Why Home Prices Keep Rising

[cinematicdiversions]

https://www.newyorkglobe.co/2022/01/20/why-home-prices-keep-rising/


Two years into the pandemic, rundown bungalows command bidding wars, buyers keep snatching up places they’ve never seen, and homebuilders can’t find enough cabinet doors for everyone who wants a new home. The median price for an American home is up nearly 20 percent in a year. The for-sale inventory is at a new low. And the hopeful buyers left on the sidelines have helped drive up rents instead.

All of this may feel unsustainable — the tight inventory, the wild price growth, the dwindling affordability. Surely something’s got to give.

But what if that’s not exactly true? Or, at least, not true anytime soon for renters locked out of homeownership today or anyone worried about housing affordability. There’s probably no quick reprieve coming, no rollback in stratospheric home prices if you can just wait a little longer to jump in.

“It’s not a bubble, it really is about the fundamentals,” said Jenny Schuetz, a housing researcher at the Brookings Institution. “It really is about supply and demand — not enough houses, and huge numbers of people wanting homes.”


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There is a different rate of inflation and an entirely different economy for those that are homeowners and those that aare renters.

Unfortunately for renters, homeowners vote in much larger numbers.

What is even more insane is we have people in thier 50's,60's and 70's still renting. What are they supposed to do when the cost of housing doubles in five to ten years.

[andym]

1. Efforts to control Inflation should drive mortgage rates up at least somewhat

which should cool the housing market at least somewhat.

[Fiendish Thingy]

2. It's not rocket science

Below average numbers of listings make it a sellers’ market. Historic low interest rates make it easier for buyers to qualify for more debt.

[PortTack]

3. The unspoken reason, corporations across the nation have been snapping up homes as fast as

They can, then rent them for profit. Another reason for exorbitantly high rents. Zillow was doing it too until they suffered a 2 billion dollar loss. They are getting out of the market, slowly dumping there houses back on the market.

But, there’s no sign of corporations letting up. They will end up being the ultimate slum landlords

[appalachiablue]

5. +

[Hugh_Lebowski]

8. They're not just US based corporations either ...

I think investors worldwide see the US housing market as a safe place to invest, with reliably decent returns ... and NOBODY wants to actually do anything about it.

The media and TPTB never talk about it, all us old-fogey homeowners are enjoying our on-paper money in the form of equity, the government doesn't care to stop it because it means property taxes go up (in most places) ... there's nothing to stop this trend, unless companies involved in construction are able to massively increase availability of new homes ... which they won't do until COVID is more under control.

[Hugh_Lebowski]

4. Not sure what you mean by this ...

"There is a different rate of inflation and an entirely different economy for those that are homeowners and those that aare renters."

Homeowners are gaining equity but that's money not realized until they sell. Day-to-day life in terms of buying the things you need to live ... doesn't vary depending on whether you own or rent

I think bottom-line is that COVID is driving down new housing starts, for a variety of reasons, which is making existing developed property of most kinds ... more valuable.

[cinematicdiversions]

9. My mortgage went up $25 last year (Taxes and insurance) My friends rent went up $600.

That is what I mean.

My housing expenses are fixed while in my area (Tampa) rents yes to year are up over 30%.

That is a very different outcome (Even if you don't include gains in equity)

[Hugh_Lebowski]

13. Ah, good point ... didn't think of that, haven't rented since 2007-2015 and our rent

only went up like 15% total in that entire timeframe.

In my younger years when I rented a few times, rents never went up by anything near 30% in a year, that's insane.

[ret5hd]

10. But your rent doesn't go up if you are buying...

and the cost of buying a house isn’t rising every day if you aren’t in the market.

[Hugh_Lebowski]

14. Fair points my friend (nt)

[Igel]

12. Inusrance and property taxes went up.

But not by the same %age as rent increased. My mortgage is fixed. And depreciating with inflation. My retirement and salary's taken a hit, but so as the value of that mortgage.

Inflation hit renters in my area more than it hit homeowners. I pay more for groceries and some services/goods. They buy the same services and goods, but their rent's increased because of inflation. For the duration of their lease the monthly payment depreciates, but you know, with renewal inflation's priced into the new contract.

Personally, I consider part of the house price increase to be inflation and part to be bubble. But rent increases? ... Pure inflation.

As to "entirely different economy," that strikes me as hyperbole.

[Klaralven]

6. People trying to buy before the interest rates go up are driving prices up

Of course, when the interest rates actually go up, the price of houses will fall and they'll be under water on their mortgages.

[dutch777]

7. This is all true until it isn't. With interest rates rising, fewer will be able to buy. And...

...there will be a downturn in the broader economy at some point that will lower employment figures for some period. Sad thing will be the renters in the lost jobs category will have an even harder time affording rent. Nomadland may well keep expanding, for one reason or another.

[madville]

11. Older people that still rent could get roommates

Kind of a Golden Girls scenario, split the bills to stretch social security and any pensions further. Not ideal but an option, have known several older ladies and gentlemen that had roommates later in life and appeared to enjoy it, helps with loneliness I bet.