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Mortgage rates at 7% is pretty much the average mortgage rate going back 70 years or so. We're basically at the average mortgage rate now. The Fed screwed up by

Mortgage rates at 7% is pretty much the average mortgage rate going back 70 years or so. We're basically at the average mortgage rate now. The Fed screwed up by keeping rates too low for too long which juiced home prices such that a huge chunk of people who would like to be able to buy a home are priced out of the market. The problem, though, is that home building needs to continue in order to improve the housing supply problem (caused at least in part by the dearth of home-building during the '08-'12 period) and thus help with affordability. I tend to think that the government needs to step in here and do something to either incentivize home-building and/or at the very least do something to streamline permitting/zoning. Building codes need to be examined to see if there might be innovations that could lead to lower building costs which are currently being precluded. But keeping mortgage rates artificially low isn't the answer, that led to prices getting out of hand.

subsubzero 4y ago
100% agree: > But keeping mortgage rates artificially low isn't the answer I don't know what the solution is for the housing issue, on one hand you have people (like myself) who bought at high prices(and at low interest rates). My house will be a money loser if I try to sell, and this includes the thousands/millions? of people also in my boat(we are essentially trapped in our house and unable to move). On the other hand houses that will need to be built and houses on the market now are not selling, the cost to build a house and interest rates are too high in terms of affordability given current prices of houses. This leads to less mobility for Americans, and for those that are locked in their low rates right now(and bought in the past 7 years or so, and at lower levels pre-pandemic) would be crazy to sell which is another factor driving down supply.
- jerf 4y ago
  "I don't know what the solution is for the housing issue" To the extent that there is are "solutions", they all exist in the past now. The best solution is to stop trying to "fix" the market and take the pain now, because the efforts to avoid pain now involve lots of pain later. Unfortunately, it's already "later", and quite a bit later at that, after several previous rounds of "oh crap, we can't have rich people being slightly less rich, better goose the market again!"
Auracle 4y ago
[flagged]
- theGnuMe 4y ago
  What is your hypothesis exactly? Are you saying those 5m folks took the 3m houses?
  - dsfyu404ed 4y ago
    He's saying that while the numbers make it look like we're building homes slightly faster than the population is growing that's not the case once you count off the books immigration. So the housing deficit is getting worse, not better.
    - UncleOxidant 4y ago
      Off-the-books immigration is by definition tough to quantify. But it doesn't seem likely that illegal immigrants are either renting or buying houses in large numbers since they don't tend to have a lot of money. More likely they're doubling up with family that's already here and as such not causing a significant amount of housing demand.
      - Auracle 4y ago
        That's a huge reach. You can only "double up" so much.
        theGnuMe 4y ago
        Yeah they quadruple up or even live 10 families to a 2bdrm and sleep in shifts.
        UncleOxidant 4y ago
        A hispanic family lives next door. 1200 sq ft. house. 4 BR (it would be 3 BR but the garage was converted to a BR), 1 bathroom. At times they've had up to 12 people living there. I can't imagine it, but somehow they manage to make it work.
robocat 4y ago
> The Fed screwed up by keeping rates too low for too long which juiced home prices such that a huge chunk of people who would like to be able to buy a home are priced out of the market. I disagree: if Jane first home buyer has an income of $50000, and can only just afford $30000 per year on their mortgage, Jane will bid on a house the maximum she can afford. I agree that over the long term, with everybody acting the same as Jane, then the price of homes is mostly controlled by the interest rates. However interest rates, per se, do not affect the affordability of homes very much. There are secondary effects that do change things. However the primary market dynamic of bidding as-much-as-you-can-afford means that affordability doesn’t change much. (It also means your population is playing a zero-sum bidding game of how-much-can-we-pay-the-banks, which is bad, especially in New Zealand which doesn’t own most of its banks). Secondly, the usual answer is to increase housing supply. That would work only if there can be a super-abundance of new supply in a suburb. Think of a desirable locarion, and let’s magically create 20% more homes there. Would that fix supply? No, because the latent demand is far bigger than 20%. Why? Firstly, in my circles in Christchurch NZ, relatively well-off people own multiple homes: their primary home in the suburbs, sometimes a second home or an investment property (rented or Airbnb), ideally a holiday home somewhere which is often empty, perhaps even a town-house in a city. Secondly, in my other circles there are a lot of people sharing a home (one home split into several flats, flatting, still living with parents), so there is a huge latent demand for people that want their own home. I think that in many desirable suburbs, you could double the number of homes and prices would not shift down in the slightest. For people to own their own homes needs something new to happen. We have had a housing boom going on in Christchurch for say 5 years now, and house prices went up and up, because people bid what they can afford. Projections are for housing to increase faster than population in Christchurch, but that is not fixing affordability. Statistics: “Christchurch City's most recent population estimate was 392,000 (June 2021). The 2010/2011 earthquakes resulted in a net loss of around 21,000 people, but by 2017 the city's population had recovered to pre-earthquake levels. Projections suggest that by 2028 the population is likely to be around 417,000 under a medium growth scenario.” “In 2018, there were an estimated 148,000 households in Christchurch city. Projections suggest that this will likely increase to around 161,000 households by 2028 (medium series).” https://ccc.govt.nz/culture-and-community/statistics-and-facts/facts-stats-and-figures https://ccc.govt.nz/culture-and-community/statistics-and-fac... I don’t understand their projections, because on the same page they show a graph with more than 10000 new homes already. Also we have massive housing growth outside of Christchurch - I have seen recent large subdivisions in: Rolleston, Lincoln, West Melton, Amberley, Methvyn, etcetera.
nathanaldensr 4y ago
Sorry, but there is no "the" government. Zoning is a city and state issue with regards to state-incorporated land.

subsubzero 4y ago

100% agree: > But keeping mortgage rates artificially low isn't the answer I don't know what the solution is for the housing issue, on one hand you have people (like myself) who bought at high prices(and at low interest rates). My house will be a money loser if I try to sell, and this includes the thousands/millions? of people also in my boat(we are essentially trapped in our house and unable to move). On the other hand houses that will need to be built and houses on the market now are not selling, the cost to build a house and interest rates are too high in terms of affordability given current prices of houses. This leads to less mobility for Americans, and for those that are locked in their low rates right now(and bought in the past 7 years or so, and at lower levels pre-pandemic) would be crazy to sell which is another factor driving down supply.

jerf 4y ago
"I don't know what the solution is for the housing issue" To the extent that there is are "solutions", they all exist in the past now. The best solution is to stop trying to "fix" the market and take the pain now, because the efforts to avoid pain now involve lots of pain later. Unfortunately, it's already "later", and quite a bit later at that, after several previous rounds of "oh crap, we can't have rich people being slightly less rich, better goose the market again!"

Auracle 4y ago

[flagged]

theGnuMe 4y ago
What is your hypothesis exactly? Are you saying those 5m folks took the 3m houses?
- dsfyu404ed 4y ago
  He's saying that while the numbers make it look like we're building homes slightly faster than the population is growing that's not the case once you count off the books immigration. So the housing deficit is getting worse, not better.
  - UncleOxidant 4y ago
    Off-the-books immigration is by definition tough to quantify. But it doesn't seem likely that illegal immigrants are either renting or buying houses in large numbers since they don't tend to have a lot of money. More likely they're doubling up with family that's already here and as such not causing a significant amount of housing demand.
    - Auracle 4y ago
      That's a huge reach. You can only "double up" so much.
      - theGnuMe 4y ago
        Yeah they quadruple up or even live 10 families to a 2bdrm and sleep in shifts.
      - UncleOxidant 4y ago
        A hispanic family lives next door. 1200 sq ft. house. 4 BR (it would be 3 BR but the garage was converted to a BR), 1 bathroom. At times they've had up to 12 people living there. I can't imagine it, but somehow they manage to make it work.

robocat 4y ago

> The Fed screwed up by keeping rates too low for too long which juiced home prices such that a huge chunk of people who would like to be able to buy a home are priced out of the market. I disagree: if Jane first home buyer has an income of $50000, and can only just afford $30000 per year on their mortgage, Jane will bid on a house the maximum she can afford. I agree that over the long term, with everybody acting the same as Jane, then the price of homes is mostly controlled by the interest rates. However interest rates, per se, do not affect the affordability of homes very much. There are secondary effects that do change things. However the primary market dynamic of bidding as-much-as-you-can-afford means that affordability doesn’t change much. (It also means your population is playing a zero-sum bidding game of how-much-can-we-pay-the-banks, which is bad, especially in New Zealand which doesn’t own most of its banks). Secondly, the usual answer is to increase housing supply. That would work only if there can be a super-abundance of new supply in a suburb. Think of a desirable locarion, and let’s magically create 20% more homes there. Would that fix supply? No, because the latent demand is far bigger than 20%. Why? Firstly, in my circles in Christchurch NZ, relatively well-off people own multiple homes: their primary home in the suburbs, sometimes a second home or an investment property (rented or Airbnb), ideally a holiday home somewhere which is often empty, perhaps even a town-house in a city. Secondly, in my other circles there are a lot of people sharing a home (one home split into several flats, flatting, still living with parents), so there is a huge latent demand for people that want their own home. I think that in many desirable suburbs, you could double the number of homes and prices would not shift down in the slightest. For people to own their own homes needs something new to happen. We have had a housing boom going on in Christchurch for say 5 years now, and house prices went up and up, because people bid what they can afford. Projections are for housing to increase faster than population in Christchurch, but that is not fixing affordability. Statistics: “Christchurch City's most recent population estimate was 392,000 (June 2021). The 2010/2011 earthquakes resulted in a net loss of around 21,000 people, but by 2017 the city's population had recovered to pre-earthquake levels. Projections suggest that by 2028 the population is likely to be around 417,000 under a medium growth scenario.” “In 2018, there were an estimated 148,000 households in Christchurch city. Projections suggest that this will likely increase to around 161,000 households by 2028 (medium series).” https://ccc.govt.nz/culture-and-community/statistics-and-facts/facts-stats-and-figures https://ccc.govt.nz/culture-and-community/statistics-and-fac... I don’t understand their projections, because on the same page they show a graph with more than 10000 new homes already. Also we have massive housing growth outside of Christchurch - I have seen recent large subdivisions in: Rolleston, Lincoln, West Melton, Amberley, Methvyn, etcetera.

nathanaldensr 4y ago

Sorry, but there is no "the" government. Zoning is a city and state issue with regards to state-incorporated land.