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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?

#271

Post by alexose »

01100011 wrote: post #240
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.

It's really great for a lot of folks but not without its drawbacks. Some people need access to 'tier-2' or higher cities for things like specialized medical care or educational assistance. I think some people moving away from the urbs are going to get a shock when they see what incentives will arise because of global warming. Rising energy costs may force you back to a city in the next decade or two. That said, I'm j…

That's true. There are certain things in cities that are irreplaceable. And to be honest, there are tons of things I miss about living in a city.

I'm not sure that energy costs are necessarily higher in the country, but I suppose it depends on the climate and the house itself. In my case, I'm going down the solar/hydro route and plan to be off-grid at some point.

Climate change is a huge issue, though. Drought and wildfire are existential threats to my current way of life.

Re: Will real estate ever be normal again?

#272

Post by nostrademons »

wombatpm wrote: post #114
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…

In the early 80s a 13% mortgage rate was not uncommon. People survived. Very little blood was spilled

I think people forget just how bad the early 80s recession was, possibly because most of the people affected then are dead or senior citizens now. Nationwide was 10% (on par with the 2009 recession), and in some cities it went up to 25%. Farmers drove their tractors into Washington DC and blockaded the Eccles building. Car dealers sent coffins containing the keys of unsold vehicles. Construction workers sent 2x4s to Volcker because nobody needed them for home construction. The Treasury Secretary publicly undermined him, and the House Majority Leader called for his resignation.

Re: Will real estate ever be normal again?

#273

Post by vorpalhex »

clairity wrote: post #160
vorpalhex wrote: post #139

Earlier quoted context omitted.

Most of those 99% have retirements of some form or another, and have their wealth trapped in their house.

retirement savings don't affect day-to-day decisions or welfare, and most folks will not be selling their home, especially not in a recession, so those are both non sequiturs . long-term assets, particularly for the middle class, are relatively recession-resistant.

~17% of people right now are living off their retirement and that percentage will increase as baby boomers hit retirement age.

Remember 2008 when a bunch of houses were underwater, cash strapped poor families could neither make payments nor sell to get out, and the whole thing was awful? Yeah that didn't really help wealth inequality.

Re: Will real estate ever be normal again?

#274

Post by Robotbeat »

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…

So, I’m 36, and I promise you don’t want a deep recession. Cheap housing doesn’t matter if you don’t have a job. We dodged a freaking bullet economically with COVID. We recovered quickly. Heck, even in 2008 we did better than the countries that tried fiscal or monetary austerity.

And yeah, the real enemy is zoning. It’s fun to blame Blackrock, and they deserve it, but it’s regular homeowners trying to restrict more housing that is the cause.

Re: Will real estate ever be normal again?

#275

Post by hammock »

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.

>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

Speak for yourself. That sounds more desirable to me, not less

Re: Will real estate ever be normal again?

#276

Post by mbesto »

seanmcdirmid wrote: post #199
mbesto wrote: post #182

Earlier quoted context omitted.

> 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 g…

> You should also check housing prices in states like Kansas, they're all through the roof - https://www.zillow.com/ks/home-values/ How is a $184,486 average "through the roof?"

I guess you missed the 13.6% delta increase in the last year...I meant through the roof relative to previous years. Not sure how you interpreted that any differently given the context...

Re: Will real estate ever be normal again?

#277

Post by nostrademons »

clavicat wrote: post #231
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…

If the permabubble option is so predictable, though, it should be easy to account for. Just empty your bank account and send all your funds to a stock brokerage and go all in on TQQQ (triple-leverage NASDAQ-100 ETF). Your gains should predictably outpace inflation and even real-estate appreciation so long as the Fed doesn’t prick the bubble by hiking interest rates like they did with the dot-com bubble. This is why I…

Note that this is exactly how countries undergoing hyperinflation operate. Nobody keeps savings in the national currency, and if they do, they don't have savings for long. They keep their wealth in stocks, gold, foreign currency, bottles of alcohol, bullets, or any other durable liquid asset.

Re: Will real estate ever be normal again?

#278

Post by MuffinFlavored »

jschveibinz wrote: post #2

Clickbait title. Article is about the real estate prices in Austin, TX after Tesla announced the move there. Will real estate ever be normal again? I think that what's happening in real estate is perfectly normal from an economics point of view. Mortgage rates are extremely low, more people are moving because of remote work opportunities, and the younger folks wanting to buy homes now outnumber the baby boomers, all…

> which has created high demand for houses

Does anybody have any guess on when that high demand will come down and match more closely to the supply? I don't see anything that will push residential real estate prices down in the next few years.

Interest rates and property values are linked. Selling agents help buyers target a monthly price figure, all relative to interest rates + property values. Rates low? Raise asking price. Rates high? Lower. In the end, same $x/mo payment they target that they know families can afford/shop by.

Re: Will real estate ever be normal again?

#279

Post by nostrademons »

hammock wrote: post #267
kelnos wrote: post #180

Earlier quoted context omitted.

10x isn't terrible, though, is it? Assuming 20% down on a mortgage, if you're frugal, you can save for a down payment in 4 or 5 years or so. Not ideal, of course, but not impossible. In some places in the US folks could save for a decade or more and still not be able to afford a down payment.

The rule of thumb I have heard is 3x. If you buy a house 10x your income and put 20% down, your monthly payments are 40-45% of your income before tax. That's a lot

3x is based on early-80s interest rates (12%). I did out the math [1] for someone on Reddit and it turns out that if you buy 3x your income @ 3% interest, you'll only be spending about 12% of your income on housing. To get to 30% of gross on housing (the other common rule of thumb), house prices need to be about 7x income.

[1] https://www.reddit.com/r/investing/comments/oawyqu/is_there_...

Re: Will real estate ever be normal again?

#280

Post by letitbeirie »

JamesBarney wrote: post #255
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…

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.

The problem from the manufacturers' perspective is that the gear required to meet 2021 safety, emissions, and fleet efficiency standards by itself almost pushes a new car's price over $5000, and that's without leaving any budget left over to make it a car anybody would want to buy.

They do sell vehicles at that price which get around all of those standards, but they lose two wheels in the process.

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