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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

#131

Post by Gibbon1 »

bko wrote: post #130
Gibbon1 wrote: post #106

Earlier quoted context omitted.

The government responded to the crisis with fiscal austerity and massive levels of QE. If you wanted to enrich the FIRE sector and screw working class people that would be exactly how to do it. If you look at inflation by sector instead of focusing on nominal and ignoring everything else, you find asset bubbles on stocks, bonds, and real estate, no wage growth and low rates of nominal inflation.

Austerity: difficult economic conditions created by government measures to reduce public expenditure. > Federal Spending was increasing modestly, year on year, in the mid 2000s. But it jumped by $700 billion a year in the Great Recession to bail out the banks and provide “stimulus.” Since the recession federal spending held steady at about $3.6 trillion per year for a few years, before resuming growth in 2015. Viewed…

Combine the Federal Governments fiscal stimulus with state an local austerity and they balance each other out.

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

#132

Post by telotortium »

DubiousPusher wrote: post #84
walrus01 wrote: post #57

Earlier quoted context omitted.

Ethernet to all rooms is really cheap, like one box of cat5e ($85), some $3 faceplates and $1.50 keystone jacks from monoprice. Assuming he did the typical builder thing of putting a steel box in the wall between two studs somewhere. Plus cost of low voltage installer labor to staple it to wood before the drywall is done, and maybe a $20 patch panel in the in-wall box. And a $9 punchdown tool. I've seen this done by…

Most construction materials are cheap. Especially at contractor rates. Labor is the expensive part. If you're a contractor you've got to have an hourly rate that covers your business expenses and pays you well. If it takes even just 20 hours of work to run all the Ethernet that's probably about $1500 added to the top line. Added a dozen features like that to a home and you're at $15,000-$20,000 higher asking price to…

20 hours for just Ethernet? That doesn't pass the sniff test. It seems like something that would be done concurrently with wiring the house, certainly with wiring coax. Even wiring an entire house should take a few hours at most when drywall isn't installed yet.

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

#133

Post by bko »

Gibbon1 wrote: post #131
bko wrote: post #130

Earlier quoted context omitted.

Austerity: difficult economic conditions created by government measures to reduce public expenditure. > Federal Spending was increasing modestly, year on year, in the mid 2000s. But it jumped by $700 billion a year in the Great Recession to bail out the banks and provide “stimulus.” Since the recession federal spending held steady at about $3.6 trillion per year for a few years, before resuming growth in 2015. Viewed…

Combine the Federal Governments fiscal stimulus with state an local austerity and they balance each other out.

> Total US Government Spending, federal, state and local, was increasing briskly, year on year, in the mid 2000s from $4.4 trillion in 2005 to $6 trillion in the depths of the Great Recession in 2009. For several years after the end of the recession total government spending leveled out at $6 trillion. But in 2015 spending started to increase again. per year. Viewed from a GDP perspective, total government spending was steady at about 33 percent GDP in the mid 2000s and then jumped, in the Great Recession, to 41 percent GDP. But in the subsequent economic recovery total government spending has steadily declined as a percent of GDP down to about 34 percent GDP in 2015.

Maybe, but there was no austerity. There was a freeze in total spending in absolute terms and inflation was practically zero so real terms as well. The years prior to the crisis spending grew in absolute terms as th economy grew so spending stayed at the elevated rate

https://www.usgovernmentspending.com/total_spending_chart

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

#135

Post by TheCoelacanth »

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…

Assuming a below average construction cost of $100 per square foot, $25k would let you build 250 square feet of housing. Not many people would be happy with that amount of space, and that doesn't leave any money for land acquisition, constructing any of the other infrastructure needed to support the house, or constructing the rail transportation.

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

#136

Post by NTDF9 »

jameslk wrote: post #105
gowld wrote: post #75

Earlier quoted context omitted.

Of course it's been predicted. Economists have predicted 9 of the last 7 recessions. But besides that, the Fed doing exactly what is was chartered to do and constantly issues press releases about is not a shocking revelation of hetereodox economics.

The Fed isn't doing exactly what it was chartered to do--it has had a dual mandate since 1977 that complicates its purpose. Regardless, the problem in this system seems more attributable to fractional reserve banking, which is force multiplier on the effects of central banks.

I believe the Fed's mandate is wrongly placed. The Fed should only be responsible for money supply, not for full employment.

Full employment should be a burden taken on by elected representatives in congress or the executive.

The dual mandate asks a fish to make sure the boat flies.

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

#137

Post by aedron »

sokoloff wrote: post #112
Latteland wrote: post #99

Earlier quoted context omitted.

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...

Cheap borrowing drives up prices of goods. This is true in housing and it is true in education.

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

#138

Post by sokoloff »

nostrademons wrote: post #119
dmichulke wrote: post #113

Earlier quoted context omitted.

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.

Thanks for bringing data into the discussion!

("Yes and") There's also very little rate benefit to adjustable mortgages right now, so it's quite sensible to take a fixed rate mortgage. When I bought my first house (in 1996), I recall that fixed rate mortgages were several points higher than adjustable rate mortgages during their fixed portion. In cases like that, it made for an actual decision.

With both fixed rates and ARMs having roughly the same initial rates, there's little reason to choose adjustable.

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

#139

Post by jeffbax »

Gibbon1 wrote: post #131
bko wrote: post #130

Earlier quoted context omitted.

Austerity: difficult economic conditions created by government measures to reduce public expenditure. > Federal Spending was increasing modestly, year on year, in the mid 2000s. But it jumped by $700 billion a year in the Great Recession to bail out the banks and provide “stimulus.” Since the recession federal spending held steady at about $3.6 trillion per year for a few years, before resuming growth in 2015. Viewed…

Combine the Federal Governments fiscal stimulus with state an local austerity and they balance each other out.

State budgets are utterly imploding under public debt obligations. To claim there was austerity in the US is comical. The lack of meaningful budget tightening now is going to cause actual austerity eventually though.

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

#140

Post by yardie »

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.

> Ethernet to all rooms, and put in other silly features

I feel wired ethernet is essential. 2.4GHz is saturated and 5.8GHz has trouble penetrating certain rooms. I'm lucky that my 10yo condo has Cat5 wiring to telephone jacks in each room. Rather than an expensive wire run I just punch in new jacks.

What boggles my mind is poorly designed designer kitchens, bathrooms, and closets. Like adding granite countertops and a built in espresso maker suddenly means luxury. Our old apartment has less square footage yet felt 2x as large.

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