The nation-wide high cost of housing

[ckissick]

This may belong in PARF, but let's start here and see what direction it goes.

I just read another article about skyrocketing rents and house prices. In this article, they said even doctors can't afford to live on Martha's Vineyard. I live right over the hill from Silicon Valley and prices are absurd. A tear-down there will cost over 2 mil. And I read that prices are rapidly going up everywhere.

They blame a shortage of housing. You know, supply and demand. Of course, that has to be a big part of it. So why is there a shortage of housing? Around here, it's take years and huge sums of money to get a building permit. That has to be part of it, as well. And in that liberal bastion of Palo Alto, (oops one step toward PARF-sorry) a complex of dozens of affordable housing units was planned. The citizens got together, wrote a ballot measure, and voted it down. So the developer built a few 5-million-dollar houses instead. So NIMBYs may be partly to blame.

On the demand side, around here I see a lot of people coming over from China with loads of money and snapping up multiple houses. So there's that. And then there are the second and third homes used as sources of short term vacation rental income.

What did I miss? More importantly, what is the solution?

[Arizona_928]

someone calling 2008?


The bubble is going to burst as the interest rates go up. Fools will be parted with their money...

[Dantilla]

Originally Posted by ckissick

They blame a shortage of housing. You know, supply and demand.

This^
New housing starts have not kept up with population growth for the last 20 years.
I hear lots of hand wringing and gnashing of teeth locally, but it's actually happening nationwide.

[908/930]

I think it is simple, there are easier ways to make money with less risk. The people who were in the large development game retired. Up here there are Lots of custom homebuilders can not keep up with demand, anybody good one or two year wait list, and they will not lock in a quote on the job just an estimate.

[McLovin]

It’ll fix itself. It’s starting already.
I’m seeing huge price drops on houses currently for sale in my area. Like hundreds of thousands of dollars at a time.
Of the ones that went into escrow earlier this summer, many are falling out. And the ones that are closing are very often at a discount.
Yes, it’s 2007 again, some different reasons, but same result.

[look 171]

Part of the reason is the tech industry pays too well. Yep, the supply and demand thing people seem to refuse to understand. The poor and politican scream, cost is too high, not enough housing again and again. For years, people ahve been screaming about the very same thing around the world in crowded cities, Tokyo, NYC, London etc. There's work and they pay well compared to smaller cities or towns. Interest rated goes up and the rental market booms as many basically stopped looking because those 1-2 points hike in rate blows their affordable mortgage payments. BTW, elimination of well paying jobs aren't the solution. I am just being sarcastic. That's the answer I give to those tho complain about the high cost of hosing and ask them if they are OK with lower income so all can have affordable housing. yes, I live in "left country".

[Bugsinrugs]

Old people are living longer and young people are having babies. More people then houses. I’m in Glasgow,Scotland as I type this and it’s the same here. Housing is expensive.

[faverymi]

Try Detroit
Or any other depressed area in the world

[berettafan]

Originally Posted by Arizona_928

someone calling 2008?


The bubble is going to burst as the interest rates go up. Fools will be parted with their money...

i thought this as well but locally (resort town on the coast) i'm hearing a lot of 'glass is half full' types suggesting the white collar class is making a permanent mass migration from the cities and their suburbs.

[berettafan]

Originally Posted by look 171

Part of the reason is the tech industry pays too well. Yep, the supply and demand thing people seem to refuse to understand.

To be crass and generalize you have a lot of 20 somethings with moderate to severe social skill deficiencies (diagnosable IMO) making $200k + and looking to force their surroundings into compliance with what they want. The tech skills they have and positions they hold give them 'invisible man' like powers.

The effect on everything from the real estate market to social policy is and will continue to be disastrous. A conspicuous lack of morals and, perhaps more importantly empathy, is bad mojo for quality of life. We are creating a new ruling class that is entirely unfit for the job.

[craigster59]

I talked with my good friend last week who sells real estate. He's seen the market here in Santa Clarita slow down a bit. Mostly people having to drop their unrealistic pricing. Before homes were going $60-100k over asking, now they are getting near asking or having to drop $10-15k.

He recently bought in Idaho, fled California as many have. He said that market is really cooling down there after the run up from "Ca Refugees" buying up homes. He sells in Santa Clarita from Idaho since homes were selling so fast here he rarely ever had to show a home or do a Open House.

I should be fine with my home. Desirable area, beautiful hilltop view, no HOA, no Mello Roos and SCV has a thriving commerce/industrial area. They want to build 29k new homes here, can't imagine what traffic will be like.

[Jeff Higgins]

One key element you guys have neglected to touch upon is the rampant foreign investment in our housing market. Here in the Seattle area, many of those homes being purchased by foreign investors will even sit empty for extended periods of time. They are creating an artificial demand, waiting for prices to rise, and flipping them - to yet another foreign investor.

This got so bad up in British Columbia that they passed a moratorium on foreigners purchasing homes. I'm not sure how long it will last, but it's a step in the right direction.

It turns out that less than 40% of Seattleites own the abode in which they live. Rents are such that your average professional, for the most part, cannot afford to save for a down payment on their own place. A good example is a buddy's home, one block off of Lake Washington. Built in the 1940's, maybe 2,000 square feet, in pretty average condition. He is renting it out for $8,000 per month. Imagine flushing $96k down the rent hole every year...

It's not just here, either. I recently found this, from Ireland.

https://www.irishtimes.com/opinion/2022/07/12/unwelcome-return-of-the-gintleman-that-takes-the-rint/

[GH85Carrera]

One of things we are seeing in our area is the large corporate buyers of nice houses. They buy the house, and only rent them at high rates. One real estate agent I know said houses sell to the corporate buyers withing hours of the listing. Like Ticketmaster getting all the tickets a second after the ticket sales start.

[VenezianBlau 87]

Originally Posted by Arizona_928

someone calling 2008?
The bubble is going to burst as the interest rates go up. Fools will be parted with their money...

I shouldn't be surprised (but I am) that small increases in the prime rate would dramatically affect new housing starts in Atlanta area. These folks must be really leveraged that a couple % on a mortgage is a deal killer. To me, a normal 30-year mortgage rate should be around 7-8% given the interest rate risk and default risk. Anything less is evidence of artificial invisible hand.

Also, I sort of empathize with those who bought on the high side last summer. Timing is everything but it was obvious something weird was going on and it wouldn't last.

edit: we've had 20 years of artificially low rates and deflation. New territory now as that's crashed. Anyone's guess what's in store the next few years but I don't think we've seen anything yet.

[911 Rod]

The bursting bubble will still not bring the selling prices to what they were here a few years ago.
Some will win and some will lose.
Ontario government is talking about a tax for empty homes.

[pwd72s]

"Scuse me for living too long. The place is paid for. Often get cold calls from realtors and, of course, those Zillow emails. I look at the prices as an illustration of how much government has devalued the dollar through inflation. It's all just paper with numbers on it.

However, the opening post did make a point...other than monetary inflation, the paperwork of the permit process has made it increasingly difficult to build.

[cockerpunk]

adam smith said it best: "[Landlords] are the only one of the three orders whose revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own. That indolence, which is the natural effect of the ease and security of their situation, renders them too often, not only ignorant, but incapable of that application of mind"

[NYNick]

It's a crock. "Unaffordable housing" has been the norm for decades. You think your parents could afford the house they bought 50 years ago? Hardly. They scrimped and saved and clipped coupons so you could eat. Remember?

BTW, I couldn't afford my first house either, so I built one in the 70's at age 28. Was I dumb and stupid? You bet. But my gamble paid off and it's worth 10 times what I originally invested. Was I trying to make a fortune? Nah. I was just trying to afford a house.

Air cooled 911's aren't affordable either. So what? Go find another fun car you can make your own. There are literally dozens of them out there, just like there's an affordable house for everybody. It's just not on the beach.

BTW, maybe if these prospective home buyers weren't driving $60,000-$80,000 cars or SUV's, they could figure out a mortgage payment.

[Jeff Higgins]

Originally Posted by NYNick

It's a crock. "Unaffordable housing" has been the norm for decades. You think your parents could afford the house they bought 50 years ago? Hardly. They scrimped and saved and clipped coupons so you could eat. Remember?

BTW, I couldn't afford my first house either, so I built one in the 70's at age 28. Was I dumb and stupid? You bet. But my gamble paid off and it's worth 10 times what I originally invested. Was I trying to make a fortune? Nah. I was just trying to afford a house.

Air cooled 911's aren't affordable either. So what? Go find another fun car you can make your own. There are literally dozens of them out there, just like there's an affordable house for everybody. It's just not on the beach.

BTW, maybe if these prospective home buyers weren't driving $60,000-$80,000 cars or SUV's, they could figure out a mortgage payment.

I'm sorry, but that is the worst sort of uninformed bullschitt I have read in ages.

Housing prices today, when expressed as a percentage of income, are many, many times higher than those of my generation. My wife and I bought in 1987. Our home is now "worth", on its worst day, twelve times what we paid for it. As very well paid working professionals in our respective fields (engineering and nursing), there is absolutely no way that the entry level salaries we enjoyed in those days - that enabled us to buy our home - have increased at anywhere near that rate. Entry level salaries have, at best, doubled, or maybe a bit more. No way in hell have they gone up twelvefold to keep pace with housing prices.

And no, these young people are not driving around in $60-$80k cars, living some lavish lifestyle, squandering the money they could be using for down payments. You clearly cannot be exposed to anyone just starting out in their profession, maybe a few years out of school, trying to start their families and buy homes. Before I retired, I worked with half a dozen young engineers in our group who quite honestly had no realistic hope of doing this. And every one of them were driving at least ten year old schittboxes of some kind, saving every penny they could. Yes, they "scrimped and saved and clipped coupons" in their efforts to get into a home. The few that did buy homes had parents helping them do so, either by covering the down payment or at least a substantial portion of it.

This situation has changed dramatically in my lifetime, in the 35 years since we bought.

[cockerpunk]

Originally Posted by NYNick

It's a crock. "Unaffordable housing" has been the norm for decades. You think your parents could afford the house they bought 50 years ago? Hardly. They scrimped and saved and clipped coupons so you could eat. Remember?

BTW, I couldn't afford my first house either, so I built one in the 70's at age 28. Was I dumb and stupid? You bet. But my gamble paid off and it's worth 10 times what I originally invested. Was I trying to make a fortune? Nah. I was just trying to afford a house.

Air cooled 911's aren't affordable either. So what? Go find another fun car you can make your own. There are literally dozens of them out there, just like there's an affordable house for everybody. It's just not on the beach.

BTW, maybe if these prospective home buyers weren't driving $60,000-$80,000 cars or SUV's, they could figure out a mortgage payment.

this is a crock.

my parents bought my childhood home in 1983, the median income was $25,580 dollars, and the median home price was $75,300. near as makes no difference, about 3x annual income was the price of a home.

the 2022 median income was $44,225 and the median home price is $428,700

or near as makes no difference, 10x annual income.


so if my parents were scraping buy to buy a home 3x their annual income ... how are their children supposed to buy a house at 10x their annual income?



c'mon guys, this is easily googlable stuff. how can you just be so wrong?