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Uh no - the price of homes is part of inflation - the value is determined by the market - that means not overpriced just more than YOU think they are worth. But unless you are the one buying it, your opinion is irrelevant. Also houses have through an appraisal so the values have been justified independently by a certified appraiser or the loans are not approved.
Different products or services may rise far more acutely - or perhaps far less - than aggregate inflation. Electronic gadgets are about the same price, in numerical dollars, as they were 40 years ago. Brokerage trade commissions and mutual fund fees are actually lower. College tuition has meanwhile risen much faster than aggregate inflation.
What about houses? We have the Case-Shiller index, which shows that over a century or so, housing prices more or less track aggregate inflation. Sometimes they exceed it, sometimes they lag it. Well, that was the case in the 20th century. The 21st has been more... interesting. Prices surged in 2003-2006, then crashed all of the way down to... the historical line. More recently, price rose to a much higher point, than in the 2006 bubble.
This doesn't mean that prices are "wrong", or that they're somehow manipulated. It just means that markets work in inscrutable ways. Maybe the Case-Shiller historical trend has itself changed, so that what was formerly a reliable trend, is obsolete. Maybe on the contrary we're due for a staggering crash. Or just a lengthy period of malaise, while aggregate inflation catches up with housing prices. If we at all believe in the utility of Case-Shiller, then Rodentraiser is right: houses are indeed overpriced... just as say gold was overpriced in 1980. It's not a matter of her opinion, or mine, or yours... but of what the market can bear.
If a development in the market is brief and unsustainable, then we'll eventually know that the items in question, were indeed overpriced. We just have no way of knowing at the moment.
The point I was trying to make was how much over inflation current homes cost. No one can deny they're overpriced.
The point we're trying to make is you're wrong.
Yes, we can deny they're over-priced. Obviously, you don't understand the meaning of the word "markets."
The US is not one giant housing market. There's more than 160,000 and if you want to add in existing housing markets, it's just under 600,000 markets total.
You think some guy in Detroit is looking at houses in Tempe, Arizona? He doesn't give a damn about housing prices there. He's only interested in housing markets in Detroit but he's probably not interested in the Hamtramck market unless he's a Muslim.
Most people in Cincinnati looking for housing in existing markets are probably not going to consider East Walnut Hills, East Westwood, East Price Hill or South Fairmount. All those markets are saturated. The only way to build new housing is to tear down existing housing or commercial/retail structures.
Saturation is another word obviously not part of your vocabulary.
You think some guy in Miami Township with a 4 bedroom ranch and 2 1/2 baths on an acre of land worth $139,000 is going to go onto Zillow and look at 4 room cottages on a lot 3,000 miles away priced at $750,000 is going to ask $1 Million for his home?
That's what Zillow wants and being the McConimist you are, you'd be all too happy to help them and then have the gall to whine that housing prices are overinflated.
You don't even understand the proper way to do comparisons. It's price per sq/ft not price of the home. That's especially true when comparing home prices over time.
Prices naturally rise for any number of reasons and none have to do with central banks. You just have to look at Census data from 1870-1910 to see wages and land values doubling every 10 years during which time the price of Gold was fixed at $18.72/ounce so Gold didn't do squat for them.
There are a few of the 160,000+ new housing markets that are over-priced but it is absurd to generalize and claim all 160,000+ new housing prices are over-priced because that is simply not true.
I have to go out later this afternoon. I'll try to take a photo of the sign saying "New Homes in the $180,000s. Those are not over-priced.
There are many reasons why it is difficult to increase supply in some areas - you can't just build as needed if land is limited or if there are lots of restrictions or regulations on building - these limit locations and delay projects that drive up prices and limit supply.
Agreed, but the regulations need to be relaxed. I can hear the NIMBYs freaking out right now. No, that doesn't mean eliminated, but reduced. Zoning regulations have piled up over the decades and do, indeed, drive up costs, often unjustifiably.
Agreed, but the regulations need to be relaxed. I can hear the NIMBYs freaking out right now. No, that doesn't mean eliminated, but reduced. Zoning regulations have piled up over the decades and do, indeed, drive up costs, often unjustifiably.
Local Planning Departments and Building Departments wield power via those regulations. They purposefully put in place roadblocks such as minimum setbacks and height restrictions with the explicit plan to grant a variance so long as the developer agrees to spend money to do good deeds for the community such as build a park on the other side of town or fund bicycle lanes on a major boulevard.
Are you saying corporations shouldn't be allowed to build 300 unit apartment structures and rent them out to willing renters?
I think what he's saying, and it was relatively clear, is that Corporations should be out of the single family residence market. For a very long time, this was easy because there wasn't enough margin for investors to make money from anything except multi-unit residences. The maintenance and upkeep on a single building for a single renter was just not worth it. However, that's no longer the case. As most organized companies have stronger credit levels than individuals, it puts individuals at a disadvantage in an area where you really would want individuals to have the advantage.
I think what he's saying, and it was relatively clear, is that Corporations should be out of the single family residence market. For a very long time, this was easy because there wasn't enough margin for investors to make money from anything except multi-unit residences. The maintenance and upkeep on a single building for a single renter was just not worth it. However, that's no longer the case. As most organized companies have stronger credit levels than individuals, it puts individuals at a disadvantage in an area where you really would want individuals to have the advantage.
I am unable to find compelling evidence that corporate ownership of SFH-as-rentals is substantially distorting the market. The biggest corporate landlords have something like 80K houses. That sounds like a lot, but there are what, 80M single family houses in America? What percentage is corporate-owned? This article: https://www.cnbc.com/2023/02/21/how-...0to%20analysts. says that it's "5% of the 14M SFH rentals" in America... that's 700K... so, about 1% of all American SFH.
It's easy to blame corporations. They have some role, of course. But I blame the mindset of the good old American consumer, who mistrusts paper-assets and just plainly feels better in parking his money in dirt, concrete and wood. And the rapacity of the foreign consumer, for whom American real estate is a place to park cash.
Imagine if millions of Baby Boomers said, "I'm going to cash-out of my house, put the money into paper assets, and live in a rental apartment". And that millions of Millennials said, "I don't need a house to raise a family; I'm going to do it right here, in the apartment were we've been living since college". And millions of Germans and Singaporeans and Chinese said, "Hey, why should I bother with American real estate, when I can put my money into the Nikkei, the Dax, the Hang Seng or the FTSI?" The market would be different. We would be putting more money into things like development of new drugs, or fusion, or transportation, or chips... and less money into dirt, concrete and wood.
Instead we have a frenzy of putting cash into real estate. It is this collective "we" that's to blame, and not Invitation Homes or Blackstone.
It’s also related to bailouts and monetary policy that were intended to prevent asset prices from going down when they should have. This has had the effect of robbing younger generations to pay baby boomers.
Corporations of any kind should be expressly forbidden from owning residential properties of any kind.
Highest inflation adjusted home prices in this nation's history.
Some Dutch cities ordered houses to only be sold to people who would live in them. How? By ordering these houses could not be rented out for 4 years after sale. University of Amsterdam did a survey and found out first time buyers profited off of this, so I can only hope the survey will spread to other countries and more, the ordinances will be followed. The problem is that housing is treated as a speculative asset, rather than a place to house people. Institutional investors have been swallowing up as much housing as possible because they know people need it, and until we stop their greed the problem won’t get any better.
The younger generations have less in assets so not "robbing" them. Also much of the money is going to things like the Build Back Better, Green New Deal programs and Inclusiveness / Woke policies - that is not "paying boomers" in any way. The ones paying for the bailouts and monetary policy are those that are paying taxes - that is mostly the older generations.
As far as corporations not owning residential properties - really silly idea. Technically corporations are treated as if an entity / person - they have the right to own any property. Who can afford to build and manage apartment complexes without using the corporate structure. Even for individual houses, not a good idea, most houses are built by corporations so would get rid of affordable housing. Even after that, many corporations that are not in real estate often end up own houses temporarily when transferring people so that able to move without worrying about the real estate they own. Corporations also can be as small as 1 shareholder, not all are large entities.
Most comparisons of housing prices fail to take into account that the average house today is 47% larger than the houses in the 80s. If you think that prices are too high, then don't buy but no one here was responsible for these increases.
There are programs like that in the US also that require the buyer to live in them. Most are first time buyer programs. Has nothing to do with your rant about corporate owned houses since the resale can be to a corporation after the period expires. It is called supply and demand - Corporations buy houses if they think they can make money that they can get more in rent than the payments would be - yet the rest of your post is about prices being too high - which is it?
The have and have nots are splitting more. Who's making money in the stock market, those who can invest. Who's making money in high yielding saving accounts, those who have enough money where 4.6% is significant. Yes that's well below inflation but its risk free money.
The market is down in many years and still strong in sought out areas. Nowhere is as sought out as San Diego. It's become the most expensive city. I contribute that heavily to remote work. It was always expensive in SD but never the most expensive. The influx of Bay and Seattle money boosted prices. Many tech employers are forcing hybrid in office return very soon. So places that spiked with Austin and Phoenix are already going down. Florida is near its peak IMO, I think people are realizing its not that cheap anymore considering the high insurance rates and low salary range.
The days of people moving to cheaper states are still going to happen. However, its going to come at a steeper cost. It'll only be cheaper if you move to the not-so-good spots of the cheaper place. People can do that within their same state and not have to uproot themselves.
Personally, I think we're on a long-tail of inflated stock market and people borrowing money. I don't expect a steep drop or strong recession in any form. I do expect a slow lagging downward 2024 with some upwards gains in 2025.
It’s also related to bailouts and monetary policy that were intended to prevent asset prices from going down when they should have. This has had the effect of robbing younger generations to pay baby boomers.
Corporations of any kind should be expressly forbidden from owning residential properties of any kind.
Highest inflation adjusted home prices in this nation's history.
Some Dutch cities ordered houses to only be sold to people who would live in them. How? By ordering these houses could not be rented out for 4 years after sale. University of Amsterdam did a survey and found out first time buyers profited off of this, so I can only hope the survey will spread to other countries and more, the ordinances will be followed. The problem is that housing is treated as a speculative asset, rather than a place to house people. Institutional investors have been swallowing up as much housing as possible because they know people need it, and until we stop their greed the problem won’t get any better.
Exactly where is one supposed to live in the interim between getting gainful employment and having enough saved to put money down on a home?
There are not enough individuals in this country with the resources and willingness to be a landlord. Something like 40% of the population is always going to be renting for one reason or another.
I am unable to find compelling evidence that corporate ownership of SFH-as-rentals is substantially distorting the market. The biggest corporate landlords have something like 80K houses. That sounds like a lot, but there are what, 80M single family houses in America? What percentage is corporate-owned? This article: https://www.cnbc.com/2023/02/21/how-...0to%20analysts. says that it's "5% of the 14M SFH rentals" in America... that's 700K... so, about 1% of all American SFH.
It's easy to blame corporations. They have some role, of course. But I blame the mindset of the good old American consumer, who mistrusts paper-assets and just plainly feels better in parking his money in dirt, concrete and wood. And the rapacity of the foreign consumer, for whom American real estate is a place to park cash.
Imagine if millions of Baby Boomers said, "I'm going to cash-out of my house, put the money into paper assets, and live in a rental apartment". And that millions of Millennials said, "I don't need a house to raise a family; I'm going to do it right here, in the apartment were we've been living since college". And millions of Germans and Singaporeans and Chinese said, "Hey, why should I bother with American real estate, when I can put my money into the Nikkei, the Dax, the Hang Seng or the FTSI?" The market would be different. We would be putting more money into things like development of new drugs, or fusion, or transportation, or chips... and less money into dirt, concrete and wood.
Instead we have a frenzy of putting cash into real estate. It is this collective "we" that's to blame, and not Invitation Homes or Blackstone.
And I think what Ohio is saying, rather clearly, is that he's taken my clarification of shalomar's statement, which I felt was significantly misinterpreted as apartment complexes being the same as single family homes, and made it my position.
However, I'll take the point. Corps do not own the majority of the $45 Trillion single family home market. This is true, but that doesn't mean they don't have a negative impact. Starward Waypoint alone owns 82,000 SFR rental properties, so I have no idea where you're getting 80,000 total from. Blackstone's Invitation invests in select markets, such as Sacramento, where it is the largest private property owner in the county and property inventory is especially tight. Truly, the overall of all homes is not dominated by these companies, but their recent expansion into the area makes them a meaningful participant in sales....which are then comparable for all other home valuations. Across the country, about 370000 homes are sold a month....so new entrances, especially in crowded markets...can be significant.
If corporations want to participate in the single family home market, they should build them. Otherwise real estate, left to its animal instincts, is a game of leverage....and that will not be won by the individual. I know during the downturn I had the renewal of my wife's dry cleaning lease, and I was looking to acquire an industrial building for ITW and could pay cash. The difference in treatment was amazing. If you ever get a billion dollars in your bank account. I highly suggest going industrial property shopping in a recession. You'll have all kinds of new friends.
With nothing else sacred....can't we let people get first cut on existing homes?
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