In Canada extremely unaffordable housing has been the reality since the Pandemic. I think the US is just catching up and when it does there will be more unrest because of how much influence the states have over social media and news in general around the world.
Will real estate ever be normal again?
201–210 of 620 posts
Re: Will real estate ever be normal again?
#202The 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…
Canada already did #2. Average home prices in almost all metro areas are around 10x yearly income. There is no blood on the streets and it is still considered a destination country.
Yeah, the situation in Canada is getting bad. Look for the blood on the streets soon.
Re: Will real estate ever be normal again?
#203Earlier quoted context omitted.
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,…
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…
In cities with no zoning todays luxury housing is tomorrows affordable housing. For example in Houston apartments and houses that were touted as luxury in the 80s are slums now.
Re: Will real estate ever be normal again?
#204Renters and buyers are increasingly in the same boat - the one where people with money in the bank are finding there's nowhere to live. In the case of renters, many with savings are facing homelessness - once those savings are burned up on hotels. This isn't a dramatization or overstatement. It's what I'm witnessing personally and very nearly happened to us. We were one of the few to beat long odds and score a place…
I have friends who were impressed to see their house has gone up in value by 20-30% or more since they purchased it. But selling is pointless, since they would have to buy another overpriced house to move into. It doesn't really seem like there are many winners in this current scenario. Unless you're selling to "downsize" or move somewhere cheaper. Or an investor...
You nailed it. This doesn't benefit Principal Place of Residents (PPOR). It only benefits those with investment properties since that equity can be liquidated to purchase other assets and get out.
Re: Will real estate ever be normal again?
#205I am surprized no one me tioned we could just limit home ownership to 2-3 for individuals and lets say 20 or so for a company. The actual limits can be decided based on discussion and metrics but just having a limit, any limit could stop companies or rich assholes from buying real estate as "assets" as opposed to a place where people live. Also a limit on just holding property that is meant to be rented out. Either u…
> lets say 20 or so for a company
Wouldn't rich people just create multiple companies each holding 20 properties?
Re: Will real estate ever be normal again?
#206Earlier quoted context omitted.
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, whic…
> If the real problem was always zoning, wouldn't dense cities like NYC and Shanghai be cheaper than average, not way over average?
It's not about supply by itself, it's supply vs demand.
Big cities have big populations and economies, which means a lot of demand.
But as far as zoning goes, note that like other metros, NYC has actually effectively downzoned areas over time; in fact, a huge proportion of buildings there would now be illegal due to different types of density restrictions: https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...
A lot of NIMBY's tend to go, "well, there's still some areas where it's possible to build more, so there's no real issue there". This is approximately like restricting car manufacturing to one state, and then when car prices go through the roof, saying "well, there's still more land to build car factories there, so I don't see the problem, it couldn't possibly be this rule".
Re: Will real estate ever be normal again?
#207Earlier quoted context omitted.
There is another option: The government could buy/build/offer public housing as an alternative to the free market. It was done in the past and in other countries and I see no reason not to do it now. The way I see it (and the way you put it) the free market has failed to provide housing to people, to an extend that there is no free market solution going forward. If the government (federal/state/county/municipal/etc.)…
> the free market has failed to provide housing to people Is it really a free market in places like the Bay Area where zoning is so restrictive and NIMBYs can show up to planning meetings to basically block any new construction? It's been pointed out elsewhere in this thread that Japan also had a free market but less restrictive zoning and housing is much more affordable there. The main argument for government effici…
Eminent domain?
Re: Will real estate ever be normal again?
#208Earlier quoted context omitted.
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…
> Only if the old housing stock isn't torn down to make room for the new housing stock
This is about zoning too. Normally, if the demand is there for it a smart land owner would build more housing on the same plot, e.g. turning a single family into a two family, but of course that is illegal in many places.
Re: Will real estate ever be normal again?
#209Earlier quoted context omitted.
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.
For most people it's both. There's a reason home ownership is often a component of "the American Dream". Owning land and a house is a huge step in status and financial security. Owning a house is also a huge luxury. It's strange to deny either of these realities. Some people don't want luxuries, okay, but it should be clear that nearly everyone does.
Recognizing it is one thing, but thinking it’s a good “investment” is another. Often funding/chasing status is a fools errand IMO.
Part of the problem is that homes being the largest asset that a person owns because they’re chasing the status of that American Dream. Can you think of any other illiquid asset that people would suggest piling a majority of your net worth into?
Re: Will real estate ever be normal again?
#210Earlier quoted context omitted.
It seems pretty simple, I can spend money to rent a place, and after 30 years (rent), have nothing to show for the money I put in, or I can buy a house (mortgage), spend money for 30 years, and then have an asset I own. Not to mention the freedom to do whatever you want to your home / house without having to ask for permission, or being in a position of putting money into an asset that you don't own.
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…
Ya, you saved because you are living single, and _assuming_ you have no kids as you live in 1 BR.
Rest of the population have family's, and have to care where and how their children grow up.