The Frozen Real Estate Market!

[@PBoyle]

The first 100 people to use code BOYLE with the link below will get 60% off of Incogni: incogni.com/boyle

[@georgedoolittle7574]

Something about Hungary having mortgages priced in Swiss Francs?

[@shephusted2714]

With libraries facing legal annihilation from every direction if they attempt to carve out surveillance-free spaces for digital books, the future of reading is in the eleventh hour.

[@ronswanson1410]

I like big bruttx

[@w.harrison7277]

That Britney Spears snapshot juxtaposed against "federal conservatorship" was hysterical! 🤣

[@shephusted2714]

@@w.harrison7277 what can you honestly do but laugh when the world is so upside down politically, socially, and economically? answer: not much, maybe make some videos that are absurdly acerbic?

[@bart_fox_hero2863]

I panic purchased my first home in late 2020. 30 year fixed rate VA backed mortgage at 2.75%… I feel like I got off the bus at the last stop before it went off a cliff

[@samsonsoturian6013]

Best time to do it.

[@moviemusicmash4899]

If you panic purchased, that means you OVERPAID for a home. Why do you think you missed the cliff?? It sounds like you fell right off.

[@personzorz]

I disagree ​@@moviemusicmash4899

[@xiphoid2011]

That's actually fortune smiling on you my friend. My wife and I got 3.25% fixed in 2015, possibly one of the best deal we got. Just live in our house, and smile at what Zillow say our house is worth. We don't plan to sell, we like our house. It's just feels good to get a good deal. :)

[@rathelmmc3194]

@@xiphoid2011 Well hopefully you don't start or expand your family, or find some other reason you need to move. This market is brutal.

[@UnbornApple]

I didn’t even particularly want to be a home owner, but in 2019 I knew my rent that was way below market rate wouldn’t stay that way, and I thought I could scrounge up a down payment and take advantage of low interest rates and get a house. So January 2020 I closed on my house. Then the pandemic happened. Prices sky rocketed, then interest rates skyrocketed. And now I’m probably gonna live here forever with my 3% interest rate.

[@Soldknight324]

Good timing

[@lockedinracinglir5725]

Same I refinanced in 2019 and went to a 15 yr fixed @ 2.25%. For about 200 dollars more a month I eliminatied pmi and 115k in interest. 🙏

[@HermanWillems]

3% is not even low. Here in Netherlands many people have interest levels around 1% with 30 year fixed rates. AND we can transfer our mortgages so we are not stuck at all.

[@wolfumz]

Its a little weird reading about how the market is so unequal right now. If you're buying, moving, or renting, you're totally screwed. But if you bought in, your house has made you hundreds of thousands of dollars in paper wealth, all while you do nothing other than pay the mortgage. My wife and I really struggled to buy in 2016 in San Diego... but the valuation now has almost doubled. It's insane I was just thinking about this when I was listening to my boomer family member who sold her home (and kept a rental property) in San Diego this year. She moved near her grandkids in Plano, TX. She whines all the time about California, but IMO, California was very good to her... her exploding property assets made her 1.5 million dollars while she slept, just in selling the house. Not even going to get to the rent she's collecting from her tenant in biotech. But man, you would think Gavin Newsom and Joe Biden personally stole from her, the way she complains. And she's not alone in her opinion. In her view she's somehow been jilted by a bad economy, or federal incompetence. I don't understand it. I don't get how people are looking at this.

[@UnbornApple]

@@wolfumz doesn’t CA have some law that basically freezes your property taxes, so long time residents are barely paying any taxes?

[@eoghancallaghy2634]

Before 2008 I thought i would never own a home. Than the crash happened and i bought one for $85000. It is now worth $350000. While that benefits me personally, something is not right. The only way young families can afford a home now is to wait for another crash. This is not sustainable.

[@SigFigNewton]

If it truly is unsustainable, prices will fall. Will be interesting to see how much of the country will see further price drops

[@deaddevil7]

That is exactly my point: millions of people complain about housing prices at the same time planning to use their future house as an investment that beats inflation. Like....bruh, you are part of the problem.

[@SigFigNewton]

@@deaddevil7 house prices won’t be beating inflation Each year that home prices rise more than incomes, the portion of incomes that gets spent on housing gets closer to 100%. It’s very clearly not a sustainable trend, and really only went on for as long as it did because interest rates were basically falling for 40 years. Expecting home prices to outpace inflation going forward is foolish

[@deaddevil7]

@@SigFigNewton what is your reasoning to state that house prices didn't increase more than inflation? Are you saying that because CPI formula includes housing and, as such, if the housing price index increases, CPI will increase proportionally?

[@SigFigNewton]

@@deaddevil7 I’m saying that they DID increase more than inflation and that in the future they are extremely unlikely to increase more than inflation. It’s mathematical fact that if housing costs increase more than incomes, a larger portion of incomes gets spent on merely being housed, and that if housing costs always increase faster than incomes, even if only by a tiny amount, then as time approaches infinity, the portion of incomes spent on housing approaches 100%. Taking it out that far in time highlights that it’s not sustainable for housing costs to increase faster than incomes. Simply not possible for it to continue and continue and continue. Stating fact. Where it gets cloudier is when I replace “housing costs” with “home prices” and especially when I replace “incomes” with “inflation.” Housing costs could conceivably increase faster than incomes forever without increasing faster than inflation, but that requires incomes to increase faster than inflation. Which is its own unsustainable thing. Incomes do outpace inflation occasionally, but we’re an economy that is like 75% services only 25% goods, and in much of the service sector prices are determined largely by what service workers are paid. Incomes and inflation tend to closely align

[@Kermitable]

yeah ive read this nyc article too.

[@brianborkowski5977]

Hello Professor Boyle. An important point to add: due to low interest rates, many owners who moved have kept their prior home and coveted them to rentals or air BNBs, with rentals being by far the most likely. Then they buy a home at their new location, further reducing inventory. You said this but I wanted to be clear what most people are doing with their homes when they move. They usually make twice the income on rent versus mortgage payments so it's a "no brainer." This is a very difficult problem that I don't see resolving unless rents drop or more inventory comes online and home owners can't find renters.

[@priola7587]

In 2012, there were five or six houses on my street in foreclosure sitting vacant for about the 2nd or 3rd year in a row, and priced near 130k, down 70k from 2009. I just don’t think 2012 is a useful comparison to today as described. This just jumped our at me because I still have PTSD from having my mortgage under water from 2009 to 2018. Nine years under water. Talk about frozen. Also, as a retiree, I’m incentivized to keep my home and its 3.3% interest rate, in part, because there is nothing to downsize to. Condos come with ever inflating HOA dues and no one is building small affordable units. I am now very grateful for my 30 year fixed loan/payment. God bless the young folks looking to buy.

[@priola7587]

@@basilmagnanimous7011 Basil, your assumptions about what I am looking for are products of your mind, not mine. “People like you”? Having my first and only home drop nearly 35% below what I owed on it, a year after I bought it, actually was a lot like the car market. It’s a very modest home in a working class community, and I could barely afford it. It shook me up because it was the biggest financial commitment I’d ever made. Im mostly interested in stability, and housing security, not making inflated profits. Between land cost, building materials, skilled labor and regulatory requirements, taxes, and yes, infrastructure contributions that are factored into the permits, we won’t likely be seeing homes around this part of the U.S. selling for anything near 30k. I’m not crying about my 9 yo Subaru with 139k miles, by the way. It’s paid for and will likely last another 5-10 years. No tears. Laughter. I love that car.

[@dismurrart6648]

Yeah my partner and I are in our early and mid thirties. We're trying to buy but house prices are outrageous near me. Even if I go a town over, the taxes are so high that I might as well buy in my expensive town

[@priola7587]

@dismurrart6648 Best wishes to you and hopefully you will have an opportunity at some point.

[@shane_rm1025]

Zoning and other "local control" measures have made building small units either unprofitable or outright illegal

[@crispi101]

I see it more like this: 2009 is more like 2024 and probably 2027 will be more likely 2012...

[@aidanrushton5472]

you should add a 'lil citation to Ben Casselman's article, since he did some extensive research. Super informative video!

[@birkobird]

Here in New South Wales it feels a bit more like 2008. A combination of terrible planning, rising numbers of wealthy immigrants, and government corruption has led to the overwhelming majority of homes that are build being priced in the 1-2 million range from the jump, and the entire city is becoming unaffordable as it follows the prices. Roughly a third of Australian homes are investment properties (i.e. the person who owns them already owned a house when they bought it) for renting, yet rent is still at an all time high basically everywhere. It has left young people like me praying for either radical market intervention (like rent control or placing legal limits on the number of properties a single entity can own) or some kind of housing crash. Problem with the second one, of course, is that we’ll be the ones ripped apart most by the wider economic consequences of any such crash.

[@cheeseman417]

The sweet spot of mortgages is somewhere around 4.50%, because when it dropped to 2.75, homes were snapped up within a day, and obviously above 5 there's a smaller buyer pool.

[@revview5594]

I field frequent calls from head hunters and companies offering "relocation benefits." As that would entail a sell, move, and purchase or rent, I just stop 'em cold and tell them unless you can cover all-in actual costs plus the rate spread then forget it. Amazing how they then change their tune and offer remote ending up being a possibility. I don't regard lack of mobility being an impediment.

[@zwatwashdc]

What line of work?😊

[@McVaio]

I rent out my own home while working abroad. Works well.

[@ironmantooltime]

​@@zwatwashdche's a coder

[@revview5594]

@@ironmantooltime nope

[@ironmantooltime]

@@revview5594 you work in IT though right

[@david12eebi]

My wife and I graduated from college as a nurse and electrical engineer within the last two years and even as a household with substantial double income, we are unable to afford a decent, single family home like we want. We even have very little debt on a single car that will be paid off within the next few months and our lifestyle expenditures are relatively low as well. We were just a couple years too late to the market and now fear that we may never afford a home that we will be happy with. We are currently renting an apartment for the next year or so in hopes of improving conditions but after that we may just suck it up and buy an absurdly overpriced home and deal with it. It's depressing to see what we would have been able to afford a couple years ago that now are solidly out of our price range.

[@danielclawson2099]

I was in a similar situation to yours 17 years ago: recent graduate, good income, low debt, unable to afford housing. Prices were rising much faster than my wage ever could. I thought I would never be able to afford it. Eventually the market turned. My income stayed stable, prices went down. It will get better. A big plus for you two: nursing and EE are very stable, in addition to being good income. A more affordable time will come. But probably not in a year. Balance your patience vs. your needs. Renting is (relatively) cheap. Save the difference. Invest, increase retirement contributions, or use the savings to increase your down payment, lowering your monthly payment. Either way, you've got a lot of time ahead to avoid tying yourself to an expensive asset that will probably lose value in a few years. That is a worse situation than renting. I've watched it destroy people.

[@bwvl]

Never is a long time. I'm hopeful that the next few years will see improvements for young buyers like you. I recall when my mortgage was under water for 5 years, I thought I was stuck forever in my house. But it didn't end up being forever.

[@1MinuteFlipDoc]

move in with family (one of your parents) and save - save - save! Renting is an absolute waste of money.

[@johng4093]

Just about everyone was just a few years too late to have gotten a much better deal, but you go ahead anyway...and after a few years others are wishing they had got the deal you did.

[@dsj9831]

Best sensible and factul commment in a while.​@@danielclawson2099

[@DirkLondon]

Same in Europe. ‘Social scissors’ opening wider, so the only ones buying are elderly people up/downgrading and those who inherited a big chunk of the deposit

[@SkySong6161]

I really wish I saw two things in this: the problem of ghost houses, the fact that private markets can't fix the public problems that they've caused, and the fact that the fed can *only* affect interest rates, which is why raising them merely slowed the price growth problem and caused entirely different ones. Ghost houses (or buy-and-leave) is a problem in every housing market, although to what severity depends on the popularity of the location. It's when a house is bought as an investment and *nothing else.* It's not a vacation home, or an airbnb, or a long term rental, or undergoing renovation, or condemned and thus unfit for habitation, or empty plots of undeveloped land. The buyer leaves the home sitting completely empty, and intends to leave it that way until they want or need to sell it. I'm in FL where this is especially egregious - a state wide average of 12% of ghost housing, with certain major metro areas (Tampa, Miami, and Orlando as well as their surrounding areas) having ghost housing as high as 20%. A common salespitch I heard in Tampa when I was trying to buy back in 2019 was that I wouldn't have to worry about noisy neighbors - the entire floor or block were company owned investment properties that nobody was expected to ever live in. Up to 20% of all housing in a city, *empty* with ever increasing homelessness and affordability, as former public parks transform into homeless camps nearly overnight. The private market has also decided "you'll own nothing and be happy," as whatever housing *is* being built is for-rent only or mcmansions so far outside the reach of the income of the normal (not average, *normal*) income that of course the only purpose of these dwellings is to become ghost housing, air bnbs, or 6k rentals being split by six roommates. Unfortunately, it's gotten so bad that we must turn to (ick) government funded and built housing, *not* private developers. I'm not thrilled with this notion, given how egregiously corrupt and fascist the US has become (and is expected to get worse), but short of burning everything down and starting over from scratch, it's the least-worst option on the table atm. I'm frankly sick to death about hearing about how the fed is failing to fix housing prices. The fed can only fix interest rates. *Everything else,* from ghost houses to NIMBYs and airbnb, is outside of the Fed's control. They have exactly one tool in their toolbox, and that's interest rates. Interest rate hikes aren't going to fix bad land use laws, corporate greed, or the corruption that's eating us alive.

[@PBoyle]

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[@paxdriver]

How does a frozen mortgage market affect derivatives like MBS's over the long run? It's a new dynamic to me, I don't quite know how to forecast those instruments.

[@georgedoolittle7574]

The crisis in not just the USA but Canada is the incredible internal mobility of the population creating absolutely *EPIC* speculations in where the "next hot market"(baseline New York) is going to be in the urge to splurge on *MEGA* borrowing(s) commercial credit and supertall Rent the Musical. And thanks to lockdowns this has played out with an *EPIC* mania still raging away in both Florida and Las Vegas. In the meantime the Fed which was apparently bamboozled by said speculators mostly notably Donald Trump with "covidiocracy" which did impact the entire World needs noting ... well, this has created I guess I would call "expectations completely un-anchored from reality" or something being from New York that makes no sense from what the baseline price should be for a piece of swamp or desert(the bid) versus what the asking price is (what a buyer can actually pay with even perfect credit.) This "skew" is hardly limited to the real estate to include most spectacularly now the global Airline Industry which is dominated by just two manufacturers namely Boeing and Airbus. Because of Putin Russia and a literal World War 3 quite suddenly most global travel has ceased and desisted excepting North America to include Caribbean and Panama and Middle East. The Middle East is fairly easy to understand as the only safe way to travel is by Aircraft. For North America however there are now a litany of options for travel period not least being air travel and most certainly there is that. To bring this on "home"(so to speak ... I think a Baseball idiom) the urge to speculate especially and almost exclusively in the USA alone now this market has suddenly been massively contracted through inversion of the yield curve yes absolutely but also there are still ability to speculate in markets still Greater Nevada/Northwest Arizona but most spectacularly is the State of Kansas which includes the now massive City of Kansas City (Greater) and all that comes with that...which is quite a lot in point of fact *PLUS* you can pick up a perfect good house there still for $40,000 US Dollars. My take anyways is that no, this is not the Great Depression in fact this is *FAR FAR FAR* worse as just like the Okies who fled to California a lot of USA Americans simply *LEAVING* the crazy high priced with bs lifestyle to find something that actually makes sense to retire in/enjoy life in you name. This is leading to an EPIC deflation far larger than anything experienced 1929-1933. Interestingly though this actually impacted the US stock market quite the opposite record highs hitting everywhere in point of fact....so there are big time cash buyers out there....tens of thousands actually after Crash 2022 but recovery from that as well. #abandonment_issues all made worse by the insane asylum of Social Media...and again Putin Russia Crazy Ivan upon both Ukraine and the West...a War most assuredly Russia is losing.

[@bluulock9538]

The one thing that I think should’ve been mentioned is how many of the most in-demand markets have had prices pushed sky high due to zoning laws which made it impossible for supply to rise to meet demand, and are now starting to see up zoning beginning or on the horizon as the YIMBY movement has started to gain ground. I would also be interested in how it might play out if interest rates stay, if not as high as right now, at least significantly above the historically anomalous near-zero rates of the 2010s. The market can’t stay frozen forever.

[@tylermc11795]

30 year Fixed rates are going to make the housing crisis worse in the US. It’s not only zoning laws that halt construction. When rates shoot up, construction also collapses

[@supersleepygrumpybear]

Or how they built/ are building apartments in most downtown areas but still expecting $2'000-$3'000 / month in rent. They're built using cheap wood, so you can hear your neighbors. And most downtowns are probably some of the worst places to live right now...

[@liveoak227]

​@supersleepygrumpybear imagine what those buildings will look like a few decades from now. It's a shame how many brick and masonry buildings were demolished to make way for these shoddy eyesores

[@ariellubonja7856]

This is the real reason. Housing construction has outpaced demand for decades now

[@dismurrart6648]

Yeah I live in the Midwest. The city I live in, houses average about 500k. Every town around us is 200k cheaper but the towns up the tax so you end up paying the same. With 40k down, my partner and I can afford a house that's about 400k. We can't even afford the other towns because we'd need an extra grand a month. What's frustrating is everything being built across the state seems to only be luxury. You'd think everyone expects to sell to 1%ers

[@tomwz5726]

Could you please provide me with the title or link to James Mackintosh's article? 🤔

[@Kahlnen]

What do you mean?

[@toriitoraa]

​@@KahlnenThey want to be provided with the title or link to James Mackintosh's article.

[@Kahlnen]

@@toriitoraa who's James mackintosh???

[@FluxMD]

Good chance you'll get pay walled

[@grmpf]

@@toriitoraa lol I love this kind of "being a lil sh*t" type reply.

[@hugokatz]

90% of all accidents happen at home. Yet most people stubbornly insist upon living there.

[@mirceskiandrej]

If you live in the streets, 100% of the accidents happen at home 😉

[@IncredibleMet]

100% of divorces start with marriage yet some people stubbornly insist of getting married. What can I say, humans are crazy!

[@johng4093]

I know, makes no sense, but people keep doing it.

[@wagadoogy420]

such foolishness!

[@SigFigNewton]

100% of money spent on housing isn’t spent by that consumer at local small businesses. Yet people pretend that high housing costs aren’t terrible for the economy.

[@frmcf]

As a point of order, 30-year fixed-rate mortgages are also very common in Spain. 73% of new mortgages are fixed-rate, and here that means fixed for the entire period of the loan, which can usually be up to 30 years.

[@jadegrniz]

Same in France. My French cousin actually told me he thought Americans often choose ARMs and he was surprised 30yr fixed is the standard

[@MikeGaruccio]

I think there’s an argument that the home improvement market won’t take the same hit that some of the other sectors you mention are. People who would otherwise have been looking for a new house are going to be starting to consider renovating their existing homes instead, especially if this trend continues and people decide that it’s not worth the wait to move to get whatever they want out of a new home.

[@MikeGaruccio]

@@basilmagnanimous7011 sure, or the owner would have before selling. But in either case that would be expected to be flat in terms of sales for the home improvement supplier.

[@weird-guy]

In my country homeowners with more than one house are renovating it left and right to rent it, some are even investing in renovating theIr lapidated houses that they inherit from parents,grandparents ect, even in their primary residency a lot of them are doing improvements.

[@q45ij54q]

Patrick, you didn't mention Wall Street investment firms like Blackrock who have bought up large swaths of houses to rent them out. This has contributed to the lack of supply in the market. What we need is legislation to prevent firms with billions in capital from buying up houses and leaving nothing for individual buyers. But it's unlikely to happen due to congressional lobbying. Also, prices are not falling much across the country as a whole, but many markets in the south and west have already seen significant price declines. This will continue if the Fed doesn't cut rates.

[@johng4093]

As a percentage basis of residential housing it's an insignificant factor.

[@hulkingmass]

Time to go to the comments to see middle-aged people who think they are special laugh at 20 year olds for “timing the market wrong”

[@imooumoo4]

Yeah, it's pretty bad in comment sections like this

[@richardcoughlin8931]

I’ve bought and sold six houses over a 45 year period. My first mortgage in 1978 was 13%. My current mortgage is 3%. Both of these extremes were the product of extraordinary economic circumstances. In the intervening years my typical mortgage rate was around 7%. So the current rate does not surprise me at all - and fortunately I don’t have to move. But it presents a real dilemma for my daughter who bought her first home six years ago and refinanced at some point to 3%. She has a growing family and wants to move to a larger house but going from 3% to 7% presents a formidable obstacle. Around here the existing 3% mortgages are called golden handcuffs which is another metaphorical way of describing a frozen market,

[@HetkiPieni]

13% interest rates weren't as bad as people make them out to be. Pay rises used to be a lot higher for most people and the prices of houses were a lot lower, so the real interest rate that you used to pay wasn't as high as it is today. As an example, if you have a 400000€ house and pay a fixed 10% interest rate for 20 years, the actual price of the appartment/loan is 930000€. Those old school interest rates aren't feasible anymore

[@stefnirk]

High rates and low prices used to be the norm for a long time. As interest rates went down, we got low rates but high prices, which was great for those who got in early. We are now looking at high rates and high prices; something has to give. But all in all, high rates and low prices are always better because people can pay down the mortgage, another word for a tax-free, high-yield savings account.

[@bdegrds]

​@THEGAMERpro5 no wages were alot less back then, household items were more expensive than today as well. People were willing to work alot harder back then, that's why they could afford a house. 50-60 hour work weeks were normal.

[@SigFigNewton]

Affordability levels and interest rate levels are very different things. In the early 80s when rates were 14%, homes were more affordable than they are now at 7% rates. And it isn’t only because the ratio of median home price to median earnings was so much lower back then. It’s also because other essentials were cheaper relative to incomes. Savings rates are much lower now than in the early 1980s. Saving for a down payment is now pretty much not an option for a larger portion of the population. People are like nah, I’d rather have health insurance.

[@richardcoughlin8931]

@@SigFigNewton Good point. I should mention that the house I bought in 1978 with a 13% mortgage cost me $33,000 ($155,000 in current dollars.) The same house today in a trendy Southwest city is on the order of $450,000. (2Br, 1 bath, ~1000 sq ft).

[@dexterbunco4212]

I just bought a house a month ago. Rate was 7.75%. Even though my income is 80% higher than when I bought a house in 2007, this home is only 50% more than my 2007 home. We weren’t able to get our dream home which would’ve been a new construction, instead we found a home in a more economically modest neighborhood. As high as everything is, we made the leap because we plan to refi later, we wanted something to build equity in, and even though the home and neighborhood isn’t our most desirable choice, it was comfortably affordable within our combined incomes. If we were a single income couple, this home would be cripplingly expensive.

[@cryptowolf-zf3fs]

I had a house built in a white trash neighborhood in Texas in 2005. I paid off that mortgage early and sold that house for 100k more than I paid for it in 2021. Gentrification is a wonderful thing if your are willing to put up trashy neighbors and running off crackheads and slowly the area improves, home values go up.

[@Gnomezonbacon]

This house price enrages me. I was right about to be able to buy a house.

[@stachowi]

they don't want you owning a home, the want renters

[@nlabanok]

​@@stachowi"They"...who TF is "they"?

[@TapoutT]

Yep I'm traveling and screwing a hot ukranian girl now instead why? Because the crash is gonna get worse I might as well have fun before the collapse.

[@calvin6429]

just do it

[@stachowi]

globalists who don't want you consuming the earths resources@@nlabanok

[@carlgarrett5142]

Patrick has missed the fact that 30 year fixed mortgages are made possible by pooling these loans and converting them into 30 year fixed bonds. That's Fannie Mae and Freddie Mac's primary function. Mortgage rates do tend to rise and fall along with treasury bond performance, but that is more coincidental, as they are actually based on the rise and fall of mortgage bond prices.

[@trappart9209]

What exactly this fact changes in the full picture? Curious

[@BeastOfMetal1989]

My mom looked into selling hers shortly after my dad died a few years ago, but with the interest from his final refinancing (in 2011) and the state of the house at the time, she was underwater on it. (This is why you should spend up front on maintenance over time - trying to "save in the short term" just causes a teetering pile.) She hasn't revisited the discussion since.

[@marioskoutras6583]

Here in Greece at least, prices went up when foreigners bought dozens of apartments to transform them into short term rentals for the airbnb platform. Prices went through the roof, foreigners don't want to buy anymore, simple logic. I know a group of people who right now are selling some of their apartments for outrageous prices. We're talking 150k-200k for a 70's, 80-100 square meters apartment, it's just crazy. Ads are online for over a year so far with no interest from any buyers and they don't want to accept the fact that nobody buys them, their not in a hurry to sell them either. Other people see these ads and they think that these are the current prices. There is a big difference between what people ask and what they really get. Somebody has to put an end to this nonsense.

[@olfrud]

same here in austria. a lot of russians and chinese buy up everything lol

[@SumanutiLudjak]

​@@fxsrider You can't know that. Why would it correct and what event is he waiting out for? Nothing special about Greece, in entire southern Europe properties are hard to afford compared to local income, especially the tourist destinations.

[@weird-guy]

Same in my country, the government sold our country for tourism with golden visas,tax breaks for digital nomad and retirees although is going away now, building of luxury housing,airbnb´s and hotels popping up in every corner on the lower classs level they are bringing a lot of migrants without enough available housing because of the financial crisis making rents to rise even away from metro or turisty areas.

[@poisonedlava]

Same thing happened in Vancouver

[@dariadari3370]

​@@olfrudfunny but people from Austria on the other hand buy up everything in Czech republic boosting prices and screwing local market for locals. Pretty sad. Also I hope governments will manage problems with Airbnb.

[@chrism3790]

Sky high prices and interest rates. Tanking inventory. Record consumer debt. Companies laying off workers. People tapping into their retirements to survive. Soaring property taxes. High inflation. It feels like the room is full of gasoline and someone is about to light a match.

[@JesseBeahm]

The thing about assumable loans is its hard to actually pull off for many reasons. A few would be, it takes real corporation from the seller, the other reason is most homes have a lot of equity in them, so the buyer would need to somehow find a way to bridge the gap between what's left on the assumable loan and the equity, in other words they usually need to come up with a bunch of cash they don't have.

[@dougnyc8324]

Spot on, I came to comment on this point. While it happens, it happens rarely primarily for this reason. The home seller will also be buying their next home and will be assuming a much higher payment - while they might be able to sell their home for a bit more, if they had a mortgage rate at the average of 3.5%, it would have to be north of 15% more to "buy down" a new 7% rate to 3.5%. I don't see this moving the needle in any meaningful way on home sales.

[@alhollywood6486]

Considering how valuable these 3% FHA assumable loans are now, it would add so much value to the house that any appraisal would come up woefully short, since appraisers do not factor that into the price.

[@sparksmcgee6641]

It takes two loans. A second to cover the equity.

[@onefailatatime]

Not necessarily some lenders will allow you to take out a heloc if there is enough equity from the purchase price to qualify.

[@mauihomebuyers]

Good points. And like others mentioned, you could use a second mortgage or heloc to cover the gap. But another issue is the timeline. We negotiated to purchase a condo with 287k out of the 395k being an assumable loan. But we ended up renegotiating and paying cash bc the lender estimated that it could take 3-6 months for them to complete the transfer 🤯 and the seller was distressed and needed us to close in 15 days. I was bummed bc I’ve always wanted to assume a loan; But it really didn’t matter much since we need up flipping the condo anyway.

[@stvWndrz]

No idea how I came across your channel, but thoroughly enjoy your videos. Thanks.

[@tommykaira7619]

My jaw DROPPED when he mentioned conservatorship and showed Britney Spears 💀. He’s with the pop culture! Subscribed.

[@samsonsoturian6013]

It's hard not to know celebrity bullshit. I knew about it because it came up in a LegalEagle episode

[@ypey1]

That one was on point 😂 i spat out my coffee

[@coonhound_pharoah]

Patrick's sense of humor is one of the best.

[@nitehawk86]

This channel's primary focus is rap music news, actually.

[@FluxMD]

I liked that part

[@robertbeisert3315]

Reminder that high prices are bad for everyone. Higher prices mean higher down payments, which puts them out of reach of many. Higher prices mean higher closing costs and other percentage selling fees. Higher prices mean higher taxes. And, finally, higher prices don't help the seller unless they plan to downsize. If your house is now worth a million dollars, but the house you want is also now a million dollars, you're out the percentages with no real benefit.

[@tHebUm18]

Maybe a little worse for all of us forever renters or people who've become homeless than all the people who saw the value of their home leap 50% in two years. I reckon those people who became surprise millionaires in 2 years are not fretting much about not being able to move. Also--they could easily sell and rent for awhile.

[@ironmantooltime]

Lol literally no one cares but this is the single biggest thing fncking the economy 😂

[@johng4093]

Besides downsizing the owner may also be able to move to lower cost areas.

[@deaddevil7]

Maybe the population should either (1) stop complaining about high prices OR (2) stop looking at their houses as an investment to beat inflation. You can't complain about the prices while hoping to be on the winning side of asset appreciation. It is hypocritical.

[@ironmantooltime]

Homes should not be an instrument of leveraged financial speculation: it's only going to end one way - resources will make their way up a pyramid. The transmission mechanism of wealth from the lower levels to the top needs to be slowed and reversed.

[@appalachiabrauchfrau]

KZbin unsubbed me from you, weird. It's not like you're controversial, you're only the best source of rap news smh.

[@codycast]

Even if he was super controversial, it’s not up to KZbin to decide what you want to watch.

[@caitlinelizabeth7808]

YT and Ray D are conspirators

[@henrytep8884]

Yt didn’t do it. Dude just fat fingered the sub button.

[@zeissiez]

@@codycast “No we don’t”, says The Algorithm with a wicked smile.

[@Thornspyre81]

​@@henrytep8884 I started thinking that same thing a few years ago when there were tons of people saying that YT unsubbed them

[@aL3891_]

Sweden here, my dad sold his apartment recently and it certainly was a buyers market, he's had it for 40 years with no major renovations so he was still happy with the price he got, but his neighbor who was also selling was having a much harder time.. loans here are also much more expensive but here you usually lock your rate from 3 months to 5 or maybe 10 years. My rate used to be at around 1% a few years ago but is now sitting at 5.6%

[@jadegrniz]

That sounds awful. I bought my house in the US with a 3% interest rate and if it was adjustable, my payment would have gone up by 20% by now. Utilities have also become more expensive. My income did not increase by 20%, that's for sure

[@Triple_J.1]

5.6% is still very good for today. Some in the US are lock is down in the high-3% range from five years ago. 3% interest is effectively zero interest due to inflation. Generally, Adjustable Rate Mortgages are considered undesirable in US. Most people opt for 30-year fixed rate. As the years ago on, it gets much easier to make the payment due to inflation/high pay at the end of your career. Though almost everyone trades up along the way, because there is no income tax on capital gains when selling/buying real estate, as long as the next property cost more than you sell the previous for.

[@kevinpowers2959]

Its like I'm stuck on a treadmill. My income has risen significantly since I graduated in 2019 but housing has gotten harder to afford every day since then. Any career progress is out-paced by the increase in house price/(un)affordability

[@Lilliz91]

Same.

[@samsonsoturian6013]

Liar. Your spending has outpaced your career

[@HermanWillems]

Time in the market vs timing the market. U just should have bought a house no matter what type back then. I did the same after i got my diploma in electrical engineering. After i got a job i directly bought whatever i could find and still profit from that while my salary increased. Now i just bought a new bigger house.

[@pascualsmithvaldes9038]

Yes, if only we all graduated like 10-15 years ago lol. Even 7 years ago lol. Unlucky us I guess @@HermanWillems

[@stevenshorten6184]

Look outside the US at this point. This country sucks now. Average homeowners think they're Warren Buffett. The good things about living here are quickly fading.

[@MichaelWilliamz]

Well done! I really really enjoy and look forward to your videos. I’ve watched them all!

[@jakedesnake97]

It's a messed up situation when so many people are unable to afford shelter, or are delaying or outright deciding not to start a family because of cost. Housing and child rearing are two of the most basic needs a society requires to thrive; how did we mess up this bad?

[@xiphoid2011]

To be fair, US housing is still incredibly cheap by international standards. I find most Americans I know don't know how good they have it. I immigrated from Shanghai, China, where the average apartment cost 40x the average income. Having the good fortunate to study and then immigrate to the US, seeing the average income is 5x higher and the average house is only 4x the income, and don't have to study and work 60+ hours per week? It seems to me like every american is born with a winning lottery ticket in his/her mouth.

[@CobaltLobster]

@@xiphoid2011 You clearly don't live in New England.

[@GuyIncognito764]

ha, pretty clear they explained that. @@CobaltLobster

[@chessco4516]

​@@xiphoid2011 I'm not gonna argue with you. Its certainly better than most places in the world, however, it is getting worse and the average person is quickly getting priced out. It might get better in the future as the rock bottom interest rates are gone, but who knows. All I know is it looks really bad if you want to own property and your own home no matter where you live in the world. but yeah, that 40x ratio is batshit insane. I dont know how anyone in china can even think of leasing an apartment. Genuinely, congrats on getting out of there.

[@lenerdenator]

@@xiphoid2011 Horrific policy in other places does not excuse worsening conditions in the United States. Many people are working multiple jobs, and many have massive student loan debts to pay off. It's beginning to impact the child-rearing practices of the country, and "deaths of despair" are increasing. People in early-middle age in China can unquestionably claim a better standard of living than their parents; their peers in the US have, as a generation, a decidedly worse standard of living than their parents at the same age.

[@dennishillman3502]

Thanks!

[@matthewbaker1157]

A million dollars for a house has all of a sudden become commonplace in the current market. It's definitely frozen, but eventually the ice thaws.

[@stevenshorten6184]

Not really much solace to the millions of people who couldn't have a home or form a family during the freeze.

[@davidrubenstein3489]

Affordability will have to improve eventually. But my theory is that’s going to happen slowly by the nominal prices of homes remaining relatively unchanged for a long time. Despite high prices and high rates, the people now are well qualified and won’t be forced to sell.

[@greenspot1123]

Very good video. Pls do a video on Europe's Real estate and How do American Banks survive in high interest rate scenario.

[@WhatsBliss]

We were looking to buy earlier in the year, but it went from “tight” to “unfeasible” in July. We were ready to put down 10% (which is high for first time home buyers) but the payments would have killed us. We actually had an offer accepted and then had such immense buyers remorse we backed out before putting down earnest money. Given that we currently pay below market rent for our area, it seemed best to hunker down and save, rather than get locked into a mortgage at double our current rent. Though it’s tight living space in our 800sqft apartment, so we have been looking into renting a house, even though my partner really had his heart set on home ownership as our next move.

[@seasidescott]

My partner works for the water company and has to deal with a quarter to a third of homes being vacant though not for sale or even vacation homes. They are being held off the market and get their lawns mowed and mail picked up to make it look like someone is there. When a problem arises, like broken irrigation pipe, the same management company names appear for contact.

[@dizzolve]

it may be frozen buy they sure keep calling my cell asking to buy my house as is ......... I keep telling em no thx

[@razorswc]

I just tell them 10 million dollars and its yours. That usually ends the conversation, and I don't hear back from them.

[@dizzolve]

LOL I'll give it a go @@razorswc

[@johng4093]

Probably a lot are scams anyway.

[@ryanreedgibson]

There was housing affordability issues long before the interest rates were raised. I bought in 2008 and paid mine off in 2017. I will never borrow again for a home.

[@gabecodina]

I bought during the pandemic, here in Australia we have Variable rate loans and the banks simply pass on any hikes. My payments have gone up ~50%. Once I have lived in it for 3 years I can sell it with favorable tax situation. House prices in Australia dont ever seem to come down.

[@deaddevil7]

If they don't ever come down and wages don't keep going up at the same rate, you either will face a wide spread revolt by millions of people without access to a house or the government will become even more authoritarian to neutralize the desperate folks.

[@MCPicoli]

In Brazil the standard financing is fixed rate, 30 years for residential properties and has been this way for the last decades.

[@mathiasbergma]

Fixed rate 30 year mortgages are the norm in Denmark as well. People do take out variable rate loans off course. I myself have a 30 year fixed rate at 6% for 250k. Used to be 1%, but I converted it to take off ~90k.

[@ironmantooltime]

Well that was an outrageously bad decision 😮

[@JanBruunAndersen]

​@@ironmantooltime- not necessarily. The interest rate went up but the principal went down from 340k to 250k. That would mean a shorter payment period at 6 %. I am sure Mathias made the necessary calculations and came out on top, or at least not worse off. And in a few years he can probably refinance his < in 250k mortgage to a lower rate. Win win.

[@ironmantooltime]

@@JanBruunAndersen Oh right I thought he said cash out not pay off 90k. Still, you could have put the 90k into a pension, realised the tax relief, or into money market and paid the mortgage off the interest, which would be greater than the 1% cost. Both would have avoided losing that tasty 1% lifetime rate. Each to their own. I hope it wasn't a mortgage broker who advised this route as it was very obviously against the borrower's interests.

[@EspritsFantomes]

It’s also fixed rate in France. Variable sounds like hell to me because I would never know how much I’ll pay each year in advance. At rear with fixed, there is no bad surprises

[@dankspain]

And also in Denmark there aren’t taxes on capital gains on the sale of your main house. The “only” way to get rich in Denmark… Outsiders that haven’t been able to buy a home yet, like me, are truly fucked.

[@Carlos-hb6dj]

Patrick in Colombia we have up to 20-25 year fixed rate mortgage. Thanks for your videos 😊

[@bosoerjadi2838]

Another mortgage difference between America and Europe is that if structurally forfeiting on the mortgage payments, in the US the home owner 'only' loses his house to the lender without a remaining debt, while in Europe the owner remains in debt to pay off the mortgage after the forced sale of the house.

[@jkbeatty1]

That's not generally correct in the context of a foreclosure. In most US jurisdictions, the borrower is still liable for any loan balance that's not covered by any recovery from the sale of the foreclosed property. It's called a deficiency, and lenders can obtain a deficiency judgement.

[@sparksmcgee6641]

That isn't true. It's state by state and most of them it's a personal loan with the signer liable

[@johng4093]

But can a foreclosure together with personal bankruptcy get the owner out of that debt?

[@deaddevil7]

What do you mean by "Europe"? The laws are very different across all countries.

[@will5286]

Why doesn’t anybody talk about the huge impact that investor buy up of houses during the “financial crisis” which now controls huge swathes of homes and often dominating whole neighborhoods

[@juanhaver6584]

Real estate was about to start get some correction then Santa Powell announced his elves are getting the printers ready again

[@zwatwashdc]

It could be that lower rate expectations actually cool the housing market even more as any potential thought of capitulation changes to a wait for lower rates approach. We need some desperate sellers, though, to get the ball rolling.

[@juanhaver6584]

@zwatwashdc ya true its a tricky dynamic at the same time it could make even more investors scared of holding dollars and again move even more investors into real estate again

[@zwatwashdc]

@@juanhaver6584 There is still some decent safe yield out there. I imagine that unless you pay cash or are very desperate, the play is to wait on purchase. The risk reward right now is terrible. At 7% mortgage rates real rates are higher than inflation. Not too many real estate deals look tasty at that price. At least that is how I see it….

[@johng4093]

Unlikely to see substantial "correction" short of a major depression or zombie apocalypse. A lot of wishful thinking.

[@GT-tj1qg]

Gosh, a 30-year fixed rate! We can only get 2-5 year fixes in the UK

[@adrienadrien5940]

Hi, just as a side note, here in France we have long terme fixer rate morgage as well (up to 25 or 30 years) and it quite comment to refinance it when raté does down (you have a 6 month interest rate penalty to do so). So typicaly I've got a 25 year morgage in 2009 at 5% and it was refunded when rates goes down at 1.8%. I sold my house and buy a new one in 2021 with a 20 year fixed rate loan at 0.85%, since the rate hickey and the real estate plugend slightly (something like 5% down) and we are experiencing a decline in volume as well. Clearly i won't sell my homme in these circumstances. So basically a very similar situation as in US

[@zogjones]

I sold 2 homes in 2022 and had no problems finding buyers. Trying to sell a single family this year has been stressful. On the market for 4 months, and still holding it. Hoping to delist and relist in February

[@MikeJones__Who]

For the past two to three years, furniture makers, realtors, constructors, etc. have been gouging consumers due to the pandemic and it was unsustainable. Im glad the market will eventually see a corrections

[@MikeJones__Who]

@shreddy_mcgnar6359 I didn't even notice that. RH is ridiculous. As you said...I saw them sell a couch to someone for $15,000 when I saw something very similar for $5K. Crazy

[@fingersm]

No one is forced, Control oneself ffs

[@Phi1point62]

Would appreciate your take on the Australian Housing Market Patrick, in particular why it has yet to crash as Steve Keen predicted.

[@strigiformsW]

Would love a video on the Canadian real estate crisis. I'm thinking about leaving the country over it.

[@johnstirling6597]

Australia says, "hold my beer".

[@harryireland1935]

@@johnstirling6597 It's the result of a global takeover by central banks. Ask yourself, who owns the central banks and who benefits from blowing assetbubbles and THEN raise interestrates. The entirety of Western Europe's residential propertymarket is completely frozen. Canada and Australia are examples of utter insanity. Which probably has something to do with your insane 'leaders'. And of course, if you CAN leave, just leave. There's still places in the world where you can buy a mansion for the price of a new car. But if you do that, don't do it impulsively. Travel around, go see places, drive around, talk to people. The grass certainly isn't greener everywhere....but most places would be an improvement over the scorched earth you currently live in.

[@RunFromBlaine]

Similar story with regards to unaffordable prices at current interest rates freezing the market and being supported by severe shortage in supply (among other points brought up in the video). Developers in Canada can't build because the math doesn't work. They need to sell their new homes at ridiculous prices in order to cover the cost of debt and equity to fund their projects, so the projects don't get off the ground. Difference is, in the US, development projects can put shovels in the ground within months, whereas in Canada it takes years to get projects through government red tape--that adds to development costs. So housing development is frozen, while new demand isn't slowing down due to immigration. Shorter mortgage terms help the Bank of Canada's policy rate increases work their way through the system better than in the US, so we should be in a position to lower our rates before the US, but there's many factors that go into rate decisions--like considering the impact of decreasing rates on the currency, which would likely become devalued, increasing the cost of imports, which would be inflationary... so although the BoC should be in a position to lower rates before the US, they'll hesitate to do so. Unless we can dramatically increase supply, I don't see prices going down. I do think home sales will pick back up when rates decrease because affordability will improve somewhat, but the supply-demand imbalance won't be resolved any time soon. Projects will start putting shovels in the ground again as their costs and required rates of return go down, but not nearly enough to close the gap. I don't think prices will keep going up like they have, because they didn't come down, and buyers have shown that they can only afford so much. I expect homes to start selling very quickly once rates come down, but near their current asking prices (at which they're currently not selling).

[@strigiformsW]

@@RunFromBlaine Very interesting points, thanks for sharing. I have one more year of my masters program and then it'll be time to make a decision. My intuition is similar to yours, I don't think Canada is going to be a great place to start a family anytime soon unfortunately.

[@RunFromBlaine]

@@strigiformsW Some cities are less difficult than others. I bought my first home last year in Montreal (but I had to live in other cities the last couple years to get work experience to get a decent job when I came back to Montreal so I could buy a house...). It's not easy buying your first home in Canada, but it's not impossible! If you decide to stay here, little piece of advice: once you've saved up a down payment, keep your mortgage pre-approval letter ready, and make browsing real estate listing sites a hobby. Check every few days for new listings and eventually one will pop up with a reasonable asking price, then you have to pounce on it immediately! You probably won't get the first house you bid on, but eventually you'll get it. Good luck wherever you decide to go!

[@aaronformella2869]

@PBoyle The 40 year fixed-rate mortgage was approved this year in May. So, a 4th way housing can become "more affordable:" by extending the length of the mortgage to a point where the monthly cost is reduced to within the +/- 30% of gross income range, with the trade-off of a much greater overall expense. It seems to stand with the American way of, "put it all on credit." Thank you for the very informative and excellent video!

[@resipsaloquitur13]

I think you nailed it down pretty good as usual, Pat. Youre a pretty smart chap.

[@richardeastman9846]

An alternative to the low-inventory theory of why home prices stay high is while each income bracket is now the demand for the houses that lower brackets bought in the past there is now also much greater demand for housing as rental properties by those selling their IOUs to the FED and putting the money elsewhere, for example the stock market and idle cash balances also rise, but clezrly in rental acquisition.

[@urbanm3rmaid387]

I bought my house in 2019 with a 30 year fixed mortgage at 4%… was going to refinance but then my house skyrocketed in value during covid. Definitely thankful

[@flywheelshyster]

This is infuriating, I put off buying home wheb pandemic hit and now I just can't afford one in the entire county I live in

[@lolllama1504]

Well you made a choice, took a gamble and this is how it played out

[@007kingifrit]

the prices will crash

[@samsonsoturian6013]

That's not so bad. Just rent until the opportunity presents itself

[@HermanWillems]

Time in the market beats timing the market. And you timed wrong.

[@ravidhanwani867]

@pboyle It would be really awesome if you could do a similar analysis for the Canadian Market. The following factors seem to be influencing the Canadian market: - High-interest rates like the US - Primarily 4-5 year terms. - Constant (up to 400K, 500K new folks) immigration.

[@nicks8129]

yes please, also the Australian housing market

[@kalef1234]

What was the point of raising rates if they're just going to lower them next year and prices will just continue to climb that's so stupid

[@thosoz3431]

You can use the same sort of 'logic' with a pan of water on the stove. It doesn't work there either.

[@lolllama1504]

@@thosoz3431you mean a pot? XD who puttin water in a pan

[@weird-guy]

The point is to decrease the money in circulation and it the inflation target of 2%, if you dont know inflation is calculation against the same time last year, prices will not go down a lot apart from some commodities.

[@johng4093]

The government printed too much money, so your money is worth less. Think of it as a hidden tax increase.

[@jbender5935]

Trenton ontario. 2.5 months with a handful of showings with many failed open houses. Prices down 10-15% from the top. 50k price reduction, and it doesn't draw in buyers.😅 luckily locked in 1.6% until Apr 26

[@Sarcastro_78]

It will be interesting to see what happens to the US housing market in the next year or so. In the D.C. area the market has hit a point similar to 2007-2008 where two six figure incomes are needed for a single family home purchase. Rent is again exceeding mortgage payments from pre interest rate rise affordability. New construction 3 bedroom townhomes for $1.5 million in my postal code is just insane.

[@doomedwit1010]

What's the time frame on usual length of stay in a home for say the 25% most mobile? I figure we'll only see a correction when that time period runs. Average time people keep a home os apparently 12 years. So the correction may be slow in coming. Even if average time in home in 2020 was 6 years, that pushes it out to 2026. Not that I guaranty a crash, but I won't believe we dodged it until closer to 2030.

[@ThinkTwice2222]

Prices go up... Incentive goes up... Supply guess up

[@jwkprod9540]

If interest rates drop, home prices are likely to stay and could possibly increase. Low interest rates is partial how we got into this mess in the first place!! Lowering interest rates is a death sentence!

[@samsonsoturian6013]

What mess? The Mess is everyone who wants a house and can afford one already ones it. Subsidized at the expense of idiot bankers who thought low interest rates would last forever

[@falcorzed]

@@samsonsoturian6013there’s millions waiting on the sidelines

[@altaccout]

@@samsonsoturian6013 The mess that housing costs are >50% local income in any given market.

[@bdegrds]

Houses were cheaper in the 80's-90's but mortgage was over 20% in alot of cases, income was alot less than today. Those people bought those homes because they worked alot harder, alot more hours than young generation is willing to today

[@sovrappensiero1]

This is the most comprehension video on the U.S. real estate market today. Thank you so much for covering so many aspects of this complex situation.

[@LuigiMordelAlaume]

I don't often hear people talking about higher rates helping people reliably save up money without risks/fees of investing in the stock market. This is extremely important for people that don't know anything other than putting cash into a bank.

[@ScottLovenberg]

I'm locked in at 3.5 on 25% of my, then, income. I see no reason to to do anything other than stay until i can't manage my property any longer. For context, Minneapolis suburbs, software engineer.

[@McChes]

Hang on. 4 minutes (~quarter of video length) of intro, followed by a suggestion of “let’s look at” a bullet point list of questions, then a few second later into a sponsor ad… Was this script written by HowMoneyWorks?

[@thosoz3431]

Count yourselves lucky in the states. Here in Australia any fixed term loans are relatively short term and most housing loans are variable rate loans.

[@samsonsoturian6013]

I was under the impression all the banks went fixed-rate only after 2008. It's not necessarily a good thing because fixed are always priced higher than the current floating rate to cover the bank's cost of insurance

[@tomlxyz]

​@@samsonsoturian6013 fixed rate are better if you expect interest rates to rise which is to be expected when you take one out when rates were so low

[@Tom_Skelton]

I am in between wanting to buy a new home and not. USA here. I have a decent condo that I bought in March 2021. Since then, I found the love of my life. It would make sense for us to find a biggest home and start a family. I am tempted to delay moving until interest rates go down because my rate now is so low. We both have decent, middle income stable jobs and could afford a decent middle class house even now. On the other hand, my condo could accommodate 1 baby, and there is no harm in saving money for a couple more years. I will probably break down and buy a new home, but I am feeling the different financial incentives now.

[@SuperMooMooFarm]

Weren't most of the defaults in 2008 from prime mortgages? Some economists argue that it was a glut of investors which caused the last crash. If that's true, could investors be the catalyst for another crash? After all, RE prices are set at the margins, and all costs relating to home ownership, including insurance and upkeep, have increased dramatically in the past few years.

[@sparksmcgee6641]

There isn't going to be a crash or even a large decrease. It wasn't the investors that caused the 08 crash it wS the loans the banks put together.

[@janis3167]

Bought the house weeks ago, prices here has fallen quite a bit. Paid roughly the same than the same house was sold in 2012. Norway. 5,8% interest seems bad, but honestly almost the same payment as 3% from full price

[@bananasandwich8335]

We looked into changing our house to a different one half a year ago and new rate was just too much for us. It would’ve added almost +1k in payments to our mortgage.

[@Triple_J.1]

For a worse house! Thank government Inflation and also artificially low interest from the last 10 years has you homeowners paying negative interest, that is far below inflation.

[@mattanderson6672]

Patricks humor is next level!

[@NoblessePascal]

Good stuff on the way, lets get it!

[@TheDanieldineen]

I love what you do Patrick and I understand the incentive to focus on the US rather than the small fish like Ireland but I'd really love a video on the residential and commercial markets in Ireland!!! 🤞🤞🤞

[@harryireland1935]

Can't you see the reality for what it is? Mass influx of people, practically no newly built houses, financial repression by the bankingcartel and realtors playing their biddingwar games. I'm sorry, but don't expect anything to change for the next few years. The establishment has made its intentions quite clear. There will be no stopping immigration. I'm so sorry for the Irish youngsters that don't see a future in this country anymore. Practically everyone I talk to is either leaving or preparing to leave eventually.

[@Ultrarooster33]

Cant wait for the updates on the world of rap music.

[@TisDana]

Me too. Been way too long.

[@CasualTS]

Around the time my rent started to rise and my landlord stopped maintaining my current property was exactly the time house prices shot up to unaffordable levels. Average house is $450K in my area currently. Oh well guess I'm stuck here for a few more years of disappointment waiting for houses to come down in price :(

[@AlexeyLevin]

Hey, thanks for awesome videos! Would it be possible to publish sources lists for the videos? Maybe I failed to find it, but I imagine for such an accurate production, there should be the list in the description. I don’t mean to be demanding, but if you would put a link to the original for every chart you show in a video, it would be amazing. Even if easy to find, it would save tons of time for all the people watching. And of course, adds legitimacy - since all can be verified. Sorry again if I didn’t search for literature deep enough, quick look on yt and your website wasn’t enough for me. Thanks again for the content!!

[@danielc7877]

Without a doubt my favourite KZbin channel, great content!

[@davidrubenstein3489]

To me it seems much more realistic that affordability improves slowly over time by nominal house prices staying flat or trailing inflation. People with low rates will continue to sell at a trickle. New home construction isn’t fast enough to correct the market alone. And if rates drop considerably, you’re going to have a lot of existing homeowners enter the market again, but with a massive arsenal of home equity to keep the prices of the homes they bid on up.

[@eirikarnesen9691]

housing will go down. prices do not go up forever. the autitude that we stabelize on the insane covid levels, is getting really destructive.

[@davidrubenstein3489]

​@@eirikarnesen9691Nominal prices can, and have gone up forever when looking on a long enough timescale. Prices in terms of affordability are the cyclical part.

[@SkySong6161]

This only assumes that incomes in the US continue to trend upwards, which they haven't. Adjusted for inflation we're being paid less than we've ever been paid since the great depression. It doesn't matter how "slowly" the price increases are if the pay is constantly going down.

[@davidrubenstein3489]

@@SkySong6161 That's not totally inconsistent with my point. Household income relative to inflation has barely budged since the 70s-80s and yet nobody has accused home prices of stagnating during that period. Affordability didn't change quite as dramatically the price increases would indicate because interest rates fell so much since then too. My argument is that affordability must improve at some point, but that doesn't require nominal prices fall on a large scale. A combination of lower interest rates and rising nominal incomes could support current price levels for a while. Again, not in terms of affordability which is the combination of price, rates, and incomes. Plus if incomes fall relative to inflation that would raise the likelihood of seeing sustained lower interest rates. That would mean a slow growing economy.

[@mauihomebuyers]

@pboyle 14:14 - regarding James Macintosh’s comments I’m struggling with this idea.. I under the premise, but the reality is that the borrower still needs to pay back $500k, not $287k. It seems like the bank is the one that takes the hit on this? Wouldn’t this be comparable to the bonds that SVB bought? The government still had to pay back the same amount they originally agreed to, just like the borrower in this example. Am I missing something?

[@HermanWillems]

Yes. Here in Netherlands we also have fixed rate for 30 years. Some even have 30 year fixed rate @ 1% interest or lower. And yes we can transfer the mortgage to another house. Which means i can transfer the low interest with me. So our housing market is not so stuck as USA.

[@vprwave]

Fascinating. No way they'd let you port a mortgage to another property here.

[@HermanWillems]

@@vprwave why wouldnt it be possible. Appraise both properties. Add a mortgage to it. Get a transfer loan, put your other house for sale..yes banks only take 85% value of your previous house to take in account price drops in the market. But all in all its not that complicated. Sell your old house if sold.. the. The transfer loan gets paid off.(transfer loan is just a loan where u pay interest and pay off after u sold.) Then the whole mortgage is transferred + extra mortgage if u go from cheaper house to more expensive one. Right now i have 3 different rate mortgages on my current house. 3.6%, 1.25% and latest one 4.5%.

[@Ryan-wx1bi]

And I pay half in income tax that I would in the Netherlands. 36% for the lower bracket and 49% for the upper bracket? Hah. Have fun with that. Even with a higher interest rate you're losing way more income than I am

[@vprwave]

@@Ryan-wx1bi What is the link between income tax and financial market regulations governing mortgages?

[@bwvl]

@@vprwavedid you watch the video? Apparently there are some loans which have this feature in them in the USA.

[@jp5047-r7s]

It is interesting that the assumable mortgage option is so opaque. It seems like it is much more in the favor of the buyer because it allows them to transfer their rates when selling - without this the rates must reset at that point. It should be worth something but it's not really discussed in my experience.

[@cv990a4]

When markets freeze, it's a reason to expect a correction. In 2008, prices stayed high but sales collapsed (one difference from today is that inventory soared). It was like Wile E. Coyote running off the cliff with legs free-wheeling in space. This persisted for months in advance of the collapse of prices. I'm NOT saying this will occur this time - but for sure it's a reason for extreme caution.

[@fabioq6916]

In relatively illiquid markets a price expectation gap can persist for a long time with sellers taking a long time to accept a decline. It leads to low transaction volumes unless there is a catalyst.

[@Wildbarley]

@@fabioq6916this is spot on analysis.

[@samsonsoturian6013]

How can you talk so much but say so little?

[@tiddlypom2097]

I watched something recently which talked about a related delay, in the context of corruption/fraud. The delay between assets becoming worthless and when the owner or investors realise. But in some cases it stays like that for an extended time. Like the empty bank vault that isn't checked for years or overvalued paintings that are used for money laundering etc and no one calls it out. Probably on the How Money Works channel.

[@fabioq6916]

@@samsonsoturian6013 who or what are you referring to?

[@robertpopek6063]

In Sweden the most mortgages are for three months. Understand the crisis in Sweden.

[@saab9251]

The fun thing with that 30 year mortgage is how slow you build usable equity in your home. 10 years in and you’ve gained less than a 1/4 of the loan balance in equity. This lack of equity heavily decentivizes people to trade into higher interest payments because many of them would actually be stepping down in the amount of home they can afford. Unless 08 levels of bankruptcies start happening, I don’t see this situation improving for nearly a decade.

[@davidrubenstein3489]

I also think the "correction" is going to happen slowly. I doubt we see 3% rates again anytime soon, meaning people with those low rates are staying put until their incomes rise a lot. And even then, 2019 prices aren't ever coming back in nominal terms without massive and sustained unemployment. The people who bought post-covid and post- 3% rates are way more qualified than people in 06. The massive fire sales won't come the moment the economy turns. I think we'll see home prices very slowly come down in terms of affordability, but that's most likely going to happen via stagnating nominal home prices and incomes creeping up.

[@RetroTechUSA]

Some of us may eventually own a home, but our children never will.

[@TotallyFred]

In Belgium. 20 years fixed rate mortgage is very common. What’s killing the market is the plethora of taxes associated with the sale and transfer of property.

[@beatrixwillius]

Yup. Same here in Germany.

[@jakovcu]

In Croatia we have 3% tax for any real estate sale.

[@beatrixwillius]

@@jakovcu I'll move to Croatia when I retire.

[@TotallyFred]

@@jakovcu Belgium is more or less 15 to 20 % compound taxes and registration (even your mortgage has to be registered and has associated “taxes”) depending on the age of the building.

[@chriscowboyfan]

Dropping all kinds of gems in this one. Wow.

[@anonymous..-]

The buyer is the bottom in this housing market.

[@Erik-rp1hi]

I had to sell in the Palos Verdes area because my Biz got hurt from covid. 2020. I built it, finished it in 2010. Was not ready for the property taxes at $22 K. My mortgage was only $1,300.00 mouth, it was the idea of retiring soon with a Fix cost of over $22K every year when not making money that had me sell. I was going to down size in the same area, not getting on the LA fwy system, no way. Sold for $2.25 Million. Now that buys you a dump compared to what I built. I'm so mad at how prices went up 40% since I sold. I have a place to live that cost next to nothing, my business property so I will wait. My hats off to people in my area that can afford a $12K monthly mortgage. I'm getting close to using my savings to live and buy again on.

[@jasonhaven7170]

Unfortunately, the US housing bubble won't be popping in our lifetimes, at least not in the major coastal cities. Even Detroit is alredy seeing house prices increase rapidly over the past few years.

[@rizzorepulsive7704]

I'd give it 20-30 years before the effects of population collapse catch up and housing enters in a downwards spiral; by the time anyone normal can afford a house it won't be a thing that gives you wealth, it will be a depreciating asset like a car.

[@xvx4848]

"In our lifetimes" You're an idiot or a bot. Real estate is highly cyclical. It may not crash for some time but it will crash as it always does.

[@cykablyat1466]

people should give up on the idea of a 2008-like crash. it's not happening, people I know have held out for years for one. this only gets fixed by a large inflow of newly built houses.

[@JesseBeahm]

its not a bubble, supply will never again match demand

[@akatheking82]

Detroit is still cheap compare to other big cities, so obv. there will some taking a chance.

[@djeejah]

Brilliant and easy to understandan explanation of real estate market. I would be very curious to have your take on UK which works differently as you know