4 ms·

IANAE but if housing prices are too high, and no one can afford to live in them, at what point or timescale does the price lower to meet demand ability? Clearly

IANAE but if housing prices are too high, and no one can afford to live in them, at what point or timescale does the price lower to meet demand ability? Clearly there are places to live in, but the prices have become so high that on one can afford them, so that means they sit empty. I would hate for a rental property to sit empty month after month. Is it greed that keeps landlords and companies hanging on to the higher prices, or is there some other dynamic I'm missing? I guess the better question now that I've written all that is this: When does competition kick in?

ericmay 5y ago
Well, basically the restaurants will close or just start charging like $50 for a burger and fries. People will find a way. Like maybe they just won't have convenience stores, or restaurants, or w/e. That'll lower the quality of life, or people will just say it's not worth it to have those things in the town. The free market (and voluntary association) is the only solution to this problem. And although I'm a pro-free market guy, I try to view things as what I think might be the best solution. Government intervention here won't work.
- SmellTheGlove 5y ago
  > Government intervention here won't work. The government has already intervened by not permitting enough new construction. There is no free market there.
  - ericmay 5y ago
    There is no truly free market anywhere anyway which isn't relevant to any conversation. And besides, you're demonstrating the point - the government already intervened. So there's no reasonable criticism of the free market to be had here, in fact, without government intervention there would be new and additional construction. Anyway. The government is made up of the citizens, it's their choice isn't it? At what point does that no longer become true? And if they've made their choice to not build more housing, then the market dynamics that follow that decision will come to bear. In this case maybe it's no stores or shops, or the citizens will have to pay extremely high prices for things.
    - SmellTheGlove 5y ago
      > And besides, you're demonstrating the point - the government already intervened. Yes, as the comment I'd responded to is worded to suggest the government hadn't yet intervened and such intervention wouldn't work. Otherwise, yeah, I agree with you.
      - ericmay 5y ago
        You’re right, I suggested that in what I wrote. I was considering further intervention.
axaxs 5y ago
That's what you'd think, but not what's happening at the moment. Rents and house prices have skyrocketed across the vast majority of the country, and nothing is sitting empty. People are paying the higher prices. What's it take to change? A rise in foreclosures and evictions. Usually caused by economic turbulence, but in this case, just as likely caused by people buying more than they could afford. I'm seeing a -ton- of this in my home city. Houses that should be about 200k selling for 300k, and some beatup Ford Aerostar in the driveway. Feels very 2008ish.
- MelvinButtsESQ 5y ago
  Those foreclosures you speak of are forthcoming over remaining part of this year and next year. The foreclosure moratorium and government mandated "you don't have to pay your mortgage payment during COVID" is ending and stupid people are in for a rude awakening when they realize that a year of mortgage payments are now due (in addition to their ongoing monthly payment). It is going to be interesting, few are talking about it. Same goes for rent moratorium. Do people think that their landlord is just going to forget the 1 year of rent they didn't pay because "they didn't have to"?? Evictions are going to sky rocket and rentors are going to be sued in numbers we may have never seen before.
  - harambae 5y ago
    >stupid people are in for a rude awakening when they realize that a year of mortgage payments are now due That's not always what happens, and in the case of COVID in particular, many will have it tacked to the end of their mortgage. see #3 "Lengthen your loan term and pay off the missed amount at the end of the extended loan term, with additional mortgage payments" [0] [0] https://themortgagereports.com/69687/cares-act-mortgage-forbearance-ending-what-to-do https://themortgagereports.com/69687/cares-act-mortgage-forb...
  - 737maxtw 5y ago
    While you are right in that we have not yet seen the foreclosure/eviction impact, I think not all of it is 'head in the sand'. At least in the US, there are more systems in place to help people who are behind. Lenders are more apt to do a modification then risk another market collapse. And, I would be willing to bet our current administration will be happy to do what they can. A failure to contain the situation will not be good for them -or- their donors. One thing we are already seeing; the CFPB is putting in safeguards in that will likely delay a number of foreclosures even further [0]. Another change is FHFA loans being eligible for interest rate reductions that wouldn't be possible under the LTV. How this 'smoothing' plays out remains to be seen. [0] https://www.housingwire.com/articles/cfpbs-roadmap-for-the-forbearance-exit/ https://www.housingwire.com/articles/cfpbs-roadmap-for-the-f...
Ccecil 5y ago
You can afford to keep empty buildings when you are making more on the property value increase overall. This is a common tactic in Coeur d'Alene with the commercial units. They leave them empty instead of lowering rents because the property value is largely based on what you can rent them for. I have been watching and there are several buildings which perpetually have empty units with for lease signs. Just started happening more with the rentals. Big investment companies came in and bought up a ton of houses at way above market value and held them (not speculation...they knocked on my parents door too). Then they either leave them empty or make vacation rentals from them. This lowers the availability of houses. It was not a coincidence that these companies came to the town April 2020-September 2020 and made these purchases...I have heard stories about the unreal prices people got for just standard houses local. So now that the availability is down they hold the houses and trickle them out slowly as the prices raise due to competitive bidding from people moving to the area who don't realize that the house they are buying isn't worth the price (nor is it able to be rented by anyone working in town at the price they need to get). If the property values stay the same then it is going to collapse to the point of tent cities. If the valuses go down not only will those who just bought houses lose a lot of money...but also those who just refinanced their houses are likely going to be underwater.
code_duck 5y ago
I lived in Breckenridge, Colorado, a rather fancy ski resort town a couple years back. At the time a large portion of service industry workers could not afford any housing at all within 45 minutes and slept in their cars in alleys near their work. Same as this, the issue is people moving in from areas with higher housing costs who can afford higher prices, while they depend on workers whose wages aren’t nearly enough to live nearby even if doubled. This is not a new phenomenon or a much different than what has been going on in cities such as Denver. It will be interesting to see whether the pandemic changes continue to have an effect on pricing near the central business district. Remote work etc is likely to make resort towns even worse in this regard.
- jumby 5y ago
  I live in a ski town, and while I agree with you on the major problems that exist (here, too), _some_ of the 'living in your car in the alley' is the ski-bum ethos and viewed as a right of passage. Live to ski!
  - code_duck 5y ago
    It’s true that mostly these are young people who choose to live there, and have party oriented lifestyles. I think packed 4 to an apartment would be more reasonable than homeless though.
    - illegalsmile 5y ago
      Having friends that patrolled, ran lift and ski bummed in the 00s and 10s that's what they'd do. Pack people in party houses/apartments. The only time you'd sleep out of a car was when you were at another resort and didn't have any connections. *These were not the people who were working in at the restaurants or retail shops.
swiley 5y ago
Eventually the market pressure causes construction or artificially constraining housing creates social and humanitarian crises like what you see in SF which will bring the market back to equilibrium in other ways.
- deleted 5y ago
  [deleted]

ericmay 5y ago

Well, basically the restaurants will close or just start charging like $50 for a burger and fries. People will find a way. Like maybe they just won't have convenience stores, or restaurants, or w/e. That'll lower the quality of life, or people will just say it's not worth it to have those things in the town. The free market (and voluntary association) is the only solution to this problem. And although I'm a pro-free market guy, I try to view things as what I think might be the best solution. Government intervention here won't work.

SmellTheGlove 5y ago
> Government intervention here won't work. The government has already intervened by not permitting enough new construction. There is no free market there.
- ericmay 5y ago
  There is no truly free market anywhere anyway which isn't relevant to any conversation. And besides, you're demonstrating the point - the government already intervened. So there's no reasonable criticism of the free market to be had here, in fact, without government intervention there would be new and additional construction. Anyway. The government is made up of the citizens, it's their choice isn't it? At what point does that no longer become true? And if they've made their choice to not build more housing, then the market dynamics that follow that decision will come to bear. In this case maybe it's no stores or shops, or the citizens will have to pay extremely high prices for things.
  - SmellTheGlove 5y ago
    > And besides, you're demonstrating the point - the government already intervened. Yes, as the comment I'd responded to is worded to suggest the government hadn't yet intervened and such intervention wouldn't work. Otherwise, yeah, I agree with you.
    - ericmay 5y ago
      You’re right, I suggested that in what I wrote. I was considering further intervention.

axaxs 5y ago

That's what you'd think, but not what's happening at the moment. Rents and house prices have skyrocketed across the vast majority of the country, and nothing is sitting empty. People are paying the higher prices. What's it take to change? A rise in foreclosures and evictions. Usually caused by economic turbulence, but in this case, just as likely caused by people buying more than they could afford. I'm seeing a -ton- of this in my home city. Houses that should be about 200k selling for 300k, and some beatup Ford Aerostar in the driveway. Feels very 2008ish.

MelvinButtsESQ 5y ago
Those foreclosures you speak of are forthcoming over remaining part of this year and next year. The foreclosure moratorium and government mandated "you don't have to pay your mortgage payment during COVID" is ending and stupid people are in for a rude awakening when they realize that a year of mortgage payments are now due (in addition to their ongoing monthly payment). It is going to be interesting, few are talking about it. Same goes for rent moratorium. Do people think that their landlord is just going to forget the 1 year of rent they didn't pay because "they didn't have to"?? Evictions are going to sky rocket and rentors are going to be sued in numbers we may have never seen before.
- harambae 5y ago
  >stupid people are in for a rude awakening when they realize that a year of mortgage payments are now due That's not always what happens, and in the case of COVID in particular, many will have it tacked to the end of their mortgage. see #3 "Lengthen your loan term and pay off the missed amount at the end of the extended loan term, with additional mortgage payments" [0] [0] https://themortgagereports.com/69687/cares-act-mortgage-forbearance-ending-what-to-do https://themortgagereports.com/69687/cares-act-mortgage-forb...
- 737maxtw 5y ago
  While you are right in that we have not yet seen the foreclosure/eviction impact, I think not all of it is 'head in the sand'. At least in the US, there are more systems in place to help people who are behind. Lenders are more apt to do a modification then risk another market collapse. And, I would be willing to bet our current administration will be happy to do what they can. A failure to contain the situation will not be good for them -or- their donors. One thing we are already seeing; the CFPB is putting in safeguards in that will likely delay a number of foreclosures even further [0]. Another change is FHFA loans being eligible for interest rate reductions that wouldn't be possible under the LTV. How this 'smoothing' plays out remains to be seen. [0] https://www.housingwire.com/articles/cfpbs-roadmap-for-the-forbearance-exit/ https://www.housingwire.com/articles/cfpbs-roadmap-for-the-f...

Ccecil 5y ago

You can afford to keep empty buildings when you are making more on the property value increase overall. This is a common tactic in Coeur d'Alene with the commercial units. They leave them empty instead of lowering rents because the property value is largely based on what you can rent them for. I have been watching and there are several buildings which perpetually have empty units with for lease signs. Just started happening more with the rentals. Big investment companies came in and bought up a ton of houses at way above market value and held them (not speculation...they knocked on my parents door too). Then they either leave them empty or make vacation rentals from them. This lowers the availability of houses. It was not a coincidence that these companies came to the town April 2020-September 2020 and made these purchases...I have heard stories about the unreal prices people got for just standard houses local. So now that the availability is down they hold the houses and trickle them out slowly as the prices raise due to competitive bidding from people moving to the area who don't realize that the house they are buying isn't worth the price (nor is it able to be rented by anyone working in town at the price they need to get). If the property values stay the same then it is going to collapse to the point of tent cities. If the valuses go down not only will those who just bought houses lose a lot of money...but also those who just refinanced their houses are likely going to be underwater.

code_duck 5y ago

I lived in Breckenridge, Colorado, a rather fancy ski resort town a couple years back. At the time a large portion of service industry workers could not afford any housing at all within 45 minutes and slept in their cars in alleys near their work. Same as this, the issue is people moving in from areas with higher housing costs who can afford higher prices, while they depend on workers whose wages aren’t nearly enough to live nearby even if doubled. This is not a new phenomenon or a much different than what has been going on in cities such as Denver. It will be interesting to see whether the pandemic changes continue to have an effect on pricing near the central business district. Remote work etc is likely to make resort towns even worse in this regard.

jumby 5y ago
I live in a ski town, and while I agree with you on the major problems that exist (here, too), _some_ of the 'living in your car in the alley' is the ski-bum ethos and viewed as a right of passage. Live to ski!
- code_duck 5y ago
  It’s true that mostly these are young people who choose to live there, and have party oriented lifestyles. I think packed 4 to an apartment would be more reasonable than homeless though.
  - illegalsmile 5y ago
    Having friends that patrolled, ran lift and ski bummed in the 00s and 10s that's what they'd do. Pack people in party houses/apartments. The only time you'd sleep out of a car was when you were at another resort and didn't have any connections. *These were not the people who were working in at the restaurants or retail shops.

swiley 5y ago

Eventually the market pressure causes construction or artificially constraining housing creates social and humanitarian crises like what you see in SF which will bring the market back to equilibrium in other ways.

deleted 5y ago
[deleted]