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The economy is going great, except for the housing market

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Re: The economy is going great, except for the housing market

#41

Post by mattmcknight »

wussboy wrote: post #21
AnimalMuppet wrote: post #18

Earlier quoted context omitted.

Barring unlimited immigration, we could build enough high-density housing in cities to meet demand. (At least, we could if we fixed zoning.) (Or, we could in most cities. A few, like New York and San Francisco, are very limited in terms of available land.)

Zoning and parking minimums are the real problem. Ensure houses are safe (fire, collapse, etc.) and let the market decide where, when and what should be built.

parking minimums are a red herring.

zoning, absolutely. however, in a lot of places we have homeowners' associations as well.

random density doesn't help much, need to build density near existing and planned infrastructure.

Re: The economy is going great, except for the housing market

#42

Post by rootusrootus »

smileysteve wrote: post #4

The 2017 tax act had an obfuscated impact on corporate ownership of houses. Capping the personal SALT deduction while simultaneously lowering the corporate tax rate made local tax policies to increase local ownership ineffective.

Saw that directly. Everyone talks about the tax cuts, but my taxes went up as a result of the SALT changes. There was a real effect on people, especially those in high cost of living areas, when they could no longer deduct mortgage interest.

I wonder if it will be allowed to expire on schedule and my taxes will go back down. Probably too much to hope for.

Re: The economy is going great, except for the housing market

#43

Post by damiankennedy »

Ancalagon wrote: post #16

The SoCal housing market is insane, especially San Diego where the pay to mortgage payment ratio is completely off-kilter. Don’t know how this city is going to function in 10-20 years.

How long do US people typically fix their mortgage? Are there many people that will refinance their home and have to pay a higher rate or does this just happen if you move house? Can refinancing be avoided if you just move house and transfer the debt to the new property but keep the same rate? In New Zealand you can fix for 6 months, 1 year, 18 months, 2, 3, 4 or 5 years with 2/3 being most common but recently 6 months to 1 year becoming popular due to the expectation that rates will fall. The flip side to that is a lot of people on a historically low < 3% 3 year mortgage had to take a 6%-7% mortgage so a lot of money gets taken out of their pockets and the economy.

Re: The economy is going great, except for the housing market

#44

Post by nostromo »

Dalewyn wrote: post #22

I think the economy is doing decently in aggregate , but doing either extremely great or extremely bad depending on which specific part of the economy you look at. Kind of like how the US Air Force will tell you there is no such thing as The Average Man. Looking at the securities market (stocks and bonds) they're basically a statistical anomaly with how good they're doing. Inflation is irrelevant with luxury goods an…

Bonds are not doing well. Far from it.

Re: The economy is going great, except for the housing market

#45

Post by brailsafe »

carom wrote: post #25
jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

As someone who wants higher density, I see very little progress of this happening. Voters consistently vote against it. The one exception is California state has passed some good laws around ADUs and parking minimums. People will keep voting for rent control and affordable units to prevent construction. The other side of the equation is that wages could increase relative to the price of housing.

Rent control is absolutely important; although it does probably have a measurable effect on how quickly things get built, I don't think it's near the top of the list of bottlenecks.

> The other side of the equation is that wages could increase relative to the price of housing.

It's a system problem with various feedback loops, and people absolutely aren't getting paid enough and don't appreciate how little money they're making relative to what it can buy. In my city we're at a point where a new studio condo with no walls along a major thoroughfare outside the downtown area starts at ~$600k CAD, and older one bedrooms in the same range will still have asbestos and coin-op laundry in the basement. My landlords recently moved out and our living circumstances long-term are being considered. I had a conversation with one of them and she was seemingly clueless about how vulnerable it might have made us, and that's a bit humiliating; "but you guys have been here a while and surely you're making good money since moving in 5 years ago", to which I actually laughed and didn't elaborate, since we now depend on them putting in a good worth with our new overlords. We don't have the job security, we don't have the proportional increase in earning potential. Any decent money made gets erased in the next round of layoffs. Burn it all down.

Re: The economy is going great, except for the housing market

#46

Post by worstspotgain »

_heimdall wrote: post #40
worstspotgain wrote: post #10

That's not really surprising, considering that's exactly how interest rate increases are supposed to work. They crowd out a bit of business investment and a lot of housing investment [1]. This in turn cools the economy by curtailing construction. Unfortunately, housing in most areas was screwed to begin with. This was not nearly the case with prior inflation bouts that required rate increases. The Fed was left with t…

If you want to consider interest rates in the usual model where increases are meant to reduce demand and lower prices, the Fed either really screwed up or we're about to see a huge drop in the housing market. Prices consistently went up over the last couple years of high rates. The recent fed funds rate drop didn't seem to help, and last I checked loan rates had stayed flat or actually gone up a bit. If loans weren't…

Prices are not the relevant statistic though, it's housing starts [1]. They dropped from ~1.8M in April 2022 to ~1.3M today. Prices are affected by supply and demand equally, while starts are much more affected by supply.

As for how the Treasury and Fed managed the crisis, it was easily the most incredible macro success story since I've been alive. Had you told me in 2022 that they'd manage sub-3% inflation without a recession at all, I'd have said you believed in fairy tales.

[1] https://fred.stlouisfed.org/series/HOUST

Re: The economy is going great, except for the housing market

#47

Post by FooBarBizBazz »

_heimdall wrote: post #36
rangestransform wrote: post #13

Encouraging as many voters as possible to own homes was one of the worst mistakes of all time in the us/canada

Its quite a nice circle. First you limit voting rights to land owners, then people wise up and let everyone vote, then you incentivize anyone that may vote to buy land.

Already you can barely function as a citizen unless you either own a house or pay rent to a landlord. Want to live in your car? Want a bank account registered to a box at the Post Office? Can't do it! Whether you are a human being deserving of rights is determined -- who would have guessed? -- by whether you get a bill from the electric company.

Homeowners are the only caste that matters.

Renters are grudgingly accepted as human in some limited circumstances.

All other adults are considered subhuman.

Re: The economy is going great, except for the housing market

#48

Post by acdha »

Ancalagon wrote: post #16

The SoCal housing market is insane, especially San Diego where the pay to mortgage payment ratio is completely off-kilter. Don’t know how this city is going to function in 10-20 years.

The weird thing is that you could have written that same sentence 20 years ago. I remember around 2005 the Union Tribune ran a map of San Diego showing the percentage of household income spent on housing, with the entire coast red even in the rich neighborhoods where people were getting interest-only mortgages on multi-million dollar homes. At the time I remember being amazed at how many people would take such risky loans but now I’m more impressed by how often that worked: unless they couldn’t make it through the 2009 collapse and had to sell right then, they probably did clear a good profit from that strategy.

Re: The economy is going great, except for the housing market

#49

Post by germinalphrase »

damiankennedy wrote: post #43
Ancalagon wrote: post #16

The SoCal housing market is insane, especially San Diego where the pay to mortgage payment ratio is completely off-kilter. Don’t know how this city is going to function in 10-20 years.

How long do US people typically fix their mortgage? Are there many people that will refinance their home and have to pay a higher rate or does this just happen if you move house? Can refinancing be avoided if you just move house and transfer the debt to the new property but keep the same rate? In New Zealand you can fix for 6 months, 1 year, 18 months, 2, 3, 4 or 5 years with 2/3 being most common but recently 6 mont…

It’s quite common in the US for homeowners to have their rate fixed for the full fifteen/thirty years of the loan.

Re: The economy is going great, except for the housing market

#50

Post by germinalphrase »

FooBarBizBazz wrote: post #47
_heimdall wrote: post #36

Earlier quoted context omitted.

Its quite a nice circle. First you limit voting rights to land owners, then people wise up and let everyone vote, then you incentivize anyone that may vote to buy land.

Already you can barely function as a citizen unless you either own a house or pay rent to a landlord. Want to live in your car? Want a bank account registered to a box at the Post Office? Can't do it! Whether you are a human being deserving of rights is determined -- who would have guessed? -- by whether you get a bill from the electric company. Homeowners are the only caste that matters. Renters are grudgingly accep…

Allowing the post office to do very basic banking sounds like a fine idea to me.
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