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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#571
post #493

Earlier quoted context omitted.

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.

It's an asset but not an investment.

It's factored in your net worth (i.e. your wealth) but it's not something you can leverage like the rest of your wealth.

Note that if you're a homeowner, and the overall market goes up, you don't benefit from it at all. Your wealth goes up on paper, but it doesn't change anything in your life except it will be more expensive if you want to move.

Re: Will real estate ever be normal again?

#572
post #270

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 I could definitely see that being how it works in a lot of cases, but it seems like a stretch to assume that's some sort of natural law of prices. If I have a market of te…

The price of a house is not fixed. Likewise, in your example, you would have to lower the price from $10 to sell your goods.

My point is that it's at least mathematically possible for a scenario to exist where the assertion I was responding true does not happen. If the idea is that _in practice_ people always lower the prices, then it seems more direct to just say that rather than claim some sort of law of economics that doesn't actually have any mathematical proof.

Re: Will real estate ever be normal again?

#573

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…

Buying Bitcoin might be a potential response since buying a house for protection is probably out of the question for now.

Re: Will real estate ever be normal again?

#574
post #558
post #289

Earlier quoted context omitted.

Precisely. People really underestimate the costs of home ownership. You need to include everything like: 1) mortgage interest, 2) property taxes, 3) insurance, 4) maintenance, 5) opportunity cost of down payment, 6) transaction costs buying and selling. Clearly if you see major appreciation in the value of your house you'll clearly come out ahead of renting, but I've been in two situations (one while renting, one whi…

> You need to include everything like: 1) mortgage interest, 2) property taxes, 3) insurance, 4) maintenance, 5) opportunity cost of down payment, 6) transaction costs buying and selling. Factor 1 to 4 are all included (with additional profit margin on top) in rent so you're always paying for those regardless. As an owner at least you don't pay the extra profit margin on it to the landlord. On #6, if you're moving ve…

No, #1-4 isn’t factored into rent. Plenty of condos for rent in Toronto that are cash flow negative each month.

Buying and renting are separate markets. Just because housing prices go up doesn’t mean rent does as well.

Re: Will real estate ever be normal again?

#575

Earlier quoted context omitted.

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…

The caveat is that the currency is being debased and interest rates are being manipulated, forcing people out on the risk curve.

Re: Will real estate ever be normal again?

#576
post #535

Earlier quoted context omitted.

>>Those "interlopers" are ... I notice that your example start with actual locals growing out of a locale to people who have nothing to do with the locale. Whether someone is enemy or friend all depends on attitude. Are you trying to work with and build upon what the previous generations have built, or are you trying to merely appropriate it because you don't like the price of single-family zoning? >>That depends on…

Your note above contains a lot of assumptions about what I think, and vitriol, words like steal, destroy, trash, etc. This seems to be something that you are emotional about. Lots of people think it's immoral for neighbors to be able to micromanage the living spaces of other neighbors outside of basic safety issues. I'm not sure how you'd defend imposing your will on other people just because you can at any given mom…

I can tell you that no one is "freezing anything in time", or "micromanaging the living spaces of other neighbors", or "doing it for their own convenience", or attempting to "morally marginalize people I'm afraid of".

I'm making no assumtions, merely responding to what you put in print. Maybe you are merely playing dumb, but you show little evidence of knowing how any of this actually works, or evidence of having even participated in a town meeting, much less actively worked to get any changes done.

>>I'm not in favor of big developers or corporations or profits.

Actually, that is EXACTLY who you are in favor of - that is how it works.

I've seen in multiple locales how developers make alliance with the old-timers that don't like rules, and then they push through zoning variances, overrides, or elimination. And what goes up is NOT anything in remote characterization related to the neighborhood -- what goes up IS as many units as possible, stacked as high as they can go, or shopping malls/factories if that's more profitable.

If you don't want "single use zoning", you WILL get multi-use, because the appraisal of everything is done by "best and highest use", which means whatever brings in the most money. So, if they can develop a high-rise or factory within an inch if your property line and make the most money, that's what you'll get.

>>words like steal, destroy, trash, etc. This seems to be something that you are emotional about.

Yes, I care about it a lot, but my direct experience is that these are the most accurate words to describe what actually happens (not in your idealized concept).

We literally have right now, on my backyard, a 50+ acre lot that a developer recently bought in a 2-acre zoned area, with typical lots 3-7 acres. This area is very hilly and includs the wetlands that also stretch onto more than half of my lot and harbor multiple endangered species and a great variety of other wildlife. we and our neighbors literally enjoy this wildlife multiple times every day (and some of it also enjoys our gardens).

Did he propose to put up a handful of homes to increase the density but in keeping with the neighborhood? No one would have seriously objected to that, and he could put up a handful of quite profitable high-end homes.

Instead he proposed 5 different plans with 60-300+ 4-story condo units. These 60-300+ units would all add that miultiples of the current traffic to a street that now only serves 20 houses.

It would also completely trash the environment- Their plan was to literally strip-mine the place, put up 35ft+ retaining walls, plant a few trees and some grass. And tap into the same water supply that feeds the 30-odd wells from the same lot - so this could easily run us all out of water. AAnd the land is so steep that the roadways would exceed the allowable specs for fire trucks in the summer, and this is New England which has winters, so people could easily be trapped in multi-unit buildings with fire & rescue unable to reach them.

So, whether you want to talk environment, community, traffic, water, or safety, these interloper developers -- yes, they come from out-of-state and have zero local investment -- are perfectly happy to trash all of it for their own profit, then leave town.

This is literally taking paradise and putting up a parking lot - you don't know what you've got till it's gone.

And this is typical. There are these multi-hundred 3-4 story projects going up everywhere in the region - anywhere they can find a plot and push it through.

And yes, upon finding out about Planning Board meetings to get variances for this, we worked late and weekends for about a month, and shut down this abomination for at least a few years. More people showed up at that Planning Board meeting than ever before, by an order of magnitude. ZERO of them were concerned about their property values. I literally never heard it brought up in a single conversation, email, or meeting. Everyone had concerns, whether it was traffic, safety, environment, water supply, waste treatment, infrastructure, or whatever, but:

ZERO ever even mentioned property values.

ZERO ever mentioned who might move in (and some of these were proposed to be low-income units, because that gets the developers lower regulations).

Yet those are your first accusation, that everyone is greedy and just cares about their prop values, and is "afraid" of who might move in.

And your concerns about "steal", "destroy", "trash" are not emotional, they are simply accurate descriptions of what happens.

And yes, this is a democracy, and you do not have a vote in the towns which you presume you should improve their rules. If you don't have any skin in the game in the locale you propose to change, your are literally an interloper - just check any definition [1-5].

If you like Japan, go there. If you want to make a difference here, then go to a town or city. Get involved in the governance. They are always looking for people to help. run for a position - you will be welcomed in any decent place. INVEST your money and your time in the place. THEN you will legitimately have a say in how it is run.

Until then, stop being so entitled and stop the clueless rhetoric.

While you think you are helping yourself and some other poor people, all you are doing is literally helping developers 1) steal value from others who have spent generations building it, 2) destroy the existing environment and culture where they build, and 3) trash the surroundings.

[1] https://dictionary.cambridge.org/dictionary/english/interlop...

[2] https://www.merriam-webster.com/dictionary/interlope

[3] https://www.dictionary.com/browse/interloper

[4] https://www.thefreedictionary.com/interloper

[5] https://www.collinsdictionary.com/dictionary/english/interlo...

[6] specifically, in the Vladimir Lenin sense of a person who is unaware of what they are doing, but nevertheless helpful to the cause.

[edits: formatting, grammar]

Re: Will real estate ever be normal again?

#577
post #493

Earlier quoted context omitted.

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.

It's an asset but not an investment. It's factored in your net worth (i.e. your wealth) but it's not something you can leverage like the rest of your wealth. Note that if you're a homeowner, and the overall market goes up, you don't benefit from it at all. Your wealth goes up on paper, but it doesn't change anything in your life except it will be more expensive if you want to move.

I completely understand the distinction, but it’s not entirely different from other assets for the typical American. The two largest wealth assets are their homes and 401k/pensions. Both those groups have a lot of friction before their gains can be realized.

And many people do downsize as they get older, meaning it’s less expensive to move events if their home value increased. Unfortunately, many people (just skim this thread) assume home values always go up so they consider them an investment.

Re: Will real estate ever be normal again?

#578
post #522

Earlier quoted context omitted.

Thank you. Maybe you can help me understand this correctly. Your link shows the "owner-occupied" housing was relatively flat during the housing crises. The link below shows new housing units were still increasing during that time.[1] Does that imply most of the new builds were investment properties (i.e. not owner occupied) during this time period? [1] https://fred.stlouisfed.org/series/HOUST

Vacancies were also (relatively) high during that time. https://fred.stlouisfed.org/series/ESALEUSQ176N I think this is what matters most. It's good to have some vacancies so that people have options but too many likely indicates there's some speculation/over-building going on that the market doesn't support.

That makes perfect sense, thank you.

Re: Will real estate ever be normal again?

#579
post #565
post #181

Earlier quoted context omitted.

> And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle That doesn't seem to be true in the Bay Area which has a very high buy/rent ratio because everyone expects housing here to be a great investment. The property tax alone on a townhouse can be higher than the rent on a similar apartment. And property tax, mortgage interest, HOA fees/utilities like garbage and water, ar…

> And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments. You're paying for all of that when renting as well, so not a differentiator.

It is a differentiator if those things would add up to more than rent. In that case renting is literally saving money that you can e.g. put into the stock market instead of real estate.

Re: Will real estate ever be normal again?

#580

Earlier quoted context omitted.

We have the same problem with the car market. I can only afford a $5,000 car, but the car manufacturers make all their money building $20,000 cars. I just can't see how Honda making another $20,000 fit is going to help me afford a $5,000 car.

Are you forgetting that used housing and cars are cheaper? Nobody is forcing you to buy a brand new car.

This was my point, that like cars, luxury homes and apts turn into affordable housing over time.
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