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

Office real estate crash will be so sharp, values unlikely to recover by 2040

fortune.com

Post reply on HN
Print view View original

51–60 of 241 posts

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#51

Post by cowsandmilk »

xbmcuser wrote: post #5

Current market prices for a lot of commercial real estate seems to be a ponzi scheme especially in the US. It is not in the interest of any of the players to decrease prices only the renters. Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. Banks need higher prices as they are highly leveraged and will be on the hook…

> Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets.

California is the only state facing this due to Prop 13. Most jurisdictions are able to adjust real estate tax rates in response to the drop in valuations and many did so when property values dropped in the Great Recession.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#52

Post by jddj »

gremlinsinc wrote: post #32
heywhatupboys wrote: post #23

Earlier quoted context omitted.

meh, we have much more stable financial institutions in 2023 than 2008.

lol was that sarcasm? how many banks just failed including the bank most sv startups used and 16th largest? I think we'll adapt and hopefully build housing where offices used to be.

Without commenting one way or the other on the strength of the system, a large bank failing and life more or less carrying on as normal isn't a sign of systematic weakness

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#53

Post by 2OEH8eoCRo0 »

spokeonawheel wrote: post #6

crazy idea: us govt scoops up all the office real estate at the crash and converts to low income housing for free. Solve two crisis at once, the obviously coming real estate crisis and the homeless crisis. All for the cost of a handful of F35s If only politicians had an iota of strategy.

I don't want more low income housing and fewer F-35s though- in fact I want the exact opposite.

Low income housing comes with associated costs to the city and the people who inhabit them pay essentially no taxes so everyone else's taxes need to go up.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#54

Post by AnimalMuppet »

RyanAdamas wrote: post #4

This is why changing zoning laws is so important. These buildings and their underlying values can be saved by 'going condo' or conversion to smaller unit spaces for the purpose of housing so many who are struggling with massive increases to rent. Most rent does not increase because of increased asset expenses, it increases because of increased owner expenses and that quickly becomes a slippery slope in the face of ad…

> In the United States, the government holds hundreds of millions of acres of land in trust...

True.

> ... and it needs to be relinquished in part to help grow the actual base of humanity they hold stewardship over

Almost entirely false. See, the land they hold, they hold because nobody ever claimed it under the Homestead Act. Nobody could figure out how to grow enough to feed a family, even with 168 acres of it. This mostly means that there's no water there.

I'm pretty sure that the solution to the housing crisis is not a few square miles of waterless sagebrush in private hands. If you build a city there, where are the people in it going to work? (If they're currently homeless, they're probably not going to get hired for the kinds of jobs where work from home is possible.) How is it going to integrate into the surrounding economy? Where is the food going to come from? Where are the roads for the food going to come from? Where are the power and the water going to come from?

And even if that is the answer... what private hands? Mine? I don't have the money to develop it. Blackrock's? The banks? I don't think you're going to think that approach is the answer, either.

(True, some of that land is forest rather than just sagebrush. But if the federal government sells it, it will be bought by someone wanting to log it flat for the timber. That won't leave it with cities on it, either.)

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#55

Post by hotpotamus »

2OEH8eoCRo0 wrote: post #53
spokeonawheel wrote: post #6

crazy idea: us govt scoops up all the office real estate at the crash and converts to low income housing for free. Solve two crisis at once, the obviously coming real estate crisis and the homeless crisis. All for the cost of a handful of F35s If only politicians had an iota of strategy.

I don't want more low income housing and fewer F-35s though- in fact I want the exact opposite. Low income housing comes with associated costs to the city and the people who inhabit them pay essentially no taxes so everyone else's taxes need to go up.

I never really thought about the tradeoffs, but given that the F-35 is mostly used to destroy low income housing of government undesirables, I suppose there is some tension there.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#56

Post by swalsh »

spokeonawheel wrote: post #6

crazy idea: us govt scoops up all the office real estate at the crash and converts to low income housing for free. Solve two crisis at once, the obviously coming real estate crisis and the homeless crisis. All for the cost of a handful of F35s If only politicians had an iota of strategy.

Given the inverted demographics and an aging population... is the housing crisis a long term issue?

I'd guess in a few decades people are going to be trying to come up with solutions for all the people who overpaid for their houses, and can't find an adequate buyer.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#57

Post by endisneigh »

ClumsyPilot wrote: post #50
endisneigh wrote: post #18

Earlier quoted context omitted.

[flagged]

You complaint makes no sence - this is an oportunity to make bank. its not an expense

Please do tell how this makes money, and why many are not jumping at this opportunity

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#58

Post by breckenedge »

williamcotton wrote: post #49
xbmcuser wrote: post #5

Current market prices for a lot of commercial real estate seems to be a ponzi scheme especially in the US. It is not in the interest of any of the players to decrease prices only the renters. Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. Banks need higher prices as they are highly leveraged and will be on the hook…

How is it a ponzi scheme? There is actual real estate being bought, sold and rented. What has happened is that demand for office space has dropped dramatically. The proper market reaction is to spend the money to convert these office spaces to some other use, perhaps residential. Then these properties will more likely find tenants.

> How is it a ponzi scheme?

Because it’s credit built on credit. It’s not an intentional Ponzi scheme (maybe).

> The proper market reaction is to spend the money to convert these office spaces to some other use, perhaps residential.

It’ll be prohibitively expensive for most properties to convert them to residential. They might as well be demolished for their land value.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#59

Post by m0llusk »

williamcotton wrote: post #49
xbmcuser wrote: post #5

Current market prices for a lot of commercial real estate seems to be a ponzi scheme especially in the US. It is not in the interest of any of the players to decrease prices only the renters. Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. Banks need higher prices as they are highly leveraged and will be on the hook…

How is it a ponzi scheme? There is actual real estate being bought, sold and rented. What has happened is that demand for office space has dropped dramatically. The proper market reaction is to spend the money to convert these office spaces to some other use, perhaps residential. Then these properties will more likely find tenants.

high demand, limited inventory, fifteen years of near zero interest rates mean prices have been set in a market environment of extreme distortion

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#60

Post by swalsh »

2OEH8eoCRo0 wrote: post #53
spokeonawheel wrote: post #6

crazy idea: us govt scoops up all the office real estate at the crash and converts to low income housing for free. Solve two crisis at once, the obviously coming real estate crisis and the homeless crisis. All for the cost of a handful of F35s If only politicians had an iota of strategy.

I don't want more low income housing and fewer F-35s though- in fact I want the exact opposite. Low income housing comes with associated costs to the city and the people who inhabit them pay essentially no taxes so everyone else's taxes need to go up.

I question the need for F-35's in future warfare. Ukraine has been using drones with ruthless efficiency.

And though it scares the living heck out of me. That can be scaled up with AI.

Post reply on HN