I know I’m supposed to want it to keep going up as a wealth generator or whatever.
But like… I wouldn’t be able to afford the monthly payments if I bought my house right now and it’s scary. Also none of my friends are buying homes, none of them are even renting full places. Just like renting rooms.
So what are your feelings home owners of lemmy?
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For me personally, my wife and I are probably going to stay in this house until it’s time for the old folks home so it’s just numbers that’ll never actually mean anything. If it crashes by half or more I’ll actually get a reduction to my property tax.
Let it crash, this is unsustainable. Having a secure, long-term roof over your head shouldn’t be so fucking hard.
Hey, newer homeowner here. If the housing market crashes, does that actually affect me at all? Or is it just like, I can’t profit if I wanted to sell my house or some shit
It can. The housing market doesn’t impact all properties across the board, and some neighborhoods get away unscathed while others are devastated.
In the worst case scenario, having a downturn can cause a “buyer’s market”, where there are more people trying to sell their house than there are prospective buyers, so they have the power to negotiate much better deals. If you purchased your house 10 years ago for 200k, and in that time it appreciated to 400k, and then there was a sudden market downturn and it lost 50% of it’s value, your house would be worth about what you paid for it, but all your equity is gone, so you don’t profit but you are also not totally screwed.
If you bought your house for 400k right before the market downturn, you will be “underwater”, and own a property that is worth less than what you paid for it, meaning that if you tried to sell you wouldn’t get enough to cover the mortgage you owe to the lender. Forget about profit at that point.
If you plan to live in the house you are in now until you die, then none of that matters at all, really. In fact, having market downturns benefits you in that scenario because if your property is worth less money (relative to all the properties around you) you pay less in taxes and insurance. But most people don’t plan on living in the same house forever. They might want to move to a nicer house, or one in a better location, or downsize when their kids move out, etc. so it’s usually seen as a bad thing when the market crashes because you have to spend years building equity and loan amortization means that for the initial few years of your mortgage payment, you are basically paying off the interest only and barely denting the principal.
This is very region dependent. But here in Canada we have 25-30 year mortgages broken up into 5 year terms, every 5 years we renegotiate our interest rate and have the option to switch lenders.
If your house value were to drop 75%, it might make it harder to switch lenders (does a bank want to lend you more than what the house is now worth).
I think there is an escape hatch here where if you stay with the same lender they will still accept you, but I honestly don’t know much about the specifics.
Things would need to get pretty bad for this to actually matter (and I suspect the government might step in if it became widespread)
It would ruin our equity. So no selling or refinancing for awhile.
It would mostly hurt people selling, renting, renovating, and building homes.
good, fuck em. Seeing houses as an equity Builder was retarded in the first place. It’s literally not sustainable, if it’s supposed to constantly appreciate value no matter what it means that there is an ultimate threshold where it becomes unaffordable for everyone.
A house is a place to live, not a fucking financial asset to make money with.
Everything can be an asset to make money with. Before money it was bartering and you can bet your ass the home was an asset back then too. Humans value the creation of things. Assets of created thing will always exist.
I would be an equity builder even if the price was flat. Which would honestly be ideal. Of course the built in rent control doesn’t hurt either.
Ah, that makes sense. Thank you!
If the market crashes hard enough these huge corporations that have been sucking up all the single family homes will probably start unloading them at lower and lower prices to pay their creditors. It could be good for people who want to buy. Couple that with the coming crash of corporate office space and it could be quite an interesting time.
The real truck is going to be coming up with legal/constitutional bans on corporate ownership of single family houses.
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yea they will be packaged in giant batches with no mortgages, of course.
Don’t care. My land and my house are mine, and I don’t care what somebody else thinks how much they might be worth.
For people that have a mortgage a crash could still be relevant, because the bank could want more collateral.
That is too bad for the bank, since the contract is already signed.
If you look at history you’ll find banks have a way of getting what they want or destroying faith. It’s never straight forward. They have teams of lawyers, teams of people who make moves based solely on profit.
Wouldn’t mind some new neighbors, not planning on selling, not going to contribute to the landlord crisis, I say let it burn.
My house is like 25% paid off, I don’t care if it loses 90% of it’s “value” I’ll keep paying the bills. Rather everyone have affordable housing than some extra cash in my bank account.
I’m really surprised to see all these bitter comments. Downvote me all you want, but I think people hate the housing market because of a lack of knowledge.
I did my homework, worked my ass off and in a few months I will be buying two houses. One to live in and the other as an investment. And the best part is that the first one will be paid off in 5 years (thanks to publicly available banking tools). The investment property will not be paid off until the end of the mortgage. Why? Because it will give me huge tax deductions (again - great banking tools). After a few years I will be able to buy another investment property which will give me even more tax deductions. And so on and so forth.
So no, I don’t want the housing market to crash.
You are probably in a different tax bracket than us.
The median house hold income is 60kish in the US. Meaning half of all households make less than that.
2k for rent or 3k mortgages just isn’t doable. But that is the only thing availabe for most of us. The math can’t work with taxes, insurance, and utilities. Children right now is a poverty sentence for 50% of Americans.
And “make more money” can’t work for everyone. The median is 60k per household, meaning 10s of millions of people would need to find much higher paying jobs to be able to deal with this. But that’s not possible, there are not 10s of millions of 80k+ jobs just sitting around.
As I said before - lack of knowledge. You are assuming that the monthly repayment will be $3k. There are tools available for everyone to make it way less.
Let’s start with offset account. Having it setup with your mortgage will decrease the interest part of the repayments as long as you will keep adding money to that account. More money, smaller interests.
Second tool - interest only loan. For first few years you will pay only interests. In my case it will cut the monthly repayments almost by half. Combine it with the offset account and each month you save some money on offset account the interests rate will be lower allowing to save more.
And finally - interest in advance (pay the whole year of interests upfront). I don’t know US tax laws but where I live this gives me tax deductions starting from day one. This will work only for investment property.
Also there is a thing called refinancing a loan. When the interest only and in advance things are coming to an end refinance a loan and start over.
On top of that is the mindset. People need to realise that in order to make things better some sacrifices have to be made. So when buying a house get the investment property first and work your ass toff to pay it off as soon as possible. After few years the value of the property will go up and you will be able to get a bigger loan. Buy another investment property in a better neighbourhood to get a bigger return.
To summarize, talk to someone who knows that stuff (not a banker, a real money guy), check bank offers, read articles about investments, learn about taxes. It’s easy to complain and do nothing.
When people can’t even afford 2K rent, there are no games to play. Median house hold income is 60k After taxes that’s closer to 40k. When rent alone is 24K, there are no games to play, no moves to be made. The math doesn’t work. 2K isn’t me over exaggerating, it’s median.
Then you’re supposed to put 6% into your 401k, then how ever how much for medical insurance , then cost for car insurance ,gas… where is money for food? Where is the 20% for investing for retirement? The basic of budget is 50,30,20. You’re not supposed to spend more than 50% of your income on “needs”, yet the median rent is more than 50% of the median after tax household income.
All those tricks are just putting the debt ahead into the future. That only works if you think you’ll be making more in the future, but wages have been super stagnant.
You can’t play games when rent requires more than half your income.
I own my home, life is fine, I’m fine. But try to do the math, try to make it work. For 60k gross pay and 24k yearly rent, explain how to make it work, how to save up the 10% down for a house and save for retirement.
I was starting with aroud $45k usd before taxes. I live in Australia, one of the most expensive countries. But instead of complaining and saying that math doesn’t work I made it work. For years I was saving on everything, putting away every penny on managed fund. It didn’t give me huge interest but at least I didn’t lose on inflation. Fast forward 7 years and I’m about to buy two houses.
It’s all about mindset, dedication and knowledge. And no, this isn’t moving debt to the future. It’s working around the debt, it’s making the debt to work for you. Again, talk to a real money guy and he/she will explain you how it works.
Cost of living, rent, and taxes are all lower in Australia than US on average. Also median income is higher in Australia.
And where did you live? Did you have room mate or live with family?
Melbourne - expensive city to live in and I was living with my wife. The $45k was a household income.
And what was your rent?
I’m trying to fix up a few things then get it re-appraised so I can get PMI taken off my mortgage. After that I don’t really care, I plan to live here for awhile so if the value goes down in the short term I’m not too bothered.
Line goes up? My housing payment stays the same. Line goes down? My housing payment stays the same. I was lucky inasmuch as I borrowed back when banks were practically paying us to take out loans, so if I ever have to refi I’m gonna eat shit, but I also bought what I needed instead of what I could afford and I put more than my mortgage payment into savings every month so shit is gonna have to go real bad before I’d ever be forced to refi. This is my place to live and buying it wasn’t so that I could leverage it to get into the aristocrat class. I bought it to protect myself from those same aristocrats who would raise my rent every year until I’m paying twice as much as I am now for half as much house to actually live in.
The only real bummer about a housing market crash is that it will accelerate us into being a renter society overall. A few people might claw their way out, but if prices dropped by half tomorrow all that would mean is the predatory megalandlords can take twice as many houses off the market with the same money.
The one good thing about a housing crash is that our taxes would decrease dramatically.
I’m paying about $6,000 a year in real estate taxes right now and a crash could drop that by four grand or more which would be nice even if it hurts my feelings a little bit
I also got a great interest rate, and tried to continue my practice of paying extra every month to end the mortgage early. However interest is so low that it’s just not worth it. Pre-paying makes very little difference, and I can put it to better use elsewhere. It’s crazy that even a simple savings account pays me higher interest right now
I dunno. I calculated that paying an extra $200/mo on my $240k loan at 3.75% would wipe about 8 years off the 30 year loan. I think the interest savings is a good chunk but not a life changing amount of money when spread out over 30 years. In my view I’d rather have the security of a paid off house than the marginal potential gains from investing that money (in addition to my other investments) over the same time period.
I’m sure on paper it makes more sense to pay the minimum and invest the rest, but again I’d rather be more conservative and it’s likely I’d just spend that money on something else like a new car.
I talked about this in a different thread: the value of owning your own home isn’t just a number. There’s a certain psychological value to knowing that, when things seems to be going off the rails pretty regularly nowadays, they’re gonna have to go off the rails, over the cliff and into the river before you can lose your home. I overpay every month too, and I see my aggressive savings plan as essentially a self-funded mortgage insurance. It’s a 30 year loan, and every month I save the value of the mortgage, so I really only need things to be okay for 15 of those 30 years and I still walk away with my house.
Non-home owner of Lemmy here. I want you all to know that my fondest wish to see the housing market completely implode is strictly not personal.
My only chance to buy a house slipped away a few years ago. House prices have gone up by 50% or more in some locations, and interest rates have more than doubled. What was previously affordable is now completely outside my means to pay for each month.
My last hope now is for a 2008 repeat so I might be able to snag something up for what it’s actually worth. I certainly can’t count on the state or the government to take the housing crisis seriously enough to have them actually build more affordable housing for people to buy and drive the asking prices lower.
I feel this so much. My dad was a general contractor in California during the 2008 crash; we lost 6 houses that were either ready to sell, or still being built. So I personally know the kind of pain and suffering that a housing market crash can cause for certain people. At this point though I have to look out for me and my family, currently renting part of a way-to-small condo in an area where you’d need 3 incomes to afford a mortgage on a house big enough for all 4 of us.
So yeah, crash and burn market. Give me a chance to get us out of here.
It was a gigantic mistake to ever allow homes to become investments. That economic value growth is only possible by limiting the availability of homes near popular areas, which is by definition exclusionary meaning some people must be priced out of having a home in a place with good opportunities.
It’s not just unfair, it’s also inherently unstable. You’re eventually chasing away many of the workers you’re dependent on, you can’t avoid bubbles and crashes, etc.
Absolutely 💯
Sid doesn’t know.
Sid doesn’t care
As a homeowner, there is nothing to be ready for. Nothing has value unless you’re trying to buy or sell it and I’m doing neither in the near/medium future regardless of the price of my home. I bought before prices went stupid so I feel like it is unlikely any crash will do the value to below what I paid.
Your HOME is not an investment. Unless you’re planning to sell and live in a cardboard box.
When you buy a house, you’re essentially locking in your housing costs, which can be especially advantageous if you have a fixed-rate mortgage. Rent, on the other hand, can increase over time. My monthly mortgage payment for a house is already several hundreds less than what my friends are paying for their tiny rental apartments. In about 17 years, my house will be paid off, and then I’ll only have maintenance and utility bills remaining, while my friends will still be paying rent, which probably has increased by quite a lot by that time. I don’t need to sell my house to benefit from investing into it.
Got it. So when I also limit my exposure to cost increases by switching to a cheaper grocery store, I’m “investing” in groceries.
Ridiculous.
No, that’s just being frugal. Not spending money on something is not investing. Grocery example would be buying in bulk; you pay more for something upfront because it’s going to be cheaper on the long run.
This exactly. The 2 things that affect my fixed rate mortgage are property tax, and homeowners insurance. Even those don’t affect the payment much in either direction.
Can’t wait. If it could happen in isolation and not involve a lot of people losing their jobs, I would love to see prices come down. No downside for homeowners really, the house is the same house independent of market value but taxes will decrease so monthly cost will decrease.
I’m old and know prices don’t go up forever. As soon as those “we will buy your house” signs and phone calls start, it’s near the end.
but taxes will decrease so monthly cost will decrease.
Doubt. Your local government isn’t going to cut spending just because revenue went down. And why should they? It isn’t like the workload changed. When housing collapses it isn’t like there will be less crime and less homeless and less school age students. All that stuff is going to continue to happen independently. You will either see raised rates or suddenly a lot of homes will be marked as worth more.
It often feels like it doesn’t even matter to me. I’m never going to be in a position to get out of massive debt and afford a decent home either way.
