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.
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.
Dylan Williams
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.
Jordan Peterson
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.
Bentley Reed
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.
Ryder Harris
It's not the boomer's fault entirely, it's the usury that allows such things to happen.
Julian Flores
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.
William Wilson
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.
Christopher Powell
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?
Connor Watson
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.
