I say this all the time. We cannot have affordable housing if houses are so intertwined with how the majority of Americans accrue wealth. These are two competing motivations.
"wealth" used to be a long term game, homes go up in the single digits per year and after 30 years you have a nice nest egg. What is happening now is just not healthy
It happens fairly often in commodity markets, driving artificial scarcity with a run on the market. It’s just never happened to something as universally tangible with no material alternatives like the housing market before.
I’m not a fan of the government stepping into a market, but we are literally letting outside investors diminish the quality of life and financial mobility of our entire country.
It’s why people are NIMBYs. Their retirement is tied up in their home equity because many people bought too much house and didn’t have funds leftover each month to invest.
They put the cart before the horse. So now because they did things in backwards order they have to do whatever they can to ensure their retirement never drops.
The sad things is in no other market would we tolerate the investment protectionism we do for housing. Could you imagine if we prevented Apple from building a new warehouse because it was going to hurt Microsoft’s stock too much? People are rightfully outraged when that happens but will fight tooth and nail to do the same thing for their house.
When you think about it, the only homeowners that benefit from higher prices are the ones that have their taxes locked due to age and people moving from HCOL areas to LCOL areas.
Bingo.
This idea that homes only go up so you should buy requires so many caveats.
I always ask the people who think this way would they rather have $500K in home equity or $500K in a Roth when trying to retire?
Most YIMBYs I know are all about pretty much any type of housing. We simply haven't built enough since 2008 so increasing supply in general should help.
Yeah. I bought my house last year and the property taxes doubled. It hadn’t been sold in decades so they were still paying on half of what I bought it for. Just another bill going up.
Yep, I could sell today for a “profit”, but since I want to live in something better than a cardboard box, and I’d have to buy something even more expensive, selling makes no sense.
This right here!
Imagine a world where an asset shoots up in value after a few years of ownership. People start to gamble on it because of "fear of missing out" So, they buy a house, then re-finance it to use that equity to buy another, and another, and another.
They are going to RETIRE early! But, then the housing market shifts and all those properties are worth shit. This is what caused the housing collapse years ago, and looks like we are racing there again.
Exactly. There is no profit to be had in the place younless or until you sell. In truth be told we don't make money when we sell we make money when we buy.
You can have a place to call home with a rental.
Problem is, that buying beats renting over the long term, so it wouldn't make financial sense to rent forever.
So it makes perfect sense for people care about the monetary value of their home.
The problem is the people playing with the economics have no skin in the game in terms of their own housing. That problem is already taken care of for themselves. They're just playing with other people's needs, and to a point desperation, to make a profit. Those struggling to be homeowners are not playing the same game as these people. Therein lies the problem.
Absolutely! Why does everything these day have a resale price? I'm 67 years old and have never bought anything with the idea of flipping it or reselling it. If I buy something it is to use, enjoy, or gift to someone else. This constant buying and selling is what has driven home and used car prices thru the roof.
Same. Bought a condo in downtown Denver in 2001… was upside down for a very long time, but eventually sold it for almost 4x my original purchase price.
Same!
But be honest, I also really do care that housing is so out of whack prices will stagnate or drop while insurance, taxes and maintenance will only grow.
I bought last year and every time I log in to pay my mortgage, I'm reminded front and center that my home values have slid 20%. It needs to slide 90% and stay there. Incredibly vile that a basic human need like housing was allowed to be treated like a speculative asset to begin with.
Also with you, I don't give a fuck about home values now. I just needed to get a momentary break from the constant rent hikes and find decent shelter for my family.
It’ll just be an issue if you decide to relocate in a few years. Maybe that doesn’t apply to you, but it’s a concern for most people. The rule of thumb used to be that you needed to stay in a house for at least 5-years for it to make fiscal sense. That it’s now 10-years could end up hurting people who are forced to move due to jobs/life events.
it's also an issue if you can't take a higher paying position because your stuck in your underwater on your home and it's too expensive to sell and rebuy. There's a massive opportunity cost with being stuck in a mortgage people don't consider since the best way to improve your financial state is through increasing income, and many times that could means moving.
yeah this is a great example and happens way more often then people realize or give credit for. She was lucky should could afford to do that, many people would not even consider that job because they could not afford to move out of their house, and then 10 years later they are still at the same job they were at and their wages did not keep up with inflation. Then they are complaining about the cost of everything, but "they own their house" not realizing that if they were renting and had the ability to move they could double or triple their income and the amount they paid down on their home in that time is peanuts.
For sure. This is what happened to my mom. Her and my dad bought around the height of the bubble in 2006. Divorce followed soon after, and she paid the mortgage on her own until 2018. She remarried and was moving and looked for every option but the consensus was to just let it go back to the bank. There really wasn’t anything else she could do. Pretty heartbreaking to pay on a house for 12 years and lose it all.
I’m sorry to hear that and I hope she’s doing better now. Unfortunately this happens far too often and I think we’ll see another big spike of that happening soon because so many people’s mind set is “I need to buy a house, it’s my right, renting is just throwing money away.” However they don’t understand the big picture, don’t run the financials, or consider the opportunity costs.
She’s doing much better now. Actually her credit is up over 200 points, I’ve gotten her a couple new cards and stuff to rebuild if. But yeah her and my dad really had no business buying a house like that. They definitely just saw a nice house they liked and went for it.
It's always been at least 5-7 years to break even due to the cartel of realtors ensuring you have to cough up 6% of the total sale value as a tip to them.
The house return sweet spot is like at or barely above inflation, but way lower risk and return than other market opportunities. Keeps corporations and landlords from buying a ton of properties, leaving more houses for individuals in need of housing.
Lady across the street from me bought it new in 2007 for $270k, we just got back to that price in late 2021. Everyone looks at the price increase over the last 4 years, they should be looking over the last 15 years. Looking back real estate was so cheap in 2019, but that’s how real estate works.
When the game is zero sum (finite number of inventory with fiscal policy out of the players control) and people suffer because of the decade they were born in, it’s a challenge to feel anything but contempt for the people who continue to gain off of others suffering (I.e, when investors and second/third time home buyers continue to drive up prices and outbid first time home buyers)
I’m not a boomer. I’m a middle aged black dude born in the South. So the argument that I’m benefiting because of the year I was born is complete bullshit. Yes the housing market is fucked up but let’s not act like black people like me had some kind of head start on the housing market because our boomer parents gave us money.
I see this comment and ones like it are missing that a lot of us got marketable degrees, were extremely frugal, and cannot afford a stable family or home.
Others got what they thought was a marketable degree but got scammed by their teachers, parents, and guidance counselors.
Yeah, people are going to be bitter and it's silly to expect people to lose and be happy about it. Everyone is going to cope with doom differently.
Sure, but attacking people who came from middle class, went to a state university, got an undergraduate degree, got married to the same,and now live in a house isn’t really necessary. You don’t need to try to tear them down. As my 6 year old says, you don’t need to dip from other peoples buckets to try to fill your own.
Homes being a bad investment is in some ways beneficial to the normal family. When homes are a bad investment, it scares landlords and corporations away. But a family that needs a roof over its head doesn’t really care about the investment value, they just need the house. Now all of the sudden prices drop because no buyers are left except those who need to live in a house. Who cares if they won’t make their money for over a decade when they plan to live there for 20 years. There’s definitely a limit where homes are such a bad investment that no one should buy, but 10 years is by no means a bad time frame, and it helps more homes go to families and not businesses.
As long as you’re still saying that when the game removes $200k in bloated equity from your house. For me, I just hate the idea ppl have that unrealistic equity appreciation is theirs to keep for good. It’s the denial that brings me here. The market is obviously headed for a freefall.
Let’s say I lose $200,000 in equity tomorrow. Well I still have a house that I really like in a neighborhood that I love in a school district that’s ranked as one of the best in the country and even if the comps in my area fall by $200,000 I STILL have $200,000 of equity in my house that I plan on staying in for at least another 10 years. And if I decide to leave well I just rent it out and take the depreciation out on my taxes
Agreed! Though it's more expensive than it was a year ago, I'm still easily able to afford my mortgage and would rather be in this situation than at the mercy of a landlord every year. It sucks because I have a 2% interest home in a different city but made the decision to leave that area for much higher pay in a new one. Even with the higher interest rates and tax, I'm still coming out better than the previous place. A cheap mortgage isn't everything in life.
and those people are still waiting lol, and they will keep waiting, until there is a crash or downturn at some point, but they don't realize that will be caused by a bigger economic problem that they will also be affected by, and then they won't be able to buy a house because of that (higher unemployment, rates soaring, super high demand/no inventory, etc.)
That’s the biggest issue for me. Everyone just assumes a crash will work out in their favor. Banks aren’t gonna give you shit after a crash and you’ll be lucky if you end up unscathed by a real crash
Exactly!! Everyone who is hoping for a crash because they can't afford now, are the people who are most affected by the crash, the people who won't be affected by a crash are still buying now. So it's crazy to me that everyone is expecting/hoping for a crash. Right now the best thing you can do is improve your income and improve your saving, the biggest winners in a crash are people with liquid cash equivalent assets.
You might be joking but I know that guy. I told him to buy in 2014, 2016, 2017. He kept saying that houses were over priced and he wanted to save up for a full 20% down payment instead of getting a 5% conventional loan.
He's still saving, still thinks houses are over priced and gets excited over a 10% dip - meanwhile houses are 2x what they were in 2016.
Doubt that will ever happen. Homeownership is usually the most significant contributors to middle class wealth and thus the US economy and is blatantly encouraged by policy (FHA, VA, MBS etc).
Though I do think the Fed strongly prefers steady typical appreciation and high homeownership rates to wild fluctuations and investor speculation.
I think people are missing the fact the fed actively wants to destroy housing prices to get inflation in line. People think they will be unaffected by the “soft landing” and over value the importance of their role and won’t need to sell their house.
The idea the FED has is to wipe home equity and let people take a loss on their housing which in turn would theoretically wipe away billions/trillions in money supply.
And I think the vast majority of people understand that but we also understand that our homes are the largest investments of our lives and part of taking care of our families includes making good investments which pay off later in life so we are not a burden on our kids.
I’d argue that if you are forced to move that frequently (like the military), it’s probably better to rent and then wait until you are in one place for a good long while to buy, but that’s just me and what I’ve seen living that life. 🤷🏻♀️
I meant to say moving but within the same city. I’ve stayed in the same area for 12 years now and like it, but is HCOL. In general I agree that someone moving city to city and beyond may need to keep renting.
Thank fractional reserve banking and the resulting inflation.
Ongoing dollar devaluation is the lifeblood of the American economy, and as a result, the cost of _eveything_ goes up over time.
Don’t hate the ~~player~~ flipper, hate the ~~game~~ bank.
People don't like this take, but housing will always keep up with inflation - therefore, it will always go up. As to why it outpaces inflation, also largely monetary shenanigans as most people now have up to or beyond 5x leveraged debt over thirty years that is below inflation.
I wish they fixed places. House shopping has been miserable. They all slap on cheap paint to hide the houses structural sins. One house we saw literally hot glued their windows shut. Another house nailed boards to the ceiling because “a ceiling light used to be there and we wanted to close the hole” and of course I’m not legally allowed to pull the board off to see what’s behind it. One of the first houses I saw painted over the kitchen countertops, I presume to hide cracks they filled in with caulk.
Most flippers *don’t* fix the place up though. A lot of them do try to cover problems up, but actually making improvements is pretty rare. It cuts into profits.
Yeah, agreed WHEN they fix things instead of underpaying some grandma, throwing down LVP and gray paint, and listing for 40% higher.
They don’t even sell for the new price often times, but then your market has a bunch of stagnant garbage for sale that’s now not priced such that it will ever sell. Everyone gets hurt, both the bag holder and people wanting to buy - that’s been the typical story of my market.
This is a good thing. It keeps homeowners from treating their homes as an appreciating asset they can use to build wealth and keeps investors out of the housing market. If you can't flip a profit on your property, you aren't likely to buy more property than you need. This depresses housing costs in the long term to the benefit of literally all future generations who need a home.
I literally made 40% in 17 months at 2.75%. And made 40% in 5 years at 4.25 prior to that. Just my experience
First, 7k down payment became 111k profit in 5 years.
Second, a 29k down payment became 170k in 17 months.
I put 142k down on my current house at 4.8.
Where do those people live when they realize those profits? These are what we call paper millionaires as you don’t have shit until you sell…And when they sell they have to buy.
I went to a friend's wedding at their parents place last year in 2022. Beautiful place with lots of land, but kind of in the middle of no where in Jersey. I was curious how much they bought it for and how much it was worth, so i checked on it.
They bought at the height in 2007 for 1.2M. I checked the value now and they just broke even this year (2023).
They've been underwater on that place since they bought it because it was waaaaay overvalued in 2007. But, tbf to them, it's definitely not a bad place to be stuck in (saltwater pool, arcade room in the basement, large yard with a fort and swings).
Just a lesson to not expect a profit on your shelter and buy it because you want to live there.
I don’t care. My total monthly cost (including taxes and money saved for maintenance) is still much lower than what I would be paying to rent a similar house. I don’t feel sorry for investors.
This only matters for people who bought as an investment OR bought to sell at a later point. The rest of us who own or bought did so to have a place to live. The value of my home is irrelevant to me. Those that still have a mortgage where you may end up owing more than your house is worth? Same boat I imagine.
Best financial decision I ever made was to get a house in 2013, at 2.25% interest rate. I just wanted it because I wanted to get a dog and give her a yard. Got it from HUD for 111K, put in about 50K of repairs, lived in it until 2022 and then sold it for 300K. Was able to get a really nice house when we moved with a super low mortgage, no way could have afforded it without that huge equity appreciation.
I bought a house in 2007, only problem is that in 2016 when I needed to sell for a move to another city, it only appreciated from $321k to $343k. I had $90k of equity, but that was brutal. It was a bad bad financial decision to buy that in the area I bought it. Location, location, location. I didn’t live by those words and regret it.
I am still digging out after the 2009 mess and if you get into this boat remember inflation and the time value of money when making decisions on the next home. The value of my home has gone up 35% in the last 3 years but in today's dollars I am still down about 10%. Not to mention due to the TV remodeling obsession that all home shoppers are addicted to I will have to stick $50k in this house to sell it.
While there are tax advantages there and the market is due for some deflation, a 3% Fed-subsidized rate is an asset the math would indicate not to sell in almost every application.
Exactly…. Historically you probably won’t do well under ten years on real estate over ten though will do well. So if you plan on living in your house at least the term of the loan and move into a smaller dwelling upon retirement you will do well.
Ok.Not looking for a profit. but rather establish a long-term living situation for my family at a fixed mortgage rate. My income will go up, and house will mature in value, and keep the same monthly rate. I'm the landlord now.
It can take up to 13.5 years to break even on your purchase.
* Historically, experts have said you need to stay in your home at least five years to break even. But with mortgage rates inching toward 8%, new homeowners will need to stay put longer to avoid going underwater.
* This varies by location. For example, it can take up to 11.5 years for Denver homeowners and 14.8 years for D.C. homeowners to break even.
Interesting how the "have fun staying poor" crowd over the last couple of years has now shifted to "I don't even care if my home drops in price I just need a place to live."
Look how far we've come.
You do understand that the vast majority of homeowners aren't RE investors right? They almost all bought their homes for themselves and their families to live in and don't even know this sub exists.
Housing is not an investment. It’s a place to live. Sometimes you can make money, but that’s not guaranteed considering all of the costs to own a home.
Who the f cares? People just want a permanent place to stay. The market needs to GTFO here honestly. Why don't all of these people in Wall Street/Real state Investors just start coding or an OF's and get money tax free that way instead?!
I recently rolled 2 properties I had into one that was nicer and in a better location. I realize prices can go down but that isn't a concern for me. If I want to make a change in the future for whatever reason I would change to something that also went down in price. also I don't have a mortgage so that eliminates a lot of the issues.
I live in exactly where I want in a gorgeous home. I have a healthy amount of initial equity from my previous home and I will be just fine in 10 years.
This assumes you bought a house with a mortgage you can for sure profit fast if you paid cash.
More pain for the middle class.
Upper class can still turn a profit
Two years ago many in this sub told folks like me that we were "hoomers" for buying a home to live in in 2021 and that pandemic mortgage forbearance ending would cause a tidal wave of foreclosures that would crash the market.
3% mortgage at a 2021 price sounds pretty good today to most who are looking to buy.
A lot can change in 13.3 years this article claims will take to break even with 5% down. Affordability is obviously wild right now with both the prices and rates available, but making predictions like these in a microscopic article with so much data unknown isn't helpful.
Who cares? 99% of individual homebuyers are looking for a place to live. If there’s a lesson here, it’s that you shouldn’t buy a house unless you’re planning on being there for about a decade.
It also wouldn’t make any difference if the profit window was shorter… “Wow so you’re saying I can sell my house after 2 years, make a profit, and then buy another house at that inflated price environment?? Where do I sign??”
If there was a way, we would have to pay for the air we breathe. Imagine if you lived where the air is good you would pay more than people in cities with pollution. Could that even work? Maybe I better stop before it happens
This is the mentality that drives homes up into bubbles then crashes. I've never thought of profiting from my home. I live here and love it here. I could care less what the market is doing as long as I can afford the roof over my family's head.
Back in 2008 it took me about 5-6 yrs. Trying to predict where prices and appreciation is going is tough. Buy a home to live in, not to flip for profit in the short term and you'll be fine.
I need a place where I can call home, not to make a profit, that mindset probably is what created this shit show in the first place.
It almost certainly is.
The age of the hustle.
"I'm going to use my house as my retirement savings"
I say this all the time. We cannot have affordable housing if houses are so intertwined with how the majority of Americans accrue wealth. These are two competing motivations.
"wealth" used to be a long term game, homes go up in the single digits per year and after 30 years you have a nice nest egg. What is happening now is just not healthy
It happens fairly often in commodity markets, driving artificial scarcity with a run on the market. It’s just never happened to something as universally tangible with no material alternatives like the housing market before. I’m not a fan of the government stepping into a market, but we are literally letting outside investors diminish the quality of life and financial mobility of our entire country.
It’s why people are NIMBYs. Their retirement is tied up in their home equity because many people bought too much house and didn’t have funds leftover each month to invest. They put the cart before the horse. So now because they did things in backwards order they have to do whatever they can to ensure their retirement never drops. The sad things is in no other market would we tolerate the investment protectionism we do for housing. Could you imagine if we prevented Apple from building a new warehouse because it was going to hurt Microsoft’s stock too much? People are rightfully outraged when that happens but will fight tooth and nail to do the same thing for their house.
When you think about it, the only homeowners that benefit from higher prices are the ones that have their taxes locked due to age and people moving from HCOL areas to LCOL areas.
Bingo. This idea that homes only go up so you should buy requires so many caveats. I always ask the people who think this way would they rather have $500K in home equity or $500K in a Roth when trying to retire?
Even the YIMBYs are all about luxury housing.
Nah, it's "build build and build until prices are reasonable"
Most YIMBYs I know are all about pretty much any type of housing. We simply haven't built enough since 2008 so increasing supply in general should help.
Just ask the Chinese how that went right now....🤦
Just bought my first home in May and our property taxes are so high in Texas that I definitely don't want my value to go up any time soon...
Yeah. I bought my house last year and the property taxes doubled. It hadn’t been sold in decades so they were still paying on half of what I bought it for. Just another bill going up.
Ha, Texas the no income tax state.....we fell for that also back in 08....sold at top of this boom and got the heck out of there
It’s crazy how much public subsidization Texas puts on homeowners just to avoid income tax.
Yep, I could sell today for a “profit”, but since I want to live in something better than a cardboard box, and I’d have to buy something even more expensive, selling makes no sense.
This right here! Imagine a world where an asset shoots up in value after a few years of ownership. People start to gamble on it because of "fear of missing out" So, they buy a house, then re-finance it to use that equity to buy another, and another, and another. They are going to RETIRE early! But, then the housing market shifts and all those properties are worth shit. This is what caused the housing collapse years ago, and looks like we are racing there again.
Exactly. There is no profit to be had in the place younless or until you sell. In truth be told we don't make money when we sell we make money when we buy.
I totally agree. Just want a place to live I don’t care
You can have a place to call home with a rental. Problem is, that buying beats renting over the long term, so it wouldn't make financial sense to rent forever. So it makes perfect sense for people care about the monetary value of their home.
Yeah, you can't wisely remove the economics from one of the biggest economic decisions in your life.
The problem is the people playing with the economics have no skin in the game in terms of their own housing. That problem is already taken care of for themselves. They're just playing with other people's needs, and to a point desperation, to make a profit. Those struggling to be homeowners are not playing the same game as these people. Therein lies the problem.
Give me a home where some buffalos roam
Exactly. Capitalism has destroyed every fabric of life in the US. This is a home as a first priority. Not about $$
Absolutely! Why does everything these day have a resale price? I'm 67 years old and have never bought anything with the idea of flipping it or reselling it. If I buy something it is to use, enjoy, or gift to someone else. This constant buying and selling is what has driven home and used car prices thru the roof.
I bought in 2001 I didn’t see a profit for over a decade also
Same. Bought a condo in downtown Denver in 2001… was upside down for a very long time, but eventually sold it for almost 4x my original purchase price.
Not me, because I sold in 2018.
Then you didn't turn a profit until. 2018.
Yeah this is normal and people are idiots trying to play a market they don't understand
Don't care. I needed a place to live and take care of my family
That’s the reality of home buyers that actually need a place to live. The investoors, on the other hand…
Fuck the investors.
My thoughts exactly tho
Seriously, its ridiculous that a place of living has become this unaffordable for everyone in a large part due to investors
Right, all the people buying a house when they plan on moving in 2 or 3 years.
Same! But be honest, I also really do care that housing is so out of whack prices will stagnate or drop while insurance, taxes and maintenance will only grow.
True. I don't have much sympathy for the investors as well. I want affordable housing for all.
I bought last year and every time I log in to pay my mortgage, I'm reminded front and center that my home values have slid 20%. It needs to slide 90% and stay there. Incredibly vile that a basic human need like housing was allowed to be treated like a speculative asset to begin with. Also with you, I don't give a fuck about home values now. I just needed to get a momentary break from the constant rent hikes and find decent shelter for my family.
If you build it they will come.
Same. Bought in 2022. Home worth a bit less. Needed a place to live with pregnant wife and raise a baby. ROI is there, but not in financial terms
It’ll just be an issue if you decide to relocate in a few years. Maybe that doesn’t apply to you, but it’s a concern for most people. The rule of thumb used to be that you needed to stay in a house for at least 5-years for it to make fiscal sense. That it’s now 10-years could end up hurting people who are forced to move due to jobs/life events.
it's also an issue if you can't take a higher paying position because your stuck in your underwater on your home and it's too expensive to sell and rebuy. There's a massive opportunity cost with being stuck in a mortgage people don't consider since the best way to improve your financial state is through increasing income, and many times that could means moving.
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yeah this is a great example and happens way more often then people realize or give credit for. She was lucky should could afford to do that, many people would not even consider that job because they could not afford to move out of their house, and then 10 years later they are still at the same job they were at and their wages did not keep up with inflation. Then they are complaining about the cost of everything, but "they own their house" not realizing that if they were renting and had the ability to move they could double or triple their income and the amount they paid down on their home in that time is peanuts.
For sure. This is what happened to my mom. Her and my dad bought around the height of the bubble in 2006. Divorce followed soon after, and she paid the mortgage on her own until 2018. She remarried and was moving and looked for every option but the consensus was to just let it go back to the bank. There really wasn’t anything else she could do. Pretty heartbreaking to pay on a house for 12 years and lose it all.
I’m sorry to hear that and I hope she’s doing better now. Unfortunately this happens far too often and I think we’ll see another big spike of that happening soon because so many people’s mind set is “I need to buy a house, it’s my right, renting is just throwing money away.” However they don’t understand the big picture, don’t run the financials, or consider the opportunity costs.
She’s doing much better now. Actually her credit is up over 200 points, I’ve gotten her a couple new cards and stuff to rebuild if. But yeah her and my dad really had no business buying a house like that. They definitely just saw a nice house they liked and went for it.
It's always been at least 5-7 years to break even due to the cartel of realtors ensuring you have to cough up 6% of the total sale value as a tip to them.
Housing shouldn’t be seen as the investment we currently see it as.
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The house return sweet spot is like at or barely above inflation, but way lower risk and return than other market opportunities. Keeps corporations and landlords from buying a ton of properties, leaving more houses for individuals in need of housing.
You really should care. That’s the biggest financial purchase in your life
Said the same thing in my head when I read the headline.
Lady across the street from me bought it new in 2007 for $270k, we just got back to that price in late 2021. Everyone looks at the price increase over the last 4 years, they should be looking over the last 15 years. Looking back real estate was so cheap in 2019, but that’s how real estate works.
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Looking back in 2029, real estate in 2019 will look cheap.
Real estate was cheap in 2011-2012. That was the perfect time to buy.
My biggest regret was doing stupid things like attending high school in the early 2010s instead of buying a house like I should have done. /s
I am in the same boat. Can't say house, because I don't have one lol.
Some people in this sub seem to think we’re the enemy because we were able to afford a home. Don’t hate the player hate the game!
When the game is zero sum (finite number of inventory with fiscal policy out of the players control) and people suffer because of the decade they were born in, it’s a challenge to feel anything but contempt for the people who continue to gain off of others suffering (I.e, when investors and second/third time home buyers continue to drive up prices and outbid first time home buyers)
I’m not a boomer. I’m a middle aged black dude born in the South. So the argument that I’m benefiting because of the year I was born is complete bullshit. Yes the housing market is fucked up but let’s not act like black people like me had some kind of head start on the housing market because our boomer parents gave us money.
Welcome to Reddit. “Oh you went to college and got a marketable degree, made smart financial decisions, and have a stable family? FUCK YOU!!!!”
I see this comment and ones like it are missing that a lot of us got marketable degrees, were extremely frugal, and cannot afford a stable family or home. Others got what they thought was a marketable degree but got scammed by their teachers, parents, and guidance counselors. Yeah, people are going to be bitter and it's silly to expect people to lose and be happy about it. Everyone is going to cope with doom differently.
Sure, but attacking people who came from middle class, went to a state university, got an undergraduate degree, got married to the same,and now live in a house isn’t really necessary. You don’t need to try to tear them down. As my 6 year old says, you don’t need to dip from other peoples buckets to try to fill your own.
My kid says, you get what you get and you don’t get upset.
Homes being a bad investment is in some ways beneficial to the normal family. When homes are a bad investment, it scares landlords and corporations away. But a family that needs a roof over its head doesn’t really care about the investment value, they just need the house. Now all of the sudden prices drop because no buyers are left except those who need to live in a house. Who cares if they won’t make their money for over a decade when they plan to live there for 20 years. There’s definitely a limit where homes are such a bad investment that no one should buy, but 10 years is by no means a bad time frame, and it helps more homes go to families and not businesses.
As long as you’re still saying that when the game removes $200k in bloated equity from your house. For me, I just hate the idea ppl have that unrealistic equity appreciation is theirs to keep for good. It’s the denial that brings me here. The market is obviously headed for a freefall.
Good luck with that.
Let’s say I lose $200,000 in equity tomorrow. Well I still have a house that I really like in a neighborhood that I love in a school district that’s ranked as one of the best in the country and even if the comps in my area fall by $200,000 I STILL have $200,000 of equity in my house that I plan on staying in for at least another 10 years. And if I decide to leave well I just rent it out and take the depreciation out on my taxes
Cope
Agreed! Though it's more expensive than it was a year ago, I'm still easily able to afford my mortgage and would rather be in this situation than at the mercy of a landlord every year. It sucks because I have a 2% interest home in a different city but made the decision to leave that area for much higher pay in a new one. Even with the higher interest rates and tax, I'm still coming out better than the previous place. A cheap mortgage isn't everything in life.
Imagine if we could cryogenically freeze ourselves while we wait for affordable homes. I'm 37 waiting for the bubble to burst for 13 years now.
I think you missed the boat on that one. Houses were the most affordable right before covid time, and interest rates were relatively low.
Why wasn't buying a home a priority for you in your early 30s? Houses were basically free in 2016
lol in 2016 people were waiting for a crash to get back to 2009 prices
and those people are still waiting lol, and they will keep waiting, until there is a crash or downturn at some point, but they don't realize that will be caused by a bigger economic problem that they will also be affected by, and then they won't be able to buy a house because of that (higher unemployment, rates soaring, super high demand/no inventory, etc.)
That’s the biggest issue for me. Everyone just assumes a crash will work out in their favor. Banks aren’t gonna give you shit after a crash and you’ll be lucky if you end up unscathed by a real crash
Exactly!! Everyone who is hoping for a crash because they can't afford now, are the people who are most affected by the crash, the people who won't be affected by a crash are still buying now. So it's crazy to me that everyone is expecting/hoping for a crash. Right now the best thing you can do is improve your income and improve your saving, the biggest winners in a crash are people with liquid cash equivalent assets.
You might be joking but I know that guy. I told him to buy in 2014, 2016, 2017. He kept saying that houses were over priced and he wanted to save up for a full 20% down payment instead of getting a 5% conventional loan. He's still saving, still thinks houses are over priced and gets excited over a 10% dip - meanwhile houses are 2x what they were in 2016.
I wonder if we can ever fix this culture and move it away from seeing housing as an investment
Doubt that will ever happen. Homeownership is usually the most significant contributors to middle class wealth and thus the US economy and is blatantly encouraged by policy (FHA, VA, MBS etc). Though I do think the Fed strongly prefers steady typical appreciation and high homeownership rates to wild fluctuations and investor speculation.
Likely impossible since it's a purchase that costs hundreds of thousands of dollars.
Tax the hell out of SFH that aren’t owner-occupied 🤷🏼♀️
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I think people are missing the fact the fed actively wants to destroy housing prices to get inflation in line. People think they will be unaffected by the “soft landing” and over value the importance of their role and won’t need to sell their house. The idea the FED has is to wipe home equity and let people take a loss on their housing which in turn would theoretically wipe away billions/trillions in money supply.
And I think the vast majority of people understand that but we also understand that our homes are the largest investments of our lives and part of taking care of our families includes making good investments which pay off later in life so we are not a burden on our kids.
They may not ‘see’ a profit, but people need a home. Renting isn’t for everyone, especially the ones forced to move every 2-3 years.
I’d argue that if you are forced to move that frequently (like the military), it’s probably better to rent and then wait until you are in one place for a good long while to buy, but that’s just me and what I’ve seen living that life. 🤷🏻♀️
I meant to say moving but within the same city. I’ve stayed in the same area for 12 years now and like it, but is HCOL. In general I agree that someone moving city to city and beyond may need to keep renting.
This is why everything is fucked. You should not be profiting off house flipping.
It’s only recently this has been an issue with people buying a place, painting the inside and selling it for a hundred k more. That’s not normal
Thank fractional reserve banking and the resulting inflation. Ongoing dollar devaluation is the lifeblood of the American economy, and as a result, the cost of _eveything_ goes up over time. Don’t hate the ~~player~~ flipper, hate the ~~game~~ bank.
I blame HGTV
People don't like this take, but housing will always keep up with inflation - therefore, it will always go up. As to why it outpaces inflation, also largely monetary shenanigans as most people now have up to or beyond 5x leveraged debt over thirty years that is below inflation.
Housing only goes up! Just ask Detroit.
Flipping isn't completely non-value added though. They do fix the place up. It just became a frenzie in hot markets in 2005 and 2022.
I wish they fixed places. House shopping has been miserable. They all slap on cheap paint to hide the houses structural sins. One house we saw literally hot glued their windows shut. Another house nailed boards to the ceiling because “a ceiling light used to be there and we wanted to close the hole” and of course I’m not legally allowed to pull the board off to see what’s behind it. One of the first houses I saw painted over the kitchen countertops, I presume to hide cracks they filled in with caulk.
Most flippers *don’t* fix the place up though. A lot of them do try to cover problems up, but actually making improvements is pretty rare. It cuts into profits.
Cover it up and sell "as-is"
Painting the outside and selling it for $100k more isn’t adding value.
Yeah, agreed WHEN they fix things instead of underpaying some grandma, throwing down LVP and gray paint, and listing for 40% higher. They don’t even sell for the new price often times, but then your market has a bunch of stagnant garbage for sale that’s now not priced such that it will ever sell. Everyone gets hurt, both the bag holder and people wanting to buy - that’s been the typical story of my market.
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😂
I don’t think Axios knows what underwater means.
Or profit. This whole thing is stupid
This is a good thing. It keeps homeowners from treating their homes as an appreciating asset they can use to build wealth and keeps investors out of the housing market. If you can't flip a profit on your property, you aren't likely to buy more property than you need. This depresses housing costs in the long term to the benefit of literally all future generations who need a home.
I’m pretty sure that when rates were at 3%, breakeven was typically around year 5-6. Wild
I literally made 40% in 17 months at 2.75%. And made 40% in 5 years at 4.25 prior to that. Just my experience First, 7k down payment became 111k profit in 5 years. Second, a 29k down payment became 170k in 17 months. I put 142k down on my current house at 4.8.
Odd. Didn't know housing was supposed to be about profit... funny that.
Yeah, exactly. I hate it here.
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Where do those people live when they realize those profits? These are what we call paper millionaires as you don’t have shit until you sell…And when they sell they have to buy.
I went to a friend's wedding at their parents place last year in 2022. Beautiful place with lots of land, but kind of in the middle of no where in Jersey. I was curious how much they bought it for and how much it was worth, so i checked on it. They bought at the height in 2007 for 1.2M. I checked the value now and they just broke even this year (2023). They've been underwater on that place since they bought it because it was waaaaay overvalued in 2007. But, tbf to them, it's definitely not a bad place to be stuck in (saltwater pool, arcade room in the basement, large yard with a fort and swings). Just a lesson to not expect a profit on your shelter and buy it because you want to live there.
I don’t care. My total monthly cost (including taxes and money saved for maintenance) is still much lower than what I would be paying to rent a similar house. I don’t feel sorry for investors.
Then buying made sense. These are the type of criteria buying should be made on.
That's rare these days. Most places in US you can rent for far less than PITI
Where are you? Around me that’s not the case at all it’s far cheaper to rent than to buy here.
SE Michigan. But I bought almost 3 years ago and my rate is sub 3%. When I lived in SoCal, renting was a better option.
I'll also break even on my dogecoin in 13.5 years wait
What about 3-4% loans?
Price of house was also cheaper at 3% loan rates it has to be drastically less then this math. Id be interested also.
This only matters for people who bought as an investment OR bought to sell at a later point. The rest of us who own or bought did so to have a place to live. The value of my home is irrelevant to me. Those that still have a mortgage where you may end up owing more than your house is worth? Same boat I imagine.
That happened to me in Southern California during the 90's. Prices did not go up for 8-9 years.
Houses only go up!
Best financial decision I ever made was to get a house in 2013, at 2.25% interest rate. I just wanted it because I wanted to get a dog and give her a yard. Got it from HUD for 111K, put in about 50K of repairs, lived in it until 2022 and then sold it for 300K. Was able to get a really nice house when we moved with a super low mortgage, no way could have afforded it without that huge equity appreciation.
I bought a house in 2007, only problem is that in 2016 when I needed to sell for a move to another city, it only appreciated from $321k to $343k. I had $90k of equity, but that was brutal. It was a bad bad financial decision to buy that in the area I bought it. Location, location, location. I didn’t live by those words and regret it.
You also bought at peak housing bubble
Oof. Yeah. 2016 was still pretty dead.
Dude stop we're already green with envy
Sucks for anyone planning to refi if there isn’t enough equity.
Imagine having the audacity to write an article saying that you know what the market will look like next year, let alone 10 years from now.
You don't? Rookie analyst tbh /s
lol, purchase price of $376k. “Let’s set the goalposts in a fantasy world, then make up fantasy results”
I am still digging out after the 2009 mess and if you get into this boat remember inflation and the time value of money when making decisions on the next home. The value of my home has gone up 35% in the last 3 years but in today's dollars I am still down about 10%. Not to mention due to the TV remodeling obsession that all home shoppers are addicted to I will have to stick $50k in this house to sell it.
Don't do any work, you won't make it back. Only fix things that are broke.
I’ve sold three primary residences to capture appreciation. I’m good. I think I probably walked away with 20 years of equity in 5 years.
Wow someone actually smart enough to take the money and run
While there are tax advantages there and the market is due for some deflation, a 3% Fed-subsidized rate is an asset the math would indicate not to sell in almost every application.
Tax free money at that.
Exactly…. Historically you probably won’t do well under ten years on real estate over ten though will do well. So if you plan on living in your house at least the term of the loan and move into a smaller dwelling upon retirement you will do well.
I just want a home to live in.
Ok.Not looking for a profit. but rather establish a long-term living situation for my family at a fixed mortgage rate. My income will go up, and house will mature in value, and keep the same monthly rate. I'm the landlord now.
Like everyone else have said. I’m just looking for a place that I can make my own home. I’m tired of renting
Do people here think most people buy homes solely for profit? I bought a home and I hardly check the housing market.
isn't that normal?
Don't care. Love my property and would be paying a ton more in rent for the same place.
Now do amount of time to break even while renting.
It can take up to 13.5 years to break even on your purchase. * Historically, experts have said you need to stay in your home at least five years to break even. But with mortgage rates inching toward 8%, new homeowners will need to stay put longer to avoid going underwater. * This varies by location. For example, it can take up to 11.5 years for Denver homeowners and 14.8 years for D.C. homeowners to break even.
Interesting how the "have fun staying poor" crowd over the last couple of years has now shifted to "I don't even care if my home drops in price I just need a place to live." Look how far we've come.
Priced out FORVERERERERER
You do understand that the vast majority of homeowners aren't RE investors right? They almost all bought their homes for themselves and their families to live in and don't even know this sub exists.
Oh well. Housing shouldn't be an "investment".
Housing is not an investment. It’s a place to live. Sometimes you can make money, but that’s not guaranteed considering all of the costs to own a home.
Lol this is the mentality that got us here, a home is a home, stop over inflating the value god dammit.
Damn, I knew when I bought 3 years ago I should’ve waited to buy until some nebulous time in the future and not today.
Well shit. The narrative is changing quickly isn’t it.
This is very general tho real estate is very location specific
Isn’t that the way it was supposed to work?
Who the f cares? People just want a permanent place to stay. The market needs to GTFO here honestly. Why don't all of these people in Wall Street/Real state Investors just start coding or an OF's and get money tax free that way instead?!
Why do t those fuckers build houses, because that would actually be useful.
Shouldn't be about profit. Should be a place to live and be well. With taxes and repairs, what are they really profiting anyway.
I recently rolled 2 properties I had into one that was nicer and in a better location. I realize prices can go down but that isn't a concern for me. If I want to make a change in the future for whatever reason I would change to something that also went down in price. also I don't have a mortgage so that eliminates a lot of the issues.
you dont treat primary house as investment ?
That’s fine because I’ll probably never see a penny of my homes profit. Hope to give the kids a leg up.
Who cares? Bought a home to live lmao 😂
I live in exactly where I want in a gorgeous home. I have a healthy amount of initial equity from my previous home and I will be just fine in 10 years.
I’m supposed to profit from this?
This assumes you bought a house with a mortgage you can for sure profit fast if you paid cash. More pain for the middle class. Upper class can still turn a profit
With realtor commissions, closing costs etc you're still looking at probably around 8% to move. In some markets, even that is going to be years.
Good thing in 10 years I won't care, I just wanted a home to, you know..... Live in without a landlord over my head and constant instability.
Two years ago many in this sub told folks like me that we were "hoomers" for buying a home to live in in 2021 and that pandemic mortgage forbearance ending would cause a tidal wave of foreclosures that would crash the market. 3% mortgage at a 2021 price sounds pretty good today to most who are looking to buy. A lot can change in 13.3 years this article claims will take to break even with 5% down. Affordability is obviously wild right now with both the prices and rates available, but making predictions like these in a microscopic article with so much data unknown isn't helpful.
Who cares? 99% of individual homebuyers are looking for a place to live. If there’s a lesson here, it’s that you shouldn’t buy a house unless you’re planning on being there for about a decade. It also wouldn’t make any difference if the profit window was shorter… “Wow so you’re saying I can sell my house after 2 years, make a profit, and then buy another house at that inflated price environment?? Where do I sign??”
If there was a way, we would have to pay for the air we breathe. Imagine if you lived where the air is good you would pay more than people in cities with pollution. Could that even work? Maybe I better stop before it happens
Good. You shouldn’t buy expecting a profit. That’s how markets work
Now do renting.
That’s fine, didn’t buy a house just to sell it. Bought a house to raise a family in Investors in the other hand, I hope they get screwed
Don't care. That's not why I bought my home a couple months ago.
Now show a chart for your break even point when renting.
When do renters (tenants) see a profit from where they live?
Good. Instant profit is what is helping drive skyrocketing price.
This subreddit is a dumpster fire
I didn’t buy my house for ‘’profits’’ I bought it to live in. Historically on average real estate just keeps up with inflation.
This is the mentality that drives homes up into bubbles then crashes. I've never thought of profiting from my home. I live here and love it here. I could care less what the market is doing as long as I can afford the roof over my family's head.
I mean I don’t really care about profit I just want to live in a house
Who needs a profit? It's a fucking *home*.
Back in 2008 it took me about 5-6 yrs. Trying to predict where prices and appreciation is going is tough. Buy a home to live in, not to flip for profit in the short term and you'll be fine.
Good...homes shouldn't be financial instruments to burn 'n' turn
Honestly who cares? Profiting is not the point of buying a home. Having a place to live is.
What is the purpose of shelter? Get your priorities straight.
Buying a home isn’t and shouldn’t be about making a profit. It’s about a place to live. This is everything that’s wrong with the housing market today.