121–130 of 198 posts
Solving housing crisis requires making housing not an investment. Make very very very tax inconvenient to buy places for the sole purpose of renting them out. Do this, and most problems are solved. But banks and legislators have no interests in doing so, therefore nothing will ever solve housing crisis. Make peace with it. It will only get worse.
Is there even a shred of evidence that the housing crisis is a result of higher construction costs? Or is the Fed trying to draw attention away from the catastrophic impact of its zero interest and other policies on the massive increase in asset prices?
This is not a constructive or informed comment. Interest rate policy is not singularly to blame for the housing crisis, just as it wasn't in 2008. The issue in 2008 was lack of internal enforcement at banks or by federal regulators of interest rate products. In the case facing us today it is less to do with Fed policy, more to do with land use policies that have made housing construction literally illegal.
How did you quantify "less"? Low Fed rate made mortgage body 60-70% cheaper, hence prices are higher.
For a good laugh, read the conclusion of the paper, which sounds like it was written in the year 1960, when inner cities were crumbing, and imagines that rural areas will get better public transit when the poor escape the cities they are “trapped in”: There is a literature that asks why the poor live in cities. One answer provided is that transportation options are much better in cities than rural areas and small tow…
The entire paper is a joke. Monopoly in the construction market? Dude, there are multiple competing contractors in every field even in smallest towns. In fact, I’d endeavor to say that construction is probably the least centralized major industry in US, certainly less centralized than, say, farming.
Farmers in most industries are basically price-takers.
Earlier quoted context omitted.
Housing markets are regional. In my overpriced, overpopulated corner of Western MA construction simply isn't happening. The relevant metric isn't units per person, it's units per workplace. No one is interested if housing is plentiful in any deindustrialized rust belt city when people are moving to either coast. The person posting that graph has a bridge to sell
Housing is fungible and substitutable. Especially in a WFH world. Ergo building in FL or TX can reduce prices in CA. Why do you think the northeast and CA are losing population?
Certainly, the last year as been absolutely stupid, but I would argue that we've actually, for the first time since 2005, gotten to unsustainable levels. The headline is sensational, but please review the last graph here: https://realestatedecoded.com/real-monthly-mortgage-payment-... What really matters to people are monthly payments relative to paycheck. Of course, if people also believe that inflation is underesti…
I hear this repeated often, fail to see how it's true. Let's say I'm 50, just starting a 30 year mortgage. Monthly payments relative to paycheck? Sure that's important. So is the fact that I'll have to be paying until I'm 80..?
Earlier quoted context omitted.
Density still has huge benefits unrelated to work. I don't know much about SF as I haven't lived there as an adult, but New York is an incredible place to live for lifestyle reasons too. It has great food, a very high concentration of smart and highly educated people, great museums, great performance arts, etc. It's also an incredibly walkable city, which is rare in the US. Hands down it would be my choice of city if…
SF only has one thing going for it really - weather. Everything else pales compared to NYC.
Earlier quoted context omitted.
Past a certain level of density, the only thing you can realistically own is a condominium. The key differences between renting an apartment and buying a condo that I was able to identify seem to be that condos are more expensive, harder to get out of if you want to move, and not covered by the city's tenant bill of rights ordinance.
Rentals must on average cover the debt, taxes, and profit for the owner. The tennant pays monthly rent including all of the above and has nothing to show for it when the lease ends. Condos at least build some equity that you can recover when you sell. Sure there are some risks and maintenance costs that renters don't "pay" but it's all included in the rent, over time.
With a condo, several entities are jointly responsible. If you don't like it, you can sue.
I would rather deal with a landlord than a Surfside Tower like incident.
Earlier quoted context omitted.
Sure, and I’m not making any claims about the future, either — just pointing out what the causes have been so far: demand/supply mismatch has had a far larger impact than speculation and interest rate policy or “narrative” on Bay Area housing prices. If demand plummets, of course prices will follow.
Demand is driven by those factors you say don’t matter. That’s the point folks are trying to make. It doesn’t just magically appear.
It’s not driven by Fed policies around interest rates. It’s not driven by speculation.
It’s driven by people wanting to own homes. Period. The other factors are small.
Earlier quoted context omitted.
I don’t think we are talking past each other. There is absolutely a housing supply crisis in the Bay Area that is not reflected in the national stats. I’m not sure why so many people believe that housing prices in high-demand markets are dominated by things like interest rates — there is certainly an effect, sure — but by far the predmoinant reason a 2br house on a small lot with a small yard costs $2m+ in Palo Alto…
‘Demand’ includes availability of funds by potential buyers (and what they consider expensive) which is directly influenced by stock prices (which have seen major drops this year), and by interest rates. The amount that can be loaned/supported by a given income, and hence a lot of underwriting standards, are based indirectly on the cost to service the loan relative to the income the person has. The lower the interest…
The market clearing price is also driven by these things.
But let’s be clear: the primary driver of sky-high prices in the Bay Area is (1) people moving here, getting well-paying tech jobs, and wanting to buy housing, and (2) not nearly enough new construction to meet that demand.
Earlier quoted context omitted.
Inventory is not the same as structural supply. That's the big mistake many make, and inventory can very quickly accelerate back to a glut when conditions change (few months). There is an element of changing preferences, but city centers also up greatly in price. Can't be the whole story
This research[1] estimates (15.1/23.8) 64% of the increases over pandemic period to remote work change, sounds like it could be a pretty big part of the story. [1] https://www.nber.org/papers/w30041
You can tie LCOL price increases to them. But if that's the case, you would expect HCOL/central places to decline in price via the flip side of the same effect. Yet instead we see massive price increase in LCOL and smaller yet still big price increases in central/HCOL.
Obviously a many variable system, but stating that remote work should lead to a national 20% increase in prices is nonsensical