Quote:
Originally Posted by dradernh
However, if you've bought a home you were barely able to afford and your rate was 2-3%, you're much more likely to be "stuck" as you've already assumed all the housing cost burden you can handle. I don't know if the term has gone out of common use, but in CA back in the day that was called being 'house poor' - and there were a LOT of people in that situation.
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Oh, there are plenty of people in CA that are house poor. And with the little meltdown we're having a lot of people are going to be, even if they're not now.
I've said it before in this thread. Home prices, and prices in general, will not fall substantially as long as unemployment is so low.
Why? People with jobs spend money (even if it's money they don't have) because they believe that they'll be able to make it work somehow, even if it's not clear how. When people start losing jobs, or maybe when their best bruh or next door neighbor loses theirs, that's when they'll stop spending. And not just on houses, on lots of stuff; essentially anything discretionary.
We're starting to see the effects of this in the Bay Area, I think. Homes are sitting on the market and you're seeing asking prices come down 5-10%. If interest rates stay high (likely) then over the next 12-24 months prices will keep going down as people will be forced to sell because 1) they lost their job and can't afford it any longer, so they figure they'll cash out and use the funds to rent (at least it's not '08 and they have equity), 2) they have to move for a new job and need the cash, and/or 3) they're just tired of the overtaxed sh*thole that CA has become and figure they'll take their money and run to somewhere cheaper.
This will ripple down the economic spectrum to all of the people who provide goods/services to those now-vamoosed tech workers. Home prices and apartment rents will likely fall even further in the lower strata, since everything hurts those folks more.
It's all about the jobs and like it or not, we need 1-2 million more people unemployed in this country to get inflation down, even to 3%. It's not going to be pretty. Especially going into an election year. A lot of people are going to call Powell a lot of nasty names. Hell, Warren already has.