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A Growing Problem in Real Estate: Too Many Too Big Houses

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Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#311

Post by enraged_camel »

brightball wrote: post #231
hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

I agree and disagree. On the one hand, yes, you're right that the repair expenses can be a big deal. If you don't want anything but the basics for the technology in your home, sometimes a home warranty can be a good option too but experiences vary significantly. On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still p…

>>Personally, I can't imagine having kids and dogs without a yard.

Wow, you can’t?

edit: laughing at all the downvoters. I think y'all should become more familiar with how people in other countries manage to live. sorry, but "i can't imagine having kids and dogs without a yard" sounds incredibly, I mean incredibly privileged and entitled.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#312

Post by rifung »

simplify wrote: post #281
rifung wrote: post #250

Earlier quoted context omitted.

> On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer. If you can assume historical returns, renting is a financially superior choice. Well, assuming my math was correct. Both are big assumptions admittedly. The reason is that whe…

How do you invest a would-be down payment such that it compounds effectively?

Put it in an index fund like VTI and don't touch it or use one of the robo investor platforms like Wealthfront and Betterment.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#313

Post by jandrese »

larrywright wrote: post #226
baron_harkonnen wrote: post #172

Earlier quoted context omitted.

I've gone the full cycle from renting -> own -> renting, and I can tell you that you're forgetting about a lot of the limitations that come with renting. There are a huge number of things that are out of your control and hobbies you simply can't have. Especially if you want to compare apartment to SFH. You can't paint the walls, keep a bicycle outside, grow plants you want, have any loud hobbies, BBQ, even keep your…

I came here to make this same comment - renting forever is probably fine for people who are willing to accept a certain kind of lifestyle, but for most people it's too limiting. Got kids and want a playset in the backyard? Not in an apartment. Want a wall where there isn't one, or remove a wall that you'd rather not have? Again, nope. Want a home theatre with a big subwoofer so you can watch movies at home (one of my…

The way I see it renting will always be more expensive because you have all of the same costs but you add in one other person to pay: the landlord.

Maybe the landlord can hire less expensive maintenance staff than you can, but maybe they can't. Is it really that different to have the house plumber come down and fix something vs. hiring a plumber from the yellow pages?

The landlord has to pay the mortgage same as you would. Maybe he gets a better rate because he can get some 1%er special equity deal, but fixed loans are like 3.5% so his margin can't be huge. He doesn't get a break on the taxes for the primary residence (although this went away I think?).

Ultimately it's difficult for a landlord to be so much more efficient that he can offer the rents at a lower rate and still make money.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#314

Post by Theodores »

What gets me is the absence of ballrooms. Yes, ballrooms.

In former times grand mansions would have a ballroom. There would be hundreds of people or even just modest gatherings of thirty people, which could be just a few families with a huge amount of kids each.

But the McMansions never seem to have a ballroom. There may be vast swimming pools and all kinds of huge extra bedrooms but they lack the fantasy aspect that goes with a grand ball.

The grand ball could be a wedding or a birthday or just a seasonal event. People would have to dress up for it in very impractical clothes. A certain level of class hierarchy goes with it though, not very American doing that.

I can't remember which one, but years ago the English king would not really use the grand palaces but stay in a regular house in the grounds. He just preferred everything on a practical scale. I think I would be the same had I been born with parents with one of these McMansions, for them to pass the behemoth on to me. The place would have to be in some storage mode and I would live in some small one room caravan out the back, to only use the big house when guests arrive.

How does the heating work out for these McMansions? I don't see a lot of doors. Do these people just have huge electricity and other bills to keep the lights and HVAC on the whole time?

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#315

Post by thousandautumns »

spamizbad wrote: post #211
pbuzbee wrote: post #97

This article claims that these homes are going because buyer preferences have shifted towards smaller homes in walkable areas. I don't disagree with this, but I'm surprised the article didn't factor in the cost of these homes. These homes are priced in the millions and are generally not in areas known for high salaries. Coming up with that much money is out of reach for most members of younger generations. Some peopl…

The article is generalizing a bit, and focusing on just one aspect of boomer housing matters. For example, it's also quite common for baby boomers to hold onto their existing 3-bedroom homes, and in the process restrict housing supply of what should be affordable, reasonably-sized homes for millennials seeking to put down roots and start a family. I don't think there's anything wrong with this BTW, as it can be quite…

I'm not sure millenials or Gen-Xers are any less materially obsessed, I think we just generally have less money to spend on the things Boomers did. It isn't like we aren't spending thousands on tech, clothing, etc. I hesitate to condemn Boomers too harshly for their lifestyle choices given the benefit of hindsight when I'm sure my generation will also be pilloried for the aspects of lifestyle we are living that will later be seen as moronic.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#316

Post by 83 »

hn_throwaway_99 wrote: post #93

One of the trends that I can only hope continues is getting rid of this idea that home ownership (especially single family home ownership) is the American dream. I live in and own a detached single family home (was a compromise with my spouse) and to be honest, I hate it. I hate having to take care of the yard, to deal with unreliable tradespeople when things break, to deal with the huge expense of minor home repairs…

Really comes down to lifestyle - I love having a home. Want to run 220v for a basement milling machine? Easy. Want to knock out a wall to put in a big spa tub? Done. Want to put a spray booth in the garage to paint wooden kayaks? No problem. Much of what I want to do in my spare time wouldn't be feasible in an apartment. Then again, I don't mind doing some minor home repairs so my costs are minimal. You can always get a home warranty plan if repairs bother you that much.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#317

Post by dang »

mensetmanusman wrote: post #296
module0000 wrote: post #277

Earlier quoted context omitted.

> Everybody follows each other in a grand parade to oblivion. You sir, are a genius. I love that wording. That should have been on the welcome brochure we all get as babies, assuming we could read it.

The economist just had a really fascinating interview with parents of extremely gifted children. Apparently many of these types of children start obsessing over this grand parade and it can become quite debilitating for them.

This one? https://news.ycombinator.com/item?id=19925859

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#318

Post by rifung »

jandrese wrote: post #297
rifung wrote: post #250

Earlier quoted context omitted.

> On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer. If you can assume historical returns, renting is a financially superior choice. Well, assuming my math was correct. Both are big assumptions admittedly. The reason is that whe…

> over the long term on average home prices don't increase. I assume you mean adjusted for inflation here? Even then that hasn't been true. The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you inste…

> I assume you mean adjusted for inflation here? Even then that hasn't been true.

I used the numbers from here: https://economics.harvard.edu/files/economics/files/ms28533....

Specifically in section IIIA

"The stylized fact from the studies on long-run housing capital appreciation is that over long horizons, house prices only grow a little faster than the consumer price index"

> The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you instead invested need to make up for the monthly loss in rent, plus the lack of an asset at the end of the process.

Right, but the down payment ends up compounding to greater than the value of the entire home at the end of the 30 years and the difference is significant enough to cover (rent - mortgage)

> This comparison isn't entirely fair because the rental unit also included maintenance and groundskeeping. In my house I have to do all that work myself or hire someone. However, in the rental unit I had to pay for the utilities. This is a problem because the landlord will never replace something like an AC unit or a refrigerator with anything but the absolute cheapest and most expensive to run model. In my house when I replace it I have the option of buying the high efficiency model and enjoying the cost savings over the life of the unit. Plus when something breaks in my home I just fix it or go out immediately and hire someone to fix it. In the apartment you have to contact the landlord who then sits on it for two weeks before contacting his maintenance guy who only comes by once every couple of weeks to look at it and then order the part so maybe he can fix it on his next visit. In the meantime I'm freezing my ass off with no heat for all of January. I don't miss renting at all.

I completely agree. The thing I actually really wanted to buy a house because I want a grand piano and to not have to worry about moving it. Sadly at least from my own calculations I just can't justify it.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#319

Post by BeetleB »

jawns wrote: post #137
chrisBob wrote: post #115

I built a house last year, and had to work with a few different banks to finally get a construction loan. One of the fist ones said to me "1900 sq-ft? You shouldn't be building a house that small". We made it work, but would have gone with a manufactured home before we would have built something with 3k+ square feet just to make the bank happy.

I would assume the first bank advised against it, and the other banks passed on it, is because they need to think not only about whether you can be expected to repay the loan, but also about how easy it is going to be to offload the property if you can't afford the loan and they need to foreclose. Yes, YOU might be perfectly happy in a 1,900 square foot home, but if the market demand is for houses significantly large…

I was about to say the same. I know someone in the Salt Lake City area who built his own home. His realtor told him "You can build what you want, but a house with 4 bedrooms will not sell well".

People have a lot of kids there.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#320

Post by cblum »

mox1 wrote: post #252
cblum wrote: post #204

Earlier quoted context omitted.

Did you enjoy making repairs though? In my experience that’s what makes people either love or hate owning their place. Personally I loathe doing any kind of maintenance work. I hate dealing with drywall, paint, wiring, pipes, and whatever else you have to deal with when maintaining a home.

As an engineer (software) who owns his own SFH, I absolutely love doing repairs to my house. I preemptively replaced my water system this spring (electric to gas heater, added water softener). Took me a whole week (5-10pm work) and lots of pre-planning, but every time I walk downstairs I can't help but admire all the coppers lines I piped in. I dunno it was kinda like Hello World of the building trades, hearing the h…

Yeah, we’re at opposite ends of the spectrum here :)

I hate all that stuff. I hate spending hours at Home Depot trying to find the right parts and tools to do things.

I just hate dealing with hardware in general.

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