A Growing Problem in Real Estate: Too Many Too Big Houses • Hacker News Board

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

#361

Post by SketchySeaBeast » Thu, Jun 20, 2019, 9:31 PM UTC

scarface74 wrote: post #183

nostrademons wrote: post #177

Earlier quoted context omitted.

> 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…

> 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.

Hopefully wage growth keeps up with inflation then.

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

#362

Post by marssaxman » Thu, Jun 20, 2019, 9:33 PM UTC

dmitrybrant wrote: post #327

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 think the point here is "to each their own", and there shouldn't be such a thing as "the" American dream, or rather that the American dream is for every person to live their life exactly as they want. My wife and I would not give up owning our house for anything, and would never go back to renting. I pride myself in being able to make minor repairs to all kinds of things around the house, and seeing them as fun eng…

> I really value peace and quiet, and true peace and quiet can only be achieved in a detached house

Irony: one of the few reasons I continue to put up with the hassle of homeownership is that it affords me the freedom to play music as loud as I like, as late at night as I please, without irritating my neighbors.

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

#363

Post by nowarranty » Thu, Jun 20, 2019, 9:34 PM UTC

cglace wrote: post #146

roasm wrote: post #128

Earlier quoted context omitted.

This seems like a great area for disruption. You can imagine a property manager for a homeowner who you call for anything. They can charge a monthly fee plus a percentage on top of any (vetted) subs they use. A single person can probably juggle dozens to hundreds of homes; then scale that. It's the services of a rental property manager without the rental part. With adults these days (me included) being more technical…

You can get a home warranty that will cover a lot of the systems in your home.

As someone who has been through the pain of using a home warranty I highly recommend against it. When we had one we found one of 2 things always happened:

1. Whatever broke wasn't covered by the warranty. For example on a fridge, the most common component to break is the compressor, and that's not covered by a home warranty because it costs just slightly less than the cost of a refrigerator to repair. 2. The warranty company gets to choose who fixes your problem and they choose the lowest bidder, which is almost always a person who doesn't have better work to do because they aren't very good. Every single time I've used a home warranty, I had to have someone come back and re-do the work because it was so shoddy.

YMMV, but I've heard similar stories from others who have used them. I now consider a home warranty to be a negative rather than a positive because I've had to pay another person to come in and fix something correctly that was done improperly by a home warranty repair person.

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

#364

Post by mcguire » Thu, Jun 20, 2019, 9:38 PM UTC

treis wrote: post #302

mcguire wrote: post #290

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.

What it put a dent in was the expectation that real estate prices only went in one direction. (Of course, the popping of several previous real estate bubbles should have dented that before 2008, but....)

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

#365

Post by nowarranty » Thu, Jun 20, 2019, 9:39 PM UTC

mensetmanusman wrote: post #275

rdiddly wrote: post #268

On one of my harder-hearted days I would've felt schadenfreude (rich assholes waste obscene amounts of money on tacky shit, get burned, film at 11), but today I feel sorry for them. The whole thing is just sad. On the macro level, such a tragic mis-deployment of resources. And on the micro level, misplacing one's priorities on material things and finding out the hard way that it doesn't bring any meaning to your life…

Maybe someone could disrupt the ownership model here and invite a number of families to move in together?

This is already being done. I read an article about it a few months ago. It's like living in a dorm. There's a shared kitchen and bathroom, but you have a private bedroom. I don't remember the term for it. ("Shared Living" seems to be about people with disabilities, but it was a name similar to that.)

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

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Post by FearNotDaniel » Thu, Jun 20, 2019, 9:52 PM UTC

pram wrote: post #280

module0000 wrote: post #277

Earlier quoted context omitted.

> Everybody follows each other in a grand parade to oblivion. You sir, are a genius. I love that wording. That should have been on the welcome brochure we all get as babies, assuming we could read it.

I mean, that’s a pretty common theme in the Bible: As one dies, so dies the other—they all have the same breath. Man has no advantage over the animals, since everything is futile. All go to one place: All come from dust, and all return to dust.

> I mean, that’s a pretty common theme in the Bible

Actually, it isn't. The book of Ecclesiastes, which you quoted, goes very much against the grain of the rest of the Bible, which generally tends more towards the idea that man is distinct from the animals, and does have a higher purpose, which is to serve God. Ask any Bible-thumping evangelical and they will be very quick to tell you that all do not go to one place, because their whole raison d'etre is to persuade you that if you don't follow exactly whatever particular flavour of Christianity they are pushing, then you will end up going to a very bad place indeed whereas they, of course are already assured of their entry into a not-so-bad place for all eternity. They will also tell you that the Bible never contradicts itself. I leave you to draw your own conclusions.

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

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Post by brightball » Thu, Jun 20, 2019, 9:57 PM UTC

rifung wrote: post #250

brightball wrote: post #231

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…

If you run the numbers and assume that whatever you’re putting into the mortgage will be invested instead once it’s paid off, the house catches up over time.

Of course, this is varies a bit depending on the numbers involved.

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

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Post by secabeen » Thu, Jun 20, 2019, 9:58 PM UTC

thorwasdfasdf wrote: post #328

bonniemuffin wrote: post #307

Earlier quoted context omitted.

+1, my annual SF earthquake insurance premium is 0.06% of the appraised value of the house. It's not even worth mentioning in adding up the total cost of ownership.

are you sure? That's almost 5-10 times cheaper than the averages posted, above.

It's also not clear if any of these numbers are %ages of the total property value, land + house, or just house rebuilding costs (which are often over $400/sqft in California after a disaster).

My worry with CEA is in "the big one", will they have enough money? They have $17 billion in assets, which is theoretically enough. However, the Northridge quake caused over $10 billion in damage, and the 1906 earthquake was over $8 billion in todays dollars. (Although I question that number too. 500 city blocks were destroyed in 1906. Would it only take $8 billion to rebuild 500 SF city blocks?)

If we see a major San Andreas quake that devastates LA, the CEA could run out of money.

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

#369

Post by jtolmar » Thu, Jun 20, 2019, 10:00 PM UTC

Balgair wrote: post #352

rdiddly wrote: post #268

On one of my harder-hearted days I would've felt schadenfreude (rich assholes waste obscene amounts of money on tacky shit, get burned, film at 11), but today I feel sorry for them. The whole thing is just sad. On the macro level, such a tragic mis-deployment of resources. And on the micro level, misplacing one's priorities on material things and finding out the hard way that it doesn't bring any meaning to your life…

With the lack of 'wealth' that many Millenials are experiencing, it's not only real estate that is going to be affected. Stocks and other areas are also going to feel the effects. Strangely, it's not a lack of supply that will be the issue here, it's a lack of buyers. Millenials just don't have the cash to pay the Boomers for the houses and stocks they accumulated and the Banks can only buy and sell the properties to…

Concentration of wealth won't cause a lack of buyers for stocks. The wealth is still there, the very wealthy will just buy more stock. The value of a stock stacks in a way that the value of additional giant houses doesn't.

(Being able to buy ownership of a business, via stock or other means, is why wealth is concentrating in the first place.)

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

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Post by lazyjones » Thu, Jun 20, 2019, 10:02 PM UTC

rdiddly wrote: post #268

On one of my harder-hearted days I would've felt schadenfreude (rich assholes waste obscene amounts of money on tacky shit, get burned, film at 11), but today I feel sorry for them. The whole thing is just sad. On the macro level, such a tragic mis-deployment of resources. And on the micro level, misplacing one's priorities on material things and finding out the hard way that it doesn't bring any meaning to your life…

Not going to analyze your apparent state of mind, but: many people find mansions built centuries ago by incredibly wealthy people fascinating, beautiful, desirable. Who cares if they are dead, they left pieces of art. If anything, the lack of taste and craftsmanship is a problem with today’s “McMansions”, not their size or depressed Millennials’ lack of imagination.