High-income job losses are cooling housing demand
(jbrec.com)289 points by gmays 2 days ago
289 points by gmays 2 days ago
Can confirm, this is where I’ve spent four years trying to buy a starter (2BR/2BA) home in on a single income. The biggest problem in older markets is that most housing stock is of appalling quality, requiring another five to six figures of work to get into a modern, habitable shape - unless you do the work yourself, which most can’t while they also hold down a FTE gig and deal with the return of urban commuting.
It’s bad.
A lot of lower-end housing spends some years in the hands of people who can’t afford to keep up maintenance, and/or are too old to keep up with it well (… or to keep up with cleaning). As a result, it’s all but ruined by the time someone else gets a crack at it.
Yep, and a lifetime spent moving every few years (and my obsession for details and desire to understand how everything works) means that I can see the chasm between what properties are actually worth versus what folks are asking for. I’ve seen some really pricey nightmares these past several years ($650k for a 1400sqft home with knob-and-tube electrical wiring and an honest-to-god fire bucket in the basement next to the oil heater!), and I cannot afford to take such extreme risks on the most expensive purchase I’ll likely ever make in my life.
It sucks.
Your target price range is set too low for the area if you keep seeing poor quality houses. I've heard plenty of people complain about the quality of the housing stock in my (old) area, but that's because they insist on lowballing in desirable neighborhoods, there's plenty of well-maintained properties as well including at the low end. You just can't expect a miracle for the price of a foreclosure.
I sympathize and was in the same situation albeit a much easier market in hindsight. I came to Bay Area in 1999 and after finally facing the reality of the market after a couple of years, bit the bullet and bought something. The prices were/are so outrageous compared to my former residence in Austin the sticker shock and hyper competitive real estate market at the low end - every SFH I could comfortably afford was going to require significant amount of work to make palatable to someone who did not want the inside aesthetic of the 1950-1970s and still each had multiple bids, with cash bids above asking with no inspection always winning, I imagine this has only gotten worse at entry level with the elevation in total compensation for certain fields.
yeah for some reason there seems to be a pricing disconnect on many homes, the discount on home that needs a lot of work seems to be less than the current cost to fix it (especially when taking into account labor shortages and tariffs on materials)
Find a run-down structure not surrounded by derelicts on land that's otherwise favorable. 1 wall remodel. A modest structure costs roughly around $250k if built by someone else, vaguely divide that in half if DIY.
Yep. Recently tried to sell my 2BR/2BA in Boston. Exactly 2 people visited over 3 months and several open houses and price cuts. Realtor said it's the same across the board for 2BR/2BA because the pool of entry-level buyers dried up with layoffs.
After I switched it over to a rental listing I was able to rent it out within 3 days at a significant profit. Another unit in my building rented similarly fast at a similar price. I know it's just anecdata, but it doesn't feel like the rental market is cooling down at all.
nobody to buy at your asking price so you take the house off the market rather than match the market expectations, thereby increasing scarcity for potential buyers at a lower price who are instead forced to rent due to market dynamics
There's a floor. If you sell a home for less than your mortgage amount you have to have enough cash to make up the difference.
Also, selling for significantly under the appraised price decreases likelihood of qualified buyers because it may be a red flag.
Renting until spring is a logical option when there's no buyers, since that's when the supply of buyers is much larger. I don't want to be a landlord but I also don't want to pay money to part with my house. One home in my neighborhood finally sold for 60% of what they bought it for after 6 months on the market. I think only rich people or people who've been in their homes 20 years can afford that.
Yes, I hold, sell and by stock the same way. Either it is a market, or it isn't.
I'm teetering on the edge of being able to afford a small condo (a small SFH would be nice but not as much supply) in the Bay Area (SF).
However, I keep thinking about how someone I know was laid off last year only two months after buying their first home.
I'm a SWE making OK money here but not FAANG/unicorn-level, so it's tough to imagine buying and then being on the hook for a mortgage without a job even with some savings.
}}}} I'm teetering on the edge of being able to afford a small condo (a small SFH would be nice but not as much supply) in the Bay Area (SF).
Posting this anon. At our last office, executives purposefully encouraged home ownership because it made people desperate, risk-avoiding, and easier to control.
How do executives encourage home ownership? Slip a little zillow ad into the all-hands?
Every boss I've ever had has slipped a little life advice into our one on ones.
I hate to repeat this old adage, but in case it helps to see it here: if you've been wanting to buy something, and you see yourself staying in the area and the place itself for many years, and you have some savings buffer if things go south, then buy. Don't do it because you want to magically have paper equity gains in the next 12 months. Do it because you like the place you're looking at, the neighborhood it's in, and because you have enough funds in place to get through a downturn if a layoff happened.
Of course I say all of that and it's good to know what could happen if a terrible downturn does happen like in 2008 (even the nicest Bay Area hoods prices dropped 25%+).
Last thing, single family houses, especially in the Bay Area, are typically more insulated from price drops (insulated not immune). If you can afford a small single family then it might be worth it, especially if there's expansion potential (either for yourself or the next buyer if you decide to move on). And even better if there are some cosmetic problems that are tractable because let's say you do get laid off there's nothing like building some sweat equity in the downtime.
Just my two cents having gone through similar in the past.
Do you mean the opposite as in they purchased because they wanted to make some money? If so, that makes sense since one of the many reasons people buy homes is to invest in them. Here's hoping you didn't follow their lead, though, given https://fred.stlouisfed.org/series/MEDLISPRIPERSQUFEE6075.
But even having said that, people will buy houses or condos in SF today and make a profit in spite of any broader market conditions. But that seems dumb for someone who has a full-time gig that's anything other than identifying underpriced residential investment opportunities given how crazy both housing prices and equity (tech in particular) prices are.
FOMO is a powerful emotion, but like all emotions its a bad idea to make it a primary decision maker for any important matters.
Reading all this from distant Europe, its interesting (and logical) how in US the swings in prices are so extreme in both directions. In fact, most things in any regard are way more extreme in US compared to Europe. May be good for the lucky ones but long term stability or dependability this ain't.
If you're taking what I said as FOMO I didn't intend it that way. The opposite in fact unless your sentiment is that anyone who wants to buy and live in property in the US is solely doing so because of FOMO. If you're saying that then that's a tautology and so how can I argue with it?
But if that's not what you meant then there are few things we as people can do for "stability and dependability" that better accomplish those goals than owning property that you actually want to live in. Most importantly it puts a permanent roof over your head, which we all need in some way, shape or form to survive (no exaggeration there I don't think). And it makes the cost of that necessity predictable, especially in California where property taxes are almost perfectly-predictable. It pretty much de-risks the largest expense most people will have in their lifetimes. That's not to say that you don't lose something in the proposition, but calling that FOMO seems inaccurate.
Not quite what I was saying, but now that you've put that so succinctly, if it were me, knowing the Bay Area and what's happening in tech/AI at the moment, I would hold off on the condo. The single family with some grit I'd probably say have at it assuming the most important part of what I said holds true: it's not for equity upside, it's because you want to own that place, and in that location because that's where you will be happy living.
If someone reads this thread once there's been another 2008-level reckoning in 2026 I'm not surprised the reckoning occurred.
its not easy to do, but being able to afford a year+ of mortgage payments and living expenses is pretty important to your peace of mind.
>it's tough to imagine buying and then being on the hook for a mortgage without a job even with some savings
Key thing to remember here is that you always have to live somewhere, even if you're laid off. Unless you're ready to head out to BFE to save a few hundred bucks on rent, it doesn't get much better than owning in that situation. Plus you could potentially have equity to tap, get a hardship forbearance, or worst case scenario foreclosures take much longer than evictions. This was the lesson COVID era taught me; if you're losing your home it's considered a tragedy, and there are tons of resources to help you. But if you're being evicted from an apartment it's considered a personal moral failure, and you're treated like a criminal.
Owning is only more expensive than renting if depreciation + interest + maintenance exceeds rent. And in most US cities, depreciation is negative in the long run.
Lots of advantages to owning and having a mortgage too: deduct mortgage interest from taxes, use equity as a line of credit, you can actually make substantial changes to your living space, and so on.
I waited till I had the whole sale price in cash then bought, it's reduced my layoff anxiety 1000% and I'm sure it's not the savviest financial choice, but I'm happy with the security of knowing I can stay here for a long time no matter what
I don't understand. The increase in property tax is forcing you to sell? How much percent is the property tax? Alternatively won't you make a windfall in the sale (I assume property tax only go up when the value goes up)
Most people will never be able accomplish this because home prices increase so much. And meanwhile you have to live somewhere, and all the rent money is money you dont get to save or put towards home equity
Maybe so, but I just have always been averse to debt and mortgage for exactly this kind of scenario
From the article:
> The Bay Area continues to lose jobs across high-income sectors (-0.4% YOY), driving modest overall employment declines. These job losses have slowed compared to a year ago but remain negative YOY. Despite generating substantial spending and wealth, the AI-driven tech boom hasn’t added meaningful employment to the region.
That is because there has been an absolute massacre in biotech in the bay area. Between tariffs (higher COGS), chaos at the FDA, cuts to NIH funding for basic and translational research, and competition from China biotech ventures are getting squeezed from both ends.
Recently sold a condo I had in NE California. When I first bought there ~8-9 years ago, a town near by had old railroad cabins for ~100k or less. As the housing / migration boom to Reno took hold, those cabins are now in the 2-250k range. The median income in the county ~40k.
The town I was in saw prices for something that was ~175-200k 7-8 years ago peak at around $425k in 2023/2024 and now "cratering" into the low to mid $300ks. Median income hasn't changed, just people with 2nd/vacation homes and wanting to offload them due to the economy.
The post doesn't have housing data to back up the claim, but the job growth by city is interesting. HCOL cities like DC and SF in the red, as you would expect. Government jobs down in DC is expected, but mostly green in other cities? What is Philly and New York doing right?
The article notes that Philly and also NY underperformed in last few years so really they are catching up to baseline. As a resident of the philly suburbs this matches my lived experience - there has been something of a jobs bubble (at least for some demographics, in some industries) since covid ended but for the decade before that the areas was economically stagnant.
But will lower demand coupled with still high interest rates actually lead to reduced housing prices?
Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life)
If my house is worth less than what I owe then moving (selling short) can make sense.
Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.
~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local).
Delistings Jump 28% as Sellers Pull Homes Off Market Rather Than Settle For Low Prices - https://www.redfin.com/news/delistings-jump-sellers-pull-hom... - November 25th, 2025
Foreclosures Rise for 8th Straight Month—These States Have the Worst Rates - https://www.realtor.com/news/trends/foreclosure-increase-att... - November 14th, 2025
Pending Home Sales Slip As Would-Be Buyers Wait For Lower Rates and Economic Clarity - https://www.redfin.com/news/housing-market-update-pending-sa... - November 13th, 2025
(real estate market participant)
People moving isn't driving the real estate market. It is people dying or being born. Unfortunately you cannot bring real estate and other investments like your retirement entitlements with you when you pass away from this life, so something will happen to your house.
Do note that, even if the math works out such that the bank doesn't actually lose money, a short sale remains on your credit history for the subsequent seven years, which makes it very difficult to buy another house during that period. It's not something you want to do if you can avoid it.
I said CAN not will be worth it. Details of your particular situation matter, for some they should hang on while for others the credit hit is too small to matter. You need accountants and lawyers to advise you based on your exactly situation not internet commenters.
> If my house is worth less than what I owe then moving (selling short) can make sense.
I believe this varies by state but I thought in some states the lender can come after you for the difference and in others you can just walk away (albeit with a credit ding).
https://en.wikipedia.org/wiki/Nonrecourse_debt
https://www.financialsamurai.com/non-recourse-states-walk-aw...
(have walked away from underwater fha mortgage from 2008 gfc in a recourse state, ama)
What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long.
And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.
> But will lower demand coupled with still high interest rates actually lead to reduced housing prices?
One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".
There is also "Return to Office" polices that may be buoying housing prices near the urban core.
Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!
For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.
Houses here are sitting on and off for 6 months at a time without closing. The market has all of the energy of a banana slug.
It has in several cities, including Austin, where I live.
Zillow publishes some interesting data:
What's fascinating to see is that around me the wealthy towns are seeing 6-7% annual appreciation whereas the lower middle class towns are in the 2-3% range.
K-shaped economy and all that I suppose.
Ish? Look into towns that didn't have a high reliance on tech. In particular, look for ones that didn't ride the rollercoaster of really high wages that a lot of tech drove and is now flattening off.
Looks like shipping is also an industry that you probably don't want to track on this search. Other than that, places that saw modest wage growth saw similarly modest housing cost growth. And haven't seen it fall back, yet.
I feel like 50% of that is explained by the luxury housing build out bubble in Austin specifically.
Moved out of ATX to somewhere around hill country last year. There were just too many boring, uncool, rich bozos moving in, and I couldn't take it anymore.
40 percent of transactions in NYC were done with no finance contingency ("all cash") in the last year.
That's a record and it's vastly more than years past. We live in a world where people with vast assets are beating out people who rely on job income for things like housing.
The stock market exploded the past year, and there's your bifurcation: those with assets and those without - getting worse.
We (me and my spouse) made an offer for a small condo and then next week company started the layoffs. Luckily we were not in that position where we spent all our savings and ended up in a position where paying mortgage would have been a huge challenge. It's been a year, have a job but uncertainity is very high. Loosing a job now means finding the next one is not very easy and no certainity that it can be a matter of month or two. We made a decision that since we have enough to pay for the downpayment and enough to pay a year of mortgage, we would not go and buy a house in Southern California. It is better to live in rented property but not safe to be in a position where you loose the property.
I saw HUGE ramen displays yesterday at Safeway, including some of the less common flavors like blue (Soy Sauce, formerly "Oriental") and yellow (Creamy Chicken).
I can't find the blog post from the last major recession where people were talking about all the crazy flavors you only see when the economy is REAL bad.
I'm a fattie on a D.A.S.H. (low salt) diet, but I do buy a dozen or so Creamy Chicken ramen every year.
At WalMart, they're now 47¢ (and I swear low-30s within the past year)... which actually helped me not purchase any this last visit (too expensive for all it is).
I was always taking noodle bowls to work. Fill with water, microwave, enjoy at my desk. A dollar or two.
Couldn't believe how many people would go to the sushi restaurant at the base of the building and spend $25 on lunch a couple days a week. Yikes.
Noodle bowls are usually pretty high in saturated fat (between 8-15 grams on average). I can't imagine eating them daily.
At the very least you should consider steaming some vegetables (also very cheap), slice them up, and mix'em in to get some moderate nutritional value from it.
https://www.health.harvard.edu/heart-health/whats-your-daily...
Are they doing it on company time? Because it might just be true that both you and your sushi eaters get net result 0 from this meal.
"Hey, I heard you like eating sushi. Have you ever tried having a bowl of par-cooked microwaved noodles, instead? It's basically the same thing!"
Edit: The last time I worked in an office building, I had a limited time for lunch. I could have brought in ramen, or purchased something from the decently-stocked break room coolers. I could have sat at my desk or gone outside or eaten in the break room.
And sometimes, I did do those things.
But what I quickly discovered was that what I wanted on my lunch break was primarily a break.
I wanted to get the hell away from that place, surround myself with something completely different, and spend time relaxing my brain before getting through the second half of the day.
So I often went out to get lunch.
But because time was limited, it had to be nearby, and my options were thus very limited.
So I ate a lot of bargain-menu Wendys and tacos from Qdoba because I could get there, and eat, and relax a bit, and be back on time.
If there were instead a sushi place right downstairs, I'd have probably hit that once or twice a week, too. It would have had a higher monetary expense, but my brain would have thanked me for the extra time to unwind and I'd have had a better and more-productive rest of my day and come home in a better mood than I might have otherwise.
I feel you man. I had a lot of lunches alone at a McDonalds walking distance from the office having a quarter pounder with a side salad streaming shows on my Windows Phone through a Slingbox back in the day. Just gotta get out and disconnect for a half hour to reset my mind from the problems of the day.
That was the same year where I was homeless while technically having a "tech" job.
You don't have to spend $25, of course, and you can make lunch. But microwavable noodle bowls, especially at your price point, are terrible for your health.
Why do people cheap out on food, but spend that money on less important things? We're talking about your health here! It's even worse when people with high incomes do it.
Unless you're making them yourself or at least customizing them a good bit, noodle bowls are pretty unhealthy food.
Nothing fresh in them, high sodium, freeze-dried ramen or noodle bowls were originally survival food and should be treated as such.
Not saying don't eat them, and I don't know your socioeconomic background or anything, but if you want to eat them or have to eat them, try to add a little something extra into them.
A cup of shredded cabbage and/or a few cherry tomatoes and/or a half cup of onion slices and/or an egg, things like that should be cheap and easy to add and will help dilute the sodium and add a healthy component to the meal, and your kidneys and heart will thank you for it.
Creamy Chicken is virtually impossible to find in stores where we live!
Just gotta wait for the economy to get worse... I haven't really paid attention to Top Ramen before, so I don't know if the creamy chicken is new in my store, but these giant displays caught my eye.
Someone please tell the stock market, I moved my investments to be more risk averse and it hurts to watch the green line go up.
There is generally no point in doing this, keep a constant asset allocation that match your risk appetite, otherwise you're just playing the casino.
Timing the market is bad, but I'm reading "risk averse" as selling equities and buying bonds.
The problem is that this recent equities run has been extra terrible for more conservative 60/40 portfolios [0].
[0] https://www.morningstar.com/economy/6040-portfolio-150-year-...
Almost all of the gains on SP500 are from 7 stocks - I'll let you guess which 7. The market overall is nowhere near as exuberant.
https://www.washingtonpost.com/business/2025/11/24/sp500-sto...
The market can stay insane longer than you can stay insolvent.
Also, its possible that the market thinks job losses are good (aka that AI is replacing jobs)
The brutal truth…
Stocks go up, wages and income go down, things keep on keeping on because AI has quietly replaced you.
You and me both, but working poors like us should be investing for long-term gains, not short-term returns. I put my money into bonds and international indices because I want to be better protected when the AI CAPEX bubble pops here, but I have no idea when that’ll happen.
We can’t time the market, but we can protect the scraps we’ve accumulated at least.
We were already in one following the tech correction since Nov 2021. [0]
The problem here is some waited for too long to be told we are now in a recession, then some politicians tried to redefine it.
But that is nothing compared to what will happen in the next 5 - 10 years. Nothing goes up forever. The only hint is that we need to prepare before 2030.
Not for nothing--I'm no optimist either--but, by what measure? I see at most one quarter of negative GDP[0]. The US market is up at least 50% since then.
Gemini, ChatGPT, Claude and Grok all said no, we're not in a recession just now when I asked them.
objectively we're not yet, but things are certainly weird
Objectively, I'm not sure we can reliably say any longer, given how much pressure has been put on formerly objective reporting agencies to conform to this administration's narrative.
we can, there's a specific definition that hadn't been met yet
Gemini, ChatGPT, Claude and Grok all said no, we're not in a recession just now when I asked them.
Any evidence if this is global trend in developed countries?
Anecdotally, in my corner of the Silicon Valley, I've been looking to trade up homes from my 7/10 district to a nearby 10/10. Over the last year, I've seen the comparable properties in 10/10's rise about 10%, while my 7/10 has gone down about 5%. Both areas are very short commutes to high tech.
Things are visibly cooling up here in Marin, houses are actually sitting on the market (even just at the end of last year houses were generally scheduling offer dates and picking the best one). Some of this is just seasonal cooling, so I'm wary to draw any larger conclusions... but I'm seeing a lot lot more `for sale` signs than I'm used to.
If this - "High-income job losses are cooling housing demand" is true, doesn't this mean UBI would never work?
>> If this - "High-income job losses are cooling housing demand" is true, doesn't this mean UBI would never work?
If UBI were national, it would work beautifully, because depending on the UBI amount, it could allow people to finally untether geographically. You could spur a rebalancing of irrational demand in HCOL cities due to jobs away from HCOL to LCOL
I don't see how one follows the other.
On the one hand, less high earning employees seems to logically indicate that large purchases would also go down.
And on the other hand, a program to give everyone a little eating money would never have been able to pay for a house, anyway.
A drop in housing prices might be the only silver lining if an actual recession hits (whether the official statistics will actually admit to a recession is debatable of course).
That said, even if housing prices drop materially and eventually bottom it will provide little opportunity for "normal" folks to buy in if they're jobless. Will be interesting to see if Fed interest rate cuts translate to mortgage rate cuts, and whether those rate cuts lessen any price drops.
I've said this before on here, but the historical price-to-income for housing has been something like 4x. Today it's 7x (that is as insane as it sounds). A long way to revert to the mean unless you really think "this time is different."
Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard time buying a few years ago, because investors kept out-bidding me with all-cash offers. I had to raise my price target to move outside of their impulse buy range, which I was not too happy about.
> Housing prices dropping aren’t so good for those who own homes.
As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.
The dynamic here is that investors accept 3% return for housing because there are no good alternatives.
The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made).
Investors will likely not be an issue as long as we don't go into zirp again.
> Housing prices dropping aren’t so good for those who own homes.
Isn't it only bad news for people who are selling their homes?
Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.
You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.
I think with the amount of corporations and existing homeowners buying homes that the demand is strong enough to keep prices high no matter what happens. There are billions of dollars set aside to gobble up homes in the event of a price drop. In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
> In my area, 20 percent of homes are owned by investors and realtors delist homes that don’t sell as opposed to drop price.
This has been so weird to see over the last couple dips.
In the ‘08 crash, banks were sitting on houses that were developing mold issues because they had been sitting vacant so long. These houses were getting more damaged and less desirable by the day, and before long would require hundreds of thousands of dollars to fix (up from the low-tens already evident) but they still preferred to sit on them. They weren’t listed, or were listed but at too-high prices and they were just ignoring offers, not even responding.
Then you look at “depressed” housing prices that are still way over historic norms, so you’d think builders would keep going… but no, they totally halt all work, no new houses until prices are heading up again.
Something’s super messed-up about the housing market in ways that it wasn’t in the last millennium. Recessions don’t even fix it, they just make everything pause.
People say this a lot, but it makes no sense to me. A recession comes with lower incomes and wealth for everyone, so affordability doesn't change for the average person. It only increases it for those who had a short position in their asset allocation, but that's just investment outperformance which you can have even without a recession.
You're generally right except it's not true for everyone. Every recession that hits a lot of folks just keep their jobs and their salaries. Maybe their stock portfolios (for the few who have those outside of 401k's) take a hit. But the key is that if there's a real estate downturn, almost every single home (house, condo and even land) takes a hit and so you end up with a situation where all the inventory drops in price, but not all the eligible buyers "drop in price" (i.e., not all eligible buyers suffer a downturn and so, net, you actually get more people into homes).
The key of course is that the downturn isn't so massive (hello 2008!), where the blood flows so freely that the layoffs/foreclosures/etc. overwhelm the eligible buyer pool in absolute numbers. That can for sure happen, but is atypical historically.
You've just listed a set of specific circumstances under which some number of people might find housing more affordable, but that's a lot more like "investment outperformance" driven affordability than "broad based housing price decrease" affordability. That can happen even without a recession. A small number of people could've found Bay Area houses more affordable in the last decade if they were HODLing some 10x stock.
FWIW I think I just listed a set of circumstances that happen every time there is a drop in housing prices historically, at least going back to the 90's savings and loan crisis. I'll tell you when people found Bay Area houses more affordable? 2009-2012. And during that time the unemployment rate was at roughly 10 or 12% (had to look it up just now but knew it was around there). Housing prices during that same time? Dropped as low as 40-50% in some parts of the Bay (best case they were down 20%+). 10x stock needed? No. A job? Yes. You can repeat the exercise for the start of Covid, but the timeline for the drop in prices, and the % drop, was muted in comparison to the housing crisis. Same for S&L crisis. Dotcom bust too, though, again, housing prices didn't crater like the housing crisis.
Desirable metros seem to have very sticky prices. San Francisco, where I lived for 15 years, turned into a grotesque caricature of what it once was, but prices barely budged (and for most of that transition, they surged wildly). Sure, it's no longer the single most expensive rental market in the country, but it's still one of the highest despite quality of life degrading massively and even a big decline in population.
The illustration is misleading because it forces things into three buckets, two of which are colored to indicate "not good". But still, that bottom right corner of the graph is telling.
Also pretty disgusting to me that healthcare is "growing faster than normal" across the board. You'd think it'd be "growing the normal rate" at least somewhere. It's not like population is growing faster than normal across the board. Isn't 20% of the GDP enough for an industry that's fundamentally a cost center of society? Wars have been fought over less.
The elderly are on Medicare, and health care providers know they can treat much more aggressively when the government is picking up the tab. Despite the fact that in a purely economic sense, it is more important that children and young adults get health care.
When I went to the doctor about fatigue, the advice given to me was to stop exercising and take a break.
When my father went to the doctor about fatigue, they gave him a full blood panel and scheduled a cardiologist and respiratory therapist visit.
>The elderly are on Medicare, and health care providers know they can treat much more aggressively when the government is picking up the tab.
People should not make the unqualified statement that Medicare is free, which is what "the government is picking up the tab" sounds like. Medicare isn't free. Some people, not all, can qualify for free Part A but Parts B, C and D have premiums no matter what.
An aging population combined with people generally being a lot less healthy (eg look at obesity or diabetes rates) means we either let people die off, or else spend more and more on healthcare.
The large baby boomer generation is getting old, and thus their costs will go up just by nature of old people needing more. They are also realizing that health is the largest factor in how long they will live (not to mention that they likely started smoking before people realized how harmful it was - most have long quit but with unknown damage done. There are other choices that they often made that are now questionable)
Which is to say I expect spending to go up just for demographic reasons of large numbers of people starting to care. Don't confuse this for thinking all is well with health care costs.
What’s the maximum price you’d pay for a cure to a rare, fatal pediatric disease?
Answer this question, and you’re on the journey to the solution to the problem you are talking about. Tell me some BS why the question doesn’t matter or is wrong or whatever, and discover why “Dunning Kruger” is at least part of the answer.
>Answer this question, and you’re on the journey to the solution to the problem you are talking about. Tell me some BS why the question doesn’t matter or is wrong or whatever, and discover why “Dunning Kruger” is at least part of the answer.
I posit that the people who hold an ideology, moral compass, world view, or whatever else you want to call it, that permits the question to even be framed in this way are a root problem exacerbating many other problems in society, healthcare likely being one.
I don't know what the "solution" is but the fact that ~1:5 dollars in this country is spent on maintenance of the human body is just wild and likely unsustainable or indicative of some gross error in how we measure such things.
I think you're misrepresenting "Dunning Kruger." It only predicts that the subset of your respondents already known to be low ability in the domain of health care economics will end up inflating their assessment of their own ability in the same domain. (Perhaps also inverted for high ability respondents.)
You're claiming to predict that-- for particular branch of response types-- all respondents will be low ability. There are a lot of ways I would characterize that claim, but none of them would be "Dunning Kruger."
In fact, my gut tells me that some significant number of flame wars I've read over the years were due to this confused heuristic.
From experience from my peers getting pregnant it's the cost of a "selective reduction" (which can be 1 to 0). Newly pregnant friends are spending $$$ on tests in utero to weed out children with such things.
You're free to downvote, it won't make it less true. Genetic testing is all the rage in my social circle. No parent want's "dies basically immediately after birth" disease which is a surprising about of genetic conditions and way more people than I expected were silent carriers of at least one.
well, you didn't answer the question, but it sounds like you are saying $40,000? how much do you think Orchid costs? do you think it even works?
$40,000 cap would exclude all the therapeutics targeting rare disease being developed today. not just pediatric. all. it would exclude tirzepatide, which costs $250,000 to $400,000 for most people. if you want to cure obesity. and by the way, congress expressly banned paying for all weight loss treatments from medicare.
> Newly pregnant friends are spending $$$ on tests in utero to weed out children with such things.
do you think pregnancies at age 40 compared to pregnancies at age 20 are more expensive, or less expensive? define expensive, yes? and what price should the government pay? should it pay 40 year old mothers different than 20 year old mothers?
it's too bad that i'm being downvoted, since you're engaging with the question and hopefully it is really illuminating why there are no easy answers to capping healthcare costs. it starts with people, especially people who think of themselves as being very smart, being unable to specify a max price they are willing to pay, which is conceding that a market-based solution can exist but be very deeply flawed.
Because I don't think there is a max price. Like of course there is in practice case by case because individuals don't have infinite money but nobody wants to be told "sorry, we can treat your condition but we're not going to because you're not valuable enough to society to get it." The episode Critical Care in Voyager muses on what such a system looks like formalized and it's awful.
And I think what makes it so that we're resistant to caps is because it's not just rare diseases you could write off as unlikely to ever get that are ruinously expensive and it's likely that in everyone's social sphere they know multiple people personally who've had "blown out their out of pocket max by factors of 5-10x" medical issues. It's a this really can happen to you thing.
So I think if your goal is to reduce healthcare costs on a nation scale your only option is make it so your people develop health problems less and tackle the smaller but much much much more frequent expenses. Things like ending the caps on the number of doctors, giving nurse practitioners full prescribing rights, moving more medications OTC, ending drug patent loopholes or for critical medications or "buying out" the patient so it can be immediately be made generic, adding more restrictions to testing so doctors have to actually think before ordering every test under the sun because it's not their money, massively reducing the regulations on medical devices, I could go on forever.
Stupid unnecessary expense times your population is way more money than the treatment for some rare disease.
Crashing the economy is of course going to have knock on effects. I don't think anybody should be surprised by this?
Housing is essentially a bottomless pit when the economy is good, it can sink any amount of money because it is an absolute necessity. So when people have money they'll use it to bid against each other for a scarce resource. But when the economy pauses or even starts to shrink then that surplus evaporates and one of the first indicators that this is happening is the demand for housing. Usually the result will be some price adjustments and after that it is business as usual. But if the cuts go deeper then there may be more substantial effects.
The only thing that is holding the US economy afloat right now is the fact that there are still a couple of levers of power that Trump hasn't gotten his fingers on. When and if that happens I fully expect things to go into freefall.
I use Mozilla VPN and I've been noticing this trend more and more. Especially for auth endpoints.
Shame we can't lower prices because people who "buy" things are leveraged out of their minds. Sounds like a pretty stupid way to do things.
Oops! We're really sorry but we accidentally tricked a bunch of you guys into becoming slaves!
My parents and grandparents were decidedly blue-collar and new middle class from the late 60's to mid 90's, and my grandfather, a mechanic, bought a new home on the Los Gatos border using the GI bill. It requires an income of about 600k USD to afford to buy housing where I grew up. I'm basically solid lower class in the southwest corner of the Texas Triangle now.
The main problems, as I see them, are the protectionist limitations on new supply, unfair importation of immense overseas' and out-of-state wealthy individuals' wealth causing gentrification, and the absurd inequality of wages into extreme power law distribution by the cheapening and decline of labor due to under-restrained capitalism.
I hate it when Trump or whoever touts all the jobs created because I'm sure most of those jobs are of the low-wage variety and aren't really helping anyone. It doesn't matter if a bunch of part-time, crap jobs get created while high paying roles are headed to India or just disappearing.
The government does nothing but lie to our faces.
As far as housing goes, if we do managed to deport 20 million non-citizens, that should at least help some. Oh yeah, yeah, it's so inhumane to disinvite all those folks whom the NGOs and mega-church charities took advantage of and trafficked here. Every one of those people had dollar signs on their backs for someone else. Now we have an affordability crisis caused by government fiat printing and these never-ending scams moving people around the globe. Good times.
Boston is seeing some headwind especially from slowdown in biotech, the main driver of growth over the past decade or so. Rents are also down. However, worth noting supply is still constrained especially if you exclude replacement-ready homes.