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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#211

Post by willis936 »

bumby wrote: post #209
willis936 wrote: post #191

Earlier quoted context omitted.

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?

There is no other asset I can own that alleviates the financial burden of burning nearly half of my take-home pay in perpetuity to fund some rich landlord's beach vacations.

Re: Will real estate ever be normal again?

#212

Post by gassiss »

mesh wrote: post #117
throwvirtever wrote: post #107

Earlier quoted context omitted.

I don't quite understand the obsession with homeownership. If a large enough percentage of people rented from property management companies, there would be more impetus to have strong tenant's rights laws to protect residents, and people would have more flexibility to move around. Moreover everyone would have an interest in increasing supply to keep their own rent down, pushing prices down toward cost-of-materials an…

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.

This is what most people get wrong about home ownership. Mortgage and rent are two different, unrelated things.

Rent is part of the value of a property. If you live in it, you're essentially paying its opportunity cost. That in itself has nothing to do if you borrowed money against it or not.

The only way to not pay rent is to make someone else pay for you (eg live with someone else that doesn't charge you)

Re: Will real estate ever be normal again?

#213

Post by TulliusCicero »

DannyBee wrote: post #61
jedberg wrote: post #32

Not until zoning or ownership laws change. More people want to live in the places then there are places to live. There are three ways to fix this: incentivize builders to build more places to live, have the government build housing, or penalize investors. Or any combination of the three.

Or tell people no, and be happy with a place that works. Eventually people will leave when they can't be there. The option of "growing to meet exponential need" rarely, if ever, actually works in the end. By works i mean "leads to an equilibrium that actually is any good" Usually what happens is people push on creating housing, and think once they've done it, the rest will take care of itself. This is the easy part.…

If an economy is booming in an area, and people keep trying to move there, that's a sign that the metro is doing something right, and that it's desirable.

Forcing the government to get in the way and tell people not to go where they want to go is stupid and exclusionary. It's "I'm in, now shut the gates on everyone else".

Like, how is indulging NIMBY attitudes useful or productive at all? It means less freedom for people to live where they want to live, it means higher housing prices that strain people's budgets, it means it's harder for businesses to grow and be productive, and it usually means more suburban sprawl that destroys the environment.

Re: Will real estate ever be normal again?

#214

Post by darkerside »

rayiner wrote: post #178
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…

Behold, and tremble! https://www-bankrate-com.cdn.ampproject.org/i/s/www.bankrate...

This links directly to an unknown attachment. Just FYI for anyone else who would have cared to know that.

Re: Will real estate ever be normal again?

#215

Post by bogota »

drdec wrote: post #173
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…

Inflation can be good for young people. If you really think there will be significant inflation, go buy a house, borrow more than you are comfortable with it necessary. Inflation will make the debt easier to deal with in time.

This is wildly irresponsible and terrible advice

Re: Will real estate ever be normal again?

#216

Post by Nition »

dzhiurgis wrote: post #70

I'm no expert, but seems there's some sort of feedback loop going on: * leverage existing property to get new loan (sometimes at mere 20%) * rent goes up because "market adjustment" * first home buyer dreams inches further way since less disposable income & higher initial deposit * property owners accumulate equity even quicker At least in NZ, PM Jacinda Ardern said multiple times no one's equity should go negative e…

One factor that makes things even worse here in New Zealand is, from what I've heard in the US a home mortgage is usually at a fixed interest rate for the entire term - is that correct? Whereas in New Zealand the rate will usually be fixed for a maximum of five years.

So you might have a 30-year mortgage fixed at 3.5%, but if interest rates go up, then in year five you might start paying 5%, and maybe you can't afford it anymore. I suspect the banks require a bigger buffer between payments and income than they do in the US to allow for potential interest rate increases, but that only works up to a point.

Re: Will real estate ever be normal again?

#217

Post by Breza »

alexose wrote: post #74

I know this may be sacrilege to some, but: Consider moving to a less desirable place if you can. I got priced out of my hometown of Seattle. So I moved to a small town in rural Oregon and I couldn't be happier. The combination of spending comparatively little on housing + a tech salary is hard to beat. I have my own shop! It feels like freedom, even if it comes at the cost of being near my extended family.

This is an interesting Post article on that very topic. I used one of my monthly free shares, so you'll be able to read the job even if you don't subscribe. https://wapo.st/30nLgUm

Re: Will real estate ever be normal again?

#218

Post by TulliusCicero »

sushsjsuauahab wrote: post #56

I don't have any economic theories to offer. All I know is I love my house, with all of its land, trees, and nice quality living. I will protect this thing to my death, because it is so much better than living in an apartment. I don't care if it costs me $4,000 a month.

Jesus Christ, for the last time, upzoning isn't about taking away anyone's home away from them. It's about allowing homes that are currently illegal, not forcing anything.

Some people want what you want, others are fine with less space if it means less money. Upzoning means they get to choose what to do with what property they own.

Re: Will real estate ever be normal again?

#219

Post by mapme »

TulliusCicero wrote: post #206
seanmcdirmid wrote: post #184

Earlier quoted context omitted.

> 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 ther…

It’s wild that manhattans population was ~2.5 million in 1910 and is now only ~1.6 million.

Re: Will real estate ever be normal again?

#220

Post by seanmcdirmid »

wan23 wrote: post #208
seanmcdirmid wrote: post #186

Earlier 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. 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.

Yes, that is exactly what is happening in Ballard (Seattle area) right now. Those cheap 100 year old low income housing complexes (one or two stories) are being raised for a bunch fo three story townhomes, smart developers can sell each of those town homes for $1 million each, and they could get much less if they kept it as a hotel-like complex. I just bought one of those town homes, so I'm not going to complain too much, but I'm self aware about what is going on here.

So poor people are still getting screwed. My daily walk to the grocery store passes by a few places that are pretty shabby (so low income) and right across the street they are building a bunch of luxury town homes. It doesn't take a rocket scientist to figure out what will happen to those shabby places in a year or so.

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