U.S. now short 4.5M homes as housing deficit grows • Hacker News Board

Re: U.S. now short 4.5M homes as housing deficit grows

#21

Post by BadHumans » Tue, Jul 16, 2024, 5:44 PM UTC

silisili wrote: post #15

Question for anyone who may know from experience: where are all the people coming from? It's a question everyone in my home city keeps asking after seeing all the new developments, and never really investigating an answer I guess. They keep squishing in apartments and tract housing everywhere there's a postage stamp of land, and it's sold the next day. Even wayyy out in the rural county. My very quiet road was a traf…

While this isn't a complete answer, remote work has let people move away from tech hubs and spread out more to small towns. Idaho has seen rapid increases because of people moving from California and Washington now that they can work remotely. Big money also buys a lot of real estate. Around where I used to live, Berkshire Hathaway bought almost all the houses in the area.

Re: U.S. now short 4.5M homes as housing deficit grows

#22

Post by onlyrealcuzzo » Tue, Jul 16, 2024, 5:44 PM UTC

goalonetwo wrote: post #11

iambateman wrote: post #7

My first home (bought 2014) is up 100% and my second home (bought 2019) is up 55% over purchase price. It's unsustainable for this country to think that houses can be both (1) an appreciating investment and (2) affordable. But in order for us to find long-term price stability, people like me must make peace with the idea of our houses _never_ appreciating beyond inflation.

How much did you "make" on your investment once you account for the ton of fees that are involved in housing though? If your house doesn't go up at least 5% a year, you are already losing money once you account for HOA, insurance, taxes, repairs etc. I would bet you would have had a better outcome renting and investing in the SP500 instead.

If you're up 55% in 5 years on 5:1 leverage - that's a 275% return - or an annualized return of 22.5%.

S&P returned ~16% over the same period.

This is pretty consistent for the last ~20 years.

A 6.5% annualized return might not sound like a huge difference - but over 40 years - that's an order of magnitude difference in your outcome.

i.e. the difference in a $100k investment being worth $335M or $37M ($102M vs $11M inflation adjusted).

Re: U.S. now short 4.5M homes as housing deficit grows

#23

Post by iambateman » Tue, Jul 16, 2024, 5:45 PM UTC

goalonetwo wrote: post #11

iambateman wrote: post #7

My first home (bought 2014) is up 100% and my second home (bought 2019) is up 55% over purchase price. It's unsustainable for this country to think that houses can be both (1) an appreciating investment and (2) affordable. But in order for us to find long-term price stability, people like me must make peace with the idea of our houses _never_ appreciating beyond inflation.

How much did you "make" on your investment once you account for the ton of fees that are involved in housing though? If your house doesn't go up at least 5% a year, you are already losing money once you account for HOA, insurance, taxes, repairs etc. I would bet you would have had a better outcome renting and investing in the SP500 instead.

Well...the substantial difference is that I could borrow at 3.6% and 2.7% respectively.

On my first home, I put $5,000 down on a $96,000 house. I owe $40k (15-year mortgage) and it's worth $180k. Subtract $20k in seller costs, and $20k in expenses over the past decade and I have $100k in equity.

That is about 6x better than just investing the $5k in the S&P.

Re: U.S. now short 4.5M homes as housing deficit grows

#24

Post by BadHumans » Tue, Jul 16, 2024, 5:45 PM UTC

hooo wrote: post #14

josefresco wrote: post #8

Earlier quoted context omitted.

Your source does not support your claim. It doesn't even mention housing, or have anything to do with US housing.

How does it not support the claim? More people more housing need.

This talks about "encounters" at the border which really means how many people are caught at the border and are waiting for a hearing. To make the claim you want to make, you would need to know how many of those people actually get hearings and are admitted into the country.

Re: U.S. now short 4.5M homes as housing deficit grows

#25

Post by silisili » Tue, Jul 16, 2024, 5:46 PM UTC

silverquiet wrote: post #20

silisili wrote: post #15

Question for anyone who may know from experience: where are all the people coming from? It's a question everyone in my home city keeps asking after seeing all the new developments, and never really investigating an answer I guess. They keep squishing in apartments and tract housing everywhere there's a postage stamp of land, and it's sold the next day. Even wayyy out in the rural county. My very quiet road was a traf…

Is your home city not one of the big HCOL cities? If so, I assume it's people fleeing them. I live in San Antonio and hear all the time about people coming here, often without even a job lined up. I was talking to someone in a bar the other week about how she had come in from Hawaii. Her husband had found a job before they moved, but it seems like they were going to move even if he hadn't.

It's a decent sized city in the midwest, and not HCOL.

I thought about that, but the census only reports 6% growth between 2010 and 2020. Unless the census is grossly wrong, which is entirely possible I suppose.

Re: U.S. now short 4.5M homes as housing deficit grows

#26

Post by silverquiet » Tue, Jul 16, 2024, 5:47 PM UTC

baggy_trough wrote: post #19

gitfan86 wrote: post #12

My concern is that the market incentivizes building at the higher end. People who can "only" afford a 4m home will be helped by the home builders who will build plenty of 3m homes but the people who can only afford 400k are getting very few homes built for them.

When you move into a 3m home, you generally leave a vacancy in a sub-3m home.

Yeah, but if the interest is sub-3% on a mortgage that's like half value of the hose, you can probably rent the sub-3m home at a profit while it appreciates.

Re: U.S. now short 4.5M homes as housing deficit grows

#27

Post by silverquiet » Tue, Jul 16, 2024, 5:49 PM UTC

silisili wrote: post #25

silverquiet wrote: post #20

Earlier quoted context omitted.

Is your home city not one of the big HCOL cities? If so, I assume it's people fleeing them. I live in San Antonio and hear all the time about people coming here, often without even a job lined up. I was talking to someone in a bar the other week about how she had come in from Hawaii. Her husband had found a job before they moved, but it seems like they were going to move even if he hadn't.

It's a decent sized city in the midwest, and not HCOL. I thought about that, but the census only reports 6% growth between 2010 and 2020. Unless the census is grossly wrong, which is entirely possible I suppose.

2020 definitely shook things up, so it's possible that the situation has changed a lot since the last census.

Re: U.S. now short 4.5M homes as housing deficit grows

#28

Post by goalonetwo » Tue, Jul 16, 2024, 5:51 PM UTC

onlyrealcuzzo wrote: post #22

goalonetwo wrote: post #11

Earlier quoted context omitted.

How much did you "make" on your investment once you account for the ton of fees that are involved in housing though? If your house doesn't go up at least 5% a year, you are already losing money once you account for HOA, insurance, taxes, repairs etc. I would bet you would have had a better outcome renting and investing in the SP500 instead.

If you're up 55% in 5 years on 5:1 leverage - that's a 275% return - or an annualized return of 22.5%. S&P returned ~16% over the same period. This is pretty consistent for the last ~20 years. A 6.5% annualized return might not sound like a huge difference - but over 40 years - that's an order of magnitude difference in your outcome. i.e. the difference in a $100k investment being worth $335M or $37M ($102M vs $11M i…

Except that you don't have a 5:1 leverage, not even close once you account for the fees. The math is surprising. I recommend the NYT Rent or Buy calculator.

There is also absolutely zero chance that you will get a 22.5% chance return on your house over 40 years. Those have been the crazy covid returns that will most probably be reverting to the mean over the next few years.

"House Price Index YoY in the United States averaged 4.63 percent from 1992 until 2024"

https://tradingeconomics.com/united-states/house-price-index...

Re: U.S. now short 4.5M homes as housing deficit grows

#29

Post by pneill » Tue, Jul 16, 2024, 5:52 PM UTC

Asking why there isn't enough housing is like asking why water is wet. The answer is state/local government regulation.

There's an old saying "your margin is my opportunity" and I suspect that the current crop of homes that are built have decent margins, but in a deregulated market an entrepreneur could come in offer more affordable housing options with lower margins.

You can see this in vehicles. Nobody complains about the vehicle affordability problem because there are far fewer regulations in the transportation industry (don't get me wrong, there are regulations, but not a constraining as you see in the housing market). There's a vehicle at every price point. You got bikes, then ebikes, mopeds, scoters, motorcycles, sub compacts, compacts, full size, trucks, suvs, and all the way to crazy expensive sports cars.

You don't see that in house because affordable housing is not a good business. It's impossible to offer options at the lower end of the market because of zoning laws, environmental impact regulations, a difficult permitting process, nimby's, and affordable housing politicians that are really big proponents of affordable housing except "they have question about this particular housing project."

Here is a terrific video that everyone should watch that shows how insanely difficult it is to make affordable housing. A

https://www.youtube.com/watch?v=ExgxwKnH8y4

Sometimes what you need is less government regulation, not more.

edited sentence "You don't see that in house it's not a good business." to You don't see that in house because affordable housing* is not a good business.

Re: U.S. now short 4.5M homes as housing deficit grows

#30

Post by goalonetwo » Tue, Jul 16, 2024, 5:52 PM UTC

BugsJustFindMe wrote: post #17

goalonetwo wrote: post #6

Do we really have a housing deficit? If you look at prices they indeed go up because nobody wants to sell and too many people have been wrongly convinced that buying is always a good idea. If you look at rent on the other hand it has stabilized in most location. I was even able to negotiate a rent decrease last summer. I'm not convinced we have a housing deficit. But I'm convinced that too many people are blindly buy…

> Do we really have a housing deficit? The number of new families goes up more every year than the number of new places to live. How's your algebra? > If you look at rent on the other hand it has stabilized in most location. This is false. https://fred.stlouisfed.org/series/CUSR0000SEHA Zoom in on the 5 and 10 year windows.

Comparatively to the increase in house prices, rents have definitely stabilized. It is now clearly better to rent in most of the US than buy an equivalent house. Use the rent or buy NYT calculator