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Comment by nerfhammer | Hacker News Reader

> because in many areas the median house now costs enough that it's beyond the reach of the median person. That environment is unsustainable over a large time scale.

"Too expensive" does not equal bubble. It has to be expensive because speculators are driving the price up, thinking they're all fooling each other. As soon as they get get scared that the other speculators might be thinking of selling the price suddenly collapses as they race to not be the last to divest.

If something is expensive because it's scarce, is actually being practically used, and there are no substitutes, then there is no way to make the price suddenly collapse other than flooding the market with new supply, and it would take many years to increase the supply of housing by a significant percent. If the price of housing drops a bit all of the homeowners aren't going to rush to sell their homes in a panic like you might see with a purely speculative asset.

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There is no shortage of real estate, and real estate historically is very cyclical.

Even in an insane place like SFO, a few high profile failures can shutdown the cash pipeline for all sorts of companies. No cash, no coders, no rent.

2008 proved that when people are underwater, they walk away from mortgages because they see no consequence.

In the 2008 crisis home prices dropped by like 10-15%. The housing market didn't collapse. It's not as if the "bubble burst" and housing was worthless after that.

Not sure about that. My house and that of most friends dropped around 25-35% from the peak in 06-07 by 08-09 and only got back to the peak in 2015.

That very much depends on where you live. It wasn't that bad in the Bay Area because there wasn't a building boom, but in places that there was a boom the prices climbed very quickly and indeed collapsed even more quickly. Las Vegas, Phoenix, Miami and other markets were all hit very hard (60% or so).

Housing markets are kinda weird in a way - when hearing bad news about the economy, people don't immediately get on the phone with a real estate broker and yell to "Sell! Sell! Sell!"

For primary residences most are driven by loss aversion ("I'll sell it when it comes back to the price I paid for it, I don't want to lock in my losses, and this is still a decent place to live").

You're right that some markets experienced steeper declines than others, and the ones that descended quicker were highly leveraged through 0% down, or interest-only (or both) loans. Post-2008 lending scene has been much more restrictive, I can't imagine a lot of people being highly leveraged at the moment.

Like other comments have pointed out, some markets did see much bigger collapses in prices. The markets that did had seen huge price increases driven largely by speculation in 2002-2007.

In the early to mid 00's the idea of "flipping" real estate became popular. The idea was that you would agree to buy a property, and then sell it very quickly, often setting up a deal to sell it before you even fully closed on it yourself. There were a lot of more-or-less amateur investor types who flocked to markets with cheap real estate and strong population growth - e.g. Las Vegas and Phoenix - and started flipping houses. This was pure speculation completely divorced from underlying demand.

I don't think there is anything like that happening today - at least not nearly on as large a scale. So, while I would disagree with the idea that "the market didn't collapse" - it did in some locations - I certainly do agree that it's not likely to collapse in quite as dramatic a way any time soon.

My cousin bought a $600k home in Florida for $250k. That was pretty common.

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