[HN Gopher] It could be years until we see a normal housing market
___________________________________________________________________
It could be years until we see a normal housing market
Author : RickJWagner
Score : 62 points
Date : 2022-02-03 12:17 UTC (10 hours ago)
(HTM) web link (awealthofcommonsense.com)
(TXT) w3m dump (awealthofcommonsense.com)
| zhdc1 wrote:
| People evaluate large purchases - in part - on whether they can
| afford the monthly payment. Low interest rates and comparably
| high rents make people more willing to pay more for property.
|
| Higher interest rates, which may be on the horizon, may put a
| damper on housing prices. However, I suspect that they'll have
| less of an immediate impact in the states, where fifteen and
| thirty year fixed rate mortgages are the norm. If inflation
| continues in Europe, it will be interesting to see what happens
| in countries where people generally borrow for ten to fifteen
| years at a time, and refinance once the mortgage term is over.
| endisneigh wrote:
| Housing is already very cheap in places no one wants to live in.
|
| Housing is already affordable in the United States compared to
| other countries when you compare median house price to median
| income.
|
| If you want to see where the United States is headed go look at
| London, Vancouver, Paris, etc.
|
| As urbanization in the United States accelerates for many
| reasons, including climate change, I see house prices in
| desirable areas increasing even further.
| scythe wrote:
| >Housing is already very cheap in places no one wants to live
| in.
|
| But this isn't a solution, it's a tautology. If people started
| moving there, they'd become expensive, too. The population
| level interpretation is that inflows should equal outflows
| everywhere, which is statistically impossible unless the
| government decides where you can live. Who wants _that?_
| lotsofpulp wrote:
| The increase in prices depends on the amount of demand
| relative to supply. If all the demand for land in coastal
| California was redirected to the land in rural
| Midwest/Northeast, there is so much supply that it would
| cause a much smaller increase in price.
|
| And it very well maybe that there is no solution to the
| problem of people having to scrimp due to high real estate
| prices. People may inherently want to compete with each other
| and agglomerate into highly desirable areas.
| mrkstu wrote:
| That would be true if the lot size were the same as the
| high cost locations and home inventory could be created
| overnight.
|
| In reality, as we are seeing in Idaho, despite large swaths
| of undeveloped land available, the homes are still
| skyrocketing in price due to lack of inventory.
| lotsofpulp wrote:
| The popular areas of Idaho are tiny compared to vast
| regions of flat land available in the middle.
|
| Of course all of the demand directed all at once without
| adequate supply will result in price increases. But
| people incorporate the fact that some places will never
| have enough supply simply due to lack of sufficient land.
| In that sense, a house in a popular part of Idaho will
| always be more than a house in Iowa.
| scythe wrote:
| > The popular areas of Idaho are tiny compared to vast
| regions of flat land available in the middle.
|
| This isn't a solution to the cost of living, and in fact
| it would make it much worse. If people were spread out
| evenly over Idaho, the cost of shipping goods and driving
| to work would explode, not to mention power transmission,
| broadband, sewers, etc. Ascribing the current situation
| to some "desire to be competitive" which somehow appeared
| in the past three decades and was absent in 1900, is not
| compatible with comparisons to our past or other
| countries' present.
|
| Paris has roughly five times the population density of
| Washington, DC. We're not out of space. We're using it
| badly.
|
| Meanwhile, there are parts of coastal California that
| aren't even expensive:
|
| https://www.zillow.com/homes/Eureka,-CA_rb/
| bradlys wrote:
| Yeah - the issue in the USA is that everyone here still
| thinks sprawl is sustainable. It's not. Financially or
| climate wise - it's not sustainable. It's been cheap
| historically because the government subsidized it. It's
| actually very expensive. (Roads and service lines cost a
| lot of money - go figure)
|
| Idk why people keep thinking it's a cheaper way to do
| things when we know that it isn't. It's like no one here
| has read any of those strong towns articles.
| endisneigh wrote:
| No one said it's a solution, I'm simply describing reality,
| as you've also concluded.
|
| Also the rate of increase is not fixed. Areas with more
| propensity for development will see smaller price increases
| compared to areas with less propensity for development.
|
| It's more complicated than simply supply and demand, though
| it does reduce down to that in the end
| scythe wrote:
| >I'm simply describing reality
|
| That's clearly untrue. You're claiming there isn't a
| systemic problem, I'm claiming there is.
|
| >It's more complicated than simply supply and demand
|
| It's never more complicated than supply and demand; it's
| just that supply and demand are, themselves, both very
| complicated. If housing was just determined by such factors
| as climate and price, everyone would move to Silver City,
| New Mexico. Despite fantastic weather, relatively low
| prices and a beautiful mountain setting, it has seen a
| sharp population _decrease_ over the last decade.
|
| This isn't a matter of people being irrational, or
| "wanting" to live in "desirable" areas. It's a matter of
| people _needing_ to live in _productive_ areas. Denial won
| 't make it go away.
| endisneigh wrote:
| I never said it's not a problem, though. You're basically
| addressing things I never claimed to begin with.
|
| >>>> Housing is already very cheap in places no one wants
| to live in.
|
| >>> But this isn't a solution, it's a tautology
|
| >> No one said it's a solution, I'm simply describing
| reality, as you've also concluded.
|
| > That's clearly untrue. You're claiming there isn't a
| systemic problem, I'm claiming there is.
|
| I have no idea who you're even responding to.
| scythe wrote:
| The problem is your use of the word "wants". When I moved
| to San Francisco in 2014, it wasn't because I _wanted_
| to. I liked it there; I think San Francisco is certainly
| a _desirable_ place to live, but that doesn 't actually
| matter.
|
| The fact is, in 2014, I was planning to move to Portland,
| which, in 2014, was much more affordable than it is
| today. But I found a job in San Francisco before I found
| anything in Portland. That didn't happen because I
| thought San Francisco was desirable, it happened because
| people, except for the very few who make a lot of money
| working remotely, do not move somewhere simply because
| they _want_ to. Otherwise, I would have moved to Costa
| Rica.
|
| "Housing is already very cheap in places where there are
| few jobs, poor services and little infrastructure." See
| the difference?
| nikanj wrote:
| If you want to look at US you should look at EU. Don't compare
| US to France, compare California to France and Montana to
| Romania.
| lotsofpulp wrote:
| Maybe eastern half of Montana compares to Romania.
| harambae wrote:
| Yeah Montana is actually wildly more expensive than Romania
| across the board. Some areas (like Big Sky) are on par with
| other luxury resort areas like Vail or Tahoe.
|
| But I see the posters point, the US is larger and more
| diverse than one European nation.
| endisneigh wrote:
| Is it more expensive comparing median income to median
| house price? I doubt it, Romanians don't make very much.
| endisneigh wrote:
| Even if you do like for like the United States is much
| cheaper than Europe when comparing median income to median
| house price. Add in the highly subsidized mortgages and it's
| a slam dunk in favor of the United States.
|
| The housing crisis is a meme basically centered around 15
| locales in the states.
| nikanj wrote:
| > The housing crisis is a meme basically centered around 15
| locales in the states.
|
| Yes, because that's where the people are. The housing
| crisis heatmap is pretty much the US population heatmap (
| https://xkcd.com/1138/ ). Houses are cheap in the vast
| emptiness of the rural US. The EU doesn't really have
| similar unpopulated areas.
| endisneigh wrote:
| Ok, compare urban areas then. USA is still cheaper.
| bradlys wrote:
| Compare places with equal density is likely a better way
| to go about it.
| ChuckNorris89 wrote:
| _> Housing is already affordable in the United States compared
| to other countries when you compare median house price to
| median income._
|
| Ditto. As an European I envy how affordable real estate is in
| the US compared to Germany for example. My US boss at the time
| had bought a nice big house with a garden in the suburbs of the
| Dallas-FW area, way cheaper than something similar would have
| cost in the suburbs of Munich, where our office was.
|
| Case in point, most of our US colleagues had big houses in
| Texas which they owned, while most of the Munich team lived in
| small apartments which they had to rent. Quality of life is
| nice in Munich, but the real estate market there is crazy
| compared how good the US has it.
| helloworld732 wrote:
| >As an European I envy how affordable real estate is in the
| US compared to Germany for example
|
| You're comparing apples to oranges. You're comparing one of
| the cheapest major cities in the US to one of the more
| expensive cities in Europe. According to Zillow the median
| home price in Dallas is just under $300,000 but the median
| home price in Seattle where I'm currently renting and trying
| to buy a home is 3 times that at $900,000. So please don't
| tell me how good I have it in the US with real estate. With
| how large and diversified the US is, a more fair comparison
| would be to compare Dallas real estate prices to say a city
| like Bucharest and compare Munich real estate prices to a
| major US city on the west coast (San Diego, Los Angeles, San
| Francisco, Portland, Seattle) or the northeast (DC, New York
| City, Boston).
| Jyaif wrote:
| In Seattle, the average sale price per square foot is $535
| [1] while in Paris, the average sale price per square meter
| is 10208EUR, which is twice as high.
|
| Prices in Paris are pretty much the same as the prices of
| SF, but the salaries are _way_ lower (3x lower, and the
| taxes are almost as high as the ones in California).
|
| So yeah, I'd say you have it pretty good in the US :-)
|
| [1] https://www.noradarealestate.com/blog/seattle-real-
| estate-ma....
| razoroccam wrote:
| You're missing that houses in USA are basically built with
| wood whereas in EU its bricks and concrete, that makes a huge
| difference in price.
| ChuckNorris89 wrote:
| The insane real estate prices in some parts of Europe are
| mostly due (besides the monetary policies, NIMBYsm,
| regulations, and inherited wealth) to the scarcity of land
| in that desirable location, and less about the quality of
| what's built on it. And I'm not even talking about beach
| front properties in the south of France.
|
| Ive seen many old houses for sale in Germany for ludicrous
| money, that you'd basically have to tear down and build
| something livable.
| jazzyk wrote:
| Construction costs have very little to do with current
| asking prices.
|
| It is all about what the market can bear (and it can bear a
| lot these days, thanks to incessant money printing)
| tormeh wrote:
| Construction costs are negligible compared to land costs in
| urban areas. And the cost of land is set by demand.
| harambae wrote:
| >As urbanization in the United States accelerates for many
| reasons, including climate change
|
| Studies actually show the exact opposite.
|
| "Rapid urbanization is making people more vulnerable to the
| impacts of climate change, according to a new UN report" [0][1]
|
| [0] https://unfccc.int/news/rapid-urbanization-increases-
| climate...
|
| [1] https://unfccc.int/resource/docs/2017/sbsta/eng/inf03.pdf
| endisneigh wrote:
| I'm not seeing the contradiction between your link and what I
| stated. Your link says more people will go to cities, which
| will increase demand and subsequently prices. Which is also
| what I said
| harambae wrote:
| According to the link it's because people have moved into
| cities that they are most at risk for climate-change-based
| disruption to their lives.
|
| "The frequency of torrential rain and storm surges is on
| the rise in big, densely populated cities like New York,
| Mumbai and Jakarta, hitting those living in marginalised,
| informal settlements like slums the hardest."
|
| Also, large cities tend to be on the coastal regions --
| that's how they first became large cities, by being
| accessible to ports in many cases.
|
| Why would climate change force people out of the Omaha
| suburbs to Manhattan? I just don't understand the logic
| here at all, but maybe I'm missing something.
| endisneigh wrote:
| I'm not claiming climate change will force people to
| cities, I'm saying climate change will reduce the amount
| of available places to live, resulting in urbanization of
| the remaining locales from migrants/refugees of climate
| change.
| harambae wrote:
| Ok, could be. Predicting the future is difficult, though.
| On most real-estate forums I followed in early 2020 the
| prediction was that Covid would cause real-estate prices
| to nosedive and the exact opposite ultimately occurred.
| endisneigh wrote:
| That was a dumb prediction. Climate change is guaranteed
| to change which places are livable in the United States.
| It's anyones guess how much of an affect it will have,
| though.
| mcv wrote:
| > Housing is already very cheap in places no one wants to live
| in.
|
| Maybe make those places more attractive to live, to take the
| pressure off the high-demand places.
| ChuckNorris89 wrote:
| _> Maybe make those places more attractive to live, to take
| the pressure off the high-demand places._
|
| How? This is a catch-22 that every run down city is trying to
| solve and can't. People don't move in because the places have
| no good jobs, investments, infrastructure, teachers and
| doctors, while the investments, jobs, doctors and teachers
| don't come there because there's nothing waiting for them
| there.
|
| I've seen the same in Europe. Most good jobs, schools,
| doctors, etc, are all coming only in the big cities where all
| the talent is, and all the young talent is moving into the
| big cities, where all the good opportunities are. Catch-22.
| mcv wrote:
| Both sides would have to believe that the other side will
| show up too. There probably needs to be some sort of
| guarantee that they will.
| ChuckNorris89 wrote:
| _> Both sides would have to believe that the other side
| will show up too._
|
| The "build it and they will come" fallacy has failed way
| more times than it has succeeded. Companies know it and
| employees know it. Only governments and politicians seem
| to think otherwise when their election is on the line.
|
| I've seen it numerous times in my city. Every now and
| then there's big PR from the mayor and the university
| rector about how they'll turn $SMALL_EUROPEAN_COLLEGETOWN
| into a major tech hub, and years later down the line, no
| major tech companies have shown up. Rinse and repeat
| every ~4 years, while most grads and companies are moving
| to the capital city.
|
| _> There probably needs to be some sort of guarantee
| that they will._
|
| Nobody can guarantee you anything for the future, neither
| governments nor companies. The only truth is the present
| we live in and that's why most migration, public and
| private investments mostly happen in big cities that were
| already popular and wealthy, while the smaller cities
| with no investments are dying a long and slow death. It's
| a rampant and often unfair inequality but that's the sad
| reality.
| bluGill wrote:
| What could small town north Dakota do to make you want to
| move there? Fargo is maybe large enough to offer enough city
| life to attract you, but what could small towns actually do?
| xbar wrote:
| 10% of institutional home ownership is a couple of orders of
| magnitude more than the amount necessary to meet demand.
| ianai wrote:
| Color me unimpressed with the arguments laid down here. It boils
| down to low rates and looking at the recent past when rates were
| low. And let's point out rates have been 0-.25% for a long time
| now.
|
| Want to convince me? Pull in a Case-Schiller index comparison and
| some more technical, market level characteristic analysis.
|
| What would be interesting is figuring out price/interest rate
| sensitivities for buyers of homes in this market. Does investment
| leave the market if rates make other asset classes more viable?
| Probably. At what point?
|
| Edit-or tell me that the Fed can't possibly raises rates for
| $goodReasons.
| evancoop wrote:
| The notion of "normal" is dubious. For a decade preceding 2008,
| minimal verification of income or employment was required to buy
| a home (prices soared). Thereafter, the pendulum swung mightily
| in the other direction (having tried to purchase a home as a
| contractor, I can attest). Then the pandemic accelerated the
| migration to the suburbs for young families (prices soared).
|
| If there are as many over-levered real-estate investors as the
| article suggests, a market downturn will yield foreclosures, and
| PE firms will feast once again.
|
| There is no "normal." Only past, present, and future.
| nikanj wrote:
| A crash of 25% would take us back to..maybe summer 2020? A crash
| of 50% would take us back to...2015ish?
|
| I don't think the Fed etc have the guts to allow a 80% drop, so
| that the 2 million dollar house would drop back to $400k, and
| become reachable for the majority of people
| skwirl wrote:
| A house that's $2m today is that expensive because it's a
| highly desirable home, much more desirable than the vast
| majority of homes out there - probably in the top 5%. You can
| never make such homes reachable for the majority of people
| because there aren't enough of them - if there were, they
| wouldn't be $2m right now. 50%+ of people can never afford the
| top 5% of homes.
| nikanj wrote:
| The two-question test I use is:
|
| 1) Do your parents own their home? 2) Could people with
| similar jobs/savings/backgrounds get a similar house today?
|
| Usually the answer to 1 is yes, and the answer to 2 is no.
| 95% of homes are priced like the top 5% of homes. A million-
| dollar mansion used to be, well, a mansion. Now a million-
| dollar house is "a detached house within a 45 minutes driving
| distance to downtown".
| scruple wrote:
| At the rate things are going, in a few more years I
| wouldn't even be able to afford the home that we got into
| in 2016. It's already "appreciated" by 60% with no signs of
| slowing down. Every home that sells in our neighborhood
| today sells inside of a weekend and for "record-breaking"
| amounts. It's hard for me to even describe the way that
| this makes me feel. I suppose that I should be happy
| because, wow, look at my "investment" go! But, I don't. I
| feel afraid for my family's future, especially so when it
| concerns my very young children. I imagine that this is
| similar to how people felt during the run-up to the 2008
| crisis.
|
| edit/ words.
| esja wrote:
| That's only really true if you are talking about specific
| houses and locations, while keeping everything else
| unchanged.
|
| In general, houses are just as desirable as they were a few
| years ago when they were half the price. All that has
| materially changed is the supply and cost of credit.
|
| The same thing works on the downside: broad price falls are
| not due to mass desirability changes. They are due to credit
| becoming harder to get and more expensive to repay on a
| monthly basis.
|
| Finance 101: asset prices move inverse to the discount rate.
| skwirl wrote:
| I never said macro price changes were driven by
| desirability changes - my point was almost exactly the
| opposite: The macro price is irrelevant. The top 5% of
| homes for sale will never be available to 50% of buyers.
| Price differences at a point in time signal relative
| desirability of homes. Over time, prices may go up or down,
| but the top 5% of homes will always be significantly more
| expensive than the median home.
| esja wrote:
| That's a different point than what I think the OP was
| making, and it's not entirely accurate either (except in
| a relative sense). For it to be completely correct,
| buying power would have to move identically with prices,
| and it does not. There have been many periods and places
| in history where the median income earner can afford a
| top 20% home (but may not choose to), and many other
| periods where the median income earner can only afford a
| bottom 20% home, and may instead choose to rent. What
| we've seen over the past decades is an acceleration of
| price ahead of buying power, pushing more people into
| renting, and leading to an accumulation of multiple
| properties in the hands of a smaller number of wealthier
| people (or institutions like Blackstone).
| unnouinceput wrote:
| Buy land instead, build a home, rent meanwhile. In max 2 years
| you can have your dream house and cheaper than current market.
| fzzzy wrote:
| Building is quite expensive.
| paulnpace wrote:
| > Buy land instead, build a home
|
| You can't. That's why the prices are so high. The price of
| construction will be built into the price asked by the land
| owner such that the overall price is within bounds of an
| existing home, and usually more expensive as a new home is seen
| as a premium product.
|
| Historically, new homes are more expensive than existing homes,
| as it was in the U.S. prior to the 1990s that a new home was an
| upgrade from an older home for the people purchasing the new
| home, and the older home would be purchased (or rented) at a
| lower rate than the new home, a process that has disappeared
| due to constriction on supply and nowadays has spawned the term
| "market affordable housing", as I have seen this term used by
| charitable organizations that historically focused on housing
| for the extremely poor, now change somewhat to advocating for
| housing that merely lower class can afford, as this class is
| slowly being pushed completely out of affording any form of
| housing outside of shared _rooms_.
| goldenkey wrote:
| How do you do that in an established city?
| [deleted]
| amcoastal wrote:
| There are tradeoffs everywhere. You have to assume that when
| stacking millions of people on top of each other everyone
| will not own a home. That's not a "policy" issue, it's just
| physics. If you want to live in city for whatever reasons,
| you just have to take that into consideration.
| pmorici wrote:
| Find someone who owns an oversized lot and offer to buy their
| yard or buy a tear down.
| StevePerkins wrote:
| You'd have to find a builder. After 2008, that industry re-
| tooled and now there are considerably fewer builders working in
| residential development. And even those only want to work with
| developers on building new subdivisions, not work with
| individuals on single homes.
| bananapear wrote:
| What do you mean by "re-tooled"? What changed in 2008?
| StevePerkins wrote:
| Re-tooled in the sense of adapting their organizations to
| pursue commercial development opportunities more so than
| residential development (e.g. hiring more people with
| networks and experience in that market).
|
| The 2007-2008 crash wiped out a lot of over-leveraged
| residential developers, and individuals building single
| homes. From conversations I've had with people in that
| industry, their sense is that we learned next to nothing
| and that a repeat of that experience is inevitable. So
| commercial development became seen as more desirable and
| less risky.
|
| Now that I think about it though, I haven't had any
| conversations since COVID! I wonder if the rise of remote
| work will have enough impact on commercial development to
| flip that calculus again.
| syedkarim wrote:
| We hired a builder about five years ago to build our home.
| What we found after talking with a dozen (or more) local
| custom home builders was that the math doesn't make sense
| for lower-cost custom homes. A custom home, in this case,
| is anything that is not a part of a development or
| subdivision. The GC (general contractor/builder) charges
| about a 20% management fee on top of all costs that are
| paid to build the house. GC have minimal full-time staff of
| their own and use sub-contractors for most everything.
| Builders with really good reputations might charge up to a
| 30% management fee. The net income, after the builder's
| operational costs (insurance, taxes, overhead) are 10% of
| the home cost if the management fee is 20%.
|
| A builder can only take on so many projects per year.
| Typically three or four. The amount of work that goes into
| managing a $300,000 project (not including land) is mostly
| the same as one that costs $600,000 or $1,200,000. Why make
| $30,000 per project when there's an opportunity for $60k or
| $120k?
|
| After 2008, I believe banks started being much less willing
| to provide construction loans to builders, as many went
| upside down on projects when the market crashed. The bank
| doesn't want to repossess a halfway-done new construction
| project, which is the hardest thing to resell. There are
| fewer speculative custom homes being built now, compared to
| before 2008. And builders are no longer taking any kind of
| risk on projects, so their customers need to acquire
| financing on their own.
|
| Relatively few banks offer reasonably priced construction
| loans. We were required to have the land paid in full and
| also bring 30% as a down payment for the construction loan.
| harambae wrote:
| I just wanted to chime in (since you're being downvoted) that
| this is exactly what I'm doing and I viewed things roughly the
| same way as you.
|
| The difficult part is finding a reasonable plot of land. During
| housing booms (bubbles?) land also tends to be overpriced, and
| you need to be aware of local regulations (how far well water
| needs to be from a leach field, etc.)
|
| In my case, I'll only be required to go into work twice a week
| at most in Boston, so I'm building the house 3 hours away in
| Maine. I enjoy the rural lifestyle and also have personal
| connections to a builder - I'm not saying this is for everyone
| necessarily.
|
| In this type of climate new housing can be justifiably built to
| an incredibly high level of insulation with only some
| intentional (and controllable) fresh air allowed. ICF is better
| than wood if you plan windows ahead of time. Eventually this
| will save you money in heating costs when you live in New
| England.
|
| Anyway, yes it's still possible to build houses in America.
| parkingrift wrote:
| You could potentially build a cheaper home, but it is extremely
| unlikely. Individuals almost never have access to small enough
| plots of land for this to be feasible.
|
| This really only works in the exurbs or rural areas.
| ryathal wrote:
| Unless you plan on doing the building yourself, building is
| more expensive than buying.
| libertine wrote:
| Part of this phenomenon reached Portugal during the pandemic,
| some people from "big cities" went to the interior to buy houses
| for cheap to then either rent their houses in the city or the
| other one acquired.
|
| Basically they removed a lot of houses from the market from
| locals, making them reach prohibitive prices completely off the
| reality of what locals can afford... where will they go?
|
| What's the value added from the new-comers to those markets? They
| are not developing new houses, they aren't creating new jobs, and
| they shop mostly in big supermarkets.
| scythe wrote:
| https://constructionphysics.substack.com/p/construction-cost...
|
| https://www.vox.com/22534714/rail-roads-infrastructure-costs...
|
| It's funny that we talk about manufacturing "dying" while
| productivity is still very high. Meanwhile, the construction
| industry is actually foundering and we shrug. "Guess China is
| buying all the cement." Which cannot explain international
| disparities at all.
|
| We can build small projects out of wood just fine. But those
| smaller projects need to be supported by larger projects:
| airports, hospitals, roads. Our existing concrete (literally)
| infrastructure is overburdened, which drives voter demand for
| restrictions on move-ins. Stop moving to Atlanta, stop moving to
| Austin, stop moving to Sussex County, Delaware.
|
| We shouldn't be overwhelmed every time a city grows. Wonks blame
| the voters, voters blame the wonks, a bridge in Pittsburgh falls
| into a river.
|
| The history of many cities shows periods of rapid growth far
| exceeding Austin over the last decade. San Francisco's population
| grew by >20% every decade from 1850 to 1930. There is no general
| rule that says growing cities must be so expensive. It's a
| phenomenon in the US, right now, not everywhere, all the time.
| weregiraffe wrote:
| There will never be a "normal" housing market until the
| government starts to treat it as the food market. That is, as an
| absolute life necessity that needs to to be heavily regulated and
| subsidized to ensure everyone has access.
| nikanj wrote:
| If I own land and decide to grow food, I need way less permits
| than if I decide to grow housing
| xibalba wrote:
| Over regulation is a big part of how this mess was created in
| the first place. Go read about Stockholm's housing Utopia
| hellscape to see the future you'd create.
| mmarq wrote:
| The only housing hellscape I had to deal with in my entire
| life has been renting in London. Thank God I finally managed
| to buy a flat, but I've been at risk of homelessness with a
| solid 6-digit salary, because landlords can evict you with 1
| month notice for no reason (so guess what happens if the
| fridge breaks and they don't want to replace it). Renters are
| vetted more than somebody who requested a mortgage, are not
| expected to have any privacy and may not pass the reference
| check if they had a severe disease (say cancer). The state of
| disrepair is appalling, professionals live in places where
| Sweden, as you mentioned Stockholm, wouldn't house criminals
| or recovering addicts (as in somebody who can't pay rent).
|
| Going from this hellscape to whatever is going on in
| Stockholm would definitely be an improvement.
| xibalba wrote:
| > Going from this hellscape to whatever is going on in
| Stockholm would definitely be an improvement
|
| Are you sure?:
|
| "Sweden has not built enough rental(s) ... meaning long
| queues for rent-controlled housing ... average waiting time
| was 9 years in 2020" [1]
|
| "...fuelled a thriving sub-letting or "second-hand" market,
| with "first-hand" renters and owners alike offering
| apartments to tenants for very high prices, despite
| regulations designed to stop people being ripped-off." [2]
|
| "70% of local authorities reported a housing shortage in
| 2020." [1]
|
| "...strict rent controls discourage developers from
| building and individuals from renting out vacant
| properties..." [1]
|
| "Generous mortgage tax breaks encourage households to buy
| property and the combination has forced up house prices and
| household borrowing to levels that threaten the economy"
| [1]
|
| "Home prices have risen around 18% over the last year
| alone" [1]
|
| "Regulations ... are also fuelling market instability" [2]
|
| "'I have a lot of friends who are struggling - moving many
| times per year,' says Maria Grigorenko, a 29-year-old brand
| manager in Stockholm" [2]
|
| [1] https://www.reuters.com/article/sweden-housing/factbox-
| dysfu...
|
| [2] https://www.bbc.com/news/business-58317555
| mmarq wrote:
| You've just posted a link that proves my point:
|
| Despite its complex challenges, Sweden is in a better
| position on housing than many other EU countries. Only
| around 8% of Swedes live in households spending more than
| 40% of disposable income on housing, compared to 15% in
| the UK and almost 40% in Greece, according Eurostat data.
| Swedes are also less likely to live with their parents
| than any other young Europeans. But until recently,
| getting a well-maintained, rent-controlled apartment
| straight after school is something some Swedes have just
| taken "for granted", argues Liza, a 37-year-old tech
| worker, who didn't want to share her last name. She moved
| to London from Stockholm last year, and believes Swedes
| complaining about housing shortages would do well to put
| their struggles in a wider context. "In the UK,
| apartments are often super old and not of good standard,
| even though the rent would be much more than in Sweden."
| goodpoint wrote:
| "Over regulation" is an absurd concept: laws are not simply
| "not enough" or "too much".
|
| What really matters is *what* is allowed and prohibited and
| who benefits from it.
|
| In many countries regulatory capture led to building and
| zoning laws that serve to the interest of large investors
| groups as well as small speculators.
|
| People who have a home as necessity rather than an investment
| are put at a disadvantage.
| pmorici wrote:
| Wether you like it or not owning a home is always an
| investment. Perhaps not a good one but an investment non
| the less. To act like there are two types of people and
| that one disadvantaging the other because of their
| preference is silly.
| goodpoint wrote:
| No. You are confusing the primary purpose being an
| investment and being a dwelling.
|
| The intentions and behavior of the buyer can be
| profoundly different.
|
| Unsurprisingly, most countries have different regulations
| for first home buyer VS local investors VS foreign
| investors.
|
| If anything it's silly not wanting to acknowledge the
| difference. Or perhaps a bit cheeky.
| pmorici wrote:
| Unless the owner is letting the property sit empty it
| isn't going to have an effect on the supply/ demand
| balance of housing. Where you live is always going to
| have financial consequences that can't be ignored.
| goodpoint wrote:
| > Unless the owner is letting the property sit empty
|
| ...which happens all the time, especially with large
| speculative investors.
|
| > it isn't going to have an effect
|
| Besides, it's also plain wrong, obviously. Owners have an
| effect on the occupancy rate. The same house can be
| occupied by 2, 3 or 4 for example.
| crisdux wrote:
| Government had a heavy hand in causing the issue and your
| solution is more government to fix the problem? We need reform.
|
| In general, food in the US is not heavily regulated and that's
| why we have some of the cheapest and most varied foods in the
| world.
| alisonkisk wrote:
| Food production is extremely subsidized and that is why it is
| cheap.
| crisdux wrote:
| No food is cheap because of our vast productive land and
| technology. I'm not denying that subsidizes don't exist.
| You can't just make general statements.
|
| If you added up the entire market for all retail and food
| services-- we are talking trillions of dollars a year in
| sales. The subsidizes are small. Think restaurants, grocery
| stores, food processing, etc that are all in this category.
| rowanajmarshall wrote:
| Food is also cheap the New Zealand, who doesn't subsidise
| at all. The US has fantastic soils, good weather, buckets
| of cheap capital, and an awesome transportation network
| (both natural and artificial); that's why food is cheap.
| tootahe45 wrote:
| It's heavily regulated and subsidized in NZ and it's also lot
| more un-affordable here. Since a few years ago we've been
| allowed to withdraw our version of a 401k to buy houses, to
| give you an idea of how much the govt has been trying to prop
| things up.
| zeckalpha wrote:
| You can do that in the US, too
| https://www.investopedia.com/ask/answers/081815/can-i-
| take-m...
| StevePerkins wrote:
| Bring back mid-century urban planning? While we're ignoring
| history of utopian policies, perhaps we should give eugenics a
| second chance?
| alisonkisk wrote:
| sascha_sl wrote:
| Ah, great, another thing I wouldn't have access to in my lifetime
| despite being in the top 25% income bracket.
|
| Capital accumulates in the hands of so few, it's just so fucked
| up and hurts to even think about. I'd settle in a hut in the
| forest, but I'm sure someone will try to evict me there too!
| bittercynic wrote:
| The timing is unpredictable, but I think it's highly likely
| that you will get the opportunity to buy yourself a house if
| you are thrifty and patient.
| ianai wrote:
| Eh or buy at a high price now and find yourself unable to
| sell when prices lower. The long term population trends in
| the US are decreasing. My guess is it'll be driven by baby
| boomer population decline. It'd be interesting to look into
| that deeper.
|
| Probably the best home buying scenario right now is to buy as
| little as you need. At least the eventual hurt is lesser.
|
| I mirror GP though. I graduated into the Great Recession and
| couldn't find work for many years. The work I did eventually
| find wouldn't have afforded real estate, ever. Now that my
| incomes up to buy home territory (comfortably) there's this
| huge land grab. Not going to start on things like family
| formation. Feels like chasing a hundred dollar bill that's
| being pulled on a line away from me.
| formerly_proven wrote:
| You can't live in the forest, that's illegal.
| doingtheiroming wrote:
| When has the housing market ever been normal? It's had periods of
| equilibrium. Is that a synonym for normality? If we are thinking
| it terms of common features over time, perhaps the housing market
| mostly appearing to be demented is actually normality.
| ChuckNorris89 wrote:
| _> When has the housing market ever been normal?_
|
| When we had less regulation, the prices increases followed wage
| increases or inflation since housing was built and bought just
| so families could live in and wasn't a speculative/investment
| vehicle so others could get a return on their investment.
| mooreds wrote:
| The author ignores one of the biggest issues, which is the
| secular generational trend of the millenials (the biggest
| generation ever) moving into prime housebuying years (30-40s)
| while the boomers (second biggest generation) are aging in place.
| That's also putting a squeeze on available inventory.
|
| The author also ignores the USA's land use policy (other than a
| tangential nod to 'we aren't building enough' which could have
| many reasons).
|
| Of course, there are many factors that the author mentions that
| are also adding stress to the housing market. It'd be interesting
| to read some research that attributes weight to each of them.
| harambae wrote:
| >secular generational trend of the millenials (the biggest
| generation ever) moving into prime housebuying years
|
| I see this argument repeated everywhere and I still don't
| believe it. What, did these Millenials just crawl out of a
| swamp a week ago?
|
| It was known 35.75 years in advance when 35 year old Millenials
| would turn this age (assuming they survived life to that
| point).
|
| It's the world's most predictable situation. Are the same
| people who are surprised by this also surprised when it snows
| each winter?
| emerged wrote:
| The more articles predict continued doom and gloom, the more
| optimistic I become. Simply because that heuristic has made a
| fine Bayesian prior for most of my life.
| theonlybutlet wrote:
| UN Reckons the world population should plateau by 2100 so I guess
| then.
| euroclydon wrote:
| "It's like a doubling up. The homeowner goes to buy the next
| home, move up or move down. And because mortgages are so cheap,
| it's a really good time to keep the first one as a rental unit.
| And so each year I go to buy a next one and I keep my first one.
| And so that's one big phenomenon. And all of a sudden I'm a real
| estate investor. And at the same time, institutional money's been
| cheap. There's a lot of news about the big private equity funds
| buying up homes, but it's actually the individuals who are
| driving most of it. So in the last decade we've taken 8 million
| homes out of the resale cycle and moved them into the investment
| rental part of the pool. And that's, you know, 9% of all the
| single family homes."
|
| This tells me that home seekers should be making offers to
| landlords rather than wasting their time making cold offers for
| people's primary residence. I bet a lot of those small time
| landlords are nervous about cash flow, and you could find one
| that's ready to get out.
| willcipriano wrote:
| I think the trick to "we buy homes" or whatever is they buy way
| under market. My neighbor sold for something like 150k, they
| fixed the place up and resold it for a little over 500k.
| Landlords aren't going to go that low.
| bluGill wrote:
| I'm guessing they put in 100k or more go remodel. 290k
| wouldn't surprise me. They are still making a lot money, but
| they are also taking that risk. There is far more of it going
| on than should be, but people who need to move in a hurry
| might like it. The better such companies that have existed
| for years without the advertising have good working
| relationships with contractors and thus get both a better
| deal and faster service than you could: the contractors know
| who brings in busines. They also know which contractors are
| actually good as opposed to scams.
|
| But the business doesn't support nearly the advertising that
| you see in normal markets. Call A qualified realtor with a
| dump house and they will call these people if your house is a
| hard sell. (If you know the fair value of your house you can
| avoid realtor fees selling direct )
| willcipriano wrote:
| I'm sure they put a lot of money in, these are old houses.
| I think they target less sophisticated sellers who don't
| have capital. She could've gotten a lot better deal if she
| put 20k - 30k in herself and fixed the major issues but she
| wasn't in a place to do that. A landlord with a few
| properties has more options and won't sell as low.
| xwdv wrote:
| This will only guarantee you will buy the shittiest houses with
| poor cashflow or other issues, as those are the only ones
| landlords will sell off.
| bsenftner wrote:
| Although the books are old and the author discredited, the
| "Rich Dad Poor Dad" real estate investment series still have a
| large number of people trying to follow the author's advice.
| They and similar "pop culture investors" are the prime
| landlords in over their heads that would be likely to sell. But
| be able to negotiate potential nonsense, as they are over their
| heads and tend not to be rational about their investment.
| StevePerkins wrote:
| > _" There's a lot of news about the big private equity funds
| buying up homes, but it's actually the individuals who are
| driving most of it."_
|
| I realize there are a lot of "house flipper" shows on reality
| TV, but I don't buy this. I'm not receiving 20-30 phone calls
| and texts per week from "individuals" wanting to buy my house.
| I'm getting those calls from sophisticated commercial
| operations, who mask their phone numbers to include the same
| area code and first three digits as my own, etc.
|
| Individuals aren't putting up "We buy houses! Guaranteed
| offer!" billboards every few hundred feet in my city.
|
| I don't think that banks will even give individuals an endless
| series of mortgages. You can't declare rental income as
| "income" to qualify for mortgage loans.
| dmitrygr wrote:
| > You can't declare rental income as "income" to qualify for
| mortgage loans.
|
| You absolutely can. I did that. Bank was happy to consider
| money i make from renting out one of my houses as income when
| qualifying me for a mortgage for another.
| ryathal wrote:
| You can absolutely use rental income as income, the main
| thing is you generally need 1-2 years of experience running
| rentals. You can even use theoretical income from renting out
| a new purchase in some cases.
| OJFord wrote:
| Wow, where's that?
| StevePerkins wrote:
| Atlanta. The Southeast is booming, and Atlanta in
| particular is turning into a tech hub. There may be less
| pressure in areas that are seeing net migration outflows,
| but I don't think the U.S. has enough housing to cover our
| population increases anywhere.
| powvans wrote:
| Can confirm. I live in Atlanta and am about to write
| letters like the one from the article to the owners of a
| couple dozen properties in my neighborhood that I've
| identified as suitable for my family. Just as discussed,
| I'm not planning to sell my current home.
|
| PSA: For anyone thinking of moving to Atlanta, don't.
| It's horrible here, go anywhere else. Save yourself from
| doom! /s
| mooreds wrote:
| > You can't declare rental income as "income" to qualify for
| mortgage loans.
|
| Depends. If you have a signed lease, some lenders will take
| some portion of that into account when considering lending
| you money.
| mcv wrote:
| I think there needs to be a strong fiscal disincentive
| against owning houses for investment. Houses need to be lived
| in, preferably by the owner. I'm all for a punitive tax on
| empty houses or houses with ridiculously high rent.
| closeparen wrote:
| Being able to rent a place to live is good, actually.
| escapedmoose wrote:
| But not nearly as good as being able to buy it (assuming
| the single-family, multi-year home that the author is
| describing). Communities need both options, but the
| current climate leans far too heavily toward renting in
| situations when buying would be better for everyone.
| tut-urut-utut wrote:
| One step forward would be to just disallow any tax
| deductions for renting. Next step, increase taxes on rented
| or empty housing.
|
| In a few years, the market would settle with much more
| affordable prices for buying. But we still would have a
| problem that building new houses would stop to a halt due
| to low ROI, and renting market would heat again. For that,
| I'm not sure how to solve this.
| pmorici wrote:
| Wether a house is rented or owned by the person occupying
| it doesn't effect the basic supply/ demand dynamics of
| the market. Punitive taxes on landlords isn't going to
| cause housing prices to come down because the cause of
| high prices is a housing shortage. There is no indication
| supply is being artificially depressed by people letting
| houses sit unoccupied.
| maxerickson wrote:
| Build lots of housing so that the market isn't demand
| driven.
| readthenotes1 wrote:
| Have you seen the price of timber lately?
|
| (I know a family that opened a concrete plant in 2016.
| They are now multimillionaires whereas before they were
| scrambling to keep afloat)
| shiftpgdn wrote:
| They already have this in Texas (homestead exemption) and
| Texas is one of the hottest markets for single family
| rentals. They are building entire suburbs that are rental
| homes only. Millennials as a group don't want to live in
| apartments anymore because of the effects of Covid 19
| causing people to be locked into their homes.
| StevePerkins wrote:
| Same thing in Georgia (punitive taxes on any residential
| property beyond your primary home), and Atlanta is still
| one of the hottest housing markets in the nation.
|
| Just pass those costs on to your tenants.
| escapedmoose wrote:
| I don't think homestead exemption is big enough to
| realistically expect a broad shift in behavior.
| curiousllama wrote:
| No, but they consider a mortgage on a rental property with a
| signed lease separately from a mortgage on a
| primary/secondary residence.
|
| They'll def give an endless series of mortgages to an
| otherwise wealthy person who keeps paying them back by
| renting out the homes.
| bognition wrote:
| > "You can't declare rental income as "income" to qualify for
| mortgage loans."
|
| You absolutely can, it is income after all.
|
| All the banks care about is if the cost of the new mortgage
| is going to exceed your debt to income ratio.
| ryanianian wrote:
| > All the banks care about is if the cost of the new
| mortgage is going to exceed your debt to income ratio.
|
| Not exactly. The underwriting process is very different for
| full-time residences versus investment/rental properties.
| Rates are usually higher, debt/income ratio must be lower,
| and appraisals and cashflow analyses include rental market
| considerations.
|
| Given this it's entirely reasonable to assume the rift
| between mortgage products for investment vs residence to
| widen. If congresspeople want to do something about
| perceived imbalance between residence and income real-
| estate, they could change federal subsidies or underwriting
| requirements for income properties making mortgages for
| income properties much more expensive and/or harder to get.
|
| (Just realized a peer comment said something similar.)
| Kon-Peki wrote:
| That's not what the article is saying. You buy a house as
| your full-time residence, live in it for a few years, and
| then buy another as your full-time residence. The
| previous one is rented out. As long as you wait a few
| years, the bank holding the loan on the previous house
| doesn't care. That original, owner-occupied rate is
| locked in for the life of the loan.
| IAmGraydon wrote:
| What is described here (buying a chain of properties year to
| year) is unlikely for most people. You can't use rental income
| when calculating your debt to income ratio. Unless you have a
| massive income or an equally massive pile of cash, you are
| going to quickly run out of lenders willing to lend to you in
| your entirely over-levered position. Also, you have to stay in
| a home for a certain number of years for it to be considered a
| "primary residence" and therefor able to be mortgaged with a
| low down payment. Otherwise in each transaction you'll have to
| come up with 25-30% down.
| ttt333 wrote:
| > "You can't use rental income when calculating your debt to
| income ratio."
|
| Do you have a source for this claim? Based on personal
| friends who work in the lending / single family rental home
| space, I don't think that's correct. [0] [1]
|
| [0]: https://www.valuepenguin.com/mortgages/claiming-rental-
| incom...
|
| [1]: https://selling-guide.fanniemae.com/Selling-
| Guide/Originatio...
| StevePerkins wrote:
| If that's actually the case, and many of those mortgages
| are adjustable-rate, then we've learned nothing and another
| 2007 may be inevitable.
|
| Fortunately, I still believe that the overwhelming majority
| of new rental units are being scooped up and placed on
| market by commercial entities, not individuals. You may
| have many individuals putting their second house up for
| rent, but I'm skeptical that banks are giving individuals a
| half-dozen loans in series. With the housing shortage as
| bad as it is (we're just not building enough to offset our
| population growth), I suspect that commercial entities
| would swoop in and buy up most second houses that
| individuals couldn't maintain anymore.
| adwi wrote:
| It is the case, and generally people that are savvy
| enough to purchase these are savvy enough to lock in a 3%
| rate when offered.
| endisneigh wrote:
| Most of this is false:
|
| 1. With a lease and/or two years of prior landlord experience
| you can use rental income both for existing and projected for
| new property.
|
| 2. For multi unit, if you're owner occupied you qualify for
| FHA and therefore can put down as little as 3%
|
| 3. You only have to stay in your home for 6 months for
| refinance and 1 year for initial purchase. The guidelines are
| loose, and can relocate earlier depending.
|
| That being said, it doesn't really make sense since most
| properties in high cost of living areas don't cash flow well
| to begin with.
| adwi wrote:
| Having purchased a multifamily recently I can confirm all
| of these are true.
|
| I bought during the plummeting urban Covid rents. When
| looking for my mortgage a few banks told me their
| underwriters were temporarily directed to ignore all
| building income toward qualification.
|
| I worked with a good mortgage broker and he had the option
| of 20+ banks that were happy to write a conventional loan
| using a ratio of the building's income counting toward my
| qualification. I believe it was 80%.
|
| Re: cash flow, I live in half the building, at current
| rents the two tenants pay 84% of the mortgage tax and
| insurance. The tax write offs more than make up for the
| rest.
| ianai wrote:
| Most or all of these type of landlords that I've spoken to
| strongly disliked to actively hated being a landlord. It's very
| counter the "get wealthy slowly" narrative of being a landlord.
| Of course the financial aspects are true though they don't
| mention them. This is in a location where good renters are a
| dime a dozen and building new units is pretty much impossible.
| a2tech wrote:
| Well yes, they all complain about being a landlord. However
| as you say, they never discuss the money side of things--just
| the hassle. Most landlords in a very bad year will break
| even, but in an average year will be in the positive. And of
| course you shouldn't even be looking at rental income in the
| short term--you should be looking at it as an asset that
| someone else pays for entirely and maybe slops a little extra
| cash to you in the short term and THEN when you're older and
| they've paid for your asset as a revenue generator. I've been
| looking at buying a rental even though the prices are insane
| right now simply as a source of reoccurring revenue when my
| wife and I are older and the loan has been paid off.
| sjamaan wrote:
| I've done the same (bought a house, kept the old one for
| rental) and used an agency as a middle man. They take care of
| collecting rent, and the day to day business if, say, a
| plumber needs to be called (I just have to sign off on it).
| This at a 6% fee of the monthly rent is quite worth it to
| avoid any hassle. The rent income also fully covers the
| mortgage of the new house so basically my living costs are
| for free.
| nerdponx wrote:
| Being a halfway decent landlord is a miserable pain in the
| ass unless you live or work very close to your rental
| property. And even then, it's pretty easy to see several
| months income go up in smoke with even a modest renovation or
| repair.
|
| The income is nice, but it's anything but "passive" unless
| your rents are so high that you can afford to pay a
| management company, and/or you are comfortable being a
| slumlord.
| ianai wrote:
| Yes and I've heard mostly complaints about management
| companies. All the classic principal/agent problems with
| the costs of bringing more people into the situation.
|
| Edit-added "more people"
| prepend wrote:
| > This tells me that home seekers should be making offers to
| landlords rather than wasting their time making cold offers for
| people's primary residence.
|
| I don't think so as landlords are locked into a 3% fixed
| mortgage and have a profitable income stream.
|
| Unless there's some life event that requires them to sell,
| landlords are less likely to sell than regular homeowners.
| [deleted]
| paulnpace wrote:
| Not in the article and rarely discussed is the most powerful
| influence on the price of housing: lack of production.
|
| Prices are a function of demand _and supply_. Oddly, the article
| seems to just drive right past this as the author discusses the
| problems related to people having nowhere to go, specifically
| when mentioning that if they sell their home for a tidy profit,
| they don 't actually profit because they now have to go compete
| for a house. For all the arguments in the article, the following
| proposition seems like a reasonable evaluation: if Silicon Valley
| residents woke up tomorrow morning and discovered 5,000,000 new
| homes on the market, would that be predicted to influence the
| price? Of course it would, and that impact would be that prices
| would immediately plummet.
|
| This is true because the housing we are talking about may also be
| called _shelter_ , and the demand for shelter is highly
| inelastic. People will do a lot to maintain shelter, including
| going without many other consumer items, buying used vehicles and
| using them until they turn to dust, sharing housing, taking
| second jobs, etc. In effect, all of the things we seen the
| younger generations doing are all the things we can easily
| predict one to do in order to have shelter, though most are not
| aware of or otherwise unable to articulate these kinds of
| economic considerations.
|
| Supply was only marginally restricted until somewhere around the
| early 90s, when states, counties, and municipalities began
| placing wholesale moratoriums on housing construction*. I can
| remember in the 80s as child driving through San Jose and seeing
| large orchards that are all now suburban housing. Looking around
| the valley, there has been no other housing development anywhere
| near that size, yet the net job growth in absolute numbers is
| many times higher.
|
| Many of the valley central planners plan construction as if it's
| still 1980, where each residential unit has something like 3
| bedrooms to be occupied by two adults and two children, but
| reality is more like 3-5 adults. The result is substantially
| higher traffic and inadequate services, notably in the grocery
| stores which I observed to never have enough parking spaces, long
| lines, and popular items frequently out of stock on the shelf.
| Long commutes to far away communities are another result,
| essentially the planners deciding that among the most efficient
| workforce on the planet must be the task of sitting in a car 3
| hours every day, which commonly cuts into what would likely be a
| good night's sleep, making the workers yet less efficient.
|
| The lack of shelter problem cannot be solved through anything
| other than increased production of housing. It is not a price
| problem. Prices are just the method we use to inform us on the
| situation of supply and demand for a product.
|
| Older generations will fight this, tooth and nail, because much
| of their savings are wrapped inside of a product they are
| consuming. Younger generations, if they ever figure out what is
| going on, may become hostile to the other needs of older
| generations, which, in my opinion, is a far greater risk to the
| older generations than the loss of equity in their homes. This
| goes without having a discussion as to the immorality of forcing
| younger generations into conditions of economically-enforced
| cohabitation and homelessness purely so that older generations
| can enjoy the profit that comes with restricted supply on the
| assets they own.
|
| I suppose this was a long-winded way of stating that the
| article's title claim is wrong, because there will likely never
| be a "normal housing market" short of some sort of large scale
| coordinated effort to substantially loosen or eliminate
| restrictions on construction.
|
| * Especially in California, housing construction is largely
| limited in absolute number of "new residential units" (NRUs),
| which is different than the popular understanding of increased
| difficulty in approval of design (the latter exists, and has for
| a long time, but it is not as significant as absolute
| restriction).
| lotsofpulp wrote:
| > : if Silicon Valley residents woke up tomorrow morning and
| discovered 5,000,000 new homes on the market, would that be
| predicted to influence the price? Of course it would, and that
| impact would be that prices would immediately plummet.
|
| It might also plummet because quality of life would go down as
| resources that cannot be replicated have to be divided amongst
| many more people. Same as tourist hotspots. Why would people
| already living there want more crowded trails, ski slopes, and
| beaches?
| paulnpace wrote:
| You are taking out of context a slice of my entire argument,
| which includes the fact that the resources are already being
| consumed. The people are already living there.
|
| The choice of an outrageously high number of homes in the
| example is purely to demonstrate that the fallacious claim of
| housing just mysteriously increasing in price without any
| visible cause, often presented as some magical force within
| the universe.
|
| It is, in fact, not possible to have such a scenario because
| such a construction project would require a lot of planning,
| so prices would actually begin to fall once the plans are put
| into place, likely reducing the overall number of units
| constructed as developers abandon plans, and the ultimate
| "clearing" price will drop to within some more reasonable
| bounds than the current price reflects.
| lotsofpulp wrote:
| Sorry, I did not mean to imply that I disagree with your
| post. Rather, I was trying to provide context for why
| existing land owners are incentivized to vote for
| restrictions on new construction, or even restrictions on
| higher density construction.
|
| You are right that there is no normal. The US in the 1900s,
| especially western US, was probably a right place in the
| right time event where the parameters of the environment
| allowed for that number of humans to live at a certain
| quality of life, and the parameters have changed now that
| there are billions of more people in the world.
| paulnpace wrote:
| > You are right that there is no normal. The US in the
| 1900s, especially western US, was probably a right place
| in the right time event where the parameters of the
| environment allowed for that number of humans to live at
| a certain quality of life, and the parameters have
| changed now that there are billions of more people in the
| world, and probably tens or maybe even a hundred million
| more competitors.
|
| There is a normal, and it is to allow housing to be
| constructed as desired. The whole number of people on the
| planet is not relevant. For example, if the same
| regulations had existed for centuries before, there would
| be no metropolises today, because all construction has
| been constricted, to include the formation of a new
| metropolis.
|
| Take a look at some place like New York city in Google
| Maps, then look at San Jose, California. notice that San
| Jose has somewhere close to 1000 square miles of
| undeveloped land surrounding it. In fact, if you drive to
| San Jose going north on 101, the "Entering San Jose" sign
| is in the middle of nowhere and IIRC, you can't see
| anything resembling civilization other than the eroded
| star-thistle-saturated brown hills (they claim this is
| for "preservation" as if that is what things looked like
| before being settled).
|
| I have been through this issue for myself many times in
| considering where I live, because I was always just
| behind the curve in Silicon Valley, so I left, as the
| minimum wage to live what I consider a normal American
| life is now $150k in that region, with housing ownership
| starting salary at $250k, which is ludicrous.
|
| You have to work this back completely: at some point,
| there were no people. Then someone arrived and decided
| they would like to construct shelter for themselves in
| the form of a house atop some soil. Then more people
| arrived, and they decided to do the same thing. We arrive
| at the 1990s, and many people have this: shelter atop
| some soil. Philosophically, you cannot justify someone
| who has shelter atop soil being granted the privilege of
| owning the shelter over someone who would like to
| construct shelter atop their soil, other than to say they
| have greater rights than the other, which presents a
| rather different picture: the establishment of a caste
| system which also works to enrich those who already own
| shelter. Thus, the scenario today is the older
| generations directly profiting from the impoverishment of
| the younger generations.
|
| I call this a great moral conundrum, and what is
| difficult about it is the older generations are in no way
| motivated to ever address this conundrum. They can live
| out their entire lives profiting from this highly immoral
| scenario, and not even think about it. It is why I
| believe that land owners in California and elsewhere with
| similar policies are among the most immoral people in
| modern history.
| lotsofpulp wrote:
| Push comes to shove, the only justification needed is
| might makes right.
|
| The "normal" of allowing housing to be constructed as
| desired is rooted in property rights, which there are
| countless flavors of, all the way from the way Native
| American tribes allowed their members to live, to kings
| and queens to modern democracy and local zoning laws.
|
| This applies across time also, as current generations can
| "take" from future generations (see water, clean air,
| farmable land, etc), but the whole who has a right to how
| much and when is a conversation fraught with
| disagreements on premise and assumptions.
| paulnpace wrote:
| It takes time to work through, but ultimately I don't
| find it very complicated because it comes down to the
| single issue:
|
| Someone today has a shelter atop some soil and believes
| that someone else should not have a shelter atop some
| soil, and the person who currently has shelter atop some
| soil profits by preventing people from creating new
| shelter atop some soil.
|
| People generally introduce the other issues that are
| outside of this narrowly defined immoral position.
| paulnpace wrote:
| Sorry about that, I didn't intend to come off so
| belligerent, but it is easy to appear so with rapid
| replies.
| verisimi wrote:
| I see the housing market as part of wider transition.
|
| I think it is clear we are moving to a technocracy - we will not
| own anything, we will receive a UBI, we will be provided for (as
| a low level) but this will come at the cost of freedom.
| Technocrats (aka billionaire elites) will take closer control of
| the world's resources and micro-manage us.
|
| There are several issues before we actually enter that system.
| Firstly, it is required that we all have a biometrical-security-
| id to do anything. This part is already underway - we are
| starting to be convinced of the need to provide id (green pass,
| citizen scores or whatever) to go shopping, or even leave the
| house.
|
| Another of the issues that those who would achieve technocracy
| face, is that as much as the billionaire class owns, there is
| still independent wealth. In raising house prices, they create a
| new conflict - the older generation that own their houses know
| what it means - independence, that they worked for it, etc.
| Mostly they cannot conceive of owning nothing. The younger
| generation are the opposite, they cannot conceive of owning
| anything, or even moving out of their bedroom - they face an
| interminable childhood. I can see how being provided with a 110
| foot flat would be a step up. They are/will be fine with the
| older generation losing their wealth and having the government
| re-allocate those resources towards a small flat.
|
| On the ground floor then, we will see a conflict between
| generations. The planned result is that we are all worse off,
| living in a smaller footprint, under close control. What little
| wealth is on the ground floor, will shift up and become owned by
| corporations. On the higher floors, corporations will own
| everything - all the property. Corporations are in fact owned by
| individuals - we do not see them, but these self-styled 'gods'
| will own everything.
|
| This is not freedom - the direction of travel is more overt
| bondage for the general population. And mostly, in their
| ignorance, people will be happy at the outcome.
|
| If we were really tackling inequity, we would be tackling those
| that own everything - but this is impossible given the secrecy of
| trusts, media blackouts, etc. Ownership should be entirely
| transparent - everything should be traceable. Corporations are
| merely a further cloak - corporations are owned too. Which
| individuals own Vanguard and Blackrock? But this will not be the
| solution we seek to resolve the problem.
|
| Instead, we will fight amongst ourselves. We will cheer as new
| annual taxes (at 1%) are introduced on the value of a 'expensive'
| (read, inflated) property, or when reverse equity options are
| offered as the government buys up the housing stock. (Reverse
| equity will come with a legal agreement to prevent the purchase
| of another property.)
|
| I hope this doesn't happen, but it seems that we have far to go
| individually - when we still believe the media, when we still
| believe that the government is there to help, we really haven't
| learnt much.
| Apocryphon wrote:
| This narrative comes up a lot, back with NWO and FEMA black
| helicopters in the '90s all the way to the Great Reset and
| Davos Man in the modern day. Theodore Kaczynski also wrote
| about it. While it's hard to deny there might be those who are
| in favor of this, it's also hard to see that such an elaborate,
| well-engineered plan is actually in formation.
|
| UBI? While that popular has gotten some currency in the last
| couple of years, in the U.S. alone it's been basically
| impossible to get a measly second round of one-time $2k (now
| 1.4k) stimulus checks out, much less a reoccurring program.
|
| Biometrics? The concept of national ID has been DOA in the U.S.
| for decades. Despite the use of vaccination cards, which are
| plain paper, it is still no more politically feasible to pursue
| such policies. The U.S. has a culture that's uniquely
| individualist and anti-centralization, and this is bipartisan-
| the ACLU has resisted E-Verify because of fears of the creation
| of an onerous national ID system.
|
| Being provided at a low level? The lack of affordable housing
| and the rise in visible homelessness contradicts that notion.
|
| > On the ground floor then, we will see a conflict between
| generations. [...] What little wealth is on the ground floor,
| will shift up and become owned by corporations.
|
| That is much more believable, that centralization of wealth
| leads to centralization of power. And we have seen this before
| in history, just look at the Gilded Age. But that is a very
| different thing from a carefully-engineered plan towards elite
| control. It isn't an intentional plan to squeeze out middle-
| class homebuyers, or to crush millennials with debt. It's
| simply a side effect of vast, blind, financial games. The ants
| are getting stomped upon by warring elephants.
|
| People need to remember Hanlon's Razor. Instead of trying to
| ascribe calculated malice towards the powers-that-be, remember
| they are simply as clueless as the rest of everyone. They've
| simply been playing the game to win, and continuously rewriting
| the rules to keep winning. In such a case, technocracy is but a
| side effect, not an intentional social engineering project.
| Gibson, not Orwell.
|
| https://www.theonion.com/the-future-will-be-a-totalitarian-g...
| rowanajmarshall wrote:
| > Which individuals own Vanguard and Blackrock?
|
| Dunno about Blackrock but Vanguard is owned by it's own funds,
| so it's customers own it. It's basically a customer co-op.
| throwaway22032 wrote:
| What is "normal"?
|
| What if the everyday person, as a result of now having access to
| far more information than they did before (post Internet boom),
| acts in a different way?
| francisofascii wrote:
| Normal was when you could afford to buy a home with a blue
| collar income, you had time to mull over making an offer, you
| could visit the house more than once before buying, you could
| have inspection contingencies, and had plenty of houses to
| choose from.
| throwaway22032 wrote:
| Right, so before the information asymmetry was blown apart
| and the entire world was suddenly able to think about
| property as an investment. Hell, investment in general and
| the concept that a pension won't exist or won't be enough.
| agd wrote:
| At least in London, this has been a problem for 20-30 years. For
| most young people, buying a house is becoming an impossibility.
|
| Supply is increasing, but slowly, and there's a limit on how
| dense people want to have the city.
|
| Demand side looks like the better area to focus. Reducing
| population would help significantly, combined with
| taxes/disincentives on second home ownership and vacant
| properties.
|
| Unfortunately these policies are unpopular with governing parties
| because:
|
| a) the politicians own property (and often more than one) b)
| older people vote, and they tend to be doing well out of the
| situation
|
| I see a lot of right wing VC folk on twitter calling for massive
| derugulation of the housing market to grow supply. However, I
| think there's a strong case to be made that housing and land are
| different from other parts of the market. People want green
| space, they don't want high rise everywhere. You cannot (for the
| most part) make new land.
|
| So, I agree that this problem won't be solved for 20+ years.
| Declining population is probably our best bet to improve the
| situation. And of course, young people will move to cheaper
| areas, particularly when they start families.
| [deleted]
| ianai wrote:
| Declining population is a commonality in the developed world.
|
| Regulation pushing investment out of homeownership absolutely
| is needed. Granted, the population decreases headed after the
| baby boomer generation starts declining will be interesting at
| least in the US.
| Leherenn wrote:
| I don't think declining population will change much, it's not
| going to be uniform. The remote villages/cities where all the
| kids leave as soon as possible will disappear once their ageing
| population die out. What's left of those villages will keep on
| migrating to the big cities, potentially even making the
| problem worse.
| mmarq wrote:
| > At least in London, this has been a problem for 20-30 years.
| For most young people, buying a house is becoming an
| impossibility.
|
| The real problem is that 70% of what we call London is square
| kilometres of single family homes, with not even a church
| within a 5km radius. This creates both scarcity of houses and
| overcrowding of the few areas worth visiting. A more European
| zoning system, with 4-5 storey buildings with stores on the
| ground floor, would greatly improve the lives of many. Now you
| either live in zones 1-2 (plus some exceptions) or you live in
| a non-place where the only thing that matters is the tube stop,
| if there is one.
| s5300 wrote:
| I think we're just going to become mole people tbh. Servants of
| our above ground geriatric overlords.
| speedcoder wrote:
| Hmm. How do RVs fit in all this?
| newacc9 wrote:
| its because theres nothing else to buy... bond yields are too
| low, no obv tech stocks to buy, etc... the financialization of
| housing around 30pct of the good suburbs around Minneapolis are
| not owner occupied and demand is strong from investors, whether
| blackrock or otherwise, to buy the rest
| [deleted]
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