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The global housing market is heading for a brutal downturn

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Re: The global housing market is heading for a brutal downturn

#41

Post by arcticbull »

cm2187 wrote: post #37
arcticbull wrote: post #33

Earlier quoted context omitted.

Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard…

Well, Japan hasn't seen population growth. I have a lot of sympathy for deregulation and think it should be the primary tool, though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London.

> Well, Japan hasn't seen population growth.

I don't know why this is everyone's immediate reaction. I'm saying housing is governed by supply and demand. If you want to drop prices you can either increase supply or decrease demand. They allowed supply to meet demand by increasing supply into flat... ish demand. ([edit] SF and Tokyo both grew ~10% from the mid 90s). So the system works :)

> I have a lot of sympathy for deregulation and think it should be the primary tool.

Great me too.

> ... though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London.

Think of Hong Kong. A wonderful city. It's very different from the 50s when it was basically the same height as SF. I don't think anyone misses that. ([1] before, [2] after - I'd hardly call that ruined).

Yes, construction will change the character. But so what? Look at SOMA. Do you miss the old warehouses? I don't. And I certainly wouldn't miss the mishmash of almost identical 4 story buildings in the Sunset. They ain't no painted ladies is all I'm saying. Or much of the Mission. Honestly the entire SF affordability crisis would disappear if the Sunset was zoned 6 story instead of 4.

Embrace change!

[1] https://www.mardep.gov.hk/theme/port_hk/en/p1ch6_1.html#

[2] https://en.wikipedia.org/wiki/Victoria_Peak#/media/File:Hong...

Re: The global housing market is heading for a brutal downturn

#42

Post by ChrisMarshallNY »

benj111 wrote: post #34
bamboozled wrote: post #24

Earlier quoted context omitted.

I think one of the issues is this, there are so, so many people waiting to buy in the downturn with money saved that it will create its own boom. I do wonder though, if all this cash in the bank people are hoarding for the downturn will have other effects on the economy, recession ? I'm in the same boat though, I've saved and invested a shirtload of cash waiting for a downturn.

Are people hoarding cash/assets? From what I understand the savings rate has been dropping across the western world. In theory though, savings are countercyclical. People made unemployed can still maintain their spending. So it helps break the feedback loop of redundancies -> falling spending -> redundancies. Although we seem to be heading for recession, with high inflation and interest rates, so the normal mechanism…

> From what I understand the savings rate has been dropping across the western world.

I’m not sure that’s the case. It may have just declined, but I think it was pretty high, during the COVID years.

Re: The global housing market is heading for a brutal downturn

#43

Post by owlbynight »

ThrowawayTestr wrote: post #25

Contrary to the wording of the title, this is a good thing for people that treat housing as a place to live instead of an ever appreciating asset.

Sure it does, after 2008, my parents bought a house for $25k that would probably sell for $250k right now.

Re: The global housing market is heading for a brutal downturn

#44

Post by dmitriid »

cm2187 wrote: post #37
arcticbull wrote: post #33

Earlier quoted context omitted.

Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard…

Well, Japan hasn't seen population growth. I have a lot of sympathy for deregulation and think it should be the primary tool, though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London.

> you can't replace every construction with a high rise building without destroying the city. Think of Paris or London.

There's a living example of that: Stockholm. They destroyed the center of the city in the 50s-60s and replaced it with high-rise buildings and a highway [1] [2]

They botched it so badly that you can't even properly see the city hall the way its architect intended.

[1] https://goo.gl/maps/q8wxq3UWvSU5yDmD8

[2] https://goo.gl/maps/7uVYivYFQvmpWVGR6

Re: The global housing market is heading for a brutal downturn

#46

Post by cudgy »

arcticbull wrote: post #33
cm2187 wrote: post #32

Earlier quoted context omitted.

Population growth. The city centre doesn't expand but the demand for it does. And logically it should also be a hedge against inflation. I am not sure that our modern economies have the stomach for what it takes to rein in inflation (too leveraged).

Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard…

Is SF obstinate or are the employers that insist on building their businesses there and attracting employees from other areas despite a lack of housing for them the obstinate ones?

Re: The global housing market is heading for a brutal downturn

#47

Post by arcticbull »

cudgy wrote: post #46
arcticbull wrote: post #33

Earlier quoted context omitted.

Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard…

Is SF obstinate or are the employers that insist on building their businesses there and attracting employees from other areas despite a lack of housing for them the obstinate ones?

Yes obviously it is the people who want to live there who are wrong. How dare they?

It's funny, especially considering all the 800K people who already live in San Francisco are the beneficiaries of previous liberal zoning rules - who are now pulling up the ladder behind them. The city was like 300K people in 1900. If they'd stopped building houses then, that would be the population now. I wouldn't be here, and assuming you live in SF, neither would you.

Folks just out here picking an arbitrary point in time and saying, whelp, I'm here, that's good enough for me. No new buildings! No up-zoning. No densification. No duplexes until the state forced it through with S.B. 9.

Without even stopping to consider the benefits of density: diversity, like actual diversity ala New York. Transit. Infrastructure. A tax base. Stuff we can use to have nice things.

But I guess my real question is, I own the land, who are you to stop me from developing it as I see fit?

Re: The global housing market is heading for a brutal downturn

#48

Post by cudgy »

Beaver117 wrote: post #5
baq wrote: post #4

Earlier quoted context omitted.

It’ll happen slowly then all at once. Be ready to make a move in the next couple years. Be patient, but pounce quickly.

If the downturn is so short you need to "pounce quickly" it isn't much of a downturn. Some countries have had stagnant real estate markets for years. Anyway interest rates are not going down to 2% anytime soon so don't hold your breath. People who bought/refinanced in 2020-2021 will probably never sell.

> People who bought/refinanced in 2020-2021 will probably never sell.

They may not be able to sell for 10-12 years if prices move down like they did in the last real estate down cycle. There is a reasonable risk that this process has already started.

Re: The global housing market is heading for a brutal downturn

#49

Post by cudgy »

benj111 wrote: post #39
hyperbovine wrote: post #22

Earlier quoted context omitted.

This. We refi’d in 2020 and our monthly payment is just stupendously cheap now, like < 1/7 my monthly take home pay. Even though we sort of need a bigger house at this point, the thought of giving this up makes entering the market again a complete non-starter. I feel bad for anyone trying to buy a house in the US right now, particularly their first.

High inflation is good if you've just bought a house though. Yes it's hard to begin with but compound inflation soon erodes the value of the debt.

This assumes housing moves with inflation, which will not be the case if real wages to pay high interest mortgages do not rise with inflation or prices for housing drop to compensate, which has already started. Buying at the peak even with low interest rates is not a panacea.
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