I need housing to be a political priority in 2020 (or now)

[Velar Fricative]

Because this nonsense is killing me. I thank the universe every day that we have a great home and didn't have steep competition to buy it. But there are just so many different issues within the whole "housing in America" umbrella that I really do want the D candidates to go hard on this. How are people supposed to enter the market and build wealth when they're competing with people with means/businesses they likely can't beat? How are non-owners supposed to afford to live when rents keep going way up? Meanwhile, there is an incredible amount of home building happening already and I constantly ask myself who's buying these homes? Do we have that many more second-homeowners or something? How much has airbnb affected the market?

I know things are different from place to place but it's still interesting and I want to vent about it. 

www.nytimes.com/interactive/2019/06/20/business/economy/starter-homes-investors.html

For decades, single-family homes were an investment primarily for people who wanted to live in them. Real estate investors were around, but they were mostly individuals or small partnerships. That changed with the Great Recession and its aftermath, when investors bought at least two million homes, and almost certainly far more than that, with prices depressed. Large-scale institutional investors bought tens of thousands of homes for less than they cost to build.



At first, the flood of capital seemed like a one-time opportunity arising from the collapse of the residential real estate market. Once the bargains dried up, the investors were expected to stop buying.



Except they didn’t stop. Last year, investors bought about one in five starter homes in the United States (defined as priced in the bottom third of the local market), according to CoreLogic. That was even higher than in the early years after the Great Recession and about double the level of two decades ago. In the most frenzied markets, investors bought close to half of the most affordable homes sold last year, and as much as a quarter of all single-family homes.

[dontlook]

They are throwing up houses in our area all the time. H and I also ask who is buying all of these houses. What is happening to all the pre-existing houses?

I’m glad we bought when we did where we did. We could use another bedroom upstairs but I refuse to move. Our house has appreciated $100k in 4 years. We couldn’t even afford to buy our own house right now. Houses are getting snatched up in hours. It’s crazy.

None of this was helpful but I could rage about real estate all day.

[rupertpenny]

Jun 20, 2019 13:52:11 GMT -5 Velar Fricative said:

 Meanwhile, there is an incredible amount of home building happening already and I constantly ask myself who's buying these homes? Do we have that many more second-homeowners or something? How much has airbnb affected the market?

Around here? Foreign investors. Still mourning the pied-a-terre tax. 

But yeah. We made a very good living and still have more earning potential, but I'm not sure when/if we will ever be able to buy.

[bronxgirl]

In my neighborhood they keep putting up more and more luxury apartment buildings, despite the fact that the market really needs middle class housing. So all these construction projects are going on which is disruptive to current residents for buildings that then sit empty. In the meantime it’s getting harder and harder to find affordable family housing. It’s so frustrating.

[goldengirlz]

In my market, building new homes isn’t the issue because we simply don’t have enough places for people to live and we need to be higher density than we are to support effective public transit initiatives. So that’s different from the suburban sprawl problem of new construction developments popping up farther and farther away from the urban core because people want “new” in “good school districts.”

But the investor issue is rampant here.

The affordability problem of having them in the market is a core problem but it’s not the only one — the flip side of that is that I suspect that real estate will continue to be significantly more volatile than in the past. It used to be you bought a home and could expect steady appreciation as a hedge against inflation. That’s why homeownership became the American Dream. Now you could spend every last dollar to get on the real estate ladder (because that’s what you’re “supposed” to do) and in a recession, your house could lose 50% of its value. And it may or may not recover. Because properties are bought and sold like stock and stock is inherently risk.

ETA: And that doesn’t even touch the issue of investors getting into the mortgage market through asset-backed securities and subprime lending.

[Velar Fricative]

Jun 20, 2019 14:05:16 GMT -5 bronxgirl said:

In my neighborhood they keep putting up more and more luxury apartment buildings, despite the fact that the market really needs middle class housing. So all these construction projects are going on which is disruptive to current residents for buildings that then sit empty. In the meantime it’s getting harder and harder to find affordable family housing. It’s so frustrating.

I feel like the luxury buildings are just a way for developers to be able to do what they want while also throwing a bone to local governments to make 20% of the apartments designated as affordable housing. But that's still not enough affordable housing for everyone who needs it, and that still makes 80% of new homes home that appear out of reach to any kind of typical household in the US. I know foreign investors are a significant percentage of buyers of this property but it's so out of hand.

[redheadbaker]

Jun 20, 2019 13:52:11 GMT -5 Velar Fricative said:

How are non-owners supposed to afford to live when rents keep going way up?

This is where we are. Just last year, for the first time, our combined salaries are over $100k. We finally both feel stable, job-wise.

@@@@@ mentions below

We would have loved to be looking for a house instead of another apartment (a mortgage payment would be cheaper than a rent payment), but between health care premiums, after-school childcare/summer camp, and rent, saving up enough for a down payment feels impossible.

[rupertpenny]

Not about buying real estate, but I just came across this and it seems relevant:

Notorious B.I.G.'s apartment now renting for $4k

ny.curbed.com/2019/6/20/18692916/notorious-big-clinton-hill-brooklyn-home-for-rent

[pixy0stix]

I'm reading, and I'm having a hard time turning off my capitalistic worldview that has been pushed on me for forever.

[ESF]

I'm going to go a little broader and say that for all the Dem plans floating around, it's very frustrating that not a single candidate has introduced some kind of comprehensive urban policy plan that addresses both housing AND infrastructure, as well as thinks about what our needs are going to be given the changing climate.

We aren't going to fix housing if we can't figure out how to get people to places of employment efficiently and safely, and we aren't going to fix either of those things long term if we aren't paying attention to how increasing energy costs will impact behavior.

That said, the entire real estate market is just a disaster. Housing never should have been seen as an investment vehicle. I don't know how we go back though.

[elleblue]

Jun 20, 2019 14:05:16 GMT -5 bronxgirl said:

In my neighborhood they keep putting up more and more luxury apartment buildings, despite the fact that the market really needs middle class housing. So all these construction projects are going on which is disruptive to current residents for buildings that then sit empty. In the meantime it’s getting harder and harder to find affordable family housing. It’s so frustrating.

Do you live in my city because the same thing is happening here. Naturally the impact on traffic has residents up in arms but to me the issue is lack of affordable housing.

[Velar Fricative]

I have other varied thoughts/questions about stuff, which are related but I can't figure out solutions.

1) How can we promote denser living when the American Dream is so intertwined with a lawn, a white picket fence and "good schools"? Especially when more and more people (at least in my IRL experience) seem perfectly fine with soul-crushing commutes so they could get what they want in a house.

2) Real estate is the primary way people build wealth. It's supposed to be our nest egg during retirement. But that seems unsustainable to me since that would require home values to increase in the unsustainable ways they have been doing. Messing with people's retirements is a terrible idea but I feel like the problem is the fact that our homes are our primary nest eggs in the first place. It seems like a broken system to me, as someone who's a homeowner but grew up with parents that have never owned a home. But...it's the way things are so I just figured I had to get in on the game when I could.

I know about the "why" to these questions/concerns, but fixing them seems herculean.

[pixy0stix]

Along with everything else, this is what kicked off a large part of the recession. We've talked before about how the cycle is shortening up, and I bet within a year or two we're going to be right where we were 12 years ago. The housing market burst, and everyone holding on for dear life.

[ESF]

Jun 20, 2019 14:33:39 GMT -5 Velar Fricative said:

I have other varied thoughts/questions about stuff, which are related but I can't figure out solutions.

1) How can we promote denser living when the American Dream is so intertwined with a lawn, a white picket fence and "good schools"? Especially when more and more people (at least in my IRL experience) seem perfectly fine with soul-crushing commutes so they could get what they want in a house.

2) Real estate is the primary way people build wealth. It's supposed to be our nest egg during retirement. But that seems unsustainable to me since that would require home values to increase in the unsustainable ways they have been doing. Messing with people's retirements is a terrible idea but I feel like the problem is the fact that our homes are our primary nest eggs in the first place. It seems like a broken system to me, as someone who's a homeowner but grew up with parents that have never owned a home. But...it's the way things are so I just figured I had to get in on the game when I could.

I know about the "why" to these questions/concerns, but fixing them seems herculean.

I think that many people believe that homes started to get expensive when it became easier to finance them. Let's say that in a region, the average home buyer has $1000 a month to put on a house. If you can only get a 15 or 20 year mortgage at 6% interest, housing prices will adjust to make it so that people with $1000 a month to spend can buy them. But if you can get 40 year mortgages at 4%, they can change a lot more for the same house because people will just spend the same $1000 a month, but for longer. Similarly, people can buy more house with their $1000 if they can take 40 years to pay it off instead of 15.  Then things like property tax write offs only make these big homes and mortgages that much more affordable.    

Now the problem is that homes are so expensive that increasingly people can't buy their forever home with enough time left on the clock for them to pay it off before they retire. And because they are carrying massive debt for decades instead of just a tiny portion of their lives, they are so much more susceptible to market fluctuations.

The band aid solution is to go back to making loans harder to get and more expensive to take out. There are two big problems with that though. First, it will disproportionately hurt minority home buyers. And second, if you tighten up the restrictions to get loans or cut the property tax benefit, tons and tons of home owners will see their home values drop instantly, and many will find themselves underwater (or deeper underwater). So many that I'd imagine there could be a massive recession (or depression), one far worse than what we saw in 2008, and millions of people would never recover.

So for a reset to be possible, we'd have to allocate billions for bailouts. We'd still have a glut of enormous homes on the market, but at least we might be able to stabilize the market a bit.  (ETA - and someone smart would have to come up with a solution for dealing with getting access to loans for minority/underserved populations without breaking it in such a way so as to hurt them more when the pendulum swings back, like it is doing now.)

[jeaniebueller]

I live in a rural area and affordable housing is fucked even here and even with a MCOL. If you don't qualify for Section 8, you are stuck renting from a slumlord for an astronomical amount (considering the hourly wages). There are very very few rental options.

[Deleted]

Jun 20, 2019 14:33:39 GMT -5 Velar Fricative said:

I have other varied thoughts/questions about stuff, which are related but I can't figure out solutions.

1) How can we promote denser living when the American Dream is so intertwined with a lawn, a white picket fence and "good schools"? Especially when more and more people (at least in my IRL experience) seem perfectly fine with soul-crushing commutes so they could get what they want in a house.

2) Real estate is the primary way people build wealth. It's supposed to be our nest egg during retirement. But that seems unsustainable to me since that would require home values to increase in the unsustainable ways they have been doing. Messing with people's retirements is a terrible idea but I feel like the problem is the fact that our homes are our primary nest eggs in the first place. It seems like a broken system to me, as someone who's a homeowner but grew up with parents that have never owned a home. But...it's the way things are so I just figured I had to get in on the game when I could.

I know about the "why" to these questions/concerns, but fixing them seems herculean.

Re: number 1, I’d really like to start seeing a lot more emphasis on townhomes and small lots to meet the desires for a family home. Doing away with setback requirements would be huge on this one.

One of the biggest reasons we bought a house was wanting a yard. But we didn’t want a 3/4 acre lot out by the edge of the county like some of our friends have. Our lot is 4300 square feet. Our house is like 5 feet from our neighbors on one side and maybe 10 feet on the other. We have lots of duplexes in my neighborhood. Our yard has space for a veggie garden, a small play area, a storage shed, and a patio where we can grill. We have so little grass that we have a reel mower. I was tired of living in an apartment building and having no private outdoor space, but I didn’t need a new build on half an acre.

[Velar Fricative]

Jun 20, 2019 15:12:41 GMT -5 ESF said:

Jun 20, 2019 14:33:39 GMT -5 Velar Fricative said:

So for a reset to be possible, we'd have to allocate billions for bailouts. We'd still have a glut of enormous homes on the market, but at least we might be able to stabilize the market a bit.  

Isn't it wonderful that corporations are saving so much money on their taxes right now? 

[suburbanzookeeper]

We purchased our home in 5/2010 in Southern California. We put offers in on 11 homes and lost to investors on 8 of those, often times 30-60k over asking price. Most of those were either flipped in the last few years or became rentals. There were many we didn't bother with offers because we were already advised of multiple offers and didn't want to waste our time.

Our friend purchased in December in LA county and it took him over two years of actively looking to "win" on his house (SFH, 1600sqft, built in the 50's). He put in an average of 1-2 offers a month over those two years and almost half of those homes went to investors.

[tiramisu]

I gave up on the idea of home ownership a long time ago. It would be nice, but there's no way I could afford it in my city, I don't think. Maybe someday, but that feels out of reach. I have student loans to pay back still and until I started my new job, was making a fairly depressed wage/salary at a social services nonprofit. Even looking for apartments was hard, but luckily I got into a older complex owned by a family. When people hear my rent, they all tell me what a great deal I have. But until the new job, it was just barely within my budget.

One of the things I see happening here is the building of luxury condo buildings. So freaking many. And then some later get converted into apartment rentals because they couldn't seem enough condos. But I know those are out of most people's price range because they're next to buildings that have "bespoke studios" for over $2,000/month.

[pugz]

It boggles my mind that $400-$700k houses are ALL that is being built in my Kansas City suburb. Myself and none of my friends can afford these, especially when so many families here live on only one income. We bought our house for $150k a decade ago. Now first time home buyers can buy an outdated and ugly house for $225k if they want to become homeowners and get a house with more than one bathroom.

[goldengirlz]

I don’t think homes need to appreciate insane amounts for them to be a “nest egg.” All they were intended to do was track with inflation. So you have a fixed mortgage payment in today’s dollars but your home value increases to whatever inflation is 30 years in the future. In addition, if you can pay off your home by the time you retire, you’ll only need to worry about property taxes and insurance. (Capping property tax increases for long-time homeowners is a whole other contentious debate.)

However, we now have Baby Boomers whose homes didn’t just track inflation — they crushed inflation. Like imagine buying a home in Palo Alto or Scarsdale for $75k in the 1970s. If real estate had just kept pace with inflation, that would be a $410k house in today’s dollars. A respectable investment. But those houses are literally worth millions now. That’s not a sustainable model.

Moreover, houses (around here, at least) have appreciated 50% in FIVE YEARS. That’s insanity.

[pugz]

And yes investors have bought up all the under $200k houses in my neighborhood, renovated them, and then rent them out for $1500 a month. Tons of people would GLADLY buy these houses to live in for years

[sillygoosegirl]

We need more inclusive zoning. This link has some great visualizations showing the land area in some major cities which is reserved strictly for single family homes.

www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html

In many locations developers are not building affordable housing because zoning does not allow enough high density development.

[Jalapeñomel]

We have flippers around here who are taking the starter homes and making them completely unaffordable for the MC.

[jigsy]

I feel like there is no good solution to this problem.

I have been looking at ways to reduce my housing expense because I want to aggressively save money. I have been looking at renting rooms, and even there, people are asking for $1k/month for a shared bedroom. I honestly think I will end up renting an efficiency studio for the same price because at least its my own space, even if it is only 300 sq ft with no kitchen.

I don't know if rent control is really a good option, because I have seen how that can negatively impact housing stock and causes mobility issues. But, obviously we can't trust the market to control because people figure out a way to pay the exorbitant rents by just adding more people into units.

And then, you have the air bnb issues - I have stopped using the whole apartment option from Air bnb when staying in large cities with rental shortages because that is the only way to combat this issue.

Really, it just feels impossible. I don't want the housing market to crash because those who do own count on that investment, but, in a sense, they are counting on other people to bear the weight of that investment. And all the while you have the mega rich just getting richer because they can buy the apartment buildings and overprice them, or they can come in with the cash offers to undercut buyers.

[ESF]

Jun 20, 2019 16:47:08 GMT -5 goldengirlz said:

I don’t think homes need to appreciate insane amounts for them to be a “nest egg.” All they were intended to do was track with inflation. So you have a fixed mortgage payment in today’s dollars but your home value increases to whatever inflation is 30 years in the future. In addition, if you can pay off your home by the time you retire, you’ll only need to worry about property taxes and insurance. (Capping property tax increases for long-time homeowners is a whole other contentious debate.)

However, we now have Baby Boomers whose homes didn’t just track inflation — they crushed inflation. Like imagine buying a home in Palo Alto or Scarsdale for $75k in the 1970s. If real estate had just kept pace with inflation, that would be a $410k house in today’s dollars. A respectable investment. But those houses are literally worth millions now. That’s not a sustainable model.

Moreover, houses (around here, at least) have appreciated 50% in FIVE YEARS. That’s insanity.

The 2 bedroom, 1000 square foot house across the street from me is a perfect illustration of the fucked up combination of capped property taxes and flipping we have here.

It sold in dilapidated condition to what I assume was an all-cash investor in 2016 for $510,000. They flipped it and fourteen months later later, buyers paid $930,000. Prior to the 2016 sale, the property tax basis in 2015 was $35,000 and no I'm not missing a zero.  I have no idea when it was originally purchased by the prior owners, but they definitely paid pennies in property taxes for decades. Which starves the city of money to build affordable housing!!!!

[InBetweenDays]

Jun 20, 2019 16:59:13 GMT -5 sillygoosegirl said:

We need more inclusive zoning. This link has some great visualizations showing the land area in some major cities which is reserved strictly for single family homes.

www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html

In many locations developers are not building affordable housing because zoning does not allow enough high density development.

Developers aren't going to build affordable housing unless they are required to. We have areas "upzoned" near us for increased density. Single family homes are being sold for $575K, torn down, and replaced with three townhomes that are each selling for $800K. We have "apodments" with 140 sf units and shared kitchens that are renting for $975/month. Maybe eventually this increased density will lead to lower housing prices, but we haven't seen any sign of slowing. 

[mrspez07]

Our City (suburb of Denver) has a special election initiative that is being proposed to control growth for many of the reasons many of you mention. I personally think it is a poor solution to a complex problem, and many of those arguing in favor want to shut out apartments (luxury or not) because it doesn’t match their vision of our City’s “character”, and are mad about a few specific projects.
Link below is from the City’s website, since so much of the press on it is not impartial.

I hadn’t thought about investors being such an impact on the market, but it makes sense.

www.lakewood.org/City-Clerks-Office/Elections/2019-Special-Election

[kershnic]

This talk partially makes me feel so relieved that we moved to a LCOL city.... we bought a lovely 4 bedroom house with a nice yard, 15 minute commutes, and a well regarded school system, for 185k.

And yet I still have feelings of bitterness that we were essentially forced to move, because we knew that we were going to be priced out of our HCOL neighborhood within a few short years because rent was going up, and we wouldn't ever be able to afford to buy a million + $ home.

[wawa]

Jun 20, 2019 18:45:45 GMT -5 InBetweenDays said:

Jun 20, 2019 16:59:13 GMT -5 sillygoosegirl said:

We need more inclusive zoning. This link has some great visualizations showing the land area in some major cities which is reserved strictly for single family homes.

www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html

In many locations developers are not building affordable housing because zoning does not allow enough high density development.

Developers aren't going to build affordable housing unless they are required to. We have areas "upzoned" near us for increased density. Single family homes are being sold for $575K, torn down, and replaced with three townhomes that are each selling for $800K. We have "apodments" with 140 sf units and shared kitchens that are renting for $975/month. Maybe eventually this increased density will lead to lower housing prices, but we haven't seen any sign of slowing. 

Certainly restricting supply isn't going to help lower prices.

But yeah, there should be an across the board affordability requirement for increased density. You're either providing enough units that say 15% can be affordable or you're paying into a fund to subsidize affordable housing in the area.