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In reply to the discussion: three quarters of recent home buyers expressed some regret [View all]mnhtnbb
(31,372 posts)53. Unlike 2008, inventory is a big part of the problem this time.
This is a good read and I recommend the entire article.
The wounds from the Great Recession of the mid-2000s are still healing, especially when it comes to housing. An estimated 10 million people lost their homes to foreclosure from 2006 to 2014, following a period of frenzied and speculative homebuying fueled by easy credit. The housing market is yet again on a tear with home prices up nearly 19% nationally compared with last year, and that has people rightfully worried that another housing bubble is brewing.
Unlike the last housing boom, one could argue that home price growth since the start of the pandemic was justifiable. The demographics of the U.S. were already supporting housing growth and the desire to own only increased as people saved more and spent more time at home. The lifestyle change brought on by the pandemic caused many Americans to reassess their living arrangements, including some renters that turned into house hunters and some existing homeowners that sold to move into a larger home.
The jump in homebuying demand hit right as existing housing supply declined rapidly for a variety of reasons, including fear of COVID-19. Homebuilders, most of whom became more prudent following the last cycle, were cautious with how many homes they were bringing to the market, resulting in equally tight new home inventory.
The supply and demand mismatch pushed prices upward, but that was just the tip of the iceberg for rising home values. Some Americans became much wealthier over the past year following a 31% run-up in the S&P 500 and a nearly 20% jump in home equity. Others became wealthier on a relative basis as remote work led to increased migration, often from higher cost areas to lower cost ones.
Further, safety measures have been put in place since the Great Recession to help prevent a similar housing collapse. Mortgage credit availability is starkly tighter than in the mid-2000s and the often more risky adjustable rate mortgages represent less than 5% of total purchase and refinanced loans compared with over 35% at the peak of the last cycle.
Unlike the last housing boom, one could argue that home price growth since the start of the pandemic was justifiable. The demographics of the U.S. were already supporting housing growth and the desire to own only increased as people saved more and spent more time at home. The lifestyle change brought on by the pandemic caused many Americans to reassess their living arrangements, including some renters that turned into house hunters and some existing homeowners that sold to move into a larger home.
The jump in homebuying demand hit right as existing housing supply declined rapidly for a variety of reasons, including fear of COVID-19. Homebuilders, most of whom became more prudent following the last cycle, were cautious with how many homes they were bringing to the market, resulting in equally tight new home inventory.
The supply and demand mismatch pushed prices upward, but that was just the tip of the iceberg for rising home values. Some Americans became much wealthier over the past year following a 31% run-up in the S&P 500 and a nearly 20% jump in home equity. Others became wealthier on a relative basis as remote work led to increased migration, often from higher cost areas to lower cost ones.
Further, safety measures have been put in place since the Great Recession to help prevent a similar housing collapse. Mortgage credit availability is starkly tighter than in the mid-2000s and the often more risky adjustable rate mortgages represent less than 5% of total purchase and refinanced loans compared with over 35% at the peak of the last cycle.
https://fortune.com/2021/09/09/housing-bubble-2008-market-correction-great-recession/
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properties were selling within a day or two after listing giving buyer little time to decide
Demovictory9
Feb 2022
#6
Thanks, makes sense that labor shortage might result in such 'weird' (to me) behavior.
elleng
Feb 2022
#11
Even when interests rates rise again, it will cause a long hangover in housing
Amishman
Feb 2022
#34
This is why I am suspicious of those who think housing prices will collapse.
cinematicdiversions
Feb 2022
#50
Another issue is all the properties that left the market in the foreclosures
Sherman A1
Feb 2022
#17
Same with me, I bought in 2003 near the height of the market and it's been a long time to get equity
TheBlackAdder
Feb 2022
#55
Inspection is a complete waste of time. I don't even bother. Most of those who call themselves
Demsrule86
Feb 2022
#29
Sounds like you had a crap inspector. My inspector, on both my property purchases,
Scrivener7
Feb 2022
#32
It is a waste of time...you can check most things you can see yourself before you make an offer.
Demsrule86
Feb 2022
#35
Well to each their own. I have not found inspections useful unless you are trying to get the price
Demsrule86
Feb 2022
#38
That depends on the Warranty. I negotiated one with the Wisconsin House when we bought it
Demsrule86
Feb 2022
#44
I completely disagree...most of the folks I know including family members had inspections...
Demsrule86
Feb 2022
#37
It is based on years of experience. Most people don't buy and sell as many houses as I have.
Demsrule86
Feb 2022
#46
most people do not have an expert family friend or know what they are looking at themselves.
uncle ray
Feb 2022
#49
Those upside down buyers if they don't need to sell are usually fine...Real-estate is up since 2008
Demsrule86
Feb 2022
#30
I am not sure these -percentages are all that much different in any particular year.
cinematicdiversions
Feb 2022
#15
In 2007/2008 the same thing happened. There was a bubble, people paid too much and
Vinca
Feb 2022
#24
Exactly right, and why my partner in crime (house flipping) made more money than he ever made
Demsrule86
Feb 2022
#28
That is fairly common...so common there is a name for it...buyers remorse. I have bought
Demsrule86
Feb 2022
#26
And I will say, we still have very little inventory here...so it continues. I take everything
Demsrule86
Feb 2022
#27
As a child who was expected to help out on Grandpa's farm I get that. I would never buy a
Demsrule86
Feb 2022
#48
Good for you. Your new house sounds great. I suggestn square foot gardening and you can also
Demsrule86
Feb 2022
#60