11 ms·

The US Housing Market Has Become an Impossible Mess

50 points by jawns 3y ago

joeconway 3y ago
https://archive.ph/2023.11.02-091422/https://www.bloomberg.com/news/articles/2023-11-02/housing-crisis-gets-worse-for-americans-on-mortgage-lock-in-effect https://archive.ph/2023.11.02-091422/https://www.bloomberg.c...
dcdc123 3y ago
https://archive.ph/l1xzv https://archive.ph/l1xzv
poulsbohemian 3y ago
Maybe we have a patience problem? My first house was not ideal, but I did what I could to build equity in it. My current house is the worst house in one of the best neighborhoods. It seems to me like so many people are chasing the dream Disney sold them on the world rather than realizing they might have to compromise. Likewise, I bet a year from now a lot of the housing glut will have come unstuck again - so maybe you have to wait a year. Life is always happening - job changes, mom passes away, it's time to downsize, it's time to upsize - people buy and sell because life changes. Sure, interest rates are higher than they were, but in my market it is a buyer's paradise - more inventory than we've had in at least 4 years, take your pick. This is honestly a great time for people who have felt shut out by competition to be buying - in some markets. And that's my final point of emphasis - national stories on real estate only tell part of the story, as each market will have unique nuances. I'd recommend talking to a real estate professional to understand what's actually happening in your local market, but this is HN and you all think us Realtors are useless freeloaders.
- jchonphoenix 3y ago
  To be fair, I used to run pricing at one of the ibuyers. 95% of realtors have no idea what they're talking about and the other 5% are just as likely to tell you whatever they think will get you to buy vs what they know to be reality
  - lainga 3y ago
    But they still all had jobs, right? So does it matter that much? Or is there some other force keeping them from losing their hides to competent realtors?
    - brewdad 3y ago
      Lack of information. Most buyers will only buy a home a few times in their lives and often in completely different markets. You only know your realtor is good or bad well after the fact. Excluding the obviously bad ones but they tend to fall away quickly.
    - scruple 3y ago
      I mean, yes. My MIL was a good realtor and retired early. Both of the homes I bought in California since meeting my wife, my actual realtor was useless as fuck and I went on MLS myself with my MIL to sort out the local market and find what was right for our needs. My agents wanted to sell me homes they could double dip on both times. In one case, she could've pulled it off but she was so incompetent that she didn't understand what we were looking for.
- hasbot 3y ago
  This comment is quite a wild ride so much so that I read it twice. I'll just focus on your first point: patience. You might be right there but as you pointed out the last four years have been rough for buyers and patience can only last so long. Gotta understand a buyer getting traumatized by having to bid on a house they haven't even toured, buyers given only 15 minutes to view a house, 20+ offers on a house, offering $20k over asking and still not getting it. With no end in sight.
  - underseacables 3y ago
    That's the market at work. Not everyone can live downtown in a walkable neighborhood. Last thing we need is the government putting mandates on how much you can sell your home for.
    - dml2135 3y ago
      Sounds like the market isn't quite working right if there is such a mismatch between supply and demand.
- laurencerowe 3y ago
  US realtors are undoubtedly useless freeloaders. Other countries do just fine with 1-1.5% realtor commissions while in the US they are 5-6%, that’s about $75k on a median home in SF!
- babelthuap 3y ago
  [dead]
- hiAndrewQuinn 3y ago
  > I'd recommend talking to a real estate professional to understand what's actually happening in your local market, but this is HN and you all think us Realtors are useless freeloaders. I'll take you up on that. Is there a way to post a specific price I want to pay, and then pay the realtor x% of the difference between what I set and what I actually pay? For example, if I set $400,000 and they find me a place at $300,000, maybe I could pay them $25,000 at a 25% difference.
  - lotsofpulp 3y ago
    You are able to write that contract and try to find an agent that accepts it.
- hiddencost 3y ago
  Home ownership has gotten massively less accessible. It's not a patience problem. Most of an entire generation will never own a home.
- vkdelta 3y ago
  What is your market?
- itchyouch 3y ago
  To address your latter point, realtors absolutely bring value to a transaction. The world isn’t quite as black or white. What is up for debate and highly contested is whether the commissions collected are commensurate with that value. The old pre-internet world had deep informational asymmetry via the MLS. Realtors were magical in that they could bring forth magical houses at magical price points and the commissions “felt” like value. And more than being a facilitator, the realtor also played part as pseudo-therapist and mind reader reading situational cues to find good fits for their clients. However, I’d argue that several things have sullied the relationship over time. 1. The low-ish barrier to entry to become a realtor. Made for a lot of professionals that could coast on value adding activities. So the client who feels that they would have never found or sold their dream property or deal has become less and less so. 2. The democratization of information via the internet has pushed the labor of searching for properties to the client. 3. The democratization of loan broker services via the internet have reduced what a seasoned buyer would have to go through to obtain financing. So this has reduced the realtor from value adder along the whole process to merely door opening facilitator. Now that the genie is out of the bottle, it’s not going back, but the question is, is the value offered today, still commensurate with percentages charged as Realestate prices continually go up?
  - bequanna 3y ago
    > To address your latter point, realtors absolutely bring value to a transaction. The average home is ~$425k and a commission is 5%. I've never met any Realtor that brought $22k in value to a simple single family home transaction.
    - lotsoweiners 3y ago
      At least in my area the last time I bought a house that 5% was split between the seller and buyer agent. Seller got 3% and buyer got 2%.
- manuelabeledo 3y ago
  > ... but this is HN and you all think us Realtors are useless freeloaders Realtors in the US, when compared to those in pretty much any other first world country, are definitely overcharging for their services, and, according to at least one judge, they colluded to keep commissions artificially high [0] > It seems to me like so many people are chasing the dream Disney sold them on the world rather than realizing they might have to compromise. And why is that? It maddens me that, generation after generation, people have been told to aim high, get a job, work hard, get a degree, move out, see the world, etc. Turns out, now people in their thirties have to "compromise" or "settle" on buying their first homes at half the size, twice the price, and ten years later than their parents, likely earning a relative third less as well. [0] https://www.cbsnews.com/news/realtors-liable-for-1-8-billion-for-high-commissions-jury-finds https://www.cbsnews.com/news/realtors-liable-for-1-8-billion...
  - bryanlarsen 3y ago
    > half the size A typical starter home in the 70's and 80's was 1200 square feet. I don't think people today are buying 600 square foot houses.
    - BadCookie 3y ago
      I have heard it claimed that people did not used to include the basement in the square footage of a home, which leads to some apples and oranges comparisons in these kinds of statistics. But I’m not sure if it’s true.
      - rpgwaiter 3y ago
        That's true, my house seems tiny by official sq. foot but it has a basement that doubles the usable space
  - ProxCoques 3y ago
    > It maddens me that, generation after generation, people have been told to aim high, get a job, work hard, get a degree, move out, see the world, etc. Turns out, now people in their thirties have to "compromise" or "settle" Well, it's the generation after Reagan came in with the whole monetarist trickle-down thing, but yes. Sometimes I think the toxicity of this situation (and it's not just the US) fuels in large part the tendency for people to believe in conspiracy theories about secretive cabals keeping them down. And in a way, it's kinda true too when it comes to housing. You're told you're living in a land of democratic opportunity, wealth and justice. Yet somehow...
- riku_iki 3y ago
  your story is about winning lottery of being born and buying house when they were 5 times cheaper, and now pretending to be some kind of wise man.
- lotsoweiners 3y ago
  > more inventory than we've had in at least 4 years Not in my area. Very few people are selling because no one wants to trade a 3% mortgage for a 7% mortgage.
- giardini 3y ago
  FWIW one might search for a house that has an transferable (assumable) mortgage. So the buyer picks up the loan where the seller left off. This would preserve the (presumably) lower interest rate of the seller's home loan. From https://www.forbes.com/advisor/mortgages/can-you-transfer-a-mortgage-to-another-person/ https://www.forbes.com/advisor/mortgages/can-you-transfer-a-... "Loans backed by the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) and Department of Veterans Affairs (VA) are typically assumable. Conventional mortgages, on the other hand, usually aren’t assumable. Instead, conventional mortgages typically come with a due-on-sale clause—meaning the loan must be paid off if you want to transfer the property title."
mindslight 3y ago
Highest rates in a "quarter of a century" indeed. Thanks Bush, Obama, and Trump. We really needed those low rates supporting elective wars for the oil empire, bailouts for the Wall Street extractionists, and then juicing the stonks to pretend the "economy" was unaffected by the pandemic. Now we've got multiple generations who grew up thinking 5% interest is "high", and a society full of impossible situations. While I'm fond of the Austrian school of economics, history has seemingly shown that such true austerity is politically untenable - my above gripes are actually just acts in the larger pattern of post Bretton Woods looting. Modern Monetary Theory seems to be the only attempt at a way out that is actually talking about unbinding us from this martingale of austerity for Main Street plus massive continual handouts for the banks and Wall Street. The government has played these "hands off" interest rate games long enough - it's time to leave rates at the moderate level they are currently at and spend direct stimulus on things our society actually needs (which on this topic is building more housing).
- theandrewbailey 3y ago
  > spend direct stimulus on things our society actually needs (on this topic, housing). When governments put money into a thing, that thing will have insanely high prices. Why would sellers lower prices when they know that Uncle Sam will pay any price? Didn't you notice that high housing prices are a big part of the problem we already have? And you suggest a solution that will make it worse? 5% interest rates will change things for the better, and maybe we can phase out the mortgage interest tax deduction, too.
  - mindslight 3y ago
    My suggestion to spend on housing is obviously to build more supply, not to bid up existing stock. Bidding up existing stock is exactly what the profligate monetary policy of the past two decades has done. Yes, the prices of construction materials will go up. This is called a price signal, indicating that more of a thing is needed. I personally will not be happy about higher prices. But the pain created by this is due to economic damage that has already occurred and needs to be realized, rather than continuing to kick the can down the road as it has been. I'm ambivalent about the mortgage interest tax deduction. People act like it's some amazing cut-from-whole-cloth subsidy, but from a business context it's just a regular straightforward deduction of a customary expense.
fulafel 3y ago
From the global perspective US housing is opulently roomy, iow energy-economically wasteful, even in the "well off western countries" peer group. (See eg https://homescopes.com/average-home-size/ https://homescopes.com/average-home-size/) And it correspondingly shows in domestic energy use as well. In the climate crisis the direction could use a change.
- readthenotes1 3y ago
  I don't know why you're downvoted as your statement is spot on. In terms of housing affordability, the dominance of mcmansions with small yards (but big enough for a swimming pool in the back) and large houses certainly reduces supply for first home buyers. And, cities suffer because supplying utilities (light, gas, water, roads, trash, sewer, etc) all cost more because of the large horizontal footprint.
  - theluketaylor 3y ago
    Not just the dominance, but the legal requirement for. Height restrictions, floor area ratio, lot coverage, setbacks, parking minimums, square footage minimums, lot size minimums, and lots of other zone requirements all contribute to a floor on the price of housing. There are plenty of really good requirements like firebreaks and egress points, but not everything should to be enforced by zoning. Many of these things should be allowed to be controlled by the market. If people truly want 2 car garages and 1/2 acre lots they can pay for it. Making it the legal minimum to construct massively distorts the market. Zoning massively benefits the existing occupants of a location and when there is a housing crisis just makes matters so much worse.
- CapstanRoller 3y ago
  This is due to zoning laws. Many people desperately want smaller housing, but it's effectively illegal everywhere in the USA. The only alternative is to buy rural land and try to get creative with the law (e.g. your tiny home on an existing rusted old trailer frame is considered a "remodel", etc) or simply build a small cabin and hope no one from the government comes to bulldoze it. Even success here means you're stuck far away from jobs, infrastructure, etc. Existing small houses are priced as high (or higher) than new-build McMansions. See also: "missing middle" https://youtube.com/watch?v=SfsCniN7Nsc https://youtube.com/watch?v=SfsCniN7Nsc
mullingitover 3y ago
There is an answer to this problem, and it's public housing. Not the designed-to-fail model that the US has historically implemented, however. There are other, very successful, public housing systems that show how it can be done successfully. We can basically copy Singapore and Vienna's homework.
- mattnewton 3y ago
  I think the answer is to stop forbidding the kinds of housing that would increase supply. But higher density housing is illegal and disliked by current residents who fear their property values decreasing as supply increases and poor people move in, so they fight tooth and nail to keep supply restricted in areas that would most benefit from density.
  - bradleyjg 3y ago
    I don’t think higher density decreases prices. On the contrary a plot of land that previously could only have a single family home but now can have a six story apartment building is more valuable. The homeowners just don’t want to live next to the apartment building or move.
    - hiAndrewQuinn 3y ago
      But a six story apartment can now house six families. If a city has 10,000 families and 10,000 single family houses, and just 1,000 of those single family houses become 6 story apartments, there are now 15,000 living places people can choose between. That is called "an increase in quantity supplied", and the supply curve slopes downward. You see where I'm going with this.
      - Spivak 3y ago
        It's less rosy than this because those 6 story apartments are built on credit where the valuation of the building is based off the market rents. If rent goes down the bank comes-a-calling telling you that your LTV dropped and you have to put up more collateral. The building owners just straight up can't afford to do this so they're stuck between keeping rents high and accepting vacancies which limits their revenue and foreclosure. The spice must flow, property valuations must go up or the whole thing collapses. It's why non-SF-esque cities only allow expansion in-line with population growth or a little less because they will immediately be tarred and feathered if they make everyone's mortgage underwater. To be clear this isn't a good thing, but no one wants to blink first and start another 2008.
purpleblue 3y ago
The biggest issue with 0% interest rates is that it let the stock market skyrocket. From 2009, the returns on some stocks like FAANGs are 20X or more, in less than 15 years. This created a huge, ridiculous income gap between the haves (ie. those with tech stocks) and the have nots (everyone else). Everyone with exposure to tech stocks got extremely rich, including hedge funds. So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. That raised the price of houses to unaffordable levels, and now hedge funds with all their tech wealth are buying homes to turn most people into renters. There's no room for the Have Nots to buy houses anymore. If you don't currently have a house, and you don't make millions on the stock market, there's no way you're ever going to be able to afford a house. We need a housing crash, but the Fed will never allow it, and hedge funds know this. That's why supply remains tight. Only rich people are currently buying houses, and it won't change regardless of interest rates. Hedge funds have to suffer catastrophic losses in order for supply to reenter the market.
- RhysU 3y ago
  > So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. "Nice place!" I said to many of my professors. "How'd you afford this part of town?" "Oh, housing crashes happen periodically" said the professors. "Find where you want to be, save money outside the markets, and just wait." So I rented too small a place for over 5 years, saved, and waited. Sure enough, Covid tanked prices and interest rates yet my down payment was fine because I had kept it outside of the markets. This approach is not hard. It just can take a decade.
carabiner 3y ago
But the GDP grew 4.9% last quarter, better than expected.
patja 3y ago
Would be nice to see some energy around ideas like eliminating the stepped up cost basis on inherited housing and using that new tax revenue to fund social housing.
- onlyrealcuzzo 3y ago
  Would be better to fix housing then to fund social housing and break it even further for the largest subset of the population (everyone not extremely rich or extremely poor). YMMV.
Izikiel43 3y ago
Because the US doesn't build apartment buildings en masse. It's a solved problem, but US people dislike the solution.
- hiAndrewQuinn 3y ago
  It's true. I'm continually amazed by the tall apartment buildings we call "concrete suburbs" here in Finland. What other people as plain, boring, unadorned, I see as one of the most powerful levers of equality out there.
- mnky9800n 3y ago
  Most apartments in the United States also sucks completely compared to anywhere else because they are not walkable to anything. They also are very dehumanising. Every usa apartment I lived in had mold issues, crackheads, managers who did nothing, managers who threatened to throw me out when I asked them to do things like take care of the mold. And one apartment had this huge owl that would fly around the complex catching rats. That was pretty cool actually. All the flats I've lived in outside of the USA (Tokyo, Berlin, Oslo, Brest, Utrecht) were super walkable, had landlords that treated me like a person, and was not made out of cardboard. I guess my point is either get a flat outside of the USA or get one with a bad ass owl.
  - Izikiel43 3y ago
    That owl sounds like a cool feature, I only have coyotes come to visit. There are nice apartments in the USA, I'm in Seattle, everyone of my friends live in apartments and they are nice. I live in an old building from the 60s, but the apartment is great. The problem is that there aren't enough apartments.
- taylodl 3y ago
  We don't?! In my city they've been building multi-block apartment buildings en masse for several years now yet the rents are still rising. Seems like every other week another multi-hundred unit is being built.
francisofascii 3y ago
If you are trying to buy a house now and either are getting outbid, or priced out, you unfortunately have a few realistic options, none of them ideal. 1) Wait to see if the market crashes and hope your job is still intact, 2) Set your sites on a less desirable neighborhood with a bad school district. 3) Buy a small or major fixer upper in a good neighborhood, or 4) Move to a lower COL city. Each of these are a tough pill to swallow and will depend on each situation. Waiting for our leaders to fix our broken housing policy is not a realistic option. It could get worse. We chose option 4. It took some adjusting, but are used to it now. We would still be renting otherwise.
- HDThoreaun 3y ago
  > Waiting for our leaders to fix our broken housing policy is not a realistic option. California is at least trying to fix their broken housing policy. No clue if they'll succeed but I think it's realistically possible.
  - francisofascii 3y ago
    True, they might fix it eventually. But how many years of your life are you going to wait?
- RhysU 3y ago
  Notice 2, 3, and 4 distribute conscientious talent across the country in a way that might well be net additive. For 2, the purchaser will likely improve the neighborhood and schools. For 3 they improve the housing stock. For 4 they bring desirable skills to employers who cannot otherwise afford to pay for such skills. Proverbially "Go west, young [person]!" and all that.
  - onecommentman 3y ago
    There is also still the option of new build. It was common for popular magazines like Sunset and other regional magazines publishing in the 1930s and 1940s to include basic blueprints/layouts for houses you could build yourself or have built. Cottages by today’s US standards, but perfectly fine starter homes. You need buildable land but, say, rural US doesn’t have that as a problem. One of the material advantages of staying around your hometown if you were born in those areas is you find out about land opportunities from family and friends and get steered to the right builders or they help in your build-your-own. End up house-rich, not house-poor. If we still had a culture of formal coming-of-age rites, building your own small house on a little gifted land would be a good one.
deleted 3y ago
[deleted]
klipklop 3y ago
All this is solved by heavily taxing private equity when it comes to SFH real estate holdings. Force them to sell.
underseacables 3y ago
I'm not an economist, but it would seem the culprit is the federal reserve. You cannot force someone to sell a home, anymore than you can force someone to buy. But the phone reserve can stay out of the marketplace and let the market choose interest rates. I don't quite understand it, but it just seems like the federal reserve is the culprit here

50 points by jawns 3y ago

https://archive.ph/2023.11.02-091422/https://www.bloomberg.com/news/articles/2023-11-02/housing-crisis-gets-worse-for-americans-on-mortgage-lock-in-effect https://archive.ph/2023.11.02-091422/https://www.bloomberg.c...

dcdc123 3y ago

https://archive.ph/l1xzv https://archive.ph/l1xzv

poulsbohemian 3y ago

Maybe we have a patience problem? My first house was not ideal, but I did what I could to build equity in it. My current house is the worst house in one of the best neighborhoods. It seems to me like so many people are chasing the dream Disney sold them on the world rather than realizing they might have to compromise. Likewise, I bet a year from now a lot of the housing glut will have come unstuck again - so maybe you have to wait a year. Life is always happening - job changes, mom passes away, it's time to downsize, it's time to upsize - people buy and sell because life changes. Sure, interest rates are higher than they were, but in my market it is a buyer's paradise - more inventory than we've had in at least 4 years, take your pick. This is honestly a great time for people who have felt shut out by competition to be buying - in some markets. And that's my final point of emphasis - national stories on real estate only tell part of the story, as each market will have unique nuances. I'd recommend talking to a real estate professional to understand what's actually happening in your local market, but this is HN and you all think us Realtors are useless freeloaders.

jchonphoenix 3y ago
To be fair, I used to run pricing at one of the ibuyers. 95% of realtors have no idea what they're talking about and the other 5% are just as likely to tell you whatever they think will get you to buy vs what they know to be reality
- lainga 3y ago
  But they still all had jobs, right? So does it matter that much? Or is there some other force keeping them from losing their hides to competent realtors?
  - brewdad 3y ago
    Lack of information. Most buyers will only buy a home a few times in their lives and often in completely different markets. You only know your realtor is good or bad well after the fact. Excluding the obviously bad ones but they tend to fall away quickly.
  - scruple 3y ago
    I mean, yes. My MIL was a good realtor and retired early. Both of the homes I bought in California since meeting my wife, my actual realtor was useless as fuck and I went on MLS myself with my MIL to sort out the local market and find what was right for our needs. My agents wanted to sell me homes they could double dip on both times. In one case, she could've pulled it off but she was so incompetent that she didn't understand what we were looking for.
hasbot 3y ago
This comment is quite a wild ride so much so that I read it twice. I'll just focus on your first point: patience. You might be right there but as you pointed out the last four years have been rough for buyers and patience can only last so long. Gotta understand a buyer getting traumatized by having to bid on a house they haven't even toured, buyers given only 15 minutes to view a house, 20+ offers on a house, offering $20k over asking and still not getting it. With no end in sight.
- underseacables 3y ago
  That's the market at work. Not everyone can live downtown in a walkable neighborhood. Last thing we need is the government putting mandates on how much you can sell your home for.
  - dml2135 3y ago
    Sounds like the market isn't quite working right if there is such a mismatch between supply and demand.
laurencerowe 3y ago
US realtors are undoubtedly useless freeloaders. Other countries do just fine with 1-1.5% realtor commissions while in the US they are 5-6%, that’s about $75k on a median home in SF!
babelthuap 3y ago
[dead]
hiAndrewQuinn 3y ago
> I'd recommend talking to a real estate professional to understand what's actually happening in your local market, but this is HN and you all think us Realtors are useless freeloaders. I'll take you up on that. Is there a way to post a specific price I want to pay, and then pay the realtor x% of the difference between what I set and what I actually pay? For example, if I set $400,000 and they find me a place at $300,000, maybe I could pay them $25,000 at a 25% difference.
- lotsofpulp 3y ago
  You are able to write that contract and try to find an agent that accepts it.
hiddencost 3y ago
Home ownership has gotten massively less accessible. It's not a patience problem. Most of an entire generation will never own a home.
vkdelta 3y ago
What is your market?
itchyouch 3y ago
To address your latter point, realtors absolutely bring value to a transaction. The world isn’t quite as black or white. What is up for debate and highly contested is whether the commissions collected are commensurate with that value. The old pre-internet world had deep informational asymmetry via the MLS. Realtors were magical in that they could bring forth magical houses at magical price points and the commissions “felt” like value. And more than being a facilitator, the realtor also played part as pseudo-therapist and mind reader reading situational cues to find good fits for their clients. However, I’d argue that several things have sullied the relationship over time. 1. The low-ish barrier to entry to become a realtor. Made for a lot of professionals that could coast on value adding activities. So the client who feels that they would have never found or sold their dream property or deal has become less and less so. 2. The democratization of information via the internet has pushed the labor of searching for properties to the client. 3. The democratization of loan broker services via the internet have reduced what a seasoned buyer would have to go through to obtain financing. So this has reduced the realtor from value adder along the whole process to merely door opening facilitator. Now that the genie is out of the bottle, it’s not going back, but the question is, is the value offered today, still commensurate with percentages charged as Realestate prices continually go up?
- bequanna 3y ago
  > To address your latter point, realtors absolutely bring value to a transaction. The average home is ~$425k and a commission is 5%. I've never met any Realtor that brought $22k in value to a simple single family home transaction.
  - lotsoweiners 3y ago
    At least in my area the last time I bought a house that 5% was split between the seller and buyer agent. Seller got 3% and buyer got 2%.
manuelabeledo 3y ago
> ... but this is HN and you all think us Realtors are useless freeloaders Realtors in the US, when compared to those in pretty much any other first world country, are definitely overcharging for their services, and, according to at least one judge, they colluded to keep commissions artificially high [0] > It seems to me like so many people are chasing the dream Disney sold them on the world rather than realizing they might have to compromise. And why is that? It maddens me that, generation after generation, people have been told to aim high, get a job, work hard, get a degree, move out, see the world, etc. Turns out, now people in their thirties have to "compromise" or "settle" on buying their first homes at half the size, twice the price, and ten years later than their parents, likely earning a relative third less as well. [0] https://www.cbsnews.com/news/realtors-liable-for-1-8-billion-for-high-commissions-jury-finds https://www.cbsnews.com/news/realtors-liable-for-1-8-billion...
- bryanlarsen 3y ago
  > half the size A typical starter home in the 70's and 80's was 1200 square feet. I don't think people today are buying 600 square foot houses.
  - BadCookie 3y ago
    I have heard it claimed that people did not used to include the basement in the square footage of a home, which leads to some apples and oranges comparisons in these kinds of statistics. But I’m not sure if it’s true.
    - rpgwaiter 3y ago
      That's true, my house seems tiny by official sq. foot but it has a basement that doubles the usable space
- ProxCoques 3y ago
  > It maddens me that, generation after generation, people have been told to aim high, get a job, work hard, get a degree, move out, see the world, etc. Turns out, now people in their thirties have to "compromise" or "settle" Well, it's the generation after Reagan came in with the whole monetarist trickle-down thing, but yes. Sometimes I think the toxicity of this situation (and it's not just the US) fuels in large part the tendency for people to believe in conspiracy theories about secretive cabals keeping them down. And in a way, it's kinda true too when it comes to housing. You're told you're living in a land of democratic opportunity, wealth and justice. Yet somehow...
riku_iki 3y ago
your story is about winning lottery of being born and buying house when they were 5 times cheaper, and now pretending to be some kind of wise man.
lotsoweiners 3y ago
> more inventory than we've had in at least 4 years Not in my area. Very few people are selling because no one wants to trade a 3% mortgage for a 7% mortgage.
giardini 3y ago
FWIW one might search for a house that has an transferable (assumable) mortgage. So the buyer picks up the loan where the seller left off. This would preserve the (presumably) lower interest rate of the seller's home loan. From https://www.forbes.com/advisor/mortgages/can-you-transfer-a-mortgage-to-another-person/ https://www.forbes.com/advisor/mortgages/can-you-transfer-a-... "Loans backed by the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) and Department of Veterans Affairs (VA) are typically assumable. Conventional mortgages, on the other hand, usually aren’t assumable. Instead, conventional mortgages typically come with a due-on-sale clause—meaning the loan must be paid off if you want to transfer the property title."

mindslight 3y ago

Highest rates in a "quarter of a century" indeed. Thanks Bush, Obama, and Trump. We really needed those low rates supporting elective wars for the oil empire, bailouts for the Wall Street extractionists, and then juicing the stonks to pretend the "economy" was unaffected by the pandemic. Now we've got multiple generations who grew up thinking 5% interest is "high", and a society full of impossible situations. While I'm fond of the Austrian school of economics, history has seemingly shown that such true austerity is politically untenable - my above gripes are actually just acts in the larger pattern of post Bretton Woods looting. Modern Monetary Theory seems to be the only attempt at a way out that is actually talking about unbinding us from this martingale of austerity for Main Street plus massive continual handouts for the banks and Wall Street. The government has played these "hands off" interest rate games long enough - it's time to leave rates at the moderate level they are currently at and spend direct stimulus on things our society actually needs (which on this topic is building more housing).

theandrewbailey 3y ago
> spend direct stimulus on things our society actually needs (on this topic, housing). When governments put money into a thing, that thing will have insanely high prices. Why would sellers lower prices when they know that Uncle Sam will pay any price? Didn't you notice that high housing prices are a big part of the problem we already have? And you suggest a solution that will make it worse? 5% interest rates will change things for the better, and maybe we can phase out the mortgage interest tax deduction, too.
- mindslight 3y ago
  My suggestion to spend on housing is obviously to build more supply, not to bid up existing stock. Bidding up existing stock is exactly what the profligate monetary policy of the past two decades has done. Yes, the prices of construction materials will go up. This is called a price signal, indicating that more of a thing is needed. I personally will not be happy about higher prices. But the pain created by this is due to economic damage that has already occurred and needs to be realized, rather than continuing to kick the can down the road as it has been. I'm ambivalent about the mortgage interest tax deduction. People act like it's some amazing cut-from-whole-cloth subsidy, but from a business context it's just a regular straightforward deduction of a customary expense.

fulafel 3y ago

From the global perspective US housing is opulently roomy, iow energy-economically wasteful, even in the "well off western countries" peer group. (See eg https://homescopes.com/average-home-size/ https://homescopes.com/average-home-size/) And it correspondingly shows in domestic energy use as well. In the climate crisis the direction could use a change.

readthenotes1 3y ago
I don't know why you're downvoted as your statement is spot on. In terms of housing affordability, the dominance of mcmansions with small yards (but big enough for a swimming pool in the back) and large houses certainly reduces supply for first home buyers. And, cities suffer because supplying utilities (light, gas, water, roads, trash, sewer, etc) all cost more because of the large horizontal footprint.
- theluketaylor 3y ago
  Not just the dominance, but the legal requirement for. Height restrictions, floor area ratio, lot coverage, setbacks, parking minimums, square footage minimums, lot size minimums, and lots of other zone requirements all contribute to a floor on the price of housing. There are plenty of really good requirements like firebreaks and egress points, but not everything should to be enforced by zoning. Many of these things should be allowed to be controlled by the market. If people truly want 2 car garages and 1/2 acre lots they can pay for it. Making it the legal minimum to construct massively distorts the market. Zoning massively benefits the existing occupants of a location and when there is a housing crisis just makes matters so much worse.
CapstanRoller 3y ago
This is due to zoning laws. Many people desperately want smaller housing, but it's effectively illegal everywhere in the USA. The only alternative is to buy rural land and try to get creative with the law (e.g. your tiny home on an existing rusted old trailer frame is considered a "remodel", etc) or simply build a small cabin and hope no one from the government comes to bulldoze it. Even success here means you're stuck far away from jobs, infrastructure, etc. Existing small houses are priced as high (or higher) than new-build McMansions. See also: "missing middle" https://youtube.com/watch?v=SfsCniN7Nsc https://youtube.com/watch?v=SfsCniN7Nsc

mullingitover 3y ago

There is an answer to this problem, and it's public housing. Not the designed-to-fail model that the US has historically implemented, however. There are other, very successful, public housing systems that show how it can be done successfully. We can basically copy Singapore and Vienna's homework.

mattnewton 3y ago
I think the answer is to stop forbidding the kinds of housing that would increase supply. But higher density housing is illegal and disliked by current residents who fear their property values decreasing as supply increases and poor people move in, so they fight tooth and nail to keep supply restricted in areas that would most benefit from density.
- bradleyjg 3y ago
  I don’t think higher density decreases prices. On the contrary a plot of land that previously could only have a single family home but now can have a six story apartment building is more valuable. The homeowners just don’t want to live next to the apartment building or move.
  - hiAndrewQuinn 3y ago
    But a six story apartment can now house six families. If a city has 10,000 families and 10,000 single family houses, and just 1,000 of those single family houses become 6 story apartments, there are now 15,000 living places people can choose between. That is called "an increase in quantity supplied", and the supply curve slopes downward. You see where I'm going with this.
    - Spivak 3y ago
      It's less rosy than this because those 6 story apartments are built on credit where the valuation of the building is based off the market rents. If rent goes down the bank comes-a-calling telling you that your LTV dropped and you have to put up more collateral. The building owners just straight up can't afford to do this so they're stuck between keeping rents high and accepting vacancies which limits their revenue and foreclosure. The spice must flow, property valuations must go up or the whole thing collapses. It's why non-SF-esque cities only allow expansion in-line with population growth or a little less because they will immediately be tarred and feathered if they make everyone's mortgage underwater. To be clear this isn't a good thing, but no one wants to blink first and start another 2008.

purpleblue 3y ago

The biggest issue with 0% interest rates is that it let the stock market skyrocket. From 2009, the returns on some stocks like FAANGs are 20X or more, in less than 15 years. This created a huge, ridiculous income gap between the haves (ie. those with tech stocks) and the have nots (everyone else). Everyone with exposure to tech stocks got extremely rich, including hedge funds. So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. That raised the price of houses to unaffordable levels, and now hedge funds with all their tech wealth are buying homes to turn most people into renters. There's no room for the Have Nots to buy houses anymore. If you don't currently have a house, and you don't make millions on the stock market, there's no way you're ever going to be able to afford a house. We need a housing crash, but the Fed will never allow it, and hedge funds know this. That's why supply remains tight. Only rich people are currently buying houses, and it won't change regardless of interest rates. Hedge funds have to suffer catastrophic losses in order for supply to reenter the market.

RhysU 3y ago
> So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. "Nice place!" I said to many of my professors. "How'd you afford this part of town?" "Oh, housing crashes happen periodically" said the professors. "Find where you want to be, save money outside the markets, and just wait." So I rented too small a place for over 5 years, saved, and waited. Sure enough, Covid tanked prices and interest rates yet my down payment was fine because I had kept it outside of the markets. This approach is not hard. It just can take a decade.

carabiner 3y ago

But the GDP grew 4.9% last quarter, better than expected.

patja 3y ago

Would be nice to see some energy around ideas like eliminating the stepped up cost basis on inherited housing and using that new tax revenue to fund social housing.

onlyrealcuzzo 3y ago
Would be better to fix housing then to fund social housing and break it even further for the largest subset of the population (everyone not extremely rich or extremely poor). YMMV.

Izikiel43 3y ago

Because the US doesn't build apartment buildings en masse. It's a solved problem, but US people dislike the solution.

hiAndrewQuinn 3y ago
It's true. I'm continually amazed by the tall apartment buildings we call "concrete suburbs" here in Finland. What other people as plain, boring, unadorned, I see as one of the most powerful levers of equality out there.
mnky9800n 3y ago
Most apartments in the United States also sucks completely compared to anywhere else because they are not walkable to anything. They also are very dehumanising. Every usa apartment I lived in had mold issues, crackheads, managers who did nothing, managers who threatened to throw me out when I asked them to do things like take care of the mold. And one apartment had this huge owl that would fly around the complex catching rats. That was pretty cool actually. All the flats I've lived in outside of the USA (Tokyo, Berlin, Oslo, Brest, Utrecht) were super walkable, had landlords that treated me like a person, and was not made out of cardboard. I guess my point is either get a flat outside of the USA or get one with a bad ass owl.
- Izikiel43 3y ago
  That owl sounds like a cool feature, I only have coyotes come to visit. There are nice apartments in the USA, I'm in Seattle, everyone of my friends live in apartments and they are nice. I live in an old building from the 60s, but the apartment is great. The problem is that there aren't enough apartments.
taylodl 3y ago
We don't?! In my city they've been building multi-block apartment buildings en masse for several years now yet the rents are still rising. Seems like every other week another multi-hundred unit is being built.

francisofascii 3y ago

If you are trying to buy a house now and either are getting outbid, or priced out, you unfortunately have a few realistic options, none of them ideal. 1) Wait to see if the market crashes and hope your job is still intact, 2) Set your sites on a less desirable neighborhood with a bad school district. 3) Buy a small or major fixer upper in a good neighborhood, or 4) Move to a lower COL city. Each of these are a tough pill to swallow and will depend on each situation. Waiting for our leaders to fix our broken housing policy is not a realistic option. It could get worse. We chose option 4. It took some adjusting, but are used to it now. We would still be renting otherwise.

HDThoreaun 3y ago
> Waiting for our leaders to fix our broken housing policy is not a realistic option. California is at least trying to fix their broken housing policy. No clue if they'll succeed but I think it's realistically possible.
- francisofascii 3y ago
  True, they might fix it eventually. But how many years of your life are you going to wait?
RhysU 3y ago
Notice 2, 3, and 4 distribute conscientious talent across the country in a way that might well be net additive. For 2, the purchaser will likely improve the neighborhood and schools. For 3 they improve the housing stock. For 4 they bring desirable skills to employers who cannot otherwise afford to pay for such skills. Proverbially "Go west, young [person]!" and all that.
- onecommentman 3y ago
  There is also still the option of new build. It was common for popular magazines like Sunset and other regional magazines publishing in the 1930s and 1940s to include basic blueprints/layouts for houses you could build yourself or have built. Cottages by today’s US standards, but perfectly fine starter homes. You need buildable land but, say, rural US doesn’t have that as a problem. One of the material advantages of staying around your hometown if you were born in those areas is you find out about land opportunities from family and friends and get steered to the right builders or they help in your build-your-own. End up house-rich, not house-poor. If we still had a culture of formal coming-of-age rites, building your own small house on a little gifted land would be a good one.

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klipklop 3y ago

All this is solved by heavily taxing private equity when it comes to SFH real estate holdings. Force them to sell.

underseacables 3y ago

I'm not an economist, but it would seem the culprit is the federal reserve. You cannot force someone to sell a home, anymore than you can force someone to buy. But the phone reserve can stay out of the marketplace and let the market choose interest rates. I don't quite understand it, but it just seems like the federal reserve is the culprit here