8 ms·

Good riddance. If large-scale house flipping took off, we might actually end up in a scenario where housing was treated as a speculative asset, with empty house

by _xnmw 5y ago

Good riddance. If large-scale house flipping took off, we might actually end up in a scenario where housing was treated as a speculative asset, with empty houses getting flipped between investors looking to make a quick buck, further lowering the supply of actual places to live (because housing units remain empty while being flipped), driving up the cost for families who just want a place to live. Oh wait...

h2odragon 5y ago
My wife did some work for the Census last year. Our extremely rural neighborhood has lots of unused housing, some for a decade+. That work got her out to see some of the places not visible from the roads, and increased our awareness of the scale of the problem. At a guess, in our county, 20%+ of the housing is idle, owned by out-of-state companies, some of whom pay property taxes and some dont. The county isn't auctioning off because of tax default anymore, no one was buying these places at $100. Many of these places are complete teardowns now; some actually no longer exist, having burned or apparently been scrapped. The tax assessments on those have not been adjusted, for the few i checked. I think the housing market is so fucked no one really grasps the scale of the problem.
- jason-phillips 5y ago
  > I think the housing market is so fucked no one really grasps the scale of the problem. I don't think I agree with this assessment. I live in a very rural area two hours northwest of Austin, literally in the middle of nowhere. I've studied the local economy and understand how things work here. I think the characteristics you've identified in the rural housing supply are not unusual and also not as serious in a practical sense as you seem to be indicating. For example, in San Saba, Texas, 20-30% of the households are under the federal poverty threshold. The median household income in the town of San Saba is about $32K/yr. People just don't have any excess cash so the maintenance on dwellings is neglected. That means folks become extremely thrifty and resourceful patching what needs to be patched, very cheaply, if not for free. Some dwellings simply aren't maintained and one day won't be there anymore. Families live on small budgets, don't require much and generally just "get by". The municipal and county governments have very small budgets but extremely resourceful staff who accomplish a lot with very little. Everyone comes together as a community when needed (see: February 2021 freeze event) and it all works very efficiently, actually. To someone who is not from here and who doesn't understand that dynamic, they might see those properties as you described and believe a tragedy was unfolding. But that doesn't reflect reality on the ground vis-a-vis my neighbors.
  - h2odragon 5y ago
    I'm in rural TN; not that different a place at all. I'm not speaking of family owned homes tho. I'm talking about the Abandoned, uninhabited homes that are now owned by some out of state thing per county records... which is a lot of them. LLC's and INCs whom I believe have the properties valued highly on some book somewhere and haven't done anything to maintain them. Our local Craigslists always have "Property inspector" jobs listed. You go take some cell phone shots of buildings to prove they exist. The people I have spoken to who have done those say they didn't bother going to the places as often as not and took pics of some neighbors house. Even when people actually do that job and document the true state of these properties I can't help but suspect the information is buried or lost because thats not the narrative management would want. The actual family owned housing stock got better the last two years, our population doubled for the last 3/4ths of 2020, and all those relatives did a lot of renovation and rebuilding.
    - jason-phillips 5y ago
      I actually used to work with people from East Tennessee for the past 2.5 years. They described how the Knoxville area was growing like crazy with folks from the coastal states moving there. I understand what you're saying. The ripple effect created by that dynamic would unjustifiably inflate local property values, reducing affordability for locals, creating synthetic demand by reducing supply as the land could otherwise be auctioned.
      - h2odragon 5y ago
        West TN; we've got that happening too. The neighbor's $750k McMansion has ludicrous "market value" implications for the hunting camp trailers beside it and the doublewide up the road. and (ahem) East TN is more "western Arlington VA" IMO. I said rural. I'd have to walk a half mile to get a decent rifle shot at a neighbor. It's getting too crowded here.
        SteveGerencser 5y ago
        You just described my road here in Henderson County,TN. We bought 100 acres and built a dream home. In the last years (ish) 4 new single wides went in and a couple of new smaller homes. We were told during the entire build that we will never get out of it what we are putting into it and we don't care. We aren't building for resale, selling it is our kid's problem. But there are so many abandoned places out here. People have just walked away and never looked back. We had one across the road that over the last 10 years the woods has reclaimed and unless you knew that it was there, you would drive right past it.
- toast0 5y ago
  > The county isn't auctioning off because of tax default anymore, no one was buying these places at $100. What's the issue with out of state companies owning rural properties nobody wants? If the market is heating up, maybe it's time to run tax auctions again. In WA state, if there's no bidders, the county retains the land and will auction it again when someone expresses interest (or it some cases, can sell it to a neighboring land holder without auction, like for the 1930s era tax foreclosure I bought last year)
  - h2odragon 5y ago
    They'll eventually be reclaimed and re-titled one way or another I'm sure. I'm concerned with the larger implications, if my supposition is correct that they are being accounted more valuable than they actually are. These are the leftovers of Countrywide mortgage bonds and such I think.
    - toast0 5y ago
      Makes sense now, thanks!
- gnopgnip 5y ago
  Vacant housing is a problem, but across the US less than 2% of single family homes are vacant
  - rsj_hn 5y ago
    Vacant housing is only a problem in constrained areas. The vast majority of the U.S. is not constrained. Your summer cabin in Montana isn't depriving anyone of a home, because it isn't driving up prices. Your unoccupied condo in Manhattan is depriving someone of a home, but I suspect that there are not so many of these.
    - asdff 5y ago
      When they did the vacancy tax in Vancouver it only affected a couple hundred properties out of like two hundred thousand in the market.
      - rsj_hn 5y ago
        Yeah, when most people talk about vacant homes, they don't understand that almost all of those homes are just between tenants. They are not actually being left vacant.
- asdff 5y ago
  That's been true for rural areas since the green revolution in the 1950s changed agriculture and manufacturing went overseas. Even if there is still a mine in the hills outside of town, there are fewer jobs at that mine than there were when the town was built out 100 years ago. Jobs generate demand for homes. Homes cost a lot in areas where there's been more jobs added than homes. In the last decade, the bay area has added seven jobs per every unit of housing constructed.
- reaperducer 5y ago
  in our county, 20%+ of the housing is idle, owned by out-of-state companies, some of whom pay property taxes and some dont. I've seen this personally, too. A house I rented until a couple of years ago was owned by a Chinese company, which also owned half of the other houses on the block. We all paid rent to the same LLC that forwarded the cash overseas, and did almost zero maintenance. I think the housing market is so fucked no one really grasps the scale of the problem. One thing I don't see discusses very often is the affect that large "master-planned communities" have on a city's housing prices. I've seen at least three cities where mega developers like Howard Hughes Corp own massive tracts of land, but instead of building houses, sit on that land waiting for the price of housing to go up. Sometimes the developers are very open about it. Sometimes not. But instead of allowing a free market to develop 5,000 new homes, they develop one lot here and one lot there. Or worse — I've seen them build hundreds of homes and then sit on them, empty and vacant, waiting for prices to climb high enough to put the houses on the market. Again, a drip at a time, to keep the housing supply artificially small so they can boost their profits. Meanwhile, people have nowhere to live.
  - nebula8804 5y ago
    I don't understand why the US does not push back on Chinese ownership of property. From what I understand, there are so many restrictions of owning land in China as a foreigner: 1. The property must be residential 2. If the property is commercial, a foreigner must incorporate in China 3. You may own only one property 4. You must possess a long-term visa 5. You cannot be a landlord, as a foreigner 6. You must pay a 1% deposit and an initial 30% of the purchase price to the seller in RMB, if you are obtaining a mortgage I think there needs to be a campaign to educate the US population on how lopsided the system is. Only then will politicians start to get massive heat to enact at least equivalent restrictions. Right now its all the rich and foreigners picking away at the carcass that is America.
libertine 5y ago
Half way through I was already clicking "Reply" thinking "...is this guy for real?!", only to see the "Oh wait..." The amount of social media content revolving around "how I became a milionaire/how I reached my first million" and the common factor is "I bought a house in 201*", then I'd say something is a bit off... Either there's massive speculation, or 1 million isn't what it used to be, or worst: both.
- lotsofpulp 5y ago
  Or $1M has different purchasing power in different places.
- cwilkes 5y ago
  The problem with those scenarios is that for every one that made a killing in real estate there’s plenty that barely broke even. The winners think they have some special sauce … maybe rhey did, maybe theg didn’t. The problem is that their blogging about it attracts the people that want to get rich quick and they are the ones likely to lose their shirts.
- AdrianB1 5y ago
  It's just a bubble: owners want the value to increase, county or city wants the value to increase (to get more tax money), everyone wants the supply to be very limited to increase the price and the value, it's a Munchausen pulling himself by the hair from the swamp. In this case 1 million is not what it used to be.
TristanBall 5y ago
Honestly, this is the most important point. Rampant speculation, amount other things, is already destroying housing affordability ( Hi from Melbourne Australia, where I'll probably need $150k for a deposit on nothing special at all, in an inconvenient location ). It's massively increasing wealth inequality, at a rate that seems to be increasing. If this kind of algorithmic speculation took off, not only are we likely to see the algorithms themselves form feedback loops to push prices up far higher than otherwise, even if they don't sell directly to each other, I believe it will drastically increase the size and rate of the boom bust cycle.. and we're doing that to _peoples homes_. The scope of human suffering possible here is huge, the societal damage massive. This needs to be so very very illegal.

by _xnmw 5y ago

h2odragon 5y ago

My wife did some work for the Census last year. Our extremely rural neighborhood has lots of unused housing, some for a decade+. That work got her out to see some of the places not visible from the roads, and increased our awareness of the scale of the problem. At a guess, in our county, 20%+ of the housing is idle, owned by out-of-state companies, some of whom pay property taxes and some dont. The county isn't auctioning off because of tax default anymore, no one was buying these places at $100. Many of these places are complete teardowns now; some actually no longer exist, having burned or apparently been scrapped. The tax assessments on those have not been adjusted, for the few i checked. I think the housing market is so fucked no one really grasps the scale of the problem.

jason-phillips 5y ago
> I think the housing market is so fucked no one really grasps the scale of the problem. I don't think I agree with this assessment. I live in a very rural area two hours northwest of Austin, literally in the middle of nowhere. I've studied the local economy and understand how things work here. I think the characteristics you've identified in the rural housing supply are not unusual and also not as serious in a practical sense as you seem to be indicating. For example, in San Saba, Texas, 20-30% of the households are under the federal poverty threshold. The median household income in the town of San Saba is about $32K/yr. People just don't have any excess cash so the maintenance on dwellings is neglected. That means folks become extremely thrifty and resourceful patching what needs to be patched, very cheaply, if not for free. Some dwellings simply aren't maintained and one day won't be there anymore. Families live on small budgets, don't require much and generally just "get by". The municipal and county governments have very small budgets but extremely resourceful staff who accomplish a lot with very little. Everyone comes together as a community when needed (see: February 2021 freeze event) and it all works very efficiently, actually. To someone who is not from here and who doesn't understand that dynamic, they might see those properties as you described and believe a tragedy was unfolding. But that doesn't reflect reality on the ground vis-a-vis my neighbors.
- h2odragon 5y ago
  I'm in rural TN; not that different a place at all. I'm not speaking of family owned homes tho. I'm talking about the Abandoned, uninhabited homes that are now owned by some out of state thing per county records... which is a lot of them. LLC's and INCs whom I believe have the properties valued highly on some book somewhere and haven't done anything to maintain them. Our local Craigslists always have "Property inspector" jobs listed. You go take some cell phone shots of buildings to prove they exist. The people I have spoken to who have done those say they didn't bother going to the places as often as not and took pics of some neighbors house. Even when people actually do that job and document the true state of these properties I can't help but suspect the information is buried or lost because thats not the narrative management would want. The actual family owned housing stock got better the last two years, our population doubled for the last 3/4ths of 2020, and all those relatives did a lot of renovation and rebuilding.
  - jason-phillips 5y ago
    I actually used to work with people from East Tennessee for the past 2.5 years. They described how the Knoxville area was growing like crazy with folks from the coastal states moving there. I understand what you're saying. The ripple effect created by that dynamic would unjustifiably inflate local property values, reducing affordability for locals, creating synthetic demand by reducing supply as the land could otherwise be auctioned.
    - h2odragon 5y ago
      West TN; we've got that happening too. The neighbor's $750k McMansion has ludicrous "market value" implications for the hunting camp trailers beside it and the doublewide up the road. and (ahem) East TN is more "western Arlington VA" IMO. I said rural. I'd have to walk a half mile to get a decent rifle shot at a neighbor. It's getting too crowded here.
      - SteveGerencser 5y ago
        You just described my road here in Henderson County,TN. We bought 100 acres and built a dream home. In the last years (ish) 4 new single wides went in and a couple of new smaller homes. We were told during the entire build that we will never get out of it what we are putting into it and we don't care. We aren't building for resale, selling it is our kid's problem. But there are so many abandoned places out here. People have just walked away and never looked back. We had one across the road that over the last 10 years the woods has reclaimed and unless you knew that it was there, you would drive right past it.
toast0 5y ago
> The county isn't auctioning off because of tax default anymore, no one was buying these places at $100. What's the issue with out of state companies owning rural properties nobody wants? If the market is heating up, maybe it's time to run tax auctions again. In WA state, if there's no bidders, the county retains the land and will auction it again when someone expresses interest (or it some cases, can sell it to a neighboring land holder without auction, like for the 1930s era tax foreclosure I bought last year)
- h2odragon 5y ago
  They'll eventually be reclaimed and re-titled one way or another I'm sure. I'm concerned with the larger implications, if my supposition is correct that they are being accounted more valuable than they actually are. These are the leftovers of Countrywide mortgage bonds and such I think.
  - toast0 5y ago
    Makes sense now, thanks!
gnopgnip 5y ago
Vacant housing is a problem, but across the US less than 2% of single family homes are vacant
- rsj_hn 5y ago
  Vacant housing is only a problem in constrained areas. The vast majority of the U.S. is not constrained. Your summer cabin in Montana isn't depriving anyone of a home, because it isn't driving up prices. Your unoccupied condo in Manhattan is depriving someone of a home, but I suspect that there are not so many of these.
  - asdff 5y ago
    When they did the vacancy tax in Vancouver it only affected a couple hundred properties out of like two hundred thousand in the market.
    - rsj_hn 5y ago
      Yeah, when most people talk about vacant homes, they don't understand that almost all of those homes are just between tenants. They are not actually being left vacant.
asdff 5y ago
That's been true for rural areas since the green revolution in the 1950s changed agriculture and manufacturing went overseas. Even if there is still a mine in the hills outside of town, there are fewer jobs at that mine than there were when the town was built out 100 years ago. Jobs generate demand for homes. Homes cost a lot in areas where there's been more jobs added than homes. In the last decade, the bay area has added seven jobs per every unit of housing constructed.
reaperducer 5y ago
in our county, 20%+ of the housing is idle, owned by out-of-state companies, some of whom pay property taxes and some dont. I've seen this personally, too. A house I rented until a couple of years ago was owned by a Chinese company, which also owned half of the other houses on the block. We all paid rent to the same LLC that forwarded the cash overseas, and did almost zero maintenance. I think the housing market is so fucked no one really grasps the scale of the problem. One thing I don't see discusses very often is the affect that large "master-planned communities" have on a city's housing prices. I've seen at least three cities where mega developers like Howard Hughes Corp own massive tracts of land, but instead of building houses, sit on that land waiting for the price of housing to go up. Sometimes the developers are very open about it. Sometimes not. But instead of allowing a free market to develop 5,000 new homes, they develop one lot here and one lot there. Or worse — I've seen them build hundreds of homes and then sit on them, empty and vacant, waiting for prices to climb high enough to put the houses on the market. Again, a drip at a time, to keep the housing supply artificially small so they can boost their profits. Meanwhile, people have nowhere to live.
- nebula8804 5y ago
  I don't understand why the US does not push back on Chinese ownership of property. From what I understand, there are so many restrictions of owning land in China as a foreigner: 1. The property must be residential 2. If the property is commercial, a foreigner must incorporate in China 3. You may own only one property 4. You must possess a long-term visa 5. You cannot be a landlord, as a foreigner 6. You must pay a 1% deposit and an initial 30% of the purchase price to the seller in RMB, if you are obtaining a mortgage I think there needs to be a campaign to educate the US population on how lopsided the system is. Only then will politicians start to get massive heat to enact at least equivalent restrictions. Right now its all the rich and foreigners picking away at the carcass that is America.

libertine 5y ago

Half way through I was already clicking "Reply" thinking "...is this guy for real?!", only to see the "Oh wait..." The amount of social media content revolving around "how I became a milionaire/how I reached my first million" and the common factor is "I bought a house in 201*", then I'd say something is a bit off... Either there's massive speculation, or 1 million isn't what it used to be, or worst: both.

lotsofpulp 5y ago
Or $1M has different purchasing power in different places.
cwilkes 5y ago
The problem with those scenarios is that for every one that made a killing in real estate there’s plenty that barely broke even. The winners think they have some special sauce … maybe rhey did, maybe theg didn’t. The problem is that their blogging about it attracts the people that want to get rich quick and they are the ones likely to lose their shirts.
AdrianB1 5y ago
It's just a bubble: owners want the value to increase, county or city wants the value to increase (to get more tax money), everyone wants the supply to be very limited to increase the price and the value, it's a Munchausen pulling himself by the hair from the swamp. In this case 1 million is not what it used to be.

TristanBall 5y ago

Honestly, this is the most important point. Rampant speculation, amount other things, is already destroying housing affordability ( Hi from Melbourne Australia, where I'll probably need $150k for a deposit on nothing special at all, in an inconvenient location ). It's massively increasing wealth inequality, at a rate that seems to be increasing. If this kind of algorithmic speculation took off, not only are we likely to see the algorithms themselves form feedback loops to push prices up far higher than otherwise, even if they don't sell directly to each other, I believe it will drastically increase the size and rate of the boom bust cycle.. and we're doing that to _peoples homes_. The scope of human suffering possible here is huge, the societal damage massive. This needs to be so very very illegal.