Why A Real Estate Crash Won't Make Homes Affordable... For You

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#realestate #investing #finance

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There is one big problem holding most young people back financially

If you don’t already own a home, you probably can’t afford one… and you probably can’t even afford to rent one either. If your dream is a housing crash that will level the financial playing field… then I am sorry to tell you, but that’s probably only going to make things worse… According to the real estate data firm ATTOM homes are now unaffordable for median Americans in ninety nine percent [99%] of counties they analyzed, the remaining one percent [1%] were not affordable, there just wasn’t enough data to use in their report. With statistics like these the only hope that a lot of Americans have is a market correction that will bring prices back down.

High prices aren’t good for many people, buyers can’t afford a home, renters are stuck in a market where more than ever they need roommates to afford rent and even though two thirds of Americans own their own home, high prices aren’t that great for them either. If you are one of the lucky people that own a home and you sell it for a record price, you still need to buy another home which is just going to cost you a record price leaving you no better off overall.

While you own your home you are going to pay higher property taxes and if you do sell your home to buy a new one you might have to pay capital gains. Most homes in America are now selling over the IRS’s section 121 exemption of two hundred and fifty thousand dollars [$250,000] in profit since you purchased the home. So if your home is worth a lot more than you bought it for AND you don’t want to live on the street once you sell it, the only person you have really made money for is Uncle Sam.

The only people who are really winning are those that own multiple properties in addition to their primary residence. If prices are too damn high, then the best thing you could hope for is a market crash, right? … Wrong. I am once again here to crush your dreams and tell you that a housing crash would probably only make it harder for you to buy a home for three simple reasons…

So it’s time to learn How Money Works to find out why a real estate crash probably won’t get you any closer to owning a home.

[DonaldMark-nese]

Asking a real estate agent whether you should buy a home right now is like to asking an alcoholic whether they think you should have a drink lol. Homes in my neighborhood that cost around $450k in sales in 2019 are now going for $800 to $950k. Every seller in my neighborhood is currently making a $350k profit. Simply unreal. In all honesty, deflation is what we require. The only other option is for many people to go bankrupt, which would also be bad for the economy. That is the only way to return to normal.

[NicholasBall]

Because so many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.

[tatianastarcic]

I think it's time to make it more appealing for potential buyers. Real estate can be quite the rollercoaster! the stress and uncertainty are getting to me. I think I'll cut rents to attract potential buyers and exit the market, but i'm at crossroads if to allocate the entire $680k liquidity value to my stock portfolio?

[DistrustHumanz]

My plan was to live in a van down by the river... but have you seen the prices of vans lately?!

[zoraster]

Older millenial here; born in 83.

Bought a house in 2012 for $109k and as a result my taxes are only $1, 500 a year and can only increase 3% each year.

Refinanced to a 2.75% rate.

It’s currently worth $350k and if I bought it today the taxes would be $6, 000 a year and my interest rate would be more than double.

Also graduated without student loans when scholarships were still good and credit hour costs weren’t obscene. Got my masters degree for like $10k in tuition.

My joke is that I was the last X-Wing out of the Death Star.

[merevial]

Least depressing "How Money Works" Video 😭😭😭😭

[PassportBrosBusinessClass]

HOMEOWNERS ARE THE NEW NOBILITY CLASS.

Once you own 3 properties, you can have people refer to you as LORD.

[DeusExRequiem]

A real estate crash would mean a loss in confidence in it as an investment vehicle, meaning investments might go into things like R&D, new businesses, startups, etc. In the short term a housing market crash would cause a lot of property owners to lose their bets, but in the long term it would stop being a drain on societies wealth.

[demigod]

My parents: Just buy a house

Me: How the fuck do you expect me to buy one?

[_xeere]

The sad truth is that housing is continually under-supplied, so prices will only drop due to a lack of demand. Housing prices will only decrease when you are less able to buy one, at which point someone with a lot more money with you will get to take advantage of the deal.

[Heropsychodream]

As someone who bought 2 years ago, I'd advise people to take that warning about elites being the only property owners to heart - don't keep renting forever. The only 2 ways I'm seeing young people buy a home is 1) massive inheritance or 2) getting married/not having kids and saving. I took option 2 and saved for 9 years. If you don't have rich family, start on route 2 now and buy when you reach 20%. If you're watching videos like this, you're smart, and you can do it if you play the long game.

[MaxwellMax]

I was fortunate to buy my house back in 2009 for $126, 000 during the heart of the 2008 housing market crash. That on (at the time) a $32, 000 salary. Despite having a low annual salary, having a stable job and purchasing a house in a rural area helped getting the mortgage loan.

I don't see the conditions that led up to the last housing market crash happening anytime soon.

[whoeveruwantittobe]

The best method I can think of would be to reduce the amount of residential property a corporation can own which would increase supply without raising prices significantly.

[RailPreserverK]

So in other words my generations been screwed basically.

[connorferguson]

Ok I was worried you were going to tell me something new to be afraid of, I'm glad I'm already aware of all the other things that suck about trying to get a house.

[marklapis]

I don't care anymore. I wanted a house for so long, gave in and ended up buying a tiny plot of land outside of the city and a trailer for a fraction of the cost to rent last year. Don't own a house and may never, but it doesn't even matter because I'm set and all your fear propaganda and depressing videos about this don't faze me now.

[nadmoi]

One thing often not addressed is urbanization and the change of needs around it. Previous generations had jobs spread out all over the world. Companies created job opportunities in smaller towns and didn't need to rely on international airports. Nowadays, you have to choose between

1. An affordable home far away from any good jobs
2. A relatively affordable home in the outskirts of a big city with hours spent on commute each Day
3. An insanely priced home with a good commute.

Price to income ratios are bad as it is, but they average across the above categories. If you look at price in a locality with income of jobs available within half hour commutes, the number will look way worse.

[amesasw]

Lending loosened by 2012, and homes were still a great deal from 2011 to 2013. The reset helps people catch up.

[cram]

Finfluencers after holding a for sale sign in front of a burning house 🕺💃🕺💃

[tacituskilgore]

I live in a van down by the river. Seriously. I actually do.