The housing market needs more condos • Hacker News Board

Re: The housing market needs more condos

#121

Post by [deleted] » Sun, Feb 13, 2022, 7:47 AM UTC

staticman2 wrote: post #120

everforward wrote: post #91

Earlier quoted context omitted.

> I don't know why you wouldn't desire rules about noise if your home is attached to another home where loud neighbors would bother you. The level and type of noise that reaches nuisance levels is highly subjective, which leads to conflict between neighbors. You also have no control over your neighbors, so you might be able to practice your guitar for a decade and then suddenly your neighbors move and the new ones do…

Depending on state law and the requirements of the condo bylaws major changes in the condo rules in many projects require a supermajority of residents to vote in favor of such a change, so rule changes aren't necessarily something that can be easily or arbitrarily changed for important aspects of the project.

[deleted]

Re: The housing market needs more condos

#122

Post by nicbou » Sun, Feb 13, 2022, 8:13 AM UTC

llampx wrote: post #80

nicbou wrote: post #63

Earlier quoted context omitted.

The alternative is to tie up a significant amount of money into a home. In Germany, ~12% of the purchase price is lost to fees. A lot more is lost to interest. Some more is lost to things that are normally included in your rent. Oh and you need to pay for maintenance. You need to take care of maintenance. To illustrate my point, most German landlords fail to beat inflation. Some 20% are losing money. The homeowners I…

I'm not so sure that buying is always a bad decision. I live in Berlin, and see where you are coming from. Germany has strong tenant protection laws, and you generally don't get much or any freedom when buying an apartment in a building. You can't change the layout as you'd like, for example, due to load-bearing walls. However, in terms of building equity (not to become a small-time landlord), buying an apartment is…

A part of your payments will indeed build equity, but over 30 years of payments, most of it won't (see previous comment).

If the market crashes, your house will not remain yours if you can't afford making payments. If things go south, I see unavoidable payments and illiquid assets as a liability, not an asset.

Selling is indeed tax-advantaged after a few years though. That's a good point.

The main pro for me is that it's a hedge against rent prices and inflation. However that's assuming that housing prices are reasonable, and that there are no better investments.

Re: The housing market needs more condos

#123

Post by divbzero » Sun, Feb 13, 2022, 8:20 AM UTC

seanmcdirmid wrote: post #103

twalla wrote: post #5

A lot of people have a big chunk of their net worth tied up into home equity because it's sort of the "ordained" path to building wealth for the middle class - condos don't see similar appreciation, get hit harder in downturns and are one of the last types of properties to recover in value afterwards. Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see…

> Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see plenty more condos. This happens in Japan, but happens mainly as a result of: a. No one sees real estate as a sure shot after the excess of the 80s. b. Declining population means even Tokyo has a lot of extra housing. c. It is easy to rebuild housing, so people rarely buy "used" homes, leaving on the…

> a. No one sees real estate as a sure shot after the excess of the 80s.

That sounds ominous. Are there good comparisons of how excessive the real estate market is in the US today vs. Japan during the 80s?

Re: The housing market needs more condos

#124

Post by nicbou » Sun, Feb 13, 2022, 8:23 AM UTC

trinovantes wrote: post #102

The housing market needs to deregulate zoning and let the free market decide what gets built Not everyone wants to chose between a 2000sqft McMansion or a 500sqft shoebox in the sky

The free market lets actors choose what's best for them at the expense of the group. For example the recreationally remote are bankrupting American towns, and using up far more land and resources than sensible. This also have an environmental impact, but that argument tends to fall on deaf ears among free market proponents.

Re: The housing market needs more condos

#125

Post by bruhboribhe » Sun, Feb 13, 2022, 8:32 AM UTC

divbzero wrote: post #123

seanmcdirmid wrote: post #103

Earlier quoted context omitted.

> Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see plenty more condos. This happens in Japan, but happens mainly as a result of: a. No one sees real estate as a sure shot after the excess of the 80s. b. Declining population means even Tokyo has a lot of extra housing. c. It is easy to rebuild housing, so people rarely buy "used" homes, leaving on the…

> a. No one sees real estate as a sure shot after the excess of the 80s. That sounds ominous. Are there good comparisons of how excessive the real estate market is in the US today vs. Japan during the 80s?

> Between 1956 and 1986, the price of land increased by as much as 5,000 per cent in Japan. At the peak of the bubble economy, Tokyo real estate could sell for as much as US$139,000 per square foot, which was nearly 350 times as much as equivalent space in Manhattan. By that reckoning, the Imperial Palace in Tokyo was worth as much as the entire US state of California. The Japanese property market was worth four times more than the US property market

https://www.scmp.com/magazines/style/news-trends/article/309...

Re: The housing market needs more condos

#126

Post by trinovantes » Sun, Feb 13, 2022, 9:05 AM UTC

nicbou wrote: post #124

trinovantes wrote: post #102

The housing market needs to deregulate zoning and let the free market decide what gets built Not everyone wants to chose between a 2000sqft McMansion or a 500sqft shoebox in the sky

The free market lets actors choose what's best for them at the expense of the group. For example the recreationally remote are bankrupting American towns, and using up far more land and resources than sensible. This also have an environmental impact, but that argument tends to fall on deaf ears among free market proponents.

While I acknowledge absolute free market may result in tragedy of the commons in many scenarios, you gave a pretty poor counterexample

American towns are going bankrupt because federal/state subsidies (e.g. the Highway Act) allowed them to make inefficient decisions like creating financially unsustainable suburbs instead of intensifying urban areas

Re: The housing market needs more condos

#127

Post by pydry » Sun, Feb 13, 2022, 9:10 AM UTC

aaomidi wrote: post #115

seanmcdirmid wrote: post #107

Earlier quoted context omitted.

Considering china is still very rural that doesn’t seem surprising. But China is still in their 1980s Japan phase where real estate in Shanghai is worth more than all of California.

China just builds out entire cities years before they're necessary.

It's not a deliberate policy. There's precious little else to put your money in so the Chinese end up using property as a savings account.

Developers will often skimp on construction quality as a result, since they know that nobody will actually be living in them.

Re: The housing market needs more condos

#128

Post by closeparen » Sun, Feb 13, 2022, 9:14 AM UTC

The article gets into some technical rules consequences that are fresh and interesting relative to the usual zoning and NIMBYism discussions. I think they would apply to markets where developer interest, rather than a planning commission, is the limiting factor.

- Condo projects are uniquely sensitive to credit availability for first time buyers. Shifting credit towards established buyers naturally shifts housing starts towards SFHs since that is what established buyers want. I would imagine this would also be at play in the disappearance of starter houses.

- Developer warranty encourages HOAs to become involved in litigation right as the building starts to be occupied. You can’t get a mortgage in a building with ongoing HOA litigation. Once the developer has sold enough units to generate a lawsuit but not enough units to cover his costs, he gets stuck in limbo squatting on inventory until the lawsuit settles. You could imagine ways of fulfilling both intents without such an unfortunate interaction.

Re: The housing market needs more condos

#129

Post by pydry » Sun, Feb 13, 2022, 9:22 AM UTC

trinovantes wrote: post #102

The housing market needs to deregulate zoning and let the free market decide what gets built Not everyone wants to chose between a 2000sqft McMansion or a 500sqft shoebox in the sky

The problem is that free market is deciding and it's deciding that returns on providing stores of wealth to the very, very, very rich are greatest and as such that crowds out investment in places to actually....live.

If you're looking for a wealth store fungibility is a net positive. McMansions and standardized condos are known quantities that can be valued accordingly.

Re: The housing market needs more condos

#130

Post by quartesixte » Sun, Feb 13, 2022, 10:24 AM UTC

seanmcdirmid wrote: post #103

twalla wrote: post #5

A lot of people have a big chunk of their net worth tied up into home equity because it's sort of the "ordained" path to building wealth for the middle class - condos don't see similar appreciation, get hit harder in downturns and are one of the last types of properties to recover in value afterwards. Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see…

> Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see plenty more condos. This happens in Japan, but happens mainly as a result of: a. No one sees real estate as a sure shot after the excess of the 80s. b. Declining population means even Tokyo has a lot of extra housing. c. It is easy to rebuild housing, so people rarely buy "used" homes, leaving on the…

C is the really important piece of the puzzle here. Tokyo allows for a lot of building because zoning and codes are more permissive.

But. From when I lived there, my general observation was that in exchange for keeping the cost of the house fixed, rising property values is dealt with by making property lots smaller. Where 1 house stood now stands 2.

I would like to add

D. apartments are plentiful and cheap. I paid ~300USD a month for a small apartment in an outer suburb of a mediumish city. I was making ~2500USD a month.