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Neither the fed or congress can do any quick fix for housing prices (and the fed can't really do anything). There are only two ways (yes, it's a real life bina

Neither the fed or congress can do any quick fix for housing prices (and the fed can't really do anything). There are only two ways (yes, it's a real life binary system) to lower housing prices. 1.) Build more housing 2.) Make an area less desirable to live in. That's it. There is nothing else besides those two.

mothballed 1y ago
I fixed housing prices by moving to a place that was completely deregulated then building a shack for $60k. Deregulate and you can make things very cheap even with barely building anything, because the replacement cost to build another livable house is far lower, so now current home owners are bidding against cheap competition.
- Workaccount2 1y ago
  The actual problem is that voters in municipalities are overwhelmingly homeowners, and their home is overwhelmingly the golden-goose of their wealth, so they do everything possible to protect that, including voting for town leaders who will weaponize regulations to make new builds near impossible.
  - mothballed 1y ago
    Right, and we managed to destroy that where I live. Deregulated ("opt-out") houses don't get a certificate of occupancy, so you cannot easily get a mortgage, or easily get insurance. So the house is essentially highly valuable to you but not worth a lot to anybody else. We have no real incentive to regulate because the whole structure of the house paperwork makes it pretty much impossible to use as a goose egg.
    - mindslight 1y ago
      What did you actually end up avoiding that would cost so much? Architect/plans/structure permitting? Minimum space/setbacks? Grid hookups? Merely skipping inspections, or did you skimp on actual code compliance? Also curious where you're at, if you don't mind my asking. The biggest blocker I see here is the concentration of job markets into metropolitan areas (near the centralized money troughs). One thought that comes to mind is if you could keep remodeling/adding on, and eventually get it to a place where it could get a CoA and become a bubble-worthy house. Kind of an incremental self-mortgage. Not that I don't personally wish to see the bubble smashed to a million pieces, but as long as it isn't, then it is still an attractor.
      - mothballed 1y ago
        >What did you actually end up avoiding that would cost so much? (yes means yes it was avoided) Architect/plans/structure permitting? yes yes partially yes (rubber stamp permit) Minimum space/setbacks? avoided square foot requirements, but there were required setbacks that were legally meaningless since they were smaller than the road easements. Grid hookups ? yes Merely skipping inspections, or did you skimp on actual code compliance? skipped inspections and code compliance was not checked. AZ, area with lots of stable jobs
        mindslight 1y ago
        Have you done any analysis of your biggest sources of savings? It sounds like the main cost savings was the square foot requirement? Literally just building less structure? Then maybe followed by grid hookups, the cost of which would have been higher due to being in a less-developed area with cheaper land? With alternatives these days, grid hookups shouldn't really be required for any house, but the state walks on individuals with all the care of a human walking on ants. Of course there's also the builder overhead, in that professional developers are making a profit based on what the market is willing to pay over the actual cost to build (due to cheap money loans). To be clear by "code compliance" I meant building things still to code such that they would pass a hypothetical inspection, as opposed to "good enough works for me". Like for example I'd guess that an electric kitchen range will work just fine off of a 12-2 NM. The code has a large margin of safety because over time problems tend to multiply. I tend to do a lot of DIY electrical (legal here), but I make sure to follow the NEC so that an unexpected inspector would have a harder time declaring it "unsafe", so insurance doesn't have any argument that the work was derelict (not that this really matters), and primarily because I accept that I've got unknown unknowns and I don't want to die in a house fire.
        mothballed 1y ago
        Everything is as close to code as possible. I wouldn't wire a range 12-2 willingly but then again I wouldn't hesitate to use one on a 12-2 and then put a 20 amp breaker on it if I had to, and only use one or two burners at a time until I figured out what I could get away with without tripping the breaker :) The NM-B I use is rated for temps well above the steady-state temp at the breaking amperage so the normal 20% derate wouldn't be much a concern. Not having plans meant I was able to figure out how to do everything, including framing etc on the fly. This made it possible to do the project without having to know everything up front which in my mind would be pretty much impossible for a newcomer. I did not even know how I was going to frame the roof until the walls were already framed. I believe pretty much everything on my house meets code but it was almost entirely built to the absolute IRC minimum. I believe part of the savings are the fact I took a lot of risks a builder would never take or at least not without a premium, including buying an unproven well share that worked out perfectly and saved me $~50k over havign to drill my own, doing all my own utility extensions ( DIY underground 200 amp power extension and water main are big ones), and buying unproven land without utilities. It took me 6 months to even get electric connected and it was fortunate I was an electrical engineer who was able to work with the power engineers to get a solution to get power for cheap. I worked with the utility to get exempted from their inspections too so they let me wire the secondary side service entry myself and install the service entry hardware myself. The lack of inspections though are what made it all possible, because I was able to work a day job and do work on the house on nights/weekends and not have to quit my job to be around during the day for a bunch of inspections. Square footage definitely a big one. The width of the house was the max size of off-the-shelf dimensional lumber so I was able to build the entire house with no engineered lumber and no load bearing structures anywhere in the interior of the perimeter of the house. I also used 6" grouted cmu foundation which is extremely rare (well normal in latin america) but meets code. But the biggest savigns were probably just that I was able to do everything DIY without worrying about it getting inspected and then having to do it all over again because an inspector disagreed with something. If it were inspected I probably would have had to hire someone to help me.
dgfitz 1y ago
Correct me if I'm wrong, but if interest rates went up 10% tomorrow, housing prices would have to come down if people wanted to actually sell their homes.
- mothballed 1y ago
  I think the biggest challenge you will come up with then, is that if interest rates go up 10% you also just increased their opportunity cost to exchange a house up 10% interest for current owners, and now you have to buy them out of the differential between the ZIRP loan they got and the new interest rate to make it worth their time to sell it. The 30 year mortgage on ZIRP basically created a ratched effect that locked up the market for 30 years, the only way to unlock it I can think of is to drastically reduce the cost to build a house, you don't even need to hardly even actually build any, just force the hand of current owners by making the replacement cost radically lower.
- Workaccount2 1y ago
  Housing prices would come down (although many sellers would back out, crushing supply), but mortgage payments would skyrocket. Interest rates and housing is kind of like squeezing a balloon. Building new homes is like letting air out.
myrmidon 1y ago
You can also reduce housing demand by making it less attractive as an investment or store of value (basically decreasing demand). There are lots of approaches that go that route, like decreasing wealth inequality or suitable taxation.
- mothballed 1y ago
  Eliminating AML controls would probably help. Real estate is a haven asset to exchange value away from the grips of a tightly controlled and monitored banking system, although this is something normally transparent to the middle class.
- Workaccount2 1y ago
  Correct, you do that by building more housing, which naturally makes investments in property less appealing. There is no other approach. You can follow these paths of taxing, regulating, minimum waging, but none of them create more houses and all of them just push the same air around the inflated balloon.
  - cloverich 1y ago
    But taxing investment homes does, because it incentivizes the divestment of houses. Investment homes account for 20%+ of the market. Whether this adds pressure to rental market depends on how many SFH renters convert to buyers - we certainly would be buying at modestly lower prices.
somewhereoutth 1y ago
Completely not true and in fact dangerously (willfully?) misleading. Housing is much more complicated than supply and demand - for a start houses are not fungible. Local conditions are extremely important. A lot of high house prices is due to financial engineering - for example long mortgage periods at low interest rates. Just one of many mechanisms to make the rich richer by making the poor poorer. Any momentary affordability benefit is soaked up by higher prices, and those mortgages have to be paid off for longer with much higher total payments. High house prices are also caused by demand elasticity - things like AirBnB, 2nd, 3rd, 4th homes for the super rich, and housing as a place to park funny money (regardless of whether the house is actually being used to home people) mean that normal people can't compete with this non-home demand. We could go on.
- Workaccount2 1y ago
  Cool. But the only fix is to build more houses. Regulate all you want. You'll just end up with shadow markets and loopholes.
  - danaris 1y ago
    That's not true, not if your regulations are sufficiently strict. For instance, if you tax second homes (or third homes, or homes not occupied at least 8 months out of the year, or whatever specific condition you want to use) at 100% of the value per year, you're going to end the purchase of empty real estate to park money, without directly affecting ordinary middle-class people who just want a place to live. Unfortunately, such a measure would be politically untenable—frankly, even in the 2024 environment, and exponentially moreso now.
    - Workaccount2 1y ago
      You can create LLCs that own the homes. You can rent the home to a friend one night a year so it's an actual business. The ways to get around something like that are fractal and lead to dumb wasteful whack-a-mole legislation. So to actually fix the problem, you just build more housing.
    - 1y ago
deleted 1y ago
[deleted]

mothballed 1y ago

I fixed housing prices by moving to a place that was completely deregulated then building a shack for $60k. Deregulate and you can make things very cheap even with barely building anything, because the replacement cost to build another livable house is far lower, so now current home owners are bidding against cheap competition.

Workaccount2 1y ago
The actual problem is that voters in municipalities are overwhelmingly homeowners, and their home is overwhelmingly the golden-goose of their wealth, so they do everything possible to protect that, including voting for town leaders who will weaponize regulations to make new builds near impossible.
- mothballed 1y ago
  Right, and we managed to destroy that where I live. Deregulated ("opt-out") houses don't get a certificate of occupancy, so you cannot easily get a mortgage, or easily get insurance. So the house is essentially highly valuable to you but not worth a lot to anybody else. We have no real incentive to regulate because the whole structure of the house paperwork makes it pretty much impossible to use as a goose egg.
  - mindslight 1y ago
    What did you actually end up avoiding that would cost so much? Architect/plans/structure permitting? Minimum space/setbacks? Grid hookups? Merely skipping inspections, or did you skimp on actual code compliance? Also curious where you're at, if you don't mind my asking. The biggest blocker I see here is the concentration of job markets into metropolitan areas (near the centralized money troughs). One thought that comes to mind is if you could keep remodeling/adding on, and eventually get it to a place where it could get a CoA and become a bubble-worthy house. Kind of an incremental self-mortgage. Not that I don't personally wish to see the bubble smashed to a million pieces, but as long as it isn't, then it is still an attractor.
    - mothballed 1y ago
      >What did you actually end up avoiding that would cost so much? (yes means yes it was avoided) Architect/plans/structure permitting? yes yes partially yes (rubber stamp permit) Minimum space/setbacks? avoided square foot requirements, but there were required setbacks that were legally meaningless since they were smaller than the road easements. Grid hookups ? yes Merely skipping inspections, or did you skimp on actual code compliance? skipped inspections and code compliance was not checked. AZ, area with lots of stable jobs
      - mindslight 1y ago
        Have you done any analysis of your biggest sources of savings? It sounds like the main cost savings was the square foot requirement? Literally just building less structure? Then maybe followed by grid hookups, the cost of which would have been higher due to being in a less-developed area with cheaper land? With alternatives these days, grid hookups shouldn't really be required for any house, but the state walks on individuals with all the care of a human walking on ants. Of course there's also the builder overhead, in that professional developers are making a profit based on what the market is willing to pay over the actual cost to build (due to cheap money loans). To be clear by "code compliance" I meant building things still to code such that they would pass a hypothetical inspection, as opposed to "good enough works for me". Like for example I'd guess that an electric kitchen range will work just fine off of a 12-2 NM. The code has a large margin of safety because over time problems tend to multiply. I tend to do a lot of DIY electrical (legal here), but I make sure to follow the NEC so that an unexpected inspector would have a harder time declaring it "unsafe", so insurance doesn't have any argument that the work was derelict (not that this really matters), and primarily because I accept that I've got unknown unknowns and I don't want to die in a house fire.
        mothballed 1y ago
        Everything is as close to code as possible. I wouldn't wire a range 12-2 willingly but then again I wouldn't hesitate to use one on a 12-2 and then put a 20 amp breaker on it if I had to, and only use one or two burners at a time until I figured out what I could get away with without tripping the breaker :) The NM-B I use is rated for temps well above the steady-state temp at the breaking amperage so the normal 20% derate wouldn't be much a concern. Not having plans meant I was able to figure out how to do everything, including framing etc on the fly. This made it possible to do the project without having to know everything up front which in my mind would be pretty much impossible for a newcomer. I did not even know how I was going to frame the roof until the walls were already framed. I believe pretty much everything on my house meets code but it was almost entirely built to the absolute IRC minimum. I believe part of the savings are the fact I took a lot of risks a builder would never take or at least not without a premium, including buying an unproven well share that worked out perfectly and saved me $~50k over havign to drill my own, doing all my own utility extensions ( DIY underground 200 amp power extension and water main are big ones), and buying unproven land without utilities. It took me 6 months to even get electric connected and it was fortunate I was an electrical engineer who was able to work with the power engineers to get a solution to get power for cheap. I worked with the utility to get exempted from their inspections too so they let me wire the secondary side service entry myself and install the service entry hardware myself. The lack of inspections though are what made it all possible, because I was able to work a day job and do work on the house on nights/weekends and not have to quit my job to be around during the day for a bunch of inspections. Square footage definitely a big one. The width of the house was the max size of off-the-shelf dimensional lumber so I was able to build the entire house with no engineered lumber and no load bearing structures anywhere in the interior of the perimeter of the house. I also used 6" grouted cmu foundation which is extremely rare (well normal in latin america) but meets code. But the biggest savigns were probably just that I was able to do everything DIY without worrying about it getting inspected and then having to do it all over again because an inspector disagreed with something. If it were inspected I probably would have had to hire someone to help me.

dgfitz 1y ago

Correct me if I'm wrong, but if interest rates went up 10% tomorrow, housing prices would have to come down if people wanted to actually sell their homes.

mothballed 1y ago
I think the biggest challenge you will come up with then, is that if interest rates go up 10% you also just increased their opportunity cost to exchange a house up 10% interest for current owners, and now you have to buy them out of the differential between the ZIRP loan they got and the new interest rate to make it worth their time to sell it. The 30 year mortgage on ZIRP basically created a ratched effect that locked up the market for 30 years, the only way to unlock it I can think of is to drastically reduce the cost to build a house, you don't even need to hardly even actually build any, just force the hand of current owners by making the replacement cost radically lower.
Workaccount2 1y ago
Housing prices would come down (although many sellers would back out, crushing supply), but mortgage payments would skyrocket. Interest rates and housing is kind of like squeezing a balloon. Building new homes is like letting air out.

myrmidon 1y ago

You can also reduce housing demand by making it less attractive as an investment or store of value (basically decreasing demand). There are lots of approaches that go that route, like decreasing wealth inequality or suitable taxation.

mothballed 1y ago
Eliminating AML controls would probably help. Real estate is a haven asset to exchange value away from the grips of a tightly controlled and monitored banking system, although this is something normally transparent to the middle class.
Workaccount2 1y ago
Correct, you do that by building more housing, which naturally makes investments in property less appealing. There is no other approach. You can follow these paths of taxing, regulating, minimum waging, but none of them create more houses and all of them just push the same air around the inflated balloon.
- cloverich 1y ago
  But taxing investment homes does, because it incentivizes the divestment of houses. Investment homes account for 20%+ of the market. Whether this adds pressure to rental market depends on how many SFH renters convert to buyers - we certainly would be buying at modestly lower prices.

somewhereoutth 1y ago

Completely not true and in fact dangerously (willfully?) misleading. Housing is much more complicated than supply and demand - for a start houses are not fungible. Local conditions are extremely important. A lot of high house prices is due to financial engineering - for example long mortgage periods at low interest rates. Just one of many mechanisms to make the rich richer by making the poor poorer. Any momentary affordability benefit is soaked up by higher prices, and those mortgages have to be paid off for longer with much higher total payments. High house prices are also caused by demand elasticity - things like AirBnB, 2nd, 3rd, 4th homes for the super rich, and housing as a place to park funny money (regardless of whether the house is actually being used to home people) mean that normal people can't compete with this non-home demand. We could go on.

Workaccount2 1y ago
Cool. But the only fix is to build more houses. Regulate all you want. You'll just end up with shadow markets and loopholes.
- danaris 1y ago
  That's not true, not if your regulations are sufficiently strict. For instance, if you tax second homes (or third homes, or homes not occupied at least 8 months out of the year, or whatever specific condition you want to use) at 100% of the value per year, you're going to end the purchase of empty real estate to park money, without directly affecting ordinary middle-class people who just want a place to live. Unfortunately, such a measure would be politically untenable—frankly, even in the 2024 environment, and exponentially moreso now.
  - Workaccount2 1y ago
    You can create LLCs that own the homes. You can rent the home to a friend one night a year so it's an actual business. The ways to get around something like that are fractal and lead to dumb wasteful whack-a-mole legislation. So to actually fix the problem, you just build more housing.
  - 1y ago

deleted 1y ago

[deleted]