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Will real estate ever be normal again?

nytimes.com

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Re: Will real estate ever be normal again?

#251

Post by throwawaygh »

lostmsu wrote: post #47
throwawaygh wrote: post #30

Earlier quoted context omitted.

Presumably OP means a job in their profession, not employment generically.

In the current system not everyone is entitled to a job for their profession. People should get used to it.

So instead of optimizing for efficient allocation of labor and capital, we should instead optimize for the short-term benefit of the landed gentry class?

Seems like a likely path to either economic ruin or political revolution. Probably both.

Since you don't seem like you're be sympathetic to an ethical argument, here's some real-politik: "fuck the poors" works well enough when the poor are actually poor. Less well when the people being systematically fucked over have significant social esteem, education, and economic means. See: the American Revolution.

Re: Will real estate ever be normal again?

#252

Post by seanmcdirmid »

bobthepanda wrote: post #242
seanmcdirmid wrote: post #225

Earlier quoted context omitted.

NYC housing has pushed outwards into Queens and the Bronx, manhattan is less populated these days because it lacks full time residents (the apartments are still sold, but their owners list upstate/Connecticut/long island properties as their permanent addresses, and they have many less occupants in them even when full, not like the turn of the century when more than a few people were crammed into small apartments). >…

> My only point was that making cities more dense seems to make them more desirable, causing more people to want to live there. Increasing housing in this manner would probably boost land prices, but over a greater number of units, so result in overall decrease in housing cost. NYC is a bit of a weird spot in real estate, in that having a Manhattan address (and probably a Williamsburg or Bushwick address to a lesser…

> * The 23 special wards of Tokyo, 8.9M people, built 110,000 new homes that year.

Since housing is refreshed in Japan on a 20-30 year basis, you can't quote the number of housing built without comparing it to the number of housing torn down (since, as mentioned before, housing depreciates).

> * The metropolitan area of NY, population 20.3M, approved 27,000 units in 2012, but approvals != actual construction.

Do you mean no housing was built in 2012?

Re: Will real estate ever be normal again?

#253

Post by iknowSFR »

IAmGraydon wrote: post #81
ByteJockey wrote: post #59

Earlier quoted context omitted.

2007 implies right before the 2008 recession where housing prices tanked. In 2007 people were panic buying houses because they thought that if they didn't buy right now, they'd never be able to afford to buy a house.

It’s true…the market always seems to turn when you start seeing widespread sentiment that it will never turn.

The article directly addresses this:

“The last time U.S. housing saw such rampant price growth was in 2005, and the market corrected itself, infamously, in 2008. But the underlying reality today is different. Back then, a geyser of subprime adjustable-rate mortgages sputtered out as borrowers defaulted. (According to Bloomberg News, 60 percent of mortgages during the bubble years were adjustable rate; fewer than 0.1 percent of mortgages are now.) The current boom is better compared to a river, one fed by streams that have long been visible on the horizon: high demand, low supply and a dysfunctional economy in which wages are stagnant while restrictive zoning and poor public policy have turned housing into an artificially scarce commodity. Historically low 30-year fixed mortgage interest rates, hovering between 2.68 and 3.08 for the last year, are narrowing the riverbed, quickening the current.”

Re: Will real estate ever be normal again?

#254

Post by eyelidlessness »

TulliusCicero wrote: post #193
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…

> 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.) This is like saying that Toyota would rather sell Lexuses than Camrys. Yes, it's true, but they sell Camrys anyway. Why? Because the market for luxury is only so big. They can make more money total addressing other parts of the market. So…

Can only speak for my city (Seattle), but no one’s building Camrys and building is constant. It’s not because any zoning prevents building affordable units. It’s because there’s limited land to develop at all and demand for property of any kind is extraordinarily high. All of the development in residential neighborhoods is already zoned for everything that could accommodate 4-10 times as many tenants. But they’re building luxury units anyway.

Doesn’t surprise me but this zoning explanation ain’t it.

Re: Will real estate ever be normal again?

#255

Post by JamesBarney »

noahtallen wrote: post #138
arcticbull wrote: post #122

Earlier 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…

We have the same problem with the car market. I can only afford a $5,000 car, but the car manufacturers make all their money building $20,000 cars. I just can't see how Honda making another $20,000 fit is going to help me afford a $5,000 car.

Re: Will real estate ever be normal again?

#256

Post by [deleted] »

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,…

[deleted]

Re: Will real estate ever be normal again?

#257

Post by deathanatos »

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,…

While I agree zoning is a huge issue (I think that interest rates being so low doesn't help, either, but I concur with your thesis that zoning is the bigger problem), this, however:

> Houses cost roughly the same on a $/sqft basis, adjusted for inflation, as they did in the 1970s.

Sorry, but no. My parents bought their first home for $72/sq ft. real¹. They sold it for $99/sq ft. The same house last sold for $208 sq ft., and is Zestimated today at $302/sq ft. The value of the home has averaged >7% gains YoY, well outpacing published inflation.

Their current home, built significantly later, and like you say, significantly larger, was $149/sq ft. at purchase, and is $182/sq ft. today.

Every house I look at sings this same tune. Accounting for inflation, where my parents got a large house ready to move into, for the same amount to day I'm looking at what I call a "contractor's paradise", and that will require significantly more than the sticker price to make it habitable.

¹all dollar figures in this comment will be in 2021 real dollars, not nominal ones. I.e., adjusted for inflation.

Re: Will real estate ever be normal again?

#258

Post by [deleted] »

xur17 wrote: post #232
willis936 wrote: post #211

Earlier quoted context omitted.

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.

But it doesn't remove that financial burden entirely (or even close to entirely). You're still paying: * opportunity cost * property taxes * interest

[deleted]

Re: Will real estate ever be normal again?

#259

Post by rafaelero »

mlcrypto wrote: post #72

Once investors figure out that Bitcoin is the superior investment property after you already have a primary residence the excess speculation will get sucked out of real estate. This may be in the 2024 halving cycle. I say Bitcoin is superior because it's more portable, more fungible, no property tax, and the work of managing the properties doesn't scale linearly with the amount you own. Don't need to worry about bad…

Exactly. Hopefully, Bitcoin will soak the monetary premium from real estate and correct this mess.

Re: Will real estate ever be normal again?

#260

Post by JamesBarney »

bogota wrote: post #215
drdec wrote: post #173

Earlier quoted context omitted.

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

It's only bad advice if we don't have a spike in inflation.
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