If prices are whatever people are willing to buy something at, then how are housing prices set?

If prices are whatever people are willing to buy something at, then how are housing prices set?

I say this because they seem to be "set" rather than an emergent property of market interactions.

But then it gets stranger because banks treat the price of the house as if it is actual money. Who determines this? Why does it even work? Especially if no one is willing to buy the house.

Wouldn't this be the same as someone grabbing a rock and going "I value this as ten million dollars. Therefore, I have a ten million dollar asset."? Even though no one would ever buy it for ten million dollars (or at any price, most likely). But then a bank taking it seriously and taking it as collateral for ten million dollars.

What's the deal here? Am I missing something because it seems like someone, somewhere, is pulling something.

I only say this because I am trying to figure out why housing prices are so high even though every other thing about them should suggest the price should be dropping.

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Because they really only need one person to agree with you, the banker, that the rock is worth 10 million dollars. The bank writes up the paperwork and sends it off to Freddie Mac
freddiemac.com/
which then insures the value of your mortgage at 10 million dollars. Then the bank deposits 10 million dollars (positive) in the account of the previous owner of said rock, and gives you a mortgage to pay over 30 years for 10 million dollars plus interest (negative). Any idiot can now see that this transaction was net negative for the money supply, and over the next 30 years, through this policy, the government can now spend NEW MONEY INTO EXISTENCE in an amount not less then the interest on this loan (positive). You will go to work an earn this money, and the principal as well (which was created by the deposit), and pay off your loan, if things work out as they should.

The story doesn't end. The bank then takes the 10 million dollar mortgage for your rock, plus 9 other mortages of 10 million each, and bundles them together into a 100 million dollar collateralized debt obligation pool. It then divides this pool into 100,000 obligations (bonds) with a face value of 1,000 each and sells them to your pension fund. Where did that pension fund get the money to buy them? Why, from your salary, of course! You've voluntarily set aside that money, which through twists and turns is the same money that you borrowed to buy the rock in the first place. At every point along the way, fees were taken, and that is how the Jew pays for his dinner.

The other side of this is people selling a 1 mil house for 10 mil. Obviously nobody is that retarded so normal people don't buy it. However there used to be rich chinks whose government is much more serious about tax evasion than ours. They would buy these houses as a money laundering/asset hiding scheme, so to them it doesn't really matter if they're overpaying 10x or 100x, the point is to jew away money that the chink govt would have taken.

Chinks have closed that loophole a few months ago and started cracking down hard, so california and toronto luxury house markets are shitting themselves now. While "sale prices" still look high, houses have to sit on the market for 2/3s of a year before being sold, where before it was like a month or 2 I believe. Anyway soon these top real estate markets are going to BTFO, I'm hoping this fall.

Generally, there's a housing bubble in the US, especially in desirable urban/metro areas. A lot of things are coming that will probably rek it pretty badly:

Yes, Septemberfags were wrong, but not about the happening, just when it would be. All the huge red flags in the markets, which also mimic the lead up to every other major crash, are still there. So we survived september, but the stocks are still not going up, there's even a slight downtrend if you look, and it's undeniable that panic permeates the market.

It is mostly because of financing, but houses and land do, of course, have some intrinsic value. You have to leave somewhere and have to maintain a certain level of utilitarianism for most civil districts(plumbing, electric, etc) and also the house is a material cost as well. Now, just based on the materials of the house and the size of the land there is some value there. Then you get into the proximity of other services that make life easier: schools for children, markets, higher education and most key employment. All of those can affect value as well. And then you get into the financing. Go look at a graph of real estate prices and look at 1995. What happened? Financialization of mortgages. By the way, the same thing is happening to a certain degree with the student loan market over the past however many years. Why are these basic instruments of life being securitized and collaterized? Well , that is a deeper question and you already on /pol, so you probably have a good head start in understanding what/who may be in play.

I hate these faggot boomers who "flip" homes so that homes that were once affordable so that our generation would not need to get into debt will now have to take mortgages out to buy a home.

It's not the boomer's fault entirely, it's the usury that allows such things to happen.

Prices are what the last few houses sold at. In a good neighbourhood almost none of the houses are up for sale, so you can't buy in and have to wait and then bid immediately to get it.

If however you introduced too many houses and put them all up for sale at the same time nobody would buy and the last sale price would plummet. That doesn't really mean houses are worthless - it just has to do with timing.

So when people think their house is worth a lot of money they are gambling that everybody won't sell at the same time and that housing supply won't increase faster than the population.

I don't know OP, but it's fucking pissing me off. Home prices are going up and wages are stagnating or going down. If current trends continue, it will be impossible for me to ever buy a house. I live in an oil area where everyone is losing their jobs and selling their houses that they can no longer afford, so supply should be high, but the prices are still through the roof and still increasing. The only feasible path I see is buying some dirt cheap land in the middle of nowhere and building a cabin, which might actually be preferable the way things are going.

Aren't those chinks going to lose their millions when the bubble pops? That's what I don't get about this. Do they not foresee the bubble popping, or do they just not care as long as the money doesn't go to the government?

You, you get it!

So glad to hear someone else talk about the mechanics of Chinese dirty money and how it is playing havoc with housing markets.

It is the same in Londonstan.

It’s a use it or lose it situation.

They HAVE to get rid of the money, if they don’t and they are caught with it they might actually lose their life let alone the money.

Losing some of it in a housing crash is really not an overriding concern.

It is a scam. Because almost everyone needs to take a loan to buy a house, the prices are artificially propped up by the banks so they can get more interest.

threads like these really drive the point home that i should learn some things about basic economics

im a smart guy with dual degrees in STEM fields, and yet i've never bothered with economics, because i didn't fucking care. To a large extent i still don't, but I recognize that I should learn about it anyway in a sense of obligation, because this shit not only affects my life but my nation as well.

I know so very little about economics, but I definitely do know that the US economy is absolutely fucked when eventually the cows come home; there's been so much rigged shit and shady, illegal dealings on such a grand scale that's been ignored or allowed (even if illegal) for decades that at some point, our economy is probably going to fucking collapse.

If not the world's.

Good explanation.

Prices are whatever people are wiling to pay.

In the case of a house (((they))) have convinced people its is "normal" to enslave yourself for 30 years to pay for it.

So the price of a house has become the amount you can borrow over your income for the next 30 years.

It's set by whatever the banks are willing to loan people money for and whatever idiots are willing to take out in a loan.

Basically if you buy houses at auction in cash you will get their true value and it's usually much less then "market"

Henry Ford

Ditto. I'd be interested in finding some redpilled economics books.

In the '50s, a seven year mortgage was the max, and no white man with a job had trouble finding 25% down for the house. The only way you can have 30 year mortgages (and the high prices they permit) is with government subsidy. 30 year loans were typical only for governments and top quality industrial concerns. They were not intended for the average joe.

Real estate value is speculative.

Meaning - if your neighbor 2 blocks over sold his house for $X, and your house is similar, then your property is worth $X

But there are many other factors

In short
its all bullshit

It's called supply and demand, you impotent little statecuck.

It's all because of loans, low interest rates, and little to no screening of people applying for loans.

Imagine there are no loans, everyone has to buy houses from their savings only. That means if the seller asked for $300k they wouldn't find anyone willing to buy it, so they'd have to drop the price to something the average buyer could save up, maybe say $100k.

But enter the Jew - if you pay me interest, goy, you can have that house now. You'll pay double what the house is worth over 30 years, perhaps more, and that profit belongs to the Jew.

So you, a smart man, decide not go get a loan, you'll put in a fair $100k offer. But wait! Society is full of idiots who willingly sign up to get jewed by loans. So you can't buy that house for $100k, even though that's the fair price, because some other idiot with less money than you can afford the $300k. Any seller would be retarded to not accept the highest offer.

What's EVEN WORSE is when the interest rate lowers, because now even the idiots with cold feet are jumping into loans and throwing in even higher offers on that house, they might get $350k now because idiot #3 REALLY wants it.

And then what causes the crash is when idiots who could never afford a loan in the first place, i.e. would never pass the banking and credit checks to be approved for a loan, are given loans by institutions who don't care that they're signing people up for loans they cannot pay.

top tier post
Also correct on that the US economy is completely and utterly fucked, I'm surprised we've managed to crawl along as far as we have

We haven't had a free market since the civil war OP.

Flipping as in buying and increasing price hoping someone is gullible enough to buy it or waiting for more bubble inflation without making any improvements to the house is sheer kikery.

Flipping as in renovation and improvement for profit is usually honest work and helps improve the quality of a neighborhood piece by piece or fix properties that were ruined by hoarders, meth labs, section ape, etc.

As long as it is not pure arbitrage and the flippers actually improve or repair a house I have no problem with it but speculators are enormous faggots.

Or with speculation and normal banking practices.

Drug money plays a big role to, real estate is a convenient asset for organized crime to launder money and if enough of their houses get seized by the feds the bubble they create with illicit profits crashes and affects neighboring real estate values as well, or if the feds get lucky and bust enough people high on the food chain in a short period of time it crashes housing prices.

Here's a huge secret about finance.

If you actually take time to meditate about this fact, it could change your life.

money is fictitious

B-b-but muh gold.

das rite OP

fiat currency

It's called a bubble.

I'm still new to mortgages.

But the idea is that the entire US economy is based on housing prices as that's where everyone puts their asset in.

Land becomes more valuable over time and is a sure-fire investment (at least that's what people thought), and so people invest into their home.

The Romans had such a system but rather, instead of a bank account determining status, it was citizenship, where-by landed citizens could serve in the army to increase the power of the state.

Since you owned land, you owned a part of the state. Nowadays, the globe being globalized, all countries link and all currencies linked, currency acts as your share of the world economy.

The more shares you have, the more determined you are to what goes on with it. This system of course means nothing to the dynastic Jewish banking families, as they own the very system.

However, our work and labor and indeed business is rather our share, of the hegemonic Jewish dynastic system, as opposed to land. Now, land or a house, since it's your biggest investment, determines your standing and your standard of living.

Now, the question of the price of houses is based on location, the neighborhood, the neighbors. Shitty neighborhood? Low price.

Same with the local city. Bad schools? High crime? Low prices. Living by the shore? Beautiful scenery? Or even laws as well. With the legalization of Marijuana in Colorado, housing prices skyrocketed.

In the US, we have a rather stable environment as opposed to Syria for example. We therefore, have that factored into the price as well.

-Crime
-Neighborhood
-Neighbors
-City
-Environment
-Country
-Businesses nearby
-Pleasantness of the surrounding area

Really, other houses nearby sorta set the standard. Which are in turn set by what's next to them, and what's next to them and so on and so on. Until you get to the ecosystem as a whole.

Think of every auction of a house as an ebay auction, it can be set to whatever but there is a rather low to high price point and that's determined for what sold nearby and what someone else paid to move in.

Oftentimes housing prices are based on comparable sales. The sales price of similar properties (same number bed + bath, same neighborhood) are averaged together and the mean average is the stated property value recorded in the local tax assessor's office. Previous professional assessments are also taken into account since the same size house in the same neighborhood can have very different amenities and be in very different condition.

This can leave the prices unnaturally inflated though; for instance, if no properties in the neighborhood have sold in the past year or two and there's been a housing bust, the value of the house will be based on inflated housing boom prices.

A homeowner can go to the tax assessor's office with a recent (lowered value) appraisal and appeal their recorded property value, but it's guaranteed that they'll only get their PV discounted by a certain percent rather than adjusted to the real market value because property taxes are based on recorded property values. It's not uncommon for tax assessors to REFUSE to make adjustments early in a housing market bust, claiming that it's a temporary market adjustment and that prices will stabilize and rise again very soon, so there's no need to discount housing values (and lower taxes) right now.

Supply and demand OP, supply and demand.

In theory, it's like this.

More supply than demand => lower prices because people are fighting each other to sell houses/apartments (aka buyer's market). this is what happens pretty much in any capitalist country, across all markets

Equal supply and demand => this is supposed to be market equilibrium, something that in theory everyone should strive for. this would offer the best possible price for both seller and buyer (i.e. you can afford it and the seller can make decent money off it). this does not exist in real life.

More demand that supply => higher prices because people will be fighting for a house and will be willing to pay more and more. this is what happens in all communist countries

to that you also have to factor in labor costs, material costs, cost of buying the land, overall development and desirability of the area, and any other costs the developer/manufacturer may have had when building the house, costs that he ultimately must cover.

for example in my country right now, it costs the developer just shy of 500$ per square meter of living space to build a 10 story apartment building with 96 apartments. however said apartments are put on the market for no less than 1000$ per square meter of living space. that would literally be an apartment in a 10 story building in a very shitty area. apartments in more desirable areas start at 1400$.

so while the developer racks up costs of 500$/sqm to build something, they put it on the market for 1000$/sqm, because at this point there is a high enough demand (people are just buying whatever, like idiots, without thinking of the consequences) that they can literally ask whatever price they want.

TL;DR: there is no TL;DR, otherwise you will never understand market fluctuations.

needless to say, my country will be going through a housing and banking meltdown next year, that's why I'm waiting till next year to buy a house, because I'll have enough money saved up and the economy will be in shambles, and then it will be a buyer's market.

If you can easily understand systems then economics will be a breeze… so go for it!

Remember, that economists make it seem more complicated on purpose to scare normies away.


I recommend
Economics: The User's Guide Ha-Joon Chang

Vancouver too.

When I was a child it was illegal to pump your own gas or use a credit card at the grocery store. Kikes fooled us into thinking both were restricting 'freedom'

There was a great scam going on a few years ago. "Grew a few wrong plants indoors goy? Oh, now your house is a "grow op" and value is halved, goy. We will do you a solid and take it off your hands…

Legalized theft fucks with the market. Who would have thought.

This is the same attitude that leads to programmers in Silicon Valley being "Marxists" or "Socialists" out of sheer ignorance. Don't be an ignoramus, it's very unbecoming.

My recommendations are:

A Microeconomics Textbook (you can get good prices online at the beginning of summer; buy used and older editions). This will give you a good background in orthodox economic thought, as well as the foundation of libertarian/capitalist thinking.

"Debunking Economics" by Steve Keen. This one is a good rebuttal to the orthodox thinking in the micro textbook. There is a pdf of it in the monthly Holla Forums book thread/mega archive. It will get you thinking about the effects of debt on the economy and contains a more sophisticated analysis than you will find in the micro textbook. I would also recommend anything by Michael Hudson.

When your choices are "take a 70 percent haircut when the property bubble crashes" (this is extremely unlikely, the crash will probably be no more than 30-40 percent in the short term) or "take a 100 percent haircut when the government finds your hidden account" you don't give a shit.

The key thing to take away from economics is that it is actually incredibly simple - but all dressed up and obfuscated in a myriad of ways that are meant to make you say "Wow, that shit's complicated and I don't want to put in the effort to understand it.", so that you're easier to scam. If I said "I'm leveraged to the hilt and all in on collateralized debt obligations and mortgage backed securities" it'd sound like gibberish but the actual underlying meaning is actually really simple.

If you've got some time to kill, play this fun game based on Vancouver real estate prices as of 2010:

crackshackormansion.com/

I google microeconomics textbook and several different books come up. Is there any specific author?

Or because programmers are typically subhuman.

No. Just find a cheap one - it will do for starters.

Thanks.

While I agree, there's a common theme among STEM academics that scoffs at certain fields and prefer to wallow in ignorance. My math department in particular is full of socjus sympathizers, armchair leftists and other "go along to get along" types that, though brilliant in their own field of expertise, are comfortable in being ignorant of most things outside of it - even important things like the economy or politics.

filtered

Hell in my experiences the cops would just seize that shit.

"Yes goyim, drugs are evil. So you should let us be able to outright steal from those evil druggies"

Housing prices are maintained by population increase. That is one of the major reasons the skimmers need to keep flooding the country with immigrants.

Also, they know the baby boomers are dying and they hold most of the high end properties. Most Younger American's can't afford the homes at those prices (unless they themselves are skimmers) so now they are trying to flood in more Chinese and Indian buyers to prop up the high end market.

Its an emotional reaction, not an intelligence based decision.

Think about it.

Most super-haxors are autistic nerds and socially inept. They are not willing to leave their comfort zone, and crave being part of the crowd for once.

Do you see them standing up against a majority decision if it isn't involving their expertise?

also:

Computer nerds are like those thirsty betas looking for female approval, only they are doing it on a scale for the entire crowd