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New home sales are at a near 30 year low at this very moment, at least in the US. No one is really buying, but prices are still inflated drastically. The people

New home sales are at a near 30 year low at this very moment, at least in the US. No one is really buying, but prices are still inflated drastically. The people that -are- buying homes, are people that already have them. Houses in rural and suburban areas are also super inflated as well. It's not just a city phenomenon. There is clearly something very broken in the market. It really comes down to NIMBYs, entrenched interests and ZIRPs massive distortion of the market that locked a ton of people into a low rate. Many current homeowners have their wealth in their home, they want it to (in some cases) to continue to out-perform the S&P 500. Since they live there, they bully the local governments to not allow more building so there is less supply to compete with their asset. State and federal agencies are going to have to step in at some point to incentivize local governments to upzone. Not even mentioning this isn't remotely sustainable as a tax base in most instances, because subdivisions and infrastructure to deal with the sprawl this a bill that will come due in a harsh way making higher property taxes inevitable pricing out many of the people that were in. The #1 reason people are fleeing California and New York is due to costs...and in turn they are about the lose electoral power in Congress and Electoral college.

tokioyoyo 2y ago
Yeah I agree with basically every statement. But house prices are extremely sticky with 30 year mortgages. Less stickier in Canada because of 5 year mortgages. There’s actually a big drop in rental prices in my very-in-demand city. SFH still sell like hotcakes though. Since rates might be coming down again, it’s incentivizing people to move and lock in for 5 years.
ndriscoll 2y ago
People who intend to continue living somewhere don't care about the price of their asset per se (they're not going to sell it), and dense zoning tends to increase land prices anyway. Opposition to density is about quality of life. In a related phenomenon, people will pay more to be around better neighbors (which you can see reflected in price differences across similar houses in similar areas but in different school catchment areas). It makes some sense that people will pay as much as they can to be in a better area with better kids when you look at the state and direction of public education. If you can't afford private school, that's basically your only lever to try to buy quality. If you can, you still have a tradeoff that you could spend ~13k/yr/kid on tuition or add 200k/kid to your home budget to live in an area with better public schools. Living in a more affluent area carries other QoL benefits as well of course.

tokioyoyo 2y ago

Yeah I agree with basically every statement. But house prices are extremely sticky with 30 year mortgages. Less stickier in Canada because of 5 year mortgages. There’s actually a big drop in rental prices in my very-in-demand city. SFH still sell like hotcakes though. Since rates might be coming down again, it’s incentivizing people to move and lock in for 5 years.

ndriscoll 2y ago

People who intend to continue living somewhere don't care about the price of their asset per se (they're not going to sell it), and dense zoning tends to increase land prices anyway. Opposition to density is about quality of life. In a related phenomenon, people will pay more to be around better neighbors (which you can see reflected in price differences across similar houses in similar areas but in different school catchment areas). It makes some sense that people will pay as much as they can to be in a better area with better kids when you look at the state and direction of public education. If you can't afford private school, that's basically your only lever to try to buy quality. If you can, you still have a tradeoff that you could spend ~13k/yr/kid on tuition or add 200k/kid to your home budget to live in an area with better public schools. Living in a more affluent area carries other QoL benefits as well of course.