Opinions: What's causing the home price crisis?

[Al3x Lee]

Looking back in hindsight, we know what caused the bubble that led to 2008, but now we find ourselves in a new situation that experts can't seem to agree upon. Some say that lending practices have become so much more strict than 15 years ago that another bubble like 2008 isn't possible.

What's your opinion? What do you think is causing the spike in housing prices? Do you think it's sustainable?

This data is old but still holds true into 2023, although it seems to have leveled out a bit.

 

[adjusterjack]

I doubt that there will ever be an agreement among historians.

 

[Al3x Lee]

I doubt that there will ever be an agreement among historians.

What about amongst insurance agents?

 

[LostDollar]

What about amongst insurance agents?

(Caveat, I am NOT an agent)

Not amongst Final Expense Agents.
Don't know about P&C Agents.

 

[Markthebroker]

Inflation would be my guess. Hard assets generally do well during inflation, but what I do know.

 

[Tahoe Ray]

I doubt that there will ever be an agreement among historians.

What's your interest rate on your mortgage?

Mine is under 3%. Like a lot of people I know. I can pay off my house in half of the time than if I got a mortgage today. No way I'd sell.

No supply = rising home prices.

Couple that with private equity firms snapping up properties all over the country to rent to locum workers, perfect storm.

Just an opinion but my belief.

EDIT: Sorry @adjusterjack but I didn't mean to direct this at you. Just in general.

 

[Markthebroker]

Another way to look at it is that the value of the dollar has gone down, so it takes more dollars to buy the same house. That doesn't mean the house went "up".

Let's say the dollar lost 20% of it's buying power in the last 3 years. During that same time home prices "went up" 20%.

Think about it. Did "home prices" actually go up, or it is just a proper representation of the loss of the buying power of the dollar in said scenario?

Just food for thought.

 

[Tahoe Ray]

I'll add to my other response.

I would love to see this graph based on sq feet.

Houses have just become stupidly big vs. A few decades ago.

Pricing is often based on sq foot comps so people keep building bigger houses, guess what they sell for more.

 

[DonP]

Tahoe rays exactly correct . 84% of all home Loans are at 4% or less 7% now . Education time . I’m locked in my loan at 3% . I lost my job and I have 3 kids and a wife . My house payment is $1500 a month . If I lose my house and have to rent a place my payments $3-$3500 a month . I’ll stand on the street corner and beg and Steal to make my payment . The alternative is being on the street homeless as I can’t afford rent . My neighborhood has had zero homes for sale for over a yr . The moral of the story is nobody’s giving up their 3% mortgage thus zero inventory. Even if builders build like crazy crazy house prices x 7% mortgages means unaffordable .

 

[Tahoe Ray]

Tahoe rays exactly correct . 84% of all home Loans are at 4% or less 7% now . Education time . I’m locked in my loan at 3% . I lost my job and I have 3 kids and a wife . My house payment is $1500 a month . If I lose my house and have to rent a place my payments $3-$3500 a month . I’ll stand on the street corner and beg and Steal to make my payment . The alternative is being on the street homeless as I can’t afford rent . My neighborhood has had zero homes for sale for over a yr . The moral of the story is nobody’s giving up their 3% mortgage thus zero inventory. Even if builders build like crazy crazy house prices x 7% mortgages means unaffordable .

My neighbor a few doors down just sold. We also have very little inventory (outside of new builds).

I was thrilled with what they got but I have to believe that it was all cash.

Nobody wants to be saddled with a giant note with all of the uncertainty out there.