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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?

#321

Post by adrianN »

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…

You can participate in wildly inflating markets by other means than buying a home. If you have a high income job, invest your money into things that grow with inflation.

Re: Will real estate ever be normal again?

#322

Post by jurassic »

throwvirtever wrote: post #107
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…

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…

Money aside, there's a big difference in lifestyle (some might say quality of life) of homeowners vs renters. There's a lot you can do in a property you own yourself that you simply cannot do in a rental. It's hard to put a price on being able to customize things exactly to your liking. For example I recently had 20 year old thermostat replaced with a Nest thermostat that gives me a lot more flexibility and efficiency in how I heat my home; I never would have made that type of change in a rental. I can paint whatever I want without permission from the landlord. Ditto for having pets.

And greater housing security in old age is very appealing. That people will need a place to live even after they stop working is something even the financially illiterate can understand and plan for with home ownership. For my parents who are retired on a fixed income, having a paid off home is the difference between a comfortable enough retirement lifestyle and being stressed a landlord is going to claim an even greater share of their meager income with every passing year. As owners they still have exposure to property tax increases, but that's modest compared to escalating market rents.

Re: Will real estate ever be normal again?

#323

Post by porb121 »

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 your worldview is that possible futures split into one scenario of blood in the streets and another of "cyberfeudalism"

i wish i were so imaginative!

Re: Will real estate ever be normal again?

#324

Post by dumdumdumdum »

jurassic wrote: post #315
alexose wrote: post #298

Earlier quoted context omitted.

Hello fellow 36 year old! I think graduating into the 2008 mess gives us peculiar point of view. Two years older, we might have already had burgeoning careers. Two years younger, we might have avoided it altogether. I remember so much impending doom from those years. Pretty different than the current sentiment.

Two years younger reporting in, things were still terrible for the Class of 2010 graduates. New grad unemployment didn't recover until 2012.

2013 here. I'd say things weren't that great then too.

Re: Will real estate ever be normal again?

#325

Post by _huayra_ »

I see a lot of fellow millenials thinking that the only way to escape the poverty trap that is being chronically burdened by onerous rent payments is to "play the game", i.e. to do all of the house hacking stuff to by MFUs, live-in-and-flip, or whatever the thing to do is.

There is no doubt that this stuff can work. If you become a very savvy investor, you can start seeing net positive on your housing as an investment.

However, what doesn't get written up is the horrible downsides of this, e.g. not being able to find tenants because of a market miscalculation and then being financially screwed for years to come, or having a crappy contractor try to fix your house only to have to deal with their faulty stuff for a year or more while getting another contractor to fix it.

I decided that I don't want to become a "real estate guru" just to avoid paying rent, so I just found a small apartment that was well within my salary and leveraged my existing CS skillset to almost quadruple my compensation within about 3-4 years of studying my ass off and making the right career hops. I am still paying miniscule rent on a small place, but I spend almost no time in my apartment; I'm either at work, or climbing a mountain somewhere. Perhaps I "should" buy a house, but as there is a huge surplus of ADUs as everyone else is trying to house hack (i.e. supply is large!), I can spend a teensy tiny portion of my income "wasted" on rent while spending none of my time worrying about housing issues or avoiding financial ruin in a risky bet.

Basically, this house hacking stuff is about leveraging your time to hopefully produce a monetary gain. You have to learn how to not get absolutely screwed over in some of the largest financial outflows you'll ever make in your life, and it's easy to get screwed when much larger fish (e.g. black rock) are way more savvy than you.

This obviously doesn't apply if a 1br/1ba is not for you (e.g. you have a family) or you want to have a home for sentimental reasons.

edit: Basically, what I'm trying to say is that there is a huge, life-altering downside to failing at the real estate game, but there is almost no downside to mastering a new, valuable skill that can lead towards a better job (and more pay).

Re: Will real estate ever be normal again?

#326

Post by bobthepanda »

seanmcdirmid wrote: post #252
bobthepanda wrote: post #242

Earlier quoted context omitted.

> 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…

So the way it works in NY IIRC, you can get an approval and not actually act on it, and the reason you can do this is because the approval can be sold with the property, which isn't an uncommon thing.

NYC does not track construction starts like that, or at least not when that article was written

Re: Will real estate ever be normal again?

#327

Post by eyelidlessness »

RyanCavanaugh wrote: post #268
eyelidlessness wrote: post #254

Earlier quoted context omitted.

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…

50% of the developable land in Seattle is designated for single-family homes, and not one single inhabitable SFH in Seattle city limits is what anyone would call "affordable". The fact that it's illegal to replace those SFHs with duplexes, quadplexes, or midrises is a primary driver of housing unaffordability. Seattle's population growth has outpaced its housing growth for multiple decades. There's a huge amount of "…

They’re replacing SFHs with multiplexes all over the city all the time. Instead of assigning A/B/C units or fractions they just split the numbers already designated for the lot.

Zoning for MFHs won’t change that. It’ll maybe bring more skepticism to luxury developments. But people buying million dollar units with no lot will know they’re buying the same thing.

And mixed use luxury apartments are the only development otherwise. No one is building anything more affordable in zoning more favorable for it. At best this is trickle down economics where everyone who needs somewhere affordable to live might be able to get scraps at the most dangerous furthest flung place in Lake City.

Re: Will real estate ever be normal again?

#328

Post by listenallyall »

blip54321 wrote: post #171
listenallyall wrote: post #147

Earlier quoted context omitted.

> Anyone who relies on revolving business debt, credit card debt, or other non-fixed-rate debt goes bankrupt. This is hyperbole. Rising interest rates aren't fun, but they aren't cataclysmic. Rates have gone up and down for decades. Further, if you signal that you're taking the option to raise rates off the table, risk tolerance and asset prices will explode (some would say this has already happened due to Fed signal…

I hope you're right. The extent to which you might be right or wrong depends to some extent on how much debt there is in the system (or how leveraged/wound up the economy is). A debt-based economy is much more vulnerable. Last time we raised interest rates rapidly, in the eighties, household debt was less than half of what it is today, adjusted for GDP.

Yes, whenever rates eventually rise, it's going to hurt some people. People and companies burdened with debt. Some will in fact go bankrupt (most will not, of course). But that's not a reason not to do it, all that is, is more evidence of fiscal irresponsibility. Any company which is unable to withstand higher debt costs is just as poorly managed as one which is unable to withstand a rise in any other input cost. If McDonald's went bankrupt tomorrow claiming rising beef costs, you'd say their business plan was flawed, being overly reliant on subsidized farming and not planning ahead for contingencies. The same is entirely true for a company that is bankrupted by higher interest rates. Making excuses and accommodating heavy debtors by keeping rates artificially low is one of the most damaging things you can do.

Re: Will real estate ever be normal again?

#329

Post by acchow »

chuckee wrote: post #40
throwaway55421 wrote: post #29

It will change when people want it to change, just like workers' rights did over the last century. 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 won't do that, though. It's more likely, IMO, that the entire world becomes more feudalist again until there are few escape hatches. But it'll u…

> 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...

People moved to London in search for cheaper housing?

Re: Will real estate ever be normal again?

#330

Post by zo1 »

eyelidlessness wrote: post #327
RyanCavanaugh wrote: post #268

Earlier quoted context omitted.

50% of the developable land in Seattle is designated for single-family homes, and not one single inhabitable SFH in Seattle city limits is what anyone would call "affordable". The fact that it's illegal to replace those SFHs with duplexes, quadplexes, or midrises is a primary driver of housing unaffordability. Seattle's population growth has outpaced its housing growth for multiple decades. There's a huge amount of "…

They’re replacing SFHs with multiplexes all over the city all the time. Instead of assigning A/B/C units or fractions they just split the numbers already designated for the lot. Zoning for MFHs won’t change that. It’ll maybe bring more skepticism to luxury developments. But people buying million dollar units with no lot will know they’re buying the same thing. And mixed use luxury apartments are the only development…

So if this is a "problem" for government to fix via either Zoning being abused or the free-market being naughty, then why doesn't the government just create very specific and targeted "high-density, high-rise, cheap-price" zone that can only be built with the right and necessary units?
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