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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

#621

Post by gilbetron »

The issue, as with health care, is that this is a market the consumer cannot choose to exit. I can't decide to not live somewhere, just as I can't decide not to have an appendectomy. I can decide not to have a tablet or a car or a bike or an espresso machine, so markets work well. But if you must participate in a market, it changes the dynamics to the detriment of consumers.

I love free markets but they don't exist without laws and regulations, and those laws and regulations must match what is being sold.

I mean think about it, people can't get housing in cities without paying a ridiculous multiple of the costs to create that housing. It's like if restaurants cost 10x or more than the cost of goods for meals. I can make my own steak dinner for like $50 in components, but if I want to eat out at a nice place, even 3x is extreme, and really nice. This is like if all restaurants, even cheap ones, were $500+. It's insane.

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

#622

Post by bjourne »

ryan93 wrote: post #606
bjourne wrote: post #588

Earlier quoted context omitted.

Not true. There are over a million rent-controlled apartments in Sweden.

How many people want those million homes though?

Millions of people live in those homes. That there are more people than apartments available in the most desirable areas is not a system failure.

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

#623

Post by carom »

turtledove wrote: post #604
carom wrote: post #487

Earlier quoted context omitted.

How often would people have to move?

When they wanted to. Forcing people to move is, imo, needlessly cruel.

Isn't that unfair to someone else who wants to live there? It just seems like the first to arrive is the lucky one.

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

#624

Post by turtledove »

b112 wrote: post #580
turtledove wrote: post #438

Earlier quoted context omitted.

Surface parking lots take a huge volume of space that could be used to house tens or hundreds of families. It has nothing to do with "cars bad", and everything to do with "why are we letting all this precious resource go so poorly utilized?"

This is the problem. You have an agenda (cars are unimportant / should be banned), therefore, you cite parking lots as "poorly utilized". You also act as if there is a land shortage. There is not, with exceptions stated above.

You are falling prey to the fundamental attribution error. It has nothing to do with "cars should be banned".

If my objective is "maximize housing" then step one is too evaluate the space and find areas where housing does not exist in quantity.

Those are places like parking lots, parks, commerical only buildings, single family homes, hospitals, schools, etc.

To increase supply, we must tear down existing sites. Parking lots have the most limited positive upsides.

Where would you build a new, 1000 unit apartment building downtown?

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

#625

Post by nly »

TapWaterBandit wrote: post #518
nly wrote: post #506

Earlier quoted context omitted.

> 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 pay…

The interest rate hasn't even gotten to 1% yet and these things take time to filter through to the market. And it is worth pointing out that as you can see from the link below the UK has had rates at less than 1% since the GFC. https://www.propertyinvestmentproject.co.uk/property-statist... I have no idea where interest rates are going to end up however I wouldn't assume that the relevant reference point is late 2019…

Sure, we've had sub 1% zero rates since 2009, but over that 13 years the cost of housing has tripled. Even going to 2% over a couple of years could be devastating to home equity when people are so leveraged.

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

#626

Post by andsoitis »

turtledove wrote: post #466
cycrutchfield wrote: post #392

Earlier quoted context omitted.

“profit from rent is amoral”. Care to elaborate on this? Does this ethical standard also extend to other human needs as well? For instance should farmers not be able to profit from providing food?

A farmer and a landlord are different things. My family are farmers, I've been a landlord. (FWIW, before anyone calls me a hypocrite, I paid back every renter every penny of profit I made from them plus appreciation.) The labor that the farmer puts in should absolutely be rewarded. But the labor of a farmer is absolutely nothing like a landlord who makes money purely because they had enough money to buy housing. Plen…

> purely because they had enough money to buy housings

whence did the money originate? from loot or labor?

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

#627

Post by Biologist123 »

AlchemistCamp wrote: post #356
Biologist123 wrote: post #337

Earlier quoted context omitted.

That’s a sweeping comparison. I’ve visited both and my take would be that Europeans have a higher standard of living than Americans. But that’s just a hunch, I’d be interested to see a breakdown by specific metric and class.

I'd take data over an anecdote or hunch. Specific breakdowns are harder to find, but top of line numbers are pretty easy to find in a minute on Google: https://datacommons.org/tools/timeline#place=country%2FUSA%2...

I’m not sure GDP is a reliable national wealth indicator in countries with very high levels of inequality and cost of living. Certainly not as a comparator. Plenty to google on that too. This isn’t a criticism of your point - more that we need a better set or metrics to evaluate “wealth”.

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

#628

Post by andsoitis »

turtledove wrote: post #617
UncleMeat wrote: post #590

Earlier quoted context omitted.

We should enforce this with the law. Right now, landlords raise rents anyway. I've never once heard of a landlord lowering the rent once they finish paying their mortgage, even though their expenses are now far lower.

Let me be the first then. I've been a landlord for a decade. I've paid back each and every one of my tenants the rent I collected in surplus to costs. Adjusted upwards to reflect the appreciation of the unit. I now rent at cost, choosing to believe that it's better to help the people who live with me establish themselves and build financial safety.

> help the people who live with me

are you saying you and them live under the same roof? i.e. they're your roommates?

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

#629

Post by UncleMeat »

turtledove wrote: post #617
UncleMeat wrote: post #590

Earlier quoted context omitted.

We should enforce this with the law. Right now, landlords raise rents anyway. I've never once heard of a landlord lowering the rent once they finish paying their mortgage, even though their expenses are now far lower.

Let me be the first then. I've been a landlord for a decade. I've paid back each and every one of my tenants the rent I collected in surplus to costs. Adjusted upwards to reflect the appreciation of the unit. I now rent at cost, choosing to believe that it's better to help the people who live with me establish themselves and build financial safety.

That's certainly remarkable. You are indeed the first person I've ever heard to do this.

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

#630

Post by fundad »

turtledove wrote: post #447
paisawalla wrote: post #375

Earlier quoted context omitted.

So the landlord what, eats all of the downside in that scenario? But I'm sure you'd also restrict their ability to raise rents on other tenants (if they have multiple units) to compensate, so why would the landlord even do this to begin with? It's potentially 100% downside and restricted upside.

Yep. You got it in one. Private landlords are a part of the problem. They have every incentive to prevent new housing from being built. It should be challenging to be better at providing housing than the municipality government.

Exactly. Landlords aren’t entitled to a good business. If you diligently maintain the home you rent out AND pay income tax, it’s not a great business now. The profits are in neglect and appreciation.
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