WTF Just Happened To The Housing Market?!

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TIMESTAMPS:

WHY BUYING MADE SENSE IN THE PAST

Real estate historically built wealth through equity growth + low interest rates.

From 2017–2020, it was smart to buy and refinance into record-low rates.

HOW THE MARKET SHIFTED AFTER 2020

Builder delays + supply shortages = low inventory.

Cheap mortgages at 2–3% let buyers pay 30% more for the same home.

Bidding wars pushed prices to unsustainable highs.

WHAT’S HAPPENING TODAY

Mortgage rates = highest since mid-2000s.

Monthly payments for a typical home have DOUBLED in 4 years.

Affordability is now at its worst level in history.

THE REAL COST OF OWNERSHIP

Median $410K home with 20% down + 6.2% loan:

~$19.5K interest per year

~$4.1K property taxes

~$2K insurance

~$4K maintenance

Plus the opportunity cost of your downpayment.

Total = ~$31,600/year just to “own” a home that might only appreciate $1,200.

WHY RENTING OFTEN WINS TODAY

Across all 50 states, buying costs ~50% more than renting.

Renters avoid 6% closing costs and huge monthly carrying costs.

Example: $500K home today = $3,000/mo. Neighbor who bought in 2020 pays $1,765 and can rent profitably at $2,000.

THE SUBSIDY PROBLEM

Just like student loans, government-backed mortgages artificially inflate prices.

Higher conforming loan limits = higher home prices.

CA’s $300M down payment assistance fund? Gone in 11 days — without lowering costs.

THE INVESTOR MYTH

Hedge funds and Wall Street aren’t buying all the homes.

Only ~11% of investors are big institutions — most are small landlords.

Investor purchases are actually declining because today’s prices aren’t profitable.

WHEN BUYING DOES MAKE SENSE

Stability - long term costs come down.

FINANCIAL REALITY:

Only worth it if you’ll stay 15+ years at today’s prices.

Otherwise, the math heavily favors renting (unless prices drop or rates fall substantially)

FUTURE OUTLOOK

Mortgage rates may not follow The Federal Reserve (they depend on long-term bond markets)

A “Silver Tsunami” of baby boomers selling by 2035 could add supply.

Until then, expect slow changes - but no "real estate collapse."

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