Maybe I'm stupid, but "home prices" today mean very little when they can become unaffordable when mortgage rates, property taxes, and utilities inevitably climb to beyond someone's ability to afford it.
this post was submitted on 22 Nov 2024
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Prices still aren't affordable despite this % decline.
I agree. But things can get out-of-control unaffordable from year to year when you own a home and the expenses along with it.
If you think that's unaffordable, you should try renting which is always more expensive than owning.
Really?
As a homeowner, I've had to replace a roof, an A/C, furnace, driveway, shed, washer/dryer/oven/fridge, fencing, removed trees, and had indoor renovations done... Tens and tens of thousands.
That doesn't include any of the time and expense to maintain the property.
Unless renters have to cover expenses like that, I can't possibly see renting as more expensive.
I have kids who rent their own place, and while the rent is expensive, they never have these kinds of crazy expenses to deal with.
But I really don't want to get into an affordability pissing contest. Everything is expensive and unaffordable for the majority of the population.
Renters do cover expenses like that. Because they pay rent. And rent pays for all of that plus profit.
Historically, that is not always true and very market dependent.
Historically when there were work houses and inns that cost under a days pay, sure. But anytime after the 19th century it's been true. Anywhere in the US in Canada for the last 150 years it's been true. Any SFH it's been true, including historically.
Landlords don't rent out of the kindness of their cold, dead, grease filled hearts, they rent to make a profit. Meaning it is always cheaper to own than rent because that profit is built into the rent.
My current rent: $1600 (no utilities included).
Tenant insurance: $300 (per year!).
Tenant total: $1625 per month.
Mortgage calculation: $1863 per month for a $300,000 mortgage with a 10% down payment.
Property tax: ~$300 per month.
House insurance: ~$150 per month.
Mortgage total: $2313 per month.
And that is not even including the costs of repairs on the house. In my city a $300,000 house will be in need of some major repairs.
I'd say I'm doing pretty good. I am saving that extra $700 per month myself and am in a lot better of a position than if I was paying that mortgage.
eyup. I think a lot of people do not realize how you are not home free with no monthly nut just because you own something.
In order for home prices to actually become affordable, we'd have to have the kind of decline where economists were literally using phrases like "blood in the streets".
Let me know when prices are close to where they were 15 years ago.
That will take Dr. Emmet Brown and a heavily modified Delorean.
I wonder if that had anything to do with the Bank of Canada cutting interest rates in October. People waiting for a better mortgage rate perhaps?
If anything cutting rates would lead to increase in housing prices. New home price decline is in line with existing home price trends as well so this could be an indication of demand pressure softening.
I was thinking more along the lines of people waiting on buying homes until interest rates fall which is a decrease in demand.
Logical, though that's not an observed phenomena as far as I know. So many factors could be in play here too such as the mix of types of housing and floor sizes etc. Everything from tiny studios to 5 bedroom mansions are included in here.
True, we'll just have to wait and see if more data becomes available. My original comment was more conjecture than anything else. It's an interesting development though. Thank you for sharing.
So many factors.
Sellers may have sat on the sidelines when rates went up and sales went down. As inventory climbs, pressure grows and prices come down. Declining prices can scare sellers who come off the sidelines before prices come down further. Rates and prices coming down brings back buyers which drives up prices. Which forces dominate in any given month? For how long? No easy answers in advance.