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The U.S. Housing Boom Is Coming to an End, Starting in Dallas

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Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#111

Post by gnicholas »

modeless wrote: post #79
gnicholas wrote: post #61

Things have also cooled off in the Palo Alto area. I've seen houses dropped by $400k in the last few months, typically from nearly $2.5M to a bit under $2M. At first I thought it was just to get a bidding war started, but the homes then sold for not much over the lowered price. This is still a far cry from "affordable", but it's a change of pace from the last six years.

I've toured a couple of houses in Palo Alto in the past month. The agents were practically begging us to make an offer below asking price. I thought it was really weird. Of course, even then the prices would still be about double what I would consider reasonable.

I'm curious to see how much things soften after people do their 2018 taxes next year and realize the magnitude of the impact of not being able to deduct property taxes anymore. (In CA, the $10k cap is eaten up by state income taxes, at least for anyone who has enough money to purchase a home.)

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#112

Post by sokoloff »

Latteland wrote: post #99
gowld wrote: post #82

Earlier quoted context omitted.

You can rent out that investment if you move. Paying rent is also expensive where home prices are expensive.

If you are lucky you can get money from renting. If you were unlucky and had a house in the rust belt and jobs disappeared then few people could buy or rent your house. So people can get trapped. At least you can expunge your mortgage debt with bankruptcy. Not being able to expunge education debt is what's holding our economy down.

Not being able to expunge education debt is what makes education lending possible.

Otherwise, there’d be a line to file strategic bankruptcy after the last tuition payment was due...

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#113

Post by dmichulke »

sokoloff wrote: post #50
makmanalp wrote: post #37

Earlier quoted context omitted.

Why look at nominal though? Inflation adjusted makes a lot more sense to me, especially when we're talking about household income. https://fred.stlouisfed.org/series/MEHOINUSA672N The story here is quite different - only a 19% increase, and much more unstable over the years. Most of the increase happened before 2000. Almost no change since then.

Two reasons: 1. Every idiotic meme about how goods X, Y, and Z have more than doubled in price while [real] wages haven't. I'm torn between thinking the meme creators are completely clueless or epic trolls. 2. There is a substantial linkage between nominal wages and nominal inflation, especially for limited, competitively bid goods (like housing). Looking at median house prices https://fred.stlouisfed.org/series/CSUS…

Mortgage rates in the US have (AFAIK) usually a variable interest rate.

That means that it's sufficient for the lower income tiers (relative to the house value) to have a few months of high interest rates (in a time frame of 15-25 years) in order to lose the house.

Buying at the current rates is risky, while the risk of rising rates in 1988 was much lower. Factoring that in should change your conclusion.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#114

Post by SomewhatLikely »

neokantian wrote: post #58

I am quite convinced it would be possible to build a pleasantly-looking development of $25,000 sale-value housing at 50 or 70 miles away from the urbanized area and connect it with a fast transit rail to the main urbanization. Empty land should be cheap. Buyers should be plentiful. The reason why this does not happen, is because the bureaucracy prevents it. There seems to be a strong political necessity to make accom…

In most cities, the outlying communities already exist. It's the transportation that's the hard part.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#115

Post by nostrademons »

gowld wrote: post #82
allthecybers wrote: post #67

Earlier quoted context omitted.

Even as a DINK millennial couple with a combined low six figure income a home purchase feels like a poor investment. Not only the down-payment of $100k+ but the property tax increases and then having to pay that mortgage for 30 years. Since we expect mobility and a certain level of future uncertainty it just doesn’t make sense for us and many more of our generation to tie ourselves to such and expensive geographic an…

You can rent out that investment if you move. Paying rent is also expensive where home prices are expensive.

A lot of working professionals don't want the hassle of also being landlords, particularly remote landlords. If your tenant has a habitability issue, it's your problem. If they don't pay rent and you have to evict them, it's your problem. If they trash the place, it's your problem.

If you pay a property manager 10% to make it their problem, the economics of paying a mortgage on a home you're no longer living in and renting it out become significantly more questionable - particularly in some place like the Bay Area, where mortgage payments are already often more than you would pay to rent the equivalent dwelling.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#116

Post by ip26 »

com2kid wrote: post #68
bhauer wrote: post #62

Earlier quoted context omitted.

So would I, since wired networking is my jam. But I get the point the GP is making. The pool of potential buyers who would appreciate the value of that additional investment is small and (presumably) only getting smaller with time. Anecdote: I realized how out of the mainstream I was when recently viewing a video produced by a high-profile gamer on Youtube showing off the specifications of his desktop gaming rig via…

Modern 5ghz wireless can fully saturate most home broadband connections, and if a good router is used, the added latency is trivial. If the house isn't already wired for CAT5, wireless makes sense.

It's fine on bandwidth, but I learned for whatever reason it sucks for network filesystems... 15mbps powerline links absolutely kicked the pants off N900 for SMB performance.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#117

Post by nitwit005 »

ams6110 wrote: post #98
gizmo686 wrote: post #71

Earlier quoted context omitted.

How expensive is Ethernet to all rooms? That decision strikes me as a no brainer for any newly built house. Even if no one actually wants Ethernet in all rooms, it guarantees that Ethernet is present in the particular room(s) that the eventual buyer will want it in. And it will still be present in the particular room(s) that the next buyer will want it in. In contrast, if a room is missing Ethernet, it would be far m…

In 5 years, Ethernet outlets in homes will be like telephone outlets are today: a relic of a prior generation. I don't know anyone under age 50 who still has a landline phone. The next generation of home buyers won't know what an Ethernet cable is. Everything will be wireless. Apple doesn't even have Ethernet ports on their laptops anymore.

You need to plug your wifi in somewhere, which means it needs a cable. Many people have multiple wifi devices, which means multiple cables.

And while wifi is pretty good now, people still hit issues and plug in their various TV devices and game consoles.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#118

Post by joking »

CivBase wrote: post #70
gwbas1c wrote: post #49

I just built a home. One thing I noticed: Some builders are really stupid about reading the market and knowing what people are willing to pay. They load homes up with luxury features and then wonder why their homes sit vacant. My builder has a vacant home in my neighborhood. He ran Ethernet to all rooms, and put in other silly features, and just couldn't comprehend why his price was too high.

> He ran Ethernet to all rooms, and put in other silly features Isn't this normal by now? My house is only a few years old but wasn't particularly expensive. When I bought it, it was already wired up with ethernet - I just had to replace the wall plates (they were RJ11 outlets instead of RJ45) and hook up an ethernet switch. From what I've seen of other homes, it appears to be common for electricians to use ethernet…

In my country new built houses must have both Ethernet cat5 and coaxial TV cable run to every room. The wall plate can be rj11 however. The cost at build time is negligible.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#119

Post by nostrademons »

dmichulke wrote: post #113
sokoloff wrote: post #50

Earlier quoted context omitted.

Two reasons: 1. Every idiotic meme about how goods X, Y, and Z have more than doubled in price while [real] wages haven't. I'm torn between thinking the meme creators are completely clueless or epic trolls. 2. There is a substantial linkage between nominal wages and nominal inflation, especially for limited, competitively bid goods (like housing). Looking at median house prices https://fred.stlouisfed.org/series/CSUS…

Mortgage rates in the US have (AFAIK) usually a variable interest rate. That means that it's sufficient for the lower income tiers (relative to the house value) to have a few months of high interest rates (in a time frame of 15-25 years) in order to lose the house. Buying at the current rates is risky, while the risk of rising rates in 1988 was much lower. Factoring that in should change your conclusion.

As of 2017, 90% of mortgages in the U.S. were 30-year fixed. 6% were 15-year fixed. Only 2% were ARMs.

http://www.freddiemac.com/perspectives/sean_becketti/2017041...

People got burned bad by ARMs in the housing crash of 2009 and they still aren't willing to take the risk.

Re: The U.S. Housing Boom Is Coming to an End, Starting in Dallas

#120

Post by adrianmonk »

walrus01 wrote: post #69
neokantian wrote: post #58

I am quite convinced it would be possible to build a pleasantly-looking development of $25,000 sale-value housing at 50 or 70 miles away from the urbanized area and connect it with a fast transit rail to the main urbanization. Empty land should be cheap. Buyers should be plentiful. The reason why this does not happen, is because the bureaucracy prevents it. There seems to be a strong political necessity to make accom…

$25,000 can EASILY be spent, and triple that, just on getting well water, septic and electrical services to a rural property. I could buy 20 acres in Okanogan county WA right now for $18,000 but it'll be at the end of a dirt road, with no sewer, no water, and looking at $30k to extend grid electrical to it (or build a $20k off-grid photovoltaic system). I'm guessing from your comment that you've never actually done t…

Presumably they're talking about a transit-oriented housing subdivision with hundreds of houses all centered around a train station. With that sort of arrangement, you'd have economies of scale on the utility hookups.

But other problems remain, like getting the train service.

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