[HN Gopher] How Zillow's homebuying scheme lost $881M
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How Zillow's homebuying scheme lost $881M
Author : spansoa
Score : 278 points
Date : 2022-03-18 16:00 UTC (6 hours ago)
(HTM) web link (fullstackeconomics.com)
(TXT) w3m dump (fullstackeconomics.com)
| noasaservice wrote:
| And a solution is exponential taxation for properties not being
| lived in by the buyer.
|
| I'm done and tired of vulture capitalists and all sorts trying to
| make bank on where to live. I'm sick of landlords looking for
| shitty almost-passive income while I build them equity.
|
| Fuck'em all. I want this "industry" to die in a pit of firey
| death.
| devmunchies wrote:
| > _Zillow's exit from the market strengthens the position of
| companies like Opendoor or Offerpad, which do something similar_
|
| Does Opendoor just have better algorithms/models? What factors
| allow them to have different outcomes from Zillow?
| trixie_ wrote:
| This is a good question. I am long on some company figuring out
| how to really streamline the home buying/selling process.
| Everyone dreads it, nothing worse than trying to buy or sell a
| home. These companies could be great buffers allowing the quick
| sale/buying of a home with minimal overhead. There is
| definitely a market for providing 'peace of mind' and the
| guarantee of not being screwed which today there is a high
| probability of from all angles.
|
| Hopefully Opendoor can figure it out. They're probably going to
| need a lot of cash, homes, and software to really put it
| together into something that can be automated and scale.
| philipodonnell wrote:
| If I remember the discussion at the time, OpenDoor and Offerpad
| are pure-play iBuying while Zillow was an already huge business
| pivoting into iBuying to make up for declines in its
| advertising business. Zillow had a reason to scale faster than
| the others and they didn't do it very well.
| bkberry352 wrote:
| Mostly that they no longer have to compete with Zillow
| 1B05H1N wrote:
| How much money did this cost everyone else?
| titanomachy wrote:
| I think that "everyone else" actually made money from this.
| Zillow overpaid for houses and then was forced to sell them for
| the actual market value, so this $881M was basically free money
| given directly to the people Zillow bought from.
| maldeh wrote:
| Likely some stressed out buyers paid for overpriced homes given
| the sharply rising prices across the market (although
| completely by their choice), and the sellers probably loved it
| - but that's already par for the course with the housing market
| at the moment. Zillow probably didn't help but isn't the sole
| contributor by any means.
| bernardv wrote:
| That's what happens when you get involved in a business you
| really know not much about I.e. market-making and risk-taking.
| emodendroket wrote:
| Guess Zillow didn't have the brilliant insider information as to
| what the market would do that everybody thought.
| natas wrote:
| Based on S4 forms, Zillow execs made a cumulative $1.3B from what
| might have been called a ponzi scheme, so it was overall well
| played.
| mistrial9 wrote:
| > so it was overall well played
|
| in one breath it is overtly and explicitly illegal, second
| breath same sentence.. "wellplayed" .. any red flags here?
|
| I have heard "contemporaneously, during the Fall of Rome, there
| was a precipitous rise in the number of lawyers"...
| hgomersall wrote:
| Why could this not be run as an actual service. Zillow fronts say
| 75% of the estimated purchase price, then sells it and takes a
| cut of the premium, the rest going to the original seller. It's
| an estate agent with financing.
| Traster wrote:
| Because very often the reason you're selling a house is that
| you're buying a house, and so you need 100% of the value of the
| sale to go towards your new deposit. It's no good having 75% of
| the cash now, you need it all as a deposit and the mortgage
| company isn't going to take the risk that that 25% turns up
| eventually.
| h2odragon wrote:
| Zillow's estimates of home values in my area have consistently
| been 150% of actual prices, as far as I've seen over the past
| years. Not that I've looked that closely and given that this is a
| hard area for them with low sales and a broad range of values for
| reasons not easy for their algorithms to quantify.
|
| However, I always took that to be intentional, sort of a "see how
| valuable your home is / how high the values are where you're
| looking at"; hype that cost them nothing but made everyone feel
| better. Did the person that set that "glamor bonus" fudge factor
| get fired or just wasn't allowed to talk to the team deciding
| offer prices?
| some-guy wrote:
| Another anecdote: I'm in Oakland, where condo prices went down
| slightly during the pandemic overall, yet Zillow's estimates
| are always much higher than Redfin's (which seem to be in the
| same ballpark as the sale prices).
| mistrial9 wrote:
| maybe Redfin actually incorporates "price at end of closing"
| into their models, instead of say .. "wishful drinking"
| prices from Zillow and crew?
| civilized wrote:
| The Zestimate history for a condo I used to own is hilarious.
| There have been several sales of this property over 5 years,
| all at about the same price.
|
| If you follow the Zestimate through time, it climbs rapidly
| until there is a sale, then it goes "oh shit" and plummets down
| to the sale price, which is barely different from the last time
| it was sold. This cycle repeats each time the property is sold.
|
| Zillow is absolutely certain that this property should be
| rapidly increasing in value, no matter how many times it sells
| at about the same price it sold for last time.
|
| When we sold the property, the agent told us it was in an
| awkward spot: too expensive for single people, not quite big
| enough for high-earning families. So it's stuck in price limbo
| as all the neighboring condos skyrocket.
|
| Based on this experience, I remain convinced that there are
| micro-structural factors the fancy data science pricing models
| just can't seem to capture yet.
| throwaway1777 wrote:
| It varies widely by Area how accurate the zestimate is. In some
| places Redfin is much higher than Zillow, in others places it's
| reversed. Sometimes they're too high, sometimes they're too
| low. I presume the algorithm does best when the prices are
| fairly flat, but in this market real estate prices changed
| dramatically and it seems pretty impossible for an algorithm to
| figure it out without modeling the entire economy and movement
| patterns of the population.
| avgDev wrote:
| Odd. My house is valued at $330k on zillow, would sell for
| $420K+ in a few days.
| brk wrote:
| Mine is pretty accurate ($2.5M), based on recent sales and a
| couple of solicitations from realtor friends.
|
| FWIW, we have had a high frequency of home sales in the past
| year, so that might help. I just looked up my previous house
| (sold 5 years ago), and Zillow is saying $740K, which I am
| pretty sure is massively overvalued, however the street it is
| on, and general area, have a fairly low turnover, so less
| recent data.
| syspec wrote:
| Humble brag
| eyjafjallajokul wrote:
| Not if you bought a home a decade or two ago and house
| prices went up around you with no action of your own.
|
| I drive an old Honda Civic and my neighbors all have
| Tesla, Porsche, etc.
| brk wrote:
| I didn't mean it that way, and it's all relative really.
| There are a ton of houses above and below my price point.
| imilk wrote:
| Mine is pretty accurate as well ($44.8M), based on recent
| mentions in Architectural Digest and a couple of
| solicitations from fellow G650 owners.
| micromacrofoot wrote:
| It varies a lot based on location and what's sold locally. If
| there aren't a lot of similar properties in the area that
| have sold recently it will be much less accurate.
| nikanj wrote:
| How do you _lose_ money investing in homes since 2010 or so? The
| market has been going gangbusters everywhere with a zip code,
| with solid double-digit gains in all place with more than one
| Starbucks
| encoderer wrote:
| I was at Zillow for many years and left in 2020. On the tech side
| the pivot into iBuying was absolutely bonkers. The message from
| senior leadership was basically: I have no idea what your teams
| should be working on but it's definitely not what they are
| currently working on so stop that and figure something else out.
|
| This has nothing directly to do with their market failure but
| they probably are driven by the same leadership problems.
| phlowbieuq wrote:
| i wish we lived in the same area and could have an OTR
| conversation about this. believe it or not, the new "strategy"
| now that ZO is all shut down is even less well-defined and more
| pie-in-the-sky than ZO ever was.
| [deleted]
| itronitron wrote:
| Sounds familiar, I read this as leadership saying... "you all
| need to change what you are doing because you must not know
| what you're doing because we don't know what we're doing and
| we're the ones in charge."
| ourmandave wrote:
| I'm planning to sell very soon and love the iBuyer model.
|
| Don't have to deal with showings, or fix anything, or hope a
| buyer's financing doesn't fall through at the last minute. To me
| that's worth whatever percent they're getting.
|
| Sadly, no iBuyer operates in my fly-over state.
| JKCalhoun wrote:
| Not sure why the article goes to such lengths to legitimize
| "Corporate flipping", calling it iBuying or whatever.
|
| No matter what terminology you use, buyers without cash-in-hand
| are getting screwed.
| mywittyname wrote:
| > No matter what terminology you use, buyers without cash-in-
| hand are getting screwed.
|
| "Cash is king" is a common phrase in real estate for good
| reason. In pretty much all instances, a cash buyer has a leg
| up over everyone else. In a liquidity crunch, cash buyers get
| discounts because people can't get loans; in hot markets,
| they get discounts because they can wave contingencies; in
| cool markets, they get discounts because they can move
| faster; etc.
| bduerst wrote:
| This hasn't always been the case with real estate though.
| The market used to be much more accessible, and tech
| bubbles overlapping into it are just further destroying it.
| bell-cot wrote:
| Reminds me of an old guy in knew back in the early 90's. His
| (quite nice) house was on a lot shaped like "well, that was the
| leftovers, after we gave all the other houses reasonable lots".
| Every year, the City tried to raise his property's assessed value
| by ~10% more than the neighborhood's average increase. And every
| time that his house sold (he had decades of records, to support
| his appeals of their over-assessments), it sold for ~50% of what
| the City wanted it to be worth. Now if he could have gotten the
| City to buy him out, for what their Assessment rulebook _said_
| his house was worth...
|
| Edit: Added seemed-obvious final sentence.
| sokoloff wrote:
| I've often wished that one avenue of appeal of a city
| assessment was an option given to the property owner to force
| the city to buy the property for 90% of what they assessed it.
| You could either go through the current appeals process or just
| sell them the house if they were way off.
| nikanj wrote:
| And the same for the reverse: You can claim your house is
| only worth $40k, but then the city is allowed to buy it for
| $48k.
| sokoloff wrote:
| I'd be OK with that, but would probably design it to allow
| the homeowner to "fold" and withdraw their petition to
| reduce the assessment. (Otherwise, you'd see crap like "Oh,
| nikanj's kid is a senior next year; let's jack up their
| assessment because they're not going to want to move and so
| won't contest it...")
| bluGill wrote:
| Where I live the assessed value is a complex formula only
| somewhat related to real estate values. My house might be say
| $500k, but it should assess for about $380k. So I'm losing
| long before it would be worth a buyout
| bastawhiz wrote:
| I recently bought a home. We toured a Zillow home, and I can
| understand what they were going for and where they failed.
|
| We were able to pull up to the driveway, book a tour for that
| minute, and walk in the front door. It was almost a magical
| experience compared to the process of finding and going to
| showings. The listings were clear and thorough. The experience
| was extremely compelling.
|
| The downside: the homes were absurdly overpriced. I bought a home
| for about 10% less than the last Zillow listing. For less, I got
| three times the land, 40% more square footage, a better location,
| updated appliances, new carpets, landscaped back yard, horseshoe
| driveway, two car garage. Almost zero effort had been put into
| modernizing the Zillow home and it showed.
|
| I suspect if I had come in with a very low offer, they'd have
| accepted it. But for what?
|
| If I was Zillow, I'd have licensed the tech to realtors. I'd
| definitely be inclined to buy a home through them if they weren't
| the ones selling the property directly.
| wcfields wrote:
| If I can give any home buying tip from my experience of buying
| two houses it's been to look at places that are in "the
| middle". Both homes I've bought in SoCal have had some god-
| awful photos online, and the finish is new-ish, but done by
| someone in the 70s so it's new but tacky in a little-old-lady
| way.
|
| This ends up pricing the house too expensive to flippers, and
| not nice enough to sell compared to other houses because it
| doesn't have the farmhouse sink and looks exactly like a
| grandma took out a home equity line and renovated (which is
| what happened).
| [deleted]
| escapedmoose wrote:
| We took the same approach with our house, and the results
| were marvelous. Major props to our realtor for seeing the
| potential hidden in those god-awful listing photos.
| hammock wrote:
| Sounds nice. Where do you live?
| TomVDB wrote:
| I'm surprised you have an issue with arranging visits to open
| houses?
|
| Open RedFin, check the houses for sale, go to the open house
| when there is one? That's at least how it works in the Bay
| Area. We never had to schedule or book anything, and only after
| seeing a house we liked, we asked our agent to check it out and
| submit an offer.
| judge2020 wrote:
| > The downside
|
| If this wasn't another house in the same neighborhood then the
| differentiator most certainly wasn't Zillow or their pricing.
| dlp211 wrote:
| Why is this being downvoted. It's completely correct. The
| value of a home purchase is not just the building, but the
| land it sits on.
|
| OP got a bigger, more modern house, with a larger yard for
| less, but it's meaningless until we understand the market
| circumstances of both homes for sale.
|
| It could be that Zillow is overpriced here, or it could be
| that Zillow is properly priced, we have no idea from the
| information provided here.
| ipaddr wrote:
| You missed better location
| dlp211 wrote:
| Better location is a completely subjective statement.
| Show me the comps.
| polski-g wrote:
| Zillow prices my house 100k higher than redfin
| awb wrote:
| > the homes were absurdly overpriced
|
| That's saying a lot for a red hot real estate market.
|
| I still get updates from Zillow every month saying my home
| increased 5% in value in the last 30 days and up 30% over the
| last 12 months. Something is wildly off with their algorithm.
| CloudYeller wrote:
| I bet humans could have done a lot better than -$881M, and it
| wouldn't have been very costly to employ them. How many homes did
| Zillow iBuy in total, 10-20k? If it takes 5 minutes to evaluate a
| house, that would be 100,000 minutes, which is ~50 people working
| full time for a week. Spending $100k on that could have saved
| 100s of millions, plus it might have generated better training
| data for the model.
| antidnan wrote:
| Has anyone seen an analysis of why their pricing models were
| above market, and/or worse than OpenDoor?
| ccorda wrote:
| Mike DelPrete has done several:
|
| - https://www.mikedp.com/articles/2021/12/16/opendoor-vs-
| zillo...
|
| - https://www.mikedp.com/articles/2021/11/3/zillow-exits-
| ibuyi...
| endisneigh wrote:
| They should've set it up so you can be sent a set of cameras to
| put across your house, they photograph and setup a smart lock,
| etc.
|
| In return people would be able t book a viewing to your house
| without a buyers agent nor would a sellers agent be involved. Cut
| both parties out, pass some savings to the buyer and seller and
| take a large cut.
|
| Everyone wins.
| asdff wrote:
| Who do you talk to about the listing in this case?
| mistrial9 wrote:
| I am especially annoyed at Zillow SF holding "Data Science"
| meetups in San Francisco at the penthouse place, while
| advertising for TWO data science positions.. meanwhile, frat guys
| are at the golf course by the dozens, across three states. The
| people that they hired at that time, probably built this setup
| exactly as _required_ by the frat guys. Happy banking Zillow!
| mwt wrote:
| There's some poetry in older banks claiming they're pivoting to
| being tech companies (i.e. Capital One) while some tech
| companies are heading straight towards being banks.
| sjroot wrote:
| Former C1 employee here with a personal opinion. C1 is
| walking the walk; everyone up to the CEO is very tech-forward
| (which quite surprised me initially)
| JRKrause wrote:
| Zillow purchased a home in my neighborhood for $370K, is now
| trying to sell it for $410K. Prior to this purchase other houses
| with a larger footprint in our exact same neighborhood were
| selling for $250K(literally just months before). For some reason
| zillow chose to pay 100K over what would have been fair value for
| the house.
| annoyingnoob wrote:
| The Zillow properties in my area were all overpriced, they were
| paying too much. People were happy to sell to Zillow at a
| premium.
| skrtskrt wrote:
| Some twitter threads from Zillow insiders I saw around this
| referenced a couple things:
|
| * the pricing algorithm was good, but the business leadership got
| hungry and kept overriding it with higher offers in the hunger to
| do more business.
|
| * they were trying to do so much business that they couldn't
| source the labor need to flip - painting, landscaping etc. They
| were so backlogged they were just sitting on houses they overpaid
| for (due to overriding the algorithm), and the constant cashflow
| aspect that makes flipping work at scale was destroyed
|
| Matt Levine's take was something like:
|
| if the pricing algorithm is good but it tells you that the flip
| strategy is only profitable on relatively small number of
| properties, then it's not profitable at scale cuz you're paying a
| big engineering team to create, tune and maintain it.
| thr0wawayf00 wrote:
| The scary thing is that it's easy to see how something how like
| this could drive a market boom and bust cycle. I'm imagining a
| scenario where two iBuyer companies try to outbid each other
| algorithmically, driving the prices further and further out of
| reach of people who are looking for a primary home.
|
| Tangentially related, I talked to a friend who works on
| geospatial data for one of the big vacation rental companies, and
| he was remarking how many homes in many desirable areas are now
| rentals. It's not that uncommon to see nearly entire
| neighborhoods converted to short term rentals now in some areas
| where they're still legal. Hearing that really depressed me.
|
| We often talk about automation in terms of replacing various
| types of labor, but I've become really interested in automation
| creating adverse market incentives for smaller market
| participants because that's exactly what buying real estate right
| now feels like.
|
| It's honestly quite scary how I'm in the top 2% of income earners
| in my generation and yet I could barely afford to buy a small
| place in a semi-desirable area. I can easily see myself not being
| able to compete in algorithmically dominated markets flush with
| venture cash in the future and I earn more than just about
| everybody I know today.
| cyberpunk wrote:
| Yep. You should see the situation in beautiful yet remote
| places like the Isle of Skye in Scotland or the Outer Hebrides.
| If you have some land, it's a no brainer to build a holiday
| rental. A pre-fab will cost you maybe 120k (after the land) and
| it's k/week or more during peak season to rent it out.
|
| Of course, it means prices are going insane. A complete wreck
| of a house we were interested in buying and turning into an
| actual home which I thought would be worth max 200k went for
| 450, cash, from a buyer who never even saw it.
|
| They'll tear it down, stick a new house on it, and make their
| investment back in 5 years.
|
| Meanwhile, all the locals kids, go away and don't come back.
| What is there for them there anymore? Not a lot.
| ddoolin wrote:
| The problem here is that they were buying the homes at prices
| above what they would actually sell for to real buyers and
| Zillow ended up racking up losses in that way. In your scenario
| in which two iBuyers outbid each other -- fine, but wouldn't
| the same situation as Zillow's happen? They'd just end up with
| overpaid inventory.
| mwt wrote:
| Whether or not the market works itself out later, it puts
| everything into a weird state while the bidding war is going
| on. If iBuyer1 and iBuyer2 together buy up the inventory of a
| zip code for 120% of asking, then what are people who are
| willing to go to 105% to do? Maybe it just resets the market
| to whatever the drunken algorithm decided it to be.
| sokoloff wrote:
| Buy in one of the surrounding zip codes? Wait out the
| idiots?
| mwt wrote:
| In a housing bubble, hopping a zip code over isn't always
| possible.
|
| One can always wait out the market. You could tell me to
| simply wait for the next housing crash to buy up
| property, but until that happens, it's not an option.
|
| The whole observation the other person made
|
| > automation creating adverse market incentives for
| smaller market participants
|
| matters not just in the long-term state but while the
| adverse conditions exist.
| 999900000999 wrote:
| Honest to God, the founders of Airbnb should have been sent to
| prison.
|
| That would have fixed much of this, it's point blank illegal to
| run a bed and breakfast out of your home. Now if you're my
| buddy, and you want to slide me $200 to crash at my house for a
| week that's fine, but if you add technology to it, it ends up
| destroying entire neighborhoods.
|
| Ride-sharing is a bit different, since I'd argue the reduction
| in drunk driving deaths more than outweigh any negative side
| effects. It's amazingly easy to just call an Uber when you've
| had one too many. Countless lives have been saved already.
| cuteboy19 wrote:
| > That would have fixed much of this, it's point blank
| illegal to run a bed and breakfast out of your home.
|
| Why? It's your home, you can do anything in it. Why should
| you need a license to rent out your own home for a few days?
| Does it physically destroy neighborhoods or just your
| perception of it? If so, why should anyone care?
| JustLurking2022 wrote:
| Last summer in the midst of the pandemic, someone AirBnB'd
| an empty house a few streets over from us to throw a giant
| party. I know this because I could hear the music as though
| I were in a night club from my back yard. There were also
| cats with out of state plates parked all over the place.
| Our town is generally fairly lax on laws like noise
| restrictions, maybe because it's never been an issue and
| avoids involving the police in squabbles amongst neighbors,
| so apparently it was legal. Anyway, it was of no benefit to
| anyone who actually lived in town and a major PITA for
| everyone living in the surrounding blocks, so I can easily
| see how residents might choose to outlaw such rentals.
| humanwhosits wrote:
| > If so, why should anyone care?
|
| It's not about 'why' care, it's about the fact that they
| already do care enough to have caused regulation.
| ramesh31 wrote:
| >Does it physically destroy neighborhoods or just your
| perception of it?
|
| Yes, it does. People buy homes for more than financial
| reasons. Living in a community of homeowners with neighbors
| you've known for years is a completely different experience
| than living in a revolving door community of renters.
| There's been a whole decade of news reports about Airbnb
| ruining neighborhoods and condo buildings, to the point
| that it's not even worth citing a particular incident.
| cuteboy19 wrote:
| So we should criminalize perfectly harmless things
| because it ruins your experience? It doesn't seem logical
| mym1990 wrote:
| It can't be perfectly harmless if it is ruining someone's
| experience. Its kind of like urinating in public...maybe
| it doesn't hurt anyone but it sure does ruin a lot of
| people's experience...and thus it is criminalized.
| cma wrote:
| Isn't this like saying Walt Disney World shouldn't be
| able to sell tickets to out-of-staters? State residents
| who know each other could have a higher chance of running
| into each other at the park if it wasnt full of out-of-
| staters, and that could build valuable community.
| PaulDavisThe1st wrote:
| I think it is fine to argue that the current rules about
| what you can and cannot do within a particular zoning
| classification are wrong. In the sense that so much US
| zoning eliminates retail from residential, I would make
| that argument myself.
|
| However, there _are_ actual rules, the rules exist for a
| mixture of good and bad reasons, and it has never been true
| to say "It's your home, you can do anything in it.".
| itsoktocry wrote:
| > _Why? It 's your home, you can do anything in it._
|
| No, you aren't free to do "anything" in your home,
| including provide commercial services if not properly zoned
| and insured.
|
| > _Why should you need a license to rent out your own home
| for a few days?_
|
| This is not what's happening in many places. AirBnB went
| from "a place to crash" to an amateur hotelier platform.
| mywittyname wrote:
| Because it's the law. Whether or not you agree with the law
| is irrelevant.
| cuteboy19 wrote:
| I think most of the answers to my question repeat this
| assertion, without really answering the "why?" part.
|
| If you are a legalist, a loophole in the law is the law
| as well. So yes, whether or not you agree with the
| loophole is irrelevant
| rdtwo wrote:
| The law only applies to poor people. Rich people can and
| do ignore laws all the time. When corporations get
| involved they can just bully around all the local
| municipalities with size
| 88913527 wrote:
| Might as well eschew all zoning laws and turn your home
| into a junkyard or a industrial manufacturing facility by
| the same rationale: it is your home, after all.
| kuboble wrote:
| It's because whatever you do in your house is affecting
| everyone around it. So you making little extra money is
| taking value away from everyone else in your neighborhood.
| The fact that you don't know anymore everyone in your block
| is hugely affecting safety and let alone extremes like your
| airbnb guests getting loud, throwing trash around, making
| parties etc.
|
| In my area we have a legal agreement between all apartment
| owners that things like this are not accepted.
| 999900000999 wrote:
| Let's take this to the extreme, do you think you have a
| right to set up a commercial kitchen in your home, and set
| up patio furniture for random people to show up and order
| take out?
|
| Don't you see an issue of every single person decides to do
| this in your neighborhood, traffic being the first thing.
|
| The other issue too, is most people are renting out
| apartments, and then Airbnbing them. Like, at that point
| it's not your property, you're just granted temporary
| permission to use it. Likewise, most condo boards don't
| want you to use your property as an Airbnb.
| BirdieNZ wrote:
| > Let's take this to the extreme, do you think you have a
| right to set up a commercial kitchen in your home, and
| set up patio furniture for random people to show up and
| order take out?
|
| You can do this in Japan. Why shouldn't you be able to do
| this?
| 999900000999 wrote:
| Japan doesn't have nearly as many cars per capita.
|
| Regards you can't just ignore zoning laws because you
| feel like it.
| BirdieNZ wrote:
| We could change the zoning laws so that it isn't illegal,
| though.
|
| One of the ways you can reduce cars is by zoning to allow
| greater density, which enables forms of transit which are
| more space-efficient than cars are. It's a chicken and
| egg problem, but people will be crying out for better
| cycle ways and trains and buses if housing becomes more
| dense.
|
| Also, having commercial spread throughout residential
| areas reduces the amount of travel between areas, because
| you don't need to go far to get to the amenities you
| want.
| cuteboy19 wrote:
| > set up a commercial kitchen in your home, and set up
| patio furniture for random people to show up and order
| take out?
|
| This already happens in my country. It's a great way to
| support entrepreneurship and small businesses. I can't
| imagine how authoritarian the country must be to
| criminalize this. Are you living in North Korea or Cuba
| by any chance
| pvarangot wrote:
| > Why? It's your home, you can do anything in it
|
| You kinda can, but you don't get the type of legal
| protections a hotel or B&B that plays by the rules has.
|
| Also like it's your home, but it's not your roads, cops,
| firemen, sewage system, power grid, courts... you wanna use
| all those services you have to play by their rules and
| there's a lot of rules and they don't exactly make a lot of
| sense.
| pfisherman wrote:
| How would you feel if I paid your next door neighbor to
| store radioactive waste in their yard? What if I paid them
| to demolish their home and put up a giant flashing
| billboard facing your bedroom window?
|
| Do you think it would impact the value of you property? Do
| you think that would be fair?
|
| People care because it is a matter of justice, which is one
| of the fundamental precepts of society.
| javert wrote:
| It's because US monetary policy has created an enormous
| transfer of wealth to the wealthy and out of the general
| economy. They do this by extending credit at low interest rates
| with the collective understanding that the value of the dollar
| will continue to be printed away. The wealthy (like me...) buy
| stuff on credit now and pay it back later with much cheaper
| future dollars.
|
| COVID threw a wrench in the scheme temporarily and caused a lot
| of that money to start trickling down, which is why we're
| seeing wages rise rapidly and high consumer-level inflation.
|
| By the way, bitcoin fixes this.
| notahacker wrote:
| Ah yes, nothing says egalitarianism quite like the
| distribution of Bitcoin. Why allow one percenters to borrow
| money they actually have to reinvest in giving people jobs
| when we can just give them the printing press?
| colinmhayes wrote:
| Monetary policy and fiat currency are unequivocally good
| things. Deflation is what caused the 50 year recession from
| 1860-1910. Not being able to control inflation leads to mass
| unemployment.
| javert wrote:
| My comment explains in detail the specific mechanism I'm
| concerned about in a way that everyone can understand it.
| Your comment regurgitates something from a textbook that
| people have on reason to actually trust. I don't have a
| problem that you disagree with me. I have a problem that
| it's an argument from authority.
|
| Also, I wonder if you're conceding that the Fed steals from
| the economy in general and gives to the super wealthy, and
| simply think that that's a necessary side effect of having
| a well-functioning economy. It seems like it.
| colinmhayes wrote:
| Bitcoin is not a viable currency. It's value is not
| anywhere near stable enough. It's honestly incredible
| that you haven't even thought of the very first problem
| with using bitcoin as a currency. Yes, the rich abuse the
| current system. They will do the same with any system.
| Saying "we shouldn't ensure that our currency has
| predictable value because that would make the rich even
| richer" is insane when the rich will be richer no matter
| what you do.
|
| > I have a problem that it's an argument from authority.
|
| https://danluu.com/cocktail-ideas/ you are the developer
| who thinks building a bridge is easy. Please just admit
| that you don't understand what you're talking about.
| javert wrote:
| > Bitcoin is not a viable currency. It's value is not
| anywhere near stable enough.
|
| It can't go from zero to stable overnight. It has to
| start somewhere and gain stability over a long period of
| time.
|
| > It's honestly incredible that you haven't even thought
| of the very first problem with using bitcoin as a
| currency.
|
| You're behaving like a troll. There is an absolutely
| obvious objection to your prior sentence, but rather than
| see that, you pretend like it isn't the case, and attack
| me personally. You don't know me and you don't know my
| thinking.
|
| You're also behaving as a troll because you've totally
| changed the topic instead of answering my direct
| objections to your prior comments.
|
| I'm done talking to you. I assume your next comment will
| also be trollish, and I hope people see through it. But
| please just don't answer.
| ipaddr wrote:
| Wealth and power get transferred over to the blockchain.
| You end up with the same structures in a less
| controllable currency.
| closeparen wrote:
| iBuyers are supposed to be playing a rational strategy over a
| large portfolio; they pay what they think the house is worth,
| and unlike an irrational/emotional human who _really wants_
| that property for his primary home, they have no reason to
| participate in bidding wars past what they think the house is
| worth. The the point of the iBuyer is to turn around and unload
| it after a few weeks or months on someone who wants it for a
| primary residence; it 's not in their interest to pay more than
| such a buyer can afford.
|
| People are living longer and tolerating less construction.
| We're only building or freeing up enough homes in desirable
| areas to skim the very top of our generation.
| cheriot wrote:
| > The scary thing is that it's easy to see how something how
| like this could drive a market boom and bust cycle.
|
| iBuyers don't buy from each other or hold the house for long.
| As soon as they sell then everyone sees what a market price
| looks like without them.
|
| > automation creating adverse market incentives
|
| You seem interested in how markets drive outcomes so I'd
| suggest looking into the effects of residential zoning and
| other barriers to construction. The US has spent the last 50
| years coming up with creative excuses to prohibit new housing
| and it gets more expensive every year. Probably related!
|
| Not the best example, but one I have handy:
| https://twitter.com/DurhamFella/status/1441808710066577410?s...
| rank0 wrote:
| I think people should expand what "desirable" means to them.
| There's a ton of suitable houses all over the country. Everyone
| seems to need to own a SFH in a trendy part of a trendy city.
| alistairSH wrote:
| "All over the country" doesn't have good jobs, good schools,
| access to entertainment, etc.
|
| But, I agree on the SFH part. The expectation that a 3000sqft
| house on 1/4 acre is the norm is completely unsustainable.
| Yet that seems to be what many people want. Even in high COL
| areas where demand and cost should be driving density.
| rank0 wrote:
| There are absolutely good jobs in every city in America.
| Entertainment can mean anything...and frankly people should
| be able to find fun things to do on their own without
| needing bars, nightclubs, concert venues, etc.
|
| I concede that good schools are a major barrier. I'm young
| and won't be having children anytime soon so I don't think
| about it much.
|
| Where I live, the public schools are pretty rough. It's
| cheaper to stay here and send your kids to private school
| rather than move to a family dominated neighborhood with
| excellent public schools.
| alistairSH wrote:
| Every city, sure, but cities are expensive. Even cities
| that used to be affordable, like Portland and Austin. But
| between the cities? Not much. Some small towns might work
| if you're the town lawyer or MD, but a town can only
| support so many of those. And if you're an engineer or
| banker? Not much employment.
| rank0 wrote:
| Portland and Austin are the very essence of "trendy city"
| those places are very expensive. I'm not arguing that
| people move to small towns. There are hundreds of cities
| in the US with 100,000+ populations (not even including
| the metro areas). The idea that each of these cities is
| unaffordable and without a job market is just wrong.
|
| Everyone wants to live in NYC, SF, DC, Miami...etc
| because the other areas aren't cool enough for them.
| boring_twenties wrote:
| Not for long. Salt Lake City was one such city just 3-5
| years ago. Now everything has doubled and it's almost as
| expensive as the trendier cities, without the higher-
| paying jobs.
| notreallyserio wrote:
| Well, you should just lower your standards when it comes
| to picking a job, too. Maybe you could be a grocery clerk
| or a gas station attendant?
| sokoloff wrote:
| Of course that's what people _want_. Because it beats the
| pants off a 1100 ft^2 condo or apartment with no private
| yard and shared walls /floors/ceilings in almost every
| regard of daily, lived experience.
|
| I totally get why people want that; what I don't get is why
| they can't understand that so many other people also want
| it that most everyone will have to compromise on some
| aspect.
| kevingadd wrote:
| Are there jobs near those houses? Specialist doctors? Good
| schools?
|
| I WFH so I could probably buy one of those houses, but most
| of my friends in my age bracket are expected to show up to an
| office 5 days a week, so those suitable houses are no good
| for them.
| rank0 wrote:
| Yeah those are good points. I live in a bit of a bubble
| where most folks around me either WFH or have to travel to
| work. There are absolutely "specialist doctors" in every
| large city though...
| kevingadd wrote:
| You might be surprised how hard it is to _actually_ find
| specialists, even in big cities. In the SF bay area for
| example for a couple different procedures I had done in
| the last decade there were perhaps 3 specialists in the
| whole area who could do it, far enough from me that I had
| to book a hotel room to stay in closer to the facility
| and avoid 4+ hours of driving.
|
| A family friend was diagnosed with a difficult brain
| tumor, and to get it removed via a (if memory serves,
| this was a while ago) gamma knife procedure, he had to
| drive 6+ hours north from a relatively large mid-
| california city up to Sacramento because we had one of
| the only facilities equipped for it there at the time.
|
| In general people often will get transported to other
| hospitals for treatment, often multiple hours or even
| across state lines. Now imagine that you have to do this
| multiple times a month because you moved to a less-urban
| area due to housing prices...
| giraffe_lady wrote:
| Is my family there? My church? The park where I learned
| to play soccer? My daughter's best friend?
|
| When you sit around talking about choice of living area
| without weighing, or even _acknowledging_ these
| connections, do you realize how inhuman this sounds? Do
| you not have similar things binding you to a place?
|
| Shit even specialist doctors, have you ever depended on
| one? If you're needing long-term specialist care you got
| some major shit to deal with. Rapport, trust, history
| with an individual doctor is an important part of that
| care. And people need care aside from just the doctors.
| Who is driving you to these appointments, caring for you
| afterwards? Are they coming to the new city with you?
|
| There are a lot of _things_ in a place you know. You can
| 't reduce all or really very many of them down to mere
| transactions in a marketplace.
| rank0 wrote:
| I feel you. It's horrible if you've grown up somewhere
| and suddenly can't afford a home in the same spot.
|
| But life's unfair. Houses get sold to the highest bidder.
| This is what happens when everyone wants to live in the
| same areas. I'm not arguing that you SHOULDNT be able to
| afford a home in your preferred spot. I'm observing that
| it's IMPOSSIBLE for everyone to own property in their
| preferred spot within their budget.
|
| You can still rent, or buy cheaper homes in cheaper areas
| in your city.
|
| We can't just will affordable housing into existence when
| ~97% of people live on ~3% of the land.
| ipaddr wrote:
| If you work from home you go to good remote schools and see
| the best doctors remotely.
| jrvarela56 wrote:
| +1 GP is top 2% of their generation but not necessarily top
| 2% of the area they're looking into. Sounds fairer when put
| that way.
| civilized wrote:
| Yes. The problem is:
|
| 1. A lot of high earners want to cram into a small space
|
| 2. The existing high earners living in that space don't
| want to allow more built in that space because they like
| the neighborhood how it is
|
| So all these high earners compete against each other, and
| houses become as expensive the winning high-earning bidders
| can afford.
|
| For this to stop happening, #1 or #2 needs to stop. So,
| either the high earners need to stop cramming into a small
| space, or policy must be changed so the locals can't stop
| the growth of housing supply.
|
| (Usually when I've pointed this out in the past, I get
| mobbed by NIMBYs who insist that growing the housing supply
| will somehow cause prices to skyrocket even more. There
| seems to be a widespread NIMBY belief that standard
| economics doesn't apply to housing, for mysterious reasons
| that no one ever quite gets around to explaining. It'll be
| interesting to see if it happens again today.)
| BirdieNZ wrote:
| Per-unit rent will go down if you increase supply of
| housing, but the value of the land underneath will go up
| if you increase the amount of houses allowed to be built
| on said land. There's one part of "standard economics"
| that a lot of people forget with property, which is that
| land in desirable locations is of limited supply and you
| cannot increase its supply.
|
| Land at the boundaries of a city is not equivalent with
| land in the centre, because of location value.
|
| I do agree that #2 should stop, but be warned that it
| doesn't solve land values going sky-high; it actually
| increases land values. The solution is land value tax, a
| la Henry George.
| ipaddr wrote:
| It can happen because new homes are more expensive.
| People prefer new and will pay more. That raises the
| average price which raises prices on the existing supply.
| civilized wrote:
| Or it lowers price on the existing supply because
| wealthier buyers are going to the new supply now rather
| than bidding up the existing supply.
| t-writescode wrote:
| Not me. I just want mixed residential housing. Yeah, it's not
| happening because America made that effectively illegal.
| We're finally rolling some of that back, but it's going to
| take decades to undo and by that time the shortage will
| continue.
| rank0 wrote:
| Sorry man that sucks. I own a property that's effectively a
| duplex in Atlanta. My buddy owns a duplex in Denver. It's
| not everywhere that mixed residential homes are banned!
|
| Are you in CA?
| not2b wrote:
| In California, there's currently a fight between the
| state government, which wants cities to allow more
| housing, and local governments, which are opposed to
| higher density housing because the NIMBYs ("not in my
| back yard") fight it. The restrictive zoning laws are at
| the local level, not the state level.
| PaulDavisThe1st wrote:
| > The restrictive zoning laws are at the local level, not
| the state level.
|
| True, but the restrictive zoning laws are made possible
| at the state level.
|
| A thread here on HN a few weeks ago mentioned Japan which
| they described as having basically 5 classifications for
| "types of things you can do on land you own", ranging
| from "essentially anything at all" to "notable
| limitations". Within whatever classification your land is
| given, you can do whatever you want, local neighborhood
| be damned.
|
| I don't know if that's an accurate description, but it
| sounds like a system with a very different set of
| tradeoffs than the one found across the USA.
| InitialLastName wrote:
| Normally when people talk about mixed-use development,
| they are talking about zoning rules that allow
| residential and commercial use in close proximity, not
| necessarily about forced single-family use (although that
| is also an issue in many places).
| rank0 wrote:
| Ah I see I misunderstood. FWIW though there's businesses
| scattered all over my neighborhood and seemingly no
| zoning rules. Lots of folks, especially the ones on this
| forum, would probably not live in Atlanta simply because
| of their perception of the city.
| InitialLastName wrote:
| Atlanta has the advantage of being an old city, relative
| to the US's history of development. It certainly has its
| own issues with post-WWII development (especially in its
| sprawly areas), but the older parts have retained lots of
| the perks of pre-automobile urbanization.
| [deleted]
| janj wrote:
| I don't understand this comment, maybe you can expand. It
| makes sense to me that what is desirable for a primary
| residence would significantly overlap with what is desirable
| for rental, comfortable space, walkable to a city center,
| etc. Is your point that people should be more accommodating
| to the rental market? IMHO I think all cities should strongly
| regulate what can be a rental and add tax to homes when it is
| not occupied, prioritizing affordable permanent residence.
| This isn't just a "trendy city" problem, it's wide spread
| across the country.
| rank0 wrote:
| I'm arguing that people should lower their standards. It
| should be easy to understand that not everyone can afford
| own property walking distance to the city center.
|
| I fully agree with you on prioritizing primary residence.
| ipaddr wrote:
| Everyone can with smaller cities. Living in a megacity
| and expecting it is the problem.
| janj wrote:
| How big of a city are you talking about? I live in a city
| of just over 50k and house prices have been an issue for
| years and keeps getting worse. It's the same for every
| "city" around this size that I've looked into. I've seen
| a town with <20k where house prices have more than
| doubled in the past 2 years. It's a bold statement to say
| everyone can afford to own a desirable home in even a
| smaller city.
| lordnacho wrote:
| This has perplexed me as well. Here in the UK, the top 1% of
| incomes is PS175K. Assuming the bank lets you borrow 5x, and
| you're married to someone with a more middling income, you can
| borrow ~PS1M.
|
| Yet there's a ring around London where it's hard to see any
| family homes that are under PS1M.
|
| I mean sure maybe they're sitting on equity or mom and dad are
| contributing, but by my estimation there are a huge number of
| people who have thrown absolutely everything into owning a
| home. We'll see how they fare if rates rise.
| newaccount74 wrote:
| > there are a huge number of people who have thrown
| absolutely everything into owning a home
|
| I don't know what the situation is like in the UK, but here
| in Austria banks are really really eager to give people as
| much money as they'll take.
|
| Getting a mortage that runs 30 years? Sure thing! Why not
| make it 35 years? 60% of your paycheck goes into mortage? Why
| not? You have less than 10% of the required amount in cash?
| Who cares!
|
| The people who are buying homes right now are getting into
| massive debt, with variable interest rates. If interest rates
| rise, a lot of home owners won't be able to pay their
| mortages anymore, and they won't be able to sell because the
| only reason people can afford these crazy mortages is because
| the interest rates are so low. It looks like a bubble to me,
| and the only thing that's redeeming to me is that everyone
| has an interest in keeping the bubble going.
| sokoloff wrote:
| What's the top 3% of income of people _who work in London_?
| It 's probably not "all of the UK" that matters as an income
| reference, but rather the people who are earning incomes and
| wanting to live in that area (plus all the people from around
| the world who would consider buying a house in/near London,
| but not 100 miles away from London).
| lordnacho wrote:
| Yeah true, couldn't find London specific stats. Fair guess
| is that the lions share of UK to earners are based in
| London.
| twic wrote:
| > there's a ring around London where it's hard to see any
| family homes that are under PS1M
|
| If you mean the Stockbroker Belt [1], well, yes.
|
| [1] https://en.wikipedia.org/wiki/Stockbroker_Belt
| eli wrote:
| What's the top 1% for net worth though?
| pharmakom wrote:
| The problem is it is becoming impossible to be self made.
| Most people buying real estate in south east of UK and
| London have middling salaries but substantial help from
| their parents. The working class kid who made it to
| 70k/year? Tough luck.
| ipaddr wrote:
| People already made their money in London. Buying a home
| there means buying into an expensive mature area. Most
| people buying come from old money or they are over
| leveraged or foreign sources.
|
| You should try to make some other city into something and
| buy into their future price increases.
| PaulDavisThe1st wrote:
| Hence the absurd govt-backed "buy-and-rent-to-buy" schemes
| that the UK has seen showing up over the last decade.
| searchableguy wrote:
| London is one of the most popular places for people to
| whitewash their money via real estate.
|
| It doesn't seem surprising.
| conanbatt wrote:
| > rther and further out of reach of people who are looking for
| a primary home.
|
| This happens to all assets all the time. When it rains,
| umbrellas go up in price. Companies competing with this and
| failing is only a transfer of wealth between VC's and
| homeowners. You don't need to ascribe a moral sentiment to that
| transfer, its just what it is.
|
| If the prices then bust afterward, then homeowners that sold
| won, the ones that stayed didnt take advantage of the
| opportunity, and home buyers lost at the high and will win at
| the bottom. Like in any other price fluctuation!
| bufferoverflow wrote:
| It's "easy to see" if you don't do any math. US real estate
| market is around ~$200 billion. That $0.881 billion of zillow
| is a rounding error.
| haroldp wrote:
| > I'm imagining a scenario where two iBuyer companies try to
| outbid each other algorithmically, driving the prices further
| and further out of reach of people who are looking for a
| primary home.
|
| But iBuyers are always low-balling. They are bidding under the
| asking price with an all-cash offer that they hope will make up
| in speed and ease what it lacks in price.
|
| > It's not that uncommon to see nearly entire neighborhoods
| converted to short term rentals now in some areas where they're
| still legal. Hearing that really depressed me.
|
| I lived in Lake Tahoe for ten years before AirBnB was a thing
| and three out of four homes there were absentee owners that
| only used them a few weeks a year. It made it a very hard place
| for small businesses to stay afloat. Most visitors stayed at
| big hotels or paid huge premiums for ad hoc "cabin rentals"
| through local realtors. The most depressing part was Halloween
| - kids hiking up and down steep hills to mostly empty houses.
| :)
| pixl97 wrote:
| >But iBuyers are always low-balling. They are bidding under
| the asking price with an all-cash offer that they hope will
| make up in speed and ease what it lacks in price.
|
| But is asking price "market" price. As in does the seller
| price a 10-20% premium calculating this. Always easier to
| negotiate down than up.
| uncomputation wrote:
| > iBuyers are always low-balling
|
| Low-balling according to their _own estimate_ (Zestimate)
| with imperfect knowledge. If this Zestimate overvalues a
| house, but the iBuyers assume "we are low-balling anyways,"
| they may find themselves in an iBidding war ending in the
| winner's curse: whoever pays the most for the overvalued
| house wins.
|
| Not a problem though right? They overvalue some, undervalue
| others, it evens out. But, as the article points out, the
| nature of this algorithmic buying is that the iBuyers will
| only - or at least predominantly - end up with the houses
| they overpaid for or got only a slightly good deal on because
| many sellers will be willing to take longer for a better
| deal. The end result is very thin margins or, as seen with
| Zillow, substantial losses as they hold a lot of lemons.
| not2b wrote:
| Yes, that's exactly it. The "Zestimate" is often way off,
| and the owner knows a lot more about it than Zillow does.
| If the Zestimate price is lower than the buyer thinks they
| can get, they won't take the offer. If the Zestimate price
| ignores the run-down condition of the house or other issues
| Zillow missed, they snap that up. So Zillow mostly wound up
| with the homes that they overvalued.
| duck wrote:
| Are you saying AirBnB fixed all this? I don't see them
| renting much in late October nor passing out candy.
| pigscantfly wrote:
| No, they're saying the problem existed before AirBnB.
| pge wrote:
| Zillow wasn't pursuing the strategy of a traditional iBuyer,
| which as you note is to lowball. Zillow thought they were
| providing a service of market-making and didn't consider the
| risks (I still don't see why it wasn't obvious to them...).
| If they offered some discount from the Zestimate, that would
| have been a lot smarter, but it would have undermined their
| goal of making a market, as well as undermining the very
| concept of the Zestimate (if Zillow says my house is worth X,
| why are they offering me 80% of X?). The alternative would be
| to appraise each house in person instead of basing the
| purchase price on the Zestimate, but that wouldn't scale.
| colordrops wrote:
| Sounds like a good sci-fi story... Rebellion against the AI
| landlords.
| Aunche wrote:
| We need a land value tax or at the very least higher property
| taxes. That would disincentivize people from speculating into
| housing. It's no surprise that cities with the highest home
| prices have some of the lowest effective property tax rates.
| a1pulley wrote:
| > It's honestly quite scary how I'm in the top 2% of income
| earners in my generation and yet I could barely afford to buy a
| small place in a semi-desirable area. I can easily see myself
| not being able to compete in algorithmically dominated markets
| flush with venture cash in the future and I earn more than just
| about everybody I know today.
|
| A thought exercise: suppose that no new houses are ever built
| and that housing turnover is nearly zero. What happens to the
| price of housing in that limit? Market forces do not
| necessarily entitle the top n% of the income distribution to
| housing.
|
| I was a bit cynical about this too: I live in Los Angeles,
| where a "small place in semi-desirable area" gets listed for
| 1.5M and goes for nearly 2M. I'm somewhere in the top 5% of
| earners in California, but that $2M 1950s tract housing would
| be >50% of my post-tax income.
| lotsofpulp wrote:
| > What happens to the price of housing in that limit?
|
| The price continues to reflect the supply and demand of the
| houses. You're either lucky to inherit the land, or you earn
| enough to outbid others for it. It might even be impossible
| to outbid those who are bringing inherited wealth to the
| table.
|
| It might become a transient community, where you work and
| save and then leave to settle somewhere else.
| tshaddox wrote:
| > A thought exercise: suppose that no new houses are ever
| built and that housing turnover is nearly zero. What happens
| to the price of housing in that limit? Market forces do not
| necessarily entitle the top n% of the income distribution to
| housing.
|
| I don't think it's disturbing because "clearly the top 2% of
| income earners should be entitled to housing," but because
| _clearly everyone needs housing, and if the top 2% of earners
| can 't even afford it, that means it's even worse for
| everyone else_.
| a1pulley wrote:
| Owning and having are not the same thing: you can have
| housing while renting it, receiving it as a gift from
| parents or your spouse, etc.
| thebean11 wrote:
| > suppose that no new houses are ever built
|
| Why would you suppose that? I don't really see what you're
| getting at, that's a very unintuitive assumption; it
| shouldn't happen if market forces are allowed to run their
| course.
| kevin_thibedeau wrote:
| New _afordable_ housing isn 't built. Everything is
| "luxury" so that developers can maximize profit. When
| someone tries to build affordable duplexes the NIMBYs say
| not in my town.
| el-salvador wrote:
| One trick they use in my country is adding a pool to
| apartment buildings.
|
| The pools are unused most of the time, but having a pool
| in the building increases the value estimated by property
| appraisals' checklists.
| sokoloff wrote:
| Even luxury units add supply to the middle and affordable
| parts of the housing stock. Today's luxury units are
| often bought and moved into by someone moving up from a
| mid-market place, the buyer of which is likely moving up
| from a 25 year old now affordable place.
|
| (Alternately, if no luxury unit is built, many of those
| buyers will be forced to buy the best-of-the-rest if they
| want to move in, putting more pressure on the middle,
| which in turn puts pressure on the affordable.)
| [deleted]
| ffwszgf wrote:
| Isn't luxury the only thing that's even allowed to be
| built in most NIMBY cities? Try building large "market-
| rate" housing in Palo Alto and see what happens (even
| within the confines of their already ridiculous zoning
| laws).
| mywittyname wrote:
| It's luxury almost everywhere.
|
| The only place cheaper housing is being built are in
| developments on the far outer suburbs of flyover cities.
| But even those builders are having trouble with supplies
| and labor.
| mirntyfirty wrote:
| I think many things are intentionally mislabeled as
| "luxury". One can buy a simple refrigerator from Best Buy
| and claim that it's stainless. I've seen listings brag
| about how the place has a Nest thermostat.
| a1pulley wrote:
| I was trying to draw attention to the fact that "I'm in the
| top 2% of earners but I can't afford a house" isn't
| surprising when legislative factors make it hard to add
| housing stock, when turnover is low, and when there's net
| population inflow.
|
| My supposition was intentionally exaggerated to clarify
| what happens when you don't build enough housing: not to be
| pedantic, but understanding what happens in "extreme cases"
| is a common technique in math and physics to understand
| what happens in more common ones.
| georgeecollins wrote:
| >> it shouldn't happen if market forces are allowed to run
| their course.
|
| Apparently you haven't met my neighbors.
| aksss wrote:
| Sounds like the logical thing to do is start desiring a
| different place with sounder housing/zoning policy. Voting
| with your feet is a thing when you can't win at the ballot
| box.
| coryrc wrote:
| I think this is another large flaw in our voting system,
| where things are too local (like zoning). You get a small
| community of rich people in Berkeley block any new housing,
| and you want to live there but have no influence on the
| zoning laws.
|
| Japan's zoning is national and doesn't have this problem.
| Thus Tokyo is far more affordable than San Francisco,
| Mountain View, etc.
| ryandrake wrote:
| > > It's honestly quite scary how I'm in the top 2% of income
| earners in my generation and yet I could barely afford to buy
| a small place
|
| > I live in Los Angeles, where a "small place in semi-
| desirable area" gets listed for 1.5M and goes for nearly 2M.
| I'm somewhere in the top 5% of earners in California, but
| that $2M 1950s tract housing would be >50% of my post-tax
| income.
|
| I think the obvious answer here is that people in the top 2%
| or top 5% are not buying houses... It's the people in the top
| 0.1%. Last time I was home shopping, we were regularly outbid
| by all-cash offers of 50%-100% over asking price, no
| contingencies. These competing bidders are not teachers and
| nurses. They're not even high-paid tech employees. Do you
| really think a Senior Software Engineer at Microsoft has
| $2.5M in cash sitting in his checking account to buy a home?
| No way. These are all businesses, investors, serial landlords
| buying their 60th house, hedge funds, 0.1% wealthy people--
| that's who's buying all these houses. Not us.
| rdtwo wrote:
| You don't need a lot of there is only one decent house a
| week for an entire metro of 2-3m people somebody has a rich
| uncle, a heloc or some windfall earnings they can lean on
| to make it happen
| nunez wrote:
| but what about all-cash mortgage lending services and
| margin loans?
| jurassic wrote:
| > Do you really think a Senior Software Engineer at
| Microsoft has $2.5M in cash sitting in his checking account
| to buy a home? No way.
|
| It's not common, but definitely possible. E.g. if you were
| part of an acquihire. Or just got lucky somehow. I know a
| senior with a crypto portfolio worth more than that because
| he dropped a few thousand into bitcoin in the very early
| days.
| tomrod wrote:
| Agreed with your analysis, and add previous homeowners who
| can sell quickly and are making the cash from the equity.
| lubesGordi wrote:
| I'm under the impression that 'cash offer' just means that
| whoever is buying has already secured their financing. That
| means there's almost no risk of the deal falling through
| and the sale can go from contingent to pending immediately.
| This is better for the buyer because they sell faster.
| Senior software eng at microsoft can pull this off no
| problem (no one is buying a house with cash in their bank,
| not even rich people).
| dangrossman wrote:
| > no one is buying a house with cash in their bank, not
| even rich people
|
| That's how I bought my house, and I earn less as a
| solopreneur than many FAANG employees in this community.
| My "cash offer" came with the standard proof of funds: a
| piece of paper the local Wells Fargo branch printed for
| me on their letterhead that said I have an $X balance as
| of that date, where $X was greater than the price I was
| offering for the house. I walked into the same branch and
| wired that cash to an escrow company a few days before
| closing.
| sib wrote:
| No, there's still a distinction. Secured financing can
| still fall through.
| karpierz wrote:
| It means that they aren't using a mortgage to buy it. If
| there's a mortgage involved, then the offer becomes
| contingent on the bank's due diligence which can cause
| the deal to fall through in a variety of ways.
|
| For example: the bank will only loan you money up to the
| appraised value of the home, which is done after the deal
| is signed (banks won't send an appraiser to every house
| you make an offer on). If the appraiser says the house is
| worth 500K and you bid 800K, you need to find 300K some
| other way (usually cash) or the deal falls through.
| dyu wrote:
| While it is true cash offers in the strict sense mean
| real cash, it may also mean no-contingency offers. You
| can go through mortgage underwriting first and commit to
| pay the gap between appraised value and deal value, and
| can make a no-contingency offer with minimum risk. Or, if
| you are willing to lose your deposit (usually 3-5%) you
| can also make a no-contingency offer to be more
| attractive.
| karpierz wrote:
| > You can go through mortgage underwriting first and
| commit to pay the gap between appraised value and deal
| value, and can make a no-contingency offer with minimum
| risk.
|
| Of course, but unless the amount you commit to bridge is
| unbounded, you're still contingent in appraisal price.
| And if you did commit to that, you're just making a cash
| offer with extra steps.
|
| Deposits in my experience are token (around 2%). And
| usually sellers will verify that you have the cash on
| hand for no-contingency offers, since 2% is not worth
| waiting and then redoing the house selling process.
| jjav wrote:
| No, cash offer means actually pay it cash. If there's any
| kind of financing involved, the bank will need to approve
| the purchase, slowing down the process, which is what a
| cash offer bypasses.
|
| > no one is buying a house with cash in their bank, not
| even rich people
|
| They most certainly are. Tons of real estate sales here
| (Silicon Valley) are all-cash because the other people
| making offers are also all-cash, so the only way to make
| a competitive offer is if it is all-cash.
|
| So regular people who need a mortgage are completely shut
| out of the market.
| Dylan16807 wrote:
| > If there's any kind of financing involved, the bank
| will need to approve the purchase, slowing down the
| process, which is what a cash offer bypasses.
|
| That's not "already secured" then, is it?
| jjav wrote:
| Correct. But the point was that if you're getting
| financing from an institution, there is no such thing as
| secured, before they evalute the house and the offer.
| PaulDavisThe1st wrote:
| Your impression is wrong. "Cash offer" means there is no
| 3rd party loan involved. Obviously, if someone's aunt is
| lending the buyer money, nobody is going to catch that.
| But "cash offer" absolutely does not mean "secured
| financing".
| mywittyname wrote:
| It means they have cash in a bank account ready to go.
| Maybe they took out a loan against other assets to obtain
| the cash, but a "cash offer" is literally the person is
| handing over a cashier's check at closing.
|
| This means there is 0% chance of the deal falling
| through. Not almost no risk, none at all. Failure to
| follow through with the deal would be breach of contract
| and the buyer is liable for damages, up-to-and-including,
| being forced to hand over the money for the house.
| a1pulley wrote:
| To be fair, it's doable as a senior or staff engineer at a
| big company earning 300 to 500k/yr. I'm (lucky enough to
| be) in that range and qualified for a $1.5M loan. Combined
| with 500k for a down payment, you can see how those $2M
| houses are technically affordable. For now.
|
| Income data always lags reality by a couple of years: in my
| experience, a lot of people have a lot more money than
| you'd think. The winners of the eight purchases I've
| attempted have been young dual income professional
| families.
| runeks wrote:
| > I'm imagining a scenario where two iBuyer companies try to
| outbid each other algorithmically, driving the prices further
| and further out of reach of people who are looking for a
| primary home.
|
| That's not how market making works. Market makers don't consume
| other peoples' orders, which is required to push up the asked
| price or down the bid price.
|
| Market making is effectively (1) observing that the market is
| currently willing to buy some asset at the price A and sell it
| at the price B (where A < B) and then (2) simultaneously
| submitting a buy order at price A1 (where A1 > A) and a sell
| order at price B1 (where B1 < B). Thus the market maker reduces
| the difference between the buy price and sell price (the
| "spread").
| bloqs wrote:
| Fundamentally, NIMBYism and dysfunctional thinking drives this,
| homes cannot both be affordable and a sure good investment as a
| matter of definition
| asdff wrote:
| I would imagine if your algorithm was anything but the most
| simplest it could check for this. Having some check like "What
| is the median income among the workforce" and to not bid above
| a certain amount relative to that will help prevent overbidding
| on a house that no one in the area can realistically afford,
| short of bots.
| mywittyname wrote:
| > The scary thing is that it's easy to see how something how
| like this could drive a market boom and bust cycle.
|
| It would take a lot more than a billion dollars to make a dent
| in the national housing market. Total housing sales in Feb22
| amounted to $161 billion.
|
| That's enough to make a temporary splash in a rural market, but
| Zillow would need to spend 100x more than what they lost to
| even move the needle. And spend 10000x as much to really drive
| a boom/bust cycle nationally.
| MuffinFlavored wrote:
| > I'm imagining a scenario where two iBuyer companies try to
| outbid each other algorithmically, driving the prices further
| and further out of reach of people who are looking for a
| primary home.
|
| This is just my personal anecdote but... I'm pretty sure when I
| was rushing to show up to "new listings" on the weekends and
| waiting in line for 10-40 families to get a walkthrough "open
| house" wise, I feel like the sellers were going to pick a
| family that showed up over a Zillow website. What % of closed
| houses were being bought by families instead of "iBuyers" as
| you said it?
| IAmGraydon wrote:
| You honestly think 2 iBuyer companies would have the liquidity
| to move the entire housing market? I don't think you understand
| the size of the US housing market.
|
| If you're in the top 2% of earners and can't buy a home, you
| either live in a ridiculously expensive city (outlier) or have
| a money management issue.
| mdavis6890 wrote:
| " The scary thing is that it's easy to see how something how
| like this could drive a market boom and bust cycle."
|
| The opposite really. Speculators do their best to buy low which
| pushes the price back up toward the mean in the aggregate, and
| sell high, which pushes it back down toward the mean.
|
| Speculation is a stabilizing force overall.
|
| The boom and bust cycle in real estate is very real, but driven
| by other things.
| paxys wrote:
| One can blame Airbnb, Zillow or whoever else, but the truth is
| that speculation in real estate and vacation towns have both
| been a thing for a very long time. If the population rises and
| we refuse to build more houses, the existing ones will get more
| expensive no matter what. The solution is out there in front of
| us but everyone prefers to dance around it.
| rrrrrrrrrrrryan wrote:
| > One can blame Airbnb, but > speculation in ... vacation
| towns [has] been a thing for a very long time. > the existing
| [houses] will get more expensive no matter what.
|
| In vacation towns, the issue is that tourists are flooding
| out of hotels, and into livable dwellings.
|
| Our hotel vacancy rates are rising just as fast as our home
| prices.
|
| Perhaps the solution is tearing down hotels and building
| high-rise apartments in their stead, but it seems a bit
| wasteful compared to the alternative (regulating and taxing
| Airbnbs to nudge tourists back into the hotels designed for
| them).
| margalabargala wrote:
| On some level, this is hotels failing to compete. If I look
| up both airbnbs and hotels in a popular vacation town
| (randomly using Big Sky, MT, april 18-20, for this example)
| then I see hotels and airbnbs in similar locations, and at
| similar price points. However, there are airbnbs cheaper
| than the cheapest hotels, and they have a number of
| amenities that no hotels offer- notably, a washer/dryer in-
| unit, a full kitchen, and multiple actual rooms.
|
| Given the same nightly price, who would choose a minimal
| pared-down hotel room over an entire furnished condominium?
| wpietri wrote:
| Agreed, but there are big structural barriers. We generally
| want necessary goods to have stable or decreasing prices over
| time. But in America, we encourage home ownership as an
| investment. For many, their biggest investment. That creates
| a big constituency who want housing prices to go up. But we
| also want people, especially those just starting out, to have
| affordable housing.
|
| We can't have housing be both affordable and a good long-term
| investment. We need to pick. And given increasing prices and
| how 65% of Americans are howmeowners, I think we already did.
| c-linkage wrote:
| Change the word "house" to "car" and I think the problem
| becomes not-so obvious.
|
| It's often bemoaned that personal cars are a waste of money
| and space: they sit idle most of the time, we have to build
| parking lots to accommodate them and that takes space. It
| would be so much better if we could just hire cars on demand!
| But this doesn't scale because the demand is not spread out
| during the day -- absent carpooling, you still need one car
| per person twice a day, meaning the supposed savings don't
| exist.
|
| The same could be said for housing. If I'm at work all day,
| then my house is sitting idle (it's not housing anyone) and
| it takes up space. Why not let someone live in my house while
| I'm at work? This also doesn't scale but for a different
| reason: we all work during the day (excluding night-shift
| workers) so at night we still need one house per person
| (ignoring families, stretching the metaphor a bit).
|
| Now add "vacation homes" into the mix, now you're looking at
| ~20% of housing (calculated from empirical analysis) in any
| vacation hot-spots being rental properties. This means that
| 20% of the existing housing that could be available for
| permanent residents is missing.
|
| Saying "just build more housing" is just not realistic. 20%
| more housing is a ludicrous amount of housing!
|
| Hotels, on the whole, are much more economical in space
| utilization because people who are going on vacation do not
| vacation to _visit a home_. They go to do things in the place
| they are visiting and are thus _not at home_.
| jacobr1 wrote:
| We take two types of vacations: 1) foreign travel where we
| are constantly on the go visiting new places and 2) home
| rentals with extended family.
|
| For the second category usually it is the beach, but
| sometimes in the mountains or other area. We tend to get
| 10-15 members of our extended family and friends and the
| activities often include making food communally, playing
| games, moving between the house and walking distance
| activity like the shore, even napping. The house very much
| gets used and isn't just a place to sleep.
| iso1631 wrote:
| > But this doesn't scale because the demand is not spread
| out during the day -- absent carpooling, you still need one
| car per person twice a day, meaning the supposed savings
| don't exist.
|
| Very rare for my neighbour to be using her car at the same
| time I use my car. Not every car driver commutes 5 days a
| week 9-5.
|
| I work from home, have done for years, my neighbour is
| retired.
|
| I guarantee in my village there will be at least 10 unused
| cars at any point during the year, probably nearer 50.
| There certainly aren't that many empty houses
| sudosysgen wrote:
| Prices have increased tremendously _even in cities with
| stagnant population_. It 's not just pure supply and demand -
| real estate has a tendency to occupy enough of income in a
| given area so that the lower paid cannot afford it.
| bitlax wrote:
| Well, there are two solutions.
| moffkalast wrote:
| True, we could lower the population back down by exiling
| real estate agents.
| jliptzin wrote:
| There's even lower hanging fruit than that. I have a 6
| bedroom house, but local regulations state that I am not
| allowed to live with more than 2 people unrelated to me.
| Plenty of parking, tons of people looking for housing, but
| legally I am forced to keep 3 bedrooms empty.
| devoutsalsa wrote:
| House Hacking, Extreme Edition: legally adopting your
| roommates.
| dopamean wrote:
| Is this in the US? I've never heard of this before and am
| curious to learn more. It sounds like something that is
| nearly unenforceable.
| zo1 wrote:
| It doesn't have to be enforceable. But as soon as you do
| this, any potential hiccup like having to evict tenants
| or go to court for anything minor, and the state/police
| find out about your little "unenforceable" violation.
| notch656a wrote:
| People on AirBnB generally are not 'tenants' and kicking
| them out is as easy as trespassing them, optionally with
| a Sheriff if they refuse to leave. You're reading way to
| much into Sheriff Bill worrying about what's happening.
| The AirBnB side is typically a civil matter.
| adflux wrote:
| Good point, never thought about that. Here in the
| Netherlands, it used to be "common" to house other people
| than your direct family for some time, e.g. during harvest
| season.
| danans wrote:
| What a terrible policy. Do you mind sharing where this is?
| [deleted]
| delusional wrote:
| Why do you have a 6 bedroom house if you only need 3
| bedrooms?
|
| It sounds like you're annoyed that you can't turn a profit
| on your 3 bedrooms and the housing problem is really a
| tangential concern.
| paxys wrote:
| Agreed. Heck I know several people who prefer to keep their
| condos/houses empty rather than rent them out at market
| rate because of 100% tenant friendly city and state laws.
| Someone can move in and refuse to pay rent, refuse to
| leave, use your house as a drug den, destroy your property
| and lots more, and you can do _nothing_ about it. At that
| point the city is just incentivizing homeowners to
| contribute to the housing crisis.
| flir wrote:
| Sounds like those places need a land value tax, too.
| tristor wrote:
| > prefer to keep their condos/houses empty rather than
| rent them out at market rate because of 100% tenant
| friendly city and state laws. Someone can move in and
| refuse to pay rent, refuse to leave, use your house as a
| drug den, destroy your property and lots more, and you
| can do nothing about it.
|
| I'm in this situation right now. The only way I'll rent
| it out is if I personally know the tenant and their
| personal character. Otherwise, I'd rather leave the
| property empty. I didn't buy it as a rental, rather I
| paid off my primary residence and then had to move, so
| just kept it. I don't want to go outside the law, but
| that would be my only option as a landlord if someone
| tried to abuse me/my property, since the law offers me no
| meaningful protection. To avoid that liability, I simply
| don't rent.
| schrijver wrote:
| This is so alien to me. Why don't you sell the place?
| Staying the owner of this place makes it so that you
| can't spend your money tied up in this house, and this
| house can't provide its roof to someone. Seems like both
| of you loose.
| jjav wrote:
| > This is so alien to me. Why don't you sell the place?
|
| Selling might trigger a very large tax liability,
| depending on original cost vs. current price. When that
| is the case, it's better to keep it in case you might
| want to return to the area in the future.
| iso1631 wrote:
| Presumably value appreciating more than selling it and
| investing in other assets that are as safe.
| lotsofpulp wrote:
| Also, houses can allow you to lever up with non callable
| loans.
| schrijver wrote:
| The parent you're replying too has no problem with
| tenant-friendly laws: rather, these occupation limits are
| both tenant and owner unfriendly, because you can't live
| together in non-family arrangements that you might prefer
| (as a tenant or as owner). I sympathize.
|
| With regards to your example, if you're rich enough to be
| able to afford leaving a property you own empty, then I
| have little sympathy. It seems like their cities and
| states should introduce a sizeable vacancy tax. Or, as
| they did in Amsterdam in the 1980ies, tolerate squatting.
| And yes, maybe see if there's something that can be done
| about backlogs in eviction court, but the baseline for me
| is that it should never be feasible for an owner to leave
| their house empty.
| ForHackernews wrote:
| The obvious solution is to just expropriate them and turn
| them into public housing. It's working in Berlin.
| schrijver wrote:
| Or tolerate squatting, which used to be the case in the
| Netherlands.
| scruple wrote:
| A home 2 doors down from myself had been empty since the
| neighborhood was built in 2016 _until_ 2020 when rental
| prices in our neighborhood blew through the ceiling.
|
| I always assumed their financial calculus was such that
| the appreciation alone, on an empty home, was a better
| prospect to them than what they could've gotten in rent
| in those earlier years (weighted against
| upkeep/maintenance vs. leaving the place empty and coming
| by every 6 weeks to inspect the place -- which is what
| they were doing). Now that these homes are renting out
| for nearly 2x the mortgage price they have a tenant. I'm
| unsurprised to hear that it's commonplace. It's just...
| upsetting.
| setr wrote:
| For someone renting out a single home, I think it's the
| risk of a bad tenant much more than the basic
| calculations -- as GP said, there's really nothing you
| can do about it.
|
| I personally know a case of a misbehaving tenant not
| paying rent beyond the first two months pre-payment,
| submitted a fraudulent check for the first actual
| payment, had neighbor complaints endlessly with repeat
| HoA fines (fines given to owner, of course) -- and 1.5
| years to evict..
|
| It also turned out he had started subletting it out for
| the same rent that he himself wasn't paying.
|
| That kind of thing can get you into a deep hole pretty
| quickly, and there's not even much filtering you can do
| ahead of time, even with third party verification
| scruple wrote:
| Like another commenter mentioned, you'd real think that
| in the interest of addressing the housing shortage that
| there be some better solutions for these problems on both
| ends of the spectrum.
| Teknoman117 wrote:
| > Someone can move in and refuse to pay rent, refuse to
| leave, use your house as a drug den, destroy your
| property and lots more, and you can do nothing about it.
|
| This is one of those things that really just confuses me.
| It's like no one could agree on happy medium between
| "landlord can eject you whenever they want for whatever
| reason" and "no one can make you leave, ever, for any
| reason".
|
| And to whoever downvoted you, there are some places in
| the bay that are demanding 6 months rent up front in
| order to move in because they can't do much if you stop
| paying rent.
| TimPC wrote:
| These laws are hard to get actually correct. The major
| problem is court delays. There is a very high bar for
| kicking someone out before they get their day in court
| about whether it is fair to do so. This seems eminently
| reasonable but there is also a severe shortage of
| judicial services that result in court dates over a year
| out to resolve such issues. In that year of time, it's
| quite possible for a tenant with maybe $5K to their name
| to accumulate $500K in damages and debts. For many such
| tenants it is a cost they could never repay in their
| lifetimes which means even if the landlord gets the
| desired verdict they'll never see the capital they
| wanted.
|
| I agree there are places in the world that are so biased
| against landlords that they don't even try to get this
| problem correct but I think for many cases the problem
| isn't bad laws but rather the delays to being able to
| execute reasonable actions to limit damages. I'm not sure
| what a good solution is for many cases because I think it
| would take fairly extreme evidence to kick someone out
| without their day in court if they decided to fight it. I
| do agree with landlords it should be easier to kick
| someone out if they stop paying rent and that fact is
| adequately documented. I mean stop paying rent in the
| sense of an appropriate pattern not a single late
| payment.
| bombcar wrote:
| From what I've heard is a common thing for landlords to
| do is a "pay to vacate" where they show up at the door
| with $1k in cash if the tenant will just leave.
| dntrkv wrote:
| > show up at the door with $1k in cash
|
| In SF, there have been six-figure buyouts to remove
| tenants from rent-controlled properties.
| mikeyouse wrote:
| Sure, because those tenants signed contracts with
| perpetual leases (as also understood by the landlords who
| provided the contracts). Evicting in SF means you can't
| turn your property into a Condo (only a TIC) - so to
| maintain the value of the condo conversion option,
| landlords pay tenants to leave. The buyouts are
| proportional to the rent difference so it's not
| surprising that someone who's rent is increasing from say
| $1k/month to $4k/month would need a large sum of money
| (that's taxable!) to be convinced to leave.
|
| Call the buyout $100k -- best case scenario, it's taxed
| as capital gains so you'd take home $85k. At $3k/month
| increase in rent, you'd be looking at a little over two
| years before you're below water.
|
| Housing in California is broken in 1,000 different ways
| but the tenant buyouts seem to be pretty minor in the
| grand scheme of things.
| nunez wrote:
| if you go onto /r/landlord, you'll learn that "cash for
| keys" is (a) usually way more than $1k, and (b) not a
| fool-proof way of kicking someone out (since the squatter
| still need a place to live, and they know that the cash
| won't cover it). this was/is a huge HUGE issue with the
| COVID real estate moratoriums that popped up.
| dataflow wrote:
| How does one accumulate $500K in damages and debt in 1
| year? That's like $41k/month.
| nunez wrote:
| buy three cats, and zero litter boxes, and zero litter.
| make sure they aren't neutered. get a single male cat
| since, hey, he's got needs.
|
| cook lots of greasy ass food and drain that oil straight
| down the sink. toss condoms, paper towels, hell,
| ANYTHING, down the toilet, since it's basically a trash
| dispenser, right?
|
| once you're done having the cats pee their way through
| the foundation (cat urine DESTROYS houses) and destroying
| the plumbing, steal some copper on your way out with some
| friends.
|
| oh, and this is a pre-war establishment where everything
| is absolutely not up to code.
| Zircom wrote:
| Some people don't take kindly to being kicked out, even
| if they're in the wrong, and there's not a lot you can do
| to stop them from causing hundreds of thousands in
| damages while you go through the process of evicting
| them.
| Teknoman117 wrote:
| The first house I lived at in California was part 2 of
| that - previous owners destroyed the place during a
| foreclosure, so we got what was previously an $800k house
| for $400k in a short sale by a bank. Took ~$50k to fix up
| because we were willing to do the work ourselves over
| about a year.
|
| It was _disgusting_. Glass and other obstructions flushed
| down the pipes, literal feces on the walls, holes
| everywhere, missing parts of the ceiling, fixtures ripped
| out, etc.
|
| Move-in process was essentially move all our stuff to a
| storage area, continue renting until we'd made the place
| no longer a biohazard, then we moved in slowly as we
| fixed up rooms.
|
| But hey, a few hours of work a day for a year essentially
| saved a year of a FAANG salary on the place.
| vkou wrote:
| There is a happy medium, and many cities are in it, it's
| just that landlords love painting that happy medium as
| tyranny.
|
| They also never make any distinction between letting a
| basement or a room in a home, a private landlord letting
| a detached home, and a corporate landlord letting
| hundreds of units.
| sometimeshuman wrote:
| Not arguing, but there are also many people who do not
| rent their vacant property because they are too rich to
| be bothered and are content with the capital gain
| appreciation.
|
| Perhaps there needs to be a higher tax rate for vacant
| property that is not a primary residence.
| wwweston wrote:
| > they can't do much if you stop paying rent.
|
| I'm aware of specific stories where bad-faith tenants
| have made enforcement _difficult_ , but I'm also aware of
| enough specific stories from the other side where tenants
| -- even some who have committed no violations -- have
| found themselves without housing to know that as a total
| generalization, these statements are false.
|
| And you don't get to a resident-sourced homelessness
| crisis if landlords are truly powerless (and sure,
| coastal homelessness numbers are driven by bus-ticket
| policies elsewhere, but it's not the whole story).
|
| AFAICT there is in fact a medium between "landlord can
| eject you whenever they want for whatever reason" and "no
| one can make you leave, ever, for any reason". Whether or
| not it's a happy one probably depends more on court
| outcomes than any apparent shortcomings in statutes, but
| if anyone has _specific_ complaints about the law,
| perhaps they should point them out.
| anchpop wrote:
| > I'm aware of specific stories where bad-faith tenants
| have made enforcement difficult, but I'm also aware of
| enough specific stories from the other side where tenants
| -- even some who have committed no violations -- have
| found themselves without housing to know that as a total
| generalization, these statements are false.
|
| I'm aware of hundreds of stories about homicidal
| cardiologists, but I wouldn't try to make a judgement
| about cardiologists based on that because I have no
| reason to think the stories I'm exposed are a
| representative sample of cardiologists. In your case,
| tenants who have committed no violations finding
| themselves evicted make a much more sympathetic story
| than landlords who want to evict an annoying tenant, so
| I'd expect the former to be very overrepresented in what
| you hear.
| seanmcdirmid wrote:
| Once you are exposed to one homicidal cardiologist, it's
| no longer an anecdote. Landlords who aren't very thorough
| in background and credit checks are very very likely to
| have a bad experience (and they won't repeat the same
| mistake twice).
|
| Being a landlord is a hard way at making money.
| wwweston wrote:
| Sure. As the saying goes "the plural of anecdote is not
| data." And that goes as much for specific stories about
| sympathetic landlords suffering from abusive tenants as
| vice versa.
|
| How would we find out what the systemic pattern is? Maybe
| we'd compile relevant court records and outcomes. Maybe
| we'd collect information from tax filings.
|
| Or maybe we'd make bare assertions on HN.
| MiroF wrote:
| > It's like no one could agree on happy medium between
| "landlord can eject you whenever they want for whatever
| reason" and "no one can make you leave, ever, for any
| reason".
|
| No place in the US actually has the latter unless you've
| been letting them squat for half a decade or something,
| the issue is court delays and landlord's wanting to make
| their lot out to be worse than it is.
| dijonman2 wrote:
| It's very difficult to evict folks in Colorado, according
| to someone I know who buys and rents homes for a living.
|
| I think most landlords are pro tenant until they find
| someone who knows how to work the system. It costs them
| so much that they are skiddish to all renters.
| giraffe_lady wrote:
| Landlords have chosen to enter an inherently adversarial
| relationship with the goal of profiting from the other
| party. I'm not entirely unsympathetic to their personal
| pains here, but I don't believe "pro tenant" has a useful
| meaning except in a context where you need to support
| them _in opposition_ to some force or entity. And that
| entity is landlords.
| anchpop wrote:
| As a widget maker, I'm pro widget-users even though I
| technically have an adversarial relationship with them.
| In particular, I'm pro widget-users because without them
| I would be without money and without me they would be
| without widgets, so we're both supporting each other
| against the harsh forces of nature that would leave us
| all destitute if we didn't work together.
| Firmwarrior wrote:
| > without me they would be without widgets
|
| It seems like it'd be obvious, but landlords don't
| actually produce land or provide housing. They roll in
| and take housing using their superior resources, then
| charge rent to access it.
|
| In an ideal market, every renter would have the option of
| being a landlord just like every car lessor has the
| option of being a car owner. We just need enough housing
| supply to make investing in housing a risky venture
| instead of a government-guaranteed winner
|
| https://www.worksinprogress.co/issue/the-housing-theory-
| of-e...
| giraffe_lady wrote:
| only comparable if the widget you make is a necessity for
| life, really straining the meaning of the word "widget"
| imo.
| baq wrote:
| If there's return, there's risk. All markets are
| adversarial.
| giraffe_lady wrote:
| Yeah I don't really disagree with that. I don't believe
| housing should be a "market" in the sense I think is
| meant here. But if it is to be, I agree that landlords
| need to accept the risk of their tenants not paying and
| not leaving either.
| endisneigh wrote:
| How exactly is it inherently adversarial? Isn't what
| you're saying also true to literally any for profit
| transaction?
| giraffe_lady wrote:
| Only things that are absolute needs. You can walk away
| from a profitable transaction, you can't walk away from
| one you'll die without.
|
| People are willing to take much more extreme action
| around housing (and food, medicine, ) than they are most
| other goods. They're also less likely to agree there is
| moral justification in profiting from these things. So
| even when entering these transactions (they must, after
| all), they may not respect the other party's profit
| goals.
| endisneigh wrote:
| Should doctors work for free? Should farmers?
| giraffe_lady wrote:
| Do landlords labor?
| endisneigh wrote:
| Yes? Do you think the house magically takes care of
| itself?
| giraffe_lady wrote:
| This comment made me see red, seriously the maddest I've
| been in weeks. You couldn't have known that and I'm not
| upset at you.
|
| _I_ take care of the house in this situation. The
| landlord doesn't shovel snow or mow grass, I do.
|
| They do carry some of the burden specifically in taxes
| and liability, yes I know. I also know the maintenance
| responsibilities aren't inherently and legally mine, and
| so I can be blamed for entering a contract that requires
| me to do this.
|
| Anyway though it even more shows that landlords don't
| inherently do anything. If they stopped maintaining it,
| _the tenant_ is the one who has to live in the shitty
| house and will wind up fixing it.
|
| What the landlord does is control access to housing. I
| don't respect or value that and you're not going to
| change my mind about it today.
| endisneigh wrote:
| If you honestly believe being a landlord is such a slam
| dunk you should take out a mortgage, buy a property
| somewhere in United States (there are places as cheap as
| $50K) and rake in the cash.
|
| There are landlords who absolutely take care of all of
| the maintenance - and of course there are landlords who
| are absentee landlords as well.
|
| To say a landlord _inherently_ doesn 't do anything is
| the most ridiculous thing I've read today. Thanks for the
| laugh.
| robertlagrant wrote:
| > you're not going to change my mind about it today
|
| Probably not worth asking the question in the first
| place, then.
| jjav wrote:
| > Landlords have chosen to enter an inherently
| adversarial relationship with the goal of profiting from
| the other party.
|
| There isn't any reason for it to be adversarial, it's
| certainly not inherently so. Only if one or both sides
| want to make it adversarial.
|
| It is supposed to be a win-win scenario. Some people
| prefer to rent instead of buying, so they need a supply
| of rentals and the owner needs someone to live there so
| it doesn't sit empty costing them money.
|
| Fortunately I've never had one of the adversarial
| landlords. I paid them on time and took good care of the
| property and in exchange they have been super flexible
| and let me do whatever I want. That's a win-win.
| nunez wrote:
| covid moratoriums were basically that for a lot of
| landlords
| jjav wrote:
| > > "no one can make you leave, ever, for any reason".
|
| > No place in the US actually has the latter
|
| Not technically, no. But there are areas (e.g. San
| Francisco) where getting a non-paying tenant out is close
| enough to impossible that it might as well be.
| xenadu02 wrote:
| AFAIK that's not actually true. There are some crazy edge
| cases but for the most part if a tenant stops paying rent
| you can absolutely evict them in SF. Most of the horror
| stories from landlords are attempts to evict for reasons
| besides non-payment - which SF does make somewhat
| difficult.
| MiroF wrote:
| > But there are areas (e.g. San Francisco) where getting
| a non-paying tenant out is close enough to impossible
| that it might as well be.
|
| You absolutely can evict people in SF, unless you are
| discussing the recent eviction moratorium, which is not
| ongoing.
| registeredcorn wrote:
| >landlord can eject you whenever they want for whatever
| reason
|
| I don't understand. Why aren't landlords able to do this?
| Isn't it seen as immoral to steal property from an owner?
| pvarangot wrote:
| There's the whole "house as a human right" angle that is
| sometimes used to explain why tenant friendly laws exist,
| but it's not the only angle you have to approach the
| problem from. It's also true that a cities economy needs
| a lot of "minimum wage" or whatever workers, and for
| example if San Francisco didn't have tenant friendly laws
| like rent control then the hospitality industry would
| also suddenly need to pay a lot more to get bodies for
| their people-heavy business. After some deep
| conversations with a friend about this I now see this
| from his angle where cities are just state-sponsored big
| HOAs. If you get property in the HOA you have to abide by
| their rules and one of their rules is that for certain
| types of property if you rent it you can't easily kick
| out the tenants. If you don't like it, no one is forcing
| you to buy the property and even less to rent it, it's
| your call.
| [deleted]
| astura wrote:
| Because it's not just someone's property, it's also
| someone's home. The place they live. Society has
| collectively deemed kicking someone out of their home
| with no notice to be undesirable, even if they are
| currently struggling to pay rent.
|
| You have to keep in mind the vast majority of tenancies
| are in good faith.
| registeredcorn wrote:
| True. I was reexamining the way I worded my question and
| I certainly could have put things better. There is more
| nuance there than I had given at first thought.
|
| Having grown up in rentals, and having had close family
| member kicked out of a rental with something like 1 weeks
| notice, I am very conflicted over the issue. Thank you
| for not responding in kind to the way my question was
| worded.
| MiroF wrote:
| > Why aren't landlords able to do this? Isn't it seen as
| immoral to steal property from an owner?
|
| Well, for one, the government should enforce contract
| neutrally - so if you sign a contract leasing your
| property, you can't unilaterally break this without
| cause.
|
| Second, we as a society have an interest in giving people
| time to move their stuff out and find a new place to
| live.
| registeredcorn wrote:
| Thanks for the response! Honestly, I was going to delete
| my comment, I felt like I was asking in bad faith, but
| can't since it had a reply.
|
| I guess I see your point. I tend to side a bit harder
| with the landlords, but I don't want people tossed out on
| the streets without any sort of warning either.
| closeparen wrote:
| That's just a lease. Leases have fixed terms. When the
| lease is up either side can give 30 days notice that they
| will not be renewing. That is true even in places with
| minimal to no tenant protection laws.
|
| In a tenant protection environment, the tenant has the
| option to cancel when the lease ends, but the landlord
| does not. Regardless of where you are in the contract
| cycle, the landlord's only way to end the contract is
| through an eviction, and he will have to prove in court
| that the situation meets one of the lawful bases for
| eviction.
| MiroF wrote:
| > In a tenant protection environment, landlords cannot
| just decline to renew leases.
|
| Unless we're talking about some rent controlled context,
| where in the US is this law?
| closeparen wrote:
| For example, the entire state of California, including
| municipalities that don't have rent control and
| properties that aren't covered by existing rent controls.
|
| https://sfrb.org/article/summary-ab-1482-california-
| tenant-p...
| MiroF wrote:
| I think the large majority of units in CA are not covered
| by any sort of just cause eviction law. This law has
| several very large exemptions.
| tempnow987 wrote:
| I had a friend who let someone move in as part of an
| apartment share. Person NEVER paid them a nickel, never
| paid landlord anything, claimed they felt unsafe and got
| a restraining order. It was actually genius.
|
| My (female) friend HAD TO MOVE OUT of the house she was
| renting, the landlord required she still pay rent on the
| lease. "self-help" (changing locks) was totally out.
|
| All this would have been fine I think if she could have
| gone to court in a week or two (the person literally
| hadn't paid anyone anything).
|
| Instead it was 18 months to the FIRST court date, plenty
| of drama between A and B, and at that court date it was
| clear it was going to take a LONG time longer (in
| fairness COVID came into picture but still).
|
| It turned out of course this person had done this
| repeatedly. In my friends case the landlord just demanded
| she keep on paying rent and so was no help on eviction.
| So she was paying rent on a new place, paying rent on the
| old place AND paying legal bills vs a tenant getting free
| community legal help and who was an absolute expert in
| the rules.
|
| Luckily for her for some reason tenant DID want to move
| eventually, and they basically arranged a settlement. She
| paid landlord for some damages, she paid tenant a cash
| for keys amount (substantial) and was allowed to go on
| with her life.
|
| You could only afford this on a bay area tech level
| salary. For normal landlords and people this is insane.
|
| When someone says the eviction has to be "for" a reason,
| and a court has to review that reason and approve it, in
| the bay area that easily 1-2 years if someone wants to
| stretch it out.
| jdmichal wrote:
| So she basically directly sublet part of her apartment,
| and is surprised the landlord didn't care and still held
| her responsible? That's exactly the stance the landlord
| should take in such a situation. Assuming it wasn't just
| directly a breach of contract of the rental terms to
| start with, which would even further just protect the
| landlord.
|
| Did she even bother to draft a contract with the
| subletter? Or was this all just, "sure, stranger, move
| right on in to the property for which I am legally
| obligated? I'm sure this will all work out fine."
| 1024core wrote:
| Could you not put ejection conditions in the lease
| itself? (SF resident here, but with no experience in
| landlording). I'm wondering why can't a landlord put in
| the lease a term like "if tenant does not pay rent for 30
| days, tenant gives up all of his rights and landlord has
| the right to eject tenant within 15 days".
| astura wrote:
| You generally can't put illegal terms in a contact like
| that.
| mistrial9 wrote:
| > you can do nothing about it
|
| lies, damn lies, and landlord lies..
| gnicholas wrote:
| A friend bought a duplex in Berkeley. Due to the tenant-
| friendly laws there, she will only rent to international
| university affiliates whose roles/visas will require them
| to leave after a year or two.
|
| Interestingly, she is very YIMBY and liberal, and even
| has a PhD in urban planning. But no one wants a forever
| tenant!
| MiroF wrote:
| You're not a liberal if you're casually violating fair
| housing law :)
|
| Everyone wants to call themselves a liberal or
| progressive nowadays, it's bizarre. These things are
| about actions, not self-assigned labels.
| ensignavenger wrote:
| Is visa status a protected class for rentals in
| CA/Berkley?
| pvarangot wrote:
| Yes it is, but it's impossible to enforce because
| landlords can ask for your drivers license/ID with the
| application and if you are on a visa your ID says
| "LIMITED TERM" on it. So they can always say yes or no
| based on that but pretend it was something else that made
| them make the choice.
| ensignavenger wrote:
| Answering my own question- it appears that yes, it is-
| https://www.dfeh.ca.gov/Housing/#whoBody
| gnicholas wrote:
| Looks like immigration status is protected. I wonder if a
| plaintiff could win a case on the grounds that they were
| discriminated against because they _weren 't_ on a
| temporary visa.
|
| As a former lawyer, I realize it's possible to make the
| argument, but it's probably clear from the legislative
| history of the law that it's meant to protect people who
| are on visas, not people who aren't.
|
| Also, she would probably say that her rule is that she
| only rents to people who have an extremely compelling
| reason to leave after 1-2 years. Compelling reasons
| include time-limited positions (postdocs) or visa
| restrictions.
| dragonwriter wrote:
| Citizenship and national origin are, as is immigration
| status (under different laws.) Also source of income.
|
| Renting only to international university affiliates on
| particular kinds of visas is _directly_ discrimination on
| the basis of all of citizenship, national origin,
| immigration status, and source of income, and might also
| constitute disparate impact discrimination (which
| California FEHA also covers as well as direct
| discrimination) on other protected grounds if the direct
| discrimination wasn 't enough.
| rdtwo wrote:
| Liberals can break laws just like conservatives can. Free
| country
| Dylan16807 wrote:
| Sure they can!
|
| But ongoing intent to break certain categories of law
| will also mean that certain political labels are
| incorrect.
| nebula8804 wrote:
| >Everyone wants to call themselves a liberal or
| progressive nowadays, it's bizarre.
|
| Thats just the scam the corporate left likes to play.
| They love to be super "progressive" while actually
| performing nothing progressive other than performance
| art.
|
| It costs nothing to call yourself "progressive". Hell I
| bet Trump has probably called himself "progressive" ha
| ha.
|
| Like you said, its actions that matter. If you look at
| that, essentially the elected progressives in this
| country trend towards 0.
| dragonwriter wrote:
| > the corporate left
|
| This thing does not exist.
| Cederfjard wrote:
| Just curious as an outsider, what laws are she breaking
| by doing that?
| [deleted]
| MiroF wrote:
| Civil Rights Act of 1968, Unruh Civil Rights Act, ...
| there are a few other California specific legal statutes
| around civil rights/housing discrimination.
| missedthecue wrote:
| What part of the civil rights act does it violate?
| MiroF wrote:
| It's discussed on other parts of the thread. Also, I was
| assuming that this was not an owner-occupied duplex. It
| falls to state law if it is.
| dragonwriter wrote:
| The Fair Housing Act (the part of the 1968 Civil Rights
| Act you are referring to) exempts owner-occupied
| buildings with less than five units, so it wouldn't apply
| to the other unit in an owner-occupied duplex.
| MiroF wrote:
| I didn't understand the GP to mean they were occupying
| the duplex. But in that context, it still violates
| california fair housing law.
| dragonwriter wrote:
| Oh sure, rather flagrantly. I count at least four
| protected traits it discriminates on. (Mentioned in a
| post in another branch of the thread.)
| seanmcdirmid wrote:
| If you are sharing your own house vs renting out an
| autonomous unit, the rules are different (at least here
| in Seattle), you can discriminate a lot more legally than
| you could otherwise. So someone who rents room in their
| home only to Chinese international students is completely
| ok (as long as they share living space with the
| landlord). Not sure what the laws are in California, but
| federally it's kosher.
| dragonwriter wrote:
| > If you are sharing your own house vs renting out an
| autonomous unit
|
| A duplex by definition is a building with two separate
| dwelling units.
| [deleted]
| dragonwriter wrote:
| > Interestingly, she is very YIMBY and liberal
|
| Do you mean "liberal" the way progressives use it (i.e.,
| center-right pro-corporate capitalist) or "liberal" the
| way conservatives use it (i.e., left of the Republican
| Party, with more liberal = more left)?
| mentalpiracy wrote:
| Why should we use this as an example? You're talking
| about people who are throwing away money by leaving
| assets idle - and implying that they obviously don't know
| how to operate in this market.
| paxys wrote:
| > You're talking about people who are throwing away money
| by leaving assets idle
|
| No, they are watching their assets shoot up in value
| every day without any operational burden.
|
| > and implying that they obviously don't know how to
| operate in this market
|
| When did I say that? In fact what they are doing the most
| logical thing.
| jjav wrote:
| > > You're talking about people who are throwing away
| money by leaving assets idle
|
| > No, they are watching their assets shoot up in value
| every day without any operational burden.
|
| It's not either/or. They might be watching the property
| value go up every year, but they are simultaneously
| throwing money away by leaving it empty. They could have
| been profiting from both sources but chose to profit only
| from one.
|
| (Often rationally, since a bad tenant can destroy the
| property and never pay, but still.)
| cellis wrote:
| As a potential landlord who is doing this very thing
| right now, it isn't really "throwing money away", because
| of asset appreciation. If you get stuck with a bad tenant
| it's way more hassle than if you had just let it sit and
| AirBnB'd it every once in a while. Especially for
| properties where the rent is less than the appreciation
| per month.
| schrijver wrote:
| How do you feel about the ethical aspect? Now the home is
| not useful, except as an investment to you, but if you
| sold it there's lots of ways you could make money instead
| (and in ways that provide value to others!). And the
| place would be someone's home. Seems weird to let it be
| stay empty like that.
| cellis wrote:
| I had hoped to not wade too deep into this discussion for
| privacy reasons, but essentially I have quasi-rented it
| to someone close to me who I trust, and isn't in need of
| the place. They cover the utilities they use, and I don't
| charge them rent. Still, you have a valid point. I
| honestly don't like the AirBnBification of neighborhoods
| across the world. But, the time commitment I need right
| now to get licensure and then to interview rental
| candidates/hire a management just isn't worth the time
| commitment. Besides that, I like the optionality of
| visiting the city, and I did live in the house last year
| ( saved a ton on rent by buying in another state and
| working remotely there for my employer in California
| during the pandemic ). Hope that adds some clarity. I'm
| not part of the global elite!
| vincentmarle wrote:
| You are neglecting opportunity costs: if you could earn
| double (appreciation + rent) instead of just
| appreciation, you're leaving money on the table.
| boring_twenties wrote:
| That extra money comes with additional risks, which the
| parent has judged to be not worth it.
| sib wrote:
| But also avoiding a very real possibility of significant
| costs (property destruction, litigation to remove bad
| tenants, etc.)
| BirdieNZ wrote:
| Think about this: land value appreciation is so crazy
| that you can _not charge rent_ and still make enough
| money that a property has a good return on investment.
| LegitShady wrote:
| Thats because your neighbours probably won't like you
| opening a rooming house in their residential neighborhood
| without some kind of consultation with them on the zoning
| and appropriateness of such a thing.
|
| I've seen houses where every room (including the living
| room) is occupied by a foreign student and the 'landlord'
| is running a slum rooming house. Thats what you're not
| supposed to be able to do without getting approval. It
| impacts you negatively to avoid impacting your neighbours
| without consulting with them.
| tonyarkles wrote:
| As a curiosity, since you're probably better versed in this
| than I am, does the situation change if you yourself didn't
| live there? I'm pretty sure around here (300kperson city in
| Canada), the rules are different if one of the roommates is
| the owner or if it's a purely rental property... which
| seemed even more confusing!
| gnopgnip wrote:
| Many of these laws are a family plus two unrelated people.
| There have been broad changes in how a family is defined in
| this context.
| aksss wrote:
| I wonder if you could find exemptions for refugees. Seem to
| be a lot of those lately. Not ignoring the sad irony of
| this, but if you want to put that space to use there may
| some allowable loopholes.
| pge wrote:
| I am working through this right now with a house that I
| recently bought. No way around the restrictions, but we
| did find one loophole. Two _related_ families (eg two
| families in which the respective fathers are brothers)
| can live in the same house, at least under the way the
| restrictions are written where I live. We are able to
| house two refugee families in the same house legally as a
| result, but it 's a shame that it is not easier to do,
| and possible with two unrelated families.
| KptMarchewa wrote:
| >local regulations state that I am not allowed to live with
| more than 2 people unrelated to me
|
| What? Where is that? It sounds insane and extreme
| overreach. How can somebody regulate with whom consenting
| adults choose to live?
| londons_explore wrote:
| Regulations like this are common.
|
| Usually you need to get a special license, have home
| inspections annually, pay various fees, etc. if you want
| to do so.
| KptMarchewa wrote:
| Regulations where you'd specify minimum floor size, or
| rooms per person make sense for me. It's about straight
| up saying you can't live with people without state
| sanctioning the relationship.
| londons_explore wrote:
| In my region, the rules are _so incredibly precise_.
| Things like washing up areas must have at least 3 bowels
| in. Toilets must have flush handles above a certain
| height and below another height. Radiators must have 6
| heat settings... Etc.
|
| The entire aim seems to be to make running such a house
| not illegal, but very difficult and very expensive.
| dave5104 wrote:
| Occupancy limits are somewhat common in many
| cities/towns. But probably only enforced via neighborly
| complaint, so you don't really hear about them.
|
| Just searching "occupancy limits city" popped up the
| limits for Boulder, CO:
| https://bouldercolorado.gov/occupancy-limits
| zardo wrote:
| The kind of thing where you're fine unless you're "a
| problem" for one of your neighbors
|
| A problem as defined by your nosiest, most uptight, or
| most xenophobic neighbor.
| panzagl wrote:
| Boulder is... special. A college town where a bunch of
| rich people decided to live. I've never seen a campus
| with so many non-students on it, just hanging out like
| they belong there or zipping through campus on their
| bikes at 40 mph. But most college towns have similar
| occupancy laws for neighborhoods where they want to keep
| students of the wrong sort out of.
| pge wrote:
| These kinds of regulations are extremely common (I might
| even go so far as to say they are the norm) in many US
| suburbs. Such restrictions are intended to prevent
| single-famiy homes from being used as large group houses.
| A probably intentional byproduct of the restrictions is
| also to keep lower-income residents out of desirable
| neighborhoods (by preventing for example, two families
| from occupying a large house that neither could afford
| individually). Minimum lot sizes have a similar
| consequence. If you're interested in getting into the
| history of housing restrictions, particularly as they
| pertain to efforts to limit lower-income (often minority)
| buyers, Richard Rothstein's The Color of Law is a good
| book to start with.
| programmarchy wrote:
| If you have a family home, you probably don't want 8
| college students moving into the house next door to you.
| This was a restriction in my college town. As a student,
| I didn't like it, but as a homeowner with a family, I
| completely understand.
| Dylan16807 wrote:
| 8 people in an entire house? I don't see the problem.
|
| 3 college students could just about as easily be bad
| neighbors as 8.
|
| Unless the idea is that 3 students would be too poor to
| live in that neighborhood, in which case a rule like that
| is even worse than I thought.
| KptMarchewa wrote:
| Most people in the world live and raise families in the
| conditions where they don't control what happens behind
| the floor, walls and ceilings. This seems like very
| strong entitlement.
| programmarchy wrote:
| Most people in the world don't have time to post on HN,
| or even have the privilege of knowing it exists. You
| posting a reply here is a very strong entitlement.
|
| But if they did, they would probably come here and reply
| that they don't want 8 drunken college bros constantly
| partying next to their house either.
| notch656a wrote:
| 62% of the world has access to internet. HN is also free.
| There is no vetting process to see that you are wealthy.
| Somewhere like philippines, even the dirt poor know
| English, so English isn't necessarily a barrier either.
|
| Personal I live in a SFH, and I have a family. Even
| though I don't want 8 drunken bros living next to me,
| they have as much right to exist as my rather loud and
| surely annoying toddler has.
| [deleted]
| MiroF wrote:
| If you want to control who lives next to you, feel free
| to buy the neighboring properties.
| scatters wrote:
| Elsewhere on the thread you pointed out that fair housing
| laws mean that you _don 't_ get to control who lives next
| to you even if you're renting out those properties. So
| your only option would be to leave them empty.
| MiroF wrote:
| Yes, you're correct.
| Drdrdrq wrote:
| That wouldn't help much - there would still be neighbors
| bordering your (now bigger) property, just further away.
| You need to buy an island instead.
| programmarchy wrote:
| Thankfully, I don't live in ancapistan, so I can vote
| instead.
| vkou wrote:
| Yes, and by voting the way that you do, you are creating
| a housing crisis.
|
| I'd like for people expressing these political
| preferences to not be allowed to live in my neighbourhood
| either, but unlike you, I also recognize that you have as
| much right to live there as those 8 college students.
| conanbatt wrote:
| Actually if you live in the bay area, you live in an
| oligarchy. A great part of the renters in the area cannot
| vote and thus are not represented in this matter.
|
| If foreigners could vote in San Francisco, the majority
| of which are renters, it would overwhelmingly crush this
| position.
| jjav wrote:
| > but as a homeowner with a family, I completely
| understand.
|
| Why do you understand? Why would you care how many people
| live next door?
|
| There are potential negatives, sure. Like noise or making
| a mess outside. But those are already covered by other
| ordinances, so just enforce those.
|
| As a homeowner with a family, I wouldn't care if there
| are 50 people stuffed living in the house next door. As
| long as they're quiet and don't make a mess, it's none of
| my business.
| knodi123 wrote:
| > legally I am forced to keep 3 bedrooms empty.
|
| Not at all! Look into what it would take to lease them out
| to a self-storage facility. :-P
| RC_ITR wrote:
| Exactly. Formerly the 'unseen' behavior was seasonal renting
| brokered through agents or high-end advertising. This still
| kept locals out of the house, but 1) it was harder for normal
| people to become aware of the listings in the first place 2)
| One renter who comes every weekend for an entire season
| 'feels' more like a local.
|
| Now what we have is listings that are easily found via google
| and a much broader set of visitors whose faces change every
| week. Our limited brains interpret that as a much bigger
| shift than it may actually be.
| tshaddox wrote:
| > If the population rises and we refuse to build more houses
|
| Building more houses is generally good too, but it's a bit of
| a cop-out to blame the whole situation on that. Totally
| independent of supply concerns, I would argue that it's not
| great that in so many areas the value of homes seems to be
| almost entirely divorced from _the fact that people need
| homes to live in_.
|
| Imagine if a bunch of very wealthy people just decided to
| start collecting medicine, not to use as medicine, but to
| just collect and perhaps sell later at a higher price. Is
| that within their legal rights? Sure, it seems like it. Would
| producing more medicine be a good thing? Yeah, sure, more
| medicine is probably generally a good thing. But is it still
| really crappy that people's habits for collecting medicine
| are driving up the cost of medicine for people who want to
| _take the darn medicine_? Yeah, it 's crappy.
| anchpop wrote:
| In areas where home prices are high, the vast majority of
| homes have people living in them. So the idea that home
| prices are inflated by people buying homes and not doing
| anything with them seems a bit suspect to me.
|
| Additionally it kind of strains belief that people are
| buying homes, paying property tax, etc. just because they
| like collecting them the way a kid likes collecting pokemon
| cards. More likely they'd buy a home because they expect
| home prices to rise and they'll be able to sell the home
| for more in the future. It may be unintuitive, but if your
| market is not incredibly supply-constrained this is
| actually a good thing.
|
| Here's why. Let's say there's an up-and-coming college
| town, and speculators think that in a few years the town
| will become trendy and many people will want to move there.
| If they're right, demand will go up and home prices will
| rise. That means you can buy a home now on the cheap and
| sell it in a couple years when houses are more expensive to
| make a profit. But of course, when you buy a house now,
| you're contributing to demand for houses, so you're making
| the price rise in the present in response to a change in
| demand you anticipate happening years from now. Since home
| prices are rising, it now becomes more profitable for
| people to build new homes. (Their costs haven't changed,
| but now they can sell the homes to speculators who are
| willing to pay a lot because _they_ expect to sell the
| homes to the people who 'll move in as the town becomes
| trendier.) So what you get is people building homes now _in
| preparation_ for people wanting to move here years from
| now. Making homes available will cause home prices to go
| down, until the market is at equilibrium and homebuilders
| are no longer willing to build homes for the price that
| homebuyers are expected to be willing to pay.
|
| So in theory it all works out quite nicely. In practice,
| people who own the homes hate this because they like that
| the home they bought for $200k in the 90s is worth $2M now,
| so the lobby to get local governments to ban people from
| building homes. If there were enough homes that everyone
| who wanted to live there could, the prices of housing would
| come crashing down and homeowners would lose the bag they
| worked so hard to get (not).
| tshaddox wrote:
| My point isn't that people don't use their collectible
| homes to live in. There are undoubtedly some vacant homes
| used as collectibles, but that's not the whole problem.
| The point is that the value of the homes are largely
| divorced from the fact that people need homes to live in.
| The fact that home prices have skyrocketed recently (and
| certainly not simply due to population growth or a
| reduction in supply) ought to make this fairly clear.
|
| > Additionally it kind of strains belief that people are
| buying homes, paying property tax, etc. just because they
| like collecting them the way a kid likes collecting
| pokemon cards. More likely they'd buy a home because they
| expect home prices to rise and they'll be able to sell
| the home for more in the future.
|
| That second sentence is, of course, precisely what I'm
| talking about. Although that is also the same motivation,
| at least in my experience, of a lot of Pokemon card
| collecting. When I was in middle school, you could buy a
| Charizard for $100, and it wasn't because you could win
| back that $100 by playing that Charizard in a tournament,
| and it wasn't because you got $100 of value admiring the
| aesthetics of the card. Also of note, those Charizards
| now sell for tens of thousands of dollars, and it's still
| not being of their value in competitive play or their
| aesthetic value.
| jjav wrote:
| > In areas where home prices are high, the vast majority
| of homes have people living in them.
|
| When the very rich park wealth in real estate, it is
| precisely in the ares where prices are highest. Not much
| point in parking wealth in a cheap house in the midwest.
|
| https://nypost.com/2021/08/05/nearly-half-of-luxury-
| units-em...
| dionidium wrote:
| The problem here is that there are something like 3.5
| million housing units in New York City and Billionaires'
| Row is like 5 buildings. It just simply doesn't matter if
| _every single one_ of those units is empty. We 're not
| talking about enough units to matter.
| Retric wrote:
| Billionaires row is hardly the only home sitting empty as
| an investment. Further they represent an outsized share
| of housing space even if the total number of apartments
| isn't that high.
|
| So even if 5 buildings out of 300 skyscrapers are at 50%
| occupancy on their own don't matter much they still
| impact the market when combined with similar investments.
| Worse they prime the bubble by convincing more people to
| invest without putting them up for rent.
| gregable wrote:
| Yes, and this would really be awful in the short term, but
| in the medium term medicine companies would just spin up
| more production until the "very wealthy people" demand has
| been met and medicine becomes available again at some
| reasonable price.
|
| The fact that this is very likely prevents most of the
| speculation in the first place.
|
| The difference with real estate is that the owners get to
| determine production levels, via local zoning laws.
|
| Sure, there is some natural scarcity: Land cannot be
| created, but in most cases artificial scarcity is the
| issue.
| thatfrenchguy wrote:
| I mean, the US missed on building ~15m housing units in the
| last decade, we can bitch about airbnb all day, that
| doesn't make 15m housing unit appear.
| paxys wrote:
| Thing is if people start hoarding medicine then new
| companies can pop up and fill in the gap, or existing ones
| can increase production, making the whole thing pointless
| to do. Same goes for every other "necessary to life"
| product. Temporary disruptions will be handled by the
| market in the long term, and in the worst case government
| can step in and regulate. Housing is probably the only
| sector where all the laws and regulations work the other
| way - to actively stop you from building more of something
| that everyone needs.
| 3np wrote:
| This is missing the point that land is a finite resource
| and homes aren't fungible. It doesn't help most
| Californians that more homes can be built in rural
| Arkansas.
| jjav wrote:
| > Thing is if people start hoarding medicine then new
| companies can pop up and fill in the gap, or existing
| ones can increase production, making the whole thing
| pointless to do.
|
| Hoarding medicine isn't a trend and even so, this market
| correction doesn't happen. Look at all the medicines with
| insanely high prices because there won't be any
| competition.
| cma wrote:
| > Housing is probably the only sector where all the laws
| and regulations work the other way - to actively stop you
| from building more of something that everyone needs.
|
| The patent system does this in medicine.
| tshaddox wrote:
| Okay, but how deep is the appetite for buying medicine as
| collectibles? What if doubling the production of medicine
| just means that now the wealthiest 2% collects all the
| medicine instead of the wealthiest 1%? Not to mention,
| how long will it take to ramp up all this medicine
| production?
| mistrial9 wrote:
| no, no - this is a real-estate Zillow thread BUT.. search
| for "pharma bros" and you will see this is not a fanciful
| example
| jsnk wrote:
| This analogy is quite lacking.
|
| You should also mention that this medicine rich people are
| collecting also has dozens of other alternative medicines
| with hundreds of thousands in volume because other cities
| exist.
|
| Also you should mention that some of these rich people are
| not rich people at all, but working class people who's
| lived in a location for decades which has become a
| desirable location in recent years thanks to some other
| people who generated wealth in the area.
|
| Also you forgot to bring up the local government ran by
| some of these rich people who are blocking any measure to
| increase the supply of the medicine in the area. This
| certainly can crash the entrenched medicine cartel in the
| city, but some of these cities are North Korean style de
| facto one party system where no other opposition may
| challenge the status quo.
| giraffe_lady wrote:
| Cites are not fungible, I hate that this always comes up.
| I have relationships here going back to my childhood, I
| sometimes visit the grave of the person I am named for, I
| spend every sunday afternoon cooking and eating with the
| 97-year-old who took me in and nursed me back to health
| decades ago. If I move to another city these things
| aren't coming with.
|
| Now you can dismiss these things as inherently less
| meaningful than, and therefore rightly subjected to, the
| economic desires of asset holders. That's a much more
| radical position than I think you're wanting to take here
| though. When you say or imply people facing unaffordable
| housing can just move somewhere else, this is a position
| you're endorsing.
|
| The analogy doesn't have to cover every nuance of the
| situation to be valuable. A necessity of life has become
| a competitive investment vehicle, and the people most
| hurt by this are told that it is good and correct and
| they should accept it by wildly upending their lives for
| no personal benefit.
| lotsofpulp wrote:
| > A necessity of life has become a competitive investment
| vehicle
|
| My perspective is that a necessity of life (land) has
| started bumping up against the limits of nature.
| Population has drastically increased, and for various
| reasons such as increased access to information, economic
| agglomeration, etc, certain areas of land are in far more
| demand than others relative to supply.
|
| Allocating scarce resources (sufficient land to have a
| detached single family home and a driveway) in such a
| scenario will always lead to some people getting what
| they want, while others do not.
|
| Some options are (not exclusive to these)
|
| -letting certain classes of people have higher priority
| than others (such as California's law that keeps property
| taxes artificially low for those who were there before
| others)
|
| -letting the amount of money determine who gets to live
| where, due to increasing house prices and commensurate
| increases in property taxes.
|
| -changing zoning laws so that areas are modified from low
| density to high density housing, increasing the supply.
| This one causes various knock on effects, hence it is
| fought against in popular places that have reached its
| limits under the existing scheme (such as Bay Area and
| SFH)
|
| There are no options where no one has to sacrifice. The
| investment vehicle aspect of land is negligible and more
| of a consequence of the extreme variations in demand of
| land in different regions.
| tshaddox wrote:
| > My perspective is that a necessity of life (land) has
| started bumping up against the limits of nature.
| Population has drastically increased, and for various
| reasons such as increased access to information, economic
| agglomeration, etc, certain areas of land are in far more
| demand than others relative to supply.
|
| I think this is another all-too-convenient scapegoat,
| similar to "we just need more houses." I would again
| suggest that perhaps the problem really truly is that
| people are using houses as collectibles rather than as
| places to live.
| lotsofpulp wrote:
| As an illustration of how different the supply/demand
| situation is across the US, see this data:
|
| https://www.redfin.com/news/?p=73975
|
| All the data I see does not indicate that people are
| buying regular houses as collectibles in hot markets.
| There is simply that much demand and basically no supply,
| especially in western cities. I do not have hard data on
| how many of these sales are owner occupied or not, but
| from personal experience over the past 10+ years, none of
| these neighborhoods seem empty for part or all of the
| year.
| jjav wrote:
| > If I move to another city these things aren't coming
| with.
|
| This is the reason for things like California Prop 13. It
| gives a benefit to long-time locals to continue living in
| the same place. Which on the whole seems like a good
| thing. People can set down roots and become "locals"
| instead of having a city of ever-changing population who
| then don't really care so much about the area because
| they are transient and will be moving away soon.
|
| But most housing threads on HN favor the idea that
| incoming outsiders should be able to efficiently displace
| locals as long as they have more money to do so, and thus
| oppose prop 13.
| lostapathy wrote:
| People who are born and grown up in an area but can't
| stay as adults are also "locals" that are hurt by prop
| 13.
| sonofhans wrote:
| I love your comment, and this way of thinking.
|
| > A necessity of life has become a competitive investment
| vehicle, and the people most hurt by this are told that
| it is good and correct and they should accept it by
| wildly upending their lives for no personal benefit.
|
| I agree also with your other comments that this view is
| fundamentally inhuman. So many people in this thread are
| responding with, "Don't like it? Move!" To the extent
| that is a humane viewpoint it is either privileged or
| defeatist. Society is us. We have chosen social policy
| which turns the fundaments of life into investment
| strategies for the over-propertied. We can choose
| differently.
| tshaddox wrote:
| > Cites are not fungible, I hate that this always comes
| up.
|
| Yep. Why should we tell people "cities are fungible, just
| go live somewhere else so we can buy all the collectible
| homes here" instead of "cities are fungible, just go buy
| collectible homes somewhere else so we can live here"?
| seanmcdirmid wrote:
| They aren't fungible to you, but to other people moving
| into your city from somewhere else because of economic
| opportunities they are (or they wouldn't have moved so
| easily).
| rednerrus wrote:
| We lost four years of housing growth because of the
| recession.
| MrMan wrote:
| where I live all they do is build houses. this idea that we
| arent building houses mystifies me.
| thelock85 wrote:
| That speculation is being scaled/super-charged through
| technology, and making the proposed solution to build more
| harder, in part because an increase in corporate landlording
| dilutes the political power of regular homeowners.
|
| I'm really trying to think of reasons why a PE market maker
| that just bought a sub-division would want to build more and
| depress their future rents (unless the area has massive
| population growth).
| hyperbovine wrote:
| > The solution is out there in front of us but everyone
| prefers to dance around it.
|
| Could not agree more, just so we're all on the same page it
| is:
|
| https://en.wikipedia.org/wiki/Human_population_planning
|
| Oh, sorry, were you referring to something else? :-)
| JaimeThompson wrote:
| A town close to me has lots of land to build new homes, few
| restrictions, fast fiber Internet and prices are still going
| up way faster than before which seems to indicate multiple
| things are causing this.
| ar_lan wrote:
| NIMBYs are a special breed of evil
| somewhereoutth wrote:
| The problem is that interest rates are too low. 5% interest
| rates would fix house prices (and other capital mis-
| allocation).
|
| The reason why lots of boomers are sitting on large amounts
| of housing equity is that they bought _before_ the transition
| to low rates. The reverse will also hold - anyone buying now
| before the transition to higher rates will get clobbered (in
| terms of loan to equity - probably they 'll be ok repayment
| wise so long as they have a fixed mortgage)
| knodi123 wrote:
| > The solution is out there in front of us but everyone
| prefers to dance around it.
|
| Jesus, man, slow down. It's a little early to start
| suggesting cannibalism as a solution to the housing crisis.
| adam_arthur wrote:
| Number of housing units to households is the same as year
| 2000. 1.1:1
|
| So the undersupply story is a myth. There has been a recent
| pull forward in demand that ate through all active listings
| though.
| rahimnathwani wrote:
| "Do market makers in the stock market run into this problem?"
|
| Yes, that's why they have to account for the probability that
| whoever hits their bid is an informed trader (vs.
| uninformed/noise trader). And it's part of the reason they can
| provide price improvement when they source order flow from retail
| brokers, whose customers are mainly uninformed/noise traders.
| krinchan wrote:
| It definitely feels like market making is something all parties
| involved in a real estate transaction would like. The article
| lays out the problems of applying the concept to real estate
| pretty clearly.
|
| Personally, I think the physical cost of holding inventory and
| the lack of commodity status (commoditization?) for houses is
| manageable, if not outright surmountable. I think the condition
| that simply must change for this business model to work is the
| velocity of buying and selling residential real estate. Until you
| can go from "I want this" to "I bought this" or "I want to sell
| this" to "I sold this" in a scale of days if not hours, any
| market maker in residential real estate is going to end up a
| market risk taker implicitly betting on the future price of the
| property. Even if Zillow could move directly from closing on the
| house from the seller to initiating a sell to another buyer in
| less than 24 hours, there's still several weeks involved. If the
| market is volatile, that's a substantial risk exposure.
|
| Simply put, it needs to be possible to move the title twice in 24
| hours along with some way to finance a buyer on a very
| accelerated timescale. Both of these things will need reforms at
| all levels of government: municipal, state, and federal. I just
| don't see that happening for a very long time, to be honest.
| Invictus0 wrote:
| I wonder how this would have ended up if they just dealt in
| options instead of taking on the inventory. For those that don't
| know, a real estate option gives the holder the right to buy the
| property at a fixed price within a certain timeframe, in exchange
| for a premium. This would have been a much better way to learn
| the market than diving straight into home purchases.
| sokoloff wrote:
| Most people who are selling their house are doing so in order
| to buy another one. That is to say they need the money from the
| sale to close on their other house. Selling an option on a
| house you live in is a pretty terrible idea since if the market
| takes off, your option gets called, you're out of a house and
| into a market that's skyrocketing.
|
| I don't think there's enough benefit to sellers to make buying
| options feasible.
| devoutsalsa wrote:
| Now I want to sell puts on over priced houses.
| projektfu wrote:
| I will buy your put on an overpriced house!
| projektfu wrote:
| The author buried the lede. Zillow came up with a model to choose
| bid and ask prices. The model said, "Don't buy". They didn't
| believe the model and chased the deal, and lost money.
|
| Sometimes it's better to sit on your hands.
| Otternonsenz wrote:
| As a current residential real estate appraiser, and coming from
| being a developer for a large corporation that is very active in
| this space, this has been eye opening yet unsurprising to watch
| from where I sit with access to all the transactions in my area
| (I service the Phoenix-Metro and outlying areas).
|
| In appraisal after appraisal after appraisal within the last 6-7
| months, I have watched Zillow, Opendoor, and OfferUp getting
| cleaned out to the tune of losing $30,000 - $60,000 on home after
| home in some neighborhoods. And in AZ, Zillow and Opendoor have
| been buying and selling in this market pretty healthily the past
| few years, and we're it not for themselves and the buying frenzy
| of last Spring and Summer, they probably would not have gotten as
| hurt here in the Valley. They got suckered into paying top dollar
| in a market that was at its peak, and their algos were not
| trained to deal with the human factors causing this.
|
| When I was working as a developer for a real estate tech company,
| it was made very clear that this company, along with any other
| iBuyer are able to show homes and come up with estimates is
| because they have local access just like realtors, appraisers,
| and developers to a Multiple Listing Service (MLS). In fact, the
| company I worked for had access to every MLS in the US; They
| would use the data from any of these MLSs to populate their front
| end product, which would then be influenced by their data science
| team to give the "estimate" based on whatever factors they deemed
| appropriate.
|
| As someone whose job is predicated on objectively using primarily
| historical (for the past year) MLS/County data to asses what the
| market will allow a home to be valued at, it pains me to see
| people being taken advantage of by companies like Zillow who want
| to be "market makers" while not thinking through the implications
| of their strategies past making money on "easy" flips.
|
| All this at the cost of local communities home values losing
| touch with the realities of the people who are living in an area
| to live, not invest. And here in Phoenix, it's only gotten worse
| for anyone who doesn't already have generational or attained
| wealth to find affordable housing.
|
| The median price as of the past few months has cooled down to
| $350,000 - $400,000 for what would be considered normal for a
| less-than 2,000 square foot home. But, in some areas of the
| valley, it's gotten so ridiculous that a sub 2,000 sf house is
| able to sell for $610,000.
|
| On the one hand, I can appreciate these types of companies and
| business practices because they will keep me in a job making
| sense of the messes they make in the micro. On the other hand in
| a macro view, I hope this shakes some sense into the C-suite and
| product teams of these platforms that they need to approach this
| less as a "move fast, break things" type enterprise, for
| themselves and the communities they impact with their choices.
| bghdrmz wrote:
| I feel this is happening in the automotive space. Companies like
| carlots and carvana have been completely swallowing up all supply
| and driving prices up well beyond fair value.
| bduerst wrote:
| It's definitely happening, also compounded by chip shortages
| and supply chain issues. I've leased the last six years but
| only in the 8 months have I had dealerships calling me with
| offers to buy out my lease just to get the car back early.
| alecbz wrote:
| > Here's the problem: my autodraft team ended up with a roster
| almost exclusively stocked with the players idiosyncratically
| overrated by Yahoo!. For example, an older player whose younger
| backup had just earned praise from the coach, suggesting that he
| might be about to lose his job.
|
| I guess this is pretty obvious but just to be explicit, what's
| happening I guess is that players that are "correctly" valued by
| the algorithm are getting taken by others, and only the
| overvalued ones are left for the algorithm to choose.
| jjice wrote:
| It's such a glaring red flag that one of the largest public
| resources for getting pricing information on housing is also
| buying and selling that housing. Come on, this is so glaringly
| abusable that any teenager could tell you what's wrong.
| ianferrel wrote:
| And yet they lost hundreds of millions, so maybe not as
| abusable as you might imagine.
| lotsofpulp wrote:
| Can you illustrate the mechanism of abuse? Pricing information
| on housing is readily available to almost everyone, outside of
| the couple stated that do not mandate it. Zillow makes it
| easier, but Redfin and realtor.com and countyoffice.org and
| other websites offer the same information scraped from
| municipal websites.
| stjohnswarts wrote:
| The prinicipal of separation of concerns should be all you
| need for a legal reason for keeping listing companies like
| zillow from also participating in the market. Clearly they
| are a company, company's only limitations are they exist to
| make as much money as possible for share holders and they
| have no morals, only regulations and laws limit their
| actions. Therefore they shouldn't be in the business of
| buying/selling houses if their main goal is to list house
| values, that is a severe conflict of interest.
| afterburner wrote:
| Zillow could lie about regional home values and blame it on
| their "secret sauce".
| lotsofpulp wrote:
| Why would anyone trust Zillow's opinions over anyone else's
| opinion? Everyone has access to the same historical sales
| data that the market actually cleared at. In fact, it is
| has never been easier for the average person to research
| historical sales information. They can filter the
| parameters of the house they are interested in the area
| they are interested and find all the previous sales data,
| all while sitting on the toilet, thanks to websites like
| Redfin and Zillow.
|
| They can "lie" all they want, it makes no difference to
| what price a house sells for.
| afterburner wrote:
| People tell outrageous lies on Facebook all the time and
| they seem to work.
|
| Deception works (especially subtle deception), and
| laziness is a thing.
|
| Also, Zillow's current value estimates are about
| "current" values, not past values.
| lotsofpulp wrote:
| Zillow's current value estimates are their opinion (or
| what they want people to think is their opinion).
| Regardless, it is no different than a real estate agent
| or a cashier at target saying they think a specific
| property is worth $x.
|
| At the end of the day, a buyer and seller coming together
| and agreeing on a price is the only thing that matters. A
| seller pays as much as they do because they do not have a
| better option, and a buyer sells for as little as they do
| because they have no better option. Zillow cannot affect
| this.
| afterburner wrote:
| Perception matters. Direction and rate of value increases
| in a neighbourhood matters. The perception of the
| neighbourhood affects the value of a particular property.
|
| Zillow can affect that perception. It is making calls
| about entire neighbourhoods, not just one property that
| it has a declared interest in. It is acting as a supposed
| uninterested party (valuing the market overall) and an
| interested party (benefiting from the valuing of a
| particular property). That's the potential conflict of
| interest.
|
| How much home buying do real estate agents engage in vs
| just acting as an agent, compared to Zillow (in relative
| terms)? I don't know, maybe it's similar...
| cloutchaser wrote:
| How did opendoor manage to do the same thing better? The article
| seems like a takedown of the model, but opendoor managed to do
| the same thing profitably.
|
| From what I've read it seems Zillow never had the actual
| expertise to do this, they were always a house price checking
| site. On the other hand opendoor started out doing this from the
| start.
| ridaj wrote:
| Re opendoor etc
|
| > A less competitive market is less dynamic and worse for
| sellers, but it is better for the iBuyers that remain.
|
| _If_ they can avoid taking on the bad deals that Zillow was
| previously shielding them from. I 've seen how in some markets
| the disappearance of a provider that falls victim to this kind of
| adverse customer selection merely moves the problem to other
| providers in a cascading fashion. It's not clear that there are
| that many profitable deals to be made on the iBuying model
| buzzdenver wrote:
| The author has a valid point in that the information asymmetry
| will attract sellers whose property is overvalued to sell to
| Zillow. I suspect though that something different happened in
| reality. I live in a 70 unit condo building, so there are a lot
| of very good comparables. Zillow bought one of the units about
| 10% over market value, which makes me think that they're doing
| some sort of market manipulation, like charging a 20% fee that is
| not part of the real estate record. So they wanted to pump up
| prices, but it didn't work.
| civilized wrote:
| In my experience, Zillow is sometimes conspicuously bad at
| valuing condos and literally doesn't know their market value,
| no matter how obvious it may be to you
| https://news.ycombinator.com/item?id=30724925
| TimPC wrote:
| It's very hard to do good real estate pricing models from raw
| data. You can get all sorts of metrics on the property
| statistics but one important factor in the cost of the home is
| the state of renovation. Since most listings don't have a
| historical listing of work done in the home your best hope of
| accurately assessing this comes from something like computer
| vision on the listing pictures. Assessing the quality of work,
| recency of work, quality of materials and factoring that into a
| house price is extremely hard. It would not surprise me at all
| if Zillow paid near market value for a whole bunch of dated
| homes that hadn't kept up with the times and would sell for
| below the market of similar homes in the neighborhood according
| to typical metrics. The stories make it seem like their model
| had even more issues than that. Still I'm surprised anyone
| actually tried this idea given how poor the algorithms are and
| how obvious it is that key data points are not available.
| buzzdenver wrote:
| What was stopping Zillow from having a human look at the
| property and adjust the price based on factors that their
| algorithm didn't consider?
| Otternonsenz wrote:
| Nothing, but that would require them hiring an appraiser on
| each transaction, which would be humbling for them to have
| to do (and while biased as an appraiser myself, I would not
| trust anyone else other than a licensed appraiser to do
| that type of adjustment work, because it's a daily part of
| our jobs).
|
| Or they could have an internal team of appraisers doing
| that type of work, but the business might not like it when
| the appraisers don't validate their pricing structure
| because real data does not support it.
| aeturnum wrote:
| What stopped them is that the entire rational for Zillow's
| approach is that human appraisal isn't needed. An
| algorithm, they think, should be able to do a good enough
| job. Any individual person who, when presented with this
| scenario, thought they should have brought in a human to
| look at the house does has been selected out of working for
| Zillow.
| chrisbrandow wrote:
| How many homes did they buy? wow.
|
| <Quickly searches to answer question for myself>
|
| Oh, ~5,000/month.
| LimaBearz wrote:
| What gets me is even if the number was significantly smaller
| the fallout effect is massive. A common argument I've heard
| defending the practice is "well they didn't buy that many
| homes, it was just a small portion of total sales" ...implying
| that its not a big deal.
|
| Lets no argue the truthiness of that statement but look at it
| as stated. They buy one house within a 10-20 mile radius away
| from you and they do so aggressively paying 20-30%+ over the
| pre-bubble price (think early pandemic times when prices were
| more realistic then they are now)
|
| Well now thats the anchor price on comps for the next guy just
| looking to sell his house. Rinse and repeat a few times with
| anchored expectations on an inflated value and we have runaway
| prices.
| bduerst wrote:
| That's because real estate pricing is fixed to nearby
| inventory. Zillow doesn't have to buy many homes in a
| neighborhood to inflate the prices of all the homes, it just
| needs to buy 1 or 2.
| vanilla_nut wrote:
| It at least gives me hope that if regulation and profit
| margins push corporate buyers OUT of the market, we can
| return to sanity and I can someday own a home.
|
| But given this country's history of regulating giant
| corporations... more likely we'll just do nothing until
| homelessness balloons even more and the vast majority of
| homes are corporate owned. Then we'll have to wait for a VC
| bubble burst before they start selling all of the homes and
| tank the market.
| sys_64738 wrote:
| I thought the Zillow webpage was simply to guesstimate the cost
| of houses. This whole scenario sounds like they were totally out
| of their core competency zone.
| ilamont wrote:
| _Any time that you're working with imperfect knowledge and trying
| to operate a business on a large scale, you're likely to run into
| this kind of trouble._
|
| Can we admit that this is a major problem with the "AI" search
| algorithms operated by Google, Amazon, and others?
|
| They are assigning "value" to content, or books, or whatever
| based on an incomplete understanding of the market. It's made
| even worse because so many owners are able to game the system.
| Finnucane wrote:
| "In the real estate industry, this service is called iBuying, "
|
| Also, 'flipping.'
| dopamean wrote:
| I dont really think anyone would call the business models of
| Opendoor, Offerpad, and formerly Zillow "flipping." Yes, they
| did buy a house with the intent to sell it but imo the term
| flipping refers to a much, much smaller scale business that
| also includes fixing up the property in some way. That is not
| what iBuyers do.
| Finnucane wrote:
| Buying a house to make a short-term profit on the resale is
| flipping. You can cover it up with some marketing tech-biz
| baloney, but it is still flipping flipping.
| Otternonsenz wrote:
| Agreed.
|
| In my local Multiple Listing Service, it can show you all
| deed history for a given property, it is most certainly
| labeled as a flip if anyone - iBuyer or no - buys and then
| sells within a short period of time, even if they don't
| make profit. The intention is understood by all market
| participants.
| dpierce9 wrote:
| Anecdote on the estimates. We bought a house for X and renovated
| it. The day before we listed it both Zillow and Redfin estimate
| had an estimate around the purchase price X. When we listed it
| for 2X, both companies changed their estimate to be close to the
| listing. However, Redfin changed the entire price history as well
| showing a gentle slope. Zillow preserved their previous history
| and showed a spike.
| turkishmonky wrote:
| Another anecdote - We sold a house in late 2020, decided to get
| an offer through zillow first, since we had a newborn and
| staging would have been a hassle.
|
| Zillow lowballed us 10% under their zestimate, and still tacked
| on an 8% fee - we ended up going with a realtor instead, and
| ended up getting 15% over the Zestimate, with a 6.5% fee.
| double0jimb0 wrote:
| Noticed the same, but I still think Zillow tweaks historical
| but just not as brazenly as Redfin.
| harikb wrote:
| +1 I have always been annoyed by Redfin's rewrite of history.
| At least have the decency to show two lines (original
| prediction for last year and how it turned out to be).
| ct0 wrote:
| This happens all the time with most data providers.
| creaghpatr wrote:
| Same, I find this to be a bizarre practice. What's the point
| if the snapshots are revised?
| notahacker wrote:
| I assume the rationale is that it's are supposed to be an
| indicator of the actual value of the property at a point in
| time, not the accuracy of their algorithm at that point in
| time. So if they update with new information, it's assumed
| that instead of the price suddenly jumping (which looks
| very odd if you're trying to understand a local property
| market), the original snapshots are assumed to have been
| wrong
| projektfu wrote:
| I am guessing they don't save the price history as snapshots.
| They have the current estimate, and then they walk it back in
| time from the market averages.
| el_benhameen wrote:
| At least in my area, they've completely given up on providing
| a "historical" estimate of the house in question and just
| have a trend graph for the general area. I assume this data
| is also heavily massaged, too, though.
| echan00 wrote:
| How do you lose money in a market where homes only went up?
| JKCalhoun wrote:
| They pretty much lay it out in the article. Essentially they
| end up with the "lemons" and then have to pay to hold them
| until they sell.
| colinmhayes wrote:
| The only offers they made that were accepted were the ones on
| shitty houses that their algorithm mispriced.
| advisedwang wrote:
| The point of the article is the answer to this: they were
| systematically overpaying because the offers where they
| overestimate value were disproportionately taken up by sellers.
|
| But also there's the cost of inspection, property insurance,
| title insurance, escrow fees, labour costs of making the sale
| etc. As the article says, trading houses is not like trading
| stocks.
| prototypeasap wrote:
| I recall reading months ago that Zillow made cash offers with
| inspections waived, in order to expedite the process. I believe
| they had an algo which would access average repair cost which
| they would factor in the actual offer.
|
| Each house needs to be inspected by multiple experts as there are
| many toxic properties with huge liabilities.
| ridgered4 wrote:
| If I was stuck in a toxic house that I couldn't afford to fix
| that Zillow no contingency offer would be like a literal dream
| come true!
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