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by nostrademons
1563 days ago
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It's mostly FTHBs, investors, and purchasers of second (+ more) homes. Existing homeowners who are trading one home for another net out of the supply and demand calculations - for every house they take off the market, they add one back in. They also tend to net out financially as well: if home prices are high, they receive a lot for their home but have to spend a lot to get a new one, while if prices are low, they won't get a lot for their home but can buy a new one cheap. Existing homeowners have a pretty critical role in spreading high prices throughout the country, though. If nobody traded out of their existing homes prices would be sky-high in the Bay Area and Seattle, like they were in 2018, but this pool of buyers would have little effect on Boise and Charlotte. But because someone in the Bay Area can get $2M for their home and now has it available to retire to Boise, prices in the Bay Area end up marginally lower and prices in Boise go through the roof. |
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Only about 5,000 of them sell in a given year. Suppose Facebook shows up all at once, with >5,000 new millionaires from the Midwest. They run an auction with each other for those 5,000 homes. The price they settle on is $1.5 million. This becomes the comparable for every existing home.
So the system started with $40bn in home equity value. We injected $7.5bn worth of tech money. And we wound up with $600 billion in home equity value. 395,000 people got $1.4 million in home equity out of thin air. And they can use it to trade with each other, generating many more than 5,000 transactions at the "Facebook millionaire" price.