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Real estate is so overpriced now, and so difficult to purchase that it's no wonder that people want to stay where they are once they find a place that they can

Real estate is so overpriced now, and so difficult to purchase that it's no wonder that people want to stay where they are once they find a place that they can actually afford. It almost feels like the choices are stay or be homeless. I recently decided to move to a new state on the other side of the country, purely because of the low cost of real estate there. It feels like the tipping point was recently reached, and having zero opportunity to have the place I wanted in Utah or California, pushed me to look elsewhere. Elsewhere being Arkansas.

trianglem 7y ago
You found it hard to find a cheap place in Utah?
- nitrogen 7y ago
  Real estate in Utah is very expensive now by local standards.
- pontifier 7y ago
  Yes. The difference in price is truly unbelievable. I had to call the agent to make sure they hadn't left a zero off of the asking price. Equivalent places I was looking at in Utah were going to cost several million dollars.
  - drewmate 7y ago
    Your story sounds like those of Californians who moved to Utah a decade ago. Before you know it, people in Little Rock coffee shops will be complaining about the influx of Utahns selling their modest West Jordan homes to buy mansions in Arkansas. Utah has remained a hidden gem for years, but external market pressures are driving up prices, and supply is surprisingly constrained by the local geography (mountains and bodies of water constricting available land in the SLC metro.) Utah doesn't enjoy the same wide open space of many inland states, at least in the developed areas where people want to live.
  - Excel_Wizard 7y ago
    How big of a house do you need? https://www.zillow.com/homedetails/14455-S-Muirwood-Cir-Herriman-UT-84096/63127471_zpid/ https://www.zillow.com/homedetails/14455-S-Muirwood-Cir-Herr...
    - nitrogen 7y ago
      You also have to consider distance to the city center or recreational areas, lot size, neighborhood type, architecture, etc.
    - pontifier 7y ago
      So... I'm getting over 200,000 sqft of warehouse and office space. I'm planning on living there which will actually make it, by far, the largest private home in the entire US. I need that much space for prototyping some of my inventions and intend to open the worlds largest Makerspace, hackerspace, and artist commune.
skohan 7y ago
Everyone is talking about healthcare, but I think affordable housing needs to be the next big public issue to tackle. It seems like this is acting as a lever in wealth inequality, since less and less young people are even able to imagine owning a home in their lifetime, and many in the position to buy treat it as an investment instrument, and thus have the incentive to drive the price up rapidly, putting it farther out of reach of everyone else. I'm not against profit, but with something like housing which is a fundamental need, it seems like some effort must be made to build a system which makes it attainable for average people.
- euroclydon 7y ago
  You can find affordable housing, it’s just just the densely spaced spec homes that deteriorate quickly. We’d be better off from a value perspective if developers could only carve out subdivisions but had to sell the lots to, home buyers who could then choose the house style and materials. Get rid of the HOAs and their covenants requiring uniformity. The builder extracts a huge margin by using the cheapest materials. A home is the worst purchase to do this way, since the economic lifetime is 75 years but the actual lifetime can be longer.
  - deleted 7y ago
    [deleted]
  - zip1234 7y ago
    We should not allow developments in such a style as the lack of allowed change in such neighborhoods means that a neighborhood can never move up. The density and walkability is permanently fixed at a low level. Single family zoning and such home owners associations and cities don't allow, for example, people to turn a house into a duplex, which would increase affordability for all involved.
- nemo44x 7y ago
  The country is made up mainly of affordable housing. It’s certain areas that are so expensive because you’re competing with many high earning professionals. In many cases a pair of them. Not everyone can live in NYC or SF. Saying that, people need to consider the low interest world we live in. When their parents bought their home years ago, the interest rate was very likely 10% or higher. Today it’s 3.5% and even lower. This drives prices up. The biggest issue is getting a down payment. I believe a combination of lower standard down payments and new mortgage terms of 40-50 years would make housing more attainable for a lot of people. I also agree, more development is needed.
nemo44x 7y ago
Real estate will always be priced at what buyers in an area can afford per month when factoring in home price, mortgage interest, and taxes. Areas of CA and UT have appreciated faster than other locations mainly due to the popularity of living there for professionals. But a big part of the real estate price boom has been declining interest rates. When you’re looking at property that costs many hundreds of thousands and into the 1m range, even a single interest point can have a dramatic effect. Because interest rates have fallen so much, value has moved into the cost of the real estate. If interest rates were to rise to 8% for example, you’d see the pricing of these homes cut in half. It’s what the market can afford monthly that sets the price. Of course if interest rates were to rise like that, an all cash purchase begins to make sense.
- HammockWarrior 7y ago
  Even if you didn't purchase all cash, with a lower house price you can more easily pay off the house early by paying extra each month. The way it works now keeps people paying monthly way longer.
- pjmorris 7y ago
  > Real estate will always be priced at what buyers in an area can afford per month when factoring in home price, mortgage interest, and taxes This was the model that led me to believe there were problems in the housing market in ~2005. Well, technically, it was the concrete evidence that this model was being violated. House prices in South Florida, where I lived at the time, tripled in ~5 years, but incomes did not. Robert Shiller had a graph of housing prices normalized to income from 1890-2005 in the NYT in 2005. Price-Income generally stayed flat, with the exception of a bump after WW2, the S&L crisis in the late 80's, and an enormous launch in the early 2000's. As I see it, current housing prices are being forced out of the traditional model by the effects of the Fed's QE efforts.
  - nemo44x 7y ago
    > As I see it, current housing prices are being forced out of the traditional model by the effects of the Fed's QE efforts. Very likely true. The financial crisis messed everything up. Driving interest rates down and QE stemmed the bleeding but it is only prolonging the pain. Possibly we are in a new normal of low-to-negative interest rates for the extended future. If this is the case, expect homes to continue to rise in value and for people with access to cheap capital to continue to pull away from everyone else. I'm not optimistic interest rates will rise as inflation stays low. They tried raising rates last year and it shook the markets and there just doesn't seem to be a stomach for a prolonged reckoning.

trianglem 7y ago

You found it hard to find a cheap place in Utah?

nitrogen 7y ago
Real estate in Utah is very expensive now by local standards.
pontifier 7y ago
Yes. The difference in price is truly unbelievable. I had to call the agent to make sure they hadn't left a zero off of the asking price. Equivalent places I was looking at in Utah were going to cost several million dollars.
- drewmate 7y ago
  Your story sounds like those of Californians who moved to Utah a decade ago. Before you know it, people in Little Rock coffee shops will be complaining about the influx of Utahns selling their modest West Jordan homes to buy mansions in Arkansas. Utah has remained a hidden gem for years, but external market pressures are driving up prices, and supply is surprisingly constrained by the local geography (mountains and bodies of water constricting available land in the SLC metro.) Utah doesn't enjoy the same wide open space of many inland states, at least in the developed areas where people want to live.
- Excel_Wizard 7y ago
  How big of a house do you need? https://www.zillow.com/homedetails/14455-S-Muirwood-Cir-Herriman-UT-84096/63127471_zpid/ https://www.zillow.com/homedetails/14455-S-Muirwood-Cir-Herr...
  - nitrogen 7y ago
    You also have to consider distance to the city center or recreational areas, lot size, neighborhood type, architecture, etc.
  - pontifier 7y ago
    So... I'm getting over 200,000 sqft of warehouse and office space. I'm planning on living there which will actually make it, by far, the largest private home in the entire US. I need that much space for prototyping some of my inventions and intend to open the worlds largest Makerspace, hackerspace, and artist commune.

skohan 7y ago

Everyone is talking about healthcare, but I think affordable housing needs to be the next big public issue to tackle. It seems like this is acting as a lever in wealth inequality, since less and less young people are even able to imagine owning a home in their lifetime, and many in the position to buy treat it as an investment instrument, and thus have the incentive to drive the price up rapidly, putting it farther out of reach of everyone else. I'm not against profit, but with something like housing which is a fundamental need, it seems like some effort must be made to build a system which makes it attainable for average people.

euroclydon 7y ago
You can find affordable housing, it’s just just the densely spaced spec homes that deteriorate quickly. We’d be better off from a value perspective if developers could only carve out subdivisions but had to sell the lots to, home buyers who could then choose the house style and materials. Get rid of the HOAs and their covenants requiring uniformity. The builder extracts a huge margin by using the cheapest materials. A home is the worst purchase to do this way, since the economic lifetime is 75 years but the actual lifetime can be longer.
- deleted 7y ago
  [deleted]
- zip1234 7y ago
  We should not allow developments in such a style as the lack of allowed change in such neighborhoods means that a neighborhood can never move up. The density and walkability is permanently fixed at a low level. Single family zoning and such home owners associations and cities don't allow, for example, people to turn a house into a duplex, which would increase affordability for all involved.
nemo44x 7y ago
The country is made up mainly of affordable housing. It’s certain areas that are so expensive because you’re competing with many high earning professionals. In many cases a pair of them. Not everyone can live in NYC or SF. Saying that, people need to consider the low interest world we live in. When their parents bought their home years ago, the interest rate was very likely 10% or higher. Today it’s 3.5% and even lower. This drives prices up. The biggest issue is getting a down payment. I believe a combination of lower standard down payments and new mortgage terms of 40-50 years would make housing more attainable for a lot of people. I also agree, more development is needed.

nemo44x 7y ago

Real estate will always be priced at what buyers in an area can afford per month when factoring in home price, mortgage interest, and taxes. Areas of CA and UT have appreciated faster than other locations mainly due to the popularity of living there for professionals. But a big part of the real estate price boom has been declining interest rates. When you’re looking at property that costs many hundreds of thousands and into the 1m range, even a single interest point can have a dramatic effect. Because interest rates have fallen so much, value has moved into the cost of the real estate. If interest rates were to rise to 8% for example, you’d see the pricing of these homes cut in half. It’s what the market can afford monthly that sets the price. Of course if interest rates were to rise like that, an all cash purchase begins to make sense.

HammockWarrior 7y ago
Even if you didn't purchase all cash, with a lower house price you can more easily pay off the house early by paying extra each month. The way it works now keeps people paying monthly way longer.
pjmorris 7y ago
> Real estate will always be priced at what buyers in an area can afford per month when factoring in home price, mortgage interest, and taxes This was the model that led me to believe there were problems in the housing market in ~2005. Well, technically, it was the concrete evidence that this model was being violated. House prices in South Florida, where I lived at the time, tripled in ~5 years, but incomes did not. Robert Shiller had a graph of housing prices normalized to income from 1890-2005 in the NYT in 2005. Price-Income generally stayed flat, with the exception of a bump after WW2, the S&L crisis in the late 80's, and an enormous launch in the early 2000's. As I see it, current housing prices are being forced out of the traditional model by the effects of the Fed's QE efforts.
- nemo44x 7y ago
  > As I see it, current housing prices are being forced out of the traditional model by the effects of the Fed's QE efforts. Very likely true. The financial crisis messed everything up. Driving interest rates down and QE stemmed the bleeding but it is only prolonging the pain. Possibly we are in a new normal of low-to-negative interest rates for the extended future. If this is the case, expect homes to continue to rise in value and for people with access to cheap capital to continue to pull away from everyone else. I'm not optimistic interest rates will rise as inflation stays low. They tried raising rates last year and it shook the markets and there just doesn't seem to be a stomach for a prolonged reckoning.