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by onion2k
1314 days ago
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As a curiosity, how many people in this thread are home buyers that sat on the sidelines over the past year or two and are now waiting for prices to drop? Waiting for a price drop doesn't really work. Firstly, when prices start to drop people stop selling. You might want a cheaper house but the supply will be severely limited so you probably won't get what you really want. Secondly, when prices drop it usually comes with other changes in the market. Mortgage lenders are weirdly skittish at the moment, and they stop lending the instant anything looks bad. If you need a high loan-to-value mortgage (eg 90% of the purchase price) you probably won't get it in a downturn. I bought a place about 18 months ago and got a 5 year fixed interest mortgage because I figured we're going into a period of inflation and maybe recession so interest rates will probably go up. My timing was off a bit but it's going to save me a fortune over the next few years (and then I get a huge shock when the fix rate ends... yay!) |
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Most people who sell their home also buy a new one at the same time. So if those folks remove themselves from the market, it doesn't really change anything as they are decreasing both the supply and demand by an equal amount.
The net balance in supply and demand comes from first time buyers, investors (both buying and selling), immigration vs emigration, and the elderly (moving to care facilities or passing away). Investors have significantly reduced purchases, and as economic conditions deteriorate I expect them to start selling (for example a lot of AirBNB hosts bought at the top of the market and are starting to get nervous as bookings are declining).
Basically, you can have a market with record low inventory and still see significant price decreases if demand is also low. The fact that we have record high employment and inflation and we are still seeing prices either level off or decline is very concerning. If employment starts declining we are certainly going to see a lot more selling pressure.