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Why Do Fewer Renters Expect to Move?

libertystreeteconomics.newyorkfed.org

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Re: Why Do Fewer Renters Expect to Move?

#21

Post by louthy »

bobson381 wrote: post #4

30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now. Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far. For this and many other reasons, why would you believe a house "…

> Number cannot always go up.

Yeah, I thought that when I was young too. The housing market can keep going up for much longer than you can hold out. Then, if there ever is a correction, it probably won't drop lower than this point right now.

My advice to any young'un thinking they can wait out the market: you can't, buy whatever you can afford as soon as you can and watch inflation reduce that painful monthly outgoing to something more manageable over time.

Housing isn't an investment opportunity. It's where you live.

Re: Why Do Fewer Renters Expect to Move?

#22

Post by rootsudo »

mono442 wrote: post #9
bobson381 wrote: post #4

30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now. Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far. For this and many other reasons, why would you believe a house "…

Even if the house is worth less, the morgage is eventually paid off. Rent has to be paid forever. I can't even imagine renting when I'm retired and have less money.

I can, rent in cheap cost of living location. Why pay 600k+ usd to purchase in m-hcol when instead can live abroad during retirement and pay 1k/month and use the remaining for better living or health care or whatnot?

Re: Why Do Fewer Renters Expect to Move?

#23

Post by bobson381 »

jsw97 wrote: post #15
bobson381 wrote: post #4

30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now. Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far. For this and many other reasons, why would you believe a house "…

Buying a house isn't just about expected return. It's also about hedging. You need to live somewhere, so you have an implicit liability of a stream of rental costs. The most natural hedge for that is a house. If expected future rental costs go up, your house value goes up. If they go down, your house value goes down. Overall, your risk, in present value terms, is reduced. Of course this doesn't work exactly and you c…

Right. This would make it possible and reasonable if you could find a house that is enough, such that you can live in it, expect a reasonably good experience in it for the life of your time in it, and that that mortgage payment, plus all maintenance, insurance, tax, etc. is reasonably comparable to an equivalent rental. Depending on where you are, this is not always the case. Or you need to buy a small place at current rates and prices to make it at all comparable.

You have to decide what "enough" is, and that's variable depending on your expected standard of living, etc. I am personally currently lucky enough to be in a good rental situation, which colors my view.

Having a landlord that will fix problems and eat incidental appliance/roof/major expenses is a form of insurance paid as rental.

Re: Why Do Fewer Renters Expect to Move?

#24

Post by spacebanana7 »

jsw97 wrote: post #15
bobson381 wrote: post #4

30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now. Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far. For this and many other reasons, why would you believe a house "…

Buying a house isn't just about expected return. It's also about hedging. You need to live somewhere, so you have an implicit liability of a stream of rental costs. The most natural hedge for that is a house. If expected future rental costs go up, your house value goes up. If they go down, your house value goes down. Overall, your risk, in present value terms, is reduced. Of course this doesn't work exactly and you c…

Exactly- owning one home is actually the neutral position. Renters are persistently taking a short position on real estate and landlords/multiple owners are effectively long.

Re: Why Do Fewer Renters Expect to Move?

#25

Post by alexpotato »

bobson381 wrote: post #4

30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now. Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far. For this and many other reasons, why would you believe a house "…

"The rule of thumb was:

- buy when home prices are 10x rent

- sell when home prices are 20x rent"

- The Big Short by Micheal Lewis [0]

I remember reading this quote and then checking NYC prices and it was a 33x multiple.

0 - https://amzn.to/4cr0tWX

Re: Why Do Fewer Renters Expect to Move?

#27

Post by jameshart »

129487 wrote: post #8

Because you cannot pay market prices if you leave your rent controlled apartment. Once you are out, you never get one again. Apparently that is beyond the high and mighty Federal Reserve employees who wrote this speculation. The housing market needs to be socialized.

A vanishingly small portion of the US rental market is rent controlled - fractions of one percent. In New York City there are only about 25,000 units that are actually rent controlled - tenants who have lived continuously since July 1, 1971 in a building built before 1947.

Rent stabilization - caps on how much landlords are permitted to increase rent - are also not that widespread. Washington DC is unusual in having over half of its rental stock covered by rent stabilization, but even in NYC less than half of the rental stock has stabilized rents.

Re: Why Do Fewer Renters Expect to Move?

#28

Post by cma256 »

bobson381 wrote: post #4

30 year mortgage is founded partly on the idea that your house will be worth more in the future when you sell it. That you can lock in a lower price now. Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far. For this and many other reasons, why would you believe a house "…

This is false. Can you cite a source for the idea that the 30-year mortgage was "founded" on the idea of appreciation? The thirty year mortgage was introduced to reduce the housing appreciation requirement the old balloon loan system relied on.

Re: Why Do Fewer Renters Expect to Move?

#29

Post by the_sleaze_ »

onlyrealcuzzo wrote: post #20
cautiouscat wrote: post #3

It’s getting prohibitively expensive. Before brokers fees were banned in Boston, a $2,000/mo apartment could have cost you $8000 just to move in . That’s for first, last, security and brokers fee. That’s a worst case scenario but even just first and last months rent is $4000. It’s getting outrageous.

Way back when I started my career - I almost COULDN'T take a good job in Boston, because I couldn't figure out how I could literally live there long enough to get my first few paychecks to pay for my rent. I decided that I'd just go into credit card debt and live in the crappiest hotel that I could find until I had enough money to pay the first/last/security deposit. Luckily, I found some shady landlord on Craigslist…

Easy fix, the department of defense has been doing it for years in Southwest DC.

Just build corporate housing.

Then we can have little Amazon towns where all your needs are met and everyone lives in perfect harmony in downtown San Fransisco.

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