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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#161

Post by King-Aaron »

chii wrote: post #142
King-Aaron wrote: post #115

Earlier quoted context omitted.

Unlike paying renting, paying a mortgage is nice because you're paying for something that is eventually going to be yours.

rent is often lower, or the same, as the interest payments. The mortgage consists of both interest and principle payments, which is higher, but the principle payments can be considered equity, so it cannot be compared with rent.

The rental income my wife and I get from our little rental house very nearly covers our principle + interest, so I think it's quite comparable.

Re: Will real estate ever be normal again?

#162

Post by [deleted] »

A4ET8a8uTh0 wrote: post #129
Spooky23 wrote: post #105

Earlier quoted context omitted.

The die was cast for option 2 30 years ago. Once policy flipped to “we will provide capital to prevent bad things”. Half the economy is based on real estate… people building buildings to avoid taxation (if you have $) and borrowing against equity (joe homeowner). You cannot break equity values without breaking the economy. The people who are getting screwed are the same people who have been getting screwed since the…

In retrospect, it rings true. I think I had my eyes opened during 2008 crisis and FED was effectively buying everything thrown at it. I remember thinking how can government own its own bonds?

[deleted]

Re: Will real estate ever be normal again?

#163

Post by runarberg »

uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

There is another option: The government could buy/build/offer public housing as an alternative to the free market. It was done in the past and in other countries and I see no reason not to do it now.

The way I see it (and the way you put it) the free market has failed to provide housing to people, to an extend that there is no free market solution going forward. If the government (federal/state/county/municipal/etc.) provides and alternative to free market housing, they will directly be competing with private housing speculators. Prices on the free market will likely go down as a result (why pay $1,000,000 for a house from a speculator when you can buy a better house from the county for $400,000). These speculators will get angry, (and some bootlickers/sympathetic middle class) but they will not have the masses behind them to generate blood on the street.

This is not an alien solution, it is battle tested as it has been done multiple times in most countries several times in history, as recently as the 1960s. The only reason not to go for it (given your two other scenarios) would be that the government is so sympathetic to the few rich that it is willing to let everything else crash and burn in just to cater to the interests of the rich.

Re: Will real estate ever be normal again?

#164

Post by iammisc »

chii wrote: post #142
King-Aaron wrote: post #115

Earlier quoted context omitted.

Unlike paying renting, paying a mortgage is nice because you're paying for something that is eventually going to be yours.

rent is often lower, or the same, as the interest payments. The mortgage consists of both interest and principle payments, which is higher, but the principle payments can be considered equity, so it cannot be compared with rent.

My mortgage is less than the rent I was paying. Speak for yourself.

Re: Will real estate ever be normal again?

#165

Post by Spivak »

chii wrote: post #142
King-Aaron wrote: post #115

Earlier quoted context omitted.

Unlike paying renting, paying a mortgage is nice because you're paying for something that is eventually going to be yours.

rent is often lower, or the same, as the interest payments. The mortgage consists of both interest and principle payments, which is higher, but the principle payments can be considered equity, so it cannot be compared with rent.

Yep I hit this recently. Over the lifetime of my hypothetical mortgage I would be paying $500/mo more than my rent just in interest. Bleh. Assuming my salary keeps up with inflation this actually becomes a great deal after roughly 15 years (maybe less if my house appreciates in real value) compared to renting buttttt…

- I lose the ability to quickly scale down my life if something bad happens to me financially before my 30 years are up.

- I’m not really tied to a specific location and right now my career prospects are better if I’m mobile.

- I’m not excited to have to basically stop putting money into the market and into a single asset.

I can pay less for a mortgage but for worse living arrangements. If that was an acceptable trade I could just find a cheaper place to rent.

Re: Will real estate ever be normal again?

#166

Post by listenallyall »

_3u10 wrote: post #148
chii wrote: post #142

Earlier quoted context omitted.

rent is often lower, or the same, as the interest payments. The mortgage consists of both interest and principle payments, which is higher, but the principle payments can be considered equity, so it cannot be compared with rent.

Rent is easily comparable to a mortgage, my old rent is $3750, my new “rent” including property taxes is $3040.

> I’m $750 a month up on rent and I’m $123,000 up on equity since May. That’s $123,000 in completely tax free income if I sell.

All of HN is really happy for you. You're the man! So smart, and handsome too!

Re: Will real estate ever be normal again?

#167

Post by RappingBoomer »

lotsofpulp wrote: post #63
RappingBoomer wrote: post #51

Earlier quoted context omitted.

here is the problem: single family homes have now been financialized--the corporations have invested in them and will want to maintain the increase in home prices...therefore corporations will do what they have always done to increase the value of their assets--they will buy politicians and get the politicians to pass laws to keep home prices up...such as? Ok, such as passing state and federal laws that make home bui…

I have been in real estate development for quite a few years, and opponents to more housing are never corporations. It is always individual home owners who do not want multi unit housing or smaller housing in their neighborhood (i.e. poorer people) or do not want roads to get more congested, etc. Not once have I seen an agent of a corporation come to a city council meeting and protest against rezoning land for more h…

the corporations go to the politicians and pay them money. The politicians then pass laws that make it harder to build housing. Thus supply is restricted.

Re: Will real estate ever be normal again?

#168

Post by klipt »

runarberg wrote: post #163
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

There is another option: The government could buy/build/offer public housing as an alternative to the free market. It was done in the past and in other countries and I see no reason not to do it now. The way I see it (and the way you put it) the free market has failed to provide housing to people, to an extend that there is no free market solution going forward. If the government (federal/state/county/municipal/etc.)…

> the free market has failed to provide housing to people

Is it really a free market in places like the Bay Area where zoning is so restrictive and NIMBYs can show up to planning meetings to basically block any new construction?

It's been pointed out elsewhere in this thread that Japan also had a free market but less restrictive zoning and housing is much more affordable there.

The main argument for government efficiency would be if the government could override the NIMBYs more easily than private developers can.

Re: Will real estate ever be normal again?

#169

Post by Brian-Puccio »

blip54321 wrote: post #126
throwvirtever wrote: post #107

Earlier quoted context omitted.

I don't quite understand the obsession with homeownership. If a large enough percentage of people rented from property management companies, there would be more impetus to have strong tenant's rights laws to protect residents, and people would have more flexibility to move around. Moreover everyone would have an interest in increasing supply to keep their own rent down, pushing prices down toward cost-of-materials an…

1) Renters are a captive audience. If you have kids in a school, I can raise rents until I hit your utility cost of moving, which can be high. 2) Home owners are more likely to maintain homes well (and efficiently). 3) We have a nesting instinct. I'm more likely to customize my own home. One I rent is a throw-away.

> Home owners are more likely to maintain homes well (and efficiently).

That property owners aren’t willing to maintain property well if they don’t live there is not an indictment of the renters, but of the property owners. The renters pay the property owners to do this very job.

Re: Will real estate ever be normal again?

#170

Post by t-writescode »

jshen wrote: post #120
alexose wrote: post #74

I know this may be sacrilege to some, but: Consider moving to a less desirable place if you can. I got priced out of my hometown of Seattle. So I moved to a small town in rural Oregon and I couldn't be happier. The combination of spending comparatively little on housing + a tech salary is hard to beat. I have my own shop! It feels like freedom, even if it comes at the cost of being near my extended family.

I don’t think this is good advice financially, though there is more to life than money. First, if by “tech salary” you mean a software engineers salary or a product managers, then you should be able to afford a house in a place like Seattle. It might be tight if you are early in your career, but it is very doable. The main reason this is likely to be bad financially is that your house won’t appreciate like a house in…

I live in Seattle. I have an engineer’s salary. I cannot presently afford a condo, let alone a house. By the time I have enough for the down payment, I will again not be able to afford a home.
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