Housing & Mortgage Woes: Part II?

[Eunos_Cosmo]

Though this is mainly aimed at the USA, I wanted to break it off from the general America thread. I read through this article about mortgage delinquencies yesterday and some of the implications, if they are correct, are quite astounding. Things are always murky when banks are involved, especially for those of us who are not experts in the realm of finance, however this passage stood out to me:

Although 359,362 cumulative pre-foreclosure notices have been sent to deadbeat borrowers in Suffolk County alone, fewer than 1,000 formal default notices have been filed each month on these properties since mid-2008....

For more than eight years, the servicers have chosen not to foreclose or even begin the process for the vast majority of delinquent owners.

From the same author, another somewhat related topic regarding the housing inventory. Reading into this, you could easily correlate the two.

It’s important to understand that the so-called recovery in U.S. housing starting in 2012 did not occur because of an improving economy and a growing demand for homes. Instead, specific actions were taken by mortgage lenders, their servicers, and the government to prop up markets because millions of homeowners were still delinquent on their mortgages and faced the threat of foreclosure. These homes owned by deadbeat borrowers, which have been intentionally kept out of foreclosure, will put tremendous downward pressure on home prices when lenders can no longer kick the can down the road.

So the question is are we in another massive housing bubble where there is vast amounts of bad debt about to implode? What trigger will set it off?

Then I read this today about the Fed beginning quantitative tightening. Now forgive me for my lack of a holistic understanding of the direct correlation between the Fed tightening their balance sheet, and a lot of delinquent mortgages...but could this tightening start to pressure the banks to foreclose on delinquent mortgage holders? Could it be the start of another spiral?

The Fed had been holding about $4.5 trillion worth of mostly Treasurys and mortgage-backed securities that it accrued during three rounds of monetary stimulus during and after the financial crisis.

Is the US Treasury holding a gargantuan amount of toxic debt?

Maybe @Danoff would be able to put some reason into this thread.

 

[Danoff]

Well thanks for the mention, but I'm not an expert on the housing market. In fact, I've done rather poorly in the housing market historically. The big looming factor over all of this is the prime interest rate, which is much higher now than it has been any time in the recent past. This means that new buyers will have more and more trouble affording higher prices, but it means something else - people are stuck. Nobody wants to move when it means that getting a new loan on a new house will entail twice the interest on the same debt. That leads to a massive contraction of supply - which is why home sales are dropping and inventory is super low. Nobody wants to sell, because nobody wants to pay twice the interest rate. That props up prices against the downward pressure of rising interest rates.

I think the number of foreclosures will rise a bit partly because there will be demand for those houses, by people who have to pay substantially more money for the house than the people who are foreclosed on. Those foreclosures will be better for banks. Right now, you could argue, banks have the largest exposure to this problem - because they have properties which could be foreclosed on which are not being foreclosed on - meaning borrowers aren't paying them, or aren't paying them what they're owed. By foreclosing, the bank improves their position, because they can liquidate the property. Someone else comes in takes out a mortgage that pays more. Maybe that money goes to another bank, but it generates more revenue in general. Everyone wins except the person who was foreclosed on.

I'm not seeing a housing bubble here. I'm seeing further recovery for banks. Housing prices will be held down a bit by rising interest rates though.

 

[Eunos_Cosmo]

I think the number of foreclosures will rise a bit partly because there will be demand for those houses, by people who have to pay substantially more money for the house than the people who are foreclosed on. Those foreclosures will be better for banks. Right now, you could argue, banks have the largest exposure to this problem - because they have properties which could be foreclosed on which are not being foreclosed on - meaning borrowers aren't paying them, or aren't paying them what they're owed. By foreclosing, the bank improves their position, because they can liquidate the property. Someone else comes in takes out a mortgage that pays more. Maybe that money goes to another bank, but it generates more revenue in general. Everyone wins except the person who was foreclosed on.

I'm not seeing a housing bubble here. I'm seeing further recovery for banks. Housing prices will be held down a bit by rising interest rates though.

Bubble wasn't really the right word. But I think something resembling a crisis could be. I've wondered about the Bank's exposure. Why aren't they foreclosing, then, if what you say is true? It would make sense for them to do that, clearly. If you aren't getting paid, that's a problem. Maybe I'm overselling the bank's ability to plan something so Machiavellian (as well as uncertain), but could the Banks be intentionally not foreclosing on delinquent mortgages as a way to constrict the housing supply and drive up mortgage prices? Or maybe they are bundling the bad debt and selling them as mortgage backed securities to the fed as a sort of punt and just not caring? Maybe there is fear of a systemic risk due to credit default swaps (AGAIN)? Maybe their apparent growth on wall street is more valuable to them than the returns on the products they sell? Forgive me if anything I've said isn't logical or demonstrates a flawed understanding. I don't have confidence the larger banks will act in a way that is either ethical (that is actually pretty laughable) or even sustainable for their own business. I really like this guy's finance videos even though he curiously has so few subscribers, this one about the recession I think is a really good overview of what happened:



Edit: At 4:00 in the above video is what I meant by banks not foreclosing on mortgages to prevent spooking the market.

I have personal interest in this topic as I'm looking to be a first time homebuyer. But as you said, interest rates are high and appear to be going higher. Prices are very high (especially in the bay area) and inventory is incredibly low (especially lower end, which means anything under $500k here). I could conceivably put together a downpayment of $150k, maybe even $200k. But am I just buying something that will immediately (2-3 years) lose value? I don't have much confidence that I wouldn't be. Even more innocuous changes like the state/USA building more housing generally could have financially disastrous effects on me. I have a feeling there many others like me.

 

[Hayden]

With COVID-19 has come an astonishing hike in house prices in Australia. Our interest rates are super low, and with nothing else to do people are spending big on property.

Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don't yet own a home," Mr Lawless said.

On average prices are up 18.4% on last year around Australia, with Hobart rising an insane 24.5% in a year. In real terms it will cost you $100k more to buy a house than it would’ve 12 months ago. ABC News

Early pandemic there was much talk of housing prices going down, and wide scale economic down turn. That has seemingly gone quiet, with experts now saying they expect even more growth over the next 20 years.

My question is, how long can this seriously go on unchecked? Is there similar wild growth taking place in your part of the world? If you’re renting, have you given up on entering the property market? And finally, do you believe there is a risk of a wide scale economic downturn in the near future?

I can’t be the only one thinking that this looks like a ladder made of matchsticks.

 

[Danoff]

With COVID-19 has come an astonishing hike in house prices in Australia. Our interest rates are super low, and with nothing else to do people are spending big on property.

On average prices are up 18.4% on last year around Australia, with Hobart rising an insane 24.5% in a year. In real terms it will cost you $100k more to buy a house than it would’ve 12 months ago. ABC News

Early pandemic there was much talk of housing prices going down, and wide scale economic down turn. That has seemingly gone quiet, with experts now saying they expect even more growth over the next 20 years.

My question is, how long can this seriously go on unchecked? Is there similar wild growth taking place in your part of the world? If you’re renting, have you given up on entering the property market? And finally, do you believe there is a risk of a wide scale economic downturn in the near future?

I can’t be the only one thinking that this looks like a ladder made of matchsticks.

Some big numbers here:

Interest rates are one of the (many) things driving those prices. But there's a big problem with interest rates, which is that if they rise too fast, the governments of the world go broke. So interest rates may not be able to rise quickly. Here's what interest looks like in the US.

That's a long run of declining rates. This is compounded by inflation, which needs to keep a steady but positive (possibly significantly positive) pace to handle debt. Interest rates could rise somewhat and still feed a fair amount of house demand based on where inflation has to sit.

If rates came up quickly, I think we could see some housing prices fall - although as I said at the outset of this thread, that's a double edged sword because sellers have to buy somewhere and the rate that they'll get wherever they end up prevents them from being able to afford selling, keeping inventory lower, and prices higher.

This doesn't look like the subprime bubble. It could go down, but I'm not sure what would drive it there.

 

[Joey D]

Ok, I've been to Idaho several times and while it's certainly nice in some places, I really don't understand the attraction to move there. Boise is great, as are places like Twin Falls and Idaho Falls, but much of the state is just like Utah in that it's a barren wasteland. Also, the northern part has a real issue with white supremacy.

Maybe people just really like potatoes?

And Utah being #5 on that list is one of the top reasons why next August we're moving. There's no way on god's green Earth that I'm paying seven figures for a house that needs work done to it. I know people here love to blame California, but I really think it has more to do with the MidWest. People in the MidWest, especially young people in the MidWest, like outdoorsy stuff and were flocking to Denver for years. Now that Denver is full, they just migrated over the mountains.

The housing prices in Utah are going to cause a really big issue in the near future too. Wages aren't keeping up with the cost of living and if someone like me can't afford a house when they make six figures there's a problem. Utah is also one of the youngest states and has one of the higher birth rates, so we constantly have people getting married and trying to get a house. Starter homes are just non-existant.

Fact in that a large part of the population gives 10% of their property worth along with 10% of their income to the LDS Church every year, and well you can see the issue.

Michigan being high on that list isn't really comforting though. That shows a bigger influx of people moving back to the state. I was kind of banking on the steady decline of people wanting to get out of there. At least I'm looking for places in BFE in the northern part so, in theory, I should be OK.

 

[Eunos_Cosmo]

I think a huge part of the price appreciation, and @Joey D touched on it, is that Millenials are a huge cohort and they are basically all getting into homebuying at the same time and the other huge cohort, the boomers, ain't selling. Combine that with inflation and super low interest rate and you get an appreciation bonanza. I definitely think some markets are oversold (Idaho doesn't seem like a long term winner to me) but what else is there to invest in?

 

[ROAD_DOGG33J]

I think a huge part of the price appreciation, and @Joey D touched on it, is that Millenials are a huge cohort and they are basically all getting into homebuying at the same time and the other huge cohort, the boomers, ain't selling. Combine that with inflation and super low interest rate and you get an appreciation bonanza. I definitely think some markets are oversold (Idaho doesn't seem like a long term winner to me) but what else is there to invest in?

Bitcoin

 

[CodeRedR51]

Surprised that Arizona isn't higher on the list. Seems like the local car meet groups are non-stop posts every day that start with "Hi, I'm new in town..." Apartment prices are soaring, house prices have jumped significantly in the last 10 years. A house I looked at the other day selling for $330k (it had solar but needed upgrades badly) was $179k 7 years ago. Anything decent right now is $350k+. Meanwhile I am stuck in the ever increasing prices for apartments, now paying (as of my new lease agreement this week) nearly $1k/mo for a studio with a detached garage. I looked into houses the past couple weeks and I just cannot swing it by myself unfortunately. I'm honestly waiting for the next housing market crash so I can try again...

 

[Keef]

As far as I can tell, house prices in the Dayton area are beginning to top out and home sales have likely hit a plateau and will begin dropping off. Compared to historical prices, current prices here can be described as ridiculous, and like Danoff mentioned people have realized that once they sell they have to buy again. All the people for whom making a move was the obvious choice have done it already but now the people who were on the fence have been left hanging. For example, my cousin sold a house for $185k which he bought for $110k only five years ago, and he made the move to the very edge of the city where development will forever be slow and prices forever manageable. This is really the only choice left in the city, to sell a desirable house and move to a less desirable one. Prices are being cut already by $10k or more on $200k houses which is a solid chunk. From a basic supply and demand perspective, we've run out of people for whom the move makes sense, and thus we've run out of people who are willing to pay these prices, and thus we've run out of people who are willing to sell, all the while there are plenty of potential buyers in the $120-150k range for whom nothing exists anymore.

As the pandemic allowed me to waft through a dead spot in my career, I'm somewhat hoping that a mild housing crash allows me to waft into ownership without too much trouble.

 

[Danoff]

I'm honestly waiting for the next housing market crash so I can try again...

I'm somewhat hoping that a mild housing crash allows me to waft into ownership without too much trouble.

Sounds like there are buyers waiting to push prices up if there's a fall. You're both evidence that a crash isn't coming.

Edit:

I also would buy (more) if prices came down.

 

[CodeRedR51]

I won't be buying a house anytime soon then. Maybe when I retire. 🤣

 

[Eunos_Cosmo]

Sounds like there are buyers waiting to push prices up if there's a fall. You're both evidence that a crash isn't coming.

Edit:

I also would buy (more) if prices came down.

I would buy more if prices came down as well. The other factor is that wall street is increasingly adding single family residential to it's portfolio. Add to that post-recession mortgages are much tighter (people who have mortgages now are not typically way over their head like they were during the truly speculative era) and I just don't see the kind of situation that would precipitate a crash. There is too little supply and not any immediately plausible reason for that to change enough to make a big impact on prices. Any dips in prices will bring people aggressively back into the market, maintaining the equilibrium.

As for bigger dips? Aggressive interest rate raises could do it, but I'd guess that the federal reserve will avoid that at basically all cost. There's potential (particularly in the West and definitely in Florida) for significant climate-change related changes to demand, but that's on a decades time scale I think. I see crypto crashing way before the housing market...which will only push the housing market higher...

 

[Biggles]

Property prices in the Greater Toronto Area have been going up almost interrupted since the late '90's. Prices in my hometown increased by 30% last year ... & that's not untypical of most areas. As an anecdotal example: friends of ours owned a second property that they rented out. They bought it 10 years ago for $650,000. About three & a half years ago they sold it for $1,000,000 thinking they had done pretty well. The new owners tore down the house (a '70's bungalow) & the lot has been empty since then. This summer they put the empty lot on the market for $2.5 million. It has not yet sold however, & they may have missed the peak of the Covid boom - a perfect confluence of demand for space & sky rocketing lumber & building supplies prices. Just saw this headline:

https://www.cbc.ca/news/business/lumber-prices-1.6177016

"At family-run Peacock Lumber in Oshawa, Ont., owner Glen Peacock said retail prices have "collapsed" in recent weeks. An eight-foot-long, two-by-four inch piece of framing lumber that cost $12.65 on June 1 is now selling for $3.95, Peacock said — basically what it would have sold for before the boom."

 

[kjb]

I am surpised North Carolina isn't higher. We live in the Raleigh market we were looking for house but houses were being sold before they officially hit the market, people were buying houses site unseen, open houses would take bids the next day. It is crazy right now. To make it worst prices on apartments, townhouses and rental homes have also skyrocketed. APple and Google are coming ot the area in the next couple of years so this insanity may not stop any time soon.

 

[Eunos_Cosmo]

I am surpised North Carolina isn't higher. We live in the Raleigh market we were looking for house but houses were being sold before they officially hit the market, people were buying houses site unseen, open houses would take bids the next day. It is crazy right now. To make it worst prices on apartments, townhouses and rental homes have also skyrocketed. APple and Google are coming ot the area in the next couple of years so this insanity may not stop any time soon.

+Safiya Nygaard

 

[Danoff]

Property prices in the Greater Toronto Area have been going up almost interrupted since the late '90's. Prices in my hometown increased by 30% last year ... & that's not untypical of most areas. As an anecdotal example: friends of ours owned a second property that they rented out. They bought it 10 years ago for $650,000. About three & a half years ago they sold it for $1,000,000 thinking they had done pretty well. The new owners tore down the house (a '70's bungalow) & the lot has been empty since then. This summer they put the empty lot on the market for $2.5 million. It has not yet sold however, & they may have missed the peak of the Covid boom - a perfect confluence of demand for space & sky rocketing lumber & building supplies prices. Just saw this headline:

When I left LA I sold my house there. Thought I was doing alright taking a loss (I bought at the peak) and getting out of there. All it has done since is skyrocket upward. Sometimes life conspires to make you sell your house just at the wrong time. To make matters worse, I rented for a while to have time to find the right place in Colorado - missed out on some rising prices during that time too.

I can't complain, I was positioned well for 2021.

 

[Hayden]

Some of these price rises are insane but 46% in 12 months for Idaho is simply ludicrous. It’s interesting to see that this is happening all over the US, Aus & Canada, and the low interest rates seem to be driving it across the board.

My in-laws recently bought a house in Darwin, 10% over (an already record high) asking price because that market has become incredibly aggressive. People are writing blank checks to buy, and rental demand has gone completely silly. If you were looking to rent in Darwin, there’s 66% less houses available than last year, and you’ll be paying 22% more rent. Across the country the trend is 15% less rentals available for 8.2% more rent.

As a home owner (Adelaide), whose worked hard to reduce my mortgage, I am well positioned to survive a bad downturn. Even potentially move on my forever home and rent out my current should the opportunity arise.

However, as mentioned previously, a lot of people are waiting for that drop and prepared to spend. Boomers ain’t selling, and with a handful of investment properties each, generating rent and increasing in value, why would they? That keeps supply low and even if unemployment, downturn or interest rates crush out the young over-committed, new millennials are waiting to take their place.

It feels like a financial perpetual motion machine, but those things don’t really work forever.

 

[Imari]

I think a huge part of the price appreciation, and @Joey D touched on it, is that Millenials are a huge cohort and they are basically all getting into homebuying at the same time and the other huge cohort, the boomers, ain't selling. Combine that with inflation and super low interest rate and you get an appreciation bonanza. I definitely think some markets are oversold (Idaho doesn't seem like a long term winner to me) but what else is there to invest in?

Not only that, boomers are buying in order to rent to millenials, and can outbid them in terms of what they will get as a mortgage because they're already established home-owners.

Bitcoin

The problem is that investing like this is a zero-sum game. All it does is move "real" money around. If it's moving more money from poor people to rich people on average, then it's only going to make things worse. And when people like Musk can manipulate the market literally by tweeting I have serious doubts that the average Joe Public trying to scrape together a few tens of thousands to afford a deposit on shelter is going to come out ahead.

However, as mentioned previously, a lot of people are waiting for that drop and prepared to spend. Boomers ain’t selling, and with a handful of investment properties each, generating rent and increasing in value, why would they? That keeps supply low and even if unemployment, downturn or interest rates crush out the young over-committed, new millennials are waiting to take their place.

It feels like a financial perpetual motion machine, but those things don’t really work forever.

Yeah, I've been about six months of savings from being able to afford a deposit on a house for about the last four years. The bar just keeps moving higher, to the point that it's questionable whether I'll ever be able to afford a house that isn't either a ******* or an hour and a half from the city. There's people my age buying, but they're the ones getting $100k loans from the Bank of Mum and Dad.

There are times when I'm tempted to just buy a caravan, or a really nice tent.

 

[Hayden]

Yeah, I've been about six months of savings from being able to afford a deposit on a house for about the last four years. The bar just keeps moving higher, to the point that it's questionable whether I'll ever be able to afford a house that isn't either a ******* or an hour and a half from the city. There's people my age buying, but they're the ones getting $100k loans from the Bank of Mum and Dad.

There are times when I'm tempted to just buy a caravan, or a really nice tent.

I met a taxi driver in Sydney probably 5+ years ago who was in exactly the same situation. He was saving everything he could but prices were actually outrunning him, pushing him further from his goal. God knows he’s probably still renting today.

My wife and I built our house, swallowed a very painful interest rate for the low deposit and first home buyers grant, and then paid up as quick as we could to get equity up and switch banks.

It was a foot in the door for us, but we did it in Adelaide, where house prices are very reasonable compared to Melbourne and Sydney. We’re less than half hour from the CBD too, while a comparable place in the big cities would be an hour plus and still probably over 800k.

It’s a tough market for sure.

 

[MatskiMonk]

Me, being 42, having flushed hundreds of thousands of pounds down the rental toilet, thinking about homeowners complaining about the market...

 

[Imari]

I met a taxi driver in Sydney probably 5+ years ago who was in exactly the same situation. He was saving everything he could but prices were actually outrunning him, pushing him further from his goal. God knows he’s probably still renting today.

My wife and I built our house, swallowed a very painful interest rate for the low deposit and first home buyers grant, and then paid up as quick as we could to get equity up and switch banks.

It was a foot in the door for us, but we did it in Adelaide, where house prices are very reasonable compared to Melbourne and Sydney. We’re less than half hour from the CBD too, while a comparable place in the big cities would be an hour plus and still probably over 800k.

It’s a tough market for sure.

Yeah, I moved to Adelaide from Victoria for work but thought that it'd be a good way to get a foot in the door. Then the COVID frenzy hit driving prices up, and I'm in roughly the same position I was in but in a different state. I mean, I guess Victoria is even more expensive so it's not like I'd be buying houses over there either, it's just bad timing all around. Had I got a job over here a couple years earlier I'd probably have a house.

Me, being 42, having flushed hundreds of thousands of pounds down the rental toilet, thinking about homeowners complaining about the market...

I know, it's hard to be sympathetic to people complaining about not being able to afford their third investment property when they're the reason that the rest of us can't afford somewhere to live. The phrase "gargle a sack of phalluses" springs to mind.

 

[Daz555]

I count myself fortunate to be old enough to have jumped on the property ladder just before the UK property market lost its collective mind.

The first home (I sold it years ago) that I bought in 1999 for about £75,000 sold a few weeks ago for a shade under £500,000 ($680,000). It's is utterly mind blowing.

 

[MatskiMonk]

I count myself fortunate to be old enough to have jumped on the property ladder just before the UK property market lost its collective mind.

The first home (I sold it years ago) that I bought in 1999 for about £75,000 sold a few weeks ago for a shade under £500,000 ($680,000). It's is utterly mind blowing.

That's gotta be other influences as well. My sisters flat in London saw 10× increase in about the same period, but that was because of things like the DLR and so on. Prices around me have only gone up by about 2.5×.

Either way, it's a problem.

 

[Keef]

Either way, it's a problem.

Illustrated by the fact that I've had to spend ten years becoming a damn airline pilot just to afford the things and lifestyle that my parents and aunts and uncles did by working in machine shops or as car mechanics. Not that those careers aren't worth it, in fact I think they're rather disrespected, but it seems like every career path has taken many steps down the ladder. What used to be one of the most highly respected and highly skilled jobs out there is now just a regular middle-class job. Makes you wonder why they even wear uniforms anymore.

 

[Dave A]

That's gotta be other influences as well. My sisters flat in London saw 10× increase in about the same period, but that was because of things like the DLR and so on. Prices around me have only gone up by about 2.5×.

Either way, it's a problem.

Certainly if the interest rates rise sharply. Low interest rates on mortgages are a massive factor in why houses have risen so steeply.

My parents bought their current home in1985 for £38,000. It’s worth around £650,000 now. In 1999 it was worth about £100,000. But my dad was paying a much higher amount per month (accounting for inflation) on his £28,000 mortgage than we’re paying on our £135,000 mortgage.

Ultimately, what matters is if you can afford the monthly payments and how much can they rise by before you’re up the creek. A sizeable deposit is great, but many people can’t manage that.

 

[MatskiMonk]

Ultimately, what matters is if you can afford the monthly payments and how much can they rise by before you’re up the creek. A sizeable deposit is great, but many people can’t manage that.

The golden rule then, is to allow some headroom on your borrowing. I'm sure a return to 20% interest would be paralyzing for many people with a mortgage already... but if you go into a mortgage knowing that's what you'll be paying it's simply a case of adjusting your sights accordingly. As someone that's been throwing away 100% of my monthly payment for 20 years, I think even paying 20% interest in order to have an asset heading into retirement is pretty reasonable, frankly...

Personally I'm beginning to think that dying in my late 40's is a more sensible lifestyle choice. Working all my life in a career I hate, just to liquidate my pension to keep a roof over my head in retirement isn't really that appealing if I'm going to be as poor in retirement as I have been up until now! My circumstances probably aren't typical, I avoided spawning a family and missed out on the benefit of shared income, which I'm sure leaves me in a minority, but even I can see the financial mountain we're building for the younger generation to climb is ridiculous... we need a seismic change in how we view the privilege of wealth versus the basic human need of shelter.

 

[Exorcet]

but even I can see the financial mountain we're building for the younger generation to climb is ridiculous... we need a seismic change in how we view the privilege of wealth versus the basic human need of shelter.

Maybe part of the problem is that we're looking at things the wrong way. Does everyone need to own their own home in the first place? Or if someone is really set on that goal, do they have to achieve it right away? Looking back on my financial development I sometimes wonder what could have been if I had the opportunity to live in my family's house instead of moving out when I started working. In a lot of ways it would have been a benefit for everyone. A good portion of the money I spent on rent could have gone to investing, which you don't have to be rich to do, and I could have grown financially a lot faster than I did. The stock market over the past decade has been pretty crazy.

To be fair I could have used a similar strategy even when moving out. Instead of looking for a place just for myself I could tried finding a cobuyer to share a property with. Maybe this needs to be more common. I myself am not super keen about living with someone I don't know, but really the biggest issue that comes with it for me is just being able to keep me and my things separate. For example sharing a house doesn't sound terribly bad if it has 2 floors each with their own necessary rooms and dividing doors.

I understand the dislike for growing home prices. I'm a home owner and I still dislike them. My house value may be going up but it's harder to actually harvest that profit and it makes it hard to swap homes should the need or desire arise. On the other hand though, if there isn't much to be done about it, maybe we need to be careful about comparing to a past that unlikely to return and look for ways to adapt to our current situation. It's not as easily done as it is said, but I think it's worth some serious consideration.

 

[MatskiMonk]

Does everyone need to own their own home in the first place? Or if someone is really set on that goal, do they have to achieve it right away?

Fair questions. To the former, no, but to look at it simply.. you have a portion of your life where you can earn, and a portion where you don't. Buying means your largest outlay in old age disappears and your pension enables a fruitful life in your autumn years. Renting means your pension is used to cover your largest outlay and you've got sod all else to do but wait to die.

As for achieving it right away. In practice, it's the best way to do it. Once you leave home and enter the rental situation your ability to save for a deposit to buy is diminished or removed... staying at home with Mum and Dad until you find a life partner is by a long, long, long way the easiest way to save money, so it makes sense for your first move to be into your own place.

Instead of looking for a place just for myself I could tried finding a cobuyer to share a property with

We have shared ownership properties in the UK where you pay rent AND mortgage, and can't liquidate your investment unless the co-owner can buy you out or you can sell your half (where I live that means trying to sell half a **** hole surrounded by crack heads to other crack heads with no money, or to people that don't want to live next to crack heads at any cost). Shared rentals would make a lot of sense, but in my experience land lords absolutely do not want anything other than couples or single professionals. I've considered pretending to be gay in order to rent a place with a similarly cash strapped colleague... but the first flat inspection would have been a bust!

I myself am not super keen about living with someone I don't know, but really the biggest issue that comes with it for me is just being able to keep me and my things separate. For example sharing a house doesn't sound terribly bad if it has 2 floors each with their own necessary rooms and dividing doors.

I've done it a number of times. I'm currently renting three rooms in my sisters house, and whilst it is possible, I would suggest it's not great for mental health in the long term - though this varies by person, I'm sure - but to me, feeling like an outsider in the place you live is not great, or sustainable for more than a year or two.

I understand the dislike for growing home prices. I'm a home owner and I still dislike them. My house value may be going up but it's harder to actually harvest that profit and it makes it hard to swap homes should the need or desire arise. On the other hand though, if there isn't much to be done about it, maybe we need to be careful about comparing to a past that unlikely to return and look for ways to adapt to our current situation. It's not as easily done as it is said, but I think it's worth some serious consideration.

I think the societal issues in the US and UK are probably different, not least because of our differing healthcare and welfare system, and while comparisons to the past might not be that helpful they are inevitable. We will have generations in the future where more people than ever will be facing old age alone, with little pension and no investment, no accumulated wealth to liquidate, no shelter of their own, and a follow on generation that inherits nothing from parents who only just achieved financial freedom at the point they loose their income, and trade their kids inheritance for social care as they slowly die enjoying ever increasingly expensive treatments. In the UK, sustaining that means taking more taxes from working people/young people, and you can see how that ends up in a **** loop.

edit: tl;dr... in the UK I believe the housing market needs to be decimated by a massive increase in supply that excludes BTL buyers. People will have more money to spend (redistribute wealth to many people rather than just landlords and bankers) and it means that come old age they're more likely to have an asset to liquidate to pay for their OWN welfare costs instead of burdening the young.

 

[Danoff]

Probably one of the biggest/best answers to housing problems in the US is remote work. It doubles as a big help for climate problems too. There's plenty of relatively inexpensive housing in the US, but it's not close to where you want to work.