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Comment by rpmisms | Hacker News Reader

As a young person who could afford to buy a home, I'm not, simply because I expect the housing market to crash, and I absolutely don't want to be upside-down on a house right now.

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You should not try to time the market, but the truth in your claim is that housing has diverged from its underlying value as a high yielding asset. If this is the case because land values have increased beyond present rent value due to demolition controls, restrictive zoning, etc. then you should never expect a SFH to be a worthwhile purchase-cum-asset though hopefully in the future a condo or town home might.

I am as well.

Although I've been "waiting" for a crash since 2013, and it still hasn't fucking shown up yet.

I will just keeping hoarding money until it happens, I suppose.

Personally, I suspect that when a crash happens, it will come with higher interest rates. A 2% increase will result in an 18% higher mortgage payment, which could actually be higher than the dip in home values.

That's why I'm buying right now. I too expect a dip in values within the next couple years, but we've got cheap money right now, and I don't plan on moving again for long while, if ever.

The counterargument you will hear to your strategy is: you can always refinance at lower interest rates if rates go down at some point, but you can never change the price you paid for the home.

Granted, you should do what works for you, but there is plenty to be said for purchasing a less expensive house when interest rates are higher.

Depends on the location, but a crashing house market halving the price (or even more) of properties is not uncommon. It happened in the last one.

Treating all of the US (or any country) as one housing market is also a mistake. As wealth and economic opportunity concentrate in certain areas, I would expect some places to crash, some to stagnate, and a few to keep rising. Right now, there’s quite a few states and vast swaths of regions with lower housing prices than ever before, or housing prices that don’t move up (upper midwest and northeast come to mind). And then there are places that not only held their own in the last recession, but have doubled and more.

Right? Also rates didnt rise from x% to 3x%, they actually fell to incentivize home buying

If it's an economy-wide crash, the opposite is more likely: a reduction in interest rates.

Can they really go much lower? Interest rates won't ever dip below inflation will they? If they do, wouldn't this be detrimental to the future of our economy?

My guess is that after the election's over, interest rates will start creeping up and eventually cause an overall reduction in housing values as it becomes harder for middle class incomes to afford homes at the current values.

I don't think a crash like 2008 is coming. I just think a relatively minor adjustment is right around the corner.

They can and were below inflation during the recession. At 1.55% now, were at 2% a couple years ago, but just ~0.07% (not a typo) during the depths of the recession. Below inflation.

For that matter, some places have mortgages below 0%. Denmark, for instance.

Fed rates can't really get much lower, so I'm not sure how that'd work out...

They can. They're at 1.55% right now (they were at 2% not long ago, I guess they're trying to stave off a dip in demand). During the depths of the recession, they were basically 0% (i.e. 0.07%, etc). Below inflation.

I sold my house 1.5 years ago (after owning for 5) expecting a market crash, still hasn't happened. A market crash was actually pretty far down on the list of reasons why for me, but it somewhat factored in. Whoops. Still got a nice return on it.

I’ve been thinking that for 10 years now. Whoops.

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