[lsmeducation]

They mostly just look at most recent sales in the area. It sounds simple, but can be bewildering. Just because everyone gobbled up mortgages at low interest rates in 2020, does not mean you can keep pricing houses at 2020 levels. But that's exactly what the housing market keeps doing because they simply care about the last max bid/sale.

[lotsofpulp]

>But that's exactly what the housing market keeps doing because they simply care about the last max bid/sale.

"The housing market" is, by far, individual home sellers. Home sellers without sufficient incentive to sell can afford to wait for a higher prices. They are getting massive utility from the house already, they live in it, they might have no reason to sell if they cannot get a sufficiently high price.

Barring loss of income, death, or something else that really motivates a home owner to sell, there is little reason for homeowners to sell the property at a price they deem too low.

Hence increasing supply is the only way to lower prices, because an empty house usually has has negative utility (property tax, maintenance, security, etc), so the seller (home builders) are far more motivated to sell it.

[spicyusername]

At the end of the day people will only pay what they will pay.

Data like Zillow's Zestimate may impact the prices that people start with, but supply and demand take care of the rest.

I think that the lack of housing supply in most markets and higher demand for housing is what is keeping prices inflated.

If anything, this shows how high prices _would have gone_ had the interest rates stayed low, given that they are still high with today's high mortgage rates lowering demand.

[conqrr]

I don't think supply and demand would autofix the issue. When a baseline is set, everyone believes it to be the new price. Same as how when a lie is repeated multiple times, it can dangerously become the false truth.

[nightski]

Everyone might believe it is the new price, but that doesn't mean they are willing to pay it.

[lukas099]

After years of prices being 'high' yet continuing to rise, they night just accept it.

[nightski]

If they do accept it, that means the market is right and the house is really worth that much to someone :)

[mistrial9]

> At the end of the day people will only pay what they will pay.

this is empty verbage -- the money supply is run by groups of people i.e. the tender is tendered by tenders. Those comfortable with double-dipping into the cash supplies and using it to boost asset prices, did so with gusto. The rest of society suffers with a small (governing,lending) few benefiting mightily. The "copium" statements by the intellectually uncurious, those who are benefitting, and those that are perpetrating, come off like this vacuous non-statement above.

[ipaddr]

In the end you can only pay with the money you have. If rents go to a million and you are making $15 an hour you can't pay (no one can) and prices drop.

Keeping adding people and not housing supply and prices will go up. Remove people and add housing supply and prices will go down