This phenomenon is not limited to the US. Real estate prices in some European countries skyrocketed in the past couple of years to the point where middle class families with two sources of income are unable to afford a two-bedroom apartment in a medium-sized city, and can barely afford renting it too.
Good luck getting a bank loan for around half a million dollars to buy a three bedroom apartment in a country where the average income before taxes is well below €50k/year.
Something happened to the world economy after mid-2010s where demand for real estate grew like crazy as a kind of store of value/hoarding investment. The scapegoat keeps on shifting, from Airbnb to work-from-home to whatever lame excuse, but it's the same phenomenon everywhere.
My personal conspiracy theory is a coordinated submarine RE investing strategy from ultralarge private accounts, designed to destabilize Western economies.
The "obvious" answer of "housing bubble rollover" is so much more boring, though...
There are always so much talk of rates, economics, NIMBYism. Concerning housing prices.
How about that people are not handy anymore? The alternative to expensive professional construction have always been "I'll build it my self with my father's or brother's help". Most people can't do that anymore. The same thing with fixing cars.
Have you tried to fix anything lately? Between ultrasonic welding, firmware, the disappearance of spare parts, and the who-needs-leisure-time-work-until-you-die mentality, and a general total complexity explosion, fixing stuff got hard. Hell, I have products in my house that I literally designed -- I'm on the patent, I have the full electronic and mechanical CAD, I have as much of the code as anyone, I have the bloody design documents, and I can't fix them because the moment I open one to get access to the goodies, it'll never go back together again. (That's just cost-engineering plus IP54 at work, nothing nefarious.)
So don't tell me I'm not handy enough. It's simply not 1952 anymore.
>> There is a shortage of handy people is my take.
I don't think that. The housing prices are so high due "network effects". The land costs more than the house and everyone wants the same land parcel. I would definitely buy a land parcel and build a nice house but that parcel's almost 4 times more expensive than 2 bedroom flat so I stick to the overpriced 2 bedroom for now.
In 1970s Oregon, I knew four cases where a guy built a house for his family over a few years. They were all outside town. I haven't heard of such projects for a long time, but then I live in town and don't hang out much with that age group.
Article appears to be paywalled, but as a real estate agent...I'd say "it depends." For example, I had a monied client reach out to me this morning to say they are going to sit tight for a year and plan to buy in 2023+... well, for that kind of client, in my market, now would be a great time to buy (assuming they have the money) because there's more inventory than anytime since 2019 and sellers are somewhat motivated by fear of the unknown. For middle-class / average income buyers, sure the interest rates are worse than they have been, but potentially better than they could be in the future. At the same time, I don't see house prices dropping in my market in real terms - so might as well buy now rather than buy at a $25-50K increase 12-18 months from now. I was warning a lot of buyers that our local market was going to squeeze the working class right out of the area, and that continues as a trend. Again, every market is going to have its nuances.
[+] [-] simplotek|3 years ago|reply
Good luck getting a bank loan for around half a million dollars to buy a three bedroom apartment in a country where the average income before taxes is well below €50k/year.
Something happened to the world economy after mid-2010s where demand for real estate grew like crazy as a kind of store of value/hoarding investment. The scapegoat keeps on shifting, from Airbnb to work-from-home to whatever lame excuse, but it's the same phenomenon everywhere.
[+] [-] pydry|3 years ago|reply
r > g and low interest rates.
The tax regime is configured to allow wealth to grow faster than the real economy.
[+] [-] thechao|3 years ago|reply
The "obvious" answer of "housing bubble rollover" is so much more boring, though...
[+] [-] linuxftw|3 years ago|reply
[+] [-] rightbyte|3 years ago|reply
How about that people are not handy anymore? The alternative to expensive professional construction have always been "I'll build it my self with my father's or brother's help". Most people can't do that anymore. The same thing with fixing cars.
There is a shortage of handy people is my take.
[+] [-] exmadscientist|3 years ago|reply
So don't tell me I'm not handy enough. It's simply not 1952 anymore.
[+] [-] anony999|3 years ago|reply
I don't think that. The housing prices are so high due "network effects". The land costs more than the house and everyone wants the same land parcel. I would definitely buy a land parcel and build a nice house but that parcel's almost 4 times more expensive than 2 bedroom flat so I stick to the overpriced 2 bedroom for now.
[+] [-] profile53|3 years ago|reply
[+] [-] wrp|3 years ago|reply
[+] [-] AbrahamParangi|3 years ago|reply
[+] [-] user_named|3 years ago|reply
[+] [-] poulsbohemian|3 years ago|reply
[+] [-] thunky|3 years ago|reply
> now would be a great time to buy
> might as well buy now
Don't you have to say that?
For you it's always a perfect time to buy (or sell if you're a seller's agent).
[+] [-] ashwagary|3 years ago|reply