patrick.net

I dunno...looks like you can fit 3 families of illegals into it, or with 20% down you can AirBnB it for $150 per night and cashflow positive.

Can always put down 3.5% (less than $10k) and have a hedge against hyperinflation.

We may think it is overpriced, but some Chinese commie thinks damn I gotta get all the money I can out of mainland China before it goes to zero.

One of the "It's gonna be different this time" sayings is gonna be wrong. Higher interest rates have shot the affordability outta reach for the same properties for people with similar incomes. Therefore, prices should go down to match people's more or less constant income. However, prices of real assets historically have gone up during periods of inflation. - So one or the other "this time is different"; will be different.

Misc says

Higher interest rates have shot the affordability outta reach for the same properties for people with similar incomes.

Depends on interest rates as the 30-year rate may drop by next March to 5.5% from 7.25% now. I'm hoping there is some conversion of vacation rentals to at least long-term rentals. I'm seeing rents holding steady for last 18 months in the Florida panhandle, with a lot of offers of free 1st month rent for a 13 month lease.

If I buy, then I'd pay 4 discount points to lower the rate to 4.5% (from 5.5%) if I'm going to live at least 7 years in the home.

If we sell our townhome for $310,000, we'd offer our assumable VA mortgage (at 3% and $155,000 balance) as well as would offer to pay up to 4 discount points to lowering the buyer's rate. That is why I hope the 30 year mortgage rate is down to at least 6% by next summer.

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Misc says

We may think it is overpriced, but some Chinese commie thinks damn I gotta get all the money I can out of mainland China before it goes to zero.

Yeah, there are a few on Patnet who think that foreign investors (Chinese, Indian, etc.) are going to continue to prop up the California real estate market.

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ad says

Misc says

We may think it is overpriced, but some Chinese commie thinks damn I gotta get all the money I can out of mainland China before it goes to zero.

Yeah, there are a few on Patnet who think that foreign investors (Chinese, Indian, etc.) are going to continue to prop up the California real estate market.

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In San Francisco the homeownership rate is 35%. The average San Francisco home value is $1,269,632, down 11.5% over the past year and goes to pending in around 20 days. I am guessing that the decrease in average price has to do with more lower priced homes selling instead of lower prices for the same house. It takes about 40% down to qualify for Freddie.Fannie becuase of the price caps, so most buyers have to go with Jumbo mortgages if they do financing because coming up with $480k down to just have it sit there doesn't make sense to most people. Even so, with a Jumbo you are looking at about $250k down, needing solid employment and a strong position in other financial assets. It is next to impossible for regular folk to get a foot onto the property ladder Still...houses go pending in 20 days.

While it doesn't make sense for a W2 employee...for Commies trying to get coin outta China before it goes to zero,,,well...

Most boomers I know as a geezer millennial have already downsized and sold off. I think that wave has passed at this point. Older boomers are nearing 80 at this point. They can't manage 3,500+ square feet. They sold already. My own mother is a prime example of this.

From 2015-2020 boomers did sell off at good prices. And younger people bought at low interest rates in homes that are likely lifetime (20 year) homes. The "no one is going to buy the boomer homes" is over already. Millennials that could buy already bought. This is exactly why inventory is going to stay low for the foreseeable future. Appreciation will hit a ceiling but there's no crash coming. We'd have to build 5x's more than we are now and that's not going to happen. Housing will be expensive for the next decade and maybe longer. We haven't even hit double digit interest rates. People are freaking out over below historic normal interest rates. Calm your ponies. Give me a call when they hit 15%. Demographically we're growing and not building at pace to keep up. Higher home prices. That's all there is to it.

WookieMan says

Demographically we're growing and not building at pace to keep up. Higher home prices. That's all there is to it.

If so, then somethings got to give. I suspect it will be multi-families living in single family homes.

Outside of the big metropolitans, real estate in America is still cheap by the world standard.

Our politicians are all talk and no actions. If they want to solve the housing crisis in the metropolitans, they can subsidize and build affordable housing for everyone even if higher density building is required to accomplish this goal.

Let’s look at it from a financial perspective. New construction is higher risk so higher cost of borrowing. Land in metros is expensive. Materials and labor are expensive. Permit fees are jose bleeding expensive. How can any developer build affordable housing with all the above costs?

Instead of solving the housing issue, the politicians force the developers to designate 20% of new development to affordable housing or pay a big fee for it. This drives up housing cost for the other 80% of new housing.

When presenting with facts, the hatred comes out against landlords and mom-and-pop investors. Who voted for all these left wing politicians? YOU! You created this mess while blame it on others. It’s so typical of the left wing. It’s always someone else’s fault.

Eman says

hatred comes out against landlords and mom-and-pop investors

What hatred is that? What hatred did you observe?

Misc says

In San Francisco the homeownership rate is 35%. The average San Francisco home value is $1,269,632, down

What is the average and median household income and savings for that area?

I envision it is tech executives making at least $2 million per year and are usually paying with cash, or its foreign buyers who are paying with cash as well.

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Instead of spending money to help Americans with housing, another $1B will go to Ukraine. Of course, 10% for the big guy.

https://www.bloomberg.com/news/articles/2023-09-06/blinken-pledges-1-billion-more-to-ukraine-including-oligarchs-assets

Eman says

Instead of spending money to help Americans with housing, another $1B will go to Ukraine. Of course, 10% for the big guy.

These are Pukin's money, relax. We can't spend them on ourselves - that would be illegal. Besides, "help Americans " how? Are you proposing Soviet-style public housing projects built by the government? With 10% for the Big guy? Such an wholesome conservative you are!

RWSGFY says

These are Pukin's money, relax. We can't spend them on ourselves - that would be illegal. Besides, "help Americans " how? Are you proposing Soviet-style public housing projects built by the government? With 10% for the Big guy? Such an wholesome conservative you are!

Yes its seized money from Russian oligarchs. I am hoping more short term and vacation rentals get converted to long term rentals.

This should also reduce home prices as there will be less demand by landlord investors to purchase residential property.

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RWSGFY says

Eman says

Instead of spending money to help Americans with housing, another $1B will go to Ukraine. Of course, 10% for the big guy.

These are Pukin's money, relax. We can't spend them on ourselves - that would be illegal. Besides, "help Americans " how? Are you proposing Soviet-style public housing projects built by the government? With 10% for the Big guy? Such an wholesome conservative you are!

We can take a page from Singapore when it comes to subsidizing housing for their people.

Here's a plan to start:
- eliminate foreign investment in residential real estate
- eliminate all tax breaks for rental properties and any residential property that's not a primary residence
- for CA, eliminate Prop 13

That should loosen up the bowels

porkchopXpress says

- eliminate foreign investment in residential real estate
- eliminate all tax breaks for rental properties and any residential property that's not a primary residence

I don't think it is fair to a landlord if they cannot deduct expenses (i.e., tax breaks) such as for operating and maintenance expenses from plumbing repair to property management company services. It is a business after all, so they should be allowed to deduct expenses from their revenue.

My concern is there are a lot of homes that are sitting empty because no more than 1/2 the time they are occupied such as by vacation renters or by the property owners. I've seen a proliferation of AirBnB homes which would normally be long term rentals or occupied full time by the owners.

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Big_Johnson says

Abolish prop13, take away tax subsidies for landlords / Re investors. Change laws to make evictions nearly impossible. The list goes on and on and on.

Just because they want policies that you don't like doesn't mean they hate you.

Do you think porkchopXpress hates you?

porkchopXpress says

Here's a plan to start:
- eliminate foreign investment in residential real estate
- eliminate all tax breaks for rental properties and any residential property that's not a primary residence
- for CA, eliminate Prop 13

ad says

Yeah, there are a few on Patnet who think that foreign investors (Chinese, Indian, etc.) are going to continue to prop up the California real estate market.

I'm not one of them, homie. Just because they have till now doesn't mean I think they will continue to do so.

ad says

porkchopXpress says

- eliminate foreign investment in residential real estate
- eliminate all tax breaks for rental properties and any residential property that's not a primary residence

I don't think it is fair to a landlord if they cannot deduct expenses (i.e., tax breaks) such as for operating and maintenance expenses from plumbing repair to property management company services. It is a business after all, so they should be allowed to deduct expenses from their revenue.

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It’s a business that diminishes someone from owning a home, so perhaps it’s a business that should diminish as well. Is lining landlords pockets more important than a human’s livelihood? My proposal would make renting more expensive as it should be and free up inventory.

ad says

I don't think it is fair to a landlord if they cannot deduct expenses (i.e., tax breaks) such as for operating and maintenance expenses from plumbing repair to property management company services. It is a business after all, so they should be allowed to deduct expenses from their revenue.

All this is doing is shifting taxation onto the general public. Tell you what, if homeowners can deduct these expenses, this is fair.

Big_Johnson says

Hate is a bit of a strong word. Wishing taxes to increase for others because you don’t benefit from them is (insert a word). Higher taxes are almost never a good thing. Governments work inefficiently. The day a renter buys his first house in CA is the day he/she will love prop 13.

I know some people won't like my plan, but you can't make an omelet without breaking some eggs. I still think it would free up inventory, bring prices down, and allow people to more easily buy a primary residence. It would certainly piss off landlords but I go back to what's more important, landlords making money or people being able to buy a home?

porkchopXpress says

Big_Johnson says

Hate is a bit of a strong word. Wishing taxes to increase for others because you don’t benefit from them is (insert a word). Higher taxes are almost never a good thing. Governments work inefficiently. The day a renter buys his first house in CA is the day he/she will love prop 13.

I know some people won't like my plan, but you can't make an omelet without breaking some eggs. I still think it would free up inventory, bring prices down, and allow people to more easily buy a primary residence. It would certainly piss off landlords but I go back to what's more important, landlords making money or people being able to buy a home?

Adding to your sentiments...an ownership society is a much better society and we avoid becoming the 3rd world. @richwicks also made a great comment above. Every part of America is either financialized or in the process of becoming financialized. Those that "think" they're winning don't care. More people will wake up if something doesn't change.

https://twitter.com/STOCKMASTERJAY/status/1698747887633514694

Foreigners usually buy real estate at bubble tops then sell at bottoms, so their actions in the real estate market mostly contribute to the recycling of the dollar.

Everything of value is owned by someone, so the term "ownership society" doesn't make much sense at face value. The real idea is that Discrete and Competitive ownership is better for a society as competition promotes efficiency and prevents the rise of abusive bureaucratic power. It's not clear higher home ownership always leads a better society: China and Korea have home ownership rates approaching or over 90% (compare to around 60-65% in the US), and what they have in housing are massive speculative bubbles far worse than in the US. Because the US population has retained far lower savings rate than Chinese and Korean populations, it is quite likely that 30-40% of the population are not capable of maintaining their homes even if a home were given to them! That was proven in the last housing bubble: the no-money down loans designed to subsidize people into home ownership had a disproportionally higher foreclosure rate.

It would be quite unfair to force all people incapable of saving enough money for a roof leak or hot water tank leak to be permanently homeless; or for that matter students and people early in their career in a phase of high relocation probability. Housing service providers bring a useful service to the society by maintaining housing stock and giving people roofs over their heads. Every single one of the houses/buildings I bought was after foreclosures (and house being empty for at least a year therefore at risk of freeze-thaw cycle damage if kept empty for much longer) or short-sale (where the owner had stopped making mortgage payment and was essentially waiting to be foreclosed). If I didn't buy them, the houses/buildings would be abandoned (or was already abandoned, with thieves breaking into some of them having taken the copper pipes). I literally saved the houses/buildings from being deleted from local housing stock.

What we need to prevent is concentrated ownership. e.g. no one (or related parties) should be allowed to own more than 10% of any street block, so that people trying to buy or rent can have multiple competing choices. I have turned down neighbors trying to sell their apartment houses to me for that precise reason. What we need are discrete and competent ownership (whether homeowner or landlords) that can maximize the competition in the market place, not either the corporations owning the entire street block or incompetent subsidized temporary "owners" that shrink housing stock by letting houses deteriorate.

Too much financialization is indeed a problem. The irony is that much of the financialization in the housing market was/is subsidized by the government (allegedly) trying to increase ownership rate.

BTW, homeowners are already allowed to deduct the biggest part of homeownership expenses: interest expense. Business owners are allowed to deduct business expenses simply because business profit/income can only be calculated after subtracting expenses; it's not a subsidy. Having houses/buildings abandoned by owners/landlords would be quite devastating to the local municipal budgets, and to the local (young) population unable to find housing in the middle of abandoned buildings.

The homeless encampments of today are in some ways like the Hoovervilles of the Great Depression. But back then people were evicted or lost their homes due to the stock market and banking crash. Today it’s due to the purposeful Globalist strategy of making housing unaffordable and everyone’s life miserable. “You will own nothing.”

GNL says

The homeless encampments of today are in some ways like the Hoovervilles of the Great Depression. But back then people were evicted or lost their homes due to the stock market and banking crash. Today it’s due to the purposeful Globalist strategy of making housing unaffordable and everyone’s life miserable. “You will own nothing.”

They're also using the stock market with bizarre price distortions where money losing tech trannies get pumped to 1000 x revs in market cap while outstanding companies turning profitable get shorted to 1-2 x rev mkt cap. If course eventually value will be discovered and bid up while crap will drop, but they do this long enough to get retail to buy/sell to maximize their losses. There is now an anti-woke etf which probably will be worthwhile but you can bet the ppt will do everything to keep woke cos up

Reality says

It would be quite unfair to force all people incapable of saving enough money for a roof leak or hot water tank leak to be permanently homeless; or for that matter students and people early in their career in a phase of high relocation probability.

First, my proposal wouldn't apply to apartments, only single family homes. So, students and families, etc. could always rent an apartment. Second, rental homes would still exist but it would just be less prevalent and more expensive to operate. This is how it used to be...renting more expensive than owning. But because of financialization of housing, that paradigm is gone.

porkchopXpress says

This is how it used to be...renting more expensive than owning.

This is one of the craziest things about what's going on...renting costs less than buying.

Rental supply would shrink to less than 10% of its current size if none of the businesses expenses can be subtracted from revenue to arrive at profit. Removing all businesses expense deductions (e.g. interest expense, property tax, maintenance, etc.) would be like a 33% sales tax on rent payment if corporation, 40+% sales tax if the landlord is a high income family. I don't think Costco would be able to sell its $5 chicken if hit with a 33% sales tax or 40+% sales tax. Most landlords have very low margins. REITS usually have a cap rate between 5-10% after business expenses; a 33% tax on revenue would necessitate raising rent by 23-28% just to break even and still drop REITS' return to 0%.

If the rule only applies to single family houses instead of apartments, then Wall Street banks would make builders turn entire multi-block development into a condo / "apartment" that spreads out horizontally on small allocated plots but under one joint title.

Through most of an economic cycle, renting cost in most markets is slightly higher than ownership cost (the difference between buying small retail packages vs. Costco-sized large packages, in time domain); the owner/landlord covers vacancy for banks and municipal tax authorities. Currently in most markets, and in the past decade or two in markets like SFBA, renting cost less than buying is due to two factors: landlords passing on savings thanks to their own lower cost basis (either lower purchase price or lower interest rate, not due to generosity but due to competitive pressure); for many years landlords in one-way-up markets like SFBA and NYC also passed on some of their expected capital gain profits to tenants (once again due to competitive pressure). It shows that despite what most people caricature landlords as greedy, the competitive pressure from a plethora of landlords in any given area works well in delivering housing at cost much lower than a bureaucratic monopoly would have (which is what the banking system is, especially if the small and medium sized banks offering most lower interest loans are squeezed out by big banks). The real danger in the near-future is giant corporate concentrated ownership of homes forcing up rent price. That's why I think there needs to have policies that curb concentrated ownership and fostering competitive/discrete ownership for both owner-occupied homes and rental properties. Pottsville was a nightmare because the old man Potts owned the entire town (nearly all the rental properties in town).

mell says

They're also using the stock market with bizarre price distortions where money losing tech trannies get pumped to 1000 x revs in market cap while outstanding companies turning profitable get shorted to 1-2 x rev mkt cap.

Which Woke companies are getting pumped up ?

Which non Woke profit making companies are getting shorted or beaten down ?

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https://rudy.substack.com/p/it-was-the-zero-percent-era-that

Big_Johnson says

The day a renter buys his first house in CA is the day he/she will love prop 13.

Same day he/she becomes a parasite on the rest of the state - how is this a good thing for others!
https://www.taxfairnessproject.org/

Patrick says

https://rudy.substack.com/p/it-was-the-zero-percent-era-that

Yeah Patrick, I noticed rents are staying flat here in the Florida panhandle. And wages seem to be still increasing at least 5% annually here.

I see a lot of apartment complexes offering 1 month free for a 13 month lease.

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Patrick says

https://rudy.substack.com/p/it-was-the-zero-percent-era-that

This is good news. Its should be temporary. But I heard on radio that NY Fed not ready for next rate hike (as we are approaching elections ;) Unfortunately inflation will not bring down much of home prices, rents, stocks!

Around 1999 rent inflation started to increase at a faster pace than CPI. I wonder why this is as perhaps illegal immigration was not factored in the Census data enough to cause an increase in housing units. Granted a lot of illegal immigrants likely live in crowded living conditions like 3 people to a room.

Notice how rent did not increase from around 2008 to 2012 during the housing bust.

Blue says

Big_Johnson says

The day a renter buys his first house in CA is the day he/she will love prop 13.

Same day he/she becomes a parasite on the rest of the state - how is this a good thing for others!
https://www.taxfairnessproject.org/

Great site!

How it works everywhere else: Your home is reassessed every so often -- usually 1-4 years. If it has gone up in value, congrats! You are now wealthier. But your taxes go up too to compensate.

How it works in California: Your home's assessed value is frozen at the moment of purchase. Even if it skyrockets in value, it will not get reassessed as long as you own it.

The upshot: The houses that have grown in value the most - making their owners millionaires just by the virtue of happening to buy a home in the right neighborhood - also get the largest subsidies. People trying to buy their first homes, laden with large mortgages, get no subsidy.

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PAID FOR BY YOUR KID'S EDUCATION
Why does this matter? Property tax pays for one very important thing: K-12 education. In most jurisdictions a minimum of 40% goes toward education.

In other words: This subsidy, primarily benefiting wealthy homeowners, is paid for with lower teacher salaries, larger classroom sizes, and deteriorating facilities.

(Read more on Prop 13's impact on education)

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REFORM IS ON ITS WAY
The good news is that after 4 decades momentum is building to overturn Proposition 13.

Prop 15 is an important first step to reforming property taxation in California. It essentially unravels the subsidies for large commercial properties. You should vote "Yes" on Prop 15.

CONSERVATIVES FOR MOAR TAXES!!!

The only more ironic thing is PEOPLE OF IRISH/POLISH ORIGIN FOR THE SUCCESS OF IMPERIAL LANDGRAB WITH SOME GENOCIDE ON THE SIDE.

🤡

https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494

See above. Its about tax burden as far as state and county or city. New York is ranked 1 and California is 12. Florida is 46.

California ranked at 12 should have enough money for the public schools (K-12). Where is the money going ? To the pensions of retired state workers ?

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Just ask yourself: do you know anyone who hates the idea of owning?
Not in America, but in Scandinavian countres.....is not what society expect. "Own nothing be happy" is the way to go. Let's have a beer!

Patrick says

man palo alto is a bad example. it’s where all ultra rich self centered techies live with too much easy money for their own good. all they do there is make too much, spend it on drugs, and expensive housing.