Housing Bubbles? Is this a housing bubble?
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@dcon said in Housing Bubbles? Is this a housing bubble?:
@topspin said in Housing Bubbles? Is this a housing bubble?:
When I first started hearing about these, my first thought was kitchen/bathroom access is gonna suck. It's bad enough sharing with just a couple roommates.
At any point in time somebody will have diarrhea and half of the rest have COVID.
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@LaoC they'll never see an experience like this coming! if you allow for some assumptions about their age and state of origin.
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@Gribnit said in Housing Bubbles? Is this a housing bubble?:
@dcon said in Housing Bubbles? Is this a housing bubble?:
@Benjamin-Hall said in Housing Bubbles? Is this a housing bubble?:
@dcon I'm sure that none of them cook more than microwave.
Burnt popcorn for all!
Nothing heats up fish like a microwave.
I don't own a microwave. For reheating stuff I use my steam oven instead, but I suspect the effect on fish is different.
Steamed fish is good.
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@LaoC said in Housing Bubbles? Is this a housing bubble?:
half of the rest have COVID.
So they won't be able to smell the burnt popcorn. Problem solved!
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@Zerosquare said in Housing Bubbles? Is this a housing bubble?:
@LaoC said in Housing Bubbles? Is this a housing bubble?:
half of the rest have COVID.
So they won't be able to smell the burnt popcorn. Problem solved!
Nor the diarrhea. Win-win.
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Just over $1.6M USD
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@loopback0 895.5 square feet (83.2 square meters). That's smaller than the apartment I was renting in Silly Valley (1000 square feet). Assuming 20% down and 5% interest, the payment would be more than double what I was paying for that apartment, even with Silly Valley's inflated prices. It's less than half the size of my current house in TX, and 2.7x the price (based on Zillow's estimate of ~$600k).
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@boomzilla Ayyyyeeeeee
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That's rather redundant, since the vast majority of management is waste. But it tends to be well-paid waste, so that kind of waste management could afford a house like that.
Somewhat more seriously, that would not have been affordable for a single-income family in Silly Valley, unless the income was at least middle-management or higher. It's hard to tell just how big the house or lot are from that single photo, but I'd take a guess at $700k+ in 1999 in Silly Valley. $2M today.
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@HardwareGeek https://www.forbes.com/sites/keithflamer/2019/06/03/tony-sopranos-iconic-new-jersey-house-lists-for-3-4-million/
Per the article, comparable houses in the neighborhood (but not The House From A TV Show) were worth $1.5 million.
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@HardwareGeek said in Housing Bubbles? Is this a housing bubble?:
$700k+ in 1999 in Silly Valley. $2M today.
Bada bing!
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@GuyWhoKilledBear said in Housing Bubbles? Is this a housing bubble?:
comparable houses in the neighborhood (but not The House From A TV Show) were worth $1.5 million.
So probably at least $3–4M in Silly Valley.
Note, I've never seen the TV show, so I have no idea how big or fancy it is, other than what I can see in that photo.
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OK, but more seriously...
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@HardwareGeek said in Housing Bubbles? Is this a housing bubble?:
I'd take a guess at $700k+ in 1999 in Silly Valley. $2M today.
Only if it's located in the slums. Remember, my 1400sf home is worth nearly 2M now.
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I guess that if you're single and suffer from agoraphobia... why not?
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@Zerosquare said in Housing Bubbles? Is this a housing bubble?:
I guess that if you
're single and suffer from agoraphobiawant to live in London... why not?FTFY.
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Remember: no kink-shaming.
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Tricky question:
When a new apartment trades for 5x NVIDIA GeForce RTX 3090 Ti and 5 Bitcons, is that a bubble?
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@dcon Nah, you've got the decimal point shifted. In California, that's $1,800,000.
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@HardwareGeek said in Housing Bubbles? Is this a housing bubble?:
@dcon Nah, you've got the decimal point shifted. In California, that's $1,800,000.
You're assuming a larger lot size I think. I assumed the lot size extended about 2 feet from the tent. Maybe a couple more in front.
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@boomzilla Nearby vegetation thankfully awaiting your number 1 and number 2 donations.
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1800 square feet.
Under offer
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@loopback0 By Silly Valley standards, that's cheap. My 1400sq home is valued between 1.5 and 2M.
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@dcon said in Housing Bubbles? Is this a housing bubble?:
@loopback0 By Silly Valley standards, that's cheap. My 1400sq home is valued between 1.5 and 2M.
There's a 1500 square feet property nearby for £1.5m.
Pricewise lots of London is Silly Valley.
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@loopback0 Or like Amsterdam 78m2 (840ft2) for 1.3M. Under offer.
https://www.funda.nl/koop/amsterdam/appartement-42860208-van-breestraat-159-c/?navigateSource=resultlist
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Prices are rigged?
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@loopback0 said in Housing Bubbles? Is this a housing bubble?:
1800 square feet [for £1.4m].
There's a 1500 square feet property nearby for £1.5m.
That's... about 10k / m^2, I think? I believe this is also the average price in Paris. So sadly, not very surprising.
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@boomzilla said in Housing Bubbles? Is this a housing bubble?:
Home prices are falling at a record pace
Despite the nationwide trend of falling home pricesPrices are still up for the year, but the percentage keeps dropping each month. The S&P CoreLogic Case-Shiller Index, which tracks national home prices, reported annual gains at 13% in August, marking a decline from 15.6%
S&P also reported that the 10-City Composite annual increase fell from 14.9% in July to 12.1% in August, while the 20-City Composite annual increase fell from 16.0% to 13.1%. The largest declines in housing prices came from San Francisco, Seattle, and San Diego.So which is it? A "declining increase" is not a decrease. The prices are still rising.
According to them, anything with sublinear growth is a "decrease". Here's a quick mock-up of what they call declining prices:
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@topspin said in Housing Bubbles? Is this a housing bubble?:
@boomzilla said in Housing Bubbles? Is this a housing bubble?:
Home prices are falling at a record pace
Despite the nationwide trend of falling home pricesPrices are still up for the year, but the percentage keeps dropping each month. The S&P CoreLogic Case-Shiller Index, which tracks national home prices, reported annual gains at 13% in August, marking a decline from 15.6%
S&P also reported that the 10-City Composite annual increase fell from 14.9% in July to 12.1% in August, while the 20-City Composite annual increase fell from 16.0% to 13.1%. The largest declines in housing prices came from San Francisco, Seattle, and San Diego.So which is it? A "declining increase" is not a decrease. The prices are still rising.
According to them, anything with sublinear growth is a "decrease". Here's a quick mock-up of what they call declining prices:
It's not their fault they went to the same business school as people who work in the Congressional Budget Office
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@topspin Real house price falls are because you have people end up owing more money than the value of their assets.
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@TheCPUWizard said in Housing Bubbles? Is this a housing bubble?:
Heck, I remember when $59K for a house (now valued at around $800K) was "a bubble".... Amazing what 40 years will do....
Amazing what moral hazard will do. The only reason it's possible for house prices to inflate so insanely high is a lethal combination of 1) insanely long-term mortgages 2) which then get handed off to other parties to play hot-potato with the crazy levels of risk that should have kept long-term mortgages from ever being a thing in the first place.
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@dkf said in Housing Bubbles? Is this a housing bubble?:
@topspin Real house price falls are because you have people end up owing more money than the value of their assets.
House price fluctuations aren't a problem for homeowners. If you own your home, here's what can happen:
- You continue to live there. It doesn't matter what the price is, because you're not selling it, you're living there. It's not an "asset", it's your home.
- You want to move, and prices have gone up. This doesn't matter to you, because you're selling this place and buying a new one somewhere else, and prices have gone up there too. So it all evens out.
- You want to move, and prices have gone down. This doesn't matter to you, because you're selling this place and buying a new one somewhere else, and prices have gone down there too. So it all evens out.
There are two groups of people to whom price fluctuations really matter, and both of them are not homeowners. One is speculators: house flippers and investment companies. They take on risk with each purchase, and if things go sideways, well... they knew there was risk when they went into it. They want prices to go up because housing is an asset to them rather than a home, and they engage in all manner of market manipulation to make this happen.
The other group is prospective homeowners: people who want to be homeowners but haven't purchased one. Prices going up or down really matters to them in a way that it doesn't matter to homeowners, because they don't have an existing house they can sell to offset the cost of the purchase. They want prices to be low so they can afford to buy a house, which makes their interests diametrically opposed to that of the speculators.
And if I had to choose between housing to give people a home or housing to make people money, I'd pick "every last speculator can watch their balance crash and burn" 11 times out of 10. The last bubble popped for a very good reason, and speculators have spent the last 10 years reinflating it. Now that this one's popping, we can only hope they'll learn the lesson the second time around.
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@Mason_Wheeler you missed the fact that house prices are regional with high granularity. So if prices near you drop a lot but where you're moving don't drop as much, you're in for bad times.
The other issue comes in with things like balloon/interest only mortgages. Because if the expectation is that you'll refinance and the "improved" prices drop your LTV ratio enough to get a more conventional loan, but the prices drop instead so now you're on the hook for the entire balance...
It also screws all the people in the construction and real estate business, which has ripple effects throughout the economy.
I do agree that people should not depend on their house prices going up. But they have. House prices should come down, they're way over inflated. But let's not kid ourselves about the pain that will cause even for that who did everything right.
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@Mason_Wheeler said in Housing Bubbles? Is this a housing bubble?:
House price fluctuations aren't a problem for homeowners. If you own your home, here's what can happen:
- You continue to live there. It doesn't matter what the price is, because you're not selling it, you're living there. It's not an "asset", it's your home.
- You want to move, and prices have gone up. This doesn't matter to you, because you're selling this place and buying a new one somewhere else, and prices have gone up there too. So it all evens out.
- You want to move, and prices have gone down. This doesn't matter to you, because you're selling this place and buying a new one somewhere else, and prices have gone down there too. So it all evens out.
Case 3 is only a non-problem if you've paid more in principal than the difference between your
purchase priceloan amount and the current selling price. With how heavily biased the early payments are towards interest, that may not be true for someone who's only been in the house for 10 or 15 years.
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@Unperverted-Vixen If you've "only" been in the house for 10 years, it should already be mostly or fully paid off. With how heavily biased the early payments are towards interest, even a minuscule amount of additional-principal payment at the start has a surprisingly large effect.
Grab an amortization calculator sometime and see just how far an additional $20/month will get you on a standard 30-year mortgage. That's how my family did it, and after the first year we were almost 4 years into paying it off!
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@Mason_Wheeler I agree that that's the smart thing to do (and have been doing so myself). But it's legitimate to not do it so you can't just assume homebuyers did.
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This post is deleted!
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@Unperverted-Vixen depends. The money you pay now is worth more than the money you'll pay in the future. In fact, my own mortgage's interest is way below inflation right now, and will stay there for quite a while. The bank is actively losing money on this loan. From purely mathematical standpoint, it makes no sense for me to do any extra capital payments.
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@Gustav I haven't run the numbers myself. It wouldn't surprise me if you're right, though - I probably "should" be buying I-bonds instead. If only their website didn't suck such ass.
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@topspin said in Housing Bubbles? Is this a housing bubble?:
According to them, anything with sublinear growth is a "decrease". Here's a quick mock-up of what they call declining prices:
It’s past the inflexion point!
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@topspin said in Housing Bubbles? Is this a housing bubble?:
@boomzilla said in Housing Bubbles? Is this a housing bubble?:
Home prices are falling at a record pace
Despite the nationwide trend of falling home pricesPrices are still up for the year, but the percentage keeps dropping each month. The S&P CoreLogic Case-Shiller Index, which tracks national home prices, reported annual gains at 13% in August, marking a decline from 15.6%
S&P also reported that the 10-City Composite annual increase fell from 14.9% in July to 12.1% in August, while the 20-City Composite annual increase fell from 16.0% to 13.1%. The largest declines in housing prices came from San Francisco, Seattle, and San Diego.So which is it? A "declining increase" is not a decrease. The prices are still rising.
According to them, anything with sublinear growth is a "decrease". Here's a quick mock-up of what they call declining prices:
Did you think they could understand calculus? Things like first derivative, and second derivative?
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@Mason_Wheeler said in Housing Bubbles? Is this a housing bubble?:
You want to move, and prices have gone down. This doesn't matter to you, because you're selling this place and buying a new one somewhere else, and prices have gone down there too. So it all evens out.
That's not thinking through it. If you're selling but the amount that you're likely to obtain through selling is less than the amount of the outstanding loan, you're in a bad place called Negative Equity. At that point, you're stuck and you can't even refinance out of it because the property probably won't now provide sufficient collateral to cover the size of loan you need to take out, or not at an interest rate that you like. The only way out of Negative Equity is to continue to pay down the principal and hope for asset prices to go back up, but shit can happen to foul that plan up and prices can stay down for a long time.
If you've got the income to pay down the principal rapidly, you won't have much of a problem with negative equity. But that's very much not everyone. You've got to look at loan-to-income ratios.
I mention this because the UK had a burst of significant negative equity problems back in the late 1980s and early 1990s. It was a big economic drag.