patrick.net

Hummm... less mortgage applications means less buyers, so less competition to buy.

Heraclitusstudent says

Hummm... less mortgage applications means less buyers, so less competition to buy.

I wish less mortgages meant more cash buyers - people finally wising up and buying what they can comfortably afford without a 30 year sentence.

I had a house built in 2014. At that time, I thought house prices would continue to rise. Because people lock themselves into mortgages, it is difficult to lower prices to match a market (unless a crash). Therefore, I thought how people would deal with the situation is to have mult-generations in one house. So I had a house built to accommodate 3 generations:

Parents in the upstairs master bedroom
Grandparents on the main floor master bedroom
Grown kid (and spouse) in the finished basement bedroom/bath

This house also has a 3 car garage and plenty of driveway, along with 2 other full baths and 2 more bedrooms. Each level is about 1800 sqft.

If I guessed right, I should be able to sell when the time comes. If we have a trend toward "tiny houses" I'll be staying awhile. Just me and the wife, since our 18 year old daughter will be leaving for college in the fall.

I bought for multi generation as well. Not that the house is that big now 2100sqft but I have a 10K sqft lot and the zoning laws are compatible for inlaw units or to demolish and build and multi family units.

I'm also looking into securing cheap easy land just to hang onto and have it in the family.

Heraclitusstudent says

Hummm... less mortgage applications means less buyers, so less competition to buy.

Maybe. Lets say there is not a single house to buy. Mortgage applications would be zero. Would that imply zero competition to buy houses?

NIMBY is a major cause

HeadSet says

Therefore, I thought how people would deal with the situation is to have mult-generations in one house.

The problem is because of jobs, families tend to be spread out.

tovarichpeter says

America also has a nationwide shortage of construction workers. According to the Harvard report, building firms have 200,000 job openings, the highest number in a decade. And yet, despite persistent labor shortages, construction worker wages are rising slower than the rest of the private sector.
Madden said that all these costs, taken together, mean developers can only make a profit on high-end apartments and McMansions. He estimated that in Seattle, developers would struggle to break even on apartments renting for less than $1,900 per month for a one-bedroom unit. In New York or Boston, he said, the figure is probably closer to $3,000.

So let me get this straight:
- they have a "shortage of construction workers",
- the price of houses they sell grows faster than inflation (for decades),
- and the wages they pay are climbing slower than the rest of the private sector...
- But they can't make money on less expensive houses,

Hummm...

tovarichpeter says

NIMBY is a major cause

NIMBY is local. But the fact is there is absolutely no strategy (meaning probably no willingness) at the state or federal level to do anything to alleviate the problem. They could coordinate with some larger companies to move operations in locations where land is available. Services jobs would follow. They could create legislations like SB 827.
etc...

California's housing crunch has turned liberals against one another:
https://www.nbcnews.com/news/us-news/california-s-housing-crunch-has-turned-liberals-against-one-another-n851401

Nimbies are going to lose eventually to Yimbies.

HEYYOU says

Is debt driven by ego?

...ego and in-laws hatred.

Heraclitusstudent says

tovarichpeter says

America also has a nationwide shortage of construction workers. According to the Harvard report, building firms have 200,000 job openings, the highest number in a decade. And yet, despite persistent labor shortages, construction worker wages are rising slower than the rest of the private sector.
Madden said that all these costs, taken together, mean developers can only make a profit on high-end apartments and McMansions. He estimated that in Seattle, developers would struggle to break even on apartments renting for less than $1,900 per month for a one-bedroom unit. In New York or Boston, he said, the figure is probably closer to $3,000.

So let me get this straight:
- they have a "shortage of construction workers",
- the price of houses they sell grows faster than inflation (for decades),
- and the wages they pay are climbing slower than the rest of the private sector...
- But they can't...

Go on..... what does your Hummmmm imply?

Well it needs to speed up the implosion. I would like to buy back in soon.

steverbeaver says

Well it needs to speed up the implosion. I would like to buy back in soon.

Already happened in 2008. Should have caught it then. The next one at that magnitude could happen after 90 years. Good luck.

There will forever be a housing shortage if we keep importing millions of poor.

Strategist says

So let me get this straight:
- they have a "shortage of construction workers",
- the price of houses they sell grows faster than inflation (for decades),
- and the wages they pay are climbing slower than the rest of the private sector...
- But they can't...

Go on..... what does your Hummmmm imply?

It implies more money goes to developers but somehow they can't pay their employees.
And they are working mostly on "high margin" high end units.
So where is the money going? Just material costs? Framing lumber went through the figurative roof recently, but were flat for years to 2016.
So just land prices? They set the price. Why, in the current market, can't they get a price that allows them to pay their employees and still make their margins? It's like they don't want to build.
Or there is just no land available to develop? In that case why do they have a shortage of workers?

Strategist says

steverbeaver says

Well it needs to speed up the implosion. I would like to buy back in soon.

Already happened in 2008. Should have caught it then. The next one at that magnitude could happen after 90 years. Good luck.

lol

The trends seems to be shelter becoming a luxury. It may seem impossible, but could the West end up here?

https://www.theguardian.com/cities/gallery/2017/jun/07/boxed-life-inside-hong-kong-coffin-cubicles-cage-homes-in-pictures

HowdyThere says

The trends seems to be shelter becoming a luxury. It may seem impossible, but could the West end up here?

https://www.theguardian.com/cities/gallery/2017/jun/07/boxed-life-inside-hong-kong-coffin-cubicles-cage-homes-in-pictures

Overpopulation is local. It's not like someone forces these people to cram themselves into one city while they have huge country wide open for them. Same goes for theWest: if somebody is willing to pay $3K for a closet in SF while much more decent and cheaper accomodations are 40-minutes BART ride away (not to mention places like Texas or Nevada where you can have a giant house for the same monthly payment) - is it really a sign that "shelter has become a luxury" in general?

Heraclitusstudent says

Go on..... what does your Hummmmm imply?

It implies more money goes to developers but somehow they can't pay their employees.
And they are working mostly on "high margin" high end units.
So where is the money going? Just material costs? Framing lumber went through the figurative roof recently, but were flat for years to 2016.
So just land prices? They set the price. Why, in the current market, can't they get a price that allows them to pay their employees and still make their margins? It's like they don't want to build.
Or there is just no land available to develop? In that case why do they have a shortage of workers?

I don't have answers to most of your questions. I do know:
1. There seemed to be no shortage of land during the bubble when twice as many homes were being built. Why is there a shortage now?
2. Construction worker shortage has been going on for 6 years now. There were plenty of opportunities to hire and train construction workers when unemployment was a lot higher. Now it's gonna get worse.
------
I don't think home builders want to build too many homes, which is why they stick with the more profitable high end homes. But why don't they want to build like crazy to meet the crazy demand? I would think they want to make lots of money. It would be interesting to know the real reason they don't build like crazy instead of the excuses we keep getting.

Hassan_Rouhani says

is it really a sign that "shelter has become a luxury" in general?

It used to be you didn't need to take a 40 minute BART ride to get to work and have affordable accommodations. And what if the people that cram into the city center decide to, en mass, move outward? What do you think will happen to price to space ratio there? As I opened with, look at the trend.

Strategist says

I don't have answers to most of your questions. I do know:
1. There seemed to be no shortage of land during the bubble when twice as many homes were being built. Why is there a shortage now?
2. Construction worker shortage has been going on for 6 years now. There were plenty of opportunities to hire and train construction workers when unemployment was a lot higher. Now it's gonna get worse.
------
I don't think home builders want to build too many homes, which is why they stick with the more profitable high end homes. But why don't they want to build like crazy to meet the crazy demand? I would think they want to make lots of money. It would be interesting to know the real reason they don't build like crazy instead of the excuses we keep getting.

Capitalism states when the price of something goes up due to a higher demand, suppliers will rush in to profit until a new equilibrium is set. Why is capitalism failing in this instance?
Are the home builders scared to death after the great recession? If so, their confidence would not be at record highs.
Something is holding them back, and no one knows the reason. The real reason.

HowdyThere says

It used to be you didn't need to take a 40 minute BART ride to get to work and have affordable accommodations. And what if the people that cram into the city center decide to, en mass, move outward? What do you think will happen to price to space ratio there? As I opened with, look at the trend.

They won't because the high paying jobs are there. Some might, but they will easily be replaced by newcomers.

Strategist says

Capitalism states when the price of something goes up due to a higher demand, suppliers will rush in to profit until a new equilibrium is set. Why is capitalism failing in this instance?

As much as I hate to say it, "they're not building more land". Population is growing rapidly while habitable space is fairly fixed. Not really an issue for centuries but I think we're finally getting there, when the petri dish is finally getting cramped with humans. And unlike for bacteria, wealth can buy you more space in the dish. Which brings me back to my opener that shelter is a luxury, with the caveat that some pig are more equal than others.

HowdyThere says

Strategist says

Capitalism states when the price of something goes up due to a higher demand, suppliers will rush in to profit until a new equilibrium is set. Why is capitalism failing in this instance?

As much as I hate to say it, "they're not building more land". Population is growing rapidly while habitable space is fairly fixed. Not really an issue for centuries but I think we're finally getting there, when the petri dish is finally getting cramped with humans. And unlike for bacteria, wealth can buy you more space in the dish. Which brings me back to my opener that shelter is a luxury, with the caveat that some pig are more equal than others.

No no no. There was no land shortage in 2005. Why now?
There is a lot of room in the sky, you don't even need more land.
----------
Anyone who comes up with the real reason why home building is so stagnant stands to make a fortune by speculating accordingly. It's as simple as that.

Strategist says

There is a lot of room in the sky, you don't even need more land.

Yup. Boxes in the sky are the future.

https://www.curbed.com/2016/9/20/12990520/best-micro-apartments-from-around-the-world

http://www.businessinsider.com/the-worlds-craziest-micro-apartments-you-wont-believe-people-actually-live-in-2015-10

https://www.theguardian.com/cities/gallery/2017/jun/07/boxed-life-inside-hong-kong-coffin-cubicles-cage-homes-in-pictures

Notice the trend.

If Trump was to do everything in his first term. I would use the second Term to build Cities out in the middle of nowhere. Huge cities with Skyscrapers and Multi Apartment complexes. With retail space and factory buildings and all. Just keep building about 20 of them.

We're out of space my ass. The existing Cities we have are out of space, because they were planned when there was less population. Central Planners have classically always wanted to rebuild and accommodate large urban areas while people are living there. Leave those old towns and Cities alone they have charm and character. There's plenty of opportunity to build the Cities we're trying to make the existing cities into cities they can never be.

That's what China did during the world economic down turn while America was bailing out the losers. We could have spent those same Billions on creating new Cities and let the Boomers choke on their 1 million dollar shitholes.

I'm not a fan of the turks but thought this was interesting:
www.youtube.com/embed/pS9NqRDf6dQ

HowdyThere says

As much as I hate to say it, "they're not building more land". Population is growing rapidly while habitable space is fairly fixed. Not really an issue for centuries but I think we're finally getting there, when the petri dish is finally getting cramped with humans. And unlike for bacteria, wealth can buy you more space in the dish. Which brings me back to my opener that shelter is a luxury, with the caveat that some pig are more equal than others.

For reference: France is about the same size as California for 65 millions population.
England is half of France for a similar population.
They are the crowded petri dish. CA is not, at least not yet.
The fact is most of the peninsula is empty. (Can't be developed). You could fill-in the bay south of Dumbarton and add half a million inhabitants.
If we really wanted to. The problem is we don't want to.

People are moving to cities for jobs. Cities should be growing like crazy if we let them, while country side should be relatively empty.
The problem is we try to resist the trend toward denser more populous cities.

Strategist says

Capitalism states when the price of something goes up due to a higher demand, suppliers will rush in to profit until a new equilibrium is set. Why is capitalism failing in this instance?
Are the home builders scared to death after the great recession? If so, their confidence would not be at record highs.
Something is holding them back, and no one knows the reason. The real reason.

Capitalism doesn't define the word rush. Home building is a very capital and labor intensive industry with long payout times.

Plenty of people have written about the real reason there isn't more building. . Right now developed lots are in very short supply. With nimby regulations and lack of open land where the housing is in the most demand that isn't gong to change soon.

bob2356 says

Plenty of people have written about the real reason there isn't more building. . Right now developed lots are in very short supply. With nimby regulations and lack of open land where the housing is in the most demand that isn't gong to change soon.

True, but this doesn't explain the builders claim that there is a shortage of workers .

just_passing_through says

I'm not a fan of the turks but thought this was interesting:

The system is broken: most people cannot afford a house, but the government is desperate to (1) keep prices high, (2) do whatever to "put people in houses".

A small majority of people are economically obsolete and the rest is playing a financial game with what should be basically shelter. None of this make sense, and it will be revealed to be nonsense at some point in the future - but could be decades from now.

I don't think just bad credit explains prices though. On the other side, you have people that come with suitcases full of cash. Overall mortgage debt to income is not that bad right now.

In Santa Cruz the median home cost 18 times the median annual wage. ($910,000)

The bubble is fueled by the tech stock bubble to some degree.