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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

#741

Post by pjmorris »

oceanplexian wrote: post #111
pjmorris wrote: post #91

Earlier quoted context omitted.

I think there's a more concrete measure of value: house prices related to income. Historically (Robert Shiller has a chart for the US going back to 1890) house prices (and mortgages and rents) have maintained a stable relationship with income. Occasionally that relationship is strained but it has usually fallen back in line. One exception to this was the extraordinary, ongoing, support to the financial system post-20…

There’s no rule that you should be able to afford a house on a middle class income. In fact in many countries, particularly in Western Europe, it’s unimaginable that you would be able to afford a detached, single family home on a middle class income. Lots of people in that situation will live in apartments, row houses, or condos for the rest of their lives.

> There’s no rule that you should be able to afford a house on a middle class income.

This isn't really an ownership issue, it is an occupancy issue. Monthly rent needs to cover the expenses of a property including any mortgage, property taxes, etc as well as maintenance, so rents wind up tracking house prices. If you can't house the middle class, a) they're not really middle class and b) you have a societal problem.

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

#742

Post by hackerfromthefu »

turtledove wrote: post #454
cycrutchfield wrote: post #433

Earlier quoted context omitted.

No, profit is icky and illegal apparently.

Profiting from housing , yes, is not something I personally consider moral. But also, I believe that we don't need to meet my fairly radical moral stance to make housing more affordable and attainable for all. We can make incremental progress here by just tweaking incentives. We can go further by reducing profits. It's not some binary all or nothing affair.

Most types of profit are immoral. Providing housing is at least genuinely clearly useful.

Manipulating people to buy stuff they don't need (advertising, marketing, hollywood) is immoral in so many ways. Weapons are very questionable, massive markups on basic stuff (cosmetics) etc etc if you go on about 80% of our economy is actually immoral. Even foods which are a basic good, are generally bottom dollar hollowed out poisons compared to what they could be if health was the primary concern. Don't get me started on the corruptions of profit to the medical process.

I don't know what your problem is about housing but it seems out of perspective if you're not going to campaign against profit from just about everything.

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

#743

Post by nuclearnice1 »

zamfi wrote: post #314
trgn wrote: post #271

Earlier quoted context omitted.

The US is rotating from housing as commodity investment to housing as intergenerational asset, something which has happened in a lot of other countries already (see e.g. Western Europe, mentioned in other comments here). House prices will remain up because any gain from sale will be plowed into the next home. It's a ratchet upward. Higher mortgage rates are somewhat irrelevant in this dynamic, because the home itself…

> USA was inoculated for a very long time, because horizontal expansion over cheap land allowed for expansion of supply. That era is over. True. > Car and highway technology is no longer adequate to expand cheaply and still remain within viable commuting distance. False. The US has mind-boggling amounts of land available. What's changed is the ability and desire to build on it. Used to be, the government would pay yo…

> In NYC and SF, most existing buildings would be illegal to build under current zoning rules.

The NYC number is 40%, according to the NYT. But close enough and here are some nice maps breaking my down why those buildings couldn’t go up today.

https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...

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

#744

Post by hackerfromthefu »

UncleMeat wrote: post #590
turtledove wrote: post #475

Earlier quoted context omitted.

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

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.

Housing investment is a business. Buying the house is a risk, and you sink money and effort into it in the early phases, in the hope of getting profit out of it in the later phases.

If you are going to make that business unprofitable then no one will do it. People won't sign up for the risk, cost, effort and frustrations of being a landlord with no upside.

While we're on the topic, why not prevent programmers from putting their salary up? After all software is essential to society these days?

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

#745

Post by hackerfromthefu »

closedloop129 wrote: post #569
mellavora wrote: post #559

Earlier quoted context omitted.

> 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…

The ideas here are far too theoretical and absolutist to work in the real world.

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

#746

Post by hackerfromthefu »

aperson_hello wrote: post #582
me_me_mu_mu wrote: post #351

Earlier quoted context omitted.

Cut down home ownership to max 3 homes per household. Otherwise rent from someone else. And yes it’s possible to be capitalist and agree with sensible regulations. I’d rather we focus on building amazing companies and utilizing labor effectively.

I'd claim the big issue is Blackrock coming in and buying all the available housing and renting it out for the max amount possible. If you restrict individuals, but not corporations, you create a worse problem!

Yes corporations/BlackRock must be limited to 3 or 10 or whatever. If they corner the market we will see a dystopia for sure.

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

#747

Post by turtledove »

Ekaros wrote: post #721
carapace wrote: post #720

Earlier quoted context omitted.

In a world w/o rent control, how do you imagine things playing out here? If the landlord lowered rates now and got tenants (without rent control), then demand rebounds, does the landlord then increase the rent again? Wouldn't that put a lot of the new lower-rent renters back out on the street? Anyway, the OP's point stands: there are perfectly good homes going empty. They aren't out in the woods. They are right here…

Yes, terminate the contract according to local regulations. Rent again for higher price. Then those who can't afford would need to either move out to cheaper regions or find ways to pay the correct market rate.

You see how that's deeply fucked up, right?

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

#748

Post by turtledove »

antisthenes wrote: post #732
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?

"Amoral" means neutral, without imposing a moral judgment. So it seems to me he doesn't particularly care about it either way. If he wrote "immoral", then you could ask why he thinks that.

Not he.

But good point, immoral is probably more correct.

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

#749

Post by turtledove »

mrep wrote: post #687
turtledove wrote: post #618

Earlier quoted context omitted.

Disagree that this is a universal desire. We don't all want to have more money than everyone else. Plenty of us just want to have enough money to live modestly and comfortably.

You might, but most people do and creating policies/laws that they don't is naive and won't work.

Sure, don't disagree. The parent poster said all. I was simply pointing out that all is the wrong word.

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

#750

Post by turtledove »

quesera wrote: post #658
turtledove wrote: post #617

Earlier quoted context omitted.

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.

> I now rent at cost Be very careful. If you are in the US, you might want to speak to a tax attorney. The IRS treats property rented out at less than fair market value as a personal residence. Your tenants may have to treat the difference as income, and you are not eligible for many of the usual deductions for investment property.

I have, but that's good advice.
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