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If you sell a house these days, the buyer might be a pension fund

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Re: If you sell a house these days, the buyer might be a pension fund

#501

Post by milkytron »

abfan1127 wrote: post #231

paying 20-50% over asking price is an interesting move. To make money on that over-pricing you have to price rent accordingly. The only way to keep rents up is to limit inventory. If you can't stop the building of new houses, what's their out? Sounds like a good time to exit Blackrock as your money manager?

> If you can't stop the building of new houses, what's their out?

Many areas have significantly slowed (or prevented) the building of new houses. Blackrock probably doesn't expect this to change. Supply is constrained and doesn't seem to be getting better. In their eyes, being in the market with a limited supply, high demand, and no major changes to supply production seems to be worth the premium.

Re: If you sell a house these days, the buyer might be a pension fund

#502

Post by WarOnPrivacy »

mullen wrote: post #332
briefcomment wrote: post #72

Earlier quoted context omitted.

If you own all options and the renter needs to have some sort of housing, they'll pay anyway. The end result is that the owner will start collecting a larger percent of the renter's earnings.

When you make housing too expensive, people just get up and move. People are not surfs and are not trapped or stuck living in a house they can't afford. It might not happen overnight but populations do migrate due to housing costing too much.

> When you make housing too expensive, people just get up and move.

Not when all the jobs in that household are here.

> People are not surfs and are not trapped or stuck living in a house they can't afford.

They are when all the jobs in that household are here.

> It might not happen overnight but populations do migrate due to housing costing too much.

People who are facing homelessness this year aren't thinking about market corrections that are decades away.

Re: If you sell a house these days, the buyer might be a pension fund

#504

Post by WarOnPrivacy »

recursive wrote: post #80
briefcomment wrote: post #72

Earlier quoted context omitted.

If you own all options and the renter needs to have some sort of housing, they'll pay anyway. The end result is that the owner will start collecting a larger percent of the renter's earnings.

I'd give up housing before food. There's a limit to how high that percentage can be.

> I'd give up housing before food.

Lack of food can be fixed in a day. Lack of housing can be impossible to overcome ever.

Re: If you sell a house these days, the buyer might be a pension fund

#505

Post by lotsofpulp »

gadaprog wrote: post #462
lotsofpulp wrote: post #14

Earlier quoted context omitted.

Property taxes do not have to go up because the assessment goes up. I have had assessments go up, but the tax rate go down because the town did not increase its budget. In the long run it probably will though, since higher land values will probably cause increases in wages and other costs. But it does not have to be proportionally as much as the land value increase.

I am not a tax expert, but my understanding is that each State sets their own formula for property taxes. In every state I have lived in, the first factor of that "property tax formula" is always "Assessed Value" of said property, and then the formula continues from there based on a slew of criteria (property type, exemptions, etc.). So you are correct that "Property taxes do not have to go up because the assessment…

It is more accurate to say property taxes are going up because government expenditures go up. That might be partly caused in the long term due to increases in land prices, since the services your taxes pay for are performed by people that may need to buy land, but it’s not a 1 to 1 relationship in the short term.

I have seen tax rates drop from 1.25% to 1% and the opposite also happens when the tax collections come up short.

I can give an example. I used to have land in NJ a few years ago, and the total property tax went up year after year. If I recall, the tax rate went from ~1.5% to slightly above 2%, and the assessment barely went up. The property tax went up due to government expenses coming in higher than expected due to all the debt NJ is in that was not counted as debt (underfunded DB pensions). In fact, I lost money on that land because it was worth less since prospective buyers know the property tax will continue to rise, so they have to budget for that.

On the other hand, I had land in FL at the same time, which has appreciated a lot and was assessed for more. But the total property tax paid stayed more or less the same, since the tax rate came down since the government’s expenditures did not move as much, and/or were offset by new payers.

The property tax formulas have more to do with what proportion of the government’s expenses is each land owner liable for, but the total tax collected does not need to rise in step with total land value increase.

Re: If you sell a house these days, the buyer might be a pension fund

#506

Post by [deleted] »

foogazi wrote: post #202
seanp2k2 wrote: post #170

Earlier quoted context omitted.

I’ve ranted about this before but CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move. Two people can be living in houses next to each other valued around 1.5m, and one of them will be paying 1/10th the tax. If anyone wants to buy a house, they have to first be able to afford the property, so the barriers to entry are so much higher for t…

Prop 13 biggest beneficiaries are corporations. > so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago. 40 years ago it was still expensive to buy otherwise everyone would have bought, including the investment funds

[deleted]

Re: If you sell a house these days, the buyer might be a pension fund

#507

Post by ryandrake »

OldGoodNewBad wrote: post #466
davidw wrote: post #125

Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment. Here's one who comes right out and explains this: > Meanwhile, local opposition to building is so commonplace and the approval process so cumbersome, time consuming, and expensive, even when a proposed project complies entirely with requirements, approv…

Why artificially? People move into single family dwelling neighborhoods because they have lower crime and better schools. There’s nothing artificial about selecting the best environment for yourself and your family. Is it necessary to artificially editorialize when you’re making what is, at its root, a thinly veiled socio-political point?

I agree. I moved to a suburban single family home neighborhood specifically because I like the environment of a neighborhood with suburban single family homes. That suits me and my family. Others might like low-rise apartment buildings and townhomes, and they should have access to neighborhoods with that type of housing. Others might like high-rise apartments, and those neighborhoods should be available too. Why is it so bad that many different types of neighborhoods exist?

Re: If you sell a house these days, the buyer might be a pension fund

#508

Post by jedberg »

wwweston wrote: post #500
jedberg wrote: post #442

Earlier quoted context omitted.

This was a red herring when prop 13 was passed, and is a red herring now. 49 other states don't have prop 13, and yet seniors aren't priced out of their homes. There are plenty of other solutions. Some states allow you to just pay the same amount each year and put the difference as a lien on the house until you sell. Some states have something like prop 13, but it is applied to entire counties. ie. They allow the ent…

> This was a red herring when prop 13 was passed, and is a red herring now. 49 other states don't have prop 13, and yet seniors aren't priced out of their homes. Prop 13 is bad in at least half a dozen ways, but I'm not so sure this problem isn't coming elsewhere or even is absent. It seems to me California may have experienced a leading edge of metro dynamics that are going to come for other states soon. > everyone'…

> and wasn't this attempted by proposition a few years ago?

Yes, in the last election. And sadly it was defeated because as usual with state propositions, the side with the most money (developers in this case) were able to convince the public with inaccurate propaganda.

Re: If you sell a house these days, the buyer might be a pension fund

#509

Post by BizarroLand »

rcpt wrote: post #185
davidw wrote: post #125

Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment. Here's one who comes right out and explains this: > Meanwhile, local opposition to building is so commonplace and the approval process so cumbersome, time consuming, and expensive, even when a proposed project complies entirely with requirements, approv…

I'd say the tax advantages have a lot to do with it to. A portfolio of several thousand Prop 13 jackpots is a pretty good situation to be in.

Makes me wish that they would increase property taxes for multiple residence owners & make sure to include residential conglomerates.

It should be that each additional house after the first has a tax penalty that increases on a logarithmic scale to make it financially unsavory for people to own more than one house. In an ideal world, owning multiple homes would be an ostentatious display of wealth and not a common investment vehicle.

Re: If you sell a house these days, the buyer might be a pension fund

#510

Post by maxsilver »

brightball wrote: post #218
davidw wrote: post #125

Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment. Here's one who comes right out and explains this: > Meanwhile, local opposition to building is so commonplace and the approval process so cumbersome, time consuming, and expensive, even when a proposed project complies entirely with requirements, approv…

I just experienced something similar to this and it makes me wonder if much of this is just perception. We recently dealt with an out of state builder pushing to have a property that was zoned Neighborhood Commercial to be rezoned to something more flexible so that he could build 49 town homes with 49 parking spots on 5 acres of land. Everybody opposed the rezoning and fought to defeat it. The project would have been…

> Everybody opposed the rezoning and fought to defeat it.

Why? That's kind of an important point.

For example, unless this is NYC or similar, 49 townhomes is going to need a minimum of at least 110 parking spots (just to hold the occupants alone, assuming no one ever has guests ever). A realistic parking minimum should be 2.5 spots per townhouse.

A lot of builders outsource their pollution to the local neighborhood, especially on infrastructure (parking, water, sewer, electrical, natgas, etc). It's a common reason to opposed development, and it's a good one.

It's usually done to save cash, and it saves literally just pennies. (Parking on these projects, for example, is always less than 6% of the total cost. Cuts to sewer and electrical are less than 12% of total cost). Builders do it anyway, builders will generally build the literally shittiest thing code lets them get away with -- they'd build buildings that fall apart in the slightest breeze, if it were legal to do so.

This is why zoning rules, building codes, and the large piles of regulations are so important.

> The project would have been the most dense townhome development in 4 counties.

Ok, that means it would likely carry the highest prices per square foot in 4 counties, which means it would immediately make that neighborhood the most expensive neighborhood in 4 counties. Could that be a reason it was opposed? Density isn't free, it's a form of financial pollution that the other residents will mostly have carry the burden of. Not everywhere is California, not everywhere gets free unlimited property tax lock-ins. If you built a luxury townhouse next to a generic house, their taxes will spike 200%+ to cover your luxury development, and all nearby rents would spike in a similar way against nearby renters.

I get that California and San Francisco specifically is it's own unique terrible experience. But here in the Midwest, generally speaking, locals are pretty reasonable. You can get away with building almost anything you want, so long as you don't screw over the locals. (And I mean that quite literally, we have almost 100 new developments here in our small city, including the worlds gaudiest ugliest castle monstrosity -- zoning never stops builders ever, you can build anything you want anywhere you want, as long as you don't hurt too many people)

What is actually happening in most cases, is that some sort of builder wants to screw over all residents, residents rightly complain, and then those residents get labeled "NIMBY". The only time a project gets cancelled is when it makes residents bleed so much, they push back hard. And even then, local residents only win that fight about ~40% of the time.

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