Ethics of Real Estate Investment, NIMYism and the Housing Crisis

Snowdoggie (Forum Supporter) said:

Overall I really don't like the atmosphere here anymore. So after one drink and the usual argument, I decided to leave. I might go to the bar next door tomorrow night because in that bar the spend less time arguing and more time talking about cars that I like. 

Yeah. I know. The guys I left behind are going to laugh at me and trash my male ego talking about how I left the bar with my tail between my legs, and blah blah blah and quack quack quack.

No, they're not.  If they think about it at all, they're going to think that this topic was either not interesting to you any more, or it was too aggravating, so you decided to stop posting in it.

End of story.

Duke said:

Snowdoggie (Forum Supporter) said:

Overall I really don't like the atmosphere here anymore. So after one drink and the usual argument, I decided to leave. I might go to the bar next door tomorrow night because in that bar the spend less time arguing and more time talking about cars that I like. 

Yeah. I know. The guys I left behind are going to laugh at me and trash my male ego talking about how I left the bar with my tail between my legs, and blah blah blah and quack quack quack.

No, they're not.  If they think about it at all, they're going to think that this topic was either not interesting to you any more, or it was too aggravating, so you decided to stop posting in it.

End of story.

 

Agreed, some people take stuff online way to personally for some reason.  The reality is when anyone leaves, no one really notices, making an announcement is odd.

While I've missed a few pages, one thing that I have not seen mentioned in this thread is the concept of value.

One of the arguments is that if you can't afford it, simply work harder or find a way to make more money. 

I can't afford to buy a Ferrari or a 1963 Corvette. Would I start working harder to buy those cars? Absolutely not! While I understand that they are valuable to many people, they are not for a lot of people (myself included).

And right now, especially in Canada, your only option is to buy a Ferrari. 

Between the E36 M3ty weather, the crazy inflation, the high tax rate, E36 M3ty health care, why would anyone want to work 60+ hours a week for that? So you start looking for better places. 

And when that happens is when the housing crashes. Places like Italy and Japan used to have insanely high real estate markets in the 90's. Now they have incredibly cheap housing in most of the country. The young people left or they stopped having kids. And the migration stopped because people didn't want to move into a super expensive country. There wasn't value. 

I think the same will happen here. My kids (18, 16 and 14) are already discussing where they want to live when they are older and none of them think of staying here. Heck, if they were older, I would have sold my house and been able to retire to a nice place in Italy or Japan. 

SVrex

To answer your question, yes, I've had multiple conversations with both city council members and the mayor. 

I think through a lot of pressure on the topic, we did have a study of STRs in town and that produced some data on 2nd Homes. There have been some policies and regulation aimed at curbing STRs, but I don't think that really helps with the topic of housing shortage. 

It did not however, capture data on vacant property, or vacancy of apartments units. It didn't tell us how long vacant property was on the market, or how long the owner had held it. 

I don't have much hope for changing tax policies in our city/county/state because the legislature would need to do so, and I'm in a very anti-tax state. 

In reply to fanfoy :

If the housing stock catches up.

In reply to pheller :

Terrific. Good for you. 
 

So, your local community was not interested, and you came here to convince others?  And somehow this involves a parking lot at the university?

Is it possible that it's not a good idea?

CrustyRedXpress said:

Lots of right vs. left wing disagreement going on here. Probably time to find some common ground. 

Can everybody agree that the united states has a housing shortage of between 2.5-6 million units?

-Freddie Mac says 2.5-3.3M depending on how you measure the shortage: https://www.freddiemac.com/research/insight/20200227-the-housing-supply-shortage

-Realtor.com says 2.5-6M: https://www.realtor.com/news/trends/the-housing-shortage-has-hit-crisis-levels/

If that's the case, can everybody also get behind the idea that building more units will help lower prices?

Lol. Great questions, but we're not interested in solving problems here. This thread is for whining.

Speaking of which, can you pass the cheese?

Steve_Jones said:

Duke said:

Snowdoggie (Forum Supporter) said:

Overall I really don't like the atmosphere here anymore. So after one drink and the usual argument, I decided to leave. I might go to the bar next door tomorrow night because in that bar the spend less time arguing and more time talking about cars that I like. 

Yeah. I know. The guys I left behind are going to laugh at me and trash my male ego talking about how I left the bar with my tail between my legs, and blah blah blah and quack quack quack.

No, they're not.  If they think about it at all, they're going to think that this topic was either not interesting to you any more, or it was too aggravating, so you decided to stop posting in it.

End of story.

 

Agreed, some people take stuff online way to personally for some reason.  The reality is when anyone leaves, no one really notices, making an announcement is odd.

No it's done to garner attention. 

Robbie (Forum Supporter) said:

CrustyRedXpress said:

Lots of right vs. left wing disagreement going on here. Probably time to find some common ground. 

Can everybody agree that the united states has a housing shortage of between 2.5-6 million units?

-Freddie Mac says 2.5-3.3M depending on how you measure the shortage: https://www.freddiemac.com/research/insight/20200227-the-housing-supply-shortage

-Realtor.com says 2.5-6M: https://www.realtor.com/news/trends/the-housing-shortage-has-hit-crisis-levels/

If that's the case, can everybody also get behind the idea that building more units will help lower prices?

Lol. Great questions, but we're not interested in solving problems here. This thread is for whining.

Speaking of which, can you pass the cheese?

Sorry, I just took the last little cube.

In reply to Snowdoggie (Forum Supporter) :

I don't agree with this, and quite honestly, you really haven't convinced me of anything. I don't think you are changing any minds here. But I was late for my dog training class today doing research on the subject. Then when I got back and sat down at my computer Mrs. Snowdoggie asked me if I was going to ignore her and spend the rest of the evening arguing with people I didn't know on a "that stupid Internet forum". Then my three dogs came in and tried to distract me from the keyboard...

There is not really anything to agree or disagree about. The fact that home ownership percentages have changed little in the last 50+ years is a statistical fact, not  an opinion. I linked and referenced my sources earlier in the thread. The info is readily available. I could dig it up again if you would like. If you have any evidence to the contrary, feel free to share. If not- then you are trying to dispute fact with opinion. You can choose to ignore the facts. I'm not really sure where that gets you, but you are free to do whatever makes you happy. 

In reply to mtn :

I don't think it will. Why would anyone want to build a Fiesta with 10% margins when you can easily sell all the Ferrari you build at a 100% margin?

The population will lower to meet the stock. That's what happened in both Japan and Italy.

But it will take time. 10-20 years? Birth rates in Canada and the USA are already falling down fast and the population growth is more and more immigration dependent. 

Robbie (Forum Supporter) said:

CrustyRedXpress said:

Lots of right vs. left wing disagreement going on here. Probably time to find some common ground. 

Can everybody agree that the united states has a housing shortage of between 2.5-6 million units?

-Freddie Mac says 2.5-3.3M depending on how you measure the shortage: https://www.freddiemac.com/research/insight/20200227-the-housing-supply-shortage

-Realtor.com says 2.5-6M: https://www.realtor.com/news/trends/the-housing-shortage-has-hit-crisis-levels/

If that's the case, can everybody also get behind the idea that building more units will help lower prices?

Lol. Great questions, but we're not interested in solving problems here. This thread is for whining.

Speaking of which, can you pass the cheese?

Haha, nope! Too busy building an ADU in my backyard. 

bobzilla said:

Steve_Jones said:

Duke said:

Snowdoggie (Forum Supporter) said:

Overall I really don't like the atmosphere here anymore. So after one drink and the usual argument, I decided to leave. I might go to the bar next door tomorrow night because in that bar the spend less time arguing and more time talking about cars that I like. 

Yeah. I know. The guys I left behind are going to laugh at me and trash my male ego talking about how I left the bar with my tail between my legs, and blah blah blah and quack quack quack.

No, they're not.  If they think about it at all, they're going to think that this topic was either not interesting to you any more, or it was too aggravating, so you decided to stop posting in it.

End of story.

 

Agreed, some people take stuff online way to personally for some reason.  The reality is when anyone leaves, no one really notices, making an announcement is odd.

No it's done to garner attention. 

Which reminds me of a tagging group on BookFace. 

"This isn't an airport, no need to announce your departure."

Let's pretend that no investors were buying houses, and they were all sold to home buyers. We would still have this thread, but it would be about people complaining that they can't afford/are not ready to buy a house, and there are no rental houses available. We need more rental properties. 

Boost_Crazy said:

Many do have the same problems. They Don't want to work or overvalue their work and expect unreasonable compensation for their contributions. And automation and AI are coming for the jobs that they have priced themselves out of. They can adapt or fail. I see young, fresh faced low expirienced people succeeding every day. They are learning an in demand high paying skill. Many aren't any good at it yet, but they are trying and making sacrifices that others are willing to learn. I also hear about those that aren't willing to take those jobs. They don't want to get up early, aren't willing to travel, or don't want the responsibilities. They would rather stack boxes from 9-5 and bitch about their wages. Yes, lots of people turn down good jobs every day. That's not a systememic problem. It's not even really a problem. Why should it be a problem if people that don't want to make the effort themselves can't afford homes? I don't see that as a problem, everything is just as it is supposed to be. I tell my kids, you get one life. You can spend it waiting around for stuff to happen for you, or you can go make it happen yourself.

First of all, compensation has very little to do with contribution. Compensation, the fraction of a company's profit paid to workers, is determined primarily by worker power. A company that existed in Victorian England (say, a bakery for example) would pay their workers very little not because their contributions were small, but because their power was small. That same company in the '60s US, with their workers making the same "contributions," would pay their workers handsomely because the workers' power was great in that place and time. It's especially interesting that this exact scenario would've happened in the real world even though any 1960s bakery would've had far more automation than an 1860s one.

Second, you see young low experienced people succeeding every day due to the selection bias caused by your work environment. That would be like me implying that most people are comfortable with command-line interfaces and programming because I've seen a lot of that at work.

Third, it's not just people stacking boxes who are having trouble affording housing, it's educated professionals who put in just as much work as those fresh-faced kids you see, but weren't seen by you. As a rough guess, to comfortably afford housing in most average-cost regions of the first world, you'd need a top-20% income if you're a member of generation Y or Z. And that leads on to the last point:

It is a problem if the lower 80% of the population by income can't afford housing even if they have ordinary low-end jobs. They're not failing to make an effort, their job is effort and a job that doesn't allow an adult to support themselves should not exist. It should either pay more or be automated so that people aren't wasting their time volunteering for a business' profit. That situation can't sustain a healthy society.

Boost_Crazy said:

The background level is simply inflation.

The background level is not inflation, if it were, the blue line in this graph would just be flat:

CrustyRedXpress said:

Lots of right vs. left wing disagreement going on here. Probably time to find some common ground. 

Can everybody agree that the united states has a housing shortage of between 2.5-6 million units?

-Freddie Mac says 2.5-3.3M depending on how you measure the shortage: https://www.freddiemac.com/research/insight/20200227-the-housing-supply-shortage

-Realtor.com says 2.5-6M: https://www.realtor.com/news/trends/the-housing-shortage-has-hit-crisis-levels/

If that's the case, can everybody also get behind the idea that building more units will help lower prices?

Honestly as is usually the case, the answer is "It depends".

Yes, the US has a housing shortage.  But building more units in WV wont do a thing to help the problem, because WV has the largest housing surplus in the nation (according to the data you linked).

Everything about housing and demand is localized.  Everything.  As your link shows.

According to your data, it looks to me like there is a pretty significant issue on the 2 coasts, but the middle of the country mostly has a surplus.  If I am counting right, it looks like 22 states have housing SURPLUSES.  That's almost half the states.

I think it is also important to consider the cultural shifts.  The FannieMae data you linked is a comparison to the housing vacancies experienced from 1970-2000.  It assumes that period was some sort of heyday that we should emulate, and I am really not sure why.  We are comparing a time when there was no internet, 57% of women did not work outside the home,  the median house size was 1500 SF (its 2310 SF now), and the demographics of our country was substantially different.  Population has increased 50% since then.  Are the vacancy rates from 1970 an appropriate target for establishing our housing need today?  I have no idea.  I know an awful lot of people who are choosing to live differently than we chose to live in 1970.

Blaming the "housing shortage" on greedy investors is just silly.  The construction industry can't keep up with demand, largely because of a cultural shift in how we view housing and construction jobs.  For every 5 people who leave the construction industry, we gain only 1.  (For construction leadership positions, the ratio is 7:1).  We now live in an age when our cultural mindset (especially for young people) is that we want jobs that involve us working in office environments with computers.  Construction can't attract people away from this deeply held desire.  So, be prepared for the fact that housing shortages will never lessen, because we will never have enough construction labor to close the gap.

I would suggest that this isn't exactly a housing shortage.  It's a complete redefining of how we relate to housing and define our needs.  We DESIRE jobs with AC and computers, and we CHOOSE to change how we live in order to finance that lifestyle.  We are WILLING to cohabitate, rent, increase housing size, increase occupancy rates, and carry bigger and bigger housing costs in order to have the cultural priorities we CHOOSE.

Prices will not come down, construction job salaries will continue to skyrocket, construction jobs will remain empty, and the migration of workers from other countries to attempt to meet the demand will continue to rise (because they are smart).  Because these are the choices we have MADE.  Rinse, repeat.

I am not convinced that is a shortage.  Sure, its a shortage compared to 1970 rates, but we lived a LOT differently then.

Boost_Crazy said:

In reply to Snowdoggie (Forum Supporter) :

I don't agree with this, and quite honestly, you really haven't convinced me of anything. I don't think you are changing any minds here. But I was late for my dog training class today doing research on the subject. Then when I got back and sat down at my computer Mrs. Snowdoggie asked me if I was going to ignore her and spend the rest of the evening arguing with people I didn't know on a "that stupid Internet forum". Then my three dogs came in and tried to distract me from the keyboard...

There is not really anything to agree or disagree about. The fact that home ownership percentages have changed little in the last 50+ years is a statistical fact, not  an opinion. I linked and referenced my sources earlier in the thread. The info is readily available. I could dig it up again if you would like. If you have any evidence to the contrary, feel free to share. If not- then you are trying to dispute fact with opinion. You can choose to ignore the facts. I'm not really sure where that gets you, but you are free to do whatever makes you happy. 

Here is the home ownership percentage for reference:


This graph doesn't say much directly about the availability or affordability of housing though. It only shows what percentage of people own the home they live in. If house prices quadroupled tomorrow it would continue to hold steady for years, maybe decades. Notice the remarkably sharp (relative to the rest of the data) 3% boom & bust around the pandemic.

This is a more interesting graph though:

In reply to GameboyRMH :

That graph is not very helpful.  It is comparing average home sales to median household income.

Median household income includes everyone who doesn't own a house.  Average home sales includes every home purchased, even those over $10 million.

It only works if it is median home buyer household income  compared to median home sale.

SV reX said:

In reply to GameboyRMH :

That graph is not very helpful.  It is comparing average home sales to median household income.

Median household income includes everyone who doesn't own a house.  Average home sales includes every home purchased, even those over $10 million.

It only works if it is median home buyer household income  compared to median home sale.

It looks like the home value in that graph is the median, when I compare other sources - although the difference between the median and mean is surprisingly small, it's almost noise.

Using home buyer's median income rather than overall median income would make the graph completely useless for getting any idea of home affordability. Of course if you only chart the incomes of people who have been able to afford a home, the homes are going to look much more affordable. If the median home were $100M and only billionaires could buy them, such a graph would make the situation look hunky-dory.

In reply to GameboyRMH :

Median income also includes the low income of people who are not homeowners and can't be.  It is useless because it falsely implies that everyone should own a home, and doesn't recognize that there are some people whose lives are just fine renting.

Your graph is intentionally widening the gap to make it look worse than it is.  Not everyone can be a homeowner.  That will always be the case.

The question is "Has the ability to own a home gotten worse?"  That's not a question that should include people who can't be home owners.  That question can only be answered by showing a widening gap between potential buyers and actual prices for the homes they might buy.

A median home buyer is not a buyer of a $100M home.  That's deceptive.

In reply to SV reX :

I think we'll have to agree to disagree on the idea that there should be some designated economic class of people who can work full-time jobs and at the same time be completely ineligible for home ownership. In the grand scheme of a person's life, the only thing that can challenge the cost of buying a home is renting one. People can end up paying rents more expensive than mortgages they were found not to qualify for.

I don't see anything deceptive about my theoretical $100M median home value scenario. In that scenario, I think a person buying a home of that $100M median value would indeed be a median home buyer.

I would bet that if you charted interest rates from 1980 to 2022 you would see some correlation to housing prices. Cheap money frequently means high prices because most people buy based on the payment, not the cost of the house. Cheap money also brings in investors which also drives house prices. 

Maybe we need about 10 years of double-digit interest rates. 

In reply to GameboyRMH :

You are moving the goalposts again.  Median household income is not just people who work full time jobs.

Toyman! said:

I would bet that if you charted interest rates from 1980 to 2022 you would see some correlation to housing prices. Cheap money frequently means high prices because most people buy based on the payment, not the cost of the house. Cheap money also brings in investors which also drives house prices. 

Maybe we need about 10 years of double-digit interest rates. 

It is definitely a major factor, unfortunately for buyers it's a coffin-corner situation where any way out is going to be painful. A recent increase to rates in Canada brought a quick decrease to home values and a slight savings to buyers at least.

GameboyRMH said:

This is a more interesting graph though:

 

So, according to your graph home values aren't even keeping up with inflation:

Home values increased 100%, but inflation has risen 600+% since 1970. Although your graph itself is a bit misleading as well...

Median income has increased 700% since 1974. US Census shows that it has grown from $9800 to $72680 in 2020. House prices rose from $42k in 1970 to $391 in 2020. Yes housing prices have grown a little faster than income, but not at the rate your graph shows, 800% (income) to 900% (housing cost). Both are more than inflation but not by that much. That same 9800 in 1970 is now worth $68k, and that 42k is now 335k.