Under-building of new homes, high construction cost perpetuate housing shortage • Hacker News Board

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#61

Post by scarface74 » Mon, Oct 30, 2017, 9:58 AM UTC

prostoalex wrote: post #60

scarface74 wrote: post #57

Earlier quoted context omitted.

FHA loans are easy to get and the down payment required is 3.5%. Even with mortgages that don’t qualify for FHA it’s relatively easy to get 5% down payment loans.

They generally require PMI, so still an extra payment out of pocket, are usually hard-capped at 30% of buyer’s current income, and take looong time to close compared to strong cash offers with conventional loans, so sellers view them as last-resort. It’s possible, but not very realistic for an FHA applicant to outbid everyone else on price.

You can get prequalified for an FHA loan just like any other loan. Everyone doesn't live in SV where houses go so fast you're constantly having to outbid people.

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#62

Post by maccard » Mon, Oct 30, 2017, 10:24 AM UTC

jdavis703 wrote: post #52

maccard wrote: post #22

Earlier quoted context omitted.

Maybe one of the issues is the expected sizes of homes in the US - 2500 sq ft is about 250 sq m - which is pretty darn big. The average home in the uk is about 85 sq m...

No, this doesn't have to do with construction costs (which are about linear with square footage), it's other factors. For example, even if someone wanted to build a tiny home (i.e. less than 500 square feet), it's illegal in many places because of minimum square footage requirements. The problem comes from bad land use planning, not because "dumb" Americans don't understand a larger house costs more money.

I wasn’t talking about construction costs, I was talking about density. You can fit more 800sqft houses in a fixed area than you can 2500sqft houses

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#63

Post by bgitarts » Mon, Oct 30, 2017, 10:57 AM UTC

Analemma_ wrote: post #42

bgitarts wrote: post #40

Why isn't there a tech company trying to disrupt home construction? People speak of Uber being worth so much because of the giant market it's going after and transportation is big being the second largest consumer expenditure at 17% of wallet share. However housing is first at nearly 30% of wallet share and the biggest dent you can make in that figure is lowering the upfront cost which is several years of income for…

Because the cost is labor, materials, land acquisition and permits, none of which can really be “disrupted”.

labor has been disrupted through automation. materials can be disrupted through better manufacturing and or new materials. permits can be disrupted by removing or streamlining the process through regulatory changes or personal changes/increases at the Department Of Building(s).

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#64

Post by turk184 » Mon, Oct 30, 2017, 12:36 PM UTC

adventured wrote: post #50

freeloop3 wrote: post #35

Earlier quoted context omitted.

You're putting the poor in an awfully tight position there. Between no tax deduction for a mortgage and paying the same property tax (what you call land value tax) for their trailer as the mansion next door, they're kind of getting screwed. And what about old people that have owned their own house for decades? If the local economy goes up, increasing the land value tax, they either leave or go bankrupt. And the kicke…

People with trailers are not benefiting from the mortgage interest deduction. The mortgage interest deduction overwhelmingly benefits households earning over $100,000 per year. Only one in five tax filers take the mortgage interest deduction, the extreme majority are in that $100k+ income bracket. The substantially increased standard deduction is far more important than the MID for the middle class. Cutting the MID t…

Agreed, but I would add (if my account is not shadow-banned) that $100K/yr. is not that much money anymore. It was in the 1980s, but not now. The bait and switch on taxes is obvious--you're barely middle class with 100K income in most locales. Just look at how many people are under that figure and you know the rest of the story. Inflation killed us and we are quibbling over silly tax deductions and bones thrown to us by the multi-trillion-dollar elephant in the room!

Also, you can't give income tax breaks to people who earn no money, which is what the bottom 2/3 represent pretty much. If you want fix America, ditch the EIC and other stealth welfare and start rebuilding industry. Telling me I'm rich when I'm clearly finally just making it in life is bullshit.

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#65

Post by timlin » Mon, Oct 30, 2017, 1:00 PM UTC

amigoingtodie wrote: post #45

theseus7 wrote: post #29

Earlier quoted context omitted.

The first part of the solution is to completely eliminate mortgage subsidies and mortgage interest deductions. These do not increase the supply of housing, they only subsidize demand for more expensive houses and increase indebtedness, and increase the flow of capital into non-productive areas of the economy such as mortgage lending and mortgage backed assets. The second part of the solution is to convert all propert…

How would this affect farmland?

Pennsylvania has a "Clean and Green" act [1] that "bases property taxes on use values rather than fair market values" for farmland. Must have at least 10 acres or produce $2,000 in annual revenue off the land. For me, this cuts my property taxes substantially. If farmland is pulled out of Clean and Green (perhaps to sell it for building houses?) the landowner owes back taxes of 7 years.

I would think that other states have similar programs.

1- http://www.agriculture.pa.gov/Encourage/farmland/clean/Pages...

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#66

Post by pfranz » Mon, Oct 30, 2017, 4:45 PM UTC

eikenberry wrote: post #58

chiefalchemist wrote: post #8

"We would love to build more affordable starter homes, but when high-end homes cost the same to build and are far more profitable, we lose the incentive to build smaller units,” said Isaac Stocks of Azure Northwest Homes, a Seattle-area home builder. That sums it up. Plus, more expensive homes means more property tax revenue, so there's little incentive for state/local gov to encourage lower end housing. Finally, it…

Building high end units does help the housing market for low incomes. This article explains it pretty well. http://cityobservatory.org/urban-myth-busting-new-rental-hou...

The quote in that linked article, "As new housing ages, it depreciates, and prices and rents decline, relative to newer houses" links to another article they wrote[1]. That article just shows a graph showing rental price vs age of a home. Its already established now housing is typically built for mid/upper class--where else would everyone else go? It doesn't show that lower class housing is being properly addressed, it's just using circular logic to prove itself right.

[1] http://cityobservatory.org/what-filtering-can-and-cant-do/

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#67

Post by pfranz » Mon, Oct 30, 2017, 4:53 PM UTC

taprun wrote: post #2

No, the #1 reason it's so hard to find an affordable home is that potential buyers can get huge loans at very low rates. Since buyers compete with each other, prices go up. I guarantee that if interest rates were allowed to creep up, and the government stopped guaranteeing loans made by the banks, we'd have cheaper homes almost immediately.

Maybe in general? I don't have numbers, but over the past few years a lot of the competition I've seen seems to be all-cash buyers. At least on the west coast (Vancouver, Seattle, LA). Low interest rates elsewhere in the market could be freeing up the cash, but I don't see it being the primary driver for getting mortgages.

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#68

Post by deadmetheny » Mon, Oct 30, 2017, 8:06 PM UTC

sytelus wrote: post #48

taprun wrote: post #2

No, the #1 reason it's so hard to find an affordable home is that potential buyers can get huge loans at very low rates. Since buyers compete with each other, prices go up. I guarantee that if interest rates were allowed to creep up, and the government stopped guaranteeing loans made by the banks, we'd have cheaper homes almost immediately.

Not really... these days 20% downpayments are the norm. I know several people holding off purchases because they simply don't have downpayment. Higher home prices reduces number of potential customers but right now we have so many of them that reduction doesn't matter and margines are much higher on higher end.

That isn't even remotely true here in the Midwest, in my experience. Nobody I know has needed 20% down - most have been 5% or so. I got a conventional with 5% down with no problems. It's even easier if you go the FHA first time home buyer route.

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#69

Post by prostoalex » Mon, Oct 30, 2017, 8:49 PM UTC

scarface74 wrote: post #61

prostoalex wrote: post #60

Earlier quoted context omitted.

They generally require PMI, so still an extra payment out of pocket, are usually hard-capped at 30% of buyer’s current income, and take looong time to close compared to strong cash offers with conventional loans, so sellers view them as last-resort. It’s possible, but not very realistic for an FHA applicant to outbid everyone else on price.

You can get prequalified for an FHA loan just like any other loan. Everyone doesn't live in SV where houses go so fast you're constantly having to outbid people.

taprun's comment was describing a competitive market "potential buyers can get huge loans at very low rates. Since buyers compete with each other, prices go up".

Re: Under-building of new homes, high construction cost perpetuate housing shortage

#70

Post by tehlike » Mon, Oct 30, 2017, 11:44 PM UTC

thriftwy wrote: post #19

tehlike wrote: post #14

Earlier quoted context omitted.

Or you can build larger homes and make profit.

What if you are building your own home?

most people don't have the time/energy or money. Money can be resolved with bank loans, but they have higher interest rates (usually prime + 1.25)