19 ms·

Housing prices are dropping, as would be expected with the interest rate hikes. House prices are set at the margins, just like any asset. Even if the folks wit

by eo3x0 4y ago

Housing prices are dropping, as would be expected with the interest rate hikes. House prices are set at the margins, just like any asset. Even if the folks with 3% mortgage rates sit tight and don’t sell, there will still be downward pressure on prices because prices are not determined by non-transactions. There are plenty of listings for those who need to exit the market and liquidate, driving inventory up. Just a quick glance at Zillow and Redfin will show that Bay Area prices have already retreated 10-15% and in some cases back to 2019 levels. Every other listing has 100k+ price cuts or more.

lotsofpulp 4y ago
I like how Redfin has deleted price changes for recently listed homes. You can see the same house on Zillow list at $1.1M in Jun, and then re-list at $900k in Aug, and then at $800k in Oct. But Redfin intentionally removed it in the past couple months, and now they only show the most recent list date and price.
- andromeda-brain 4y ago
  Would you be willing to share a specific property as an example?
  - tinnou 4y ago
    Zillow: https://www.zillow.com/homedetails/1488-Sunland-Ct-San-Jose-CA-95130/19610738_zpid https://www.zillow.com/homedetails/1488-Sunland-Ct-San-Jose-... Redfin: https://www.redfin.com/CA/San-Jose/1488-Sunland-Ct-95130/home/755692 https://www.redfin.com/CA/San-Jose/1488-Sunland-Ct-95130/hom... The history between May and August was deleted on Redfin. Either there is a way to pay Redfin to delete history or @lotsofpulp is right, or maybe a convenient bug?
    - lotsofpulp 4y ago
      This one is missing the initial list price from July: https://redf.in/sITdQm https://redf.in/sITdQm https://www.zillow.com/homedetails/26-Pinewood-Ct-San-Mateo-CA-94403/15543008_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare https://www.zillow.com/homedetails/26-Pinewood-Ct-San-Mateo-... This one has a listing from Jan 2022 that is missing in Redfin, but shown in Zillow: https://redf.in/hX47mx https://redf.in/hX47mx https://www.zillow.com/homedetails/4922-Leigh-Ave-San-Jose-CA-95124/19675273_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare https://www.zillow.com/homedetails/4922-Leigh-Ave-San-Jose-C... I cannot tell if this is intentional or not, but in all cases, Zillow has shown more data than Redfin.
    - theGnuMe 4y ago
      Yeah that's a trick. They take it off the market and then relist which resets the clock. They do this so buyers won't assume there is something wrong with the property due to the price changes.
      - lotsofpulp 4y ago
        Then kudos to Zillow for continuing to provide the accurate history.
  - lotsofpulp 4y ago
    I might be wrong and have just looked at a couple houses where the data is missing now. I set the Zillow filter to “price reductions”, which Redfin does not have, but I compared a few homes and both listed price changes. The houses I had favorited with the missing price changes are gone from my Redfin favorites list now (owner decided to remove listing?). Zillow definitely has better history though, and a filter option to show price reductions.
jjcon 4y ago
If you look at the national picture in the USA prices haven't really budged by much at all, it would seem reasonable that they will but when and by how much is the million dollar question: https://www.zillow.com/home-values/102001/united-states/ https://www.zillow.com/home-values/102001/united-states/ https://www.redfin.com/us-housing-market https://www.redfin.com/us-housing-market
- bequanna 4y ago
  Housing affordability has never been as low as it is currently and we are headed into a recession. I think large drops (40-50%) in most regions are likely.
  - jjcon 4y ago
    Yeah I think a correction is likely - haven't seen anyone being nearly that pessimistic (or optimistic probably if you're younger and in the USA) but shifts from 5-15% depending on the market have been predicted by plenty of firms.
- eo3x0 4y ago
  I suspect what is happening is that the affordability crunch is causing a noticeable drop in demand in the HCOL areas (hence the pronounced decrease in prices in the Bay Area I noted in the original comment). The availability of remote work and the retreat of the HCOL population to other areas in the US is likely causing an increase in demand elsewhere, as we have seen as a macro trend since the beginning of the pandemic. This demand will keep supplies low in LCOL areas.
metacritic12 4y ago
Houses are set on the margin, but that doesn't mean the "lock in effect" doesn't have a net positive effect on prices. There is heterogeneity of sellers in how much they "must" sell (versus alternates like rent it out, not move at all if they're nearly indifferent between cities, etc). Clearly "lock in" reduces total sellers.
alexpetralia 4y ago
Out of curiosity, because I've read this a few times, what is not priced at the margin?
bequanna 4y ago
> House prices are set at the margins, just like any asset. Even if the folks with 3% mortgage rates sit tight and don’t sell, there will still be downward pressure on prices because prices are not determined by non-transactions. YES! There is a sort of delusion that has taken hold of people who became “house rich” in the past couple years. They seem to think that if they don’t sell, their house will still be worth whatever fantasy number they have in their heads. It does get me thinking about the psychology of these economic cycles and how the transformation of that delusion to acceptance/sadness on an individual level will impact their buying habits and risk taking. On a large scale, it is easy to see this is sort of spiraling into a protracted recession.
- Test0129 4y ago
  Similarly, the delusion of the "house poor" hoping for another 2008 is frankly hilarious. The difference is, if you picked up a house at 2.7% you will be winning for a long time. There are fewer ARMs, which means a small more protracted "collapse". Housing supply is still non-existent and will be into the near future. Wages will need to keep pace with housing costs in order to provide anyone a chance to succeed. Even after a so-called "recession" in housing they'll still be too expensive. For example, if my house dropped 50% in value, it'd still be way over what I bought it for. The only deluded people are the ones not holding property. Make no mistake, if you didn't buy/refinance in 2020 you lost out on a literal once in a lifetime opportunity to lock a massive short against the fed.
  - fratlas 4y ago
    > you lost out on a literal once in a lifetime opportunity I don't think anyone can make claims like this, lots of people made the right decision by not buying into an inflated market with job instability around the corner. I think the correction is needed, any people who didn't overextend will be fine if they intend to stay put for 5-15 years.
    - forgingahead 4y ago
      Yeah this the thing - somehow those of us who chose not to over-extend in times of exuberance are the ones who lost out? I've been renting for a long time, but my market still doesn't let me buy a home that I could live in with my family for an amount that won't make me lose sleep when rates go up (like everywhere outside the US, most mortgages are ARMs here). Like many of this board, I'm in the upper-echelon of earners in my location, but I refuse to over-extend on a housing loan like many folks in my location. The only difference is that recently I've resigned myself to the fact that maybe I'll never own in my current location - which even though may be emotionally sad, at least I don't have a crazy monthly payment for a shoebox apartment.

by eo3x0 4y ago

lotsofpulp 4y ago

I like how Redfin has deleted price changes for recently listed homes. You can see the same house on Zillow list at $1.1M in Jun, and then re-list at $900k in Aug, and then at $800k in Oct. But Redfin intentionally removed it in the past couple months, and now they only show the most recent list date and price.

andromeda-brain 4y ago
Would you be willing to share a specific property as an example?
- tinnou 4y ago
  Zillow: https://www.zillow.com/homedetails/1488-Sunland-Ct-San-Jose-CA-95130/19610738_zpid https://www.zillow.com/homedetails/1488-Sunland-Ct-San-Jose-... Redfin: https://www.redfin.com/CA/San-Jose/1488-Sunland-Ct-95130/home/755692 https://www.redfin.com/CA/San-Jose/1488-Sunland-Ct-95130/hom... The history between May and August was deleted on Redfin. Either there is a way to pay Redfin to delete history or @lotsofpulp is right, or maybe a convenient bug?
  - lotsofpulp 4y ago
    This one is missing the initial list price from July: https://redf.in/sITdQm https://redf.in/sITdQm https://www.zillow.com/homedetails/26-Pinewood-Ct-San-Mateo-CA-94403/15543008_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare https://www.zillow.com/homedetails/26-Pinewood-Ct-San-Mateo-... This one has a listing from Jan 2022 that is missing in Redfin, but shown in Zillow: https://redf.in/hX47mx https://redf.in/hX47mx https://www.zillow.com/homedetails/4922-Leigh-Ave-San-Jose-CA-95124/19675273_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare https://www.zillow.com/homedetails/4922-Leigh-Ave-San-Jose-C... I cannot tell if this is intentional or not, but in all cases, Zillow has shown more data than Redfin.
  - theGnuMe 4y ago
    Yeah that's a trick. They take it off the market and then relist which resets the clock. They do this so buyers won't assume there is something wrong with the property due to the price changes.
    - lotsofpulp 4y ago
      Then kudos to Zillow for continuing to provide the accurate history.
- lotsofpulp 4y ago
  I might be wrong and have just looked at a couple houses where the data is missing now. I set the Zillow filter to “price reductions”, which Redfin does not have, but I compared a few homes and both listed price changes. The houses I had favorited with the missing price changes are gone from my Redfin favorites list now (owner decided to remove listing?). Zillow definitely has better history though, and a filter option to show price reductions.

jjcon 4y ago

If you look at the national picture in the USA prices haven't really budged by much at all, it would seem reasonable that they will but when and by how much is the million dollar question: https://www.zillow.com/home-values/102001/united-states/ https://www.zillow.com/home-values/102001/united-states/ https://www.redfin.com/us-housing-market https://www.redfin.com/us-housing-market

bequanna 4y ago
Housing affordability has never been as low as it is currently and we are headed into a recession. I think large drops (40-50%) in most regions are likely.
- jjcon 4y ago
  Yeah I think a correction is likely - haven't seen anyone being nearly that pessimistic (or optimistic probably if you're younger and in the USA) but shifts from 5-15% depending on the market have been predicted by plenty of firms.
eo3x0 4y ago
I suspect what is happening is that the affordability crunch is causing a noticeable drop in demand in the HCOL areas (hence the pronounced decrease in prices in the Bay Area I noted in the original comment). The availability of remote work and the retreat of the HCOL population to other areas in the US is likely causing an increase in demand elsewhere, as we have seen as a macro trend since the beginning of the pandemic. This demand will keep supplies low in LCOL areas.

metacritic12 4y ago

Houses are set on the margin, but that doesn't mean the "lock in effect" doesn't have a net positive effect on prices. There is heterogeneity of sellers in how much they "must" sell (versus alternates like rent it out, not move at all if they're nearly indifferent between cities, etc). Clearly "lock in" reduces total sellers.

alexpetralia 4y ago

Out of curiosity, because I've read this a few times, what is not priced at the margin?

bequanna 4y ago

> House prices are set at the margins, just like any asset. Even if the folks with 3% mortgage rates sit tight and don’t sell, there will still be downward pressure on prices because prices are not determined by non-transactions. YES! There is a sort of delusion that has taken hold of people who became “house rich” in the past couple years. They seem to think that if they don’t sell, their house will still be worth whatever fantasy number they have in their heads. It does get me thinking about the psychology of these economic cycles and how the transformation of that delusion to acceptance/sadness on an individual level will impact their buying habits and risk taking. On a large scale, it is easy to see this is sort of spiraling into a protracted recession.

Test0129 4y ago
Similarly, the delusion of the "house poor" hoping for another 2008 is frankly hilarious. The difference is, if you picked up a house at 2.7% you will be winning for a long time. There are fewer ARMs, which means a small more protracted "collapse". Housing supply is still non-existent and will be into the near future. Wages will need to keep pace with housing costs in order to provide anyone a chance to succeed. Even after a so-called "recession" in housing they'll still be too expensive. For example, if my house dropped 50% in value, it'd still be way over what I bought it for. The only deluded people are the ones not holding property. Make no mistake, if you didn't buy/refinance in 2020 you lost out on a literal once in a lifetime opportunity to lock a massive short against the fed.
- fratlas 4y ago
  > you lost out on a literal once in a lifetime opportunity I don't think anyone can make claims like this, lots of people made the right decision by not buying into an inflated market with job instability around the corner. I think the correction is needed, any people who didn't overextend will be fine if they intend to stay put for 5-15 years.
  - forgingahead 4y ago
    Yeah this the thing - somehow those of us who chose not to over-extend in times of exuberance are the ones who lost out? I've been renting for a long time, but my market still doesn't let me buy a home that I could live in with my family for an amount that won't make me lose sleep when rates go up (like everywhere outside the US, most mortgages are ARMs here). Like many of this board, I'm in the upper-echelon of earners in my location, but I refuse to over-extend on a housing loan like many folks in my location. The only difference is that recently I've resigned myself to the fact that maybe I'll never own in my current location - which even though may be emotionally sad, at least I don't have a crazy monthly payment for a shoebox apartment.