[pascalxus]

We hear this ALLLLL the time. I've heard it for nearly half a decade as I waited and waited and waited forever to buy a house, and yet through all of the disasters, house prices just kept going up and up and up.

The assumption is, since almost no one can afford a house, prices MUST fall. Here's the thing no one gets: the "almost" part is very important. If, in a city of 100,000 people, only the richest 100 can afford (less than 1% of the population) a house but there's only 10 houses on the market, then prices can still continue to skyrocket.

Overall demand does not need to be super high for prices to go up. It's Demand relative to supply that matters. And in markets where supply is really really tiny then demand doesn't need to be very high in order to outstrip supply.

[tenacious_tuna]

I've felt kind of similarly. My wife and I are young--graduated college in 2018--and I feel like I've been a bit lied to about what constitutes "good financial decisions" over the past couple years. We've been squirreling away cash to have an emergency fund, long enough to support us being out of work for 6months, paying down her student loans, trying to wait on buying a car, etc--but our friends have been buying houses, cars, etc etc, and it seems like that's been the more prudent decision time and time again.

We delayed buying a house to have a bit more in savings? House prices skyrocket, our friends who leveraged the crap out of themselves look genius.

We wait to buy a car to have a bit more in savings / wait for the used market to come down? The used market goes up, our friends who bought new cars look like geniuses.

There's part of me that keeps waiting for a correction, esp. in the housing market, both so that houses come back into our budget range, but also maybe because there's part of me that feels vindictive about the fact that everyone who, to my sensibilities, seems to be acting recklessly are making out better than we are.

Some of that is reasonable, I suspect: we're very financially conservative relative to our peer group, which means we're going to miss out on some opportunities, and I don't want to be "proven right" in saving for a rainy day by everyone else having economic hardship, but I do feel rather confused about how we're "supposed" to behave in this market.

We're also remarkably well off, as is our peer group, which will obviously skew the data radically, but it also scares the crap out of me: if these are the thoughts we're having with a household income just barely under $200k this young, what is everyone else thinking?

[lazypenguin]

I know someone from FSU (former Soviet Union). Their grandparents saved for decades, literally keeping their cash under their mattress. The grandmother wanted to buy a car but the grandfather said it’s better to save. One day they woke up in December of 1991 and that money was almost worthless. “We should have bought a car”, that grandmother never let her husband live it down.

Financial decisions are not so black and white. IMO only basic rules apply: live below your means, save more than you spend, avoid debt, etc. Any advice beyond that is a crapshoot.

[pascalxus]

There's two kinds of spending: assets and liabilities. assets make you richer, liabilities make you poorer. Car is the later.

It's okay to save every penny but you can't keep it in cash. You've got to buy some real asset: either real estate, gold, equities or bitcoin.

[lazide]

It is VERY typical for volume to drop, while prices peak in high demand areas before volume drops to zero.

[rch]

Banks push this to the limit by making it comparatively expensive for individual buyers to build, preferring to offer loans for already overpriced homes.

Edit: At least this has been my experience. Have people found otherwise themselves?

[whitemary]

How dare you think critically about economics!