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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?

#341

Post by lmm »

seanmcdirmid wrote: post #186
arcticbull wrote: post #141

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. Any new stock you add increases supply, which leads to lower prices across the board. [edit] and btw, I think builders aren't tripping over their shoelaces to service the low end of the market because they know the city is so aggressively capping how much th…

> 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…

> Thankfully property taxes aren't driven in the potential value of land (rather, they are tied to actual value)

That's not a thankful thing at all, it incentivises using the limited land in wasteful (low-value) ways.

> Once the high end is say satisfied, money (investment) could simply move away from housing if it can't make any money there. Money chases the highest returns between all of the markets, not just one market.

Available capital is practically unlimited these days, anything that's profitable and legal to build will get built.

Re: Will real estate ever be normal again?

#342

Post by lmm »

option_greek wrote: post #314
mgh2 wrote: post #302

Earlier quoted context omitted.

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…

> leech the society for the rest of their lives Would these houses even be built if someone is not paying for them. They are not leeching but investing. May be we could call it leeching when they form a cartel and start raising rent prices in unison (which only biggies like black rock can do).

They invest in housing specifically because there's a bunch of tax avoidance loopholes for small-time landlords. There's nothing wrong with honest investing, but tax breaks are for leeches.

Re: Will real estate ever be normal again?

#343

Post by refurb »

hogFeast wrote: post #174
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…

To explain more about the logic used by the guy you replied to... ...the problem is people think: interest rates go up, economy slows down, we can never raise interest rates. This logic takes on a life of its own. The US economy was in this position in the late 60s: the Fed was under pressure to accommodate govt financing, they raised rates in 1959 and were blamed for causing a recession that influenced the outcome o…

This is the exact situation many financial commentators highlighted post-2008, so I think your historical points are very relevant.

The Federal Reserve is supposed to have independence from the government. It will develop its own monetary policy which doesn't need government approval. In reality, the President appoints all the Governors, so people get selected based on doing what the President wants done.

The Fed's monetary policy is typically an inflation target - keep the money supply growing to encourage growth, but keep inflation in check as well.

The problem is the political influence starts to impact the pure decisions about what's best for the economy. Election coming up? Well, hold off on increasing rates since we need good employment numbers for the next few months.

If the economy gets unstable the Fed ends up riding the razor's edge trying to stick to policy but not piss off the President. Problem is that the economy can go off the rails faster than the Fed can response.

The issue highlighted after 2008 was that "yeah, printing new dollars and buying distressed assets worked pretty well! and no massive inflation so far. But there will be incredible pressure to not raise rates later and if the Fed waits too long to apply the brakes, they won't be able to get ahead of it and inflation will skyrocket."

Re: Will real estate ever be normal again?

#344

Post by eBombzor »

I finished reading this and the first thing that I thought was this article could be condensed to about half it's size. So much irrelevant information and too many jumps in that Drew/Amena segment.

Any ways... yeah the market is in a sad state of affairs. Doesn't help that the mentioned interviewees are also doing a cash grab for themselves by opening up private real estate firms and AirBnb's. Though it's not all over America, you can't point to Austin to generalize the entire small market. I'm pretty sure houses in Iowa are as cheap as ever.

Re: Will real estate ever be normal again?

#345

Post by eBombzor »

adrianN wrote: post #321
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.

Like what? Stocks?

Re: Will real estate ever be normal again?

#346

Post by adrianN »

eBombzor wrote: post #345
adrianN wrote: post #321

Earlier quoted context omitted.

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.

Like what? Stocks?

Stocks, real estate etfs, probably a dozen other things too.

Re: Will real estate ever be normal again?

#347

Post by arcticbull »

JamesBarney wrote: post #291
arcticbull wrote: post #269

Earlier quoted context omitted.

I mean VW makes $100,000 Porsches and $20,000 Jettas. At some point it’s not economical to make cheaper cars due to materials and workmanship. You can certainly buy an e-bike for half that, I did. The cost of construction in America is $150/sqft. We’re not even close in cities. Off by an order of magnitude.

Sorry I guess I was more obtuse than I intended. My point was I can buy a used car for $5,000, and Honda building new cars allows that even if the new cars are out of my price range.

Ah I see, that makes sense, I misread!

Re: Will real estate ever be normal again?

#349

Post by monocasa »

jurassic wrote: post #322
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…

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 efficienc…

Did you know that landlords in a few states don't need to give you notice to show up and enter your home?

Re: Will real estate ever be normal again?

#350

Post by aeternum »

bumby wrote: post #179
aeternum wrote: post #75

Earlier quoted context omitted.

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…

Is there any measures of what percent of those pre-2008 builds were speculative investments vs. occupant-owners? It reminds me of the scene in The Big Short when he knew the system was on a precipice of disaster when the a stripper was telling him about the multiple homes she owns. It seems to me many bubbles are the result of speculation with easy credit and I’m not sure 2008 can be considered a “perturbation” inste…

https://fred.stlouisfed.org/series/EOWNOCCUSQ176N
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