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Homes in 97% of U.S. cities are overvalued, Moody's says

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Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#501
post #486

Earlier quoted context omitted.

Landlords don't need to raise rent if their costs aren't rising.

Landlords who acquired property 20 years will use 'market rate' as a justification. I know of someone making a living from such a building consisting of 2 small apartments and a single office. He doesn't have a job, just idols away at home at all day getting anxious about climate change and identity politics.

landlords are definitely taking advantage of the situation, but that's a consequence of the bigger picture. In EU the constant influx of immigrants from 3rd world countries is creating demand and raising the prices while decreasing the salaries since they work for half the price and quality than locals but companies hire them regardless and they don't mind living 5 people in 2 bed flat. Moreover overseas oligarchs and cartels are buying out properties and raising the prices even more.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#502
post #483

Earlier quoted context omitted.

You're confusing want and need though. You might not like to live in any house, and you might need to be roughly geographically located to do work, but for the most part any house that fits your family is interchangable. When you take the other things, like job and where you want to send your kids to school it becomes a hell of a lot more fungible. Given that commoditization is a scale, I would say it could be toward…

> Given that commoditization is a scale, I would say it could be toward that end of the spectrum if we wanted it to be. Commoditization is only a scale inasmuch as the underlying goods are fungible. Corn is a commodity because nobody cares about differences between individual kernels, but if some process came around that only worked with super-specific kernels, then you'd be reducing the commoditization of corn. I ca…

Those are things you're attaching because of privilege though. One visit to China will give you a view of just how much housing can be commodtized. Endless rows of apartment buildings, each identical, supplying everything you could need.

If you're without a home, one house is very much like another. It's only once you have money and ambition that you might want a better view, better schools.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#503

The sooner we collectively decide that housing shouldn't be a market, the better. We all need it, and we should figure out mechanisms to make it available to all. Practically that means paying to build and maintain housing stocks, changing tax incentives so developers are incentivized to build more housing and less luxury housing, charging a premium for unused land in desirable areas (parking lots don't house people)…

In spirit I agree with some of your ideas, and I hate rent-seeking. However, where I live, I nearly ended in a situation where I was not allowed to sell an appartment I owned and had lived in for 20 years. I had moved to a different city to work and live with my girlfriend, and had rented out the apartment, because obviously it is expensive to both hold one apartment and pay for a second one in the new city. I had rented out the apartment, because initially it wasn't clear if we were staying in the new city or going back to the old city, once my girlfriend had finished her degree in that city. I had made a written agreement with the tenant they rented for 2 years.

1 and a half year later, we had decided we were going to buy a house in the new city and stay there. I wrote the tenant to inform them, I had decided to sell the apartment, come the 2 year date.

"OK", replied the tenant, "it's just that, I've decided I don't want to leave this nice cheap apartment anyway, and prefer to stay.."

So I start to read up on the law in my country regarding these things. It turned out, in my country it is nearly impossible to make a pre-determined time-limited rental. In fact, there are only 4 scenarios where it is possible. It turns out, our contract should have had the specific wording "I rent out this apartment for a period of 2 years, because after 2 years I am going to move back to it myself, on this date, because I have the following specified timelimited activity I'm doing at location X". Because my contract only stipulated the duration, but not specified the exact legal grounding for the limitation, it was not valid. TL;DR. I ended up having to 'bribe' the tenant with a huge sum of money, to get their written consent to leave the apartment by the originally agreed-upon date. I also ended up losing a significant amount of money on the sale, because the presence of the previous tenants hurt the price I could negotiate on the sale.

   In fact, I would have made 5x more money on the sale,
than I made from received rent for renting out. (ie I received maybe 50000 some-currency in rent (without expenses subtracted, so in practice it may have been more like 10-20000). But the reduced salesprice was ~300000 lower, because I ran the sale while the tenants were still present (in hindsight, I should not have put it up for sale until the tenants were gone, but I paid a huge price to learn that lesson :-(.

So if I had let the appartment stay empty for 2 years instead of renting it out, I would have made 300k instead of 20-50k. Apart from the fact, that those 50k ended up being what I had to pay in "bribe money" to get the tenants to leave. So I basically let two strangers live for free for 2 years in my apartment, in return for them making it very difficult for me to sell my own apartment. A final caveat is, that technically it's even illegal to leave the apartment empty in my country - if it's empty for a prolonged period of time, you have to register it for "public rental", at a reasonable rent price.. So, yes, I definitely want the rights of tenants in place and protected, but it is possible to protect them so much, you actually make the life of people who have bought a single property miserable.

A postscript: I know many won't buy my arguments about "losing money" here, since the money I would potentially earn or lose here, are exactly the sort of 'board game monopoly money' we are arguing about whether anybody should have or be entitled to. IE the money I would make back on the sale of the apartment I have owned for 20 years, are exactly those 'the game is rigged' money, that appear out of thin air, for not exactly doing anything (apart from maintaining my apartment against wear and tear.)

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#504

Earlier quoted context omitted.

What if someone less fortunate 'wins' the mansion on the beach. How do they afford the future upkeep?

This is a fair question, and one I'm not entirely satisfied that I have the answer for. Ideally, in my mind, I wouldn't own my home but I'd also be on the hook for maintenance and upkeep. But I recognize this does not meet everyone's needs and needs more thought. I would also hope that we would tend to build fewer mansions in favor of more multi family complexes, cohousing, coops, and small community oriented housing…

You know this kind of leads towards communism... Which I think is the key problem with any kind of shared equality by force system, it will work nicely so long as no one running things decides they don't want it to, then it works really poorly.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#506

Isn't this one of those "If everyone is crazy, you're crazy" situations? If every house is overvalued by some metric, then maybe the metric is wrong. People's perceptions of value are a large part of the actual value(meaning what someone would really pay) for things like housing that should depreciate over time.

We'll find out over the next 6-12 months. At some point, a lot of home buyers started shopping by payment without regard to total price. With interest rates near their lowest in anyone's lifetimes that was workable. With interest rates rising, as buyers who haven't locked in lower rates begin looking at the current payments on offer, they will have to look at lower priced homes or drop out of the market. If this boom…

> At some point, a lot of home buyers started shopping by payment without regard to total price

Isn't this how everyone has always shopped for housing? House prices are just a Present Value calculation. For example, if you can afford $3,000/mo over the next 25 years and you have a copy of Excel or OpenOffice calc handy:

Affordable house price at a 5% mortgage rate: =PV(0.05/12,25*12,-3000,0) => $513K + [your down payment]

Affordable house price at a 2.5% mortgage rate: =PV(0.025/12,25*12,-3000,0) => $668K (30% higher) + [your down payment]

Atm, here in the UK interest rates are basically back to where they were in late 2019, but housing is still priced 20% higher. This is due to the chronic lack of housing stock and shifting buying patterns

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#507
post #481

The sooner we collectively decide that housing shouldn't be a market, the better. We all need it, and we should figure out mechanisms to make it available to all. Practically that means paying to build and maintain housing stocks, changing tax incentives so developers are incentivized to build more housing and less luxury housing, charging a premium for unused land in desirable areas (parking lots don't house people)…

Housing shouldn't be a market? Then how would housing be allocated? The state builds and gives housing to everyone? Maybe you should take a trip to Eastern Europe one of these days to see the final result of what you're advocating. Pros: everyone is given an apartment to live in. Cons: your city's skyline looks like this: https://i.imgur.com/5X1sIeP.jpg "We collectively decide" just means you decide for me. You think…

Or it could look like Vienna https://m.youtube.com/watch?v=41VJudBdYXY

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#508

Earlier quoted context omitted.

>Also, government operated facilities do not have a profit motive, Great, so the shit-show we have now, except without any incentive to efficiently spend. Sure that will go over swimmingly. Everyone knows that government construction projects are known for coming on-time and on-budget, and for the best value.

Seattle just built a major light rail expansion ahead of schedule and under budget. But I specifically believe in building more, smaller units. Places with eg 20 apartments. By building smaller scoped projects, costs are better understood up front, maintenance costs are lower, and you need less specialized construction expertise. Building 50 20-unit complexes to house a thousand families is going to serve everyone be…

There are floor area ratios (FAR) now that prevent small units. I have a 6500 sqft lot. I can build 14 units. I have a FAR of 3, so 19500 sqft / 14 units is 1390 sqft per.

Zoning is your problem, not who is building.

Developers and landlords are working in the insanity that are municipal governments. Do you understand why we write people off when they say they want more of their involvement?

Loosen zoning and I'll take advantage of it. We don't need to pay some bureaucrat who has no incentive to do their job efficiently to sit in the middle of this. Zoning office budgets should be tied to number of permits approved or units built. Right now they get the same money for being impediments.

Oh, I almost forgot, I also need to have 14+ parking spaces if I build out fully. Again, zoning problem. Developers don't just love parking lots.

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#509

The sooner we collectively decide that housing shouldn't be a market, the better. We all need it, and we should figure out mechanisms to make it available to all. Practically that means paying to build and maintain housing stocks, changing tax incentives so developers are incentivized to build more housing and less luxury housing, charging a premium for unused land in desirable areas (parking lots don't house people)…

The problem in almost every country with out of control house prices is low interest rates since the dot com crash. That's where everything went wrong. At 0-1% interest you can get insane mortgages for 90-95% of the value of the property, pushing the price up to where people spend every last cent they can on mortgages, but at $xxxx per month you can easily afford hundreds of thousands of dollars in mortgages. Raise i…

If there is a recession, young people will not be in a position to buy homes

Re: Homes in 97% of U.S. cities are overvalued, Moody's says

#510

The sooner we collectively decide that housing shouldn't be a market, the better. We all need it, and we should figure out mechanisms to make it available to all. Practically that means paying to build and maintain housing stocks, changing tax incentives so developers are incentivized to build more housing and less luxury housing, charging a premium for unused land in desirable areas (parking lots don't house people)…

Isn't the problem that housing isn't more of a market?

In an actual market, margins are competed away and prices drop over time, there's elasticity in supply and demand, and people don't view their 15-year old cars or whatever as "investments", they trade them up for a newer model and pass down the older stuff to people who can't afford them as much.

In housing, we artificially constrain supply with zoning laws and building codes, and we stimulate demand with subsidized mortgages and rent control laws. It's pretty much the opposite of what you want to do if you want there to be more affordable housing.

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