Hacker News Reader

Comment by almost_usual | Hacker News Reader

> Crypto got wiped out and now the tech and real estate bubbles are popping.

Crypto got wiped out but a BTC is still hovering around 20k?

> now the tech and real estate bubbles are popping

I sincerely doubt it, things might slow down and plateau but with the cost of everything going up (including rent) people will still desire a home with a mostly fixed cost. We also haven’t seen any massive layoffs yet coming from tech companies.

Also if home prices plateau and inflation rips the value of those homes are deprecating without price reductions.

View on HN

Home prices have been rising far faster than inflation. The "people will always desire a home" and "plateau" talk is straight out of the Realtors playbook and is said before every pullback.

People have forgotten what a real estate downturn looks like because it's been propped up by the Fed for so long, but in the good old days (before 2004 or so) it wasn't uncommon to go through periods where the average house took 9-12 months to sell and sellers went through 3-4 Realtors before it sold. Do the Realtors still say that 6 months is the average time to sell or have they forgotten that too?

The fact is that people buy homes based on monthly payment and significant rate hikes are something we haven't seen in decades. When the monthly payment doubles housing prices go down.

Monthly payments haven't doubled.

Here's an example. Imagine a $500k house in Texas with a 2% property tax rate and $2k/year in home insurance. Suppose a hypothetical buyer is putting 20% down.

At a 3% mortgage interest rate, the monthly PITI payment would be $2686. At a 6% mortgage interest rate, the monthly PITI payment would be $3398.

That's a substantial increase, to be sure, but if payments had doubled then it would cost $5372, not $3398.

How high would mortgage interest rates need to be for the payment to actually double? Answer: about 12.8%. So interest rates would need to more than double from where they are today to see actual housing payments double.

> Crypto got wiped out but a BTC is still hovering around 20k?

Yes, losing 2/3 of your value is getting wiped out.

Still 5x pre-covid March 2019.

Great for people who happened to buy at that time. Terrible for most.

By that metric, it has been wiped, what, 4 times now?

Yes. This happens in gambling too, sometimes you win large amounts of money, sometimes you lose it all, and the cycle repeats.

Not hovering, gradually dropping.

Crashes are not instantaneous. They occur in patches.

Reply on news.ycombinator.com