US home sales see worst year since 1995
US home sales have fallen to their lowest level since 1995, a drop made starker by today’s larger population and a mix of high prices and elevated mortgage rates. Commenters point to locked-in ultra-low 30-year mortgages, restrictive zoning, property tax structures, and a long-running housing underbuild as key forces freezing supply and keeping prices high despite weak transaction volumes. Some expect activity to recover as mortgage rates drift toward 4–5%, while others argue structural factors like remote work, investor interest, and global housing pressures mean high prices are likely to persist.
Interest rates, inflation, and the sales slump
- Several commenters note 2023 sales are worse than 1995 once higher population is considered.
- High mortgage rates + still‑high prices are seen as the primary reason for collapsed transaction volume.
- Debate over “real” vs nominal rates: some emphasize subtracting inflation; others counter that wages don’t keep up, so buyers don’t feel lower real rates.
- Some expect mortgage rates to drift back toward ~4–5%, which they see as a “normal” range where activity resumes.
Price stickiness and supply constraints
- Home prices are described as “sticky downward,” especially with owners sitting on 2–3% mortgages and low property tax bases.
- Many owners feel “trapped”: moving means both a higher rate and higher price, doubling payments in some examples.
- Several point out that low transaction volume plus high prices signal a deeper supply problem and barriers to building.
Tax policy and “lock-in”
- California’s Prop 13 and similar rules in Oregon are blamed for discouraging moves and keeping older, under‑taxed homes off the market.
- Big debate: some argue property tax should be capped or abolished as a tax on unrealized gains; others argue that untaxed appreciation and intergenerational tax advantages are unfair and worsen inequality.
Affordability, demographics, and regional snapshots
- Examples from the Midwest, California, Oregon, Canada, and Australia highlight:
- No new development in desirable suburbs.
- Older stock vs expensive new builds.
- More singles unable to combine incomes.
- Rents and “luxury apartments” often exceeding SFH costs.
Mortgage structures and refinancing
- The 30‑year fixed US mortgage is seen as both a stabilizer for owners and a distortion that inflates prices and locks people in.
- Many recount refinancing repeatedly during low‑rate years; some warn fees can offset gains if not modeled carefully.
- Comparisons with Europe, UK, Australia highlight that long‑term fixed loans are uncommon elsewhere, with more ARMs and associated risk.
Speculation, investment, and foreign views
- Some insist pandemic price gains are permanent and US real estate is a top global investment; others predict no major drop absent a severe crash.
- A foreign perspective portrays US property as relatively risky, politically unstable, and less attractive than Asian/European hubs.
- There is concern that treating housing as a growth asset (rather than basic shelter) is a “tragedy of the commons.”
Short‑term rentals, investors, and policy
- Disagreement on short‑term rentals: some say they reduce demand for owning (easier to rent vacation use); others argue they mainly reduce ownership supply.
- One claim: institutional buyers are a small share of single‑family purchases; another asks for evidence, suggesting perceptions differ.
- Policy ideas mentioned: zoning reform, different rates for “supply‑creation” lending, immigration or birth‑rate adjustments, and broader government intervention—often reluctantly supported.
Remote work and structural change
- Several argue remote/hybrid work is a one‑time structural shock: high‑income workers dispersed from SF and similar hubs to second‑tier cities, permanently raising prices there.
- Many HN‑style “crash” predictions are criticized for ignoring this demand shift and slow, regulation‑constrained supply response.