It’s a little like this:
No matter what DC politicians do,
No matter what the Fed does,
Ten years from now there won’t be very many buyers for 2,600 sq ft suburban homes.
And twenty years from now that picture gets even worse.
So . . . you (your kids) probably shouldn’t buy one no matter what,
but if you (they) do,
look really really hard at your assumptions first, because what has been happening your entire lives, won’t be happening anymore.
Using those immigration projections (bascially they assumed that after Trump is gone, immigration returns to fast, but not Biden-crazy-fast levels,) the study sees the following trends emerging:
Even then, large suburban homes with multiple bedrooms are not gonna be sellng very quickly, at high prices etc..
A person shoud exercise extreme caution, check his assumptons etc before buying a suburban dream house. The stuff that has been happening our entire lives will not be happening in the next 10-20 years.
Never have a Mortgage and if you do, pay it off ASAP. Speculation in anything, including RE causes bubbles and exploding bubbles. Who cares if it’s worth 4 million etc. Just live in it and pass it down.
Mine is around 1600sqft, 3 BRs. I’ve never been a fan of really big houses. Just the space around them. It doesn’t have to be an acre apart, 50-75 feet is what I consider elbow room from houses to my left and right. I have about 300 ft of room behind my house. There is forest behind my backyard.
But you’re talking bigger houses I presume? They’ll still be available. People with money will still buy them. If they become short in supply, they’ll just get more expensive than they are now.
Yes.
For a very long time, people bought big homes rate ‘X.’
They have done that for so long we naturally assume that will always continue.
But the demographics are undeniable, and they say in the 10 year future, people will buy them at a much lower rate.
The rate will be greater than zero, but much lower than the current rate.
“Assuming 873,000 Net immigration per year (the 2010’s level)
New household formation in the US wil be about 860,000 per year for the next 10 years”
The homes that immigrants cannot or will not buy will be hardest hit.
You had to know it was coming. I used to wonder why all of these developments built monster houses most people couldn’t afford. Who’s buying them? I’m not, and I’m not close to being poor. Can you just build regular housing? I guess they built those monsters to make maximum profit.
I disagree completely. To many people their house is a large part of their retirement plan. As in kids move out, parents downsize. Sell and use the money to pay cash for their new home giving them more disposable income in their retirement.
Been like that for decades.
You can still do that without ever having a mortgage. Or paying off the mortgage quickly.
Yes.
But how many middle class types can plop down 500K for a home?
If you can lay down half a million in cash for a home, chances are you don’t need it as a part of your retirement plan.
You’ll get no argument from me. I was mostly talking about people that inherit a house, then use that money to buy another. I know multiple people that will never need money of their own to buy a new house. So to speak.
I got a 30 year mortgage in 2000. Refinanced to a 15 year in 2003 at almost half the interest rate, then paid it off by 2015 if I remember correctly. A mortgage is an infringement on your available cash.
Are you aware how wonderful it is to not have rent or mortgage payment? This should be part of the “plan”
Selling the house to downsize would be fine but don’t use a new mortgage to do it and get into a new overinflated house.
Best not to expect RE values to keep going higher even though they usually do–that’s speculation that hits a bubble pop.
I bought a new Porsche 356 SC in 1964 for 3475.00. Wish I still had it today, but not all cars are sellable at an inflated price, same with homes during RE booms. Booms can Bust. Speculation and greed is the real cause of inflation.
I reiterate…..
I don’t even like having 10ft ceilings. I just see it as wasted air that I have to heat or cool.
Other buy the house with the plan to rent it out for a ridiculous amount of rent, to “middle class.” It’s all speculation and pie in the sky.
I need to install a moat, but moat prices are so overinflated these days
Here is kind of a rough illustration of what is coming.
The black boxes are people in their 20s and 30s, the people who are buying nice houses today.
The red boxes are people who will be buying them 10 years from now.
For the first time ever, that second number is smaller than the first number.
It would be a little scary if (for the first time ever) the two numbers were going to be THE SAME. But the reaility is a little more disconcerting. The two numbers will not be the same, the second number will be smaller.
Oftentimes we can read things like “Immigration will save us from a labor shortage” or “immigration will make the SS less-bad than it would be without immigration.”
I can only assume the stories we are reading are true.
But those stories probably don’t say “immigration will save the market for nice suburban houses.”
Ten years from now, there might be a strong market for smaller homes (for old folks, for small families, for immigrants etc), but the market for nicer larger homes? Probably not at all what it has been. Totally new ground.
With the cost of rent, there should be a strong market now. The house to my right rents for 4,600. It was only up for a little over a week. I’m assuming they got close to that.
That sounds right to me, but I have read some pretty respectable analysis that says in effect “No Bob. You are wrong. The short-term picture for rent is bad.”
I guess that means I am less certain and less willing to make a strong prediction there. All business involves risk.
If you are buying a suburban home thinking the next 10 year will be the same as the last 10 in terms of asset appreciation there it no way to happen given demographics. There is a huge bubble of baby boomers who will die or downsize in the next 10 meaning the supply of housing for sale on the market will depress prices. Our legal immigration, the cohort most likely to afford a home besides native born isn’t enough for our population to be at replacement level for home buyers. So we have larger supply and lower demand. Home buyers today will be happy if at the end of 10 years their house keeps up with inflation.
