When does the housing market crash?
- Thread starter Charlie Marlow
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Q4 would also be election year.. Not unusual for the market to take a plunge..
But eventually the market always corrects it self all in do time…
Great another thread that‘s made for the open scrolls.
This. Everyone and their mother is expecting the crash this time. Perfect setup for it to be very delayed/muted. I do however think the next actual crash will last much longer than 2008.
The competition for Gen Z workers in basic professional fields (teachers, business services, etc.) is going to continue to be fierce and there isn’t much slack population in that cohort to fill all of the labor and consumer service jobs. We have been a country that brings people in for the lower income gigs, offering eventual citizenship in return. Given this, our economy is designed to depend in part on immigrants.
An alternative option instead of relying solely on immigration (both legal and illegal) would be to establish policies and incentives for families to have more children. Increase the population from citizens back to what they were when the country was much more self-sustaining. That is a lot simpler than trying to go the immigration route, which causes a lot more unintended consequences and pressure on state/federal programs (which are already weak and largely punitive).
Supply has been half, or less, of what it normally is so we won’t have prices ease until supply is closer to historical averages. This is what happens when 90% of people with mortgages have a lower rate than the current rate, and most have rates in the 3-4% range.
But, price decreases will be smaller where homes are cheaper.
Also, tax considerations also keep people from moving, especially in places like here in SoCal where boomers are sitting on huge gains.
For example, my mother’s home takes a lot to keep up, with the yard, exterior, etc and she lives alone and it is a lot for her. But, she can’t sell even if she wanted to because she has a huge capital gain as the home has more than quadrupled in value in the over 30 years she’s been there.
She’s basically one of the oldest boomers and the smart move is the stepped up basis after death. That’s probably the same for the majority of boomers in CA that bought homes 25+ years ago
Edit: the smartest people out there were married couples who upgraded every time their gain hit the tax free limit of 500k. That is free money right there, a rarity
But, price decreases will be smaller where homes are cheaper.
Also, tax considerations also keep people from moving, especially in places like here in SoCal where boomers are sitting on huge gains.
For example, my mother’s home takes a lot to keep up, with the yard, exterior, etc and she lives alone and it is a lot for her. But, she can’t sell even if she wanted to because she has a huge capital gain as the home has more than quadrupled in value in the over 30 years she’s been there.
She’s basically one of the oldest boomers and the smart move is the stepped up basis after death. That’s probably the same for the majority of boomers in CA that bought homes 25+ years ago
Edit: the smartest people out there were married couples who upgraded every time their gain hit the tax free limit of 500k. That is free money right there, a rarity
That's possibly a good solution. It does rely on these children working entry level jobs or blue collar jobs. Do these kids want to work at a packing plant? Roof houses? Pour concrete? A lack of workers also might leave us in dire straits before these kids would grow up, but could be a long-term solution.
The jobs you’ve described as increasingly done by immigrant labor. Eventually in construction, the more business minded immigrants become construction bosses and contractors. This is of course how it’s always been.
Well, those kids used to do things like that in the past. It led to a lot of good things and advancing one's position in life (in generalities, as there will surely be examples of people who didn't). Do they want to? Probably not. Should they? Yes. Society over time has demonized good 'ol fashioned hard labor to the detriment of the overall common good of the country.
For what it's worth, I see it in my own family circle.
It hasn't always been that way, but I do recognize it has turned into that in the most recent generation (maybe 2 generations). A likely reason it has become that way is the reduced size of the family unit (current population has not had as many children), there has been a large influx of immigration, and "society" tells us hard work is beneath people.
Speaking of the oracle....
RUSH 2112
V. Oracle - The Dream
"I stand atop of spiral stairs
An oracle confronts me there
He leads me on lightyears away
Through astral nights, galactic days
I see the works of gifted hands
That grace the strange and wondrous land
I see the hand of man arise
With hungry mind and open eyes"
Brilliant lyrics from the late professor.
Rental rates are going through the roof too. I’ve been looking for a 2 bedroom place in Columbus or Lincoln for a sister that allows a small dog. Rents for those if you can find them are around 2000/month
Meh. There are plenty of units of housing. Not enough to satisfy free money and 2% interest rates, but plenty for current rates and income levels. Need to boot institutions out of buying up single family homes though..
Nearly all of my ancestors came from Germany, started working on farms or in farm towns, then bought their own ground. Their grandkids/great grandkids went to college. It’s always been this way.
I always kept a spreadsheet documenting virtually everything I spent on my house. So If I painted a wall I might not go as anal as itemizing sandpaper, brushes etc. but I would lump those costs into "supplies". I flagged the expenses as either maintenance or improvements. When we sold the last house in California we exceeded the $500K profit, but with sales costs and a much higher basis due to some major improvements we did, there was no capital gains tax. Was really happy I kept the spreadsheet for 20 years.
I doubt home prices are going to crash significantly. Inflation is not going away and the cost to build new homes will not go down. And corporagte ownership of single family homes will keep the prices up. For many reasons including money printing the price of everything isn't going down, does it ever except for fuel, which is policy dependent?
My advice to young people who "can't afford to buy a home" is to do like a lot of us did. We could not afford to buy a new 4 BR, 3.5 Bath with a 3 car garage and open floor plan. We bought a 3 BR, 2 Bath, one car garage home with a kitchen and living room (no family room), outdated appliances, etc. Those houses tended to be older and not in the greatest (but not bad) neighborhoods. After some years we saved up money and built up some equity and then got something closer to the 4 BR/3.5 bath. Homeownership is possible for most and for most people desirable, but it is difficult to have your dream home the first time around.
My advice to young people who "can't afford to buy a home" is to do like a lot of us did. We could not afford to buy a new 4 BR, 3.5 Bath with a 3 car garage and open floor plan. We bought a 3 BR, 2 Bath, one car garage home with a kitchen and living room (no family room), outdated appliances, etc. Those houses tended to be older and not in the greatest (but not bad) neighborhoods. After some years we saved up money and built up some equity and then got something closer to the 4 BR/3.5 bath. Homeownership is possible for most and for most people desirable, but it is difficult to have your dream home the first time around.
Nope. He’s a good builder but not building luxury homes. It might include a very small crappy lot but I don’t think so. I about fell over. I haven’t been able to find an inexpensive home to rent or buy for my sister so I asked him what it would cost. My query was based on me having the lot. He doesn’t employ migrant labor so that might be part of it.
The American dream has been snuffed out by COVID relief spending inflation.
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I have 2 kids, can barely afford daycare, 1300 a month. Daycare is only 1 staff sickness away from closing. It sucks, couldn’t have a 3rd kid even if I wanted to just for that reason alone
I've had kids that worked concrete, mowed lawns, etc. But they would never work at McDonald's, roof, or work in a packing plant. I agree. Hard work as a teenager gives people perspective on life. It's why I'm so scared right now. Young people are moving up the ladder way faster than they should in certain fields.
I feel you. Life sucks until they get to be school-aged. We worked opposite schedules because we couldn't find/afford daycare.
M
You may want to rerun your numbers based on current home prices to wages. Not sure when bought your first home, but I highly doubt a young family could replicate your experience today.
Maybe .. maybe not. We don’t have a lot of data points for when homes become this expensive in a short amount of time compared to wages. Only other time it’s been this bad the housing market crashed.
You may want to rerun your numbers based on current home prices to wages. Not sure when bought your first home, but I highly doubt a young family could replicate your experience today.
I get what you were saying now. I wasn't taking into account this type of scenario - although it is different than what has happened / is happening right now.
Sucks though because what you had spent in daycare gets more sucked up clothes, activities and you don’t net out ahead
Young families are getting killed by inflation. It makes more and more sense for one of the parents to stay at home with the kids. It’s another contributing factor to the labor shortage as some couples figured out that they could survive on one income if they weren’t paying daycare.
Here’s a good example. A house like you’re describing is around $200k in Omaha. So a young family would need to have saved around $45k for down payment and closing costs.
For this house to be affordable a family would have to make around $75k per year. Median HH income in Omaha is around 60, which a young family may not be at yet.
Families bringing over other family members, the dreaded chain migration, is how our ancestors came over. Brave ones came first, checked it out, saw it was awesome compared to their prior circumstances, and sent word to their relatives.
First home at age 30 I made around $24K and wife made around $15K while going to school, so around $39K. Home was $130K in California and was the 3BR I described in my OP and mortgage took 30% of my income. 2024 Median salary in US for a 30 year old is $50K. So a full time guy and his wife working part time might make $75K. 30% of $250K is 75K. If we are talking midwest, I claim you can get the same house I got in the late 80s for $250K or less, so things look to me to be more or less the same.
BTW. my comprehensive numbers regarding college affordability show college costs the same now as the late 70s if you take out all the modern college expenses like spring break in Cabo, luxury single apartments, new phone every year. newer cars, tattoos, etc.
Patience?Sometimes it’s just having the patience.
I've been watching for 4 hours now and they still haven't popped out.
You don't seem like a quitter. Keep watching. I bet when they do pop out they are spectacular!
Chain migration has turned some communities into Islamic strongholds. Just sayin. I saw more new mosques driving through Texas a few years ago than I could have ever imagined. This country is headed for a reckoning as immigrants aren’t assimilating in to the culture that made America a thriving nation.
You sound just like the people in the 1800's who were against Irish immigrants. Now the Irish are "one of us". Reading a book about it right now. Kind of wild how history continuously just repeats itself.
It's not like that anymore though. Hasn't been since pre covid. Any actual starter homes are being bought up by greedy corporations, leaving all the expensive houses or new builds for first time buyers.
Sure, people in general should sacrifice while young to afford bigger things earlier on in adulthood. I agree and did just that with my wife. But we got lucky, as we'd be SOL if just starting today... Much like most young people currently.
Did that! Though my wife has supplemented my income with bartending/waitressing a few evenings a week. I'd say we're better off financially through this stretch with our young boy than we would've been by both staying in the corporate rat race and paying for daycare.
Covid was a blessing for us in that way by making us seriously consider the lifestyle change. Zero regrets. But young people are either too "above" that lifestyle choice, or is more about the "stay at home father" these days. Which is cool for some, but kinda weird it's become as big as it has over the past few years.
My ancestors probably spoke German for the first generation. My grandparents still spoke German when they didn’t want the grand kids to know what they were saying. I’m sure there was some WASP back in the day concerned about the “Huns” living out on the prairie. Same story. Different ethnicity and religion. And the kids of the Muslims I know are assimilating nicely. First generation immigrant kids are known to excel.
Yeah that's what I'm seeing as well. Sticks have come down but nothing else in the building supply area
This is what my first house looked like but I got it for about 60Here’s a good example. A house like you’re describing is around $200k in Omaha. So a young family would need to have saved around $45k for down payment and closing costs.
For this house to be affordable a family would have to make around $75k per year. Median HH income in Omaha is around 60, which a young family may not be at yet.
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