Author Topic: 58% Of Homeowners Think The Housing Market Is Set For A Correction  (Read 3326 times)

RangerOne

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Not sure of the original source but many realtor and market sites have been floating around recent poll statistics that home owners and denizens of many pricey cities like Seattle believe we are heading towards a bubble or correction. Partcularly though I found one quoted comment hilarious.

https://www.forbes.com/sites/samanthasharf/2017/08/15/58-of-homeowners-think-the-market-is-headed-for-a-price-correction-are-bubble-fears-founded/#f4277f849e6c


"The market is expensive, competitive and unaffordable, but there's no evidence of a bubble," notes Nela Richardson, chief economist at (newly public) brokerage Redfin

Then following that:

A defining factor in a housing market bubble is home price growth that is unsustainable or unsupported.

Seems to me if you are willing to admit some cities are becoming unaffordable then you have a recipe for unsustainable prices...

Still its any ones guess what will happen in the short term. Thinks could drive up even higher fueled by speculation due to rapid housing price growth. Lending standards could loosen. I personally see a lot of first time buyers diving in with 3.5% FHA's, 0 down VA loans and no more than 10% for conforming choosing to suck up the average small $100 PMI you get on $400-$500k homes.

I am sure in the mid-tier markets and above most people are poring in 20% plus. But I see nothing of that sort from first time buyers in the lower tier, at least in San Diego where prices are high on the lower tier.

Call it what you will but as long as the prevailing perception is that prices can't go up forever then we are in okay shape. Still in California there always seems to be a strong feeling during our prolong sellers markets that prices will never go down and that you will be priced out if you don't buy whenever you can.


effigy98

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #1 on: August 15, 2017, 01:45:03 PM »
Interesting, but every year people think we are in a bubble even after the housing correction because Seattle did not get hit as hard as most of the US. It is supply and demand, and investors and tech workers are willing to keep paying the big bucks  (crazy amounts) faster then they can build around here. Houses in my area are getting bought before the lots are cleared in all the sub divisions with a sign outside (in the upper 900s!, sold, sold, sold), they must be on sale! Until the tech industry cools off and investors find a better place to stash cash, not sure why it would stop inflating. These are not subprime mortgages this time so I do not see the systemic problem in the Seattle area.

Travis

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #2 on: August 15, 2017, 03:06:35 PM »
The fella quoted above is right on the money.  Just because something is crazy expensive does not mean there isn't a market for it.  2008 was fueled by a lot of loose lending standards in locations that couldn't justify an exploding market. Seattle and SF have always been expensive.  As long as the industries in those areas are willing to pay people enough to live in those markets, then housing will continue to be expensive there.  The real problem with the housing markets in these areas is that the people who must work there who aren't being paid the big bucks are migrating to the fringes of these cities and affecting those cities' housing markets.  Sacramento (my hometown) has been seeing steady growth in Bay Area workers moving in because they can't afford SF proper who are willing to commute.  It is driving housing prices higher in Sac, and the people who live and work in Sac are being priced out of their own market.

fattest_foot

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #3 on: August 15, 2017, 06:34:52 PM »
Going to pile on as well. People apparently are stuck on the idea a housing bubble cycle. I don't think it's actually a thing, but everyone is convinced we're due for another 2008 crash.

But the only reason that crash hurt so bad is because of subprime mortgages (and really the CDS's behind those). As long as the loans backing the mortgages are reasonable, there's no reason to expect some big bubble to burst.

Housing is incredibly localized as well, so even if a single market experiences a big fall (San Francisco, for instance), it doesn't mean anywhere in the rest of the country will.

SwordGuy

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #4 on: August 15, 2017, 07:20:06 PM »
Once mortgage interest rates rise, housing prices will fall.

A $700,000 mortgage at 30 years on a fixed 4% rate costs about $3342 a month, not counting insurance and taxes.

At an 8% rate, a house of $455,000 costs about the same each month.

Since most people buy houses not on what they cost, but on what they can pay each month, to get the same number of potential buyers the house price has to drop $245,000.

There may be a lot of people crying they are underwater when that happens.

2Cent

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #5 on: August 23, 2017, 07:16:28 AM »
Once mortgage interest rates rise, housing prices will fall.

A $700,000 mortgage at 30 years on a fixed 4% rate costs about $3342 a month, not counting insurance and taxes.

At an 8% rate, a house of $455,000 costs about the same each month.

Since most people buy houses not on what they cost, but on what they can pay each month, to get the same number of potential buyers the house price has to drop $245,000.

There may be a lot of people crying they are underwater when that happens.
This is exactly why the rates will be kept down as much as possible. If they would go to 8% in anything but the very long term the economy would be in shambles.

Dicey

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #6 on: August 23, 2017, 09:52:23 AM »
Once mortgage interest rates rise, housing prices will fall.
Hmmm, my crystal ball gives me a slightly different answer:

As mortgage interest rates rise, housing prices will stabilize.

IMO, it will take multiple factors to make housing prices actually drop significantly. Could very well happen, but not just because of gradually rising interest rates. Heck, I remember getting a great rate on a property I bought in 1996. When I looked up the original note, I was surprised to see that the rate was 7%! As long as rates rise slowly, people will adjust.


CanuckExpat

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #7 on: August 24, 2017, 12:26:25 AM »
I don't think we'll be seeing 8% interest rates again soon.

(Wouldn't be amazed if I was proven wrong, predicting the future is a bad idea, but I think we are going to be living in a low interest rate world for a while)

simonsez

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Re: 58% Of Homeowners Think The Housing Market Is Set For A Correction
« Reply #8 on: August 24, 2017, 09:07:28 AM »
The time frame is 2 years but not pegged to any specific date or even month.

Corrections of any market will happen from time to time, given a long enough window.

If the article used a 20 year window, I'd expect the percentage to be much nearer to 100% even if 0% had any idea when exactly that was going to occur.  I suspect it's not going to keep the vast majority of people from living in houses they own.