still, who the fuck is buying these houses?
15 year mortgages were even lower (2.38% APR at the time) but I didn't want to gamble too much with COVID uncertainties (for all we know this pandemic could ride on 2-5 years).
If you're fairly financially solid and looking at real-estate, it's not a terrible time. My agent also offered a COVID plan free which declares my agent's agency will re-list and resell the property for me at no cost should I desire within one year (obviously, I'd lose any difference in value should the the market value decline, but if things get truly nasty, I can likely bounce out before the market adapts given how quick sell turnover rates are here). No closing costs would be charged under this case (obviously any require renovations would be my liability).
I should add that my mortage will be less than what I'm currently paying in rent... and in pretty solid tech hub that isn't SF.
It makes sense to buy if you plan to stay in an area long term. But, I would be wary buying if you expect to move geographically or outgrow a home within a 5-10 year horizon. If you stay local, your next home will likely rise and fall with your current home.
Overall, with a lot of research and searching, I found a good buy under a very special set of circumstances (at least I hope--there could be hidden issues but I've been very thorough). Some other homes have inflated to ridiculous price points around the area (as if they weren't already incredibly high).
It's always a balance looking at interest rates and price, so you have to be careful. Also, there's nothing saying the pandemic won't completely gut the economy and housing market in this area for years to come or even indefinitely. It's possible rates could drop lower. I'm currently betting that in the long 30 year run, it won't, for a variety of other situational reasons. YMMV.
So far.
There is no great reason to think median and higher income jobs will be hammered while the economy is in recovery mode (and lower income job openings are also soaring).
The US is back up to 5.8 million job openings, up from around 5 million at the bottom. By contrast, at the bottom of the great recession there were only ~2.3 million job openings. This recession has been a far weaker hit to the overall job market, very sharp and short as one would expect from a temporary forced shutdown.
Americans are finally doing what they should have been doing months ago - wearing masks, social distancing better, being more pragmatic regarding the pandemic, which has resulted in the case numbers being cut in half from the peak five weeks ago (along with a correlating large plunge in hospitalizations). If people ingrain that behavior, it'll be very helpful through the Winter, when the Covid mortality rate is likely to spike higher (ie it may help avoid another full lockdown, better bridging the economy from here to a vaccine). There is an old quip (possibly incorrectly attributed to Winston Churchill) about Americans eventually doing the right thing after trying everything else, that appears to again apply with the pandemic.
Over the last few weeks, I've realized that people are okay with the risk in exchange for getting back their normal lives. Six months into the pandemic, it's also clear that while it is serious, it isn't the civilization ending pandemic we initially thought it was.
these are staggering numbers, that have and will have staggering effects. think how many people go into building, maintaining and flying a simple airbus 320. everyone from airbus, to its engineers, suppliers, everyone on delta, etc., is absolutely impacted if that plane is not flying.
this trickles down into private travel which hits even more well paying jobs that build/maintain/support/fly those aircraft.
travel is simply not some dumpy motel in some dumpy town going out of business, travel/tourism has tremendous implications.
If you look at the USA age distribution of 65+, the death rate of those above 65+, and assume 50% only get it because herd immunity we're talking about ~4M deaths.
Yes, not civilization ending but Losing >1% of your population isn't something to just brush off either.
Of course if there's a vaccine then it'll be much better but this is just the USA and now think on a global scale.
Not all countries will be able to afford the vaccine, not all countries will be able to get access to it in time, not all countries will be able to produce it by themselves at scale, etc.
Let it sink in what a 1% population loss looks like on a global scale, 78M deaths.
I think this is why the markets have been so bullish. How much financially better do developed countries with retirement plans look if they didn't have to pay out ~7% less of all retirement payments.
Look at how people are behaving in states that re-opened. Given the clear evidence of human behavior it is ridiculous to assert that a recession caused by the pandemic alone would have been as bad as the recession caused by government-enforced lockdowns. People are not acting like they are afraid. Maybe they are being stupid but that's not the point -- the point is that consumers are acting like there is no virus, and it was the government lockdown, not consumer behavior, that really hurt businesses. People were living normal lives until the day the lockdowns started, and they resumed living the same way the day the lockdowns ended, despite the clear risks to their health.
That's a big brush statement considering we've never done a shutdown like this before. Sure, it can inch back but consumer confidence is essential. It's difficult to imagine confidence growing when approx half the population is going to be sold a vision of unrest, distrust, mismanagement, and so on.
A self-fulfilling prophecy isn't out of the question.
In my (large, Canadian) city they're predicting 50% or more of the local businesses failing by the end of summer / early-fall -- which isnt' far away. If the current trends continue that number may be closer to 55-60%.
Many of the business that re-opened (food, gyms, retail) are getting terrible levels of foot traffic, and several have shuttered after a couple of months of struggling. At first it was mostly local places that were already kind of marginal -- RIP my greasy local pizza place -- but now we've been seeing Starbucks Red Robin, and other chains shutting down their branches.
Eventually this is going to start cutting into real estate, ad revenue, and other white collar gigs -- some of the stories I've seen on HN reflect that.
There may not be a gigantic explosion in the stock market a la 1929 or 2008, it may just be slowly withering on the vine until you look around and realize everyone is broke. Stocks are still soaring, but 1/4-1/3 of my apartment complex neighbors are unemployed.
You have an opinion backed by real data. That's fine. Your post has value and advances a conversation.
I live in central NJ, approx 75 mins by train from NYC and 60 mins to PHL. There is a small new development in my area of approx 20+ units. Best I can tell, these homes are struggling to be sold.
I assume people moving from the city to the 'burbs and those moving to rural/small town locations possibly 2-3 hours from a big city are fairly distinct groups.
Lots of people leaving, but since their properties sold it also means that people are, by definition, also buying and moving in. The key is not "how many people are leaving" but the net outflow.
I think there would be a more serious problem if property owners are trying to leave the city but cannot sell their units. But the property sales volume (i.e. completed closings) seem to be picking up again[1] in the city.
[1] https://www.propertyshark.com/Real-Estate-Reports/2020/08/25...
FTA:
* At $1.065 million, Manhattan YTD median slides 15% below 2019 figures
* Brooklyn median drops 9% Y-o-Y, virtually erasing year-to-date gains
9-15% is a huge set of 1-yr drops.
I'd be much more alarmed if the prices kept/keep dropping further.
It seems like values are up like 10% as a result.
It’s our first home. We were planning on waiting for things to bottom out at 12-24 months after the start of the recession and were passively looking. The perfect home came on the market. Super unique. Unlikely to find another one like it. It’s the kind of home that retains value and sells fast due to uniqueness. It was only on the market for less than a week.
It’s in Seattle. Massive windows with view of Lake Washington and Rainier and so much privatcy that I can walk around anywhere in the house naked without pulling any blinds.
Whether the pandemic rages on and we’re stuck at home or everything springs back to life in downtown Seattle, my partner and I are going to be very comfortable and we have room to start a family or take in my aging father or her nephew once he’s old enough to move out.
The calculus for waiting was lowering housing prices but you also need to factor that your rent will be buying your landlord’s home during that time. Two years worth of rent for us was going to be over $120k. If we lose $100k worth of value by buying ~1.5 years early, it’s a wash.
OTOH, in my area (semi-rural Ohio) these new houses are costing at least 1.75X (and some _much_ more) what similar houses cost 15 years ago. Stuff that went for $120 - $150K 15 years ago is running north of $250K now.
With median household income in Ohio being around 56k, spending 15k on a house looks affordable.
Those folks who are selling their $150k houses for $250k are buying other houses, further raising demand.
They have normal middle-class jobs.
A pair of professional salaries almost anywhere should be able to afford a $250K mortgage.
I think most middle-class people wish their mortgage was only $250K.
So, nice solid growth in the "buying these houses" part of the sector, but by far bigger growth in the "people need to live somewhere" sector of apartments (which I am guessing is the bigger part of the apts-and-condos segment).
Some states stopped construction during the shutdown. Nearly everywhere is now allowing it, so activity surges to catch up. I know of no evidence that births slowed during the shutdown, and the deaths weren't enough to meaningfully impact demand for a place to live.
So, it's good news, but ought not to be surprising. Also from the article: "...these are the kind of gains seen after storms/hurricanes" Well, yeah, and the pandemic is in many respects more like a hurricane than it is like an economic recession.
All in all - yeah, people have time on their hands in both cases, but they're not otherwise very comparable, and I feel like, in the much higher-anxiety environment of the latter, it's considerably less likely that people will opt to pass some of that time by boning down - and on top of that, safety measures foreclose a considerable range of opportunities for doing so in the first place. That said, we'll know pretty well one way or the other by probably January or February, so for anyone not trying to front-run the diaper and formula markets, the uncertainty of the moment is probably fairly bearable.
Fwiw, some Brookings economists found not wholly dissimilar reason to predict a very measurable bust, along with an interesting aside on rates of conception during and around the various waves of the 1918 flu. I don't know whether I entirely buy their analysis, but it's at least not absurd on its face; make of it what you like. https://www.brookings.edu/research/half-a-million-fewer-chil...
But, you're right, we'll know soon enough. Lockdown lasted a lot longer than power outages, also.