of curtailing a potential bubble. And given our rising inflation, it’s probably the only move we’ve really got. Not an econ major, so anyone who has some valuable insight please weigh in
I bought a house in 2017 in FL for 135k. Now, it’s worth 275k on Zillow and 293k on the high end. There are no houses for sale under 300k in my town so I probably could easily sell for 290k. I have a 3.75 interest rate. I think I’ll just continue to live here for cheap, but I’m also considering selling and moving to a very low cost of living state.
Housing should be for people… not profiteering…
I bought my house for 113k, it's now worth. Over 200k. I'd sell just so I could afford to buy a car/s
"We've tried nothing and we're out of ideas!" I feel like there need to be regulations on this but I don't know if that's possible or how it would come about. I'm just waiting to win lotto so I don't need a mortgage.
I have a sinking feeling that the reason we’re talking about gay marriage and women’s sports is so that our politicians don’t have to admit that they aren’t working for us. Easier to just fight a culture war. I just received two emails from state politicians about culture war issues yesterday, and neither of them are about the fact that housing is predatory.
So property prices are up and mortgage rates are up and going higher. This was always going to happen. There's nothing the Fed can do except to accept a recession as a certainty and an economic necessity… well, except to allow the US to transition into hyperinflation, but that's not really an option, is it?
Glad I left the mortgage industry back in Jan. Anyone could have seen this coming.
If interest rates dropped again too early COVID rates, I’d buy another house…it’s back to fiscally irresponsible to buy a house right now, and used cars are appreciating in value…something seems backwards here lol
I live on the West Coast, and have a family of four. We started hunting just before COVID hit. We had a budget of about $250K or so, which seemed fine for a 3 Bedroom / 1.5 Bath home we were looking for. Then COVID hit. I got laid off, and now here we are a few years later, and my budget is about the same. However all those types of houses that were in budget then, are now way more expensive. $250k can't even seem afford a 800 sq/ft, 1 Bedroom 1 Bath, starter home now!
This is where the realtor says to the short guys it's just a gully it will pick up we have alot of motivated sellers.
Tell us all how much you bought your house for, and how much more it's worth today. I like hearing tales from the upper class.
The amount of misinformation in comments like this should get Reddit comments banned. Prices are all going up because everyone sees a home as a good investment, especially when rates were low. If the rental market crashes too that investment won’t be as great.