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A Growing Problem in Real Estate: Too Many Too Big Houses

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Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#181

Post by pnutjam »

camelNotation wrote: post #79
Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

What about the headache of maintaining a big home? I've seen what it is like to care for a large home. It's a nightmare, whether you have money or not. Every pool, every gymnasium, every commercial-grade appliance, etc. They all require maintenance, repair, and eventual replacement. To do that, it costs a lot more and the available labor is much more limited. You have to wait weeks for some guy who lives two states a…

Why maintain it when you can pack it with junk.

(what I've seen way too often)

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#182

Post by mulmen »

baron_harkonnen wrote: post #172
hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

I've gone the full cycle from renting -> own -> renting, and I can tell you that you're forgetting about a lot of the limitations that come with renting. There are a huge number of things that are out of your control and hobbies you simply can't have. Especially if you want to compare apartment to SFH. You can't paint the walls, keep a bicycle outside, grow plants you want, have any loud hobbies, BBQ, even keep your…

I can paint the walls in my apartment and we have several free BBQs as well as ample event and leisure space. I also live within walking distance of all the shops and restaurants I could want. And I have easy access to public transportation.

Leaving my boots out isn’t worth half a million dollars and my spare time. I’m not muddy often enough to even consider where I leave my footwear. I worked in agriculture during college. It was literally never an issue.

My bicycle is in a secure storage room near my car and motorcycle. A security guard checks on them regularly, even when I am out of the country.

I have hobbies that I pursue outside my apartment. I even rent a garage with a friend for one of those hobbies.

Why does home ownership have to be made easy for most people? From where I’m sitting home ownership and “the American Dream” appear to be incredibly wasteful and not particularly appealing.

There’s a long list of things I would rather do than home improvements, regardless of how easy those improvements are.

Can’t we all just make the decisions that are best for ourselves?

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#183

Post by scarface74 »

nostrademons wrote: post #177
scarface74 wrote: post #121

Earlier quoted context omitted.

Yes and no. I don’t consider a home an investment in the traditional sense. I do consider a paid off house to be worth the amount of money that I would have to save to have a safe rate of return to live somewhere minus maintenance and property taxes. If a paid off house will save me $12000 a year. The value of that house to me is $12000/.04 Also, a house is a great inflation hedge. Rent goes up with the market. The m…

> Also, a house is a great inflation hedge. Rent goes up with the market. The mortgage stays the same. Property taxes and insurance can go up. It's actually even better than that: if inflation goes up, you pay back the mortgage with cheaper dollars than you bought it with. If you're expecting higher inflation in the future (and it hasn't yet been priced into interest rates) a house is a great purchase. The flip side…

But you have to live somewhere. The eviction process is a lot faster than the foreclosure process. A landlord is incentivize to evict you as fast as possible. The bank does not want your house - especially during a recession where the value is dropping and then they become responsible for insurance and upkeep.

Anecdotally when my parents bought their house in 1978, the $600 a month they were paying on their mortgage was a slight stretch. When they were in their last year in 2008, that amount was laughably small.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#184

Post by Dumblydorr »

tomatocracy wrote: post #42
imgabe wrote: post #29

Why is this a problem? Some very rich people become a little bit less rich. None of them seem to be in danger of falling into penury over only getting $1M for their house instead of $2M. Sounds like the supply and demand working the way they're supposed to.

At a macro level and over the long term, even if prices fall and this means that slightly less rich people can buy them instead, big houses are more expensive and more work to look after and maintain and there is a limit to the number of people willing and able to do that. The ultimate end result could be that some of these houses become derelict, which isn’t really good for anyone. This is what happened to a good nu…

Exactly, these are brick and mortar resources and skilled labor being poured into personal assets, not into infrastructure or affordable housing or charitable causes. If all these mega homes or mega expenditures of any kind were instead more usefully applied, capitalism would feel a much friendlier and just system.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#185

Post by quasse »

LarryDarrell wrote: post #108
maxsilver wrote: post #98

Earlier quoted context omitted.

I also hate maintaining a detached single family home with a yard. I also hate being responsible for the fixes. But that situation is still far better than renting. When we rented, we were subjected to eviction at any time, for nearly any reason, for basically no notice (60 days, which in the US is effectively zero notice). Your subjected to every whim the crazy wildly-irrational housing market throws at you (we've h…

The thing I've noticed is that in my area all the modest neighborhoods (2 bed, 1 bath, sub $200k) are being bought up by landlords. This leads to a neighborhood of renters, which is a lot different than a neighborhood of owners. The Havers can buy a lot more houses than the Have-Nots and I'm left wondering what the price of single family homes would be if renting them was illegal and they were all placed on the marke…

This is something I think about as well. In my Midwestern city, some neighborhoods seem to be 60%+ landlord owned and always increasing. For every home sale to a young couple or first time owner it seems like another house is purchased in cash by some mid-size wanna-be property baron or a mega real estate conglomerate that already owns 200+ homes in the city.

It definitely feels like we're moving towards a system of feudal property barons extracting rent from people who are quickly being priced out of the means to own their own home.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#186

Post by munificent »

pdpi wrote: post #134
pjc50 wrote: post #5

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-sta... and yo…

For the families in the story, the problem is they can't get rid of homes that are uncomfortably big. Definitely a 1%-ish problem (hell, a .1% problem. I would have plenty of use for more space but I simply can't afford it in London). However, there's another problem here, one for the rest of us — The site used for a single-family 700sqm home could've been used for something denser, that would've lowered housing cost…

> However, there's another problem here, one for the rest of us — The site used for a single-family 700sqm home could've been used for something denser, that would've lowered housing costs for everybody else.

That's not really relevant in this case. All of the neighborhoods mentioned are low density distant suburbia. There are few jobs nearby and little incentive for growth there for working people. Housing costs are already pretty low for normal-sized houses in this area.

The US is huge and most of it has very low density. Unfortunately, with the transition to a service economy, automated agriculture, and the outsourcing of most manufacturing, fewer and fewer jobs exist outside of urban centers.

So you get insane housing costs in the increasingly few areas where there are lots of jobs, meanwhile other areas just languish. For the price I paid for my small Cape Cod house here in Seattle, in the small town I grew up in, I could buy a 4,500 square foot 5 bedroom / 5 bathroom mansion on a lake with a pool, two kitchens, study, game room, theater, etc. I just couldn't find a job there that would let me afford it.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#187

Post by quasse »

koverda wrote: post #122
igetspam wrote: post #87

Earlier quoted context omitted.

I like your style! So much making could be done. I'm in a ~4000sqft home right now and all I really want is a workshop with and office. I'd downsize to almost nothing if I could detach from the house and do stuff and thing.

How do you not have space for a workshop and an office in 4000 sqft?

Well you can't expect someone to displace the third dining room with a workshop can you?

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#188

Post by pnutjam »

moomin wrote: post #24
eertami wrote: post #7

Earlier quoted context omitted.

Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need…

It’s not so much a fetish for home ownership as a reflection of bad incentives. Renters have few rights and embarrassingly owning a home is often actually cheaper even in ridiculously valuable areas.

True, in Indiana; renters only recourse when the landlord refuses to maintain a property, is to move out. They also have to justify it to the judge or live with a black mark on their credit. This, like an eviction, will make renting almost impossible in the future.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#189

Post by newsoul2019 »

stale2002 wrote: post #156
newsoul2019 wrote: post #139

Earlier quoted context omitted.

Am I the only one who has always seen renting as a temporary arrangement only? If you don't own something, somewhere, doesn't that mean the same as being homeless? Not trying to offend anyone. Genuinely wondering, are there people who really don't want to own real estate ever in their lives?

No? It give me freedom to rent. At any point that I feel like it, I can pick up and move. Whether it is to a place across the street or on the other side of the country. I wouldn't have nearly that much freedom if I had the misfortune of owning my own place.

Do you see this as a temporary or permanent situation in your life? What is your "end game" so to speak?

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#190

Post by SwellJoe »

Several of my younger friends live in cooperative housing, where they rent a big house, and individually rent out the rooms. Sometimes as many as 8 or 10 people live in a "single family" home. This seems like a great solution for all parties involved (including cities with very high rents), until you learn that the cities they're in often consider this an illegal use of the property and will force their landlord to evict them on short notice if neighbors complain. And, because it's technically an "illegal" living situation, they don't get a lot of the same protections they'd get if they were "legal" tenants. So, leases are kinda meaningless, if the landlord can evict at any time.

It's a sort of housing insecurity that makes their lives a lot more stressful than anyone should have to deal with, and it gives landlords a dangerous amount of leverage over tenants (they charge more, knowing it's being used by multiple tenants, but they'll claim lack of knowledge when the neighbors complain and the city comes knocking). And, of course, they'll ignore the lease if they get a buy offer that they don't want to say no to.

Cities, especially those experiencing dramatic rent increases and that have a history of only allowing single-family homes in much of their livable land (as most US cities do), need to remove zoning impediments to multi-family housing. There was a project published a couple days ago to map the zoning in a bunch of major cities, and it's eye-opening how tiny the available space for multi-family dwellings is in a lot of them, and it makes it make sense that there is a housing crisis in a lot of major cities. Maps are here: https://www.nytimes.com/interactive/2019/06/18/upshot/cities...

Of course, that won't solve the too-big-too-far houses. The other problem with a lot of McMansions is that they were built in the middle of nowhere. Younger people want shorter commutes, the ability to bike or take mass transit, a neighborhood with shopping in walking distance, etc. People have figured out that quality of life in cities is just plain better than suburban life.

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