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Growth has been falling since Feb 2021, accelerated from Nov 2021 and are still falling (up today). Yet, house prices continue to rocket.
Can keep monthly payment the same by increasing the downpayment (to be funded by selling more RSUs).
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Growth has been falling since Feb 2021, accelerated from Nov 2021 and are still falling (up today). Yet, house prices continue to rocket.
Can keep monthly payment the same by increasing the downpayment (to be funded by selling more RSUs).
Eventually the fall of stock prices will impede peoples ability to put down payment. There is a limited number of folks willing to pay $3M and higher for 60 year old 1500 sq ft ranch houses. Just the minimum down payment of $600k requires buyer to liquidate almost $1M RSU portfolio.
The $2.4M loan at 5% plus prop tax is a horrendous PITI of $16000 per month. You can rent the same house for $4500-5000 per month!!!
In the end, home prices have to fall because money does not grow on trees for buyers. It would be healthier if prices fell 10-20% than if they went up 10-20% by next year âŚ
Cool theory. Now go find the examples of times it has happened. Youâre ignoring wage gains, unemployment under 4%, and a record number of people quitting their job for a better one.
Higher rates means current owners wonât want to sell. Who are going to be the sellers that create enough inventory that supply is higher than demand?
Housing prices fall when unemployment is increasing creating distressed sellers. We have the exact opposite happening now.
The âfallâ in stock prices puts the S&P back to where it was just about a year ago.
Thatâs not to say it couldnât go a lot lower. In '87 we had GDP growing at 3-4% and inflation well contained at under 4%. With P/Eâs right about where they are now the market crashed 40% in a single week. But I find it hard to believe that the current correction would significantly affect housing prices.
It is true that people like me who just refinanced into 2.xx% fixed rate mortgage wonât sell. I also have several years to go before retirement, so having a house in RBA near the major employers saves the hassle of wasting time in commute. If my homeâs value goes down by 500k, it will not cause me to take any action - I will just think that it went up 500k one year and came down by that next year. My monthly payment remains the same.
But there is always some number of houses that are being sold due to DDR - death, divorce and retirement. So, there will be a baseline inventory/supply no matter what
Most people buy when they have their first kid. Are people going to stop having kids? I only know 1 person selling and itâs an estate sale from a parent passing. I know multiple people trying to buy.
I personally know 3 ppl who bought homes last month. One in Tampa 750k, Austin 740k, Dallas 760k. Only 2 got closing dates and locked rate around 4.75. The other paying by cash.
Techies are very rich. Just this forum, we did a NW survey in 2018, most of us have less than $6M in NW. Now quite a few are UHNWIs.
In 2018, most with less than $6M in NW.
In 2019, most with less than $25M NW
Today⌠well, you know. $3M SFH is nothing burger.
Donât you think demand is higher than supply from DDR?
I agree with this. There is always a demand for housing, esp. nice safe SFH, from young people who are starting their families. On the other hand, there is always a supply of houses from people who have either left this world or whose families have broken up. That is the bedrock of demand and supply.
But when the new family needs to liquidate $1M of RSUs (very few young engineers get this kind of RSU grant - as a mid career engineer, I have never got even 5% of this!) to afford the down payment, and after that they have to pay 3-4x per month compared to rent for the same house ($16k PITI vs $4-5k rent), then something is really wrong. Either rents have to double/triple overnight or home price has to come downâŚ
@hanera, true that some folks like yourself and @wuqijun are one percenters now, and from your vantage point $3M NW is a nothing burger. But you guys are not youngsters starting out families - you are quite established. And even you choose to be based in Austin rather than Cupertino.
Even among techies in Silicon Valley, it takes quite a number to years to accumulate $3M NW, unless you had exceptional timing - early stage employee of unicorn that went IPO etc.
The 1500 sq ft ranchers in many parts of RBA like Cupertino, West SJ etc are really meant for young families starting out. But how are they supposed to afford $1M RSU for down payment and then $16k per month. Instead they have to rent the same from established landlords like yourself for $5k per month.
The supply from DDR is indeed very small, but when buyers are so badly squeezed, even that limited supply can build up into a large inventory
It only takes a very small number of people that can afford it to sustain it. Only the new buyers have to be able to afford current prices. People arenât buying/selling homes the way they do stocks. They buy and live there long-term. They arenât trying to jump in and out of the market to make a profit. They are raising their family there.
WellâŚremember the pictures I posted of my La Honda woodshed turned into an office?
Those folks bought my 610 sq ft. house. Then had a kid. Theyâre not planning on moving.
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This is what going around in YouTube and FinTwit. It seemsâŚ
and
Some through selling a large portion of their holdings.
Itâs weird. King county which includes Seattle had SUPER low inventory in 2017. It skyrocket by 2019 and has been declining since. Itâs still much higher than 2017. Iâm not sure why it was so low in 2017.
Inventory is rising in Tahoe. Double the low but still one third of historical normal. About 100 sfhs active in South Lake Tahoe. Prices peaked in November. Condos still going up though only 10 active. Affordability is the issue .
High end homes still selling to the one percent.
def more listings in Danville, the nice ones are going in 1-2 days and the meh ones are sitting for several weeks
I am noticing more and more price reduction (as well as lower asking price) in last couple of weeks. As well as a lot less Hot homes. This is typically the time buyer have fatigue in the cycle, but with all the macro condition, I wonder cooling off period is here. Time will tell. Share your experience if you are actively going to Open Houses and what you see.
Active houses with price reduced:
Clearly less âHOTâ houses on Redfin & number of favorites on some categories(size, area_ of houses I am tracking are down.