pheller
UltimaDork
7/19/23 2:35 p.m.
Surprised this thread is still going, somewhat cordially.
One thing that's often mentioned is how people don't want to live in cities and they can't understand paying these prices for city homes.
Thing is, if the wages for city jobs aren't going up, and the cost of rural homes is, then how can you pay for a house in either area? This is the choice a lot of Americans are making, and they choose to live in the city where there are lots of job options and wage potential, even if it means more expensive housing, because if they lived in a rural area, they'd have to drive long distances to a job that may not be stable or pay very much, and if they lose that job, there is nothing else to do.
Retiring rural is a challenge too, is many older American have found their family wants to be close to the job market, and there is no medical services in the rural area.
So why are rural homes going up in price? Simple. Remote work.
- In cities, building is expensive and we've got limit land. Housing prices go up.
- In rural areas, building is cheap and you've got lots of land, but remote workers want turn-key homes.
Remote work gives homebuyers tremendous flexibility in managing their housing costs, but they probably only make up 5% of the total job market. For everybody else, they are trying to get as close as possible to high wages and stable employment.
pheller
UltimaDork
7/19/23 2:45 p.m.
One interesting thing I've noticed is that this happening, or rather, already happened in Europe.
Rural homes are plummeting in value because all the jobs are in the cities, and no amount of mass transit makes getting to those jobs any easier.
Living in a rural area, no matter how cheap your house is, still costs money. Food, medical, transportation still costs something. Unless you're off-grid homesteading and selling your wares at a local market, or your a farmer, finding income is a challenge.
We're seeing a lot of "bouncing" between urban and rural and back to urban among our population as we age. You live in the city early career, you move further out as your income increases, you retire someplace rural when income doesn't require work, then you move back to the urban area when you need healthcare.
I wish we had a tax system that gave incentives to companies to spread out their workforce to smaller towns and rural areas. It'd be nice if more tech companies, for example, had smaller offices dotted around the country, instead of just the Bay Area. I don't think the concentration of the workforce in urban areas is entirely good for society.
In reply to pheller :
I don't disagree. We're seeing a constant influx of both jobs/industries and people moving in here to central Indiana because of favorable conditions. But it is also leading to exponential growth that can't be supported.
Boost_Crazy said:
That's two different things- the market being absurd and pricing people out of homes. I completely agree that the market has been absurd the last couple years- but just about everything has been absurd. I don't think saying people are being priced out of homes is accurate. The homes are selling, so by definition people are buying them. If they weren't, they wouldn't be increasing in value. There may be a shortage of homes in the area, but that doesn't look like it changed recently. There is decent growth in your general area, but nothing crazy. Roughly the same of percentage of people who didn't own homes homes in 2021 don't own homes today- the absurd market had little impact to the overall numbers.
On top of the vacant home stock, investment purchasing by commercial entities, and deferred first-time home-buying issues already discussed, I just ran across news that houses are selling way less recently:
https://www.cnn.com/2023/07/19/business/fewer-home-sales/index.html
pheller said:
So why are rural homes going up in price? Simple. Remote work.
We moved to the sticks because prices in the city we lived in had shot up so high and so fast that we were essentially pushed out the housing market. That was late 80's.
We're still here and it's booming with prices going crazy, and it's for similar reasons. There's also a lot of people selling their city homes for crazy money, buying out here and commuting, driving prices up to the point where our kids are being pushed out of the market. Some things never change.
We bought the place we're in late in 2000 and paid $175k, which we thought was a good deal. Accounting for inflation it should be worth about $310k today.
We could, very conservatively, get $1.25mil for it.
Soon this will be your only option...
In reply to GIRTHQUAKE :
That's why I have to disagree with Boost- like yeah, someone is buying these homes, but I know of a handful owned by VRBO, know too much about investment banking and I have too many friends and acquaintances that had to go back to actively saving to make a future attempt. And this is just Nebraska, I have friends in Florida that were priced out of 750 Square foot apartments and are now having to raise their families in trailer parks because cost of owning/renting has increased so sharply. Here in Nebraska, you can't really even make $16/hr and call it a "living wage" anymore even, and that's what I made as a paramedic in 2017.
But the numbers don't back up your anecdotal examples. The percentage of homes occupied by the homeowner has changed little in the last 50+ years.
US Home Ownership Rate
So it's not investors buying up all of the homes. That leaves basic supply and demand. Demand out strips supply because less housing is being built. But the other part of it is that those who are buying homes are willing to pay more. If you really want to point the finger, point it at those who are paying high prices for homes that "aren't worth it." I completely agree with the opinion that homes in many areas are "too expensive." But my opinion, as well as everyone else's, doesn't matter if other people are still willing to pay those prices. Effectively proving false that houses are too expensive.
In reply to Opti :
Well, "bad investment" in that a team who's faced with a choice (assuming all other factors are somehow equal) will always pick bigger homes over smaller, since their investment into the construction isn't much more than a small one versus what they get back in return. I think that "investment" also matters for time as well, since so many buildings rapidly become dominoes demanding specific things to be completed first.
As for bunches of small homes instead of one big one, I haven't seen that personally and there was a good span of those claiming they were gonna mass-manufacture cheap assembly-line housing only to either not make much of an impact, or compete with trailer homes. My city had similar back until the mid-2000s with a company I think named Century; they had monopolized small construction to the point where their course for cabinets and appliances were the same across all, but their quality was terrible and they were in hot water even before the recession.
Duke
MegaDork
7/19/23 4:44 p.m.
pheller said:
I wish we had a tax system that gave incentives to companies to spread out their workforce to smaller towns and rural areas.
Whereas I wish we would stop trying to socially engineer and control society via manipulating the tax system.
Boost_Crazy said:
In reply to GIRTHQUAKE :
That's why I have to disagree with Boost- like yeah, someone is buying these homes, but I know of a handful owned by VRBO, know too much about investment banking and I have too many friends and acquaintances that had to go back to actively saving to make a future attempt. And this is just Nebraska, I have friends in Florida that were priced out of 750 Square foot apartments and are now having to raise their families in trailer parks because cost of owning/renting has increased so sharply. Here in Nebraska, you can't really even make $16/hr and call it a "living wage" anymore even, and that's what I made as a paramedic in 2017.
But the numbers don't back up your anecdotal examples. The percentage of homes occupied by the homeowner has changed little in the last 50+ years.
US Home Ownership Rate
So it's not investors buying up all of the homes. That leaves basic supply and demand. Demand out strips supply because less housing is being built. But the other part of it is that those who are buying homes are willing to pay more. If you really want to point the finger, point it at those who are paying high prices for homes that "aren't worth it." I completely agree with the opinion that homes in many areas are "too expensive." But my opinion, as well as everyone else's, doesn't matter if other people are still willing to pay those prices. Effectively proving false that houses are too expensive.
https://www.wfaa.com/article/news/local/report-texas-leads-nation-with-nearly-third-homes-sold-investors/287-002ba716-5794-411d-982f-d3c7677d13e6
i still don't see what this has to do with EVs intrinsic inferiority to ICEs
Duke said:
pheller said:
I wish we had a tax system that gave incentives to companies to spread out their workforce to smaller towns and rural areas.
Whereas I wish we would stop trying to socially engineer and control society via manipulating the tax system.
Companies are already moving from more expensive areas to cheaper areas and this has been going on for years. I guess that raising taxes in California and New York and driving companies and people out is manipulating the tax system in a way, but not in the way they want. The problem is that when people with money move from expensive areas to cheaper areas, they make the cheaper areas more expensive for those who already live there. Property taxes go up and their kids can't afford to buy a house in the area they grow up in. Taxes have to go up to build new schools and new roads to accommodate the new residents. People who move from the coasts inland are actually bringing their problems with them and creating problems for a whole new group of people.
In reply to Snowdoggie (Forum Supporter) :
This looks like a good time to ask "what changed?"
California's population has been pretty flat for a long time, something the media and politicians like to mention. But, the median household income of families leaving is more than twice as much as families coming (I can't quickly find the reference but if memory serves it's 127K Vs 57K).
So what changed...did the high paying jobs dry up or did the cost of living explode or did the quality of life diminish?
High income people are clearly leaving...is the answer as simple as remote work; doesn't feel right to me.
In reply to Snowdoggie (Forum Supporter) :
Boost_Crazy said:
In reply to GIRTHQUAKE :
That's why I have to disagree with Boost- like yeah, someone is buying these homes, but I know of a handful owned by VRBO, know too much about investment banking and I have too many friends and acquaintances that had to go back to actively saving to make a future attempt. And this is just Nebraska, I have friends in Florida that were priced out of 750 Square foot apartments and are now having to raise their families in trailer parks because cost of owning/renting has increased so sharply. Here in Nebraska, you can't really even make $16/hr and call it a "living wage" anymore even, and that's what I made as a paramedic in 2017.
But the numbers don't back up your anecdotal examples. The percentage of homes occupied by the homeowner has changed little in the last 50+ years.
US Home Ownership Rate
So it's not investors buying up all of the homes. That leaves basic supply and demand. Demand out strips supply because less housing is being built. But the other part of it is that those who are buying homes are willing to pay more. If you really want to point the finger, point it at those who are paying high prices for homes that "aren't worth it." I completely agree with the opinion that homes in many areas are "too expensive." But my opinion, as well as everyone else's, doesn't matter if other people are still willing to pay those prices. Effectively proving false that houses are too expensive.
https://www.wfaa.com/article/news/local/report-texas-leads-nation-with-nearly-third-homes-sold-investors/287-002ba716-5794-411d-982f-d3c7677d13e6
Sorry, you just posted a link with no commentary. Not sure if you are a agreeing or disagreeing with me? My graph shows that current owner occupied homes is at 66%, pretty close to the 50 year average. Your link claims "nearly 1/3 bought by investors" despite the number in the article being 28%- closer to 1/4 than 1/3. Anyway, add in the small private investors and we are probably around 33%- which is the historical norm.
In reply to Snowdoggie (Forum Supporter) :
Hey, don't get too concerned, the kids that grow up in CA can't afford a house here either!
Think of it as Economic Pain Distribution/Equalization.
pheller
UltimaDork
7/19/23 5:52 p.m.
"Rental and homeowner vacancy rates and homeownership rates are available for the U.S., regions, states, and for the 75 largest Metropolitan Statistical Areas (MSAs). National, regional, state, and MSA data are available both quarterly and annually. Homeownership rates are also tabulated by age of householder and by family status for the U.S. and regions and by race/ethnicity of householder and by median family income for the U.S. In addition, estimates of the total housing inventory and percent distributions of vacant for-rent and for-sale-only units are available for the U.S. and regions."
That means in the 75 largest metros that homeownership rate is 66%, but what about outside of those metros?
https://www.minneapolisfed.org/article/2021/new-property-data-tool-reveals-patterns-of-investor-ownership-in-the-twin-cities-area
In the Twin Cities area, they found that as of 2022, there was about 4.5 of SFH, Condo, Townhomes housing units were investor owned. This was determined by data that indicated someone owned a property but did not occupy it. That was for investors who owned two properties or more and did not occupy them.
Interestingly, if you drop that down to investors who own one property but do not occupy it, the numbers jump to 12%.
Unfortunately, determining that data on a wider, national basis is difficult because not every tax agency collects data on ownership and occupancy.
I've heard some good arguments that the problem with investor owned housing is that investors are typically those best suited to build new housing, and instead, their buying existing stock. Is that a problem?
In reply to GameboyRMH :
On top of the vacant home stock, investment purchasing by commercial entities, and deferred first-time home-buying issues already discussed, I just ran across news that houses are selling way less recently:
https://www.cnn.com/2023/07/19/business/fewer-home-sales/index.html
This is pretty much as expected given the rapid rate of interest rate increases. Sales of existing homes doesn't really put more homes on the market. It's just musical chairs. It doesn't add inventory, it doesn't change the home ownership numbers. Except now no one wants to leave their chair, since changing chairs has a significant added cost. The only people that can afford to leave their chairs are the people moving from higher cost areas to lower cost areas. Which is why home prices in much of California have been flat/decreased a bit. And why affordable locations are seeing increases.
Boost_Crazy said:
In reply to Snowdoggie (Forum Supporter) :
Boost_Crazy said:
In reply to GIRTHQUAKE :
That's why I have to disagree with Boost- like yeah, someone is buying these homes, but I know of a handful owned by VRBO, know too much about investment banking and I have too many friends and acquaintances that had to go back to actively saving to make a future attempt. And this is just Nebraska, I have friends in Florida that were priced out of 750 Square foot apartments and are now having to raise their families in trailer parks because cost of owning/renting has increased so sharply. Here in Nebraska, you can't really even make $16/hr and call it a "living wage" anymore even, and that's what I made as a paramedic in 2017.
But the numbers don't back up your anecdotal examples. The percentage of homes occupied by the homeowner has changed little in the last 50+ years.
US Home Ownership Rate
So it's not investors buying up all of the homes. That leaves basic supply and demand. Demand out strips supply because less housing is being built. But the other part of it is that those who are buying homes are willing to pay more. If you really want to point the finger, point it at those who are paying high prices for homes that "aren't worth it." I completely agree with the opinion that homes in many areas are "too expensive." But my opinion, as well as everyone else's, doesn't matter if other people are still willing to pay those prices. Effectively proving false that houses are too expensive.
https://www.wfaa.com/article/news/local/report-texas-leads-nation-with-nearly-third-homes-sold-investors/287-002ba716-5794-411d-982f-d3c7677d13e6
Sorry, you just posted a link with no commentary. Not sure if you are a agreeing or disagreeing with me? My graph shows that current owner occupied homes is at 66%, pretty close to the 50 year average. Your link claims "nearly 1/3 bought by investors" despite the number in the article being 28%- closer to 1/4 than 1/3. Anyway, add in the small private investors and we are probably around 33%- which is the historical norm.
My link also states...
43% of the houses sold in Dallas County were purchased by institutional investors in 2021.
52% of the houses sold in Tarrant County (Fort Worth) were purchased by institutional investors in 2021.
This is where the jobs are. Where people want to live.
Your numbers are national numbers over 50 years not really reflecting recent years. My numbers are for one year in two specific counties.
I seriously doubt that institutional investors are buying up houses in places like Urban Detroit where jobs are few and crime is high, or in North Dakota where the weather is cold and where nobody wants to live. 28% of the houses in Texas were bought by investors. That includes places near Big Bend and West Texas where nobody lives, near the border with Mexico where nobody wants to live, and booming areas like Dallas and Austin. Texas is a big place.
That is something to think about. Almost half of the houses sold where I live were bought by investors in one recent year. It is what it is.
In reply to Snowdoggie (Forum Supporter) :
My link also states...
43% of the houses sold in Dallas County were purchased by institutional investors in 2021.
52% of the houses sold in Tarrant County (Fort Worth) were purchased by institutional investors in 2021.
This is where the jobs are. Where people want to live.
Your numbers are national numbers over 50 years not really reflecting recent years. My numbers are for one year in two specific counties.
I seriously doubt that institutional investors are buying up houses in places like Urban Detroit where jobs are few and crime is high, or in North Dakota where the weather is cold and where nobody wants to live. 28% of the houses in Texas were bought by investors. That includes places near Big Bend and West Texas where nobody lives, near the border with Mexico where nobody wants to live, and booming areas like Dallas and Austin. Texas is a big place.
That is something to think about. Almost half of the houses sold where I live were bought by investors in one recent year. It is what it is.
Well- yea. That's how averages work. That also means some places are far lower than 33%. What did you expect, investors to distribute their investments equally between places with growth and places in decline?
Edit: a good chunk of those investors likely didn't switch from Detroit investments. They switched from California investments. You aren't just getting the people and businesses, you are getting the investment money that proceeds them.
My brother in law bought a townhome in Thousand Oaks, California for $750,000 about 12 years ago. Two years ago he sold it. The sales price? Still about $750,000.
About 30 years ago I bought a house in East Dallas for $54,000. I still own it and it is now worth $250,000.
Prices are high in Southern California but nobody is really making money from it anymore. Dallas is a different story.
I'd love to hear the story about the Thousand Oaks house. 12 years ago was near the bottom of the market drop. I was going to make jokes about it being turned into a crack house or burned down, but it still would have been worth more in 2021 than 2011. Though $750k for a townhome in 2011 is insane. By comparison, the median home price in that area has more than doubled since then, less than $600k to $1.2 million.
Boost_Crazy said:
I'd love to hear the story about the Thousand Oaks house. 12 years ago was near the bottom of the market drop. I was going to make jokes about it being turned into a crack house or burned down, but it still would have been worth more in 2021 than 2011. Though $750k for a townhome in 2011 is insane. By comparison, the median home price in that area has more than doubled since then, less than $600k to $1.2 million.
AMGEN was the biggest employer in Thousand Oaks. In or about 2021 they were selling their campus and moving many of their operations north to the Silicon Valley. A bunch of AMGEN employees all put their houses up for sale at the same time. My sister in law decided to retire rather than move to SF, so they sold their house and moved out when everybody else did.
In reply to Snowdoggie (Forum Supporter) :
Well there you go. If you want more affordable housing, just get your largest employer to leave town.
