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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#491

Post by mikem170 »

toss1 wrote: post #227
Plasmoid wrote: post #149

Earlier quoted context omitted.

Why do you think communities shouldn't change? If the population growth rate is 1.8%, why should a city be able to decide that 0% growth is completely acceptable? Would you be willing to pay an uncapped land-value tax on your nicer area? A lot of people are vehemently opposed to paying the full externalities of their choices.

I do not think communities shouldn't change - they do change and grow all the time. Have you ever been to a town meeting? >>Would you be willing to pay an uncapped land-value tax on your nicer area? Of course — WE ALREADY DO —, as pointed out above, everyone already pays much higher taxes - based on land and building value, uncapped - to maintain the environment. (Please do try to keep up and have a clue what you are…

> Those changes are fine and should be decided by those affected, not some set of interlopers

Those "interlopers" are people's sons and daughters who want to live where they grew up, growing families that need more space, the retired on a fixed income, the working poor struggling to stay housed, those who spend hours commuting, etc. All of these people are your neighbors, not the enemy.

> who just want to basically steal the value that has been created and maintained over decades or centuries.

That depends on your definition of "value". Do you mean the well-being of everyone in the community? or the market price of your house?

For many people jobs, amenities, and culture make for desirable neighborhoods. Single family single use zoning doesn't contribute to any of that.

Re: Will real estate ever be normal again?

#492

Post by bumby »

jurassic wrote: post #336
xur17 wrote: post #232

Earlier quoted context omitted.

But it doesn't remove that financial burden entirely (or even close to entirely). You're still paying: * opportunity cost * property taxes * interest

You're paying many of these things in a rental as well. But at the end of 30 years the landlord keeps the asset.

If someone is well-off enough to be in a position to choose, renting is essentially paying a premium for freedom of movement. Used smartly, this can be an avenue to dramatically increase earnings over time because in today’s economy switching jobs is one of the faster ways to increase wages. While previous generations may not have had that problem, I think it changes the own/rent calculus for younger people.

Re: Will real estate ever be normal again?

#493

Post by bumby »

eloisant wrote: post #401
bumby wrote: post #185

Earlier quoted context omitted.

I think this argument gets confused because some people refer to it as an investment/asset while others refer to it in emotional terms as a means to pursue happiness. They aren’t always the same thing.

It is kinda wrong to see your primary residence as an investment. You can't sell it unless you find a different place to live.

I don’t disagree, but that’s the reality of many Americans. Their home is their largest asset by type. This is also why home ownership is one of the largest drivers of wealth.

Maybe it shouldn’t be.

Re: Will real estate ever be normal again?

#494

Post by harambae »

cbozeman wrote: post #356
bogota wrote: post #215

Earlier quoted context omitted.

This is wildly irresponsible and terrible advice

It's exceptionally good advice. Jerome Powell has already made it clear through his actions that everything is now 'Too Big To Fail'. Capital is at an all-time low in terms of actual real cost to the borrower. You'd be an idiot not to borrow right now. If we keep seeing dramatic inflation, there will be some increase in wages, and it'll be enough to offset whatever interest rate you get, unless you're just an utterly…

There's no guarantee Jerome Powell will always be the fed chair (and if inflation really gets out of hand he could just be the fall guy).

But the bigger problem is that in an inflationary environment, real assets get bid up high to compensate. This has already happened in housing (clearly) so you're late to the party. If you knew for certain that inflation was going to get to this level before everyone else, maybe it would have been a good idea to do what you're describing.

Re: Will real estate ever be normal again?

#495

Post by JeremyNT »

TulliusCicero wrote: post #193
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…

> 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…

There are plenty of yuppies to buy up any fancy new houses in town, though. So no cheap houses are built inside the cities proper.

In the US, there's always more land - it's just further away! The cheap "Camry" houses still get built, but never as infill. It just gets pushed further and further out to the exurbs.

Unless you take money (or cheap debt) out of the hands of the yuppies, nothing changes here.

Re: Will real estate ever be normal again?

#496

Post by sweaty »

teekert wrote: post #452
sweaty wrote: post #415

Earlier quoted context omitted.

I'm 25, and I live in The Netherlands as well. My parents managed to buy a house for 110k with government subsidies back in the 90s, they didn't need a deposit, they didn't even need any money. All they had to do was earn just above minimum wage, and they could include any costs from the buying process into the mortgage. Their house sold for 475k last year, a 90s starter home for low incomes. My grandparents had it e…

Yeah I'm happy I have a nice home but we also have some annoyances (minor compared to yours), we have been ready to move on to a bigger property for about 5 years now, very little comes up though. And when it does, we are often too late (they cap at 80 viewers for example, this is talking about 500k+ properties, I swear, 10 years ago you got a couple of viewers for each property, the realtor told me back then he nego…

We definitely need to build more houses, if you look at Topotijdreis and start from around the 50s-60s, increment by 10 years until now, you'll see that we haven't built anything to house my generation. The homes that were built, are large single family homes, not starter homes. The starter homes that we're meant to move into, are still occupied by the generation that grew old in them (born 30s-40s). Those 60s neighborhoods though are now slowly disappearing and replaced with more large single family homes bought by my parent's generation, with their starter homes being rented out to afford their mortgage. The system is completely broken and most of my parent's generation have been told not to pay off their mortgage, I'm curious what will happen when interest rates rise to 5%+ (or even 10%+ like in the 80s), so many of them will be forced to sell because so many are upside down in interest-only mortgages still.

Fortunately, people of my generation tend to earn better than their parents, so maybe in 10-20 years we'll see a situation it's completely turned around? Parents living with their children?

There's definitely enough houses if we take ageing into account (when people born in the 30s and 40s are starting to die off) but since COVID isn't the grim reaper my generation was silently hoping for, there's nowhere for us to go apart from staying with our parents or renting for insane prices.

Re: Will real estate ever be normal again?

#497

Post by danlugo92 »

goodpoint wrote: post #111
sushsjsuauahab wrote: post #56

I don't have any economic theories to offer. All I know is I love my house, with all of its land, trees, and nice quality living. I will protect this thing to my death, because it is so much better than living in an apartment. I don't care if it costs me $4,000 a month.

It's well established that low density housing is completely unsustainable.

Let's make it sustainaible instead of giving up.

Re: Will real estate ever be normal again?

#498

Post by dragonwriter »

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…

> The Fed at this point controls the whole economy

No, it doesn't. Congress has a lot more control than the Fed (in fact, a strict superset of the Fed’s powers), and definitely much finer, more targetable control, but they have a little more problems coordinating on action.

> and they have two options

They have a near infinite spectrum of options between two poles.

> Raise interest rates and stop printing

Well, the first. “Printing” is just metaphor.

> Crazy inflation stops, but asset prices crash and we enter a major recession or depression.

There is no real reason (though its a popular unsupported idea from some quarters) to believe that there is no distance between the tight monetary policy sufficient to acheive the first effect and that which will cause the second effect.

> Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently priced out of home ownership and many other things

Again, very little reason to thibk the last thing is at all true. We had high inflation with a weak economy with stagflation in the 70s, and young people then weren't permanently priced out of hone ownership. More normal, strong-economy inflation isn't going to do that.

> It seems like they are going with option 2.

Tapering QE is not “doing nothing”, its taking the foot off the accelerator.

Re: Will real estate ever be normal again?

#499

Post by rp1 »

arcticbull wrote: post #122
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…

This is only part of the problem - and a small part of the problem at that. The real problem as always is zoning. Houses cost roughly the same on a $/sqft basis, adjusted for inflation, as they did in the 1970s. They're more expensive now because outside of town they're twice as big on average [1] - in part due to zoning rules. In town, zoning rules preclude densification necessary for supply to meet demand [2]. And,…

The idea that zoning is the issue is always funny to me because it’s very easy to disprove. Plenty of paces in the US have permissive zoning (like the NY metro area). If zoning was the issue, then one would expect affordable housing in these areas, but it is still totally out of reach for most.

Re: Will real estate ever be normal again?

#500

Post by vorpalhex »

clairity wrote: post #294
vorpalhex wrote: post #273

Earlier quoted context omitted.

~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.

most households at/near retirement (55+, according to the fed reserve) are doing fine with an average net worth over a million (note that that's all the boomers), and almost none of them are still paying off mortgages. they aren't losing houses nor going without meals. moreover, social security income is inflation protected, as essentially is medicare, so poor elderly are no worse off. again, that's a disingenous arg…

Please avoid accusing opponents of bad faith, it's distasteful and childish.

If you have "enough" for retirement and then we have a depression where your retirement significantly drops.. that sort of seems like you may no longer have enough. That money needs to last you 20 some years.

Also your claim that most retirees have "an average net worth over a million" appears to be flatly untrue [1]. Please provide a citation.

Significant amounts of retirees are still paying on their mortgage [2] and are affected by changes in the housing market. This especially is important for reverse mortgages.

Social security income does adjust for inflation, but it does so infrequently and is not always a major part of many peoples retirement plans.

A depression or recession would be worse for the common person than any 1%er.

[1] - https://www.investopedia.com/articles/personal-finance/01061...

[2] - https://www.aarp.org/money/credit-loans-debt/info-2018/retir...

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