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I assume anyone with half a brain would have gotten a fixed rate mortgage when rates where at a generational low of 3%.
There certainly has been higher than normal inflation and consumer debt has risen but your second statement doesn't seem to be reflected in consumer debt service data, we're about the same as five years ago.
Again, how does a rising interest rate affect a 3% fixed rate mortgage? I'm not sure you've thought things through here.
That 3% fixed mortgage is great for the owner. Many other rates are not fixed and have floated higher. Credit cards, HELOCs, auto loans — debts common in many households, have significantly higher carrying costs as rates rise. Households at the margin with no savings or people who hit a financial bump like a job loss can and will default on that 3% mortgage.
We can debate to what extent the housing shortage has an effect on prices but there’s no debating that it does have an effect. That’s the essence of capitalism. A good/service with more demand than supply has pricing power. Whether that pricing power means homes are 20% more expensive or 50% more expensive is debatable.
The fact that individuals are still buying homes doesn’t mean there’s no shortage. I have a condo in Brooklyn and a house on LI. Most people would think I’m an idiot for paying what I did. Did I want to pay the prices I did? Of course not. I did it because I had no choice if I wanted to buy something similar to what I did.
Look at the car market post COVID as an analogue.
What we’ve had to deal with in NYC for the past 30+ years is now playing itself out for most of the country.
Oh, Jeez, give me a fricken break! You're b!otching about a housing shortage while at the same time owning two houses yourself! And your main reason for b!otching is that you had to pay more than you wanted to pay for the two houses. Talk about first world problems!
And that's the problem. Too many people have spent too much money on a house that they were BARELY able to afford when interest rates were around 3%. Now that interest rates have doubled and then some, these people can't afford it anymore.
In addition to the higher interest rates, Bidenflation has also greatly increased the cost of nearly everything we buy. People who were barely scraping by 2 or 3 years ago are now finding themselves "underwater" every month when it comes to paying their bills.
Consequently, many are maxing out their credit cards in an attempt to stay afloat. Once their credit cards are maxed out and they've borrowed/bummed money from their family, then the next step is to sell the house and move in with Mom and Dad or a cheap apartment somewhere.
If people had variable rate mortgages, then your first sentence might have merit. However, variable rate mortgages are not common in the US, and the rates don't change on fixed rate mortgages, so the only real impact of higher rates is that people who were marginal on their current house might have to stay there longer.
That's the problem with Google. A search tells us that it could be 1.5 mil, 3 mil, 3.8 mil, 4 mil, 6.5 mil, more, or.....there is no shortage at all, i.e, more housing units available than people wanting housing.
Depends entirely upon who/what you believe, right?
Quote:
Originally Posted by Esacni
We can debate to what extent the housing shortage has an effect on prices but there’s no debating that it does have an effect. That’s the essence of capitalism.
And it's effect is limited to a single market, not all 160,000+ housing markets in the US.
Can you not admit that a person who lives and works in Columbus is not looking for houses in San Diego?
Can you accept the fact that person isn't even remotely interested in housing in California, and in fact, anywhere outside of Ohio?
Well, then they're not part of the demand equation for those markets, are they?
Assuming they're willing to commute at least 30 minutes one-way to work, they'd have access to about 38 housing markets.
Some of those housing markets have a surplus of housing. There are vacant units and units for sale.
In some of those markets, there is a shortage of housing. If every square inch of that particular housing market is occupied by single and multi-family homes and commercial and retail space, then it is saturated and no new housing can be built. There is no shortage, but there is excess demand.
If you tear down the commercial and/or retail space, then demand decreases and housing prices plummet, because the reason housing in that market was in high demand is because of its close proximity to the amenities that people wanted.
Take away the amenities and people will sell and go somewhere else.
That 3% fixed mortgage is great for the owner. Many other rates are not fixed and have floated higher. Credit cards, HELOCs, auto loans — debts common in many households, have significantly higher carrying costs as rates rise. Households at the margin with no savings or people who hit a financial bump like a job loss can and will default on that 3% mortgage.
Exactly. Apparently, a few others in this discussion couldn't think that logically.
Thank you. In 2008 we saw this, people hugely upside down walked away from their homes. And, rates and prices were not as high as they are now. Financing falls through on sale after sale...the bank losses coupled with far fewer mortgages being inked is going to add up. I'm not saying the market isn't silly, normalization of prices is needed, but 7% is just too high, gonna kill the housing market and the banks.
So why say worse than 2007/8 when obviously it is not - very few are upside down now let alone reports of people walking away - most have a huge amount of equity. Unemployment is low so few job losses are causing distress from owners being able to pay. Also the interest rates have been significantly higher than 7% without killing the market or the banks.
Oh, Jeez, give me a fricken break! You're b!otching about a housing shortage while at the same time owning two houses yourself! And your main reason for b!otching is that you had to pay more than you wanted to pay for the two houses. Talk about first world problems!
I’m not complaining about a housing shortage. To the contrary, it’s advantageous for homeowners like myself. I’m trying to explain to the clowns why the long awaited “housing crash” hasn’t materialized and won’t materialize anytime soon.
And it's effect is limited to a single market, not all 160,000+ housing markets in the US.
Can you not admit that a person who lives and works in Columbus is not looking for houses in San Diego?
Can you accept the fact that person isn't even remotely interested in housing in California, and in fact, anywhere outside of Ohio?
Well, then they're not part of the demand equation for those markets, are they?
Assuming they're willing to commute at least 30 minutes one-way to work, they'd have access to about 38 housing markets.
Some of those housing markets have a surplus of housing. There are vacant units and units for sale.
In some of those markets, there is a shortage of housing. If every square inch of that particular housing market is occupied by single and multi-family homes and commercial and retail space, then it is saturated and no new housing can be built. There is no shortage, but there is excess demand.
If you tear down the commercial and/or retail space, then demand decreases and housing prices plummet, because the reason housing in that market was in high demand is because of its close proximity to the amenities that people wanted.
Take away the amenities and people will sell and go somewhere else.
The problem is that there are way more markets with housing shortages than surpluses and the shortages tend to be where the jobs are.
I can sell you a non functioning car for $500. Will you take it if you’re in the market for a vehicle because yours broke down and you have to commute to work? It’s cheap! If you buy my $500 vehicle, you can save tens of thousands of dollars!
The problem is that there are way more markets with housing shortages than surpluses
There is zero housing shortage - overall - in the US currently. There are far more (as in millions) vacant housing units than there are people looking for housing.....There may not be housing exactly where the jobs are in some cities, but that does not define a true 'housing shortage'. Sometimes you have to live further away and commute...or just move entirely....
when i got married in the 1970 a home was 30-35k in suffolk county long island..
i had about 225 a week coming in from my job so a home was about 2-1/2 times yearly income
today it can be 5 x income or more
Yeah, but, back in the good ole days your spouse was in the house not out working the same job you were.
Now, you have a software engineer married to a nurse or a lawyer, etc., etc. and they are pulling in $300,000 easily. So, $600,000-$750,000 starter home is no problem.
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And your main reason for b!otching is that you had to pay more than you wanted to pay for the two houses. Talk about first world problems! 
