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

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341–350 of 440 posts

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

#341

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…

It has long been held that home ownership had a large stack of benefits for society over the alternatives.

For example, "Social Benefits of Homeownership and Stable Housing" (https://realtoru.edu/wp-content/uploads/2014/06/Homeownershi...)

"Research has consistently shown the importance of the housing sector on the economy and the long-term social and financial benefits to individual homeowners. The economic benefits of the housing market and homeownership are immense and well-documented. [...] In addition to tangible financial benefits, homeownership brings substantial social benefits for families, communities, and the country as a whole."

(Yeah, I know everyone is going to hate the "NATIONAL ASSOCIATION OF REALTORS" bit. But the citations and such seem reasonable. An older version is at https://www.nar.realtor/sites/default/files/migration_files/...) "Reexamining the Social Benefits of Homeownership after the Housing Crisis" (https://www.jchs.harvard.edu/sites/default/files/hbtl-04.pdf):

"Turning to the policy implications, federal homeownership promotion effects have been at least partially justified by claims that homeownership creates better citizens, results in healthier neighborhoods, and provides a range of other social benefits. Thus, it is important to assess the validity of those claims. This is not to say that other good reasons for supporting homeownership do not exist, only that if homeownership is not generating the claimed social benefits, we should stop using them as a justification.

"The updated literature review presented above does provide support for several social benefits of homeownership. Even after taking self-selection and other confounding factors into account there is considerable evidence that positive homeownership experiences result in greater participation in social and political activities, improved psychological health, positive assessments of neighborhood, and high school and post-secondary school completion. The jury is still out, however, on several other claims including improved physical health, and both the cognitive abilities and positive behaviors of children."

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

#342
post #335
post #302

Earlier quoted context omitted.

Only if you were forced to liquidate before the rebound. Even if you bought at the absolute peak in ~2008 you'd still be way ahead today.

Not if you live in Phoenix[1], Miami[2], Las Vegas[3], Chicago[4] or a host of other US cities. [1] https://fred.stlouisfed.org/series/PHXRNSA [2] https://fred.stlouisfed.org/series/MIXRNSA [3] https://fred.stlouisfed.org/series/LVXRNSA [4] https://fred.stlouisfed.org/series/CHXRCNSA

You're not accounting for equity changes. Even if you lost 20% of your house value you've paid down more of your mortgage than that.

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

#343
post #338

Earlier quoted context omitted.

The way I see it renting will always be more expensive because you have all of the same costs but you add in one other person to pay: the landlord. Maybe the landlord can hire less expensive maintenance staff than you can, but maybe they can't. Is it really that different to have the house plumber come down and fix something vs. hiring a plumber from the yellow pages? The landlord has to pay the mortgage same as you…

The rental market isn't based on what it costs to own a home plus a profit. It's a separate market and can often result in rents that are lower than the monthly cost of ownership.

At which point new rental units cease to be built/bought until rental prices rise to make it profitable again.

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

#344
post #305

Earlier quoted context omitted.

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…

We really need some stronger regulation on renting. I'd like something along the lines of federal rent control. Limit the rent that can be charged to reduce the profitability of buying up house after house. This would be unpopular with the current owners of homes as it would lower property values, but over time they would remain much more stable.

Why federal? The federal government has no authority to do so. Housing is literally, more than any other market, an intra state matter, and the feds cannot regulate intra state trade.

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

#345

Earlier quoted context omitted.

Were you a month to month tenant? If not, why would you sign a lease that lets the landlord break it with 60 days notice? Doesn't that kind of defeat the purpose of having a lease in the first place?

Every lease I've seen has a provision that allows the Landlord to kick you out if you are deemed to be a nuisance. IIRC there are renters rights in many areas that make this more difficult, requiring a court order typically, but not all areas have this and Landlords will put those clauses in the lease regardless just in case the tenants aren't familiar with the law.

I mean, most HOAs will kick you out if you are deemed to be a nuisance, as can a city council.

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

#346
post #250

Earlier quoted context omitted.

I agree and disagree. On the one hand, yes, you're right that the repair expenses can be a big deal. If you don't want anything but the basics for the technology in your home, sometimes a home warranty can be a good option too but experiences vary significantly. On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still p…

> On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer. If you can assume historical returns, renting is a financially superior choice. Well, assuming my math was correct. Both are big assumptions admittedly. The reason is that whe…

Well that is simple, minimize your down payment even if it means taking on PMI as long as your mortgage payment is less than rent then you are better off with the house.

It's not that simple of course, because there are many other concerns like property taxes, insurance, maintenance, renovations/upgrades, furnishings, etc... But the idea that you have to lock away a massive down payment into a non compounding asset isn't necessarily true.

In my calculations I found a home to be slightly more expensive than renting when taking everything into account. But it's a huge lifestyle upgrade for some people, myself included.

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

#347
post #289

Earlier quoted context omitted.

Plus, there are all the benefits of renting an apartment: * If your neighbor decides to throw a party at 2:00 a.m. on a Wednesday, you're automatically invited! * Getting to meet all your neighbor's pets on the 4'x6' area of lawn designated for walking them! * No need to worry about interior decorating; your favorite wall color is always white! (And your favorite exterior color is that weird greenish-beige!) * No nee…

An apartment doesn't have to be a terrible apartment.

But a non-terrible apartment can become a terrible apartment in a surprisingly short time. And by god I hated moving every year or two.

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

#348
post #302

Earlier quoted context omitted.

Well, yeah, except 2008 kinda put a dent in that.

Only if you were forced to liquidate before the rebound. Even if you bought at the absolute peak in ~2008 you'd still be way ahead today.

It depends on the neighborhood and unfortunately the racial and the economic makeup of the neighborhood.

https://www.forbes.com/sites/forbesleadershipforum/2012/12/1...

Anecdotally speaking, I bought a house in a new minority subdivision in 2003 brand new build. The value went up by about $40K by 2008, crashed to $40K less than I bought it, and today it’s still worth $4K less than I bought it in 2003. It’s still a nice neighborhood so it hasn’t gone “downhill”.

Being the numbers oriented, unemotional person that I am, I did a strategic default in 2012 realizing that I could be eligible for an FHA 3.5% down loan in 3 years after the foreclosure, applied and received a loan exactly three years later and had a house built in a new subdivision in a predominantly White neighborhood. The value of the house has gone up $70K in 3 years and a house with basically the same floor plan is being sold for $70K more than mine was 3 years ago. .

And to hopefully stave off some of the expected replies:

- No the world shouldn’t work like that. But to paraphrase Buffett, “the world can stay racist longer than I can stay solvent”.

- No I’m not racist and it’s not that “I don’t want to be around Black people”. I am Black.

- Yes I know “White Flight” is a real phenomenon. But there is also a well studied “tipping point” when that occurs. I don’t see that tipping point happening.

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

#349

Earlier quoted context omitted.

I'm right there beside you - I'm coming on two years of home ownership, and I'm not terribly enjoying it. I love the neighbourhood, but I just don't think I'm cut out for home ownership. I've had more problems in 2 years of home ownership than I had in a decade of renting. It's cost a ton more money. Is it an investment? Possibly, but I've sunk a fair bit into it as well. I now wake up on Saturday mornings with a lis…

I had the same home ownership experience...I kept waiting for it to get better but it just got worse. Really took a toll on my partner and I's mental health. Owned for just shy of 10 years. Been renting for a little over 2 years now after finally getting out of it. Renting has its own pains, but that stuck feeling of home ownership + all the maintenance it entails far eclipses rental annoyances in my opinion.

I never hear anyone discuss that - everyone I ever talk to seem to experience nothing but joy - I'm glad that I'm not crazy for having a less than stellar outlook on the whole endeavour.

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

#350
post #210

Earlier quoted context omitted.

> When you rent, if you secure a 12 month lease, you know exactly how much you’re spending in housing over the next year. Only for exactly 12 months though. After that, your rent could double for all you know, and there’d be nothing you could do. You can move, of course, but now you’ve been forced to upend your life. I live in a rent stablized apartment, and I feel lucky not just because my current price is lower tha…

True, but from my perspective moving is a small, point in time hassle that you go through every couple years as a renter, as opposed to a lifelong stream of issues that you have to deal with as a homeowner.

Oh, I forgot that benefit of renting!

* As my ol' granma used to say, two moves is the same as a fire. New furniture all around!

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