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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#301

Post by digianarchist »

Nition wrote: post #216
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 affor…

Correct. 5 year fixed term mortgages are common to UK/Canada/NZ/Australia.

Not that interest is as significant in the United States considering it can be deducted from your taxes.

Re: Will real estate ever be normal again?

#302

Post by mgh2 »

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…

There seems to be a possible, overlooked cause & effect in the current landscape:

If FIRE followers scale the strategy of investing and renting multiple homes, are they not limiting housing supply for other potential homeowners or exacerbating homelessness?

It is not just that houses are not being built, but that a shortage of supply is caused by the FIRE generation: buying houses as investments rather places to live, with the goal of living off on other people's rents or Airbnb, not paying taxes and leeching on society for the rest of their lives.

https://www.youtube.com/watch?v=j5zndjPZ2Is

Does anyone see the potential problem of this movement or are we just equally blinded by social media?

Re: Will real estate ever be normal again?

#303

Post by nine_k »

gbh444g wrote: post #288
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…

Population grows exponentially, housing grows quadratically (as circles around towns and cities). About 20 years ago the two curves had met and since then they've been rapidly diverging.

Is the US population still growing exponentially?

Re: Will real estate ever be normal again?

#304

Post by digianarchist »

lostmsu wrote: post #46
chuckee wrote: post #40

Earlier quoted context omitted.

> If you don't want to pay a million quid for a house in London, refuse the game. Move elsewhere. Find a different way to get by in life, perhaps even a different country. People did exactly what you suggest. And the country they moved to was England, and the city, London, which now has 38% non-UK born residents: https://www.ons.gov.uk/peoplepopulationandcommunity/populati...

Million quid homes sound cheap in comparison to SF. Maybe we should move to London

It's easier to buy a $1.5 million home in the Bay Area when you earn $300k than a £1 million home on £80k.

Re: Will real estate ever be normal again?

#305

Post by nine_k »

aeternum wrote: post #75
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…

As Adam Smith said, the true price of everything is in human labor. Inflation generally raises the cost/price of new labor at the expense of historic labor. Demand for labor is still high, the price will likely continue to increase. Housing is also not a great comparison metric because it was so perturbed by 2008. New unit starts dropped precipitously and still have not fully recovered: https://fred.stlouisfed.org/se…

I think 2008 was not about housing surplus, it was about bad loans which loaners could not possibly repay.

The foreclosured realty has been selling pretty quickly.

Re: Will real estate ever be normal again?

#306

Post by TulliusCicero »

seanmcdirmid wrote: post #225
TulliusCicero wrote: post #206

Earlier quoted context omitted.

> 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…

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). >…

Demand isn't unlimited, and you have the causation mostly backwards. Cities being successful causes people to flock to them, which means there's demand for density.

The problem is that it isn't just those on the right opposed to density -- the left is little better. Sure, progressives are largely okay with what density already exists, but propose upzoning and they flip out. Just look at the California state legislature, or major west coast cities.

Re: Will real estate ever be normal again?

#308

Post by TulliusCicero »

seanmcdirmid wrote: post #230
mapme wrote: post #219

Earlier quoted context omitted.

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

Doesn't it make sense though? In 1910, manhattan was expensive but a lot of people still lived/worked there. The apartments would be crazily subdivided so you could fit 10 people into a 3 or even 2 bedroom. Now they are all owned by wallstreet bankers with small families, and they spend much of their time somewhere else (they might not even list their manhattan apartment as their "main domicile" during the census).

Demand for Manhattan apartments is crazy high, it's just illegal for taller ones to be built to meet demand most of the time.

People think Manhattan is mostly skyscrapers, but the reality is very different. Only a small portion of the land has high rises on it, just glance at Google Maps with 3D view on.

Re: Will real estate ever be normal again?

#309

Post by TulliusCicero »

eyelidlessness wrote: post #254
TulliusCicero wrote: post #193

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.) 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 bui…

> Can only speak for my city (Seattle), but no one’s building Camrys and building is constant

I'm in the Seattle metro. Building higher density housing is still illegal in most of the city, because attitudes there are still fundamentally NIMBY, even if it's not as bad as SF.

The city has generally upzoned little slices at a time around 'urban villages', and while that's certainly better than nothing, it's a lot less effective than largest scale upzones, and streamlining building processes.

Re: Will real estate ever be normal again?

#310

Post by brutusborn »

spaetzleesser wrote: post #137

Maybe the “normal” state of the world is some form of feudalism where most people own nothing? I often wonder if the 20th century with a rising middle class was just an aberration and things will go back to “normal”. The rising inequality seems to be a first indicator.

Also, could the 20th century rise of the middle class be explained by the amount of death during the great wars? This would result in reduction in demand which would make things like land much cheaper.
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