Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Americans still think they can make money flipping houses

cbsnews.com

Post reply on HN
Print view View original

71–80 of 194 posts

Re: Americans still think they can make money flipping houses

#71

Post by hiptobecubic »

jaclaz wrote: post #43
coldcode wrote: post #36

Earlier quoted context omitted.

I just sold my house for a ridiculous number. My realtor got 50 people to tour the house in a single weekend, and 5 places offers and I took the one 10% over the asking price. It's not a mansion or anything, and not in some high tech city, but nice area and a bit of land. The 6% commission is not really that much. Just prepping the house took all of my energy; trying to do marketing as well would have been too much.…

>The 6% commission is not really that much. Sure, because you (or your agent) managed to sell 10% more than asking price. Try re-evaluating this 6% if all offers were 85-90% of asking price, and confirm that it is not really that much.

They're saying that that's the whole point of the realtor. Obviously hiring a crappy realtor that can't find buyers that actually want your house is bad.

Re: Americans still think they can make money flipping houses

#72

Post by nemo44x »

yvan-eht-nioj wrote: post #70
nemo44x wrote: post #55

Earlier quoted context omitted.

Falling interest rates for 40 years wasn’t the problem. If anything there has been less demand for money which is why rates fall. Things are far less capital intensive than they used to be in many cases. Falling interest rates have been great for people as more people own homes than at any other point in history. But printing trillions more last year was a flaw. At least got physical proof that MMT doesn’t work.

"...more people own homes than at any other point in history..." I'm not sure about elsewhere, but rates of home ownership in Australia have declined since the 1980's [1], neatly coinciding with a decline of interest rates [2] and a rise in house prices as a proportion of income [3]. [1] https://www.aph.gov.au/About_Parliament/Parliamentary_Depart... [2] https://www.rba.gov.au/statistics/historical-data.html [3] http…

Look at total numbers.

Re: Americans still think they can make money flipping houses

#73

Post by s1artibartfast »

blululu wrote: post #57
chrisseaton wrote: post #42

Earlier quoted context omitted.

> House prices were bounded by wages and were understood to be depreciating assets. When was this ever true? If you literally abandoned a house and let it rot then yeah maybe in ten years it will have lost value because it will need a lot of work, but other than that I think it's never been the case they're depreciating in any meaningful sense.

Pretty much every capital asset depreciates. Even with basic maintenance everything wears out over time. Only legal entities are immune from the ravages of time.

My house has appreciated 500x since construction. Strange

Re: Americans still think they can make money flipping houses

#74

Post by m0llusk »

endisneigh wrote: post #30
m0llusk wrote: post #18

It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…

What area are you referring to where housing was understood to be a depreciating asset? Though that’s true in the literal sense, there are only a handful of instances in American history where they was empirically the case. Not to mention you don’t specify a locale which is the most important thing in real estate, heck, these days perhaps a neighborhood.

I am referring to the United States. In my youth I traveled a great deal, especially around the Midwest and Boston-Washington DC corridor and nearby countryside, much of which has since been developed.

If you do a search for long term housing price data you will see that until the burst of inflation in the mid 1970s house prices were mostly flat. There was still inflation and wear, but the prices remained about where they were. In this environment where house prices are flat and houses wear out the asset becomes known for its depreciation.

The big thing about locales is their vulnerability. It really is the case that back then some undesirable people moving in to a community could start a cascade of people moving out. In that case prices went from flat to falling fast. If you really did pick a great locale then your reward was prices remaining flat.

Re: Americans still think they can make money flipping houses

#75

Post by gonzo41 »

m0llusk wrote: post #18

It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…

It's a massive failure of neoliberal economics that this has occurred. Mortgage prices, along with the cost of electricity are two massive handbrakes on economic growth and potential productivity. Yet somehow the banks and power companies have captured the public to make people think that paying a million dollars to the bank is a great way to live. It's just crazy.

Re: Americans still think they can make money flipping houses

#76

Post by epistasis »

endisneigh wrote: post #30
m0llusk wrote: post #18

It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…

What area are you referring to where housing was understood to be a depreciating asset? Though that’s true in the literal sense, there are only a handful of instances in American history where they was empirically the case. Not to mention you don’t specify a locale which is the most important thing in real estate, heck, these days perhaps a neighborhood.

I think we need to start thinking more clearly about real estate as a combination of two things: structure (depreciating) and land.

Land behaves very different from other assets, because there is a finite amount of it, and it generates economic rent. And the increase in land value generally comes actions not of the owner, but of others, and of the government deciding what is allowed on the land (which happens at the local level, where a small cabal of landowners can exert great influence over a small number of officials making decisions).

And unlike speculation on, say, lumber futures, speculation on land by buying it and hoarding it is actually a huge economic damper. Real estate speculation, by holding a property underdeveloped until it can be sold for maximum profit, creates a land bubble because it withholds productive use of that finite resource that everybody is trying to get.

The best way to solve this would be to, IMHO, tax away all the economic rents that land generates. This removes the speculation, and ensures that every piece of property that is being underutilized will get transferred to someone who can better use it. This will keep housing prices down, because more houses will be built in high demand areas. It's a tax that would greatly improve economic efficiency, housing affordability, and our overall productivity. (It does need to be paired with zoning reform, though).

We also need to reinvigorate our construction sector's productivity, and reduce the shocks to it from the boom bust cycle, but that takes different policy.

Re: Americans still think they can make money flipping houses

#78

Post by civilized »

Schiendelman wrote: post #56
civilized wrote: post #20

Earlier quoted context omitted.

So, if houses were to become investments on a massive scale, and -- as seems inevitable -- they ended up in the hands of only a few, does that change the politics of housing supply? Before, your neighborhood's voters were homeowners who benefit from rising property values; after, they're renters who benefit from falling rents. I've heard that Germany has more of this renting situation but no idea about the politics o…

Renters are so much less likely to be voters that this has little impact. In Seattle, for instance, municipal elections are on odd-numbered years. As a result, get out the vote operations that tend to increase renter turnout during presidential elections don’t have much impact on local elections. We had a vote in the 90s that reduced housing supply considerably, “Citizens Alternative Plan.” It was a February special…

But this seems like it could change if we lived in a world where everyone was a renter, rather than renters being a young, transient population that unsurprisingly doesn't vote.

Re: Americans still think they can make money flipping houses

#79

Post by epistasis »

m0llusk wrote: post #18

It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…

> House prices were bounded by wages and were understood to be depreciating assets

The first part is still true. The thing is that it's bounded by a smaller and smaller percentage wages, and it's always the highest wages that determine this.

Housing prices being bound by seller capacity to pay means that there are not enough houses. If housing prices were determined by the cost of the houses, then we would have finally reached the point where there is adequate supply b

Re: Americans still think they can make money flipping houses

#80

Post by [deleted] »

nemo44x wrote: post #72
yvan-eht-nioj wrote: post #70

Earlier quoted context omitted.

"...more people own homes than at any other point in history..." I'm not sure about elsewhere, but rates of home ownership in Australia have declined since the 1980's [1], neatly coinciding with a decline of interest rates [2] and a rise in house prices as a proportion of income [3]. [1] https://www.aph.gov.au/About_Parliament/Parliamentary_Depart... [2] https://www.rba.gov.au/statistics/historical-data.html [3] http…

Look at total numbers.

[deleted]
Post reply on HN