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The carpetbagger’s guide to home ownership

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Re: The carpetbagger’s guide to home ownership

#61

Post by endisneigh »

AnthonyMouse wrote: post #60
endisneigh wrote: post #57

Earlier quoted context omitted.

> The reason housing increases in value to the extent that it does is that areas where it's in high demand prohibit creating more of it. It would be like prohibiting the construction of new cars. Obviously that would make existing cars cost more in general, independent of the fact that some cars are worth more than others. Yes, and the areas that are desirable and the ones that are restricting the construction. Even…

> Even if we suppose that you allow infinite construction, there will always be certain houses or parcels of land that will cost more, perhaps because of being closer to certain things. In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost. > If an area is desirable bec…

> In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost.

Why would this happen? You're talking about the construction of more housing like it's free.

Perfect example of this is something like Chicago - let's say you live right near the loop and are fortunate enough to have a SFH that's huge. The land is worth a lot, and you like your lifestyle. Sure in some perfect world that house would be purchased and turn into a high rise, but you want to live near the loop and have a SFH. Therefore that house will be expensive.

Others in similar situations will do the same. Later more people will come to Chicago and see that they want that lifestyle as well - these types of houses will then command a premium.

Not everyone will sell to a developer to turn it into a high-rise.

> "Nature" e.g. Montana or Alaska or the Ozarks. Do you believe these to be the places with high land costs and restrictive zoning laws?

Are those areas desirable? I've never been.

Re: The carpetbagger’s guide to home ownership

#62

Post by urda »

endisneigh wrote: post #11

I believe the smartest thing you can do if you are reading this in America is to buy a house that you can afford in an area you would like to live in for more than a few years with more than 1 bedroom and rent out the additional bedrooms. Setting aside appreciation, doing this is the closest thing to a guaranteed success imaginable. Leverage lowers your start-up costs, renting enables all your house work to be deduct…

> your opportunity cost is 0.

This is not true, and paints an unfair and unrealistic viewpoint.

Re: The carpetbagger’s guide to home ownership

#63

Post by pdonis »

vinceguidry wrote: post #46
pdonis wrote: post #38

Earlier quoted context omitted.

Perhaps the problem with the availability of housing is the "real estate development" model you describe, which is capital intensive and therefore will be undertaken by large corporations instead of by the people who will actually live in the area and who therefore have a personal stake in how livable it is. Perhaps if more development was done by "young people just moving there", we would have more livable areas and…

Ordinary people don't have the money to, say, build sewers and roads.

They do if they pool their resources through, say, property taxes paid to their locality. Localities can build out basic infrastructure without having to have large corporations do all the development. That has the added advantage that you get actual communities that grow and evolve over time instead of sterile cookie cutter suburbs.

Re: The carpetbagger’s guide to home ownership

#64

Post by buck4roo »

vinceguidry wrote: post #44
paulryanrogers wrote: post #32

Earlier quoted context omitted.

What are the good reasons to develop an area? Proximity to a better one? Fresh water sources? Desirable weather? Good schools? Unpolluted environment? Nice parks?

All of these things. The more the better, and places with better potential get developed first. Commercial opportunities tend to be developed first, followed by better weather. As all these places got developed, tertiary concerns become more important. Rural America will mostly stay rural and suburbs will slowly develop economies and become part of the metro areas they surround.

Suburbs are a Ponzi scheme. They do not cover their existing infrastructure maintenance costs...

https://youtu.be/7IsMeKl-Sv0

Re: The carpetbagger’s guide to home ownership

#65

Post by Supermancho »

paulryanrogers wrote: post #29
endisneigh wrote: post #25

Earlier quoted context omitted.

A burst happening has nothing to do with desirability not being the answer. Less desirable areas had bigger bursts. Relatively, desirable areas will always appreciate, by definition. Housing isn't a mass produced fungible commodity like a car. People comparing cars to houses make no sense.

It's a complex issue, though both aren't necessarily wrong. Land is limited and its raw volume rarely changes. Housing could be increased through scaling up, developing greenfield, or redeveloping underutilized land. If housing were thought of more as a consumable than ones primary investment that would accelerate better use of land for housing.

> If housing were thought of more as a consumable than ones primary investmen

Housing would be "thought of" differently, if property depreciated. Has nothing to do with how people think, but optimal financial strategy. Is there a way to solve it without taxation? Deflating the currency moves the window, but it leaves the status quo trend.

Re: The carpetbagger’s guide to home ownership

#66

Post by AnthonyMouse »

endisneigh wrote: post #61
AnthonyMouse wrote: post #60

Earlier quoted context omitted.

> Even if we suppose that you allow infinite construction, there will always be certain houses or parcels of land that will cost more, perhaps because of being closer to certain things. In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost. > If an area is desirable bec…

> In which case those parcels of land would end up with high density housing on them so more people can live near those things, until such time as the cost per square foot falls below the construction cost. Why would this happen? You're talking about the construction of more housing like it's free. Perfect example of this is something like Chicago - let's say you live right near the loop and are fortunate enough to h…

> Why would this happen? You're talking about the construction of more housing like it's free.

Not free. Less than the market price of existing real estate.

Suppose you have a 10,000 square foot building and it costs a million dollars to knock it down and build a 20,000 square foot building on the same lot. If doing this would cause the new building to be worth $500,000 more than the existing building (because local housing supply is high relative to demand), you're not going to do it, because you'd lose half a million. If doing this would cause the new building to be worth $1,500,000 more than the existing building (because local housing supply is low relative to demand), you are going to do this -- unless prohibited by zoning. Because you'd make half a million.

So when housing prices go up, you'd get more construction, until they go back down below the construction cost.

That doesn't cause housing prices to hit zero, but it establishes a long-term price ceiling, because any price above it makes new construction profitable, and increased supply lowers prices. So housing costs would converge on construction costs even if demand changes.

> Are those areas desirable? I've never been.

Those areas are beautiful, and the land is cheap and hardly anyone lives there because they're far from major cities. It's not proximity to nature that makes land expensive, it's proximity to jobs.

Re: The carpetbagger’s guide to home ownership

#67

Post by nine_k »

endisneigh wrote: post #28
josephcsible wrote: post #27

Earlier quoted context omitted.

What do you mean exactly by "a lot"? I don't think having roommates is very common for people who can afford not to.

In NYC, Bay Area, Boston, LA and Hong Kong I know people making top 15% income and have roommates. They don't necessarily need to, though.

Having a roommate has two purposes, I suppose.

One is freeing up $1-2k of disposable income that you can afford to spend on living in the most desirable place, but maybe would rather not.

Another is to feel less alone. Also, having somebody in the apartment when you're away, who could take care of a delivery or a pet may be important.

Re: The carpetbagger’s guide to home ownership

#68

Post by vinceguidry »

pdonis wrote: post #63
vinceguidry wrote: post #46

Earlier quoted context omitted.

Ordinary people don't have the money to, say, build sewers and roads.

They do if they pool their resources through, say, property taxes paid to their locality. Localities can build out basic infrastructure without having to have large corporations do all the development. That has the added advantage that you get actual communities that grow and evolve over time instead of sterile cookie cutter suburbs.

Without the advantages of upfront planning and design, they'll pay more for crappier services. If the area grows significantly, then they'll have to pay even more on top for upgrades.

But hey, at least it'll be idyllic. Good luck keeping your kids around after they graduate high school.

Re: The carpetbagger’s guide to home ownership

#69

Post by pdonis »

vinceguidry wrote: post #68
pdonis wrote: post #63

Earlier quoted context omitted.

They do if they pool their resources through, say, property taxes paid to their locality. Localities can build out basic infrastructure without having to have large corporations do all the development. That has the added advantage that you get actual communities that grow and evolve over time instead of sterile cookie cutter suburbs.

Without the advantages of upfront planning and design, they'll pay more for crappier services. If the area grows significantly, then they'll have to pay even more on top for upgrades. But hey, at least it'll be idyllic. Good luck keeping your kids around after they graduate high school.

> Without the advantages of upfront planning and design, they'll pay more for crappier services.

I've had that experience in neighborhoods that did have the "advantages" of upfront planning and design. I don't think upfront planning and design is the panacea you are making it out to be.

Re: The carpetbagger’s guide to home ownership

#70

Post by TulliusCicero »

nitrogen wrote: post #43
TulliusCicero wrote: post #42

Earlier quoted context omitted.

Owning as the only housing model doesn’t make sense. There’s plenty of reasons someone might prefer to rent instead, most of them having to do with not being in a position to put down roots. Which necessitates some kind of landlord.

Owning shares that could be transferred from house to house would make a lot more sense than renting.

That sounds like it would be hideously complicated in practice.

Renting works fine if you have some basic regulations (which admittedly is the opposite of the case in the US).

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