Good! If you bought your home as shelter nothing has changed for you.
If you bought homes as an investment, pricing out families, turning entire neighborhoods into Airbnbs, and destroying their culture you have my sympathies /S.
If you bought homes as an investment, pricing out families, turning entire neighborhoods into Airbnbs, and destroying their culture you have my sympathies /S.
Considering the price drop, the new home will be equal, in value, to the one they originally bought for 100k.
This does not include transaction prices (which can be high, of course), but they incur regardless.
Problem is that people were panic buying at inflated prices, because they thought prices would go up further in the future and had to move fast. But they get in over their head, and a slight disruption (life events happen) can cause them to miss payments. Now they are forced to sell or abandon the house, and the bank is forced to take a loss (if in the case of a short sell). And if someone is already losing their house, they aren't going to be doing much maintenance on it so the house ends up in poorer quality even if the current owner doesn't specifically try to sabotage the house. So now you end up with a bunch of houses on the market that aren't really move-in ready, so investors sweep them up limiting the supply, and cause the cycle to bounce all over again.
So yayy! We designed a system where having shelter requires leveraging yourself to the chin in an asset market (if you're renting you just happen to not be playing, but your landlord is) and then putting the blame on the people who didn't have any other option.
This is only true in the most expensive metro areas - nobody forces anybody to live there except for rare combinations like NYC + investment banking, which also tend to be very well compensated. There are plenty of low profile metros with tons of amenities and reasonable housing markets (especially now as home prices will come back from orbit and after some time, rents along with them).
My fiance and I bought 3-4 months ago and mortgage + taxes is approximately 13% of our take home pay. We make good money but nothing astronomical (no FAANG salaries for sure, for either of us) and by every reasonable metric we make 2-2.5x what we need to in order to afford this house without dumping our entire lives into it.
This is true in all metro areas. Mortgage lenders are actually having to loosen the "percentage of cash flow one spends on a mortgage" requirements because without spending a third if your income you can't buy into the market. I live in a famously inexpensive housing market and a house that sold for $300k last year is now going for $450k.
This is not just NYC and SF, it's the same story in Austin, Seattle, Atlanta, Columbus, Minneapolis, Dever.
Nobody forces you to live where the jobs in your field are, got it. I cannot understand how people assume that everyone just has the mobility to just pick up their entire lives (like they don't have friends and family), sell their house (which is taking a loss now), move and be able to find a job anywhere.
Like good lord not everyone works in a field where you can work remotely from a cabin in the woods. Some people do actually have to be on-prem. So many people in this thread are vastly overestimating the agency people in real life have to participate (or not) in the systems that surround them. If the SWE job market ever cools off I feel like the tone is going to shift dramatically.
> If the SWE job market ever cools off
So far it's only the SWE market cooling. Friends in health, education, logistics are beating back recruiters. These are occupations that have been underserved for decades and only worked as long as they have because of solid pensions. But now those retirements are coming due and no one has built the staffing pipeline. Management watched the average employee age increase every year until it was equal to retirement age and here we are. SWE market is extremely young and doesn't have nearly the same recruitment problem.
And just because home prices drop a fraction of a percent doesn't mean you're suddenly taking a six figure loss if you sell and move, especially if like your example the price has increased 50% in the last year.
This may be true for some human being in America (almost certainly is, in fact, given the size of the country) but on the whole no one is taking a loss yet [0]
* "It's great that housing prices are dropping (which makes it more difficult than it already is to move)"
* "If you can't afford a mortgage just move"
Metros are metros for a reason. People dont choose to live in a tiny expensive house because they are too stupid to move elsewhere. They are there because that is the best option available to them.
I disagree with your premise that the millions of people living in expensive cities live there because they are too stupid to make smarter decisions unlike you.
I never said anyone was stupid. There are plenty of valid reasons to live in one specific area, family/spouse/kids being a great example.
The people who were priced out and who never had any possibility of retirement are not going to sympathize. Maybe homeowners will decide to fight with them, not against them.
The average person owns a home for less than a decade.
If you bought a home and had to sell, but lost money, congratulations you were an unofficial renter. You lick your wounds and lean into the next financial scheme.
Its not a good feeling not knowing how long you are going to be stuck in the home. Hope you don't want to move due to things like having kids or getting a new job while you are upside down.
And if they see a correction now they may drop below their 2008 peak.
All homes: https://fred.stlouisfed.org/series/ASPUS
New Homes: https://fred.stlouisfed.org/series/MSPNHSUS
Property taxes