patrick.net

CL says

Haven't all of those generally become more affordable over the last 60 decades? And in the age of Globalization, low tariffs and offshore labor it's all moot!

Yup. A lot can be manufactured off-site. Japan still runs a closed economy but if you don't have a lender paying for the stuff I suspect you can bypass a lot of the non-tariff trade barrier BS.

Robber Baron Elite Scum says

The level of American stupidity is astounding... You sheep are brainless idiots. It's really comedy to me on how stupid you all are.

At least with rent for 30 years... You have the ability to save. But now you fucking debt slaves are starting to dump your mortgage liabilities on to renters.

90% of all millionaires became so by buying real estate. I am a landlord, land owner, investor, flipper, capitalist, scumbag, call me what you like, but people like me need people like you, who like to rent. Thanks for making us rich. :)

lets not forget the home builders did not build the land.

in coastal cali - maybe 50 to 80% of 'home value' is the land value.

Robber Baron Elite Scum says

A brand new home is not worth 30 years of labor since it can be made within a matter of months

How true. I paid something like 6 months income (after taxes) for my house.

Delurking says

Great thing about Japan is that they're losing ~1M people aged 25-65 a year now.

That simply HAS to put a boot up the ass of land values.

Not necessarily. I have seen places in the US where the population declines AND more housing is built without negatively affecting housing prices (stayed pretty much flat). This was on a peninsula in the Chesapeake Bay where this happened. Just so happened that the average number of people per household dropped at the same time. That's what I would expect to happen in parts of Japan where a population drop will result in more house per person but necessarily less housing.

Robber Baron Elite Scum says

A brand new home is not worth 30 years of labor since it can be made within a matter of months or within 1 year depending on the features

True, but it might take 30 people to build it in 1 year. That's 30 person-years per house. For one person buying one house, that works out to 30 years of labor.

Robber Baron Elite Scum says

The level of American stupidity is astounding... You sheep are brainless idiots. It's really comedy to me on how stupid you all are.

At least with rent for 30 years... You have the ability to save. But now you fucking debt slaves are starting to dump your mortgage liabilities on to renters.

90% of all millionaires became so by buying real estate. I am a landlord, land owner, investor, flipper, capitalist, scumbag, call me what you like, but people like me need people like you, who like to rent. Thanks for making us rich. :)

wthrfrk80 says

Robber Baron Elite Scum says

A brand new home is not worth 30 years of labor since it can be made within a matter of months or within 1 year depending on the features

True, but it might take 30 people to build it in 1 year. That's 30 person-years per house. For one person buying one house, that works out to 30 years of labor.

But most of those are laborers and are thus paid less than (hopefully)you are.

This kind of reminds me of my "Moore's Law" discussion. A fairly well-paid person in America should be able to buy a house with a couple years' labor, not permanent debt.

It's a lot like Healthcare. Insurance is because you can't afford healthcare, but now you can't afford insurance. I need insurance to pay for my insurance!

Robber Baron Elite Scum says

Therefore no man deserves 30 years of your hard labor for him doing nothing except claiming the land first before the competition.

That's why I don't (and won't) live in CA, NYC, DC, or Boston.

wthrfrk80 says

Robber Baron Elite Scum says

Therefore no man deserves 30 years of your hard labor for him doing nothing except claiming the land first before the competition.

That's why I don't (and won't) live in CA, NYC, DC, or Boston.

Well here in LA there is no shortage of people fresh from the rural areas who are dying to live here for any number of reasons. (want to work in entertainment, like the weather, are gay, etc, on and on).

Me I like the weather. Its nice to have choices - flyover is totally affordable now - but I guess its BYO job for many.

CL says

It's a lot like Healthcare. Insurance is because you can't afford healthcare, but now you can't afford insurance. I need insurance to pay for my insurance!

The market demand-side price for something you can't live without is every penny you have & ever make.

This is why free-marketeerism in real estate and health care is ideology-driven hogwash that does not survive contact with the real world.

PockyClipsNow says

lets not forget the home builders did not build the land.

in coastal cali - maybe 50 to 80% of 'home value' is the land value.

That's not unique to calif. 'Coastal' land is scarce relative to aggregate land supply. And who doesn't like going to the beach? Ocnj 1/10th acre beachfront lot goes for about 1M,,,and for some strange reason, people pay those price tags! I guess when you can lever other people money with no risk, and use preferential tax treatments, parlayed with prohibiting everyone else access to the beach, who wouldn't pay those exorbitantly fleecing price tags?

Oddly enough, those nutters in nj think "their" beaches are so darned special, they require that you pay just to access the "public" beach!

Simplest solution sounds like a heavy lvt on all coastal (within 1/2 mile) and use the proceeds to fund the navy. that and do away with the silly preferential tax treatment the gov gives RE 'owners'

PockyClipsNow says

Well here in LA there is no shortage of people fresh from the rural areas who are dying to live here for any number of reasons. (want to work in entertainment, like the weather, are gay, etc, on and on).

I consider them suckers. I hope they have fun making money for their landlord or bank.

Our ancestors fought/died/immigrated to escape serfdom/aristocracy. We modern Americans are signing up for it voluntarily!

Delurking says

This is why free-marketeerism in real estate and health care is ideology-driven hogwash that does not survive contact with the real world.

It works GREAT in the real world. IF you're the top 0.1% that reaps the profits from it.

Dunnross,
I like your previous comment. It is true that it takes a couple of illegal immigrants 3 months to build a property. I live in LA and see it all over the place. And then they are sold at a 500k or more profit to phd's who will work all of their life to pay it off-or 30 years at least. So true!

Raw comment says

90% of all millionaires became so by buying real estate.

Do you have a source for that information? I've found none, except that it is a quote attributed to Dale Carnegie commonly found on get-rich-quick websites.

Mathematics are not in agreement with the idea that buying houses or land leads to wealth. There is a long period, relative a life span, of debt usuallly associated with the purchase which means the period of compound interest will necessarily be short.

So, perhaps, if real estate is passed on through generations and sold there can be wealth building. It's wealth not realized by the original buyer though. This is probably why descendents of families who immigrated to North America and settled in the colonies are sometimes members of very wealthy families. It seems clear that the most wealth has been built through business, though.

Forgot to share some information I found. Page 50 of this summary seems to disagree with the 90% of millionaires assertion above, but without more detail is not definitive.

http://www.northerntrust.com/pws/jsp/display2.jsp?TYPE=interior&XML=pages/nt/0605/1147987494825_694.xml

http://www.ustrust.com/ust/Pages/Insights-on-Wealth-and-Worth.aspx

FunTime says

Mathematics are not in agreement with the idea that buying houses or land leads to wealth. There is a long period, relative a life span, of debt usuallly associated with the purchase which means the period of compound interest will necessarily be short.

And property taxes are working against you. If there's a structure on the property, there are insurance costs too.

FunTime says

It seems clear that the most wealth has been built through business, though.

Most wealth comes from Crony Capitalism and outright legal theft.

Jean says

Dunnross,

I like your previous comment. It is true that it takes a couple of illegal immigrants 3 months to build a property. I live in LA and see it all over the place. And then they are sold at a 500k or more profit to phd's who will work all of their life to pay it off-or 30 years at least. So true!

Yes, but pundits will always tell you that the land is worth more than the house. Now, you tell me, what's the value of a postage stamp lot, if you can't grow food on it or mine for gold? In fact, these land regulations in Cali metropolitan areas should render most of these tiny lots almost worthless. You can't even kill a rat in your own back yard, without the green peace declaring you Public Enemy #1.

robertoaribas says

Yes, land in downtown San Fran, Wall street, etc. should be free...

Yes, it should. All you have to do is empty all the shelves in the supermarkets for 3 days and close off the bridges. Sounds familiar?

Yes, its so much better to pay rent for your entire life. Ill pay a mortgage for 30 years... Prob 17 at my expected payoff rate... Rather than a lifetime of rent.

robertoaribas says

No, it doesn't sound familiar. I'm not familiar with any time ever when say London, Paris, NY, San Fran, hell even Phoenix suddenly had free land....

Back in May 1862, President Abraham Lincoln passed the first law that granted land to most people, the Homestead Act. The Homestead Act entitled immigrants, freed slaves and Americans to 160 acres of undeveloped land to increase the expansion to the west.

Robber Baron Elite Scum says

I can't wait to see the expression on the faces of you cockroaches when home prices crash 99% and shit hits the fan into cannibal anarchy.

Ironic, my family just had this precise same conversation. Don't buy into the rents rising bullshite that is the shite they want the masses to believe to jump in and buy. It's all going to hit the fan and it isn't going to be pretty.

dunnross says

In fact, these land regulations in Cali metropolitan areas should render most of these tiny lots almost worthless.

YOU GOT IT in fact what you have stated is the truth. They have the mass suckers trading big bucks for worthless shite.

Reality is that very little property is truly exceptional, very very little.

FunTime says

Mathematics are not in agreement with the idea that buying houses or land leads to wealth.

He is full of it. Only few people have made big money in real estate historically and those few have been part of a bigger manipulation. You will never make big money buying a God damn house or two. That is the sucker shite they want the dreamers to believe in.

Mathematics and science prove the facts and the facts are clear. Anyone pushing money to be made in real estate is in the business of selling bullshite.

Jean says

It is true that it takes a couple of illegal immigrants 3 months to build a property. I live in LA and see it all over the place.

It's true in my area as well. Some of these illegals are asking upwards of $40/hr to put mud on the walls. I have started a different way of bidding on these house projects. "My illegals are better or cheaper than yours". LOL I have them bid on the total job. Since they don't have a contractors license they can't put a mechanics lien on the house. On my last subcontract job (fixer) I watched carefully and figured that the labor cost was $3.50/hr! 4 illegals for four 10 hr days. Recently, I was able to get a lawn service for $40/month (it takes them 1 hour for the front lawn), so this one is still making $10/hr. In this hood, average lawn service runs $ 150-200/month

Sounds like the OP is coming to realize where his income is in relation to those around him. House prices ultimately return to a simple relationship with local incomes. Rents return to a similar relationship with local incomes much more quickly.

The total cost of labor in most houses is significantly higher than 3 people for 3 months. More like 12 people for 3 months. Then you add in the cost of land and materials... And historically, people spend about 1/4-1/3 of their labor on their housing, not the 100% implied by "their labor". Suddenly... paying to own a house over 15 or 30 years doesn't seem so crazy.

I just moved to Seattle and was looking for houses to rent. I found that rental homes were more expensive than I expected (4br2ba 2000sf going for $2400-$2600/month back in May/June). So I bought. 6br/2.5ba 3300sf for 2 years of savings + $2200/month PITI. With the amount I can set aside every month I can pay off the place in 10 years.

Ultimately, if other people are paying too much for teardowns, let them. Move to a location where people aren't paying so much for crap home, live farther away from the city center, continue to rent, whatever it takes.

Elite SCUM-

You are going to be like my pet idiot. Really, I find fun and humor in this and that is why I do it, enjoying my coffee on a Sunday AM.

Who cares how long it takes to build a house? It is all about supply and demand curves. But I do not want to make this a lesson of economics.

I am a civil engineer and I do want you to take just a moment to think about the infrastructure and the manufacture of everything. Where do you get your water pressure from? What happens when you flush a toilet? **Magically** we have a world of conveniences. Think about how cheap it is to buy PVC pipe or a sheet of drywall or a 2x4. It is economy of scale.

Now imagine you do not have any of these resources. What could you possibly build in 30 years with all of your efforts? So do not slander technological advancements which allow you to have so much more benefit for so much less cost.

And if you are spending every nickel of income for 30 years, that is because you are an idiot. I chose to spend a very small portion of my income on a 15 year note. And I will drag it out with minimum payments as long as I own the place because the interest is so amazingly low. Sorry, starting to sound like a math lesson again. Cheers!

freak80 says

FunTime says

It seems clear that the most wealth has been built through business, though.

Most wealth comes from Crony Capitalism and outright legal theft.

Except for ours of course ;)

civilsid says

Who cares how long it takes to build a house?

Yeah. Who cares if you waste 30 years of your life for something built in 1-5 years?

Makes sense.

civilsid says

It is all about supply and demand curves.

True. Realtor®'s are not there to give an equal exchange.

civilsid says

But I do not want to make this a lesson of economics.

You should because you need one. Serf...

civilsid says

I am a civil engineer

I am a criminal

civilsid says

I do want you to take just a moment to think about the infrastructure and the manufacture of everything.

The infrastructure & manufacture of a Realtor® is interesting.

civilsid says

Where do you get your water pressure from? What happens when you flush a toilet? **Magically** we have a world of conveniences. Think about how cheap it is to buy PVC pipe or a sheet of drywall or a 2x4. It is economy of scale.

Now imagine you do not have any of these resources

Then imagine a monster shit on a Realtor®'s face.

civilsid says

What could you possibly build in 30 years with all of your efforts?

Enough capital to mass murder 99% of the population.

civilsid says

So do not slander technological advancements which allow you to have so much more benefit for so much less cost.

A Realtor® & a illegal immigrant construction worker never made any technological advancement.

Their work I have found to be quite sloppy.

I never made any slander of sewers & water infrastructure. Stop making things up, smart-aleck.

civilsid says

And if you are spending every nickel of income for 30 years, that is because you are an idiot

I already said that. You are guilty of Copyright® Infringement.

civilsid says

I chose to spend a very small portion of my income on a 15 year note.

When you have no income within that 15 year period, you will spend money you don't have.

civilsid says

And I will drag it out with minimum payments as long as I own the place because the interest is so amazingly low.

That's because the price is so high. The price is the interest itself.

Fractional Reserve Lending allows us banker criminal scum to charge degenerate smart-aleck sap idiots like you interest in a concealed manner while you proudly cheer and boast around to other peasants how the banker hardly charged you interest.

Hahahaha.... You dumb sap.

civilsid says

Sorry, starting to sound like a math lesson again.

Yeah. Don't get into the math lessons. I don't want a sap peasant like you to think too much. It's better for us Bankers that way to defraud you.

civilsid says

Cheers!

Anytime Serf...

I can't belive that people are still arguing whether real estate is going up or down, as if it had any significans whatsoever.

The economic model has for decades been based on borrowing from the future. Endless economic growth is a necessity in order to service the ever growing debt, and this is impossible in a world of finite resources, and an ever growing human population demanding a larger and larger share of these. We have now reached it’s limits. Due to the inescapable rise in the energy and commodity prices, the cost of essential goods will rise. This in turn will lead to massive un-employment as even a slight reduction in peoples discretionary spending has a disproportionate effect on an economy which to a large degree is based on non-essential industries and businesses. Salaries inevitably decrease due to the deteriorating employment situation, forcing desperate people to work for less, resulting in a dramatically lower standard of living for the masses who will struggle to be able to afford the bare minimum to maintain life. On the flip side, people with surplus wealth will do better than ever, since prices on non-essential goods will fall dramatically as too many non-essential goods and services will chase too few customers. This situation lasts until the deteriorating economic situation eventually renders most assets worthless, leaving many “have’s” wiped out. This is already happening in Greece and Spain, where people have literally gone from being wealthy to being homeless in a matter of months, having lost everything! Civil unrest will break out as people get more and more desperate, as is again already the case in Greece and Spain, and will soon be in the UK, France and all the rest.

Meanwhile in the US, gangsters like J. Corzine, protected by his corrupt friends in congress, steal 1,6b with impunity, Wall Street hands out 162b in bonuses from money that the finance “industry” (which produces nothing), has in effect, extracted from the real economy or stolen from the tax payers, and the population, unlike the one in Europe, is armed to the teeth, 40mil Americans need food stamps to survive. All this is a recipe for societal mayhem on a scale that most Americans cannot even imagine possible, unlike Europeans, not having seen anything like it in their history. A dramatic re-alignment of society, with a much, much smaller income/wealth gap, along with a reduced standard of living across the board, is the only way by which we can avoid a total break down. I may be accused of being a socialist for saying it, but I’m a realist, not a socialist, with a family history of surviving or succumbing to revolutions, all of which were preceded, and caused, by a much too wide gap between the classes, such as we see now. In fact, every time the gap has grown too wide, revolutions have ensued. The difference between “then” and “now” is that economies could expand, whereas now they can’t, due to limited natural resources unable to sustain economic growth in an absurdly overpopulated world.

Only to the degree that people acknowledge that we not experiencing a regular, cyclical recession or even depression, but the inescapable end of a far greater, world-wide monumental philosophical/economic cycle, and only trough a voluntarily re-alignment, can we avoid a total and utter destruction of our civilization. Clinging on to the current model will only make the inevitable collapse so much more chaotic and painful. A total change of course is inevitable, and we can either accept this fact and try to adapt to it voluntarily, rather than denying it, and being forced in to it, with all the disadvantages this implies. Sadly, this pre-occupation with Obama or Romney, indicate that people are in denial as to the real situation, and this does not bode well.

avdltd says

Endless economic growth is a necessity in order to service the ever growing debt, and this is impossible in a world of finite resources, and an ever growing human population demanding a larger and larger share of these. We have now reached it’s limits.

Exactly one of the reasons why I have advocated the mass murder of 99% of the world's population.

It usually starts by the 99% chopping the heads off the 1%. but it never ends there. It typically ends when the people who started the mayhem get THEIR heads chopped off, and by that time a substantial reduction of the population has already taken place. The whole thing could be avoided byu people haveing fewer or no kids, and a redistribution of wealth in a direction contrary to the one that has been going on for the last decades, where the "common" wealth has been extracted, and has been placed in the pockets of a few, well connected, oligarchs.

Wow. RBES's response to civilsid is so spectacularly full of fail, it's difficult to know where to begin. It seems like he's so hostile to the idea of a fiat currency that it's a complete mystery to him how the world's economies have functioned for so long without collapse (and so it must be around the corner).

Fiat currency works if the issuing bank fulfills it's one obligation: keep changes to the amount of money (M3) in circulation gradual. And because fiat currency works (and historically, works significantly better than precious metal currencies), it's how world economies are going to continue for the foreseeable future.

"The price is the interest itself."

This statement makes no sense. The interest on loans today is 3.5%. That price for renting money is ridiculously low. If you have a recent mortgage in the US (like me), we're taking a handout from the US government because that's free money.

Now, if RBES meant to say that the price is the inflation, well then he's wrong on that side too, because if inflation is in the future, then you should be going into fixed interest rate debt just as fast as you can. A few years of 18% inflation and I can write a check to pay off my house (since owning stock in valuable companies is a hedge against inflation, and my pay is likely to rise with inflation...). Inflation hurts lenders and helps debtors.

The problem arises when you buy now @ 3.5% and need to sell later (avg. house held for 5 years) when interest rates rise. You are then handcuffed.

Unless you vow to never move and be able to always have a job where you are, then you'l be okay.

Cracker box that only lasts a few decades? True of most Americans.

However I aspire to something more.... durable. Made with stone, you may have seen a few structures hundreds of years old dotting the landscape in the EuroZone. Build your own!

oracle of Kypseli says

when you buy now @ 3.5% and need to sell later (avg. house held for 5 years) when interest rates rise

Not another glib "when interest rates rise" comment. Just when/how is that going to happen anytime in the next 15 years??

Vicente says

However I aspire to something more.... durable. Made with stone, you may have seen a few structures hundreds of years old dotting the landscape in the EuroZone. Build your own!

If you've got enough coin you can buy one of these places up in the thousand islands.