Lot/construction loans is a highly speculative business, especially as lots of builders are blue-collar guys with minimal assets who can simply close shop in a recession. Building homes is constrained by the wider economy and interest rates, and they take a while to build, so in all of the umpteen million housing crashes we've had previously, a large % of homes built will hit in the market in the middle of a crash. T…
When’s the last time a bank has “taken it on the chin”?
This is not a constructive or informed comment. Interest rate policy is not singularly to blame for the housing crisis, just as it wasn't in 2008. The issue in 2008 was lack of internal enforcement at banks or by federal regulators of interest rate products. In the case facing us today it is less to do with Fed policy, more to do with land use policies that have made housing construction literally illegal.
> it is less to do with Fed policy How did you quantify "less"? Low Fed rate made mortgage body 60-70% cheaper, hence prices are higher.
In a competitive market, prices are determined by the lowest seller, not the highest buyer.
There is plenty of cheap or even virtually free housing available in major cities such as Detroit, Baltimore, St. Louis, and many others, as well as countless trailer parks in any of countless Nowheresvilles, USA. The unspoken dirty little secret is that affordability complaints are really about housing that is around the kind of people the buyer wants to be around and not around the kind of people the buyer doesn't…
Not to mention the weather.
Part of the trade off I make personally for affordable housing is not really wanting to go outside from November to March because the weather sucks.
If you live in an area that has perfect weather you are always going to have a demand problem and high prices from people wanting to move to those areas.
Given that 50% of the state rents and you would make it illegal for them to continue their current occupancy arrangement? Not going to keep replying.
Not saying I agree, but the concept is that 50% more capacity on the market drives down prices so much that renters can afford to own. Obviously not everyone could afford, and not everyone wants to, and that transition process would be dramatically inefficient. (For example, inspectors could charge a fortune with so many people trying to buy so many homes)
But it's sort of obvious to me that to wouldn't push prices down so much that most renters, some of whom are quite poor and and have poor credit, could own.
Plus, even if you are putting 50% more capacity on the market, you are also putting multiples of that in demand on the market, since renters who don't know each other often live in the same house.
I think developing an entire neighborhood of SFH is more expensive than developing a duplex or quad, which is what most upzoning would legalize.
A duplex or quadplex in a desirable area being upzoned is still going to be well outside the realm of what anyone but the “big boys” can reasonably afford to develop. They’re going to turn it into rentals, and do their best to maximize rent for each unit. End result is paying an obscene monthly rent for ever-shrinking square footage, while anyone being paid below a living wage sits in the 20+-year-long queue for empl…
It's more than what your typical person can do, maybe, but the cost of the loan to develop a duplex in SF is not as large as you are making it out to be. There could be plenty of entrants to that market.
This research[1] estimates (15.1/23.8) 64% of the increases over pandemic period to remote work change, sounds like it could be a pretty big part of the story. [1] https://www.nber.org/papers/w30041
You can't tie bay area or NYC price increases to remote work. You can tie LCOL price increases to them. But if that's the case, you would expect HCOL/central places to decline in price via the flip side of the same effect. Yet instead we see massive price increase in LCOL and smaller yet still big price increases in central/HCOL. Obviously a many variable system, but stating that remote work should lead to a national…
People want more space. They want more space in the country. They want more space in the city. A 2 bedroom urban apt doesn't accommodate 2 people WFHing, so roommates split up, adult children move out, established owners upsize, it's a general increase in demand everywhere, and evidently more than compensated for some people going urban-to-rural.
SF only has one thing going for it really - weather. Everything else pales compared to NYC.
> SF only has one thing going for it really - weather. This is far from an universal view - I live there (well, East Bay) and I think the weather isn't that great: too cold in summer, no nice evenings, never nice to hang out by the water. And I like cold winters as a contrast. October to December are nicer though.
According to this resource ( https://www.newhomesource.com/learn/stick-built-vs-modular-h... ): - Modular home construction is an $11 billion industry, growing at 8.5% per year - The cost of modular/factory vs. stick built construction is about a 10-20% savings. On a $500k home, that’s going to be less than $25k difference in price. That’s not the problem. Additionally from this source ( https://blog.lotnetwork.com/l…
> The cost of modular/factory vs. stick built construction is about a 10-20% savings. On a $500k home, that’s going to be less than $25k difference in price.
Isn't 10-20% of $500k actually $50k-$100k? (Could buy some really nice appliances...)
> Housing can’t both be a good investment and be affordable This gets repeated a ton, but isn’t true unless you assume density never increases. Buying a SFH and replacing it with a 4-plex would be profitable in almost every market — were it allowed , which it almost never is in the US. In that alternate universe, the SFH owner makes money, the developer makes money, and the new units in the new building can be afford…
Wouldn't they also be oppressively small and bad for mental health (which is already pretty bad compared to fifty years ago)?
No, it would be a taller building.
American new construction has doubled in size (in terms of sqft/unit) over the past 50 years. If “oppressively small” were the problem, things should have gotten better, not worse?
If housing is fungible I've got a house in Gary, IN to sell to you. WFH makes it possible.
Do you understand macro scoped problems and the significance of subsets of the population having differing priorities? Seems not. Aside from the snark, I'll make it clear. If you have 100 people and even just 5 of them prioritize LCOL to their current locale, those 5 moving away will reduce demand for the area, regardless if the other 95 would never move to Gary, IN in a million years. Housing is not a closed system,…
The withdrawal from large tracts of the country towards employment centers, mostly on either coast, is still ongoing. WFH may have blunted it a little, however the tendency is the same. For every person that moves from San Francisco to Raleigh there's two that move from Lumberton, NC to Raleigh. So - prices in Raleigh are not falling, and who cares about Lumberton? And prices in the pharma hub Boston are out of control. If you are in pharma, you most likely live in Boston, SF or San Diego, with housing out of control in all three. That's the thing - housing is still most intimately tied to employment.