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U.S. home prices are the most unaffordable they've been in nearly 100 years

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Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#161

Post by huevosabio »

pphysch wrote: post #106

There's a lot of noise about supply, demand, investment cycles, AirBnB, but the elephant in the room is that USA housing is a casino and the banks are the "house", which always wins. The banks only care that housing prices remain astronomical--the mechanics are not important--so that mortgages must be taken out. And, as recent history shows, the mortgage casino is "too big to fail" because of the globally-systemic ro…

I don't think at this point is as much as "you must take a mortgage" but more like they are interested in the collaterals to keep their value.

In any case, far from noise, the cause of steadily increasing prices is restricted supply.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#162

Post by mint2 »

FredPret wrote: post #136
mint2 wrote: post #133

Earlier quoted context omitted.

Demand for homes may exceed supply but ask what that demand really is. A big chunk of that demand is for 2nd or 3rd or even 4th properties as investment rental properties. Can’t afford a house in the sf Bay Area, no problem, go buy 4 investment properties in the Midwest! I know people who’ve done that. Also look what houses are built, they aren’t starter homes in many areas. They are “luxury” (luxury per home markete…

That makes zero sense. Do you think those rental units disappear off the market? There isnone unified housing market, rent and buy. People can still rent if they can’t buy. Building more will inevitably fix the housing market, even if one investor owns every single new house.

Question: Adding out of state investors to the demand pool ( that additionally can out bid locals) will likely

A. Increase house prices

B. Decrease house prices

Question 2: adding rent seeking middlemen between people and housing is likely going to

a. reduce costs for housing

B. Increase cost for housing

So there’s a finite supply of house, investors from out of state are now competing, increasing demand but also have deeper pockets. Now the locals who would hav bought are forced to rent, increasing demand for rentals. They investors aren’t going to take a loss so they’ll rent at the rate that gives them the expected return, which they get because of the high demand they helped create, with rental prices justified relative to the sales price that they themselves jacked up

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#163

Post by shaburn »

pphysch wrote: post #106

There's a lot of noise about supply, demand, investment cycles, AirBnB, but the elephant in the room is that USA housing is a casino and the banks are the "house", which always wins. The banks only care that housing prices remain astronomical--the mechanics are not important--so that mortgages must be taken out. And, as recent history shows, the mortgage casino is "too big to fail" because of the globally-systemic ro…

Who else benefits from that?

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#164

Post by mlyle »

thaumasiotes wrote: post #159
junofan wrote: post #132

Earlier quoted context omitted.

It’s pretty unusual that we have people approach residential real estate in this hyper-financialized way. It’s a weird 1930s way to inject liquidity, and we have better tools now. An individual is fucked if something happens to crater the price of their house. Nobody hedges, really. It’s a toxic system.

> An individual is fucked if something happens to crater the price of their house. If they've already paid off the house and they want to sell it without buying another house, sure. If they have a mortgage on the house, someone gets screwed, and that someone is the bank that issued the mortgage. The mortgage is secured by the house . You can just let them take it.

> If they have a mortgage on the house, someone gets screwed, and that someone is the bank that issued the mortgage. The mortgage is secured by the house. You can just let them take it.

If you have 25% equity in the house, and something happens that knocks down the value by 30%... the person getting screwed is you.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#165

Post by onion2k »

hayst4ck wrote: post #81
superkuh wrote: post #10

From 1950 to 2008 the USA built ~25 million homes per (edit, not year) decade. From 2008 to 2018 it was about 7 million. In recent years building rates have mostly recovered but there's still that gap in production combined with everything else the last handful of years. This isn't to discount the shift of ownership from human persons to corporate persons, that's a factor too. But just numbers of available houses ver…

If home prices are going up, that means that demand exceeds supply. If home prices are going up everywhere that means demand is exceeding supply everywhere. If homes are a good monetary investment, that means home prices are going up, which means supply is not keeping pace with demand. If home prices are going up at a rate faster than wages, then they are becoming more expensive for our children. Not in a round-a-bou…

If home prices are going up everywhere that means demand is exceeding supply everywhere.

Only if the houses are selling at the higher price. There are a lot of empty, unsold houses where the owner is refusing to reduce the price. Property economics is weird.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#166

Post by junofan »

buro9 wrote: post #157
junofan wrote: post #132

Earlier quoted context omitted.

It’s pretty unusual that we have people approach residential real estate in this hyper-financialized way. It’s a weird 1930s way to inject liquidity, and we have better tools now. An individual is fucked if something happens to crater the price of their house. Nobody hedges, really. It’s a toxic system.

The hedge is that everybody is in this predicament and that is what makes it too big to fail, that the state will always support the bank's to prevent a total collapse. It's a collective hedge.

I’m talking about an individual home’s value. The sort of thing that leads to bitter zoning fights at the local level.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#167

Post by mlyle »

jjav wrote: post #158
hayst4ck wrote: post #81

Earlier quoted context omitted.

If home prices are going up, that means that demand exceeds supply. If home prices are going up everywhere that means demand is exceeding supply everywhere. If homes are a good monetary investment, that means home prices are going up, which means supply is not keeping pace with demand. If home prices are going up at a rate faster than wages, then they are becoming more expensive for our children. Not in a round-a-bou…

> If homes are to be affordable that means more need to be built. I'm not convinced it's that simple. Houses aren't widgets that you can flood the market with an unlimited supply to drop the price as much as desired. Homes cost a lot to build and use limited resources, which means at a certain point building more increases the cost. Picture a city that is building only 1000 homes a year and then they decide to start…

> If the prices were very high due to excess demand, probably not because there is enough demand to absorb those 10k units without meeting all the demand, so prices won't drop.

Supply and demand aren't quantities, they're functions. You may be trying to say that demand is inelastic around the present point, but I suspect it actually isn't.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#168

Post by icelancer »

ec109685 wrote: post #84
rootusrootus wrote: post #31

Earlier quoted context omitted.

Lots of people sitting on 2-3% fixed rate 30 year mortgages are suddenly deciding maybe staying in their current home isn't a bad idea after all. If you need a mortgage to buy a house, what you can afford just got a lot more modest. Sales will pick up a little; some people will need to move for reasons they cannot avoid. Some people who don't have fixed rate mortgages will have to sell because they can no longer affo…

Sitting on a home with 2-3% interest is all well and good, until the value drops and you’re sitting on a much worse asset. I.e. if you own a second home with a 3% interest rate, should you sell now or collect rent on it?

> Sitting on a home with 2-3% interest is all well and good, until the value drops and you’re sitting on a much worse asset.

What is the mechanism of action that causes the value to drop?

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#169

Post by icelancer »

notch898a wrote: post #77
usaar333 wrote: post #56

Earlier quoted context omitted.

Regulation blocking mortgage porting is unfortunate.

Personally I don't give a shit if people can sit on their house forever at -5% real interest rates or whatever. Just let me build a shack out of chicken wire, 2x4s, and tin roof. If you get to rig the game to get a house the least you can do is let me build something with whatever scraps are left in the financial system.

The people that fight hardest against this are the ones that crow loudest about fair and affordable housing, ironically enough.

Re: U.S. home prices are the most unaffordable they've been in nearly 100 years

#170

Post by icelancer »

whitemary wrote: post #131
KerrAvon wrote: post #72

Earlier quoted context omitted.

This is what people said about Levittown ( https://en.wikipedia.org/wiki/Levittown ), the archetype for postwar suburban housing developments in the USA. They did wear out, but the owners fixed them. If the housing is still needed, it will be maintained and repaired and improved.

Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain. Also, Levittown construction and materials are not comparable in any meaningful way to McMansions.

> Despite the US's deficit in housing ever since, many millions of houses houses have in fact been abandoned. Please explain.

Sure. No one wants to live in those areas where the houses are being abandoned, or government regulation makes bringing them up to code financially non-viable.

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