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Paying for Dirt: Where Have Home Values Detached from Construction Costs?

buildzoom.com

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Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#91

Post by kevinburke »

frgtpsswrdlame wrote: post #88
kevinburke wrote: post #85

Earlier quoted context omitted.

I guess SF’s recent experience, where years of rent and owner move-in eviction increases ended the same year we built a record number of housing units, belies this. Sure we may run into other problems, but right now a third of California renters are paying more than half their salary in rent. I’d take my chances with a lot of other crises to help with that one.

>I guess SF’s recent experience, where years of rent and owner move-in eviction increases ended the same year we built a record number of housing units, belies this. Care to link me? I'm interested in this. But mainly I agree with the article that increasing building is only a long-term solution, to fix the ridiculous prices of housing in the short-term different measures are needed - there's just no way to build eno…

http://www.nbcbayarea.com/news/local/Eviction-Notices-San-Fr...

In the short term, building more housing will still result in lower rents relative to not building more housing; its the right thing to do for both time frames.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#92

Post by matt_wulfeck »

jmcqk6 wrote: post #87
Simon_says wrote: post #35

Earlier quoted context omitted.

> “Whoever goes against this is openly causing suffering,” she said. This quote really stands out to me. Is this demonization of opposing viewpoints a new thing, or am I just noticing it more in the last two years?

I think that this is probably a logical extension of the underlying logic. Sales taxes are inherently harder on people with less money than people with more money. That's demonstrable just based on simple math. Any argument for sales taxes over income taxes that doesn't recognize that fundamental mathematical truth is not being intellectually honest (or doesn't know the topic very well).

The problem is that no one is naive enough to believe they'll somehow lower any existing taxes (either sales or property) with the introduction of an income tax. They'll keep them all, and try and introduce some new program that helps a specific demographic.

From what I see, this usually ends up with money moving between pockets with a bureaucracy taking its cut along the way. I try not to be overly political, but I can't stand the idea of a strong, central planning government.

Let's see a balanced, itemized budget. Even in the article they're just spitballing ideas with what they could do it an extra $140m.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#93

Post by rsynnott »

AznHisoka wrote: post #58
rsynnott wrote: post #52

Earlier quoted context omitted.

In a rational market, yes, absolutely; if prices are driven by a supply deficit then increasing supply cuts prices (or at least reduces price growth, if a smaller deficit remains). Housing markets tend not to be all that rational, though; there's often an aspect of speculative mania to them. It's likely that increasing supply would cut prices, but it's not actually certain, as it may just increase speculative 'invest…

what differentiates a real estate investor from a speculator?

The speculator buys property because they expect it to go up in value; the rent is just covering part of their costs. For instance, if you have an "investment" property, but the rent doesn't cover the interest component of the mortgage, but you think that's okay because you expect it to go up in value, you're a speculator, not an investor.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#94

Post by clairity »

carradjm wrote: post #81
clairity wrote: post #33

i once managed the product that calculated the cost basis for your property tax bill in most US counties & states (and some international jurisdictions), and it was common knowledge there that home prices were disconnected from construction costs. construction cost relative to home prices is interesting to a company like buildzoom because they're in the construction business (and finding the coming construction booms…

https://en.wikipedia.org/wiki/Georgism . Don't mean to boil down your entire well-written post to a single point, but I maintain that Georgism is the only sensible solution to this problem.

i'm not familiar with Georgism, but i do agree that the land value tax should be a primary taxing mechanism for a property-ownership economic system (like ours in the US). it's progressive, fair, and according to the wikipedia article, doesn't get passed on to renters.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#95

Post by AznHisoka »

rsynnott wrote: post #93
AznHisoka wrote: post #58

Earlier quoted context omitted.

what differentiates a real estate investor from a speculator?

The speculator buys property because they expect it to go up in value; the rent is just covering part of their costs. For instance, if you have an "investment" property, but the rent doesn't cover the interest component of the mortgage, but you think that's okay because you expect it to go up in value, you're a speculator, not an investor.

Ok, so anyone who invests in stocks with no dividends is also a speculator too by your definition? Or is the criteria different for stock investors?

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#96

Post by clairity »

AznHisoka wrote: post #59
clairity wrote: post #33

i once managed the product that calculated the cost basis for your property tax bill in most US counties & states (and some international jurisdictions), and it was common knowledge there that home prices were disconnected from construction costs. construction cost relative to home prices is interesting to a company like buildzoom because they're in the construction business (and finding the coming construction booms…

Why should abstract things like a futures contract be investable, while "real" things like houses shouldnt? I guess the government should recommend bitcoin investing to everyone since its not real and nobody is affected?

it's not so much that real things shouldn't be investable, but that a primary residence has unique properties (lke the lack of substitutability) that make it unlike commodities. and commodities are what capitalistic free markets was design for and for which it works best.

so a free-for-all market may not be ideal for a society when it comes to primary residences. i'd go so far as to argue that the american identity rests on the psychological safety of a reliable place to live (or at least it used to, before we turned them into slot machines).

entrepreneurship couldn't have flourished without it, along with reasonable bankruptcy laws that (until recently) fostered greater risk-taking among the labor class. it's hard to be the rugged individualist if a risk you take can lead to you and your family's death.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#97

Post by Retric »

mtberatwork wrote: post #49
Retric wrote: post #16

Earlier quoted context omitted.

Northern Virginia has very low unemployment and high paying jobs. The area also has all 4 seasons fairly balanced, zero significant natural disasters, plenty of rainfall to stay green in the summer etc. Granted, you may not like that tradeoff, but it has a lot going for it. Sure I moved to MD due to my current job, but I am seriously considering moving back.

Even with high paying jobs (if you are fortunate to have one), NoVA also has incredibly high housing costs unless you decide to live in the less desirable locations (which come with their own problems) or move far out and give yourself a massive commute.

Depends on what your comparing it to. Northern VA has a mix of jobs and houses so it's possible to have a very short commute. It's easy to find an nice apartment around 1500$ / month just about anywhere which is not cheap, but not so crazy as NYC or SV.

A dual income professional family can generally afford a 4 bedroom home, but that's hard on a single income without a massive down payment or over sized salary.

In terms of living further out, it's frequent for people to telecommute 1-3 days a week which makes a huge difference.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#98

Post by nradov »

rspeer wrote: post #37
TheSpiceIsLife wrote: post #36

Earlier quoted context omitted.

Will building more units / appartments/ houses bring the price down? Have other cities seen home prices move toward affordability when more housing has been built? I'm not saying it isn't a good idea, just that the logic seems flawed.

I'm not up on the sources, but a moderately pro-development candidate for Cambridge City Council has often quoted a statistic saying that there are only two ways to bring down house prices: 1. Make the city suck 2. Get the housing vacancy rate to 5.5% And of course he says this to encourage everyone to work toward #2, and the way to do that without displacing anyone is to build new housing. I don't really understand…

It's not a simple supply versus demand curve. Sometimes adding a little more housing without flooding the market does end up increasing prices due to gentrification that changes the characteristics of a neighborhood.

Building more housing does "make the city suck" for people who prefer quiet, privacy, and unobstructed views. In some areas it probably makes sense to build regardless of their objections but that will have to be resolved through a democratic process.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#99

Post by nradov »

rspeer wrote: post #79
ACow_Adonis wrote: post #54

Earlier quoted context omitted.

I don't see many people mentioning a proportional value-based land tax, which would probably be about the first thing a traditional economist would recommend? Brings down prices, hurts land-banking, increases density, generates revenue for infrastructure, captures public benefit from value increase, etc...

Hurts grandmas/grandpas who lucked into houses with high property values, who could be rich but don't want to be because they have personal reasons not to move. These are incidentally severely overrepresented among voters, and their votes are amplified by how easy it is to paint someone following the economic wisdom as an evil grandma-displacer. It's much more politically convenient to displace young minorities. Nobo…

One solution would be to defer tax payments and put a lien on the property instead, payable upon change of ownership. That way no one will be forced out of their home, and the government can even use those liens as collateral if they need to borrow funds for current operations.

Re: Paying for Dirt: Where Have Home Values Detached from Construction Costs?

#100

Post by nradov »

rspeer wrote: post #76
maxsilver wrote: post #71

Earlier quoted context omitted.

> I don't really understand the opposite logic, which the NIMBYs like to use, saying that building new housing will drive the price up. It actually fits the "logic" of the model you mentioned. If you build more housing, the city "sucks less", more people want to live there, so the price goes up. This is especially true with modern development, since it exclusively builds luxury units, which make that part of the city…

It would seem to me that, even in that case, building new housing increases the housing price in that local area, while not building new housing increases the housing price everywhere . Is there an alternative plan to make housing prices decrease ? The long term is at least better than never. I know there's the whole thing where you designate certain units as subsidized affordable housing and have people on a lottery…

One alternative plan would be to subsidize economic development in underpopulated cities. It's not healthy for our societies long term to squeeze everyone into just a few geographically constrained areas.
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