patrick.net

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https://www.cnn.com/2023/08/24/homes/mortgage-rates-august-24/index.html

CNN reports today 30 year mortgage rate is at 7.2% and at a 22 year high.

But last week CNN reported that housing starts have increased more than expected: https://www.cnn.com/2023/08/16/homes/new-home-building-july/index.html

I suspect home builders are expecting the 30 year mortgage rate to drop between now and spring 2024.

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Eman says

Also yesterday I tuned into NPR (after a long time) and caught some cunt speaking about plans to basically subsidize ALL renters in AlCo with state money. What that would do to housing prices is obvious.

In general, the intention is good, but they haven’t figured out the consequences of their intention.

Its a supply matter, and the problem is the existing homeowners wealth is tied primarily to their homes, or their home values are a major significant priority to them.

Hence, its politically impossible to bring new supply to areas that are in desperate need of new housing. And California especially makes it extremely expensive with its zoning rules and building code.

I don't understand the need for sprinklers.

Just put in a Simplisafe or ADT security system with a smoke and CO detector, as well as put in +2 hour rated firewalls between units like a townhome complex.

And require use of metal roofs versus asphalt shingle tile roofs, and require hardy board (or concrete board) for siding.

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Rubicon says

“ I don't know any instance where Commies were voted into power in a free election.”

Half of the US population wants more government and more regulation and higher taxes. Even on a conservative website like Patnet people want to get rid of prop 13 so that commifornia can charge higher property taxes.

And yet, no real
Commie rule in CA.

RWSGFY says

I don't know any instance where Commies were voted into power in a free election.

How will communism overcome America? It looks as though it is happening albiet very slowly.

Eman says

Eric Holder says

Eman says

Look what just hit my inbox. Looks like CalFHA down payment assistance program was a hit. More money is coming to help buyers with the down payment.

Also yesterday I tuned into NPR (after a long time) and caught some cunt speaking about plans to basically subsidize ALL renters in AlCo with state money. What that would do to housing prices is obvious.

In general, the intention is good, but they haven’t figured out the consequences of their intention.

Do you think they care? It is my belief that when income/wealth inequality gets bad enough, big changes can happen. Good or bad? You decide.

GNL says

RWSGFY says

I don't know any instance where Commies were voted into power in a free election.

How will communism overcome America? It looks as though it is happening albiet very slowly.

We'll discuss it when it does. IF it does.

Eman says

I’m not a buyer at the moment b/c the numbers don’t pencil out. The risk/reward is not there. I’m always a buyer and seller for the right price.

How much does the price have to decrease for you to buy ? Just think generally based on average and median prices now.

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RWSGFY says

We'll discuss it when it does. IF it does.

If it does, will any discussion against communism and the government will be protected by the U.S. Constitution or equally and protected civil liberties ?

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Patrick says

ad says

That is there is very little chance to fail as a residential landlord.

It depends on whether the rent covers the cost of owning. If someone pays more than the rent can cover, they are likely to fail.

Actually, when I took over some VA loans and then rented out the houses, I had a negative cash flow. I considered it buying a 3 bed, 2.5 bath, 2 car house for $75 per month. Eventually rents caught up with the payments anyway.

ad says

RWSGFY says

We'll discuss it when it does. IF it does.

If it does, will any discussion against communism and the government will be protected by the U.S. Constitution or equally and protected civil liberties ?

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LOLwhat? We'll discuss it w/o such protections.

ad says

Eman says

Once you factor in 1 and 2, it’s already $200k before the cost of land, labor and materials

Where do the working class live there ? Where do those who work the restaurants, the landscaping jobs, etc. live ?

They live 6 people in a 2 bedroom apartment ? They can't reasonably live more than 90 minutes travel distance away from their jobs.

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Well, they should work in restaurants in Tennessee or mowing lawns in Idaho, sell hot coffee in Arizona. Here in CA we employ for that works Indian engineers.

RWSGFY says

LOLwhat? We'll discuss it w/o such protections.

That means there is a chance anyone complaining could end up prisoners of conscious based on how Orwellian or authoritarian the government has become.

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ad says

Eman says

Once you factor in 1 and 2, it’s already $200k before the cost of land, labor and materials

Where do the working class live there ? Where do those who work the restaurants, the landscaping jobs, etc. live ?

They live 6 people in a 2 bedroom apartment ? They can't reasonably live more than 90 minutes travel distance away from their jobs.

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In some SFH neighborhoods, landlords put bunk beds in each of 4 bedrooms and pack 8 people into a house. At $800/month/person, they're bringing in $77k annually if they keep the rooms full. A spot in the 2-car garage will cost you an extra $300/month. In the neighborhoods where this is common practice, you won't find any spare street parking between the hours of 7 PM and 6 AM because each house will have 2 vehicles in the garage or driveway and another 6 on the street.

Big_Johnson says

Even on a conservative website like Patnet people want to get rid of prop 13 so that commifornia can charge higher property taxes.

Yes, LAND value taxes should be higher, and income and sales taxes should be lower.

Ideally, the only tax would be on land values, and there would be zero income or sales tax.

See https://patrick.net/post/1346922/2022-08-05-georgism-thread

The tax burden would be lower overall, and everyone would benefit except for those who profit from land rents.

SunnyvaleCA says

At $800/month/person

If I am young I would be saving a lot of money renting like this, assuming my monthly net income is $4000 at least.

I'd save at least $1000 a month and put it into an index fund like Wilshire 5000.

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Big_Johnson says

I don’t get it: comparing stocks to RE makes no sense to me. I have nothing against stocks and invest in them myself but I don’t get how you can compare the two as if they were interchangeable. You have to live somewhere. I would never rent and invest in stocks because I think that’s a better investment. Consider this:

Let’s say stocks go up 10% and RE goes up 4%.

Let’s say you buy a 1Mio dollar home. 20% DP (200k)

So let’s compare what happens if you invest 200k in stocks vs RE

Stocks 200k * 10% is 20k
RE, your 1M dollar home appreciates by 4%, so 40k.

Of course you can compare stocks and real estate. And, with your numbers and calculations, real estate is the easy winner! But your numbers aren't the only possible scenario, at least in some markets.

What if your million dollar house has a 1.25% property tax and a 1.25% maintenance cost? That's costing you $25k/year extra. The interest on a 5% loan is $40k. If you wind up moving in 5 years you've lost approximately $100k in buying and selling costs, which is $20k/year amortized.

In my part of silicon valley, a $2.4 MM shack rents for less than $5k/month. For a shack that is 60+ years old, a mechanically-incompetent owner would spend a fortune hiring people for repairs and maintenance, especially if done legally. Renting might well and truly be the smarter choice.

Meanwhile real estate prices have gone up so well for so long that owners around here are willing to rent out their old homes at a monthly break-even just so they can keep the capital appreciation speculation going. Also, they probably can't stomach the $400k capital gains taxes they'll have to pay if they sell—California will nick part of that gain at 12.3% cumulatively on top of the top federal 20% rate.

Another thing to remember is that closing costs and 20% down payment around here is north of $500k. That's a lot of spare change!

As for my situation, I've been happy enough with my house. My timing was pretty good — early 2004. Compared to investing in the stock market... I sold about $8 million (present day value) in Apple stock for the down payment, so, not so good. Of course you could say that I'm cherry picking Apple stock to compare to the house; however, the proximity to Apple Inc itself that is actually making the house worth what it is.

ad says

SunnyvaleCA says

At $800/month/person

If I am young I would be saving a lot of money renting like this, assuming my monthly net income is $4000 at least.

I'd save at least $1000 a month and put it into an index fund like Wilshire 5000.

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The landlords typically also pay all the utilities, since splitting the bill up is a hassle. Couple that with low-cost breakfast, lunch, and dinner at work (or free in the case of Google!), and your biggest expense is income taxes. For the first 8 years out of college I rented houses and apartments with friends from school or work.

NuttBoxer says

WE JUST NEED TO BUILD MORE HOUSES! WHY CAN'T YOU UNDERSTAND THAT!? WHAT'S WRONG WITH YOU :PEOPLE!!!

https://www.zerohedge.com/personal-finance/problem-isnt-housing-shortage-its-concentration-ownership-wealthy

I agree with this. There shouldn't be any special tax treatment apart from a primary residence. If a landlord wants to buy up SFHs, no tax breaks. No foreign purchases of US real estate. Watch inventory loosen up.

SunnyvaleCA says

In some SFH neighborhoods, landlords put bunk beds in each of 4 bedrooms and pack 8 people into a house. At $800/month/person, they're bringing in $77k annually if they keep the rooms full. A spot in the 2-car garage will cost you an extra $300/month. In the neighborhoods where this is common practice, you won't find any spare street parking between the hours of 7 PM and 6 AM because each house will have 2 vehicles in the garage or driveway and another 6 on the street.

Yes. Exploiting people who are willing to be exploited.

Real estate is only "better" than stocks because you can buy a house with a lot higher "margin" than stocks.
You can't buy stock with just 5% or 20% of the cash price.
I made a calculation for our Martha's Vineyard summer house which was later "winterized" to live in all year; it wasn't rentable in the winter, the property taxes were high and have risen, and there was constant maintenance (like a well for your water supply).
The stock indeces beat the house hands down, but a huge amount.
The AAPL shares I bought have split 28 times; the house still has the same number of bedrooms.
If your house is worth a ton or money, try getting the money out of it and see how much you are taxed.

https://finance.yahoo.com/news/disturbing-trend-real-estate-investors-130711393.html

Disturbing Trend For Real Estate Investors: Homes Sold At A Loss, Numbers Not Seen Since 2016

It appears that investors are now losing on approximately one out of every seven homes they sell.

Now, the question arises: Where are homes most likely to sell at a loss? According to Redfin, real estate investors are most likely to incur losses in markets that experienced the largest surges in house prices during the pandemic.

At the time of the report, the hardest-hit market was Phoenix, where just over 30% of homes sold by investors incurred losses. Following closely were Las Vegas, 28%; Jacksonville, Florida, 20.9%; Sacramento, California, 20.2%; and Charlotte, North Carolina, 17.4%.

B.A.C.A.H. says

SunnyvaleCA says

In some SFH neighborhoods, landlords put bunk beds in each of 4 bedrooms and pack 8 people into a house. At $800/month/person, they're bringing in $77k annually if they keep the rooms full. A spot in the 2-car garage will cost you an extra $300/month. In the neighborhoods where this is common practice, you won't find any spare street parking between the hours of 7 PM and 6 AM because each house will have 2 vehicles in the garage or driveway and another 6 on the street.

Yes. Exploiting people who are willing to be exploited.

Similar to what happens in Manassa and Prince William County in Virginia. The local government passed a law against too many unrelated adults sharing an abode intended for a single family, by a judge threw it out. This house packing policy props up high rents and keeps wages low.

HeadSet says

Similar to what happens in Manassa and Prince William County in Virginia. The local government passed a law against too many unrelated adults sharing an abode intended for a single family, by a judge threw it out. This house packing policy props up high rents and keeps wages low.

How do they enforce this as far as "boarding houses" ? You would they monitor and verify this ? They can claim their cousins are living with them.

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Houses in my hood in Orange County keep going slightly up. Most are over a million now, with the basic 3/2 models at $950k.
I don’t understand it, with the high rates. Except that people with money like certain neighborhoods and can pay.

HeadSet says

Manassa and Prince William County in Virginia. The local government passed a law against too many unrelated adults sharing an abode intended for a single family, by a judge threw it out. This house packing policy props up high rents and keeps wages low.

@Headset, do you live in the DMV? A Realtor just told me today that Arlington just passed "The Missing Middle Act(?)".

The Missing Middle Act allows a builder to go into any neighborhood -> purchase a house -> knock it down -> build an apartment building in-between 2 houses.

Shaman says

Houses in my hood in Orange County keep going slightly up. Most are over a million now, with the basic 3/2 models at $950k.
I don’t understand it, with the high rates. Except that people with money like certain neighborhoods and can pay.

They got cash such as equity / capital gains from their previous home sale and/or stock / ETF sales. Plus they want to live in white and Asian neighborhoods that have very good public schools and low crime (unless it is imported from high crime areas).

Do they have school desegregation like they did when I went to public middle and high school in Florida ? Do they allow students from poor districts to attend public schools in liberal white and Asian neighborhoods / zip codes ? Do they bus in the poorer and less affluent students ?

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GNL says

A Realtor just told me today that Arlington just passed "The Missing Middle Act

Yes they did in March 2023: https://www.arlnow.com/2023/03/22/breaking-arlington-county-board-approves-missing-middle-zoning-changes/#:~:text=The%20Arlington%20County%20Board%20voted,only%20single%2Dfamily%20detached%20homes.

Arlington, Virginia votes at least about 80% Democrat in national elections, so I am glad to see this happen there. And it was an unanimous vote in favor of it by the Arlington city council.

Big_Johnson says

I gave up a long time ago to believe things for the avg joe will get better. They get worse every year instead.

Stolen elections have consequences.

Seems around Santa Cruz, they have been trying to lock in 'lower rates at higher prices' and maybe just now the prices are starting to stabilize or drop a very little. Prices have been surprisingly robust. I am seeing more for sale signs driving around. So, the 'lock in low rates at higher prices' might be countered by the 'sell now to get peak price' group? Guess we'll see over the next couple of months.

GNL says

Headset, do you live in the DMV?

I live on the Virginia Peninsula. I have heard Eastern Shore folks call their area "DelMarVa" but have not heard that "DMV" term before. I presume that is Delaware-Maryland-Virginia, but I will add that Virginia is so varied and unique that it should not be grouped with puny and colorless places like Maryland and Delaware. Heck, even western Maryland would like to break off and join West Virginia.GNL says

The Missing Middle Act allows a builder to go into any neighborhood -> purchase a house -> knock it down -> build an apartment building in-between 2 houses.

Well, not quite any neighborhood. True, the builders can put up by right some 2-6 plex buildings in places zoned SFH, but there are always restrictions to keep them away from desirable neighborhoods, such as off-street parking requirements, nearness to a metro line, and limitations on how many can actually be built per 5 years. The new structure also cannot be bigger than the SFL it took down. Because of these restrictions, I would suspect that most inbuilding will be tearing down a 1950s era house in a moderate neighborhood and replacing it with a duplex. Maybe in a more upscale area, they can convert a 3000 sqft home into a 1500 sqft each duplex. Interesting to see if anything is done in a place like Old Glebe.

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Oct 2022 bought for $345,000: https://www.zillow.com/homedetails/7680-Shadow-Lake-Dr-Panama-City-Beach-FL-32407/305989636_zpid/

Now listed at $355,000

Already they dropped the price $20,000

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Big_Johnson says

Even on a conservative website like Patnet people want to get rid of prop 13 so that commifornia can charge higher property taxes.

Commie Prop 13 was designed for rich not to pay their fair share and looting poor and middle classes. No one is paying property taxes in CA who are at the middle to top on the Prop 13 ponzi scheme and bring the immorality of different rates for the same type of properties of neighbors. Its like "All People are Equal, but Some People are More Equal than Others".
Repeal the 1978 Prop 13 along with all its evil variants and replace a uniform tax like every other state in USA. Because of the evil Prop 13 and lack of property taxes gov and Prop 13 supporters hiked EVERY other tax in the state like income, sales, traffic ticketing, gas etc. and messed up the whole state.
There is a cost of communism for rich, someone has to pay.
By get-ridding of Prop 13 will cool off the properties as everyone is on hook for taxes.

Do you think for an instant that by repealing Prop 13, the other taxes would decrease?

Absolutely, fucking not. The politicians in Sacramento would spend the extra taxes on the homeless and illegals.

There is no limit to the amount of taxes they want.

The California budget deficit this year is forecasted at $34 billion. They are looking at increasing taxes just to cover their already excessive spending.

Shaman says

Houses in my hood in Orange County keep going slightly up. Most are over a million now, with the basic 3/2 models at $950k.
I don’t understand it, with the high rates. Except that people with money like certain neighborhoods and can pay.

Duh! it must be the (hidden double digit) inflation and lack of new buildings. Its not just CA, I guess its everywhere. This is more look like what I have seen else where double digit inflation. It happens silently, unfortunately most can not see until its too late. Only rich can benefit them selves all the time. This is where the gap among rich and poor widens.

Misc says

Do you think for an instant that by repealing Prop 13, the other taxes would decrease?

Absolutely, fucking not. The politicians in Sacramento would spend the extra taxes on the homeless and illegals.

There is no limit to the amount of taxes they want.

The California budget deficit this year is forecasted at $34 billion. They are looking at increasing taxes just to cover their already excessive spending.

I completely agree, now there are two enemies for middle and poor. Both rich and gov to extract out everything.

“ Do they have school desegregation like they did when I went to public middle and high school in Florida ? Do they allow students from poor districts to attend public schools in liberal white and Asian neighborhoods / zip codes ? Do they bus in the poorer and less affluent students ?”

No, but zone transfers are available and used by some percentage of the kids. No busing tho. The parents have to take them to school. That leaves out the hood rats because their parents are pieces of shit who won’t make that kind of commitment. And also kids on transfer can have their approval revoked for bad behavior, so with that Sword of Damocles hanging over them, the transfer kids are very well-behaved!

As far as the demographics: about 50% white, 25% Asian, 20% Latino, 5% black. And a lot of kids are a mix of one or more races, including my own who are 1/4 Asian.
D1 school in several sports, including baseball. I’m proud of my freshman boy for making the team.

Blue says

lack of new buildings. Its not just CA, I guess its everywhere.

It has not recovered from 2008 housing collapse. And I am not sure why besides zoning reasons and developers not wanting (or economically unable) to build more affordable housing. And the population in the USA continues to increase.

Wolfman at Wolf Street website has been reporting on this especially over the last three years.

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Shaman says

50% white, 25% Asian,

Sounds like that "no busing" allows easily for them to maintain this demographic. I'm surprised the "no busing" policy has not been legally challenged by Democrats and groups like the NAACP.

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ad says

Blue says

lack of new buildings. Its not just CA, I guess its everywhere.

It has not recovered from 2008 housing collapse. And I am not sure why besides zoning reasons and developers not wanting (or economically unable) to build more affordable housing. And the population in the USA continues to increase.

Wolfman at Wolf Street website has been reporting on this especially over the last three years.

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Homebuilders got burned badly in the last housing boom. Some homebuilders downsized 80% of their workforce. This is the reason why there was a lack of building as we came out of the Great Recession.

Then the cost of materials and labor went through the roof after the pandemic. As prices of materials came down, borrowing cost is too expensive to borrow. This explains why the builders just discount prices and push as much inventory out as possible the last few months. Construction loans are mostly adjustable, and the prime rate is around 8.5% now.

Big_Johnson says

Bigger luxurious homes. There is no money in building affordable tiny shacks.

I understand as its all about maximizing profit in dollars so you have to build as big and luxurious of a home that can sell. And there is enough demand for this type of housing for this construction strategy to thrive.

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