Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Will real estate ever be normal again?

nytimes.com

Post reply on HN
Print view View original

391–400 of 620 posts

Re: Will real estate ever be normal again?

#391

Post by sokoloff »

lmm wrote: post #342
option_greek wrote: post #314

Earlier quoted context omitted.

> 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.

Tax breaks are written for two major purposes: giveaways to influential donors and incentives to take certain actions.

Rarely are they exclusively the second, but landlords get to deduct the economic costs of doing business. Loan interest and property taxes cost money, buildings and fixtures wear out (but the land does not). Maintenance costs money. Landlords have the ability to deduct these costs of doing business against rental income just like every other profit-seeking business does.

Can you name a tax loophole for small-time landlords that you think is improper in the context of a tax system which taxes profits?

Re: Will real estate ever be normal again?

#392

Post by sokoloff »

01100011 wrote: post #228
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 really don't know if this is correct or not, but one thing I've heard is that low rates disincentivize lending by banks because loans are less profitable. Higher rates will actually encourage lending. Much of the money in circulation comes from the banks because of fractional lending and not from the fed's printing presses. I'm curious if anyone has a take on that. Also, I think rates need to be looked at in compar…

Higher rates increase willingness to lend. Lower rates increase willingness to borrow. You need both a willing lender and a willing borrower for lending to happen.

Re: Will real estate ever be normal again?

#393

Post by neilparikh »

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…

Bitcoin isn't going make the law of rent incorrect.

Re: Will real estate ever be normal again?

#394

Post by nly »

hogFeast wrote: post #200
danhak wrote: post #155

Earlier quoted context omitted.

This is a reasonable take but the government really does everything in its power to put its finger on the scale toward homeownership: - up to $500,000 in tax-free capital gains for couples - cheap leverage via low interest rates courtesy of the Fed and further subsidized by renters via mortgage interest deduction - SALT deduction (albeit reduced as of 2017)

You also have government guaranteed mortgages. This is probably the most unusual aspect of the American home market in comparison to other markets...it is essentially publicly owned (the only place that has a similar structure is Denmark, and even then there is no Freddie Mac/Fannie Mac...just a large secondary market for resi mortgages) and makes mortgages very cheap with little rate risk (I am in UK, 30yr fixed mor…

Habito One do longer fixed rates here in the UK.

For 20% down:

21–25 years: 3.84%

26–30 years: 3.94%

But yes, I agree that at current house prices (8-10x median local income) both the deposit size and the rates at prohibitive

Re: Will real estate ever be normal again?

#395

Post by [deleted] »

bradlys wrote: post #363
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.

> 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. Idk. I grew up in rural Oregon. And I hate Seattle with a passion. But I don’t know if having meth heads for neighbors is really the way I’d go. Going for more rural/less-expensive regions might be beneficial for some but there are some serious downsides and costs for people with children, people who li…

[deleted]

Re: Will real estate ever be normal again?

#396

Post by eloisant »

kelnos wrote: post #194
mesh wrote: post #117

Earlier quoted context omitted.

It seems pretty simple, I can spend money to rent a place, and after 30 years (rent), have nothing to show for the money I put in, or I can buy a house (mortgage), spend money for 30 years, and then have an asset I own. Not to mention the freedom to do whatever you want to your home / house without having to ask for permission, or being in a position of putting money into an asset that you don't own.

It's not that simple. Right now the interest portion of my mortgage, plus my property taxes, plus my HOA dues, not to mention maintenance and upkeep, is more than what I was paying in rent right before I bought my house. That money is "thrown away" in the same sense as rent is; only money going toward mortgage principal gives me something to show for it. It absolutely would have been more economical to rent than buy.…

It's not simple, it's a calculation to do but at the end of the day the calculation gives you a number of years you need to live in your house to make buying worthwhile.

If you sell your house 2 years after buying it, unless the prices really skyrocketted during that time you should have rented instead.

If you stay 30 years in your house however it's financially much better to buy rather than renting.

Of course there are non-financial aspects (freedom of modification for homeowner, easier to move out for renters) but the financial equation boils down to how long you stay in the same house. Exactly where is the cut-off depends where and when you live.

Re: Will real estate ever be normal again?

#397

Post by rootsudo »

robbedpeter wrote: post #197
mylons wrote: post #113

Earlier quoted context omitted.

a house isn’t a particularly good investment. it’s just the one everyone, in america, makes because they’re financially illiterate. anyone can buy ETFs now with zero commission and zero gate keeping.

Life is not all about money or investment. Sometimes it's about stability - owning a home lets you plan for the future in ways that nothing else allows for. It puts you out of reach of all sorts of predatory folks and companies.

That, itself is an investment. Stability is an investment. Forecasting is speculation and risk, and stability is to mitigate risk and that is an investment opportunity (or not.)

Re: Will real estate ever be normal again?

#398

Post by eloisant »

gassiss wrote: post #212
mesh wrote: post #117

Earlier quoted context omitted.

It seems pretty simple, I can spend money to rent a place, and after 30 years (rent), have nothing to show for the money I put in, or I can buy a house (mortgage), spend money for 30 years, and then have an asset I own. Not to mention the freedom to do whatever you want to your home / house without having to ask for permission, or being in a position of putting money into an asset that you don't own.

This is what most people get wrong about home ownership. Mortgage and rent are two different, unrelated things. Rent is part of the value of a property. If you live in it, you're essentially paying its opportunity cost. That in itself has nothing to do if you borrowed money against it or not. The only way to not pay rent is to make someone else pay for you (eg live with someone else that doesn't charge you)

Yes, they're different things. However you need a place to live so unless you already own a paid off house, you can choose between paying a rent or paying a mortgage.

It's the bigger part of your "housing costs" in both cases.

Re: Will real estate ever be normal again?

#399

Post by ZeroGravitas »

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 are many middle ways possible, but generally these problems arise because a small, connected group gains significantly and now, while everyone else suffers in minor or delayed ways.

Those systems then keep to one extreme until things break, and as you say, blood on the streets.

But it's worth bearing in mind that there are solutions that'll work for everyone, just that history shows you don't (usually) get to have nice things until things have gone catastrophically wrong and the old system been swept away.

Re: Will real estate ever be normal again?

#400

Post by bosie »

arcticbull wrote: post #319
deathanatos wrote: post #257

Earlier quoted context omitted.

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 f…

The inflation adjusted $/sqft statement is a blended average across the US. It’s lower outside of towns and higher inside towns. This is tracked by the Census bureau but as always with averages there are values on both sides of the mean. [1] One caveat is it does reflect only new construction. [1] https://infogram.com/1pqdpn20vkmlelcq6qx7jzwz9pf00g9xnq5

> blended average across the US > One caveat is it does reflect only new construction.

I am not sure what a blended average is but averaging new constructions makes your stats utterly useless?

Where are people living mostly and how does the real estate market go there.

Post reply on HN