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Notes -
Housing market predictions anyone?
As a couple we are at a point where we would be given a mortgage of a small size house in the city or a somewhat larger one in a suburb (this is a very expensive Western European capital and collectively we earn upper middle class salary). But the prices are so crazy that whatever we buy would definitely not be enough to raise a decent size family as long as we stay in range for our jobs.
The obvious plan would be to get a mid sized place now and then sell and upgrade to a larger house in 5-10 years.
I am very paranoid that the current prices are a massive bubble and if we get a loan today we will be left holding a massive bag when the prices crash and we won’t be able to meaningfully upgrade to a larger house. But on the other hand throwing a large fraction of our income down the toilet with the rent feels ridiculous when we can afford not to.
I think the catalyst for lower home prices is going to be rising unemployment rates. As the higher for longer interest rate strategy by the Fed plays out we could start to see increasing unemployment. This is because higher interest rates mean that less business endeavors are profitable so less employees are needed. Rising unemployment results in defaults/forced sales in a time where there are less people that can afford to buy homes.
I don't have any confidence in predicting if unemployment rates will significantly rise. The fed might pull off a soft landing and if that is the case there wouldn't be much of a catalyst for lower housing prices.
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