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View Poll Results: Don't vote right away, but what do you think is the main correlating factor for home price changes?
Job Creation 16 27.59%
Change in Population 15 25.86%
Loan Availability 6 10.34%
Land/Building Scarcity 20 34.48%
Environmental Factors 0 0%
Land Rights 1 1.72%
Voters: 58. You may not vote on this poll

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Old 08-05-2018, 10:03 AM
 
Location: The Triad (NC)
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Quote:
Originally Posted by Tencent View Post
In certain places it's 1:10 which leaves many homes empty being owned by oligarchs,
conglomerates just to sit there with nobody in it.
What color is the sky in your world?



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Old 08-05-2018, 10:06 AM
 
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Quote:
Originally Posted by MrRational View Post
What color is the sky in your world?



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Pitch Black
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Old 08-05-2018, 10:12 AM
 
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It really depends on where you are. If you are in California, land/building scarcity and environmental factors limit production, giving you a classic supply-and-demand scenario.



But as someone who spend 15 years advising banks before the real estate crash, the availability of easy credit was a big factor. With the loosening of credit restrictions under FMAE, FMAC, et al, it was unreal how the nature of the transactions changed. People no longer asked "What is my monthly mortgage payment going to be?" as a way to formulate a household budget. Instead, it was "How much house can I afford?" As in, "Let's buy the biggest house possible on what I can afford on this Zero Down loan?" And when the real estate meltdown came, all those people lost their houses.
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Old 08-06-2018, 07:00 AM
 
Location: Silicon Valley
2,768 posts, read 1,217,970 times
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Quote:
Originally Posted by Tencent View Post
I would say Land availability. The amount of high paying jobs do not match up 1:1 with the high priced homes. In certain places it's 1:10 which leaves many homes empty being owned by oligarchs, conglomerates just to sit there with nobody in it.
While the response is funny, this does happen. There tends to be a floor in many regions that a unit may get rented below or sold below but nobody will offer below a given line. Outside of new oil property developments (Where a company like Halliburton will actually go in and rent all available hotel spaces and buy residential properties) I don't think there's a sole entity oligarch, but it could feel that way.

Inherently, the top of the food chain is going to want selection to pick from, and your high end estates could sit on the market for years. If the owner is not in a forced seller situation, then there's no worry about dropping the price in order to facilitate a faster sale. You can't really rent them out. The wear and tear on the place could easily exceed what you take in for rents. So a balance is struck between minimum maintenance and waiting for the right buyer.

Similar thing happens in markets about to start gentrifying. People go in and buy up residences and start getting them fixed up and nice. Rather than rent them out, you may just wait a bit until a neighborhood suddenly has its season where pricing is on a whole different level that can pay for the depreciation to the improvements just put into a building.

Even in my neighborhood, one of my neighbors has five homes bought new here. He's one of these people that keep the new stickers on everything, there's like plastic on the furniture...it's ridiculous. Anyway, he bought homes when they are new and says he'd rather still have the new home thing going when he eventually sells. He only wants the capital gain, not rental income. He doesn't want rental depreciation. While I think he's generally nuts, so far he hasn't been wrong. The appreciation of homes in the area has outpaced rental income by an extraordinary degree. When he goes to sell, the buyers will know that despite the home being 10-20 years old, they will be the first to live in it. Not sure what kind of premium buyers would attach to that.

Same thing happens in commercial properties. When I was hunting for relocation for my company back in the recession, there was a whole area where a street was nothing but industrial zoned buildings on either side. They were all empty. Nothing wrong with the buildings and the rents were starting at .30 - .35 sf...cheap. The thing was, none would give a right to renew. When asked, they specifically said that we couldn't stay there. Why? They'd all sold into a master plan for an area that was awaiting a zoning change and all those buildings were to be torn out and higher density residential put in their place, which is exactly what happened.

Now, there's no Dr. Evil out there doing this, but rather just the invisible hand of real estate.
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