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House prices surpass housing-bubble peak on price-to-rent ratio

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Re: House prices surpass housing-bubble peak on price-to-rent ratio

#31

Post by question000 »

There are a lot of people vaguely guessing around at what the "real value" of a home is. In a world where you need shelter to produce income the value of a house is essentially all your income over the entire span of your life. So really arguments that houses are "overvalued" are ridiculous to me, houses have never decreased in value historically, why would they do so now? I am fully expecting single family residential properties to reach 7 and 8 figures in my lifetime. Why wouldn't they continue the track of the last 100 years?

No, increasing the supply will do nothing, speculators already own most of the available real estate so that will only drive the prices up further. Look at the number of single family home that are being bought and immediately rented out, in new construction the renters far outnumber the owners.

Until speculation is banned or the government locks in reasonable prices, prices will continue to rise in perpetuity.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#32

Post by cletus »

ghaff wrote: post #29
MobileVet wrote: post #26

Clearly there are a lot of variables including interest rates, desire for better space due to Covid lockdowns and more recently FOMO. One thing that should not be overlooked is the basic economics of supply and demand. Right now the supply is extremely low compared to much of our historical data. This at the same time as demand has been red hot (due mostly to Covid). Check out the data below, especially over the last…

Rental cars seem to be a mess. I know at least one person who canceled a trip because they couldn't get a rental car. And I reserved one for a trip at the end of September "just in case" and the price seemed significantly higher than normal.

Rental car prices are extremely high. That’s not your imagination. This is a result of car rental companies selling a third of their fleet last year to survive so supply is way down and demand came roaring back.

Tip: hire a UHaul instead. Much cheaper.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#33

Post by ghaff »

question000 wrote: post #31

There are a lot of people vaguely guessing around at what the "real value" of a home is. In a world where you need shelter to produce income the value of a house is essentially all your income over the entire span of your life. So really arguments that houses are "overvalued" are ridiculous to me, houses have never decreased in value historically, why would they do so now? I am fully expecting single family residenti…

>Look at the number of single family home that are being bought and immediately rented out, in new construction the renters far outnumber the owners.

I'm not sure I see the problem. People are living in the property one way or the other. It's not like there is some infinite pool of renters not living someplace who will absorb any supply.

What would be (and is in some places) a problem is if speculators/people parking cash bought property and let it sit empty.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#34

Post by vinw »

question000 wrote: post #31

There are a lot of people vaguely guessing around at what the "real value" of a home is. In a world where you need shelter to produce income the value of a house is essentially all your income over the entire span of your life. So really arguments that houses are "overvalued" are ridiculous to me, houses have never decreased in value historically, why would they do so now? I am fully expecting single family residenti…

> houses have never decreased in value historically

Never?

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#35

Post by akudha »

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not against people making money and getting rich, but it would be nice if it wasn’t so easy to buy up multiple properties simply because they have the cash.

There should be all kinds of incentives for first time home buyers. But it should be made very expensive/very painful from second home onwards. I don’t care that I can’t afford a luxury car or overpay for Google stock. But it annoys me to no end that the so called “investors” (not just rental companies but small time landlords too) buy properties with the sole aim of jacking up the rent and pushing first time buyers out.

Housing is not a luxury, it is a basic human need. People can own a hundred Ferraris for all I care, but there should be some sane policy on letting individuals and companies own entire neighborhoods and blocks.

Along the same lines, Bill Gates owns 242,000 acres of farm land. What for? I don’t know. It is just plain ugly to let someone own huge lands, water supplies (there are companies buying up large water sources) etc. This amount of monopoly on basic human needs is just bad.

I know this is an unpopular opinion here, as many HN readers see real estate as a way to get rich and likely own rental properties themselves. But across the world, in many urban areas, there is severe housing shortage (artificial in most cases, and houses sit empty because “investors”, see Canadian cities for example).

On top of all this, most cities and towns have extremely unfriendly policies towards tiny houses. That is whole another level of unfairness.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#36

Post by mc32 »

akudha wrote: post #35

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not against people making money and getting rich, but it would be nice if it wasn’t so easy to buy up multiple properties simply because they have the cash. There should be all kinds of incentives for first time home buyers. But it should be made very expensive/very p…

Some of it is to take money out of authoritarian regimes and move it into more rule of law countries. Another reason is a hedge against inflation which we may be beginning to see right now.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#37

Post by TimPC »

akudha wrote: post #35

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not against people making money and getting rich, but it would be nice if it wasn’t so easy to buy up multiple properties simply because they have the cash. There should be all kinds of incentives for first time home buyers. But it should be made very expensive/very p…

If only there was a law that allowed you to deduct a significant amount of mortgage interest from taxes on a home but not on other property....

Oh wait...

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#38

Post by jhallenworld »

akudha wrote: post #35

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not against people making money and getting rich, but it would be nice if it wasn’t so easy to buy up multiple properties simply because they have the cash. There should be all kinds of incentives for first time home buyers. But it should be made very expensive/very p…

It could be that the rich are getting into real estate as a hedge against inflation, even if there is no income. But rental income is really nice... the most extreme version of this is the Duchy of Cornwall, earning rent since the 1300s (currently $21M) for the Prince of Wales:

https://www.princeofwales.gov.uk/features/duchy-cornwall

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#39

Post by texaswhizzle »

This measure of value is no longer relevant. Short term rentals are the lucrative market segment now. Long term tenants provide stability, but much lower upside.

There are other factors at play.

Bonus depreciation rules from the tax cut and jobs act. Real estate investors can depreciate 100% of an investment within the first year until 2022.

Low interest rates. Borrow money cheaply now and secure cash flow later.

Interest only financing. Financing schemes that allow investors maximum leverage. More leverage means more buying.

All together the current market is tilted heavily toward real estate investors. Unless the tax law changes, I wouldn’t expect things to fundamentally change until 2025.

Re: House prices surpass housing-bubble peak on price-to-rent ratio

#40

Post by pjc50 »

hellbannedguy wrote: post #25
bko wrote: post #7

Earlier quoted context omitted.

> Low interest rates don't make people offer 150k over asking while waiving all contingencies Paying above offer always struck me as strange. In my housing market its very common as well, to the point I believe under-pricing the home is intentional. There's no reason the home should be priced considerably below the market price. Sometimes you get it wrong but homes consistently selling above ask tells you the sellers…

The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. You don't need to be a citizen of this country in order to buy our land? Just money, and a email will buy a house. The federal government could stop some of the insanity of buying a home, if they just made it a bit harder for foreigners to buy our land? Isn't the federal governments purpose to put Americans first?

Almost all countries allow foreign nationals (or their local subsidiary businesses) to buy land. The only change in recent years is that more ID checks are performed to reduce the extent this gets used for money laundering.

You could campaign to change that, but since it goes strongly against the free market and countries like money it's unlikely to go anywhere.

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