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If you sell a house these days, the buyer might be a pension fund

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Re: If you sell a house these days, the buyer might be a pension fund

#831

Post by RHSeeger »

joe_the_user wrote: post #754
bennysomething wrote: post #612

Earlier quoted context omitted.

They know that the current government planning regulations mean that getting anything built is extremely difficult. They know that due to supply and demand that this makes property a wise investment. Blame planning regulations. I read recently that Japan and new Zealand scrapped various regulations and this led to stabilization / lower of property prices. Near me, someone is sticking up protest letters at bus stops c…

A neighbor was complaining just the other day about a developer want to build two houses on a sliver of land in our small historic town. I've got no reason to support this. There's space to build an apartment building near me but no one want to do that (a building, in fact, burned down a while back and hasn't been rebuilt). Neighbors want no development. Developers want to build more of the ubber expensive houses the…

Of course, those regulations to support dense housing need to be supported by other things; like money for streets, sewer, water, etc. If the town's streets are already crowded with traffic and it's sewer system can barely keep up, then building dense housing it going to destroy the town. And for a town that is already "in place", adding a bigger sewer system is hard. Widening streets is even more difficult because you'd need to buy up the land that the current builds are on. It's not as simple a solution as "build dense housing" makes it sound.

Re: If you sell a house these days, the buyer might be a pension fund

#832

Post by pempem »

ChrisMarshallNY wrote: post #711
tootie wrote: post #401

Earlier quoted context omitted.

That has been very common for the last 30 years and AFAIK hasn't slowed down.

30 years? That seems like a long time for China. Maybe the Japanese and/or Koreans?

30 years ago was only the 1990s, its on track.

Re: If you sell a house these days, the buyer might be a pension fund

#833

Post by xapata »

ItsMonkk wrote: post #243
xapata wrote: post #51

Earlier quoted context omitted.

> Its only the most expensive thing in most people's lives that has doubled in cost in about 10 years. Most people pay for housing by monthly payments, making the nominal value of the house irrelevant if the monthly payment stays the same. Further, you should consider the home owner's "basket of goods" to include the hypothetical rent they'd be paying for an equivalent house. Their mortgage payments and home ownershi…

Here's why this matters to you. When the Fed funds rate is at 10%, the mortgage rate is 13% or so. That says that the risk that you have is 3% above the risk free rate. When the Fed funds rate is 0%, your mortgage rate is 3%, that same difference in the Fed Funds rate. But wait, think of that like we think of absorption. If I have a capacity to absorb of 1L and can absorb 50% of a liquid, then I will break when 2L is…

> ... that same difference in the Fed Funds rate.

The differential between mortgage rates and the federal funds rate is only driven in part by regulation. The rest is market forces and the perceived risk of rising inflation. If we had certainty on how inflation would change for the next 30 years, mortgage rates could be pushed to a negligible margin above the federal funds rate.

> If you want the government to control every decision regarding money in the future, you want the interest rate to be as low as possible. If you want people to use free markets to decide where money flows, you want high interest rates.

You haven't explained this assertion. I see it a different way. If we want consumer demand to decide how capital is invested, then we want more inflation. Inflation transfers wealth from creditors to debtors. Debtors spend their money, which indicates what's useful to produce. If we want a handful of bankers to make guesses (and often guess incorrectly) about what people will want to buy, then we want low inflation, transferring wealth from debtors to creditors.

The problem with (excessively) low inflation and supply-side economics in general is that the suppliers must make their choices with a decreasing level of information on what will be demanded. It's only through consumer demand and its pressure on supply that reveals what's important through market forces. Otherwise we may as well go back to central planning.

Note that I'm not advocating for fluctuating inflation. All parties benefit from stable inflation rates. Uncertainty is dead weight loss.

Re: If you sell a house these days, the buyer might be a pension fund

#834

Post by jbay808 »

joe_the_user wrote: post #826
hilbertseries wrote: post #811

Earlier quoted context omitted.

What is this nonsense? Yimbys are support upzoning property, so denser housing can be built. They support removing parking minimums so denser housing can be built.

Most places (where I live, Nevada City, for example) upzoning and reducing parking limits would just create problems. It's the actual central areas where you want to allow much greater density. A denser outlying suburb isn't a win.

Outlying suburbs should see an increase in the sorts of things that make them "places". Cafes, bakeries, bars, restaurants, offices, markets, schools, plazas, bookstores, and so on. Then they can further densify without automatically driving more commute traffic into the city.

Re: If you sell a house these days, the buyer might be a pension fund

#835

Post by rcpt »

erentz wrote: post #775
seanp2k2 wrote: post #170

Earlier quoted context omitted.

I’ve ranted about this before but CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move. Two people can be living in houses next to each other valued around 1.5m, and one of them will be paying 1/10th the tax. If anyone wants to buy a house, they have to first be able to afford the property, so the barriers to entry are so much higher for t…

Prop 13 is so ridiculously unfair and distortionary. I wonder is there a way to legally challenge Prop 13 on the basis that it confers a kind of durational residency benefit (see Shapiro v. Thompson)?

Yes.

https://harvardcrcl.org/wp-content/uploads/sites/10/2018/11/...

Norlidger v. Hahn (worth a read https://www.law.cornell.edu/supct/html/90-1912.ZD.html) didn't make it but also didn't address the Fair Housing Act.

Prop 13, especially the extensions that preserve tax rates through bloodlines, disparately impacts minorities even though that wasn't the explicit intent of the law. Turns out that intent doesn't matter on issues of race so there's legal precedent to overturn the law.

Re: If you sell a house these days, the buyer might be a pension fund

#836

Post by dionidium »

davidw wrote: post #125

Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment. Here's one who comes right out and explains this: > Meanwhile, local opposition to building is so commonplace and the approval process so cumbersome, time consuming, and expensive, even when a proposed project complies entirely with requirements, approv…

This explains why the price per unit is very high, but the land itself is valuable in the first place because there's high demand for it and that land would be even more valuable if it were legal to build more units on it, which would lower the price per unit, but increase the overall value of the investment.

This is what's called a win-win.

Re: If you sell a house these days, the buyer might be a pension fund

#837

Post by srj »

davidw wrote: post #125

Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment. Here's one who comes right out and explains this: > Meanwhile, local opposition to building is so commonplace and the approval process so cumbersome, time consuming, and expensive, even when a proposed project complies entirely with requirements, approv…

Consider that:

- Most American households own their home.

- Homeowners vote at substantially higher rates than renters.

- Home equity is one of the largest components of American wealth (roughly equal with retirement accounts).

Taken together it's difficult to see how home values will be allowed to fall.

Re: If you sell a house these days, the buyer might be a pension fund

#838

Post by deevolution »

cosmojg wrote: post #32

If only so many people didn't treat land and houses like investments, there wouldn't be such a disastrous hoarding problem. Henry George's Land Value Tax [1][2] seems like an obvious economic fix that would require a large fraction of the population to change how they think about land and natural resources, but most of them are invested in such a way (i.e. owning multiple houses on multiple parcels of land, often wit…

Part of why I like bitcoin is because the artifical digital scarcity should in theory reduce pressure from the housing market by attracting speculators to a much more liquid, low maintenance, and secure asset. Just anecdotally, I feel more inclined to invest my money into bitcoin than real estate. I wonder if there are others like me?

Re: If you sell a house these days, the buyer might be a pension fund

#839

Post by debacle »

flyingfences wrote: post #511
debacle wrote: post #190

Earlier quoted context omitted.

If the population is increasing, then land and, to a lesser extent, housing are investments.

If the population is increasing and population density is prevented from increasing then housing is a good investment.

Americans want to live in 2500+ sqft homes with long driveways, no sidewalks, etc. Like it or not, that's the modern American dream.

Re: If you sell a house these days, the buyer might be a pension fund

#840

Post by nathanaldensr »

Justsignedup wrote: post #461
JamesBarney wrote: post #355

Earlier quoted context omitted.

Yes. If you believe that no town homes should be built in the U.S. than you might not qualify as NIMBY. But if you believe that town homes shouldn't be built next to you that's the definition of NIMBY. Of course every instance has a long list of reasons why next to them is especially bad, character of the neighborhood, parking issues, infrastructure, etc.... But the end result of everyone fighting increased density i…

The irony is that density means more people, more homes, more availability. That means more jobs open up and makes the place more lively. More desireable. That means the house property value will go up. They are thinking "will this make the property value go down in the next 5 years"? vs "will this make the property value skyrocket in the next 10 years". We are catering to short-term gains at the expense of long-term…

Not everyone cares about greed-driven financials (houses as "investments") nor wants to live in a "lively" place. I'll take my peace and quiet, thanks...and my stable property values and town size.
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