Post by Velar Fricative on Feb 26, 2021 9:42:33 GMT -5
Our favorite topic! I know we've talked about housing in specific areas but this is a more detailed look at basically every factor involved in our low national inventory and what to expect from here on out.
I was especially intrigued by the section on what's going on with rentals and how that impacts owning. Also gives me the sense that we are in a bubble, but because we're in such a unique time, we can't predict when that bubble will burst because of all of the other factors discussed in the piece.
Also, I hate the idea that part of the solution is building new homes. Especially when the homes being built just aren't the homes millions of Americans need or want or can afford.
Post by picksthemusic on Feb 26, 2021 10:30:11 GMT -5
This just spurred me on to look more seriously into refinancing. We're staying put for a while (probably 5 years or more), so I'd love to reduce our monthly payment if possible.
This just spurred me on to look more seriously into refinancing. We're staying put for a while (probably 5 years or more), so I'd love to reduce our monthly payment if possible.
We refinanced from a 30 year (with about 25 years left) to a 15 year over the summer. We don't plan to move until after we're retired, at the earliest. Our monthly payment went up, but not by a ton, and we're saving a massive amount over the life of the loan, even if we were to have overpaid on our 30 year.
Our area (suburb of St. Louis) is not seeing the lowered rent part. DH and I just separated and his 2 bed/2 bath rent is more than our PITI on our 2500 sq ft house. He could definitely buy a bigger, nicer place for less, but a) we're not ready for that step and b) the lack of availability is definitely a thing here. I would say 90% of the houses on the MLS site I look at are sale pending or under contract.
We actually do still have a new housing industry here, as people are moving further away from the city where there's a lot of undeveloped land with new subdivisions popping up every month or so. But having worked in the construction industry for 15 years, I know the builders, and there is NO way I'd buy from the only builder that is affordable for the majority of families.
Also, I hate the idea that part of the solution is building new homes. Especially when the homes being built just aren't the homes millions of Americans need or want or can afford.
The idea that new housing needs to be “affordable housing” has been a bit of a red herring in the Bay Area, and has often blocked development of desperately-needed projects.
But I know there’s one pro-housing school of thought that argues it doesn’t matter if the new housing is “affordable” because it frees up inventory and puts downward price pressure on older homes, so everyone benefits.
Granted, this is Bay Area specific, where we have a severe housing shortage — and the argument often involves building new multi-unit housing near transit and job centers, not far-flung housing divisions that contribute to sprawl. But it has swayed me toward “just get it done.”
It is crazy. We have been hoping to move for some time now but the prices go up and up. We have a 2 bed 1 bath 1200 square foot cape code home on a nice 7500 square foot lot in a desirable neighborhood. In 2009 we paid 315k which is a fair price for a “starter home” in this area.
Now similar homes are selling for 500+ making owning a home unattainable for many. So we could get 500 or more for our home but the “next step up” homes are all far too expensive not to mention as soon as any house under 800 comes on the market it is a bidding war in days.
The low inventory is a huge issue, in my city now (40k population) there is I think one single family home for sale for under 500. the median household income is 80k, for reference.
I’m not sure what to do. The rates are low but I don’t want to overpay nor do I want to be in some crazy bidding war for a normal 3 bedroom house. It’s disheartening but of course we at least have a place to live so we don’t technically need to leave just yet.
Also rents here are not going down, my friend is about to move into a 2 bed/1bath 800 square foot apartment for 2k/month not including utilities. It’s expensive to rent here too. But people don’t have the money to put down on a place to buy. It’s just getting harder and harder for the middle class to afford a place to live and live a comfortable life without severe financial stress.
Post by Velar Fricative on Feb 26, 2021 10:49:13 GMT -5
The thing that did resonate re: rentals is that in my neighborhood, basically the only homes to rent are SFHs because that's mostly the housing stock we have, and it seems like they're renting out pretty fast primarily because of people coming from other parts of the city for more space but either don't want to or can't buy yet and/or want to learn more about the borough before putting down roots. But they're renting for *a lot.* Like, way more than we pay in PITI and we only bought 6 years ago. Apartments in Manhattan though? Better deals to be had there for sure. And by "deals" I just mean that they're cheaper than usual, not that they're cheap or affordable.
Uggh so many starter homes here were renovated and turned into pricey rentals, and all new builds are 2-4x the cost of starter homes.
The starter homes (like the one we live in) are all bought and renovated into giant monstrosities and sell for 2.5x more. Its so disheartening. I didn't even think about the impact that has on rentals.
Uggh so many starter homes here were renovated and turned into pricey rentals, and all new builds are 2-4x the cost of starter homes.
I wonder sometimes who all this expensive new construction is supposed to be for. Milliennials have struggled to establish themselves financially and get to a point where they can afford homeownership. And I can't imagine that aging Boomers want to move into McMansions and take on that upkeep.
We had planned to start looking for a house this year - long before the pandemic came along and messed up all of our lives and screwed up our plans. I had been looking all last year - just to be aware of what was out there and narrow down the location. There were houses out there last year. Now there is nothing. At all. Nothing. Except in the $million+ category. I am amazed at the number of houses at that price point. In the 400-600 range, which is still out of reach for many people but a bit more reasonable, there is just nothing.
One of the things I've really noticed is that when we (as a society) continuously build enormous houses, they get outdated and many people cannot afford either the upkeep or to keep them somewhat up-to-date stylewise. These houses either fall into disrepair and lose value that way or are so out of style that they also lose value. And we're talking of hundreds of thousands of dollars less than they were purchased for not all that long ago. This is just sort of a side note but I guess maybe goes along with the idea that we need more housing in an affordable price range and at a size that people can manage.
Uggh so many starter homes here were renovated and turned into pricey rentals, and all new builds are 2-4x the cost of starter homes.
I wonder sometimes who all this expensive new construction is supposed to be for. Milliennials have struggled to establish themselves financially and get to a point where they can afford homeownership. And I can't imagine that aging Boomers want to move into McMansions and take on that upkeep.
As the boomers move into assisted living or aren’t with us anymore, I can’t see how that won’t impact the market. I wouldn’t be shocked if owning property winds up being not a great investment. Owning your own home that’s a good size for your needs, sure. But a monstrosity that’s difficult to maintain, that you’re banking on funding your retirement from? I think like with many things, the children of the boomers should not count on things working out the way they did for our parents.
Nobody builds small homes anymore it seems, or even moderate sized homes. All the new builds around here are 3000+ square feet. Often they build the house so large it takes up most of the lot and you are super close to the mcmansion next door. Which makes sense if you are building multi family units, use all the space. But it seems odd when it’s detached million dollar homes.
Close to me they recently built four new detached single family homes, all 4000+ square feet and really close to each other. I guess they are trying to get as much livable square feet to raise the asking price. I thought it was ludicrous but they all sold for well over a million.
From an environmental standpoint, we really should not be building new homes.
I think this ties into all the discussions we've had lately about the "vanishing" middle class and cultural expectations that we have - aka that to "make it" we need to own a single family home of a certain square footage.
FWIW, where I live, we have a hard environmental block on new development in that large developments can't find the water rights to be able to supply the development with water. (Which, a shitton of people here don't understand, and there's a lot of yelling about why can't we build new housing for people.)
We have "knock one down, put 2 or 3 up" in my town. I've only lived here for 5 years and have seen this pattern a bunch of times now. There was a Cape Cod home for sale around the corner from me with an attached garage - the garage on a house like that is super rare around here. I looked it up last fall when I was wondering what kind of life I could have if I leave my marriage and my house. It seemed like a good in-between house if I did leave. However, a builder bought it and knocked everything down except the front wall and is putting up an entire bigger and taller house that will be double the price tag. And it will probably sell really fast as all the new construction does. A regular person never has a chance at a house once a builder gets in on the buying here.
From an environmental standpoint, we really should not be building new homes.
I think this ties into all the discussions we've had lately about the "vanishing" middle class and cultural expectations that we have - aka that to "make it" we need to own a single family home of a certain square footage.
FWIW, where I live, we have a hard environmental block on new development in that large developments can't find the water rights to be able to supply the development with water. (Which, a shitton of people here don't understand, and there's a lot of yelling about why can't we build new housing for people.)
But then a lack of new housing leads to pricing people out of affordability.
It really needs to be the right kind of housing - i.e. transit-oriented density.
From an environmental standpoint, we really should not be building new homes.
I think this ties into all the discussions we've had lately about the "vanishing" middle class and cultural expectations that we have - aka that to "make it" we need to own a single family home of a certain square footage.
FWIW, where I live, we have a hard environmental block on new development in that large developments can't find the water rights to be able to supply the development with water. (Which, a shitton of people here don't understand, and there's a lot of yelling about why can't we build new housing for people.)
But then a lack of new housing leads to pricing people out of affordability.
It really needs to be the right kind of housing - i.e. transit-oriented density.
Yes, but the people here don't want that. In part because what is somewhat affordable is being built near the University. Development has added right around 1000+ bedrooms (how the apartments are calculated) in the last 5 years or so around the university. But also, there's been pushback from the community in building more apartment infill in what's considered our midtown area. People (aka citizens at large) don't want apartments, they want houses. Which we can't build, and round and round it goes. There has to be at least some fundamental understanding of what housing CAN and SHOULD be built, vs what people want.
ETA: My other favorite pet rant is the gentrification of infill in working class neighborhoods that's happening, where people are buying smallish single family ranches, and building McMansions on the lot. Which then starts pricing the other houses out of the market as people start looking to do the same thing within the neighborhood.
Nobody builds small homes anymore it seems, or even moderate sized homes. All the new builds around here are 3000+ square feet. Often they build the house so large it takes up most of the lot and you are super close to the mcmansion next door. Which makes sense if you are building multi family units, use all the space. But it seems odd when it’s detached million dollar homes.
Close to me they recently built four new detached single family homes, all 4000+ square feet and really close to each other. I guess they are trying to get as much livable square feet to raise the asking price. I thought it was ludicrous but they all sold for well over a million.
It could be the builder, it could be their financing. Lenders want under a certain $ per sq. foot to underwrite. Since you have fixed costs (permits, utility hookups, the land, etc) often the only way to get under that price per sq ft is to make it bigger. It’s dumb, and I’m not sure what kind of reform is needed, but that’s what’s partially driving larger new houses in my area. I know cities and counties are starved for money and new homes put a burden on infrastructure, so I don’t think that lowering permit costs would be my starting point, but I’m not sure where else you’d start.
Also, I hate the idea that part of the solution is building new homes. Especially when the homes being built just aren't the homes millions of Americans need or want or can afford.
The idea that new housing needs to be “affordable housing” has been a bit of a red herring in the Bay Area, and has often blocked development of desperately-needed projects.
But I know there’s one pro-housing school of thought that argues it doesn’t matter if the new housing is “affordable” because it frees up inventory and puts downward price pressure on older homes, so everyone benefits.
Granted, this is Bay Area specific, where we have a severe housing shortage — and the argument often involves building new multi-unit housing near transit and job centers, not far-flung housing divisions that contribute to sprawl. But it has swayed me toward “just get it done.”
I don't know. Big expensive houses aren't equivalent to smaller more affordable ones.
On a hillside near me, they proposed a development of 12 moderate sized homes which would have sold quickly - because there is no inventory at the price point. Instead, the town blocked that because it doesn't like new development. The same land became three very large lots, for giant houses. Only one was built and has been sitting empty for a year. The $6 Million and up market moves very slowly if it doesn't have something spectacular going on (these lots don't have amazing views to command those prices nor the less steep yards to enjoy other amenities).
Post by icedcoffee on Feb 26, 2021 12:18:11 GMT -5
Housing is bananas right now. A house with our exact layout just went on the market this week for $130k more than we paid for ours in 2014. And the lot is horrible (right under those huge power lines that normally knock $50k off the price right away). Now just because it's listed for that doesn't mean it will sell for that, but I'm guessing the realtor wouldn't have listed it if she didn't think she could get it.
Rental prices falling is a good thing though. Especially in places like NYC where it's been so unaffordable.
Will be interesting to see what happens in a couple years when interest rates eventually rise.
H and I are never going to be able to buy a home. Even though we're miles ahead, financially, of where we were even 5 years ago.
That sucks - I feel like a lot of people about 10 years younger than me are late to the house game, but then all these iGen twenty somethings are getting into real estate early because they saw millennials being priced out as they waited and saved. It's like if you have real estate, you can buy bigger real estate, but it's so hard to come late to* (you know the whole "you gotta have ID to get ID" conundrum).
*and this plays into racism and redlining and who holds wealth and privilege in our entire country too
The idea that new housing needs to be “affordable housing” has been a bit of a red herring in the Bay Area, and has often blocked development of desperately-needed projects.
But I know there’s one pro-housing school of thought that argues it doesn’t matter if the new housing is “affordable” because it frees up inventory and puts downward price pressure on older homes, so everyone benefits.
Granted, this is Bay Area specific, where we have a severe housing shortage — and the argument often involves building new multi-unit housing near transit and job centers, not far-flung housing divisions that contribute to sprawl. But it has swayed me toward “just get it done.”
I don't know. Big expensive houses aren't equivalent to smaller more affordable ones.
On a hillside near me, they proposed a development of 12 moderate sized homes which would have sold quickly - because there is no inventory at the price point. Instead, the town blocked that because it doesn't like new development. The same land became three very large lots, for giant houses. Only one was built and has been sitting empty for a year. The $6 Million and up market moves very slowly if it doesn't have something spectacular going on (these lots don't have amazing views to command those prices nor the less steep yards to enjoy other amenities).
We’re talking about somewhat different things. I’m talking specifically about infill, not developing new land. I live along the Caltrain line and there were plans for a big multi-use housing development (apartments with ground-level retail) on a lot that’s basically empty. You had “you’re going to block my bay view” NIMBY folks aligning with those who opposed it because it wasn’t “affordable.” It was such a weird coalition of people that didn’t make any sense.
It failed (and now my town is being sued because we didn’t meet our required minimum for new housing.) At least here, I think the “affordable housing” flag often gets waved as faux liberalism when really it’s the same NIMBY folks who’ve just coopted the language.
Uggh so many starter homes here were renovated and turned into pricey rentals, and all new builds are 2-4x the cost of starter homes.
Yup. Every 2 story, 3 bed, 1.5 bath house that came on the market in our neighborhood that we wanted to actually buy and live in was bought for cash and then torn down to make a 3 story, 900k monstrosity- and I just don’t understand how many people can honestly afford to be buying all these. We could not compete with the builders in our neighborhood.
In Denver, there was a program to build affordable housing within certain developments. So people were able to buy houses at reasonable prices. When it came to sell, most people ignored the government restrictions and sold at market value, which by far and away was above the prices they should have sold at as mandated. The city didn't keep a close eye on the buying/selling of the affordable houses, and when it realized what was going on a bunch of people got screwed.
The reason I bring it up is that I think we can be mandating affordable housing with restrictions within developments, but it takes a lot of management and people being trustworthy. Because no one is going to want to build equity with house buying, and then give it up.