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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#181

Post by klipt »

setr wrote: post #125
mylons wrote: post #113

Earlier quoted context omitted.

a house isn’t a particularly good investment. it’s just the one everyone, in america, makes because they’re financially illiterate. anyone can buy ETFs now with zero commission and zero gate keeping.

It’s money you have to spend (shelter is non-optional), and mortgage is definitely a better investment than renting (you’ll get at least some of it back on selling, unless it dips very far) whereas rent is guaranteed to be burnt. And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle, assuming you can put up the standard up-front capital requirements. As far as I can tell,…

> And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle

That doesn't seem to be true in the Bay Area which has a very high buy/rent ratio because everyone expects housing here to be a great investment. The property tax alone on a townhouse can be higher than the rent on a similar apartment.

And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments.

Re: Will real estate ever be normal again?

#182

Post by mbesto »

jedberg wrote: post #53
mbesto wrote: post #48

Earlier quoted context omitted.

https://www.bls.gov/charts/job-openings-and-labor-turnover/o... https://www.bls.gov/charts/job-openings-and-labor-turnover/o... Considering there is no regional specific trends and the highest % of jobs are actually in white collar jobs (pro services, healthcare, etc.), I think its fair to assume this data represents the whole of the US...no matter where you live.

Yes, it’s for the whole US, which tells us nothing useful for this debate. If there were 10,000,000 jobs in NYC and 1 job in Kansas or 10,000,000 jobs in Kansas and one in NYC, the graphs would look the same. So they tell us nothing.

> So they tell us nothing.

You should re-read my comment - I was inferring this was the case (to your point) based on the regional numbers. It's not perfect but it's indicative. I didn't have the time to dig into more data.

> If there were 10,000,000 jobs in NYC and 1 job in Kansas or 10,000,000 jobs in Kansas and one in NYC, the graphs would look the same.

These numbers are irrelevant anyway because they're always going to be correlated in some way to local population (thus per capita is important here)

You should also check housing prices in states like Kansas, they're all through the roof - https://www.zillow.com/ks/home-values/ - in other words people aren't magically leaving these places for major metros (people follow jobs).

Anyway took some digging but here is some data that explains it better:

https://balancingeverything.com/states-with-the-best-job-mar...

For example - Ohio has 231k openings compared to NY's 345k with a fraction of the overall population.

So, no, leaving a major metro doesn't mean there "aren't any jobs". Quite the opposite actually. This has been talked about endless in media for the last 12 months, so it's no surprise the data supports it.

Re: Will real estate ever be normal again?

#183

Post by wayoutthere »

throwawayboise wrote: post #154
A4ET8a8uTh0 wrote: post #134

Earlier quoted context omitted.

It can be both, but in US real estate historically was seen as a good way to park money. I will venture to say that you are an outlier. I remember renting with my SO. The jumps in rent were getting onerous to the point, when it became cheaper for us to actually buy a place. But again, each situation varies. Before living with my now wife just like you I lived in a small apartment, because that was all I really needed…

Yes, as long as you start with a modest home that you can actually afford, it can work. The mortgage payment, including taxes and insurance, on my first home (a small 2-br bungalow) was hundreds of dollars less (monthly) than the 1-br shithole apartment I was renting (shithole because I was trying to save for a down payment). At that point, as long as home values do what they normally do, you can upsize every 5 years…

Yeah this entirely. I had a 600 sq ft shoe box in a high-rise in a major city center for $1800/mo. My mortgage a mile and a half away on a 3000 sq ft house is $2000/mo.

I don’t even use half the rooms in my house and it’s still a way better deal. And no less convenient as I still have everything I really need within a 3-4 block radius. And my mortgage will only get cheaper over time — especially if we get a ton of inflation.

Re: Will real estate ever be normal again?

#184

Post by seanmcdirmid »

arcticbull wrote: post #122
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

This is only part of the problem - and a small part of the problem at that. The real problem as always is zoning. Houses cost roughly the same on a $/sqft basis, adjusted for inflation, as they did in the 1970s. They're more expensive now because outside of town they're twice as big on average [1] - in part due to zoning rules. In town, zoning rules preclude densification necessary for supply to meet demand [2]. And,…

> The real problem as always is zoning.

If the real problem was always zoning, wouldn't dense cities like NYC and Shanghai be cheaper than average, not way over average?

> Check out Japan housing CPI - a market where supply meets demand thanks to federal zoning rules, and is also centrally banked.

Japan went through a huge bubble in the 1980s. Also, housing (the structures at least) rapidly depreciates in Japan, which prevents them from being used a speculative asset as in countries (even then they still went through a huge bubble in the 80s). It is definitely an alternative model to our own, but I'm not sure how many people will want to experiment with that. Japan also much more strictly restricts immigration than other countries, which makes it, for example, a bad place for Wenzhou house wife real estate speculation.

Re: Will real estate ever be normal again?

#185

Post by bumby »

willis936 wrote: post #153
paulcole wrote: post #127

Earlier quoted context omitted.

I think people who parrot this line try to ignore the total cost of their mortgage being quite different from the purchase price of their home, property taxes, repairs, etc. As a lifelong renter, I’ve done quite well by keeping my rent low (my preference is studio/1-bedrooms in relatively dense urban areas) and putting extra money into the market. 30 years from when I started renting, I’ll have quite a lot to show fo…

Screw the apartment. You could save so much money living out of a van. I honestly don't understand this line of thinking. "Why do people even want [tangible good]?" If an explanation is really needed: it's nice to have a large, private space. People like cars in garages, a room for their work, a room to cook, a room to relax, a room to sleep, a room to store stuff, etc. Why do people bother with any of these things?…

I think this argument gets confused because some people refer to it as an investment/asset while others refer to it in emotional terms as a means to pursue happiness. They aren’t always the same thing.

Re: Will real estate ever be normal again?

#186

Post by seanmcdirmid »

arcticbull wrote: post #141
noahtallen wrote: post #138

Earlier quoted context omitted.

Part of the problem with the first item you mentioned is that developers don’t really want to build cheap housing (I guess this is an assumption, but it makes sense financially.) They can make way more money catering to the people who can “afford” to build a $500k home, and people who want a very custom design and lots of space. On the renting end, “luxury” apartments will make more money than really basic cheap unit…

It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants. Any new stock you add increases supply, which leads to lower prices across the board. [edit] and btw, I think builders aren't tripping over their shoelaces to service the low end of the market because they know the city is so aggressively capping how much th…

> It doesn't really matter if you add new stock at the top end or at the bottom end, people from the bottom move up, and make space at the bottom for new entrants.

Only if the old housing stock isn't torn down to make room for the new housing stock. Thankfully property taxes aren't driven in the potential value of land (rather, they are tied to actual value), but most small scale landlords of affordable housing right in it are in it for property appreciation, not rents. Their exit plans are often to sell to a developer as tear downs.

> This means they will only build the most profitable units, the high end today.

There are costs are too high (to acquire property and build) to justify anything but going after the highest end of the market. Once the high end is say satisfied, money (investment) could simply move away from housing if it can't make any money there. Money chases the highest returns between all of the markets, not just one market.

Re: Will real estate ever be normal again?

#187

Post by pjmorris »

arcticbull wrote: post #133
A4ET8a8uTh0 wrote: post #129

Earlier quoted context omitted.

In retrospect, it rings true. I think I had my eyes opened during 2008 crisis and FED was effectively buying everything thrown at it. I remember thinking how can government own its own bonds?

> I think I had my eyes opened during 2008 crisis and FED was effectively buying everything thrown at it. They definitely did not. [1] The bailouts were largely loans, ones that were repaid to the US government for a pretty substantial profit, not less. And assets the Fed took on were literally that, assets, which the Fed was profitably unwinding before COVID hit. [1] https://en.wikipedia.org/wiki/Federal_Reserve_res…

On the chart shown at your link, Fed-owned assets go from ~.8T to 2.5T (blue line, assuming the MBS (red line) are part of that.) and then grow as QE takes effect and the Fed buys all manner of things. That .8T was all US Treasuries, no longer true of the expanded balance sheet. If you look at the updated chart (https://fred.stlouisfed.org/series/WSHOSHO), whatever you make of it, it doesn't look like much in the way of loans getting repaid. Whatever you want to say about loans being repaid, I think that the 1.5T (conservative number) that the Fed spent buying non-UST assets was then spent by the sellers on raising other asset prices not on paying down loans.

Re: Will real estate ever be normal again?

#188

Post by elevenoh »

uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

3. quietly accumulate crypto & default on debt. prepare for war. ;)

Re: Will real estate ever be normal again?

#189

Post by vel0city »

chii wrote: post #142
King-Aaron wrote: post #115

Earlier quoted context omitted.

Unlike paying renting, paying a mortgage is nice because you're paying for something that is eventually going to be yours.

rent is often lower, or the same, as the interest payments. The mortgage consists of both interest and principle payments, which is higher, but the principle payments can be considered equity, so it cannot be compared with rent.

My P&I, taxes, and insurance is less than what I paid for rent a few years ago. I get twice the square footage inside, private spaces outdoors, can make any modifications I want.

Meanwhile rents in the area increased 10% while my monthly went down due to refinancing. Taxes are only a small amount monthly overall so even if that doubled (it won't at least anytime soon) it wouldn't be as much of a change as the rental market.

Re: Will real estate ever be normal again?

#190

Post by diogenescynic »

hprotagonist wrote: post #10
thefounder wrote: post #8

Earlier quoted context omitted.

Why don't you move to a cheaper place/smaller city? I don't understand why there are some many homeless people in big cities (i.e NYC). If people would just move to cheaper areas/cities the whole issue of housing would be fixed.

My community is here. How is it just that I be forced into exile because “the market” says so? I’ve done no wrong.

>How is it just that I be forced into exile because “the market” says so? I’ve done no wrong.

Capitalism. The market giveth and the market taketh away.

What is the alternative? Nativism? And at what point does a claim to a particular place start? Because I have bad news for most Americans...

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