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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

#561

Post by cesarb »

throwaddzuzxd wrote: post #531
turtledove wrote: post #345

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)…

> charging a premium for unused land in desirable areas (parking lots don't house people) Housed people need parking lots though. Tons of places are not, and never will be accessible with public transports. I live in a city with a great public transport network but I still need a car, as much as I'd love not needing one: I need to visit friends or family outside the city, I have to make bulk grocery shopping sometime…

> I live in a city with a great public transport network but I still need a car

Your experience doesn't match mine. I also live in a city with a good public transport network, but I've never had a car, or felt much need to have one, or even to learn how to drive. For your examples (except the parcel one, which hasn't happened to me and I have no idea how it would happen):

> I need to visit friends or family outside the city

The friends or family I have which live outside the city actually live in other nearby cities. To visit them, I'd take a bus to their city, and then a bus or taxi within that city.

> I have to make bulk grocery shopping sometimes and bags are not enough

Every store large enough that I'd do "bulk grocery shopping" in it has a taxi stop next to it, sometimes even within the store's underground parking floor. So whenever I do bulk shopping on one of these stores, I simply take a taxi.

> I sometimes buy big housing furniture

Every store which sells big housing furniture has the option to send the furniture to your home using their own truck. You might have to wait for the next day (since they batch the deliveries - it's a big truck), but for big furniture, you usually aren't in a hurry.

> Heck, even to go to work, sometimes I'm late, or I missed my bus, or public transports are on strike

If I missed my bus, I wait less than 10 minutes for the next one. If I'm late, public transport is still faster than a car (or a taxi). And if there's a strike, it's true that having your own car might help, but when that happens (and it's not common enough to make it worth it to have a car just for that), the traffic slows to a crawl.

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

#562

Post by bjourne »

nivenkos wrote: post #524
bjourne wrote: post #478

Earlier quoted context omitted.

Sweden doesn't have social housing. What you are discussing is called rent control and means that landlords can't decide rents for their properties by themselves. Without rent control you'd get even more segregated cities as many areas would become too expensive for most to live. Landlords and their lobby organizations want rent control abolished though because doubled rents would greatly increase their profits.

The First hand contract inequality is terrible though. Just ban landlordism directly and let people buy their residences.

The probability of an average person being able to afford to live in a home in a "nice area" is much higher in Sweden and other countries with rent control than in countries without. There is no shortage of homes, there is a shortage of homes that people can afford.

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

#563

Post by mellavora »

HWR_14 wrote: post #82
nemo44x wrote: post #53

Earlier quoted context omitted.

I mean, just about every house has an owner that lives in it. Homes are expensive. Most people just can’t afford a big slice of land and home. They have to accept they will have to make do in an apartment that may be shared. Should the home they deserve just magically appear?

> just about every house has an owner that lives in it Just under 2/3 of US homes have an owner that lives in it.

and the trend is clearly and strongly towards fewer owners.

Look at the percentage of houses bought by PE vs individuals in 2021.

https://www.redfin.com/news/investor-home-purchases-q3-2021/ Real-Estate Investors Bought a Record 18% of the U.S. Homes That Sold in the Third Quarter

yes, I know 18% 6%, which was the figure in 2000.

the trend is pretty obvious.

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

#564

Post by v-erne »

cudgy wrote: post #520
v-erne wrote: post #432

Earlier quoted context omitted.

Its not like private sector is free from overspending and funds misallocation - most of money that flows in there is still controller by the jerks on top that are stroking their ego by investing in buzzwords. The invisible hand of market is myth as much as santa is.

The US market is far from the invisible hand. There is a massive hand with a club attached called the Federal Reserve, which has artificially held down interest rates resulting in a major manipulation of the housing market. Additionally, there are numerous governmental restrictions on minimum square footage, sometimes onerous building codes, impact fees, and zoning restrictions to name a few.

No true scotsman, ay?

Yes, there are many artificial constructs that prevent true free market, but I still do not believe that capital accumulation by capital overs is not an property of this idealistic system. Do You have any real example of invisible hand working (by which I mean not ending with the top dogs holding all the bones) ?

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

#565

Post by geoduck14 »

piotrkaminski wrote: post #395
turtledove wrote: post #385

Earlier quoted context omitted.

I buy electricity from a monopoly provider in my area, run the government. Is that a market? I buy sewer and garbage service likewise. There are some commodities we choose to operate as natural monopolies because competition and profit seeking leads to bad outcomes for society. My argument is fundamentally that housing is the same.

Housing is very, very far from being a commodity.

I agree. We already tried to commodity housing - and we ended up with Brutilist Archutecture. It sucked then amd it will suck again.

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

#566

Post by southerntofu »

qeternity wrote: post #537
southerntofu wrote: post #533

Earlier quoted context omitted.

There is no reason we have to pay for anything. Money is not a natural construct and is a leaky abstraction. Our ancestors built housing long before currency was even invented. Public services are not a "natural monopoly". They are a deliberate political choice (that was paid in blood by the lower classes, see also Haymarket Affair for example). We could very easily make housing free for all, or just affordable (see…

> There is no reason we have to pay for anything. Money is not a natural construct and is a leaky abstraction. Our ancestors built housing long before currency was even invented. As you note, there are other ways to pay for things than money. Whether it's "paid in blood" or other barter system, there is always a cost to pay. > We could very easily make housing free for all, or just affordable (see also HLM program in…

> Whether it's "paid in blood" or other barter system, there is always a cost to pay.

I meant the social rights/protections had to be paid in blood. But nothing in itself requires payment. We just happen to live in a society which commoditizes everything. If everyone worked some field they're passionate about (and people are passionate about many things) and we evenly shared the work for undesirable jobs (eg. cleaning) we could have everything for free.

> If you have more demand than supply (as we do with housing)

This is highly uninformed. In many countries around the planet, empty dwellings easily outnumber homeless people so we don't need to build anything at all to house everyone. Moreover, if we just stopped tearing down housing and started renovating them, that's also much less work/resources. Finally, if you really want/need more housing, a government run program (such as the HLM i mentioned before) shows you can build affordable housing for 10-30k€/appartment and rent them for a final user cost (after government help for housing) of under 100€/month.

It's a shame like all public services across France the HLM system is being corrupted and coopted into money-making machine. The buildings in popular neighborhoods go unmaintained while administrators pocket all the money, and the little that's left goes into developing higher-classes "HLM" housing which we popular classes can't afford.

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

#567

Post by zaroth »

aqme28 wrote: post #547
kriops wrote: post #424

Earlier quoted context omitted.

Wikipedia: "A commodity is an economic good (...) that has full or substantial fungibility. (...)" On the basis of geography alone, housing can not be a commodity.

Eh I see your point but I disagree. Look for housing in a highly competitive city, and soon enough you stop caring about geographical specifics and instead look for some combination of useful attributes. In practice, that's fungibility.

This whole thread is filled with similarly absurd statements like this one. That is not “fungibility” at all, not in practice, not in the slightest.

Fungibility is the absolute incontrovertible likeness of two separate units to the point where they are entirely interchangeable across all parties in the economy.

US dollar bills are fungible. Even BTC are not entirely fungible anymore. Houses are not even remotely fungible.

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

#568

Post by geoduck14 »

unwind wrote: post #479
thow-58d4e8b wrote: post #443

Earlier quoted context omitted.

> BRF system in Sweden To expand on this point, and a similar system in Finland called asumisoikeus: Municipalities have a pool of housing units. The tenants do not buy the house itself, they buy a right to live in that house, which usually costs about 10% of the price of the house, reimbursed when they move out. They also pay a rent that takes care of the energies and depreciation of the house. Socio-economic status…

The grandparent is a bit unclear in my opinion. In the BRF system, you literally do not "buy the place you live in", you instead buy the right to live there. The actual ownership of the property is with the BRF. The word is "bostadsrättsförening" [1] which roughly translates to "living rights association" or something (Wikipedia uses "housing cooperative" so I guess that's the best). The word "förening" is hard to tr…

It sounds like you are describing a condominium. Is that it?

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

#569

Post by closedloop129 »

mellavora wrote: post #559
closedloop129 wrote: post #525

Earlier quoted context omitted.

They will, as long as they have a job. All the forfeited houses from the people who cannot serve their mortgages will flood the market and drive down prices. Additionally, all the surplus construction infrastructure will be there, fighting for every project, which will make new houses cheap.

> All the forfeited houses from the people who cannot serve their mortgages will flood the market and drive down prices. I used to think this. How does your model change if there is a large pool of private equity, ready to buy properties for cash, and turn them into rental units? Assuming this pool can easily handle the flood (which it looks like it can).

Rental units on their own don't matter from a market perspective. There is some sentimental value in owning your own house but apart from that, costs have to be equal or demand shifts until they are.

Private equity can only make a profit if they corner the market and hold back units until prices massively increase.

This is possible to some extend but at its core it is most likely illegal because it requires collusion or a monopoly. So if that's an option, then there is a bigger problem than just housing prices.

But even in an entirely corrupt market, private equity cannot beat the market after Covid. Home office has become fully acceptable so huge fractions of the population are not bound to a specific city. People are free to choose where they live. There will be some municipalities that offer an abundance of housing so that prices will stay down.

Then, once people move there, companies will be founded there or move there, too. Wages will be lower because costs are lower, which will be a huge problem for the companies that didn't move.

So if the established municipalities allow the private equity companies to profit, they risk their own demise.

However, this depends on the willingness of the people to move. It is also contradicted by silicon valley being able to maintain its large housing prices.

My guess is that prices will rise for a while but some Asian city will crack the code and offer cheap housing despite being a cultural center which would make it the technological capital of the world.

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

#570

Post by geoduck14 »

mschuster91 wrote: post #554
pj_mukh wrote: post #361

Earlier quoted context omitted.

I really think most of the solution is in the first part of your plan. There’s no need to micromanage tenant-landlord relationships or setup governmental panels on who historically deserves to live where, if the government can just make sure there is an oversupply of decent housing at all affordability levels. The rest really takes care of itself at that point.

> There’s no need to micromanage tenant-landlord relationships or setup governmental panels on who historically deserves to live where, if the government can just make sure there is an oversupply of decent housing at all affordability levels. The problem is, that is outright impossible in urban areas where almost all space is already built out, not to mention it is immensely wasteful (8% of all CO2 emissions is cause…

>Governments should rather look into making rural areas livable again (by subsidizing basic infrastructure such as internet, grocery stores, doctors and public transport).

And schools, churches, youth soccer leagues, parks, and playgrounds

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