Renowned housing analyst who predicted the 2008 home price crash weighs in on the current market

[TheOilWizard]

Until you retire and move south into a more comfortable home owned free and clear.

Any further south and I'll be in Mexico

But seriously, if I'm understanding what you're inferring in that post - No, I would not choose to have an even better situation at the expense of the middle class not being able to afford a home. That is my position that I've held here in previous posts.

 

[BMWTurboDzl]

Any further south and I'll be in Mexico

But seriously, if I'm understanding what you're inferring in that post - No, I would not choose to have an even better situation at the expense of the middle class not being able to afford a home. That is my position that I've held here in previous posts.

Why must you live for the sake of others?

 

[TheOilWizard]

Why must you live for the sake of others?

Well, I do want to see others given the opportunity to prosper. Seeing the ability of the middle class to afford a home erode away should be alarming for everyone. If that means my home is worth a little less, with less equity, so be it. It goes back to some of my previous posts, "it's not all about me".

 

[Highlander 1459]

Why must you live for the sake of others?

the Latin communitas, which is in turn derived from communis, which means "common, public, shared by all or many."

aka in a more egalitarian world people as a whole strive for others success.
Compare that with the every man for himself , screw everybody else I have mine attitude many people exhibit.
Communitus makes for a better world would be my guess why he feels that way..

 

[wpod]

The boomer generation holds the majority of assets, but it’s less than half of boomers. Many of them are poor also.

So it will be interesting with the concentration of wealth if younger people will continue to support social security and tax free inheritance pass throughs which they will never get.

https://www.cbsnews.com/amp/news/retirement-baby-boomers-peak-65-financial-crisis/

I would have to say more money is always better.

 

[BMWTurboDzl]

Well, I do want to see others given the opportunity to prosper. Seeing the ability of the middle class to afford a home erode away should be alarming for everyone. If that means my home is worth a little less, with less equity, so be it. It goes back to some of my previous posts, "it's not all about me".

Okay but you can do that without sacrificing yourself for others.

 

[BMWTurboDzl]

the Latin communitas, which is in turn derived from communis, which means "common, public, shared by all or many."

aka in a more egalitarian world people as a whole strive for others success.
Compare that with the every man for himself , screw everybody else I have mine attitude many people exhibit.
Communitus makes for a better world would be my guess why he feels that way..

It's rather absurd to think that you owe your existence to the whims of others. Talk about a lack of agency

The comparison of every man for himself is the only just attitude with one caveat which is to do so without violating the rights of others.

 

[Highlander 1459]

It's rather absurd to think that you owe your existence to the whims of others. Talk about a lack of agency

The comparison of every man for himself is the only just attitude with one caveat which is to do so without violating the rights of others.

I know... we have to take care of ourself first... but some out there don't seem to realize that a rising tide raises all boats..

 

[TheOilWizard]

Okay but you can do that without sacrificing yourself for others.

Huh?

Calling out funny money (equity) created from this boom is not sacrificing anything. For every dollar your home value increased, your buying power decreased as the market adjusted. My home could 10X tomorrow, and my buying power in the market would stay relatively similar. Home prices jumped 50% in a 2-year period in my area. I'm not a housing economist, but that doesn't seem healthy.

Now, as others have pointed out, if you get a loan against this equity or completely exit the housing market (live in a van, nursing home, etc.) this could benefit you considerably. Meanwhile, existing homeowners are in an awkward spot while new home buyers are seriously struggling.

 

[Dave Hess]

As a millennial I agree there is a lot of whining, but there are definitely some things the older generation doesn't understand about how life is different for us compared to back then.

I remember two of my retired neighbors telling me I was "foolish" for not getting a job right out of college with a pension. Meanwhile the same jobs they retired from earning a pension with their full six figure salary were both hiring and those benefits were no longer included.

I disagree with the post above stating millennials will be able to retire earlier, it simply isn't the case unless you do pretty much the opposite of the societal norms these days. Retirement benefits are MUCH worse at many employers now than they ever have been. I'm fortunate to work at a university now with good benefits, but it is not the norm. All of my previous employers the healthcare and retirement were pretty sad, but inline with most corporate benefits these days. I'm very fortunate, but I have also never taken on a car loan, and was able to work full-time all through college to graduate with no student debt while also owning a business. Those are not the norm for most people these days. I have a few student employees who are also commuting and working full-time like I was during college, and even for them there is no way they will be in the financial shape I was in when I graduated. I'm not saying "oh life is so hard now" but times have changed. It is no longer financially possible to work a run of the mill part-time job, pay for school as you go, and also live in an apartment by yourself like my parents did. You wouldn't even qualify now.

I agree with you that it’s much harder today than 35 years ago, I was single and bought my first house at 24 in Lakeland, FL. I recently said that to some people in their early 30’s and they looked at me as I was crazy and kidding around. It was possible to do this back then.

You mentioned pensions.
I was lucky to get a job with a pension and voluntary pension…. plus a 401K.

These are things younger folks only dream about…..

 

[BMWTurboDzl]

Huh?

Calling out funny money (equity) created from this boom is not sacrificing anything. For every dollar your home value increased, your buying power decreased as the market adjusted. My home could 10X tomorrow, and my buying power in the market would stay relatively similar. Home prices jumped 50% in a 2-year period in my area. I'm not a housing economist, but that doesn't seem healthy.

Now, as others have pointed out, if you get a loan against this equity or completely exit the housing market (live in a van, nursing home, etc.) this could benefit you considerably.

You're talking about doing less out of some altruistic reason (See your response below). Life is not a zero-sum game. Your gains are not necessarily at the expense of others.

Any further south and I'll be in Mexico

But seriously, if I'm understanding what you're inferring in that post - No, I would not choose to have an even better situation at the expense of the middle class not being able to afford a home. That is my position that I've held here in previous posts.

 

[TheOilWizard]

You're talking about doing less out of some altruistic reason (See your response below). Life is not a zero-sum game. Your gains are not necessarily at the expense of others.

My comments are in reference to the recent housing boom that left middle class (especially first time home buyers) in the dust. I get the feeling you're conflating that to suggest I mean every possible advantage. No, I'm not saying that.

 

[pbm]

People can and do leverage the equity in homes to do other useful things. People also sell their homes in retirement and move to areas with a cheaper cost of living. Both of the above scenarios hugely benefit owners from the capital appreciation of their homes.

Not sure how your property taxes work locally but everywhere I’ve lived property tax rates are set by first establishing the town budget, then consideration is given to property values, then a rate is set based on those property values to meet the budget. My tax rates have fallen as my house value has increased. Don’t get me wrong, I pay more property tax now than I did 10 years, but it has gone up steadily and incrementally while in that time my home has doubled in value.

I've read that California (and probably NY will follow) is trying to introduce an 'exit tax' to punish those who want to leave. How nice.

 

[PWMDMD]

I've read that California (and probably NY will follow) is trying to introduce an 'exit tax' to punish those who want to leave. How nice.

They both sound like miserable places to live...

 

[CKN]

How much did

one thing I will never do is pull cash out from my home.
The reason I got my house so cheap in 2011 is because the previous owner used it as an ATM in the 2000's and eventually it caught up when the market collapsed.
guy down the street lost his home he lived in for the same reason.
He is a fireman.. his wife is employed in the medical field..
they lived in that house since 2000.
they had a nice RV, a bass boat, two new vehicles etc...
I used to wonder how they did it, they had fairly good jobs, but not that good..
they ended up moving out as the house got foreclosed when they couldn't pay the bills anymore.
learned later on he just kept using the house as piggybank...

How much did you pay for your house?
How much do you owe?
What is your house worth now?

I suspect your house would have to plummet by 40% to 50% to loose any equity you may pull out?
That isn't going to happen.
You may be be morally opposed-but the math (probably) will not agree with you.
So-how in the world would you lose your house by pulling out equity?

If your over 60 and use a "reverse mortgage" as the tool there is no way you would lose it.

 

[CKN]

Well, I do want to see others given the opportunity to prosper. Seeing the ability of the middle class to afford a home erode away should be alarming for everyone. If that means my home is worth a little less, with less equity, so be it. It goes back to some of my previous posts, "it's not all about me".

The middle class can't afford homes now-where anybody wishes to live. What you do or not do-with have zero consequences to them.

 

[JHZR2]

Am I supposed to be impressed by a “renowned” analyst???!? A broken clock is right twice a day. I feel like these folks leverage their fame making claims and then banking on the fact that they got the last one right.

It doesn’t always work out.

Is there enough housing? No. It’s scary when folks talk increasing density in nice established communities. No. Just no. That will make them not nice. So might as well fix the high density situations that already exist and are horrible, rather than destroying the next community down the road.

So there isn’t enough supply. Yet we’re destroying farmland at an alarming pace for garbage homes with no real level of craftmanship or quality. Someone is buying them.

Will it all crash? At some point too many price increases will make more and more folks not be able to afford, and it will hit critical mass, they will sell, prices will drop because it’s still $$$ with high interest rates that can’t drop because we print too much money and have too much bad debt, and something will give. Whatever it is. And a new equilibrium will form.

 

[CKN]

They both sound like miserable places to live...

Taxes/politics and the amount of people - yes your are right. Otherwise a beautiful state with unmatched weather. I lived there 50 years.

 

[fdcg27]

The thing that matters is that median housing prices are now at nearly 7.8X median income, a historic high.
See this: https://www.longtermtrends.net/home-price-median-annual-income-ratio/
This means that no matter how well you or I have done and how hard the current aspirants may work housing is simply unaffordable for many or our fellow citizens.
This is what should concern us all, not telling tales of how hard we worked and how well we've done.
Unless we want to see serious unrest among those denied the opportunities we enjoyed, we need to come up with a policy response to this inequity.
Merely saying that those who can't afford a house need to work harder or upgrade their skills is a poor response.
For every hard worker who makes it, how many are there who don't?
Remember, these are our fellow citizens and we have to live among them.

 

[JHZR2]

I'm not following. Your increase is capped but his is not? What is the value of the two homes?

We have prop 2 ½ but everyone pays the same rate:

Proposition 2½ places constraints on the maximum amount of the tax levy raised by the Town and on how much the levy can be increased from year to year. It allows a town to annually increase its levy by 1) 2.5% of the prior year's levy, and 2) an additional amount based on the valuation of new construction and other allowable growth in the tax base (new growth) that is not the result of revaluation. The annual levy limit may never exceed the overall levy ceiling, which is 2.5% of the full and fair cash value of a town's total taxable value.

With Proposition 2½, a minimum 2.5% tax increase can be expected each year. Subject to voter approval, Proposition 2 ½ allows communities to raise funds for certain capital projects above the amount of their levy limit. An exclusion for the purpose of raising funds for debt service costs is referred to as a debt exclusion. The additional amount for the payment of debt service is added to the levy limit for the life of the debt.

Be careful with this. We’ve had it for a number of years, because tax is so bad. The schools have suffered and teacher salaries have lagged. So now we’re starting to lose teachers.

I live in a walking district. Home rule. If someone doesn’t mind destroying their kids lives and health bussing them all over the countryside, maybe it’s less of an issue. But for folks with small towns and walkable districts (I’d assume much of NE is that too), it can have issues, especially if other areas not that far away are regionalized and offer more because they have more taxables/rateables. It’s a balance.