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The Fed now owns nearly 1/3 of all U.S. mortgages

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Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#251

Post by OldHand2018 »

charlesu wrote: post #228
mrep wrote: post #118

Earlier quoted context omitted.

What data are you looking at? Median home price for Chicago (where I live incidentally) is 229,000, for Dallas is 225,000, for Houston is 197,000 according to this source [0] and those are the 3rd, 4th, and 5th largest metropolitan statistical areas in the United States and Dallas and Houston have both grown a whopping 19% in the past decade [1]. Trick is, they all still have plenty of land to build new homes on to k…

The median home price doesn't mean much in Chicago. Most homes in the desirable neighborhoods are 1BR and 2BR condos and well over $300k or include outrageously high HOAs ($400 - $1K). There are thousands of sub $200k homes in the city but they're located in dangerous under resourced neighborhoods to the south and far west. In either case, you will pay 2% property taxes, which means comes out to $400 a month in prope…

"desirable neighborhoods" in Chicago is code for living in a bubble (should be very firmly noted that this is NOT race-related). Yes, you pay a lot more for that. There are neighborhoods in the city that have lower crime, faster access to downtown, higher median incomes, better-rated schools and lower house prices than many of the "desirable neighborhoods". The Near South Side is an obvious example.

However, you can look at the tax rates within Cook County and even compare them to the suburban counties [1]. The composite property tax rate is as low as it gets around here. Most cities are double or triple the Chicago rate.

It isn't as good of a deal as when I moved here, but if you've got a tech or other white-collar salary, Chicago is still a really good deal. It's your responsibility to consider cost when choosing a location within the metro area. If you ignore it, you shouldn't be surprised that you pay more.

[1] https://www.cookcountyclerk.com/service/tax-extension-and-ra...

EDIT - Illinois and Texas heavily depend on property taxes for local funding. The actual rates you pay have an insanely high variance from city to city. Some taxing districts don't align with city boundaries either, so one neighborhood may pay more than another. You can use it as a proxy for how well-run a city is, but on the other hand Chicago isn't a particularly well-run city - it just has a huge amount of high-value commercial and industrial property (which is taxed at double the rate of residential property). If you're going to live in either state, you really need to look at the hyper-local tax rates and put that into your decision matrix. The data isn't even hard to find.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#252

Post by jointpdf »

wyclif wrote: post #142
jointpdf wrote: post #61

Earlier quoted context omitted.

Housing (and construction) prices have been ballooning out of control everywhere for the last several years. Both major cities (DC, Boston, Portland, Seattle, Chicago, LA, Denver, San Diego) and secondary cities (Boise ID, Grand Rapids MI, many more) are all totally unaffordable. I’ve spent hundreds of hours researching different areas over the last year. Looking at sold homes from just 2-3 years ago, many seem like…

Since you're spent a lot of time researching this: have you ever found a way to correlate 3rd-tier and below cities with fiber internet speeds and infrastructure? Seems like that info would be useful to a lot of people here, who are looking to move to a more rural area but are working tech jobs remote long term or even permanently and need fast internet.

By “research” I really meant “searching, then searching again...and again”, not actual research. Word choice is important in HN comments because you all are too sharp.

I haven’t looked at that, but I have wondered how universal satellite internet coverage and the more permanent (?) move towards remote work will affect rural areas. It is an interesting trend to keep an eye on.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#253

Post by toomuchtodo »

tialaramex wrote: post #173
gbasin wrote: post #146

Earlier quoted context omitted.

Developers can't get FHA loans

That's correct. Developers sell homes. The FHA loan uses government money to allow people who buy homes to pay more money for the same home, this money goes to the developers.

Student loans situation, but for housing instead.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#254

Post by _zalz »

the_gastropod wrote: post #144
ethbr0 wrote: post #115

Earlier quoted context omitted.

It's possible the problem isn't speculation, but the rate of return on capital vs the rate of return on labor. If capital dominates, you're going to run into scenarios where it's fundamentally impossible to ever afford scarce goods that generate returns, because someone who started with more capital will now have an even larger delta with you, and is therefore able to outbid you.

Not all capital generates the same returns. Index funds have virtually no gatekeeper—you can open a brokerage account, toss in $10, and be an honest-to-god capitalist. And stocks tend to outperform real estate by a hefty margin. So catching up is possible.

I honestly don't think "tossing in 10$ to an index fund", i.e literally pocket change, makes anyone a /capitalist/. This is not an argument in good faith relative to the reality of capitalism we live in.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#255

Post by bfrog »

JMTQp8lwXL wrote: post #18

I would be curious to see analysis for what home prices would be with 0 Fed intervention. Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection, that the housing market is some form of a pyramid scheme, where you had to get in early to have a chance.

Maybe, but the fed exit strategy will be inflation not default would be my bet. Defaulting or causing people to default on debt is how we truely get another great depression. Inflating our way out, if controlled, might be ok. Maybe. It'll ruin the dollar as the world reserve though would be my thinking and many others. Not my idea here, just makes sense to me.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#256

Post by IkmoIkmo »

refurb wrote: post #41
scrumbledober wrote: post #34

Earlier quoted context omitted.

well as a 30 year old looking for my first home who grew up in the bay area... yeah that's exactly what I feel.

Not to be snarky or obvious, but you should do what the people in the past did - find a better place to live that allows you to buy a home more easily. That's one of the reasons why there was a big migration to places like LA. Lots of jobs and cheap land to build on. To me, SF is like NYC. Unless you got in early or are one of the 1%, it's not a great place to try and build a life in (if you're looking to own a home)…

> Unless you got in early or are one of the 1%, it's not a great place to try and build a life in

I mean, even if you got in early, you're still locking up lots of wealth in housing, an opportunity cost that could be differently spent.

For example, suppose you bought a place in NY in the 80s for 200k that's now $3m. Sure, you got in early and your mortgage has been paid off and you live without any housing expenses (outside of taxes, hoa etc, let's for the sake of argument ignore those). Let's assume we consider this to be living in 'free housing'.

But the S&P500 does 10% a year on long-term averages. It is still fully up to you to say, I like living in NY so much, that I want to forgo selling my home for $3m, putting it in the stock-market, and earning a passive average $300k a year (which compounds if left (partially) unspent, for example it'd turn into $770k a year after 10 years if not spent).

That $3m property, then, is at times a greater portion of someone's income than their own salary. I know some old people (50-60) who have nice careers, make $150-200k, yet live in a property in which $200-300k of annual investment income is locked-up. In a way, these people are 'spending' $200-300k a year on housing, while an alternative housing choice (e.g. renting a place for $3k somewhere else and selling their home and investing it long-term) would cost maybe $30-40k.

You can argue the details like whether the $3m or 10% stock return is accurate, they're just examples. But the point still stands, even those who got in early and continue choosing to live there, are continuously forgoing a lot of money (which can translate into a very high quality of life elsewhere).

I live in the capital of a EU country and own a home outright. In terms of monthly cashflow, housing is not a big deal as I just pay some taxes. Yet it's starting to weigh more heavily on me whether to stay here, or whether to sell my home, take all that money and enjoy a much higher income/consumption level elsewhere.

I used to really enjoy the city and all that it had to offer, but sometimes I now find myself just working all the time, with barely any energy, time or motivation to make use of it to its fullest.

I don't think enough people consider that you can be so called 'house poor', while owning an expensive home without a mortgage.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#257

Post by jointpdf »

OldHand2018 wrote: post #251
charlesu wrote: post #228

Earlier quoted context omitted.

The median home price doesn't mean much in Chicago. Most homes in the desirable neighborhoods are 1BR and 2BR condos and well over $300k or include outrageously high HOAs ($400 - $1K). There are thousands of sub $200k homes in the city but they're located in dangerous under resourced neighborhoods to the south and far west. In either case, you will pay 2% property taxes, which means comes out to $400 a month in prope…

"desirable neighborhoods" in Chicago is code for living in a bubble (should be very firmly noted that this is NOT race-related). Yes, you pay a lot more for that. There are neighborhoods in the city that have lower crime, faster access to downtown, higher median incomes, better-rated schools and lower house prices than many of the "desirable neighborhoods". The Near South Side is an obvious example. However, you can…

Indeed, my shortlist is Chicago (and maybe Grand Rapids) at this point. I’ve always been in love with Chicago—such a gorgeous city. Housing wise, I’m enchanted by the industrial brick and timber loft condos that there seem to be a lot of for decent prices.

Can you recommend other neighborhoods besides Lakeview/Lincoln Park? Those are the only areas I’ve spent significant time in aside from downtown.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#258

Post by PretzelFisch »

daed wrote: post #244
gwd wrote: post #214

Earlier quoted context omitted.

I think you've got it backwards. If new cars all cost $200k, would you buy one as an investment? No -- you'd either not buy one (unprivileged) or buy one anyway realizing it's a cost (privileged). I might spend $100k on a house that I was going to live in for 20-30 years, even if I knew that at the end of that time it was going to be worthless. But I certainly wouldn't spend $500k+ on a house unless I knew I'd be abl…

What if the cost of the monthly interest on your mortgage for that $500k house was less than your rent?

then you may not be factoring in your total piti. the mortgage payment is a part of total cost of ownership.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#259

Post by jointpdf »

jdhn wrote: post #143
jointpdf wrote: post #61

Earlier quoted context omitted.

Housing (and construction) prices have been ballooning out of control everywhere for the last several years. Both major cities (DC, Boston, Portland, Seattle, Chicago, LA, Denver, San Diego) and secondary cities (Boise ID, Grand Rapids MI, many more) are all totally unaffordable. I’ve spent hundreds of hours researching different areas over the last year. Looking at sold homes from just 2-3 years ago, many seem like…

>secondary cities (Grand Rapids MI) Grand Rapids? Unaffordable? Are you looking at condos downtown? Here's[0] a 3bd/2br with 1800 sq ft that admittedly is outside of downtown a bit, but is under $1000 a month. This condo [1] is more expensive, but would be totally affordable if 2 people were able to pay $1250 in rent by themselves. Both of these were on the first page of Trulia results when I searched for Grand Rapid…

A condo in GR is a possibility for sure, though you have to admit the market there has gotten ridiculous in recent years. Most of the decent houses near downtown get multiple offers instantly (same in Kalamazoo).

Is $1250/mo a realistic amount to charge a roommate in GR?

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#260

Post by OCASM »

sokoloff wrote: post #128
paulgb wrote: post #99

Earlier quoted context omitted.

I'm surprised #1 isn't proposed more. It's not really even that radical when you consider that the Overton window now includes completely eliminating student debt.

If you want to offer student loans to people with low incomes (as almost all students are and many of their families also are), you’re not going to be able to offer loans with traditional finance-based underwriting standards. If someone can only qualify for a pre-paid credit card or payday loan, is a lender going to step up and offer $100K+ in education loans? I don’t want higher education open primarily to the alrea…

There are alternative, cheaper, forms of education. There's nothing wrong with somebody having to pay more for a better quality product or service. Using government to game the system just makes things worse for everyone (government debt, inflated prices, worthless degrees and indenture servants).
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