[HN Gopher] How Zillow's homebuying scheme lost $881M
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How Zillow's homebuying scheme lost $881M
Author : spansoa
Score : 484 points
Date : 2022-03-18 16:00 UTC (1 days 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.
| jgod wrote:
| Can start with people who aren't citizens (overseas
| "investors"), and then people who may be citizens, but don't
| have the country as their primary residence. And then beyond a
| certain number / distance (discourage absentee landlords).
| 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.
| bgentry wrote:
| Yes. Source: I was employee 24 at Opendoor. Zillow's pricing
| algorithms are and always were terrible.
|
| They tried to paper over this during their iBuying push with
| humans, and then in an effort to outgrow Opendoor, they
| incentivized growing at any cost without the proper controls to
| prevent adverse selection. And due to some unfortunate timing
| with the market cooling, they got wrecked for it.
| bkberry352 wrote:
| Mostly that they no longer have to compete with Zillow
| darkerside wrote:
| I wonder Zillow could do market making without the actually
| buying and selling that introduce so much of the risk. Gather
| into from prospective buyers about what they're looking for and
| identify houses that are a good fit and serve them up to the
| buyers. Not sure how to monetize, but this is essentially
| cannibalizing realtors, which is always where I thought their
| business model was going in the first place.
| 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.
| octoberfranklin wrote:
| This is a brilliant idea, and if I ever sold my house I would
| want to do it this way.
|
| Unfortunately most homeowners are debt-leveraged out the wazoo
| as a result of the artificially low interest rates we've had
| for the past decade. Once you filter out people who aren't
| looking to move the remaining cohort is homedebtors. Although
| something like 1/3rd of homeowners own their house outright
| those tend not to be the ones looking to move or flip.
| 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.
| DonHopkins wrote:
| I'm working on my second million!
|
| ...I gave up on my first.
| 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.
| fugalfervor wrote:
| No, you're rich.
| 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.
| diamondlovesyou wrote:
| There isn't exactly a large market for homes at that
| price point. Plus at that price, a thorough DD is an
| order. So not unexpected that your home's value would be
| accurate.
| cole-k wrote:
| What's "a thorough DD"? I assume it's building on the
| previous joke but I don't recognize the abbreviation.
| a_r41 wrote:
| Due diligence.
| 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
| lvl102 wrote:
| We need to stop corporations from buying single family homes.
| 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.
| sib301 wrote:
| Please share!
| hackernewds wrote:
| what is ZO?
| allenu wrote:
| Zillow Offers. The name of the iBuying service the company
| provided. (Former Zillow myself, as of a couple of weeks
| ago.)
| [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."
| mupuff1234 wrote:
| Just saw this article today:
|
| https://nypost.com/2022/03/18/firebird-grove-scoops-up-entir...
| 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.
| jdross wrote:
| look up Opendoor's buy with cash product. Turns every buyer
| into a cash buyer in exchange for the same commission as any
| other buyer agent (maybe lower?)
| mdaniel wrote:
| Flyhomes is in that game, too: https://www.flyhomes.com/
| crate_barre wrote:
| The funny thing is that while that number sounds like a lot, it
| would only be about 900 houses in places like Cali and NY.
| 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.
| IshKebab wrote:
| The American house buying process is seriously weird!
| hammock wrote:
| Sounds nice. Where do you live?
| bastawhiz wrote:
| Raleigh NC! Nice weather, friendly people, adorable housing,
| good food. The only complaint I have is that you need to
| drive literally everywhere.
| 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.
| bastawhiz wrote:
| The house I bought was listed for two weeks. They had one day
| of showings. The following day they stopped accepting offers.
| Maybe it's different in the Bay, but here in Raleigh houses
| are available to tour for essentially eight hours.
| moonchrome wrote:
| The alternative being to ask above market the house so it
| sits on the market for longer ? I don't understand what
| Zillow changes in this story ? (I'm genuinely curious - not
| from US)
| bastawhiz wrote:
| Zillow eliminates the notion of showings as an event.
| They plug in a smart lock and (at least to my
| understanding) you can tour the minute the listing goes
| up. There's no rushing to showings, your can tour any
| house that's in their portfolio on the market.
| dragonwriter wrote:
| > Zillow eliminates the notion of showings as an event
|
| Showings aren't an event unless the seller (perhaps
| through their agent) decides they should be.
|
| > They plug in a smart lock and (at least to my
| understanding) you can tour the minute the listing goes
| up.
|
| A lockbox with a key that buyers agents can get access to
| has been routine for sales of homes where the seller
| doesn't actively choose to limit showing for a long time;
| changing the technology doesn't fundamentally change
| anything. If access is made directly to buyers that would
| be a slight change in accessibility (also an increase in
| risk for the seller), but not, in practice, a huge
| difference.
| 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.
| bastawhiz wrote:
| It was within about five minutes drive
| 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.
| garbagetime wrote:
| Better location =/= more valuable location
| hackernewds wrote:
| why not?
| dlp211 wrote:
| Because better is subjective. NYC has more crime, worst
| public schools, and smaller homes than a lot of suburbs,
| but I guarantee that NYC is more expensive.
|
| It's an extreme example, but it's not the only example.
| 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.
| bastawhiz wrote:
| The agent I was working with showed me two houses on the same
| block that were much more modern and had sold for less within
| the previous few months. The Zillow house in question had
| been on the market for almost four months and was in far
| worse shape.
| 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.
| ccvannorman wrote:
| It was surprising to me to learn that airlines are basically
| banks
|
| https://www.reddit.com/r/urbanplanning/comments/rgkne9/how_a.
| ..
| mdaniel wrote:
| If one enjoys Wendover videos, there was a recent one about
| that: https://www.youtube.com/watch?v=ggUduBmvQ_4
| 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.
| jijji wrote:
| its easy to lose money if you're buying at retail and then
| selling at retail... there is really no money to be made in that
| scenario. I buy and remodel and either sell or rent the houses I
| aquire, but I do this at drastically reduced rates below retail.
| IMHO its the only way to buy. Every property I invest in has a
| problem, which is why the price is so low, alot of times its 10x
| below retail because of this. The top reasons why a house might
| have a problem is 1) the owners died and taxes were never paid,
| 2) the bank (or an individual) foreclosed on it reducing the
| price, 3) there are leins from the county or federal government
| that are making the house not sellable or worth nothing as a
| result, 4) the house has permit or code enforcement issues that
| the owner cannot resolve on their own ... Anyway, the best way to
| buy property is this way, and one rule I learned from attending
| auctions in person along time ago (its mostly online now) was
| that once the bidding goes above a third of its retail value, I'm
| out... Because sometimes you may have to invest 10-40k to make a
| house back to normal, and so paying even half its retail value
| just makes no sense.
| 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.
| shp0ngle wrote:
| Ahh the classic "lose at every sale and make it up in volume"
| strategy
| dmix wrote:
| When you hire at a growth rate the workers will find work to do
| whether or not it helps your business. In this case I could see
| a bunch of home buyers being hired and justifying their jobs.
| 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.
| chii wrote:
| > who are willing to go to 105% to do?
|
| i too, want to only pay less money than the highest bidder
| for the mona lisa.
|
| There's no such thing as 105%. By definition, iBuyer paying
| "120%" is the true 100%. If they overpay, they lose when
| there's no buyer after them to sell to, and their debt will
| not be serviceable. At that time, the "105%" buyer could
| buy at a lower price.
| 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.
| [deleted]
| 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.
| mupuff1234 wrote:
| I think people would be mostly fine with it if it were only
| "for a few days", but it's not.
| 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.
| chii wrote:
| If there were more public toilets, there'd be fewer
| public urination. The law is there to catch the few that
| do it.
|
| But if there's tonnes of public urination because there
| are no public toilets, then even tho the law says no,
| people are still going to do it. There's a demand to pee
| that cannot be stopped.
|
| The idea that airbnb should be outlawed is irrelevant -
| the fact is that there's demand for it. This means
| there's a lack of short term rentals in the area. The
| demand must be satisfied, and so the price of it grows.
| 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.
| ftyers wrote:
| This seems to be pretty common where I'm living in Mexico
| and is also pretty great. But also everywhere is walkable
| and no one is driving their canyonero to go and pick up
| tacos.
| 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.
| wyago wrote:
| It's a bit strange to give Japan's lower cars per capita
| as a rationale for this, when surely the reason there are
| fewer cars per capita is because people have access to
| their daily necessities without a car _because_ of more
| permissive zoning.
| 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
| dataexporter wrote:
| I'm perplexed to see that you are afraid of random people
| coming into your neighborhood. In fact I'm more
| perplexing about the zoning laws in America.
|
| What you mentioned is a very common thing in multiple
| countries - No one is afraid of random people coming into
| the neighborhood. (Neither do they all have guns to
| protect themselves).
| 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.
| chii wrote:
| So what if a NIMBY pays to stop rezoning to high density
| in their suburb? Isn't it the same then?
| mupuff1234 wrote:
| If you account for societal benefits and not just the
| owner's personal gain then I don't think they are the
| same.
|
| It's really just matter whether you view regulations as
| legitimate tool to curve/change behaviors that you think
| are detrimental to society.
| cuteboy19 wrote:
| Legislating morality has been an utter failure. And here
| you advocating for legislating not morality but your own
| personal feelings and experiences. I take an issue with
| the entitlement that other people should change their
| behavior to protect your housing prices
| mupuff1234 wrote:
| I disagree it has been an utter failure, first exmaple
| that comes to mind is lack of affordable health care in
| US compared to most western countries, and other less
| "controversial" examples: child labor and minimum age for
| marriage.
|
| And no I'm not advocating for anything based on my own
| personal feelings, but if something is deemed as harmful
| to society, yes perhaps we need to pass legislation to
| minimize it.
|
| But also all laws in some way or other are based on
| morals - who decided that stealing is wrong? Why isn't it
| just fair use of "free market" of force?
| onlyrealcuzzo wrote:
| > Honest to God, the founders of Airbnb should have been sent
| to prison.
|
| This isn't how the legal system works.
|
| If something is illegal, and you do it, it doesn't mean you
| always go to jail.
|
| If something is illegal, and you finance other people doing
| it, it almost always mean you get a fine.
| 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.
| tibyat wrote:
| 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.
| game_the0ry wrote:
| > 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.
|
| Adding to your data points: this is happening in some CA beach
| communities. Many beachfront homes in Huntington Beach and
| Newport Beach have been turned into AirBnBs that seem to cater
| to social media influencers desperate for instagram-able pics.
|
| Some more anecdotal data: I know a couple of people who are
| professional AirBnB hosts and they're constantly in the market
| buying real estate to turn them into rentals. They buy cash in
| the cities I mentioned above, as well as San Diego, Las Vegas,
| Los Angeles, NYC, Brooklyn, Nashville, Austin, and others. This
| is a lucrative business, at least for the time being.
| 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.
| chii wrote:
| > but the value of the land underneath will go up if you
| increase the amount of houses allowed to be built on said
| land.
|
| which is what would incentivize the owner of that land
| (ostensibly a single family home land owner) to sell and
| let high density to be built. If the land doesn't
| increase in value this way, the owner would not have any
| incentive to sell.
| 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.
| philjohn wrote:
| And that's why I live in Rugby.
|
| Large 5 bed detached house in a quiet cul-de-sac, good sized
| garden, ample parking on the driveway for 4 cars if needed,
| and well under PS1m.
|
| Train to London Euston takes 49 minutes and whilst the season
| ticket isn't cheap (nearly PS10k) you're still coming out
| ahead with the lower cost of living.
| leoedin wrote:
| I wouldn't underestimate the effect of equity - property
| prices in London have effectively doubled over the past
| decade, so there's a lot of people who bought a decade ago
| sitting on hundreds of PSks of unearned equity. The borrowing
| limits in the UK (4.5x salary) have quite a lot of headroom
| before interest rates make them completely unaffordable
| (assuming there's not a mass reduction in salary at the same
| time).
| onlyrealcuzzo wrote:
| > We'll see how they fare if rates rise.
|
| They'll be fine. If asset prices go down, rates will go down.
| 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.
| screenbreakout wrote:
| But in a way if the rental prices were to stay reasonable (say
| it was a non profit running the schtick) isn't a great way for
| as many people as possible to share a limited ressource? Maybe
| property is like golden handcuffs, nice but locks you
| down...again it's more a western thing as we in the east tend
| to buy cash down... Though I would like to see some company
| buying out the inner city ground floor space of some of the
| banks or insurances that ghostify my town and inject some fun
| rental people instead
| thr0wawayf00 wrote:
| > But in a way if the rental prices were to stay reasonable
|
| There's zero evidence to believe that this will be the case.
| I will never trust large multi-family property management
| companies driven by software to consider keeping rental rates
| reasonable. That's antithetical to our capitalist system,
| profit is the one and only goal.
|
| > Maybe property is like golden handcuffs, nice but locks you
| down...
|
| In terms of utilizing the space, sure. However, buying
| property has been the primary method of wealth accumulation
| for most of the country going back the last several decades.
| Property ownership is also one of the best ways to protect
| yourself against inflation, which we're all getting serious
| exposure to. And with the speed at which houses are moving in
| this market (listings stay up 2-3 days in my area for the
| most part), property owners aren't very locked down either.
| screenbreakout wrote:
| "There's zero evidence to believe that this will be the
| case" Well I guess it depends on the regulatory framework,
| imo it's the constructor lobbies pushing such a
| narrative... in more developed societies where cheap labour
| isn't so available rental has become the norm...of course
| one could also argue that high real estate prices mean the
| rich and unscrupulous can hide and flip huge amounts of ill
| earnt gains... but it doesn't have to be so... Are there
| housing cooperatives in the
| US?https://en.m.wikipedia.org/wiki/Housing_cooperative
| 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.
| Melatonic wrote:
| Keep in mind you also will not (for now at least) have to spend
| a ridiculous amount on interest like many people did before
| you.
|
| It is going to get interesting when the millennial generation
| suddenly starts mass inheriting baby boomer houses - not sure
| how that is going to play out honestly.
| 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.
| runeks wrote:
| > if Zillow says my house is worth X, why are they offering
| me 80% of X?
|
| Because they want to make money. Which they can't by buying
| for X and then selling for X.
| 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.
| soggybutter wrote:
| Top 2% puts you fairly deep into the six figures, no? I've not
| even surpassed top 10% and haven't had too much issue getting
| into 2 homes in the last 3 years. Both in areas I would
| consider "semi-desirable", which leaves me wondering what
| exactly do other folks consider "semi-desirable"? Unless of
| course you mean buying a home outright, in which case this
| makes total sense
| chii wrote:
| top % income earners aren't the top wealth owners. One should
| examine the rate of wealth growth (not just via income, but
| via other forms of gains, such as capital gains and business
| income). I bet you will find that the top 2% income earners
| are barely even the top 50% wealth gainers that year.
| username_my1 wrote:
| The problem is not about homes being overpriced.
|
| The truth is that there is much much much more money in the
| middle class globally (almost 3x that of 2000) and on top of
| that the normal inflation, and freezing of supply.
|
| As long as "desirable location" stay the same, and the amount
| of people affording it growing so significantly. The
| expectation of being able to afford one is a strange one.
|
| See https://www.nasdaq.com/articles/world-reimagined%3A-the-
| rise...
| 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_.
| qeternity wrote:
| The reality that almost never gets brought up is that the
| other side of the coin is that these are natural pressures
| that are probably healthy.
|
| We know that any given habitat, like the Earth, has finite
| resources and has some upper bound to supporting life. This
| is how those pressures manifest. We can't just keep growing
| the population and have everything be affordable. Surging
| food, energy and housing prices are the first feedback
| mechanism in this process.
|
| If everybody can afford everything forever, we get infinite
| population growth.
| ohgodplsno wrote:
| People not being able to own homes is not "healthy".
| Having to pay 50% of your salary to landlords is not
| "healthy". It is concentration of wealth, it is the very
| definition of precarity. Unless your hope is to see a
| collapse of societies, things go really bad when people
| can't afford fundamental needs.
| qeternity wrote:
| You replied without understanding my comment. Let me pose
| the question back to you: if everyone can comfortably
| afford food, housing and basic necessities, what is going
| to cause population growth to level off?
|
| Your characterization of bad things happening is exactly
| my point - you're just failing to understand that I'm
| saying that's the healthy part.
| ohgodplsno wrote:
| As the other response to you shows, you're the one
| missing the point. Population growth massively slows down
| the more your basic needs are met. Countries that have
| high children counts are countries where the solution to
| actually reaching wealth is multiplying until few of them
| die, or one of them ends up making a lot of money
| (relative to the country they live in).
| orangecat wrote:
| _if everyone can comfortably afford food, housing and
| basic necessities, what is going to cause population
| growth to level off?_
|
| This is exactly backwards; both across and within
| countries, richer people have fewer children.
| 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.
| wyago wrote:
| Likewise, why would you suppose that market forces are
| running 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.
| [deleted]
| 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.
| galangalalgol wrote:
| I'm a senior staff engineer with 20+ years of c++
| experience and I make less than 200k even after stocks
| and bonuses. But I live in a part of the US where that
| gets me an almost 4000 square foot home within walking
| distance to nightlife and a short bike to a downtown with
| highrises and art museums and orchestras and operas. The
| weather is horrible swinging over 115 degrees over the
| course of a year, but right now it's wonderful out.
| Redefine what semi-desirable means. Yes I'd love to walk
| out my back door and dig clams or pull in a haul of crabs
| to cook on the beach, but putting all of us on a coast
| won't work. Also with a couple of exceptions in the
| Pacific Northwest climate change will hit the coasts
| hard. Cramming us all into condos on those few stretches
| of protected beach is even less feasible. Mountains will
| be somewhat less impacted, ski resort areas will expand
| and continue their price growth. But everyone moving
| there isn't really any more feasible long term.
| 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.
| kortilla wrote:
| > entire neighborhoods converted to short term rentals now in
| some areas where they're still legal. Hearing that really
| depressed me.
|
| Why? It makes me happy that more people get to enjoy a
| desirable area rather than using the law to keep them out.
| BeetleB 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.
|
| Top 5% puts you at over $300K/year. Top 2% is much higher.
|
| Even a top 5% person can easily afford a house in _any_ semi-
| desirable city. LA, Bay Area are not semi-desirable. They are
| highly desirable.
| jjcon wrote:
| They did say in their generation which could basically mean
| anything at that point
| 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.
| runamok wrote:
| Cities can regulate this. Recent example in San Diego:
| https://www.nbcsandiego.com/news/politics/san-diego-mayor-si...
| 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.
| chii wrote:
| > Speculation is a stabilizing force overall.
|
| a sophisticated speculator is.
|
| an unsophisticated speculator is actually destabilizing,
| because they might incorrectly speculate capital (that they
| cannot really afford), causing a loss in market efficiency in
| allocating capital to where it's needed.
|
| The 2008 GFC is in part caused by unsophisticated speculators
| (home buyers) to speculate on property. Initially they saw
| some good profits, which lead to even more unsophisticated
| people to try get in on the game (and the banks happily
| obliged).
| 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.
| voidfunc wrote:
| Nobody is dancing around anything. We need to stop pretending
| its ignorance driving the housing bubble. The problem is real
| estate is treated as an investment and in many cases the most
| important investment for ordinary people. More housing works
| against their interests.
| 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_.
| moltke wrote:
| Maybe stop bringing in a million people a year.
| 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.
| MattSayar wrote:
| But what does enforcement look like?
| 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.
| tristor wrote:
| I had to move, but I want to come back. I already have a
| paid off house in this city after living here for 14
| years. Selling it doesn't net me enough profit to
| meaningfully change things for myself in the new city
| after taxes, so it's better to hold onto it for when I
| eventually return.
| 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.
| lelanthran wrote:
| > I'm unsurprised to hear that it's commonplace. It's
| just... upsetting.
|
| Law of unintended consequences.
|
| Make it almost so expensive to evict that an eviction can
| wipe away years of profit, and landlords will rather have
| the place empty while it appreciates.
| 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.
| yardie wrote:
| My ex got about $40k cash to vacate her rent-controlled
| studio. Because turning off the heat during winter,
| greasy trashbins in the hallway, and holes in the
| staircase weren't doing it. The building was mostly
| elderly NYers and she was one of the few millennials so
| waiting for her to die wasn't going to work either.
| 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.
| bruce511 wrote:
| A side effect of tenent friendly laws is that owners get
| more and more picky about who they rent to in the first
| place. It's cheaper to have a place empty for a few
| months than to take a risk on a potentially bad tenant.
|
| Ultimately this is creating a class of people who can't
| rent. Their track record is poor - or if not them
| specifically they are in a group with a poor track
| record.
|
| Not surprisingly this mostly affects the poorest and most
| vulnerable - those with the least job security - those
| with health/work issues and so on.
|
| This overlaps with the group least likely to actually be
| able to purchase a home to begin with.
|
| This issue will not be solved with free-market economics.
| Either one accepts the need for some layer of free social
| housing, or one accepts that a decent chunk of society
| will be homeless.
| 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.
| beezle wrote:
| Was told by local sherrif who handled judgment related
| asset seizures as well as foreclosure sales that in our
| state the original owner can do as they wish, even after
| a court ordered foreclosure sale, until they day they are
| required/made to vacate. He had seen all kinds of wanton
| destruction by the outgoing former owners simply out of
| spite with repair bills likely in the 10s of thousands,
| if not more.
| Zircom wrote:
| That's a little different than a tenant who is renting
| wrecking someone else's property though, as the sheriff
| said in the case of foreclosures it's still their
| property up until the forced vacate date and they can
| technically do whatever they want and can't be sued for
| the damages, whereas tenants can but in most cases it's
| simply not worth it because the people you're suing
| usually don't have any assets or positive net worth in
| the first place.
| oldsecondhand wrote:
| Legally different but still grudge and destruction with
| no or negligible chance of recourse.
| 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.
| bawolff wrote:
| Damn. Props to you but i would rather be 400k poorer
| instead of doing that.
| pyuser583 wrote:
| The problem is ultimately how well the courts handle
| liars.
|
| The middle ground is to investigate the situation and
| establish facts. And do it quickly.
|
| That costs money, and poor tenants can't afford it.
|
| So many courts adopt the position of believing one side
| over the other.
|
| This isn't limited to liars ... it applies to all bad
| faith actors. For example, in parts of the Midwest, it's
| really hard to evict someone in winter.
|
| So bad faith tenants will sign a lease in September, pay
| for a month or two, then stop. Can't be evicted until
| spring.
|
| And by "can't be evicted" I mean can't begin eviction
| proceedings. If the proceedings can be stretched out
| ("I'm in the hospital and can't appear in court") you can
| get to the next winter.
| 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...
| chii wrote:
| > landlords don't actually produce land or provide
| housing
|
| of course they do - they provide it by being part of the
| capital flow, which starts at construction. It might not
| be the same person, but it's a chain of financing that
| lead to the landlord purchasing the property.
|
| Superior resources is just another name for capital. And
| you need capital to fund the construction. The landlord
| is just the last chain on this funding, and without them,
| the builders would not build (for who would be buying?).
|
| Shelter is a cost. Everybody pays it, whether you own
| your own building or renting.
|
| > every renter would have the option of being a landlord
|
| they do if they had the capital. No one is stopping
| anyone from making a bid for a property - unlike back in
| the old days where people who were slaves were not
| entitled to own property as a right. The fact that some
| people have more capital and is willing to bid higher is
| how the current free market system works to allocate
| capital.
| Firmwarrior wrote:
| Man, I'm not saying you're completely wrong, but that's
| such a ridiculous stretch
|
| I bought a few shares of Pfizer, does that make me a
| healthcare provider?
| 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.
| Ekaros wrote:
| Not paying sure. Not leaving no. That never should be the
| case. They own the property the should be able to get it
| vacated in reasonable time let's say 3 to 6 month. For
| any reason. There could also be a fixed time contract
| binding both sides.
| 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?
| tomp wrote:
| Do business owners labor?
|
| As someone who's moved around a lot (to London, then to
| Zurich) I definitely appreciate being able to rent, and
| hence landowners. Without them, I'd have to live 2-3 year
| homeless until I saved enough for a downpayment, then be
| saddled with 30 year monthly commitment (i.e. mortgage)
| and unable to move anywhere else.
| quesera wrote:
| > Do landlords labor?
|
| Yes they absolutely do. Sometimes quite a lot, and often
| invisibly to tenants.
|
| But other landlords suck, yes definitely. Just like some
| business owners neglect their customers, and some parents
| neglect their children.
|
| The problem is that the RE market is so distorted right
| now that it's difficult to select a new equivalent
| housing provider at a reasonable price. This is also what
| enables the bad landlords in the first place.
|
| The blame for that situation is very well-distributed.
| The best response as a buyer might be to seek out other
| markets.
| Ekaros wrote:
| No, but they certainly have provided or paid for
| previously paid capital that allowed housing to be build.
|
| Ofc, it might be better if everyone build their own
| houses like some slums around the world.
| 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.
| knodi123 wrote:
| > I also know the maintenance responsibilities aren't
| inherently and legally mine
|
| Yes, that's right, they are legally the landlord's. And
| if they stopped maintaining it, _they are breaking the
| law, and you can sue them_. If, instead, you choose to
| live with it, or deal with it yourself and pay for
| everything, then that 's a horrible mistake.
|
| It's fine for that comment to make you see red, but it
| should be the slumlord you are angry at, not the guy who
| pointed out that you're being a doormat.
|
| Landlords are one option for people who cannot afford to
| buy a home. Some of them are bad, some are good. They
| offer a service for a price, and if the price is too high
| or the service is too poor, then they are taking
| advantage. Plenty of them aren't like that. Your anger
| seems a little irrational.
| refurb wrote:
| If the roof need replacing do you replace it? How about
| if the sewer line collapses?
| 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. As for your situation, stop doing work the
| landlord should be doing.
| sobkas 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.
|
| I'm sorry, but I am not sociopathic enough to profit from
| other people misfortune (not being able to to buy a roof
| over their heads). Not everything is about making as much
| money as you can squeeze from other people.
| endisneigh wrote:
| You don't personally need to be. If it's free money why
| hasn't someone done it? Why are there houses sitting
| there vacant?
|
| I also disagree with the silly assertion that landlords
| are sociopaths would you rather people be homeless? If
| someone is unable to afford to buy a house what should
| they do?
|
| Also - are business owners sociopaths? Doctors? Farmers?
| Medical device makers?
| sobkas wrote:
| > You don't personally need to be. If it's free money why
| hasn't someone done it? Why are there houses sitting
| there vacant?
|
| I have seen some articles that it starts happening there
| too. For example buying houses in Detroit, through web of
| shell firms and sitting on them like some kind of
| slumlord dragon.
|
| >I also disagree with the silly assertion that landlords
| are sociopaths would you rather people be homeless? If
| someone is unable to afford to buy a house what should
| they do?
|
| I'm sorry, if you are using your economical advantage to
| outbid people in house market and then propose this
| people a rent that is higher than mortage on same house?
| With bonus points for squeezing them on rent so they
| can't save money to buy their own house(with or without
| mortage). Then use all that money to buy even more
| houses? So even more people can't afford them? Yes that a
| sociopathic behavior. Also word slumlord exists for a
| reason.
|
| >Also - are business owners sociopaths? Doctors? Farmers?
| Medical device makers? Are you trying to make argument
| for me?
|
| Because under capitalism only function of business is to
| make money for shareholders(aka. owners, this include
| companies not publicly traded). It's as sociopathic as it
| can be. If your only goal is to make more money, you are
| not a good person. There are owners that don't do that,
| but in the end they will have more disadvantages when
| competing with ones that do. It involves breaking the
| law/shady behavior if you think you can get away with
| that. Leaving money on the table is a sure way to get
| yourself a competitor that will take it and use it
| against you.
|
| Farmers: there are decent ones, but if they want to
| squeez as much money they can from animals/crops they
| have, they will do some horrific stuff. Just ask yourself
| why there are laws popping all over the US that make it
| illegal to film whats going on farms(including factory
| ones)
|
| Doctors: there are decent ones, as always. But there are
| doctors that will just come by during medical procedures
| in, in-network hospitals as out of the network doctor and
| then slam patient with horrendous bill, just for being
| there(or helping in some small way). Shilling to pharma
| companies by prescribing/overprescribing their drugs? To
| have a fun trip to Hawaii/other perks? Dr. Wakefield,
| crooks that sell bleach as cure all drug, other scam
| artist in white gowns? Selling dewormer as a cure for
| anything but worms? As I said before there are decent
| doctors, but also a bad ones. It's only a problem if we
| allow them to do this stuff and don't take any actions to
| stop them.
|
| Medical device makers: Have you read anything about
| EpiPen? P-value hacking? Pushing your do nothing failed
| drug as hope for sick people through FDA/etc.? This
| entities are businesses, their goal is to make money.
| Accidentally they can save some people, but it's not
| their goal. It's money. I have wrote some words about it
| earlier.
|
| So sociopathy isn't who you are, it's what you do.
|
| I'm not saying I'm a good person, I'm definitely not, but
| even I sometimes raise an eyebrow seeing things some
| people do.
| quesera wrote:
| > The landlord doesn't shovel snow or mow grass, I do.
|
| I've rented places where that was my responsibility,
| enumerated in the lease. Also taking out the trash,
| keeping porches and exterior areas clean, etc.
|
| These are common expectations when you're renting a full
| single-family house. I've also seen arrangements where a
| single tenant of a multi-unit property will accept grass
| & snow responsibilities in exchange for reduced rent.
|
| I understand that you don't want those jobs though. If
| they are not in your lease, you are not required to
| perform them. (Don't take legal advice from me, but
| that's true everywhere I've lived). You might have
| trouble finding a SFH lease that doesn't include them,
| but multi-unit buildings will be easier.
|
| The law will require that grass mowing and snow removal
| happens. The property owner will be fined if they do not
| happen. These services cost money, so if the tenant is
| unable or unwilling to do them as part of the lease
| contract, the owner will purchase these services and
| increase the rent correspondingly.
| 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.
| sobkas 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.
|
| Landlords compete with their potential tenants for houses
| to buy. When landlord driven price increase, it prices
| out people from buying a home/flat, but they still need a
| roof over their heads. So they rent. This gives landlords
| cash needed to buy more houses/flats. This also keep
| rents up as landlords pay more for buildings. So tenants
| are less likely to accumulate cash for loans/something
| else. From small owners to big corporations it is a
| vicious cycle.
| bawolff wrote:
| So you're saying that in a capitalistic society, people
| with capital do better? Colour me shocked.
|
| The landlord also takes on risk and responsibility here.
| Like any business, if they do a shitty job they go broke.
| If they do a good job, they make bank and expand their
| business.
| sobkas wrote:
| They will go broke if they do bad job at extracting money
| from their renters, not bad job at providing value to
| them. Also: https://www.wsj.com/articles/landlords-were-
| never-meant-to-g... , privatization of profits and
| socializing losses.
| bawolff wrote:
| Yes, same as any business. If you provide it for free you
| go bankrupt, if you charge too much you also go bankrupt.
| giraffe_lady wrote:
| No because you can't really decline to have a home if
| none of the options are good for you. If there are only
| shitty landlords then you'll be forced to choose a shitty
| landlord.
| bawolff wrote:
| I can't decline to eat. Food still costs money.
| giraffe_lady wrote:
| Yes almost there keep going.
| bawolff wrote:
| Instead of being condescending, can you just make
| whatever point it is you are trying to make?
| 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.
| refurb wrote:
| You'd be surprised. SF Rent Board will always seek the
| solution that keeps the tenant in their home.
|
| So a tenant might stop paying rent, a few months later
| you get an eviction hearing, but then the tenant pays the
| rent _this month_ and _promises to pay the back rent_.
| Your eviction has just been denied.
|
| Tenant falls back on rent again, but made a good faith
| effort to pay some of the back rent. Eviction denied.
|
| Finally, tenant stops paying entirely and doesn't respond
| to you. You stand a pretty good chance of getting an
| eviction then.
|
| Meanwhile, over the past 12 months the tenant made 2 full
| rent payments and a couple thousand on the $18,000 in
| back rent owed. They get evicted and you get to clean up
| the mess.
|
| So yes, it's not _impossible_ to evict a tenant, but it
| 's really damn hard (unless it's for something like
| violence or failure to pay and no response when rent is
| demanded).
| flir wrote:
| Honestly, that sounds great. The risk of being a rentier
| _should_ be higher than the risk of an index tracker. A
| lot of our problems can be traced to the fact that bricks
| and mortar are seen as a better RoI than stocks and
| shares, and one way to fix that is to change the risk
| profile of being a landlord by increasing tenants '
| rights.
| jjav wrote:
| > Honestly, that sounds great.
|
| You're saying that it's totally fine for a renter to pay
| like one month out of every six months and keep doing
| that forever, just enough to defer evictions each time?
|
| > The risk of being a rentier should be higher than the
| risk of an index tracker.
|
| Risk and return should roughly correlate, or people will
| not do it. There is already very little return in renting
| out a house, so the risk needs to be fairly low, if
| society cares to have rental properties available.
|
| > change the risk profile of being a landlord by
| increasing tenants' rights
|
| What would you expect to happen as a result?
|
| If the risk is too high to compared to the return, these
| rental units are simply removed from the market. Are you
| convinced that less available units make renters better
| off?
| 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.
| lelanthran wrote:
| > 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.
|
| I expect that that hardly ever happens. Landlords aren't
| in the business to make life unnecessarily bad for
| renters, they're there to make money.
|
| A tenant who stayed in the same place for 3 years, always
| pays on time and never damages the property is preferably
| to an unknown. Landlords know that starting an eviction
| can cost them up to a year of income, plus there is
| always the risk that the new tenant is going to be even
| costlier.
|
| Why on earth would a landlord roll the dice on someone
| new? My guess is that many of those sob stories you are
| hearing from tenants are _their_ side of the story.
|
| They aren't going to tell you that the miss rent
| sometimes (and they'd have to miss a lot of months before
| a landlord will start the eviction process).
|
| They aren't going to tell you that the landlord had to
| make substantial repairs to damages that they caused.
|
| They aren't going to tell you that they sublet to "their
| cousins", and have 4 people to a room in a 3 room house.
|
| When you listen to a landlord's side of the eviction
| story, it always comes down to money: "that house is my
| income and I wasn't getting it anymore".
|
| No landlord is cutting off their income stream for
| several months just because they want to throw tenants
| onto the street.
| staticman2 wrote:
| Landlords rarely kick people out without notice because
| society has made it illegal for them to do so.
|
| Your take is naive. Historically there was a lot of money
| to be made being a "slum lord" and renting in poorer
| communities where people have bad credit so can't get
| mortgages , there's a reason the term exists.
| 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...
| Teknoman117 wrote:
| What are the bounds of that though? No place that I have
| lived in California gives me the option of continuing my
| lease under the current terms (never once did they _not_
| increase my rent)
| refurb wrote:
| AB1482 is statewide and covers most rental stock. Units
| built in the last 15 years are exempt. Single family
| homes are exempt, but only if explicitly included in the
| lease (plenty of landlords got bit by this in 2020 - no
| notice to tenant, automatically covered by rent
| control/eviction control).
|
| This is both rent control and eviction protection. You
| cant be evicted without "just cause" - all leases
| automatically roll over to "month to month".
| MiroF wrote:
| It only applies to homes owned by a corporation, you are
| incorrect that most properties are not exempt.
| refurb wrote:
| Most properties _aren 't_ exempt.
|
| Any multi-family older than 15 years falls under rent
| control and eviction control. Considering how little
| housing is built in CA, that's a _huge_ number of housing
| units.
|
| When it comes to single family homes, you are correct
| that they are _eligible_ to be exempt if they aren 't
| owned by a corporation. However, landlords had to give
| notice back in 2020 to current tenants for that property
| to be exempt. Notice can't be retro-active, so a wide
| swath of single family homes that were rented at the time
| are under rent and eviction control now.
|
| Of course if the tenant leaves, there is an opportunity
| for the property to be exempt again.
|
| That said, if you don't think the screws will slowly be
| tightened on AB1482, you're out of your mind. Just like
| in the major cities they'll be a bunch of "updates" to
| the law to the point San Francisco style rent control is
| state wide.
| 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.
| thaumasiotes 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".
|
| Renters vote. Prospective renters don't vote, because
| they don't live there.
|
| Landlords vote too, but there aren't enough of them to
| counteract the renters.
| 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."
| zamfi wrote:
| Did you miss the part about waiting 18 months for a court
| date?
|
| A legal contract is only as strong as the incentives to
| litigate it. Doesn't seem likely a contract would've
| helped, it may even have existed.
| jdmichal wrote:
| If there was a contract, it probably would have helped a
| lot in the restraining order hearing. Which apparently
| had no issues happening faster than 18 months?
| tempnow987 wrote:
| She had lease with landlord, and was looking to share the
| place. She was planning on continuing to live in the
| unit. This is common in a college towns if the apartment
| is a 2 bedroom, often you would rent the second bedroom
| out.
|
| Yes, landlord reasonably checked out. They agreed on
| terms in terms of the monthly amount, utilities etc. New
| roommate gave some reason to want to get going on getting
| their stuff moved in or measuring things or something,
| she gave them a copy of the key for that.
|
| That's all it took.
| Ekaros wrote:
| Seems like the problem was the restraining order. Should
| have fought that one. Blame the part of the system that
| was true problem.
| tempnow987 wrote:
| My sense was that the living situation was in fact
| untenable (ie, shared kitchen, accusations of theft etc).
| 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".
| refurb wrote:
| No. It's pretty common for tenancy laws to make all other
| condition "void and unenforceable".
| 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.
| tomp wrote:
| I read this more as an indication that "liberal"
| philosophy is at best hypocritical (liberals _" want
| things"_ (e.g. free education/housing) as long as they
| don't have to pay/work for it themselves) and at best
| contradictory (e.g. "open borders" while at the same time
| "social security").
| 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.
| refurb wrote:
| Haha... all those woke Silicon Valley CEOs would prove
| you wrong.
| 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.
| seanmcdirmid wrote:
| You are right, here are the seattle FAQ on first
| qualified applications:
|
| > Yes. The first-in-time requirement applies to duplexes
| and triplexes even if the owner resides in one of the
| units. The non-owner occupied units are considered
| separate dwellings, and therefore are subject to the
| Seattle Open Housing Ordinance, which includes the first-
| in-time provisions.
|
| The other two points where exceptions exists are for
| accessory dwelling units and (as I stated previously)
| when the owner lives in the same spaces being rented out,
| see http://www.seattle.gov/documents/Departments/CivilRig
| hts/Fai...
|
| Now if the lady in question was renting out the basement,
| that might count as an accessory dwelling unit, and she
| would be exempt under Seattle rules (but this is in SF,
| so the rules would be different).
|
| My guess is that as long as she doesn't advertise the
| unit (in the sense that she put it up for application),
| she can simply mention its availability to a small
| network that conveys it by word of mouth. It is
| impossible to legislate that kind of discrimination,
| there are tons of units that don't officially go on the
| market (via advertising on zillow, for example) but still
| get rented out.
| refurb wrote:
| I know a landlord with a 4 unit rent controlled building
| in SF. As tenants leave, the units are left empty. Some
| units have been empty for 3+ years now.
|
| Why? Because she is retiring and an empty building will
| sell for several hundred thousand more than one with
| tenants - giving up $300k in rent over a few years is an
| easy trade off when she can sell the whole building for
| $600k more.
| [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!
| Peanuts99 wrote:
| As someone not from America, this seems insane to me. Who's
| stopping you from renting not living with people you aren't
| related to and why the hell are they allowed to tell you
| what to do with your own bedrooms? Equally, is 6 bedrooms
| normal? Sounds like a lot of cleaning.
| 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.
| qiskit wrote:
| > If the population rises and we refuse to build more houses,
| the existing ones will get more expensive no matter what.
|
| Mix in low interest rates and you get a major property
| bubble. Population growth and low interest rates are the two
| major predictors of housing price increases.
| jfoster wrote:
| The problem is adversarial. If real estate were more
| affordable, what of those who have invested in it?
| esalman wrote:
| Is the claim that not enough houses are being built or have
| been built backed up by data? Real estate investors don't
| seem to have much problem finding homes to turn into rentals.
| 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.
| conradev wrote:
| The problem is that you can charge rent on a house but not
| on medicine.
|
| The problem in the market is that buying real estate is the
| _economically rational_ thing to do, because you get great
| returns on that capital, just like owning some amount of
| stock.
|
| The problem is primarily the structure of the market, and
| not the actions of individuals within it. We need a land
| value tax, and we need to make it easy to build new homes.
| taurath wrote:
| We need to make primary residences extremely more
| advantageous tax-wise, and punish investment properties.
| 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...
| mancerayder wrote:
| Right. NYC is a bad example of "international rich buying
| units not to live in and making it more expensive for
| everyone else." It does happen, and it is a hedge for
| international investors, but it's not always cost-
| effective - unlike London, and I can explain why.
|
| Of the NYC housing stock, close to 63% are rentals. Of
| the rentals, more than half are regulated (stabilized
| mostly). Of the owned homes, you have houses, condos and
| co-ops. Co-ops predominate in Manhattan (where you'd
| expect the rich to want to live), but condos only make up
| the smallest fraction of the for-sale home types (115K
| according to 2017 statistics).
|
| Of the condos, if you're an international rich you want
| low carry and maintenance costs. So typically they buy
| the "tax abated" new luxury condos, and sure they accept
| to eat the maintenance costs. But if they want to eat the
| taxes, those can be ginormous, a quick streeteasy search
| will confirm.
|
| NYC is just a pain to do that in unless you want to be
| there part of the time. Paris is like that - you buy for
| your trips every few months to go shopping, or whatever
| rich people do.
|
| London is better, the carry costs are lower, being
| instead of property taxes they rely on council taxes,
| which first of all are WAY lower than anything property
| tax in the U.S. (not the least of which NY State), but
| secondly they capture more tax from the exchange (stamp
| duty).
|
| As always it's fine to explore injustice and sources of
| inequality, but we have to be nuanced and analytical
| before we repeat the slogans.
|
| P.S. - the link above is from 2021. Yes, in summer of
| 2021 the luxury units were empty because NYC was a shitty
| place to live in 2021, not the least of which because of
| how much had closed up, how much was still not opening,
| and how unpleasant the sidewalks were. So if you're a
| luxury rich person, you're going to spend the summer
| where there are mountains or beaches.
|
| Sources: https://rentguidelinesboard.cityofnewyork.us/wp-
| content/uplo...
| slavik81 wrote:
| If the rich are parking their wealth in real estate, you
| can take their wealth via property taxes. Many of the
| places with this problem choose to have low taxes on real
| estate, which is part of what makes it such a good
| investment and drives the price up.
| 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.
| dionidium wrote:
| There's no evidence for this claim. It's a popular thing
| to say, so I think it must _feel_ true for a lot of
| people, but there 's no evidence for it and simple
| arithmetic suggests that it's a red herring. The fact is
| that vacancies in NYC are historically very low and
| reached new all-time lows in Manhattan at the end of last
| year.
|
| People love the "investors and billionaires are buying up
| the market" story because it suggests a convenient
| villain, when the truth is that the millions of ordinary
| Americans who oppose new housing in their neighborhoods
| are a much bigger factor. Of course, that's not as
| satisfying as blaming a Disney villain.
|
| We've been under-building for decades. We have a massive
| shortfall of new units, far beyond the number of empty
| luxury apartments. Frankly, at this point I'd support a
| meaningless vacancy tax just so we could put this
| objection to bed and focus on things that matter.
|
| https://www.cnbc.com/2021/12/09/new-york-city-rents-
| jump-22p...
| Retric wrote:
| That's an odd takeaway from an article speaking of a 22+
| rent from increase due to COVID bounce-back. Ultra short
| term trends aren't particularly relevant compared to long
| term trends.
|
| One clear the example of the outsized impact is these
| buildings bought up air rights from multiple properties.
| So, they reduced the legally available space. When the
| city makes space for ~100,000 apartments and actually
| gets less than 1/10th that it's a problem.
|
| Another is the extreme cost of the associated tax breaks
| for affordable housing for minimal gain. The city set the
| tax break based on price while the number of affordable
| houses was based on the number of apartments. A seemingly
| obvious problem looking back, but still a problem for
| city residents.
| dionidium wrote:
| What we're seeing is a return to the long-term trend.
| Vacancies in Manhattan have hovered around 2% for a long
| time.
|
| See:
| https://www.millersamuel.com/files/2022/02/Feb22QNSrent-
| nyVA...
| Retric wrote:
| Which shows how important a seemingly small number of
| long term unoccupied apartments are.
|
| Another way of looking at 2% vacancy is over 20 years an
| apartment is vacant less than 5 months. People move, die,
| go to prison etc, so there is some inherent friction
| represented in a 98% occupancy rate. Dropping to 1% long
| term takes more than just higher demand it would require
| increases in transaction efficiency.
| chii wrote:
| the air rights are a bit of a red herring, because if the
| people in the city chooses to, they can easily abolish
| air rights, and allow buildings that previously sold
| their air rights to build it again!
|
| And a couple of tall buildings in manhattan isn't gonna
| be making any difference. The difference would come from
| building denser everywhere.
| 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.
| [deleted]
| davidw wrote:
| > The difference with real estate is that the owners get
| to determine production levels, via local zoning laws.
|
| I'm part of a local YIMBY group, and show up to hearings
| to try and get housing built, write letters, etc...
|
| I have never, ever seen 'investors' write in or speak at
| these things. It's all our neighbors who show up and
| scream about not building homes.
| WindyLakeReturn wrote:
| Could this be a side effect of efficiency? Much more
| efficient for the investors to push for the ideas that
| lead to local homeowners showing up to protest than to
| protest themselves.
| davidw wrote:
| Investors don't have a voice locally. They don't write
| letters to the editor or post on Nextdoor. Pretty much
| all they have to do is sit back and reap the benefits of
| angry neighbors doing all the dirty work of preventing
| homes from being built. It's a pretty sweet gig. They
| even say this stuff straight up in their SEC filings.
| epistasis wrote:
| This comment and analogy fundamentally misunderstands the
| problem here, though:
|
| > the value of homes seems to be almost entirely divorced
| from the fact that people need homes to live in.
|
| The value of homes is so high precisely because people need
| somewhere to live, desperately. The price is not
| disconnected from need, it's entirely because of need.
|
| And it's not that wealthy people are buying and hoarding
| homes. There's not some magic supply of 20-30% vacant
| unoccupied housing, there's desperately low vacancies,
| absolutely criminally low amounts of vacancies.
|
| But refusing to acknowledge the panacea of building new
| homes does serve the purpose of wealthy people who
| currently own home. Because they are not hoarding homes,
| they are hoarding _land_. They are hoarding access to the
| ability to build more homes, the homes that are desperately
| needed. And in high demand areas, every person that goes
| and opposes new homes, that opposes upzoning, is directly
| responsible for displacing however many people those new
| homes would have built.
|
| There is _only_ one solution to high home prices, and that
| 's building more. (Well, we could also institute strict
| border controls and price controls and completely destroy
| freedom of movement and access to jobs.)
|
| Downplaying the primacy and necessity of building enough
| homes for people that want to live in an area only fuels
| higher prices, more hoarding of land, and more exclusion.
| There's zero upside to saying "we don't need to build"
| except to enable further financialization of housing and
| concentration of wealth in homeowners.
| jen20 wrote:
| > And it's not that wealthy people are buying and
| hoarding homes.
|
| This is exactly what buy to let landlords are doing.
| epistasis wrote:
| If they are renting them out, the homes are not being
| hoarded, they are being lived in.
|
| The real problem isn't a problem of vacant units, it's a
| problem of unbuilt units.
| nitrogen wrote:
| This results in a transient population and concentration
| of wealth, and reduced overall housing security. A
| mortgage doesn't go up by 10% every year, but my rent
| sure does.
| 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.
| darkerside wrote:
| This happens all the time every day. Those rich people are
| pharmacies like CVS and Walgreens. They buy the medicine,
| stock it in smaller doses at an elevated price. It's really
| not that different from investors buying a property and
| offering it for short term rental so that people can enjoy
| it in small doses.
| 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.
| pandemicsoul wrote:
| "Thing is if people start hoarding medicine then new
| companies can pop up and fill in the gap"
|
| That's not how the market works. That's not how patents
| work. That's not how medicine works. That's not how any
| of this works.
| 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.
| pj_mukh wrote:
| Land is a finite resource but housing units are not. Once
| America gets over it's love affair with single family
| homes, we could undercut most speculators by just
| building up.
| newbamboo wrote:
| Nonesense. People are going homeless because they can't
| pay 3k a month to rent a shitty studio. Low income
| housing cannot be produced for less. Boomers wanting to
| mow lawns is obviously, for clear thinking individuals,
| not even a factor.
| bliteben wrote:
| Why can't the US just have less people with a higher
| standard of living? Why is "progress" always more. Why do
| we have to make everything worse by shifting the baseline
| (https://en.wikipedia.org/wiki/Shifting_baseline).
| pj_mukh wrote:
| Because a higher standard of living requires more people
| to come up with the said standard of living (see:
| history, the shifting of innovation centers to population
| centers)
|
| The degrowth movements garden variety neo-pastoralist
| misanthropy makes it blind to the fact that more humans
| (given a good system of governance and rules) is actually
| an amazing thing.
| jasd wrote:
| In the last 2 years condo prices in the Seattle area have
| stayed flat while everyone is desperate to buy townhomes
| and single families that are becoming out of reach for
| most. That makes me wonder if building up will actually
| fix the issue.
| zamfi wrote:
| That condo prices are staying flat is fantastic news.
|
| Now we just need to build condos that are appropriate for
| all stages of life -- not just young singlehood and
| coupledom.
|
| Building up will not solve the "not enough SFH/townhomes"
| problem, but it will fix the homeownership problem. And
| it may help with the former, if there are enough current
| SFH/townhome owners who would prefer a really nice condo
| close to work/downtown/parks/amenities/etc.
|
| But one issue there is that we currently build condos but
| don't build the public spaces that serve to supplement
| them and make them comfortable for, e.g., families with
| kids. As a result, they're full of a certain demographic,
| and less appealing to others, reinforcing the issue.
| darkerside wrote:
| > Now we just need to build condos that are appropriate
| for all stages of life -- not just young singlehood and
| coupledom.
|
| Can you share some ideas about what this would look like?
| kag0 wrote:
| not the original commenter, but I think they said it
|
| > we currently build condos but don't build the public
| spaces that serve to supplement them and make them
| comfortable for, e.g., families with kids.
|
| you need
|
| * several bedrooms
|
| * some utility space (for things one would have otherwise
| done in the garage)
|
| * nearby [safe] parks and playgrounds
|
| * nearby recreation centers
|
| * good schools
|
| etc
| pj_mukh wrote:
| I like what culdesac is trying: https://culdesac.com/
|
| If we could only scale and therefore make this cheaper.
| Aeolun wrote:
| Most people obviously want a family home, but it would be
| an improvent if they actually have an alternative.
| xyzzyz wrote:
| Yeah, most condos in Seattle are in downtown area, and
| downtown Seattle really went to shit over past few years.
| Places are closed down, crazy homeless harass you on
| every intersection, and trash and tents are everywhere.
| No wonder few want to live there, keeping pressure on
| prices relatively low.
| boondaburrah wrote:
| There are plenty of cities worldwide where building up
| has worked. Regardless, if buying a town home or single-
| family has become out of reach, it's far better to have
| /something/ to live in rather than be forced to fight the
| market for a small box in a high-rise that you still
| can't afford.
| tmp_anon_22 wrote:
| Single Family homes have the benefit of more autonomy
| where as building up means you're living on-top of your
| neighbor, its not binary but we should acknowledge the
| clear QoL tradeoffs of condensed living.
|
| Maybe its inevitable and necessary to force more people
| into condensed housing, maybe the societal benefits
| really outweigh the tradeoffs.
| chii wrote:
| > clear QoL tradeoffs of condensed living.
|
| and that's why single family homes should be more
| expensive, because it is better. People continue to bid
| it up, because they still believe that the price is worth
| and hasn't reached a ceiling yet.
|
| In asian hubs like hong kong or shanghai, they've reached
| a certain ceiling on land, and so building up is now what
| most people could buy and so they do that. The cities in
| countries like canada, australia and the west coast of
| the US, it hasn't reached that point due to large
| available land mass, and people prefer commute (or WFH
| now!) over living densely.
|
| Of course, regulation plays a part - i think there's
| unnecessarily large amount of red tape in making taller
| denser buildings, as well as a lobby of existing owners
| who don't want it near themselves.
| pj_mukh wrote:
| This is a massive failure of imagination. I moved into a
| new 5 by 1. Don't even know who lives above me (never
| heard em). Sound Insulation has come a long way.
|
| There's a lot that can be done to add autonomy and
| privacy to the condo living. And then more to make it
| cheaper and accessible. It's mostly a technical problem.
| clhodapp wrote:
| If people can reasonably afford a (non-tiny) condo but
| pine after a single family home that they can't afford,
| there isn't a housing crisis there's economic diversity.
| davidw wrote:
| No one's "forcing" anything. Legalize the housing, and if
| no one wants it, it won't be built. The problem is that
| it's not legal in so many places.
| greesil wrote:
| The invisible hand is sometimes a fist.
| [deleted]
| BucketsMcG wrote:
| As far as I'm concerned the quality-of-life tradeoff
| heavily favours higher-density housing.
|
| I live in an apartment block and so does everybody else
| for miles around. Our building, like almost every other
| around here, tops out at seven storeys. It's very solidly
| constructed, so there's little to no noise from
| neighbours, not that they make much noise to begin with
| as they're a pretty considerate bunch.
|
| The downside to this way of living is almost nonexistent,
| but the upside is massive. Instead of everybody having
| their own plot of land that's too small to do anything
| really interesting with, and which they have to maintain
| themselves, we have a communal garden. When that's not
| enough, there are no less than four parks within two
| minutes' walk.
|
| Because this higher density of living is able to sustain
| more amenities, everything you could possibly ever need
| is, at most, a short bike ride away. And I do mean
| everything. Bars, restaurants, shops, medical facilities,
| swimming pools, a velodrome, a planetarium...
|
| I've no need of a car because it's all on my doorstep. If
| I do need to travel, public transport's great.
|
| You can keep your "autonomy", I'll be too busy reaping
| the benefits of living among other people to worry about
| that.
| bliteben wrote:
| You might as well live in the matrix, you seem to live in
| an artificial world with no connection to nature. I
| myself desire to live on the edge of "civilization" as
| much as I can, I know this presents a conundrum in that
| I'm creating a market for destroying it, but this is a
| human condition as old as time.
| camgunz wrote:
| Isn't this most people in rich countries? The line's
| pretty fuzzy, but in most rich countries you're
| disconnected from nature unless your job is in nature
| (ranger, landscaper, farmer, ag researcher) or homeless.
| BucketsMcG wrote:
| 20-30 minutes on a bike and I'm out in the sticks, a bit
| further and there are forests and lakes aplenty. Higher-
| density living means less sprawl and a shorter distance
| from city centre to back of beyond.
| seattle_spring wrote:
| > It's very solidly constructed, so there's little to no
| noise from neighbours, not that they make much noise to
| begin with as they're a pretty considerate bunch.
|
| Neither of these things have been even remotely true in
| any apartment I've lived in the US, even ones billed
| "luxury". It's always been thin-walled garbage where I
| can hear every word of every conversation of my
| neighbors, who have typically felt that listening to
| music 24 hours a day and slamming down their boots while
| walking between rooms is the right thing to do.
| ChuckNorris89 wrote:
| _> It's always been thin-walled garbage where I can hear
| every word of every conversation of my neighbors_
|
| I feel this is mostly a US problem.
|
| In most of Europe, apartment blocks are solidly built,
| especially the older ones, even in Eastern Europe.
| [deleted]
| midhhhthrow wrote:
| The problem isn't finite land. It's finite voters and the
| politicians that represent them. In CA, the most crowded
| state, There are more acres than people! And somehow we
| still have a housing shortage.
|
| You can go out into the middle of nowhere in CA and find
| houses huddled together 2 feet from another behind a
| giant wall, like some kind of nazi concentration camp for
| houses. And the sadest part is that there's tons of land
| in every direction you look and people are forced to
| commute vast distances.
| markdown wrote:
| LVT would fix that almost immediately.
| wwweston wrote:
| > In CA, the most crowded state, There are more acres
| than people!
|
| Oh, well then, we'll just assign each person an acre,
| problem solved.
|
| Which one do you want? Apparently you'll be fine with one
| -- maybe even two -- in the middle of nowhere, as your
| comment seems to assume that each has equal value,
| independent of either natural or social geography.
| kortilla wrote:
| In the US we are nowhere near land being a concern.
| That's a cop-out.
| Ma8ee wrote:
| The relevant metric is _land within a reasonable commute
| to an attractive city centre_.
| bryananderson wrote:
| This is not in short supply either. In California, the
| capital of the American housing crisis, the overwhelming
| majority of new residential development in the last 50+
| years is low-density single-family on greenfield land.
| This is certainly true within the high-demand metro areas
| like the Bay and Greater LA. We could multiply the
| housing supply of these metro areas by many times without
| _ever_ building on greenfield land _ever again_. The land
| is unbelievably not scarce. It is just illegal to put a
| sane number of people on it.
| ww_wpg wrote:
| The legal restrictions on where you can build a new home
| are more of a problem in California than in rural
| Arkansas so your response doesn't address OP's point.
| 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.
| chii wrote:
| Some medicines are high price because of market
| intervention by gov't (or regulatory capture) - like epi-
| pens. Some medicines are high priced because noone really
| needs it, and the few remaining bear the brunt of the
| cost (or society subsidize the cost via taxation).
|
| How come aspirin or penicillin isn't expensive? They are
| more commonly used, and so if the hoarding method works,
| it would've been even more profitable!
| tempestn wrote:
| How come insulin _is_ expensive?
| andrepd wrote:
| >Temporary disruptions will be handled by the market in
| the long term
|
| This is the sort of gospel/dogma that free market
| absolutists like to propagate, but plainly reality proves
| this wrong. Markets are a tool, but not a universally
| useful one.
| darkerside wrote:
| Not so plain to the rest of us. Can you explain what
| makes this so evident?
| 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.
| thaumasiotes wrote:
| The patent system does that everywhere. That's its
| purpose. The FDA does it 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
| briHass wrote:
| Yeah, but much like housing shortages, the classic cases
| of 'pharma bros' (Shkreli, et. al) is due in large part
| to the government. He, specifically, was able to jack
| prices because his company owned the patents (gov issued
| and controlled) and manufacturing license (gov issued) to
| rare but important drugs.
| 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.
| moltke wrote:
| Then we should absolutely stop and do our best to reverse
| immigration. Under your model immigration is how 3rd
| world countries export their unsustainable behavior.
| 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.
| chii wrote:
| > 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.
|
| no we cannot, because it's not a choice. It's an effect.
| A different "choice" to have a desirable effect of your
| choosing is both hard, and can (and will, i bet) have
| undesirable consequences. A choice for example, could be
| to switch to a command economy instead, but i bet that
| would create housing projects that noone wants to live
| in.
| bawolff wrote:
| Scarcity doesn't go away just because we wish it would.
| 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).
| pyuser583 wrote:
| Thank you!
|
| This comes up a lot when people argue in favor reforming
| how real estate is taxed.
|
| When real estate isn't for sale, it's "value" is
| synthetic.
|
| I wouldn't actually sell my house for less than 400% what
| similar homes are worth.
|
| For some people that means the value is 400% that of
| similar homes.
|
| Thankfully the real estate tax folks don't see it that
| way.
| chii wrote:
| I actually want tax valuation to work like an offer - the
| tax man can choose to purchase your home for the
| valuation you use for taxation (you don't pay the tax in
| that case), or accept the tax payment.
|
| if you value your house too high, you'd pay more tax than
| you'd need of course, but guarantee that it isn't going
| to be immediately bought up by the tax man. If you value
| it too low, you're risking a sale. So the ideal is to
| value it at market price - where the tax man will have no
| incentive to actually buy it out.
| pyuser583 wrote:
| In practice, wouldn't this be regressive (tax poor more
| and rich less)?
|
| Imagine a homeowner who uses public transportation, sends
| their children to public schools, and and supplements
| their income with public assistance.
|
| They need to create a price for their home. They live in
| an area with good public transit and good public schools.
| These public services figure heavily into the price of
| the house, pushing it up for tax purposes.
|
| Imagine the same house being owned by someone who sends
| their kids to private schools and drives everywhere. The
| quality of public schools and transportation doesn't
| affect the value of the house.
|
| In practice, people who are poor are less mobile than
| people who are wealthy. This tax system favors people who
| are mobile (and don't consume public services).
|
| How important is it that you stay at your current
| residence? The more you make, the easier the move (moving
| costs money too).
|
| Also, because public assistance doesn't change with the
| value of the home, the larger the tax payment, the
| greater the fraction of the tax bill it is.
|
| This sounds nice, but is ultimately a tax on people who
| aren't mobile.
| lelanthran wrote:
| > I actually want tax valuation to work like an offer -
| the tax man can choose to purchase your home for the
| valuation you use for taxation (you don't pay the tax in
| that case), or accept the tax payment.
|
| >
|
| > if you value your house too high, you'd pay more tax
| than you'd need of course, but guarantee that it isn't
| going to be immediately bought up by the tax man. If you
| value it too low, you're risking a sale. So the ideal is
| to value it at market price - where the tax man will have
| no incentive to actually buy it out.
|
| I use to think this too, but it looks too easily gamed,
| and over many iterations the taxman would be left selling
| a bunch of properties lower than the price they paid for
| it.
|
| In effect, this would be passed off onto the taxpayers,
| so the net effect is going to be that the taxpayers are
| paying for the profits of private speculators who
| purchase from the taxman and sell or rent the property
| for a profit.
| pyuser583 wrote:
| But what if that number isn't near what anyone would
| actually pay for the house?
|
| Say, I live next door to my child's school, and an
| elderly parent I care for.
|
| I might not sell for anything.
|
| The "market price" has to include what people are willing
| to pay for the item, not just what they're willing to
| sell for.
| tunap wrote:
| "...the truth is that speculation in real estate and vacation
| towns have both been a thing for a very long time."
|
| Eh, in the US, it was limited by the Glass-Steagal
| protections enacted after the speculators ruined the world
| economy almost 100 years ago. We can thank the 'Modernisation
| Acts' of 1999/2000 and QE for the economic rollercoaster in
| the US(so goes the world?) for the last 20 years in housing,
| energy & metals.
|
| https://en.wikipedia.org/wiki/Glass_Steagal
|
| https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bl.
| ..
|
| https://en.wikipedia.org/wiki/Commodity_Futures_Modernizatio.
| ..
| 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
| daniel-cussen wrote:
| And commensurately there's a tight relationship between the
| percentage of income spent on rent (often cited as a third,
| it used to be less than half that), and the percentage of
| people on the street.
| 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.
| karlkatzke wrote:
| What's funny is how much property values and rent have risen
| in the US in 2020 to 2022, when population growth has been
| flat due to Covid. (Population has increased 1 million in
| that time, from 331.5 million to 332.5 million.) obviously,
| newborns aren't buying houses, but the excess deaths (not to
| mention early retirements requiring around the clock care)
| were entirely due to Covid and should have opened up a number
| of properties for first time homebuyers.
| Taylor_OD wrote:
| Sure building more houses help but many houses sit empty.
| There are other problems.
| 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.
| jxm262 wrote:
| Im genuinely curious to read more on this. Know of a source
| for that number or some resources I can try to research on
| the topic? I just mostly see people reaching for
| conclusions but see very little data to back it up.
| adam_arthur wrote:
| All the relevant data is on FRED
|
| https://fred.stlouisfed.org/series/TTLHH
|
| https://fred.stlouisfed.org/series/ETOTALUSQ176N
|
| https://fred.stlouisfed.org/series/UNDCONTSA
|
| Homes actively under construction is about to hit an all
| time high, higher than the 70s peak
|
| Plus consider demographics. Millennial hump has passed
| avg home buying age, and there are demographic headwinds
| going forward, unless immigration policy becomes more
| permissive. Of course demographic impact will take decade
| or more to play out.
|
| By demographic headwinds, I mean fewer young people, e.g.
| Inverted population pyramid. See Japan or China for how
| this will play out
| 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.
| shp0ngle wrote:
| Yeah this article makes it sounds like algorithmic trading is
| wrong by design, but that's not really true in this case at
| least
| 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.
| morgante wrote:
| Separation of concerns is not a legal concept.
|
| Zillow does _not_ have any fundamental control over the
| market. They do not have any obligation to show true
| prices. They are a private entity who _happens_ to offer
| price estimates a service. Nobody is ever forced to buy or
| sell at that price.
| 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.
| samwillis wrote:
| With the articles reference to second had car sales it
| interesting to compare to British Car Auctions (BCA) here in the
| UK. They have something like a 60% market share on second had
| sales, they are completely dominant as the central "trading
| house" for second hand sales. Most second hand car forecourts are
| buying a significant portion of their cars from a BCA auction.
|
| The other thing they have which compares to what Zillow were
| doing is webuyanycar.com. It is literally what it says, you get a
| quote from their site to value it, go to their location and they
| buy your car. When I did it I was there for just 7 minutes,
| easiest car sale ever! And they payed be nearly 1k more than
| anyone else.
|
| They are truly the market makers with this system, ensuring a
| steady stream of cars into their auctions. Have full visibility
| in real time of the pricing on both sides and are only holding
| the cars for about one week.
|
| Some argue that they were a major contributing factor to the used
| car price inflation last year (on top of the issues with new car
| availability).
| lotsofpulp wrote:
| > Some argue that they were a major contributing factor to the
| used car price inflation last year (on top of the issues with
| new cad availability).
|
| And they would be wrong. Market makers do not get to set
| prices, supply and demand does.
| PaulHoule wrote:
| Scale is the enemy of profitability for this.
|
| If you make lowball offers you won't have many accepted but you
| will make money on the ones they accept. If you make higher
| offers you'll be killed if anything goes wrong at all.
| 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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