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Comment by turbinerneiter | Hacker News Reader

This will be the 3rd once in a life-time crash since I left school. This time I finally also have savings that I can lose in the crash.

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The economy always has cycles. Expecting constant upward growth is unrealistic.

I went through 2008 and lost 30% of my portfolio. It’s up 300% since then.

You’ll survive.

Surviving isn't the issue, I'm doing fine. Affording a house is. Reaching the standard my parents had.

Good luck with that. My parents purchased 60 acres of beautiful land and built a very nice house on it. My dad was a construction worker and my mom was a part time school bus driver/eventually USPS worker.

My wife and I both have degrees. There's no way we could ever afford their place. The population has increased too much and space - even in rural areas - is finite.

My parents did the same.

Of course when they bought it was a podunk town and they bought on the edge of city limits.

Now it’s a city of 2M and their property is regarded as central.

Of course I couldn’t afford it.

But I could certainly buy on the edge of some podunk town today.

It is weird how the vast majority of commenters on HN ignore any adjustments for changes in quality in housing discussions.

Housing prices seem pretty inline with population growth after adjusting for location and building quality differences.

With rising rates expect housing to fall.

Canada had a massive run up and with increasing rate the ‘burbs of Toronto are down 25% in the last two months.

Unless you have a crystal ball, I wouldn’t count on the current trend continuing.

> with increasing rate the ‘burbs of Toronto are down 25% in the last two months

Are you saying that real estate prices in Toronto suburbs have fallen by 25% in two months? That's incredibly quick; generally real estate crashes take a couple of years to play out and bottom out at a ~40% decline.

Yes, median sales price is down 25-30% since rates started going up.

That said, those same places were up 50-100% during Covid. But the latest drop bring them back to pre-Covid levels.

However, rates just went up 100 bps today and will likely go up by another 100 bps by year end.

Canada is looking at a major correction, but that said, the median price in Canada is 2x the US, so there is plenty of room to fall.

Same here. I graduated college during the financial crisis. It's been a wild ride.

Same here. I was meaning to buy an apartment, but that's not going to happen.

During Covid, the price of real estate went up so much, that the increase of the 20% down payment, which is recommended in my country, is more than I can save in year. I'm saving 60% of my income and I'm in the top 20% income bracket.

This is why I’m wary whenever I see “top X% in the income bracket.” I think it’s misdirection, because if you can’t afford something, then you can’t afford it, regardless of how well off the statistics say you are. You can save for a down payment, and then interest rates and mortgage will obliterate you. So really, the scale for these things in terms of affordability starts somewhere beyond what you’re making - and most of the upper 20% I bet, and then extends onwards to the actual ruling/owner class.

So the metric we should use isn’t this. It’s something else.

I won’t speculate with the usual HN nonsense of armchair economists. I will say I remember Michael O’Church’s two ladder theory and I agree with it based on personal observations.

Is it expected to be able to save for an entire down payment in one year? It took me and most of my friends closer to 10 years.

The price increase of the downpayment was higher than my savings in that year.

If you have cash savings, then you’re ideally positioned to take advantage of lower real estate prices without suffering (as much) from the impact of higher interest rates.

If prices go down, which they probably won't in my city.

Also, Input everything in ETFs, as everyone told me.

I will probably escape to the countryside in a couple of years.

I'm actually not even eligible for a mortgage any more considering that interest rates around here are at 6,50%, which is more than the 30-year average.

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