My new pet theory, just based entirely on anecdotal evidence around me… a lot of people are buying houses first and then figuring out how to pay for it later. And low down payments make this even more possible. Like, they technically have the income to pay for it now but they’re gonna realize quick how little financial flexibility they have, and any shocks like losing a job or health expenses will make it so they can’t make that mortgage payment anymore. No savings, just plowing it all into a mortgage payment.
Also wondering if the housing market is one of the first signs that were gonna start seeing some massive inflation.
Its 100% small time landlords buying a 2nd or 3rd property as well as enormous hedge funds or Blackstone et al that are buying up properties. Probably more the latter, but the former is why it’s happening in podunk nowhere as well.
If housing is an investment or profit machine, you can afford tighter margins on rent to mortgage because your plan is to own and rent for the next 50 to 100 years. So who cares if it costs 2 times over asking? You’ll make it back 30 years later and then make pure profit for another 30. Plus, rates are historically cheap and the fed has shown 0 capability of raising rates to higher than 5% or so (prior to 2008 it was usually near 10%).
