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Comment by WarOnPrivacy | Hacker News Reader

Having millions of people at genuine risk of homelessness (little availability or affordability) does a lot to undercut faith in the economy.

Same goes for people who are suddenly paying well over 50% of their income on housing.

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It surprised me, that in so many countries and cities the price of apartment, flat, or house increased significantly (often almost doubled) over last two years. It either reflects raw inflation, or, for some unknown reasons, growing value. If anything, you would expect either prices keeping roughly the same level or falling.

Don't forget declining interest rates.

It's part of having high immigration rates combined with our zoning laws.

WFH workers want home office. It’s not like the housing supply changed, but the demand very suddenly did

The mortgage rate before the 2008 crisis was floating around 6.5%. The mortgage rate in 2020 dropped all the way below 2.75%. https://fred.stlouisfed.org/graph/?g=NUh A mortgage rate of 6.5% has a monthly payment of $1977 if a house is $300k with a 20% down payment. Most people make their financial decisions based on short term ability to pay. At 2.75% that same $1977 will pay a monthly mortgage on a 410,000 house (assuming a 20% down payment) https://www.nerdwallet.com/mortgages/mortgage-calculator/cal... . People are willing to pay more because they can afford more per month, and outbid people that will not match those prices.

There is also the fact that investors can get a higher rate of return by buying and managing a rental property rather than selling a mortgage, so that money is also competing to own the property. I personally feel we are in a bubble, that will pop less explosively than the 2008 bubble.

Currency debasement combined with low interest rates in nominal terms combined with extremely negative interest rates in real terms is driving a huge portion of the nominal gains in housing everywhere in the last few years. If housing is operating in a bubble the prices can continue to go up without fundamentals supporting it for quite a long time. There's also a huge number of policy decisions that have been made to prop up the real estate market. See Evergrande's issues lately for how this can eventually end up playing out when the new money stops coming in and the regulatory framework changes regarding leverage (in this case the three red lines policy changes forcing deleveraging).

Growing value. With WFH, people are demanding more living space. I know DINK couples buying 4 bedroom detached homes rather than their former 1 bedroom condos. If I buy a place anytime soon, it will likely be 3 bedroom for an office and a guest space if a friend who also WFH comes to visit.

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