U.S. now short 4.5M homes as housing deficit grows • Hacker News Board

Re: U.S. now short 4.5M homes as housing deficit grows

#71

Post by goalonetwo » Wed, Jul 17, 2024, 2:39 PM UTC

cherry_tree wrote: post #70

archagon wrote: post #66

Earlier quoted context omitted.

In what specific ways is the calculator flawed?

I looked at it and what I noticed: It assumes home prices will rise equal to inflation which hasn’t been true in recent years It doesn’t allow you to add monthly utilities for renting but assumes 100$/month for buying. I personally have never rented a place where all utilities were covered It assumes quite high property taxes compared to what I pay It assumes market returns of 4.5% which is true in a long term sense…

You can change all those assumptions? I changed most of them and even by having rent going up 5% a year and a market return for housing of 6% a year.

It also assumes the SP500 only returns 5% a year while in practice historically it is closer to 10.

Re: U.S. now short 4.5M homes as housing deficit grows

#72

Post by goalonetwo » Wed, Jul 17, 2024, 2:43 PM UTC

onlyrealcuzzo wrote: post #65

goalonetwo wrote: post #48

Earlier quoted context omitted.

you are right and you also need to include the rent equivalent, yes. I would advise to use the rent or buy calculator: https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal... It is the best one I have found so far. Even in the ZIRP era, I couldn't find places that made sense buying based on that calculator. Nowadays it is even more clear cut that buying doesn't make sense financially (it could make sense for…

> I would advise to use the rent or buy calculator I've used it. It's not good. If you asked someone to make a calculator that makes renting as attractive as possible - it would look similar to the NYT calculator. It's not surprising this calculator comes from a city where the majority of people rent, and is read mainly by "elites" who live in areas where more people rent... At the time, I lived in LA in this exact c…

Most home made calculator/spreadsheet completely gloss over all the fees and details. But also most people have already emotionally decided to buy and want to pretend they did the math to justify their decision.

Re: U.S. now short 4.5M homes as housing deficit grows

#73

Post by infotapeworm » Wed, Jul 17, 2024, 5:13 PM UTC

esalman wrote: post #53

infotapeworm wrote: post #34

Friendly reminder - Data released by Zillow, Redfin, and the likes is not regulated in any capacity. They choose the narrative that best fits their wallets.

Even then, there's absolutely to denying that inventory has gone down and prices has gone up in last few years and it created an affordability crisis for many.

Prices went up because the federal reserve system has been playing very funny games. Old lessons often have to be repeated.

Elastic money will perpetually confuse people, as it takes the discussion out of reality. This is not a simple "supply/demand" problem. It is artificial booms/busts that were instigated by the fed.

Home inventory is up 13% from last April with 1.6 million homes available. Builders are starting to go under water and are trying to flush inventory. 90 day delinquent credit card bills are at a 12-13 year high.

Reality is that the lies keep coming. The most simple and effective propaganda that exists is repetition. The affordability crisis is real, but inventory has not decreased and there is no "shortage"

Re: U.S. now short 4.5M homes as housing deficit grows

#74

Post by infotapeworm » Wed, Jul 17, 2024, 5:14 PM UTC

goalonetwo wrote: post #40

infotapeworm wrote: post #34

Friendly reminder - Data released by Zillow, Redfin, and the likes is not regulated in any capacity. They choose the narrative that best fits their wallets.

100%. I have been following the housing market for the last few years. So-called data is all over the place. It really feels that all those companies have a narrative in mind and are nitpicking the data to fit the narrative. I have rarely seen so much narrative-driven BS as in the housing market. The realtors being the absolute best at coming up with a reason why it is always the perfect time to buy or sell.

It's always great until it is not. And when it is not great, it becomes not great on a dime.

Re: U.S. now short 4.5M homes as housing deficit grows

#75

Post by oliwarner » Wed, Jul 17, 2024, 5:20 PM UTC

BugsJustFindMe wrote: post #3

It certainly doesn't help that political responses to housing (lack of) affordability are commonly demand-side price games (limiting rent increases, subsidizing loans, tax rebates) that feel good but actually cause harm because they worsen the real problem shown here which is that demand growth outpaces supply growth.

Or… the market has been enabled to spend more by elaborate and ever-expanding finance products, which in-turn underwrite pensions and other institutional investments, and that has inflated prices.

Would there be as much viable demand at a given price point if you could only get a "salary x4" mortgage like you could 15 years ago? Or x2, 25 years ago? We're x10 now.

Not controlling lending is the biggest economic failure of the past century.

Re: U.S. now short 4.5M homes as housing deficit grows

#76

Post by headcanon » Wed, Jul 17, 2024, 5:36 PM UTC

silisili wrote: post #49

headcanon wrote: post #18

I'm looking for a house now and the market is crazy, every house is subject to a bidding war and selling for at least 25% over asking, which sucks for folks who don't have the cash on hand to pay the difference (since the bank only covers so much). There is no way this is sustainable. I looked into building a house and while its certainly possible its so expensive that everyone is trying to talk me out of it. Why is…

I can help a little as I went through the same decision a while ago. In the end, I decided to buy a house someone else had built as I don't like tract housing, as it gave me a bit of the best of both worlds - I got a well built custom house, but didn't pay out the nose for it. There are a lot of factors that play in, certainly labor, but the biggest unique costs I think were the permitting and utility tie ins. When y…

Thanks, that was very helpful. I agree, a lot of new construction is really shoddy and put together in a hurry. Naturally I would want to avoid that but you're right, building yourself isn't worth it unless you're ok with waiting for the market to catch up with you, or you're able to build a bunch of houses at once (which a lot of developments do)

Re: U.S. now short 4.5M homes as housing deficit grows

#77

Post by esalman » Thu, Jul 18, 2024, 8:56 AM UTC

infotapeworm wrote: post #73

esalman wrote: post #53

Earlier quoted context omitted.

Even then, there's absolutely to denying that inventory has gone down and prices has gone up in last few years and it created an affordability crisis for many.

Prices went up because the federal reserve system has been playing very funny games. Old lessons often have to be repeated. Elastic money will perpetually confuse people, as it takes the discussion out of reality. This is not a simple "supply/demand" problem. It is artificial booms/busts that were instigated by the fed. Home inventory is up 13% from last April with 1.6 million homes available. Builders are starting t…

Whatever you are saying is probably true, for less than decent school districts.

Re: U.S. now short 4.5M homes as housing deficit grows

#78

Post by BugsJustFindMe » Thu, Jul 18, 2024, 12:54 PM UTC

oliwarner wrote: post #75

BugsJustFindMe wrote: post #3

It certainly doesn't help that political responses to housing (lack of) affordability are commonly demand-side price games (limiting rent increases, subsidizing loans, tax rebates) that feel good but actually cause harm because they worsen the real problem shown here which is that demand growth outpaces supply growth.

Or… the market has been enabled to spend more by elaborate and ever-expanding finance products, which in-turn underwrite pensions and other institutional investments, and that has inflated prices. Would there be as much viable demand at a given price point if you could only get a "salary x4" mortgage like you could 15 years ago? Or x2, 25 years ago? We're x10 now. Not controlling lending is the biggest economic failu…

What is "viable" demand supposed to mean? "Homes"/"Housing units" includes rentals. Mortgage salary ratios are irrelevant here. Do the nonviables just get to live on the street and like it? All you need to do is look at total housing units vs total families to see that demand growth naturally outpaces supply growth because we don't build enough to keep up with population increases.

Re: U.S. now short 4.5M homes as housing deficit grows

#79

Post by oliwarner » Fri, Jul 19, 2024, 10:46 AM UTC

BugsJustFindMe wrote: post #78

oliwarner wrote: post #75

Earlier quoted context omitted.

Or… the market has been enabled to spend more by elaborate and ever-expanding finance products, which in-turn underwrite pensions and other institutional investments, and that has inflated prices. Would there be as much viable demand at a given price point if you could only get a "salary x4" mortgage like you could 15 years ago? Or x2, 25 years ago? We're x10 now. Not controlling lending is the biggest economic failu…

What is "viable" demand supposed to mean? "Homes"/"Housing units" includes rentals. Mortgage salary ratios are irrelevant here. Do the nonviables just get to live on the street and like it? All you need to do is look at total housing units vs total families to see that demand growth naturally outpaces supply growth because we don't build enough to keep up with population increases.

> All you need to do is look at total housing units vs total families to see that…

… homebuilding outpaces growth of "family units"!

In the UK you can track ONS census data back in decades and +1m families, +1.1m households. In the US 2011-21, it's +5m families, +10m homes. Bigger surpluses wouldn't hurt —and I would happily believe there are markets where this isn't true— but this idea of market drought causing inflated prices is too simplistic.

What has changed is that banks have leant far more aggressively in the past 30 years. If they hadn't, homes in high demand areas would be demanded by relatively fewer people, prices wouldn't be so buoyant. By "viable" I meant the price point a market bear. There's your SAD.

Another change is the proportion of owner-occupied: absolute number in the UK has stayed relatively static, while the number of private landlords has exploded. Two thirds of those privately let properties are on mortgages that again, are a financial product that has been far more aggressively stretched in the past 30 years.

High ratio mortgages have lifted this. They allow us to afford more, so the market can charge more at the same level of demand. That means we all have bigger mortgages, the banks make far more in repayments.

It's a long game and banks have won. We even bailed them out when it bit them in the arse. What's worse is they lie about the reasons in order to build more, lend more with this idea that it will magically become more affordable. No amount of building can ever be allowed to depress these prices because our institutions depend on a constant rise.

I don't have a solution. Creative sale restrictions for newbuilds (eg everlasting price capping, return to state, etc) might be the only way to have a lasting affordable housing stock but as things are, we're only a major financial crash away from the banks being able to take 20% of all mortgaged properties when people can't keep up with repayments, and one more after that to take another 20%. That's where we're heading.

Re: U.S. now short 4.5M homes as housing deficit grows

#80

Post by BugsJustFindMe » Sat, Jul 20, 2024, 3:35 PM UTC

oliwarner wrote: post #79

BugsJustFindMe wrote: post #78

Earlier quoted context omitted.

What is "viable" demand supposed to mean? "Homes"/"Housing units" includes rentals. Mortgage salary ratios are irrelevant here. Do the nonviables just get to live on the street and like it? All you need to do is look at total housing units vs total families to see that demand growth naturally outpaces supply growth because we don't build enough to keep up with population increases.

> All you need to do is look at total housing units vs total families to see that… … homebuilding outpaces growth of "family units"! In the UK you can track ONS census data back in decades and +1m families, +1.1m households. In the US 2011-21, it's +5m families, +10m homes. Bigger surpluses wouldn't hurt —and I would happily believe there are markets where this isn't true— but this idea of market drought causing infl…

> homebuilding outpaces growth of "family units"!

The article literally says the exact opposite. If you're going to disregard the article's data and analysis, I think you need to show your sources so we can look at them together. It seems likely that we're getting tripped up on category definitions, though. The US population grew by over 21 million people from 2011 to 2021 while the average number of people in a US household dropped from 2.58 to 2.51, so it can't be only 5 million families in a relevant/meaningful sense. Atomicizing families that don't actually live under the same roof is disingenuous. An adult moving out of their parents' home becomes their own separate family unit for the purposes of real estate.

Though if you want to talk about the steady decline of the average US household size, we can certainly do that. It seems applicable. More people total and fewer people per household does turn into needing more households.