patrick.net

Blue says

Under CA Prop 13, you never ever use certain words like "rebuild" to maintain 1970s taxes forever!

100% get that. My point overall is you're given the land for free the cost to build is within 5-10% up or down nationwide. It's not necessarily more expensive to build in CA. Probably more expensive in WY or MT because it has to ship further with no water routes. This is basic economics.

AD says

Yeah, but the HO-3 or HO-6 insurance is lower since the insurer knows that the HOA covers "master insurance"

Thanks, I may be able to use that info, as I am looking at a place to but for my daughter and I ruled out condos with high HOA fees. I will now check to see the insurance offset on any place that looks doable.

PanicanDemoralizer says

With teaser rate incentives. Why pay just $20-40k less for an 80s-90s era ranch at the full rate with no teaser?

What the fuck are you talking about boy ? These are brand new homes, and in the best part of the USA , a rural part of Florida panhandle and only a 30 minute drive to the Alabama border

"I drove by a DR Horton community northwest of Panama City Beach (about an hour away) and they were showing around $240,000 for single detached homes with garages. I suspect the HOA assessment is no more than $50 a month there."

AD says

What the fuck are you talking about boy ? These are brand new homes, and in the best part of the USA , a rural part of Florida panhandle and only a 30 minute drive to the Alabama border

I'm not talking about those, I agree 110% with what you say:

PanicanDemoralizer says

With teaser rate incentives. Why pay just $20-40k less for an 80s-90s era ranch at the full rate with no teaser?

I'm comparing what delulu used home sellers are asking for vs. the new builds YOU are talking about. And adding the fact most builders are offering builder-financed teaser incentive rates well below what qualified mortgage applicants would get for a used house from their bank.

But it was kinda of unclear and I could have worded it better.

The same thing is happening on the Space Coast. An 80s-90s Ranch is in the high $200k's - but the brand new build in the same neighborhood is going for barely over $300k with more square feet under air and new everything AND a bigger garage to boot plus the 2-year teaser rate offered by the builder which the used house seller cannot match.

This is why used home sellers are fucked in Florida but haven't realized it yet and haven't accepted post-COVID reality.

PanicanDemoralizer says

This is why used home sellers are fucked in Florida but haven't realized it yet and haven't accepted post-COVID reality.

yeah, forgot the name of the reliable poster who lives in central Florida and posts about Titusville and Merritt Island concrete blocks homes built in 1960s

but from my first hand observations, townhomes in Panama City Beach are selling if they are discounted about 20% from their all time high prices set in early 2022

PD, have you SEEN any of the garbage quality on these new builds that these asshole “builders” are putting out these days? If you’re not working with a custom builder of quality or doing it yourself, you are playing craps. Take a gander at the absolute trash these home inspectors are exposing on BadTube….

Same dude, altered username.

Rents have collapsed here. Was over $2000 easy for a two bed, even on the mainland during and a bit after COVID. Now under $1700, including some decent 90s-2000s era entire houses.

PanicanDemoralizer says

Same dude, altered username.

Rents have collapsed here. Was over $2000 easy for a two bed, even on the mainland during and a bit after COVID. Now under $1700, including some decent 90s-2000s era entire houses.

yeah you have been following the Space Coast market for a while

same here in best place on Earth (Florida panhandle) as far as rents at early 2021 levels for 3 bedroom townhomes

.

Back in the 90's, I could rent a 2-bedroom, one bath pad in TX for $240 a month.

Then shit went fucking insane.

ForcedTQ says

PD, have you SEEN any of the garbage quality on these new builds that these asshole “builders” are putting out these days? If you’re not working with a custom builder of quality or doing it yourself, you are playing craps. Take a gander at the absolute trash these home inspectors are exposing on BadTube….

Yeah, some really blow. I'm still not thinking about touching jack and shit for at least a couple of years to buy again.

My idea would be a 90s-2000s build where Grandpa and Grandma actually did something to keep up the retirement home over the past decades and, if lucky, replaced the ol' Florida Contractor Special grout-gap tile for gapless Vinyl/PVC Tile. Problem with homes older than that is no Walk-Ins. I got kids and guns and lawyers and paperwork that need to be kept under air but locked up. Hard to lock sliding/accordion doors, and then you have no space for actual clothes.

The funniest thing about Florida is the Old Person Mail Patrol. "He's usually here at 1PM. Where the hell is he! It's 2:30 already! I'm calling the Post office to report him."

Soc Sec does direct deposit these days, and probably every kind of pension is now direct deposit, so it can't be those things. But I guess they just want to see the print out summary of it all.

WookieMan says

It's not necessarily more expensive to build in CA. Probably more expensive in WY or MT because it has to ship further with no water routes. This is basic economics.

Basic economics says that massive regulation causing all sorts of restrictions means costs skyrocket. And if you want to build a whole development complex (to amortize the permits and other government-related restrictions) you'll be forced to put in subsidized "low income" units and special handicapped units and have special "green" areas. Parking will have to be in a vertical garage because heaven forbid you take up more green space. All houses now have to have hookup for solar panels. Many places disallow natural gas, so you'll be building heat-pump heating.

stereotomy says

Back in the 90's, I could rent a 2-bedroom, one bath pad in TX for $240 a month.

Then shit went fucking insane.

I rented a 1 bedroom unit for $300 (included electric and water) in 1993 in Panama City Beach, it was a very nice garage apartment

same unit likely rents for $1500

about a 5% annual increase in rent over last 32 years

ForcedTQ says

PD, have you SEEN any of the garbage quality on these new builds that these asshole “builders” are putting out these days? If you’re not working with a custom builder of quality or doing it yourself, you are playing craps. Take a gander at the absolute trash these home inspectors are exposing on BadTube….

yeah we got around a $185,000 brand new 3 bedroom, 2 car garage townhome in Panama City Beach in 2016

its not perfect but its a nice home and a very good deal

yes there were punch list items we had to take care of on our own

it also held up very good in hurricane michael with +180 mile wind gusts

and citizen insurance (essentially a state run insurance) sent an adjuster / inspector to our home to inspect it prior to approving our insurance coverage and he said its a good solid home

.

MolotovCocktail says

Homes were never, ever meant to be (near guaranteed) slot machines. Most people considered breaking even on a house was a pretty damn good deal.

You can look up addresses on Zillow to find what it'd cost per month to buy ('refi"), and what it'd cost per month to rent. It says my residence would be $7k per month to own, $4300 to rent. That's an "ownership premium" of 63%, which I think is insane. Folks are still buying.

This is why homie is not impressed when "Bay Area, Cool And Hip" homeowners Talk Smug.

B.A.C.A.H. says

MolotovCocktail says

Homes were never, ever meant to be (near guaranteed) slot machines. Most people considered breaking even on a house was a pretty damn good deal.

You can look up addresses on Zillow to find what it'd cost per month to buy ('refi"), and what it'd cost per month to rent. It says my residence would be $7k per month to won, $4300 to rent. That's an "ownership premium" of 63%, which I think is insane. Folks are still buying.

This is why homie is not impressed when "Bay Area, Cool And Hip" homeowners Talk Smug.

If they can afford it and believe the prices will rise forever, it makes sense to own even though it costs more to do so.

B.A.C.A.H. says

You can look up addresses on Zillow to find what it'd cost per month to buy ('refi"), and what it'd cost per month to rent. It says my residence would be $7k per month to won, $4300 to rent. That's an "ownership premium" of 63%, which I think is insane. Folks are still buying.

Around here, that same Zillow shows about a $2,000 "ownership premium" on a million-dollar home. if so, I cannot see why so many people are buying, especially when closing costs are added in. I would assume that the owners of million dollar homes do not want to rent them out so renting is not really a choice.

B.A.C.A.H. says

You can look up addresses on Zillow to find what it'd cost per month to buy ('refi"), and what it'd cost per month to rent. It says my residence would be $7k per month to won, $4300 to rent. That's an "ownership premium" of 63%, which I think is insane. Folks are still buying.

B.A.C.A.H. says

MolotovCocktail says

Homes were never, ever meant to be (near guaranteed) slot machines. Most people considered breaking even on a house was a pretty damn good deal.

You can look up addresses on Zillow to find what it'd cost per month to buy ('refi"), and what it'd cost per month to rent. It says my residence would be $7k per month to won, $4300 to rent. That's an "ownership premium" of 63%, which I think is insane. Folks are still buying.

This is why homie is not impressed when "Bay Area, Cool And Hip" homeowners Talk Smug.

My area of the 'vale seems particularly skewed towards better to rent. My house has a rent Zestimate™ of a a mere $5760. To buy my $2.6MM turkey, your monthly mortgage and taxes would be $15,000 and $2500. So, there's a 3x premium cost to owning by that metric.

One of the earlier themes here on Pat Net was the number of years it took paying rent to equal the purchase price of a house. For example, if a house rented for $50k per year but cost $800k the number was 16 — a fairly reasonable number. If the number was higher it was better to rent; if it was lower it was better to buy. My house is a factor of 37.

Why do people hold onto their houses even after fleeting the state? Perhaps they look at the last 30 years of ownership and assume the 7 to 10% annualized gain will hold on forever; that's better than any bonds you might buy. Another consideration is that old people might want to hold until they die so that their "kids" can inherit tax free. Either way, people are stubbornly holding excess houses and keeping the purchase prices artificially high compared to rents.

SunnyvaleCA says

Either way, people are stubbornly holding excess houses and keeping the purchase prices artificially high compared to rents.

There are various end games to housing. My mom now owns my home. It's in a trust and I will get it back and can rent it out with no mortgage. My wife is not listed in the trust. By the time my mom passes it will be $3k in rent and only about $4k/yr in taxes. Kids will be gone, so expenses are only the wife and I.

I'm basically retired and it wouldn't be this way without owning a home. And we're talking low prices on houses where I'm at in IL. Outside of tech workers that get stock options I make more than guys/gals in CA paying $1-3M for a house similar to mine OR rent. Not a brag, but I get shit on for my point of view about RE from people that don't understand it. It's made me wealthy enough to not work at 42.

My next goal is vacation/retirement property. Goal is by about 48 to be living in St. Thomas or St. John during the winter months. Stay in IL with hopefully a paid off new home that's 6 years old in spring, summer and fall.

Hated my dad, but he did teach me great financial advice. I've done well.

GNL says

If they can afford it and believe the prices will rise forever, it makes sense to own even though it costs more to do so.

Right, it's all about the expected rise in price compensating for the monthly loss in cash compared to renting the same kind of house.

When prices start falling, they are likely to keep falling down to the level actually justified by rents, as people stop betting on appreciation.

Patrick says

GNL says

If they can afford it and believe the prices will rise forever, it makes sense to own even though it costs more to do so.

Right, it's all about the expected rise in price compensating for the monthly loss in cash compared to renting the same kind of house.

When prices start falling, they are likely to keep falling down to the level actually justified by rents, as people stop betting on appreciation.

Yes, I would think so but, I also think we are in an extreme wealth/income inequality system now. No, I am not woke or some other BS. I don't think "they" were kidding when they said you won't own anything but, they were wrong about the you'll be happy part.

It’s colossal stupidity that we let turn housing into ever appreciating CC. That kind of system sinks society.

GNL says

Right, it's all about the expected rise in price compensating for the monthly loss in cash compared to renting the same kind of house.

When prices start falling, they are likely to keep falling down to the level actually justified by rents, as people stop betting on appreciation.

There's lots of stuff on the internet about AI causing elimination of white collar "knowledge" jobs. Peggy Noonan, a political commentator, penned an editorial in the weekend WSJ about the phenomenon.

Here in the BayAreaCool And Hip, I have immediate family employed at some of those household name Silicon Valley companies you all have heard of, who have front row seats to what is happening. Job eliminations at employers with revenue and profit soaring as roles are replaced by AI. A long-time friend of mine was laid off with fifteen others in a manufacturing department where the "knowledge work" was sufficiently automated to retain two engineers from the original 18, - making 16 redundant. The AI changes are real. What's happening now is the tip of the iceberg.

When I was working in hardware technology development, I suppose about 80% of the time I spent on the job was doing stuff that an unsavvy person like me could train an AI to perform. Another way of saying that is my department could reduce the number of engineers by 80% and get the same results.

All the decades that manufacturing was leaving the region (first aerospace, then computers, then semiconductors) the region's cheerleaders crowed that our region will thrive because we're a knowledge economy, where knowledge workers are in demand and the pay is high. We don't need manufacturing. We have the world at our fingertips and The Sky Is The Limit.

I get it. Some AI will need some retained knowledge workers to run it. Maybe I would have been one of the 20% to stay on in my department to do that. What about the other 80% who drive the local economy?

If this AI deployment unfolds the way it looks like it's unfolding, Silicon Valley and the Bay Area are in the direct sights of the change. Other regions' knowledge worker payrolls in jobs like paralegal, accounting, etc will be reduced. But the Cool And Hip Bay Area may be hammered, since our Knowledge Worker employment cohort is highly paid and has driven our regional economy for a long time. Laid off techies competing for a shrinking number of jobs even as colleges continue to crank out new engineers is going to hit salaries and compensation for those who land a gig.

Time will tell if the changes affect rents and house prices.

WookieMan says

Not a brag, but I get shit on for my point of view about RE from people that don't understand it. It's made me wealthy enough to not work at 42.

From your posts, it looks like your wealth is more from parental hand me downs and a highly paid wife. Didn't you say your mom bought your old house and you borrowed against your mom's stock portfolio? Are you now claiming to be a self-made real estate investor? Or is this just another of your extreme exaggerations? Leveraging your mother's money makes you a shrewd RE businessman in the same way that having a drone permit makes you an "FAA certified" expert competent enough to lecture actual pilots about flying. Is this why you have not published the promised pictures of your home build, since it would expose the house as being just another mid-sized minimum code structure?

Patrick says

When prices start falling, they are likely to keep falling down to the level actually justified by rents, as people stop betting on appreciation.

I have been hearing that since the sixties. The acid test would be to find any period in the last century where if anyone who held a home for 10 years actually lost money. I am referring to reasonably sized populated areas, not small towns where a mine, military base, or rural distribution center closed down.

Fortwaye says

It’s colossal stupidity that we let turn housing into ever appreciating CC. That kind of system sinks society.

Or just evil. Maybe the goal of lefty government is to keep the population in debt. Why else did they invent the "Reverse Mortgage" except to decrease the number of mortgage free homes?

Fortwaye says

It’s colossal stupidity that we let turn housing into ever appreciating CC. That kind of system sinks society.

What is CC?

Glock-n-Load says

What is CC?

Credit Card

Maybe I heard it first on PatNet back in the 'naughties, but for most of the history of this country, it was always more expensive to rent than to own. Then the 90's hit, and shit got seriously fucked up.

Until it becomes less expensive to own than to rent, I'll continue to rent. For appreciation and opportunity cost I have PM's and stocks. I can wait.

stereotomy says

but for most of the history of this country, it was always more expensive to rent than to own.

Just a couple thoughts.
1) It makes sense that it would be more expensive to rent than own. If you are a landlord, you have to keep the place up and you have to cashflow +.
That's just business sense...unless appreciation is the goal? When will appreciation end? Again, I think we've entered an new paradigm.
2) Maybe a large enough stock of rentals exist that have low enough debt that lower rents still cashflow?
3) The drive to own is big enough to make it this way?

B.A.C.A.H. says

Time will tell if the changes affect rents and house prices.

Other threads discussing that;

https://patrick.net/post/1382641/2024-11-18-post-labor-economy-challenge

https://patrick.net/post/1313956/2018-02-21-artificial-intelligence

https://patrick.net/post/1382702/2024-11-24-farming-robot-kills-200-000-migrant

https://patrick.net/post/1378388/2023-01-25-another-episode-hype-tech-series-with

MolotovCocktail says

Other threads discussing that;

Thank you for sharing. I missed those that were mostly posted as the backstory of what's unfolding.

Now here we are in Q3 of 2025 and the Gold Collar payroll in the Cool And Hip Bay Area Knowledge Economy is shrinking.

BigSky says

The acid test would be to find any period in the last century where if anyone who held a home for 10 years actually lost money.

Detroit, MI (pop. ~630,000): From 2006 to 2016, median home prices fell from $73,479 to $45,000, a ~38% decline, driven by the housing crash and industrial decline.

Cleveland, OH (pop. ~370,000): From 2005 to 2015, prices dropped from $112,800 to $66,000, a ~41% decrease, impacted by foreclosure waves post-2008.

Flint, MI (pop. ~95,000, borderline midsize): From 2000 to 2010, prices declined from $67,900 to $50,200, a ~26% drop, due to economic stagnation.

Las Vegas, NV (pop. ~650,000): From 2006 to 2016, prices fell from $317,000 to $200,000, a ~37% decline, hit by the subprime crisis.

But even getting the same price after 10 years is a big loss because of the inflation caused by the Fed, at least 25%.

Not to mention the realtor vig of 6%.

BigSky says

have been hearing that since the sixties. The acid test would be to find any period in the last century where if anyone who held a home for 10 years actually lost money. I am referring to reasonably sized populated areas, not small towns where a mine, military base, or rural distribution center closed down.

How about the entire state of West Virginia?

https://lindynewsletter.beehiiv.com/p/the-housing-issue-we-don-t-talk-about-a6bb

That's a great point. If these areas were halfway decent, it would really add to the housing stock. Many of these places are ideal for young families to start out - if they weren't crime-ridden, shit-school dumps.

And if they ended up gentrified and going to DINKs, then that would free up more of the closer burbs, so there would still be a beneficial impact.

MolotovCocktail says

How about the entire state of West Virginia?

Much of Upstate NY, parts of Ohio, etc. in Rustbeltia, too.

Aaron Clarey had a great intro that was similar:

"I worked at the Lumber Mill for a year while your mother waited tables part time at Earl's cafe, took my pay stub to Community Bank, and we brought our first Ranch house! You just need to bootstrappity and roll your sleeves up!"