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Comment by Esophagus4 | Hacker News Reader

I think if you believed 7-8% loans were normal, you might be more likely to bite the bullet and make your move.

But if you believe 3-4% is normal, then you’re probably waiting for rates to return to “normal.”

I think it’s a side effect of years of low interest rates… people are conditioned now to believe low is normal, and they want to hang on until we get back to that.

I was hoping rates would stay “high” for a while which I thought would soften the housing market so I could buy, but that doesn’t seem to have happened. Instead of prices dropping, inventory just dried up.

Shows how silly I am for thinking I could time the market.

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It's the other way around. If you think 3% is normal, you buy now and refinance while people think that the house is unaffordable. Remember that lower interest rates make home prices go even higher!

If you think it will stay at 7%, that 3% loan you already have is a treasure to keep using for a decade or two.

Yep, it's insane that people think 3% loans will magically fix the housing market. It's beyond delusional that they refuse to accept it accelerate home price increases and bidding wars.

At 2.25% I'm not sure it will ever make financial sense for me to move. Upsides and downsides to that.

I would have agreed, but in reality, higher rates haven’t improved affordability.

Instead, high rates plus economic uncertainty has reduced supply significantly because no one wants to sell.

Maybe lower rates will make prices even more unaffordable, which would make this a low period by comparison, but if you look at home price to income numbers, they’re still near record highs.

Maybe it means: if you think the line is always going up and to the right, today is the best day to buy, but that’s a weird way for me to think of a house, which I still kind of see as a consumable good rather than an investment vehicle.

Real estate market will soften as the economy comes off the rails [1]. 6-12 months from now should have more motivated sellers depending on market (foreclosures in Clark County Las Vegas market are up 32% year over year June 2025, for example [2]). Short sales and foreclosure auctions are also options. If you still want to buy down the road, be in the strongest financial position possible to get financing and make an offer when the market conditions turn more buyer favorable. Seller concessions can be used to buy down the mortgage rate, if that’s useful information.

[1] https://www.cnbc.com/2025/07/14/us-housing-markets-falling-p...

[2] https://news.ycombinator.com/item?id=44907838

The housing market won't soften until we build a shit ton of houses which will never happen until there are a lot of very angry people willing it into existence.

I don’t think we’re ever going to build houses again at the rate we did before the 2008 GFC. A substantial portion of people who work in construction are undocumented (and will be targeted for deportation by this admin for the remains of their term), zoning remains a challenge, cost of materials continues to inflate. How many years would it take to get back up to speed? 5? 10? What does the economy look like then? Will enough young folks go into the necessary trades to meet the demand for this labor? We might keep building along at the anemic pace of today, but I argue we’ll never build again at the rate we did pre GFC.

https://eyeonhousing.org/2020/01/a-decade-of-home-building-t...

https://www.thebignewsletter.com/p/its-the-land-stupid-how-t...

Supply and demand for labor will work itself out- prices will go up, companies will invest in efficiency, etc. People just need time to figure out the details, and the legal right to do the job.

Can people wait multiple decades for this to sort out? People without housing they can afford need it immediately.

There are going to be losers in this. No avoiding it.

Indeed, that's my thesis, I appreciate you making it crystal clear. The pipeline has failed, and if there is a will to fix it, it will take time. Until it's sorted, year after year, there will be folks who go without affordable housing. There are, as you said, going to be losers from this policy failure.

How does supply/demand work itself out when an exogenous force is rapidly contracting the supply?

Humans take time to be produced.

We don't build slow because the cost of labor or raw materials have gone up. In fact productivity and efficiency has gone up across the board in the past century. We build slower because there is a will to build slower. We let local people kill high speed rail, high voltage DC, and, above all, housing. You know how we built rails in the 1800s and highways in the 1900s? We didn't give a shit when someone said "no". That's what's changed.

There are lots of businesses eager to build houses. The trouble is overwhelmingly that we can't afford it. Angry people won't get it done unless they take up construction or manufacturing as a career in huge numbers, or else rob or enslave people who can build houses.

What we have is a general shortfall of prosperity. Housing is affected by money supply in an outsized way. Prices are at least partly going up because our economy is stagnant, and wages are going down in real terms as credit continues expanding to keep the wheels from coming off.

Put in other words, in any market, there are bids and there are offers. Prices don't move until one side gets in a rush. A seller's market (like in 2021) is one where buyers are in a rush and will lift the offer. A buyer's market (like during GFC) is one where sellers are in a rush and will hit the bid.

The pressure on buyers, at least in the past couple of decades, is that the increase in the supply of housing has not been at all commensurate with the increase in population. That, combined with a great increase in the money supply, makes for tremendous upward pressure on real estate prices.

Sellers generally aren't in a rush except in times of economic crises, especially paired with a period of overleveraging running up to it; i.e. the GFC. Economic softening appears to be in the works at the moment, so buyers should get a little reprieve soon, but since there isn't the same overleveraged buyers all rushing for the exits like in 2008, a similar crash is unlikely.

How do you reconcile this opinion when only a day ago you were arguing that reduced demand for clild care would not cause a reduction in cost?

https://news.ycombinator.com/item?id=44894599

Reduction in childcare cost in my linked comment, not real estate. Unsure how you made such a connection. From that comment:

> It doesn't make sense if you need both incomes to survive. It just pushes the total fertility rate down faster when prospective parents realize they cannot afford childcare nor one parent to remain at home.

In the context of this thread, there are not enough houses for demand, that is why they are expensive, but if an administration beats on the economy hard enough, causing job destruction and increased unemployment, those who cannot continue to afford to service their mortgages will be forced to sell. This would contribute to real estate price softening. Child care costs will never come down (as I assert in my other comment) because the government refuses to subsidize it and there are labor shortages, with childcare providers unable to find staff for the childcare wages on offer. Labor shortages will persist well into the future due to prime working age population compression due to structural demographics. Citations for this are in my comment you linked to, but I can provide as many as you would like.

I expressly waited for interest rates to jump before we bought ours. Buying couldn't have been easier because of that.

7% is close to normal, historically. But not for the past couple of decades, so people forgot.

You're missing the median income to home price ratio is at an all-time high: https://www.longtermtrends.net/home-price-median-annual-inco...

So, while interest rates are at historical 'norms', affordability is not.

I ask sincerely. Is there a way out of that problem other than raising wages and inflation?

Build more houses (or housing, if you prefer).

I know that 3% interest rates are never coming back and that’s exactly why I’ll probably never move again.

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