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Maybe treating housing as an investment was a mistake

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Re: Maybe treating housing as an investment was a mistake

#491

Post by HDThoreaun »

nacho2sweet wrote: post #208
davidw wrote: post #64

Earlier quoted context omitted.

> But it's hard to see evidence of much political will to solve these problems. Disagree. The YIMBY movement is picking up steam in a big way. Here in Oregon, we re-legalized 4-plexes in our cities and the woman responsible, Tina Kotek, is now our governor. She's pushing another big housing bill. Our mayor in the city I live in regularly attends our YIMBY group meetups. It's gotten bad enough in enough places that th…

I mean good luck but the YIMBY movement is a very pro investor movement. Decrepit old SFH selling for $1.6 million turned into a 4 plex here in Vancouver would see each unit in the 4 plex selling for $1.4+ million (maybe $1.1 for the basement suite). Friend bought in a converted old place 780 sqft attic suite $940k. It doesn't really make stuff affordable. It was sold here as "the missing middle" and they basically d…

When you're ten feet deep in a hole you don't see out of it by climbing up one foot.

Re: Maybe treating housing as an investment was a mistake

#492

Post by the_gastropod »

politician wrote: post #456
lolinder wrote: post #383

Earlier quoted context omitted.

> especially the 20% needed so as to not need to get mortgage insurance The mortgage insurance isn't nothing, but it's not a big enough cost to warrant waiting until you have 20% down if that's still a long way off. You can also very easily remove the mortgage insurance once you get to 20% equity, so it's not like it sticks around throughout the entire mortgage if you can't scrape enough together at the beginning.

The problem appears when you try to buy a home from a seller entertaining 10 other offers, most of which are cash offers for 10-20% over listing price with escalation clauses. It can be really hard to buy a home, especially in markets like Seattle, because the seller chooses which offer to accept and, all else being equal, will accept the offer with the fewest conditions (no financing required, inspection waived, etc…

Yep. This. I'm living in a much lower COL area, but it's still crazy. I've been hunting for a house for the past ~6 months. And have been outbid in every offer by someone else waiving inspection, waiving appraisal, and/or paying all-cash. It's wild how many people are apparently able to / willing to behave that way.

Re: Maybe treating housing as an investment was a mistake

#493

Post by seydor »

It's amazing to think that medieval people wouldnt even consider housing difficult. Grab a few stones and you re basically done.

Surely houses today require electricity, sanitation and water, but how much do these really cost? Lots of people build offgrid and it is not THAT expensive.

Maybe there's an opportunity there, but , given the exorbitant profits of investing , it s doubtful that anyone will care

Re: Maybe treating housing as an investment was a mistake

#494

Post by entangledqubit »

I don't understand why people just don't call out mortgages for what they are - leveraged loans that let you get ~4-5x the return on housing gains. (Assuming a simplified 20% down scenario and you refi on a regular basis.)

I suspect that most housing demand stems from just people wanting in on this (subsidized) investment. From what I can tell, this is the retirement plan foundation for many Americans.

I guess this works until you come up on a generation that can't afford the last generation's houses? Or you need to be a company to afford the house and it gets "permanently" removed from the individual market.

I'm wondering if lowering the maximum fixed mortgage length by one year every 2-3 years until we get down to 10 years would help moderate some of this due to there being a bit more risk to consider.

Re: Maybe treating housing as an investment was a mistake

#495

Post by dsfyu404ed »

HarryHirsch wrote: post #393
nemo44x wrote: post #262

Earlier quoted context omitted.

Buy a "starter house" and begin to build equity. It's how people have always done it. You buy a really small house that isn't in the most desirable location and start making payments into it. Down the road you have built equity and you can sell your starter home and buy a nicer, larger house. You maybe have some family to support then and need more room. But you see young people renting for 15 years in expensive plac…

Have you tried buying a "starter house" around Western MA recently? Builder specials start around 200 kUSD, something that is actually move-in ready is at least 50 kUSD more. (Yes, you can try gentrifying McKnight or Upper Hill in Springfield, MA if you want to pay less, lovely Victorians, free bullet holes from the regular shootings included. You go first!) The advice is completely out of touch because there is a ge…

I did what you're saying can't be done.

It's fucking great. The occasional late night poppity pop, the nip bottles in the street, the un-mowed lawns gaurded by un-trained dogs, they all serve as amazingly effective repellent for the types of people who think they know how I or anybody else ought to live.

Re: Maybe treating housing as an investment was a mistake

#496

Post by swatcoder »

prds_lost wrote: post #424
lolinder wrote: post #383

Earlier quoted context omitted.

> especially the 20% needed so as to not need to get mortgage insurance The mortgage insurance isn't nothing, but it's not a big enough cost to warrant waiting until you have 20% down if that's still a long way off. You can also very easily remove the mortgage insurance once you get to 20% equity, so it's not like it sticks around throughout the entire mortgage if you can't scrape enough together at the beginning.

With the exception of FHA (life for < 10% down, otherwise 11 years prior to ability to request MIP removal).

That only applies within the original loan.

You can just refinance out of it (when the numbers are right), and it’s often easy since you now have equity, a proven payment history, and are presumably looking at even lower payments on the new loan.

Re: Maybe treating housing as an investment was a mistake

#497

Post by rcme »

fooker wrote: post #34
rcme wrote: post #12

Buying a house is an investment. You're making a bet that worker productivity will improve near you. After all, what is the value of land? Some land can be farmed or house a factory. But usually, when we talk about residential real estate, we're talking about land that houses workers. So, the value of that land is directly proportional to the economic value those workers can provide. We refer to "economic value provi…

> You can't change that. You don’t have to change that. You can just make policies which make speculative investment less profitable while still allowing homeowners to buy houses.

That won't help things, ultimately. Wages have been essentially flat since the 70s. Productivity has increased massively. Real estate was always going to become more unaffordable without real wages increasing.

Re: Maybe treating housing as an investment was a mistake

#498

Post by isodev »

gknapp wrote: post #435
photon12 wrote: post #6

> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall. I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate…

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month. An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted…

I think 33% is very high. Also converting the value to % erases the fact that this is still a very high price for what you get in return. Perhaps it’s time to reevaluate the economics around housing - maybe betting against human lives doesn’t feel right. Also, with overpopulation and climate changes, access to housing and the need for relocation will drastically change the landscape of what one needs to do to put a proper roof over their head.

Re: Maybe treating housing as an investment was a mistake

#499

Post by mixmastamyk »

s1artibartfast wrote: post #332
arcticbull wrote: post #3

My refrain remains: housing cannot be both affordable in perpetuity and a good investment. These are mutually exclusive goals. Let people build.

I don't think that is true at all. A good investment can be one that tracks inflation and simply pays out the labor and capital you put into it. Owning should be cheaper than renting in the long run for the same reason it is cheaper to cook at home than eating out. Savings by owning should be commensurate with the risk taken, cost of upkeep, and time value of money.

Returning your money (at 0% ROI) is not what people want in an investment. What you're describing is a savings account, or even a bit less. Historically you might make a percent or two after inflation, but not the last couple of decades.

Re: Maybe treating housing as an investment was a mistake

#500

Post by borroka »

rs999gti wrote: post #309
nemo44x wrote: post #262

Earlier quoted context omitted.

Buy a "starter house" and begin to build equity. It's how people have always done it. You buy a really small house that isn't in the most desirable location and start making payments into it. Down the road you have built equity and you can sell your starter home and buy a nicer, larger house. You maybe have some family to support then and need more room. But you see young people renting for 15 years in expensive plac…

I don't know why you are being downvoted. Buying small, building equity, and trading up has always been a thing in home ownership.

Because this assumes that the value of the property increases more than inflation. And this assumption means that you see and treat the place where you live as an investment.
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