patrick.net

“RayAmerica says

So what is the solution?

I know many young people that are thinking that somehow Trump has the answer. But realistically, what can he do to solve this problem? Personally, I do not see a solution!

(1) large-scale deportations of Biden migrants should take the premium off multi-family housing
(2) cheaper apts leads to cheaper SFH housing
(3) reinstate Glass-Steagall, preventing investment banks from owning and renting out domestic housing. These banks own nearly 30% of the housing market, and BlackRock in particular has access to Fed money. You can’t outbid them.

goofus says

These banks own nearly 30% of the housing market, and BlackRock in particular has access to Fed money. You can’t outbid them.

Source for this? I heard it was 3-5% at the very peak. Outrageous if true.

AmericanKulak says

goofus says

These banks own nearly 30% of the housing market, and BlackRock in particular has access to Fed money. You can’t outbid them.

Source for this? I heard it was 3-5% at the very peak. Outrageous if true.

Here’s one: https://www.cnbc.com/2023/02/21/how-wall-street-bought-single-family-homes-and-put-them-up-for-rent.html

“Institutional investors may control 40% of U.S. single-family rental homes by 2030, according to MetLife Investment Management. And a group of Washington, D.C., lawmakers say Wall Street needs to back away from the market. -[…]

The single-family rental industry got its start with government backing in the fallout after the 2008 financial crisis. “It was that rare opportunity that attracted the institutions to build a portfolio out of these foreclosed properties,” said Steven Xiao, an assistant professor of finance and managerial economics at the University of Texas at Dallas. […]

Some of these companies are financed by private equity firms such as Blackstone and investment managers such as Pretium Partners.

“It’s almost a captive market,” said Jordan Ash, director of labor-jobs and housing at the Private Equity Stakeholder Project. “They’ve been very explicit about how people are shut out of the homebuying market and are going to be perpetual renters.”

By 2030, the institutions may hold some 7.6 million homes, or more than 40% of all single-family rentals on the market, according to the 2022 forecast by MetLife Investment Management.“

This article puts institutional market share at 15% as of 2021:

Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.

https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html

“It’s not exactly accurate that [institutional] investors are “buying every single-family house they can find,” as some have suggested. If that were true, their market share in the United States wouldn’t be a piddling 15 percent. They’re really buying up the stock of relatively inexpensive single-family homes built since the 1970s in growing metro areas. They mostly ignore bigger and more expensive houses, especially ones that are move-in ready: Wealthy boomers and the nation’s finance and tech bros nab those properties. And they’re also ignoring cities with stable or shrinking populations, like Providence and Pittsburgh.

But investors are depleting the inventory of the precise houses that might otherwise be obtainable for younger, working- and middle-class households, in the cities where those workers can easily find good-paying jobs, like Atlanta (22 percent of home purchases according to Redfin data), Charlotte (22 percent), and Phoenix (20 percent).”

Interest rates on SFHs can drop quite a bit without any real effects on pricing. Prices didn't drop when interest rates went up. There is no reason they should go up if interest rates go down.

Interest rates are currently high. Investors in 10 year treasuries are looking for a return of 2.21% after inflation. 30 year home loan rates are about 2.55% over the 10 year. When Trump was in office before, investors were looking for about a .5% loss per year after factoring in inflation, and were looking at about a 1% higher rate than the 10-year.

So. the 30 year mortgage rate would be about 3.25 if return expectations in the bond market simply reverted to where they were under the 1st Trump presidency. Then the government would have to convince the builders that they won't screw with interest rates for a good long time to allow for a massive amounts of building.

The problem is the underlying 6-7x median income price, not the rate.

The rate is a cope not to accept that home prices are completely detached from incomes.

Misc says

Interest rates on SFHs can drop quite a bit without any real effects on pricing. Prices didn't drop when interest rates went up.

Strongly disagree here. People buy houses and cars based on monthly payment. Lowering interest rates raises the price of cars and houses because Joe HowMuchPerMonth considers affordability to be his ability to pay the nut. Raising interest rates will eventually cause house prices to fall, but it is a bit sticky because current owners cannot afford to sell at a loss so houses stay on the market longer vainly waiting for a higher price.

That monthly payment mentality applies to the whole payment, not just principle and interest. For example, a home in the Omaha Nebraska area costs much less than the equivalent home in coastal Virginia. However, because of the much higher real estate taxes in Omaha, the total monthly payment is the same. Since most folks buy with monthly payment, raising real estate tax has the same effect on house prices as raising the interest rate.

AmericanKulak says

The problem is the underlying 6-7x median income price, not the rate.

The rate is a cope not to accept that home prices are completely detached from incomes.

The only way that home prices could be detached from incomes would be housing subsidies or families doubling up on homes. Are you seeing muti-families living in SFHs in your area?

RayAmerica says

can home ownership become more affordable without causing a deflationary crisis for current homeowners?

No.

HeadSet says

The only way that home prices could be detached from incomes would be housing subsidies or families doubling up on homes. Are you seeing muti-families living in SFHs in your area?

Large immigrant groups are a factor but not sure it's THE factor enough. goofus says

But investors are depleting the inventory of the precise houses that might otherwise be obtainable for younger, working- and middle-class households, in the cities where those workers can easily find good-paying jobs, like Atlanta (22 percent of home purchases according to Redfin data), Charlotte (22 percent), and Phoenix (20 percent).”

The good news is that most of these areas are now seeing the fastest declines in rents as well as price, and they're starting to spread. Phoenix is technically neutral but Atlanta, Orlando, etc. are buyers markets as of a few months ago.

My big fear is they will whinge for a bailout, and we'll see "Fiscal Conservatives" like Roy and Massie suddenly get very generous.

Tenpoundbass says

Plus there needs to be a Federal property tax for every house you own that is NOT your primary residence

Need a constitutional amendment for that.

HeadSet says

What would be the employment in these new towns?

Where do you think workers will eat, live, shop, get medical care, gas their cars, lodge legal complaints.
Businesses will spring up faster than finished communities. Could you imagine having a failing restaurant in a town that zoning laws allows a Dominos to open right in the same strip mall that you're operating in. It would be a no brainer to take that pizza operation to a new boom town, that employs thousands of workers. I once worked in NC at a Nuclear Power plant that was under construction. The nearest town that could accommodate a population that big, was 20 miles away Durham Raleigh, must have been 30,000 in total working that project on various phases. There were more businesses there than there were finished communities to live. Which were going to be needed for the Nuke plant workers eventually. They were building those yet, but the business were there.
I remember during the aftermath of Hurricane Andrew, South Florida was inundated by workers all over the country coming down to help in the rebuilding.(This was before the rat bastards in Congress would import foreign non Americans, for companies with no bid contracts to do disaster clean up and rebuild.)
Not only did carpenters, roofers and electricians start flocking to South Florida. But also all of the people who worked non construction jobs, because the demand for every other service was so great. South Florida at that time was much more sparsely populated with year round residents than it has now. Back then 60% of the people who lived here were snowbirds, that came after Thanksgiving, and left after Easter. The rest of the time, they were up north.
Most people here did most of their yearly income during the season. After Andrew for a while. Trades and Service sectors were working year round nonstop.

Americans would be a lot better off, if every natural disaster was handled by the people of the US, and not tightly controlled by government and rigged contractors with non citizen workforce. Just look at the NC aftermath, that place should be a huge boomtown right now.

So to be clear for my idea to work. There's a lot of shady shit that has to be undone. Then your question would look like a very foolish one.

AmericanKulak says

Pretty much US dollar devaluation chart.

AmericanKulak says

LOL The curve was not that sharp north from 70's to the 90's. In fact it was the biggest reason for the RE bubble, it was market correction that they say never happened in the preceding decades. And btw, the average home value in the US in 2008 to late 2009 (which was the RE collapse not in 2006 that graphic claims) was about $300 or more. That's $300K for a shitbox in Toadsuck Arkansas, a shitbox house in metro areas around the country were between $400K to $700K.

There was always RE inflation before the bubble, but what potential homebuyers could afford, would always bring those prices back down to a reality check erasing those gains.
The 2000's bubble wasn't about classic homebuying. It was about making the process of taking one house, and having as many as 4 people over a 5 year period, put a fresh coat of paint on it and flip it for much more than they just paid for it. It became a market of house flippers not homeowners.

As demonstrated when the market crashed, and most abandoned those houses, because they couldn't flip it. Even if they could afford the mortgage.
I knew so many people who just flat out abandoned their $500K house they bought just months earlier because the jig was up. Yet they had the money to move into a high rent home after they left.

Obama munged the RE recovery so bad. An RE recovery was supposed to be the market coming back to reality. But as it were, Obama's FHA and Fannie Mae meddling. Just kept the con going, so they could rebound the artificial inflation. Eventually morphing into buyers buying houses to rent on Home sharing apps.

Prevent rent seekers buying Single Family homes, is the only way to ever fully recover to a healthy natural markets.

Tenpoundbass says

Where do you think workers will eat, live, shop, get medical care, gas their cars, lodge legal complaints.

You cannot build a town where everyone just takes in each other's laundry, flips burgers, and works a convenience store - there must be a major employer. In the example you gave, it was a nuke plant. Why do you think those small towns throughout the Midwest are dying? It is because the truck plant, the depot, or refinery has closed. Some towns died just because the Interstate came through and travelers no longer stop for gas and lodging.

Are you pretending boom and bust cycles don't exist?

HeadSet says

You cannot build a town where everyone just takes in each other's laundry, flips burgers, and works a convenience store - there must be a major employer

The Brits managed to do it after WW2. No major employer except initially the town government and school employees might count.

https://en.m.wikipedia.org/wiki/New_Towns_Acts

https://en.m.wikipedia.org/wiki/New_towns_in_the_United_Kingdom

America did it post WWII as well. Towns that depended on one major employer or industry, were crushed. When those industries pulled out. There are plenty of towns in America, that thrive in their local economy. Most towns in America aren't dependent on one company or industry. Sure plenty may grow as big employer moves there. Like a huge processing center or hub for a major carrier. Then they go bust when that company pulls out. But the town is still there, the same town was there 10 years ago before that employer came.

HeadSet says

Strongly disagree here. People buy houses and cars based on monthly payment.

True. But upper middle class people I know are doing fine if not great. You also have to factor in the home ownership rate.
https://fred.stlouisfed.org/series/RHORUSQ156N



This isn't 2006-08. Everything grows with population increase. We're on a decent trend line. If ownership started going up above that trend line then prices will drop.

We saw our housing bust and probably won't again in our lives. If 1/3rd of the country can't buy I think it's a good thing. That extra 3-4% is a lot of people not able to afford a home yet somehow got in one where they likely lose their low wage job and foreclose. Inflates prices and that's when you see a crash. I could see "maybe" a 5% dip down.

Fact is not everyone should own a home. I think the numbers for a lot of metrics are pretty good currently for housing. I don't check in on rentals at all though I know there's a shortage here in my part of IL.

DOGEWontAmountToShit says

The Brits managed to do it after WW2. No major employer except initially the town government and school employees might count.

Those new towns depended on relocating industry as well as commuters. Crawley for example. Gatwick just north of it became a major airport, and after the War businesses relocated outside of London and other big cities when they were rebuilt or retooled. In Crawley's case, it was a major light industrial area named Manor Royal.

inflation, massive inflation. why? because Republicans are low interest borrow and spend clowns. always were. they’ll lower rates, start spending binges. all that will skyrocket inflation. not once in my lifetime Republicans did anything different. it’s always same fucking story.

HeadSet says

You cannot build a town where everyone just takes in each other's laundry, flips burgers, and works a convenience store

You can, as long as half of them are on Welfare or DEI Instructors at State Colleges, like much of Upstate NYS rustbelt cities.