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Comment by CapmCrackaWaka | Hacker News Reader

I’m skeptical that prices are going to fall too much. Go to any Reddit thread on the topic of interest rates, talk to any of your young friends that haven’t bought a house yet, and you’ll find a common theme. “I can’t wait for house prices to fall so I can buy”. Isn’t that the definition of demand? If prices go down 10%, there is going to be a massive number of young people jumping into the market.

I’m wondering if we might see more houses go up for sale, but not necessarily a drop in prices simply because the demand will be there to soak up the supply for a long time.

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> “I can’t wait for house prices to fall so I can buy”.

By the time housing is 20% off the peak, unemployment will be raging and those people will have lost a lot of their life savings in crypto and the stock market. Without jobs and saving they won't be stepping into the market to buy. Meanwhile forced selling by people who were overly leveraged will cause a supply glut.

I understand that some catastrophe or economic collapse could cause all of that, but I don’t think it’s a necessity for unemployment to skyrocket if house prices dip 20%. Also what makes you think any of this is connected to crypto?

The economy is all linked together in positive feedback loops.

10% isn't nearly enough. If you're waiting for 10% but your interest rate doubled you're losing out.

That’s why smart money has been happily buying houses up even at inflated prices.

> even at inflated prices

Either smart money or inflated prices, pick one

With a mortgage, the side-lined young people who couldn't afford a house at 3.5% interest rate still can't afford the same house after a 10% price drop at 5.5% interest rate.

Talking about wanting to buy a house isn’t the same thing as actually being able to afford one though.

The definition of demand is quantity demanded at every given price level. With mortgage rates rising, the size of loans any individual can take out at every level of wealth/income is dropping significantly.

At the end of the day, you can want to buy all you want, but unless you have or can get the money, it’s a moot point.

I’m already seeing a slight correction in Austin, TX. I get an email with an estimate of value from Redfin once a month - last month it was around $640k (up from the $320k I paid for it 5 or so years ago) and this month it was 600k. Before this month it had steadily climbed every single month since the pandemic rebound.

> If prices go down 10%, there is going to be a massive number of young people jumping into the market.

Prices were 10% lower before last year and were was this massive amount of young people then ? Waiting for a 10% drop too

If nominal prices go down during inflation, real prices go down further.

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