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In California you have Prop 13 causing people to stay put. If you bought a house anywhere close to the coast more than 6 years ago you’ve likely seen 50-100% in

by xfour 7y ago

In California you have Prop 13 causing people to stay put. If you bought a house anywhere close to the coast more than 6 years ago you’ve likely seen 50-100% in value increase. Therefore if you move you’d pay that same increase proportionally in property tax. In addition you have 6% Realtors fees to sell plus staging and being out of the house for open houses etc. the math just doesn’t add up.

grandmczeb 7y ago
Rent control has a similar effect as well.
- skohan 7y ago
  Yes I live in an European capital with fairly strong rent control, and a competitive housing market, and everyone I know is pretty convinced they will die in their current apartment.
Hydraulix989 7y ago
This is a rather unique situation that only benefits a small fraction of people in the US. The article is mostly focusing on trends in the American midwest, and the effects of people being priced out of superstar cities and forced to stay where they are where the CoL is still reasonable because they did not get in on the bubbly pyramid scheme soon enough.
MuffinFlavored 7y ago
> 6% realtors fee I have a feeling that will get automated away in the next 5-10 years something fierce. More than it already is being by Redfin, etc. Realtors don’t deserve more than $25-40/hr in most cases, let alone 6% of my home value.
- scarejunba 7y ago
  Wouldn't you want to say "My Zillow prediction is $1.2 million, you get 20% of any more than that if you sell by June but only this low rate otherwise"? Anyone with true ability would take the deal. Aligning the incentives etc. If you flatrate it, they don't have an incentive to find you a big buyer.
  - perlpimp 7y ago
    Not sure how many purchases go for cash only but I gather that bank won't give mortgage if price of the house higher than appraised one, since it won't recover the value in case of the default ?
    - evanpw 7y ago
      They won't loan you more than X% of the appraised value, but you can make that up with the down payment (or pay the whole thing in cash, as you say).
      - scarface74 7y ago
        But magically, if you know the right collection of real estate agent, appraisers, and mortgage brokers, the house always appraises for what you need it to in order for the loan to go through.
        bluGill 7y ago
        True, but that right collection will also ensure the price you need isn't unreasonable. If the house is worth $300,000 and you need $301,500 that is in the margin of error (which I doubt is statically calculated, but if it was). If you need $500,000 on the same house you won't get it.
        scarface74 7y ago
        Maybe they will post 2008. But you would be surprised at how those same combination of people would be complicit in the loan process far outside the margin of error back then.
  - matt_morgan 7y ago
    There's something in here but 1) Zillow/Redfin predictions bounce all over the place based (I think) on recent local sales 2) Good real estate agents are good at estimating actual selling prices. I don't know if "ability" in a real estate agent results in a house being sold for more than it's worth.
- JamesBarney 7y ago
  On avg they make $24.18/hr, so $25-40 would actually be a pay bump. https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-agents.htm https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-...
  - Broken_Hippo 7y ago
    Not only that, but an actually hourly rate would allow folks to have more financial security. Unfortunately, folks in a range of sales positions can have weeks without pay if they don't sell anything. This is especially bad with car and house sales - thousands one pay period and absolutely zero the next.
    - sliken 7y ago
      Had a friend doing real estate for awhile. The owner knew damn well which were the easy sales and which were hard, slow, and/or required a ton of work. As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours. The large majority of the agents made minimal money and had to fight of the scraps.
      - pram 7y ago
        The glengarry leads are for closers only.
        chongli 7y ago
        That’s one of the best movies of all time! Somehow I knew it would come up as soon as we started talking about real estate agents.
      - rchaud 7y ago
        > As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours. > The large majority of the agents made minimal money and had to fight of the scraps. This mirrors the structure of the broader economy so in a perverse way, it makes sense.
- AnimalMuppet 7y ago
  homie.com is already doing that.
sliken 7y ago
Heh, that's exactly why I'm not moving. I bought in 1998, a small "first" home. I paid it off pretty quick. Now I'd have to pay 3-4X what I paid for a noticeable upgrade (1000 ft^2 to 1400 ft^2), which I could afford. But the increase in taxes would be pretty substantial. Seems whacky that two neighbors with identically valued homes could easily pay different property taxes by 10x. That seems to be the real problem, nobody wants to move and get nailed by the increased taxes.
- tropo 7y ago
  This is also clogging the roads with traffic, wasting our time in traffic, and polluting the air. If you can't afford to move closer to a new job, you'll have to commute.
tonyedgecombe 7y ago
It was quite a few years ago now but I think I paid 1.5% on the sale of my previous house in the UK. I'm always surprised you don't have a more competitive market in the US.
- pjc50 7y ago
  The US has cartelized markets and an inefficient title system.
  - sk5t 7y ago
    US title insurance really is the worst. Who exactly has ever collected on that contract for a residence--maybe one in 10,000?
freddie_mercury 7y ago
Are realtor fees higher now than the were in the past? If not, that's not an explanation. Do Californians move less than people from other states? If not, Prop 13 isn't an explanation.

by xfour 7y ago

grandmczeb 7y ago

Rent control has a similar effect as well.

skohan 7y ago
Yes I live in an European capital with fairly strong rent control, and a competitive housing market, and everyone I know is pretty convinced they will die in their current apartment.

Hydraulix989 7y ago

This is a rather unique situation that only benefits a small fraction of people in the US. The article is mostly focusing on trends in the American midwest, and the effects of people being priced out of superstar cities and forced to stay where they are where the CoL is still reasonable because they did not get in on the bubbly pyramid scheme soon enough.

MuffinFlavored 7y ago

> 6% realtors fee I have a feeling that will get automated away in the next 5-10 years something fierce. More than it already is being by Redfin, etc. Realtors don’t deserve more than $25-40/hr in most cases, let alone 6% of my home value.

scarejunba 7y ago
Wouldn't you want to say "My Zillow prediction is $1.2 million, you get 20% of any more than that if you sell by June but only this low rate otherwise"? Anyone with true ability would take the deal. Aligning the incentives etc. If you flatrate it, they don't have an incentive to find you a big buyer.
- perlpimp 7y ago
  Not sure how many purchases go for cash only but I gather that bank won't give mortgage if price of the house higher than appraised one, since it won't recover the value in case of the default ?
  - evanpw 7y ago
    They won't loan you more than X% of the appraised value, but you can make that up with the down payment (or pay the whole thing in cash, as you say).
    - scarface74 7y ago
      But magically, if you know the right collection of real estate agent, appraisers, and mortgage brokers, the house always appraises for what you need it to in order for the loan to go through.
      - bluGill 7y ago
        True, but that right collection will also ensure the price you need isn't unreasonable. If the house is worth $300,000 and you need $301,500 that is in the margin of error (which I doubt is statically calculated, but if it was). If you need $500,000 on the same house you won't get it.
        scarface74 7y ago
        Maybe they will post 2008. But you would be surprised at how those same combination of people would be complicit in the loan process far outside the margin of error back then.
- matt_morgan 7y ago
  There's something in here but 1) Zillow/Redfin predictions bounce all over the place based (I think) on recent local sales 2) Good real estate agents are good at estimating actual selling prices. I don't know if "ability" in a real estate agent results in a house being sold for more than it's worth.
JamesBarney 7y ago
On avg they make $24.18/hr, so $25-40 would actually be a pay bump. https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-agents.htm https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-...
- Broken_Hippo 7y ago
  Not only that, but an actually hourly rate would allow folks to have more financial security. Unfortunately, folks in a range of sales positions can have weeks without pay if they don't sell anything. This is especially bad with car and house sales - thousands one pay period and absolutely zero the next.
  - sliken 7y ago
    Had a friend doing real estate for awhile. The owner knew damn well which were the easy sales and which were hard, slow, and/or required a ton of work. As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours. The large majority of the agents made minimal money and had to fight of the scraps.
    - pram 7y ago
      The glengarry leads are for closers only.
      - chongli 7y ago
        That’s one of the best movies of all time! Somehow I knew it would come up as soon as we started talking about real estate agents.
    - rchaud 7y ago
      > As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours. > The large majority of the agents made minimal money and had to fight of the scraps. This mirrors the structure of the broader economy so in a perverse way, it makes sense.
AnimalMuppet 7y ago
homie.com is already doing that.

sliken 7y ago

Heh, that's exactly why I'm not moving. I bought in 1998, a small "first" home. I paid it off pretty quick. Now I'd have to pay 3-4X what I paid for a noticeable upgrade (1000 ft^2 to 1400 ft^2), which I could afford. But the increase in taxes would be pretty substantial. Seems whacky that two neighbors with identically valued homes could easily pay different property taxes by 10x. That seems to be the real problem, nobody wants to move and get nailed by the increased taxes.

tropo 7y ago
This is also clogging the roads with traffic, wasting our time in traffic, and polluting the air. If you can't afford to move closer to a new job, you'll have to commute.

tonyedgecombe 7y ago

It was quite a few years ago now but I think I paid 1.5% on the sale of my previous house in the UK. I'm always surprised you don't have a more competitive market in the US.

pjc50 7y ago
The US has cartelized markets and an inefficient title system.
- sk5t 7y ago
  US title insurance really is the worst. Who exactly has ever collected on that contract for a residence--maybe one in 10,000?

freddie_mercury 7y ago

Are realtor fees higher now than the were in the past? If not, that's not an explanation. Do Californians move less than people from other states? If not, Prop 13 isn't an explanation.