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You can call it greed if you want, but who is going to build a $500k house for $200k profit when you can build a $1mm house for $400k profit?
There's no shortage of people willing to spend money for more expensive homes, it's less about the builders and more about the demand. If the demand suddenly dried up for those large million dollar homes then builders would be forced to build smaller ones... economics 101
the problem isn't the builder charging too much, the problem is you don't make enough money to afford what they're selling. The answer is a 90 minute commute, each way.
I see this happening a lot. People sell their homes to builders to knock them down and rebuild, because they don't want to have to update everything. They don't even consider selling it as is.
But couldn't someone just 'outbid' the builder and move into the 'outdated' cape?
Maybe it has an old kitchen. But okay, maybe someone could offer 360,000 or even 380,000 (if they could jump in before the builder.) And for such a savings, put up with an older kitchen. And the older person who sold knows that their house is not knocked down, but has a new family.
But it is never just the kitchen. The bathrooms are all original - from the 1950s. The heating system is on its last legs and it is oil heat, so now you have to deal with an oil tank removal. There was a one cape we saw that had a dormer with wood paneling but no drywall behind the paneling - a serious fire hazard. If the home was owned for 40 years, you could count on hidden electrical and plumbing issues or oddball additions due to the homeowner performing the work or having his buddy doing the work without permits and without inspections. We saw a great room addition that was 4 inches lower than the rest of the house. How does that happen? What else was messed up besides the height of the floor that we could not see?
Due to the kid friendly nature of our town, people are moving in with 1 or 2 kids and in many cases, both parents working. There is not much energy left for renovating with 2 parents working and a couple of kids running around. Also, the prices do not leave much money leftover for renovations. People want to drop the furniture and get on with life.
the problem isn't the builder charging too much, the problem is you don't make enough money to afford what they're selling. The answer is a 90 minute commute, each way.
Ah yes! Only the rich should have decent homes and commutes to work! Got it!
The rich get the best of everything because they're rich... don't like it? Figure out how to get rich.
Again, this isn't some secret society holding you down, it's supply and demand.
Wrong. Crony capitalism is thriving in this nation and has thrown off the balance of healthy supply and demand seen in a pure capitalist society.
You have tons of empty penthouses and condos sitting in Manhattan because a Sheik from the Middle East or a Russian billionaire wanted to “invest” in real estate. Greedy developers take advantage of this and build just for people like them. In turn, it has a domino effect that inflates housing for EVERYONE.
Wrong. Crony capitalism is thriving in this nation and has thrown off the balance of healthy supply and demand seen in a pure capitalist society.
You have tons of empty penthouses and condos sitting in Manhattan because a Sheik from the Middle East or a Russian billionaire wanted to “invest” in real estate. Greedy developers take advantage of this and build just for people like them. In turn, it has a domino effect that inflates housing for EVERYONE.
That particular example isn't crony capitalism; that's money laundering.
Crony capitalism is a huge problem, but not really as it relates to the housing market. The biggest problem with the NJ housing market is the fact that renters can't save up for a down payment. When a renter pays rent, they're paying: 1) their landlord's mortgage, 2) the landlord's property taxes and insurance, plus HOA/condo fees, 3) a small amount for general upkeep and maintenance, 4) possible administrative overhead, and 5) profit. Renters can pay all of those above items, so of course your average renter could afford items 1-3 if they simply had money for a down payment.
My wife and I bought a home in February 2018 for $350,000. We've put in less than 20k of work into the home since. We put 12.5% down (avoided PMI too). We are in the process of refinancing now, and got the appraisal back at $410k. My wife and I accumulated $60,000 in equity in 2.5 years, and it wouldn't have been possible but for my wife being well off and having money saved from her grandmother's inheritance. We bought a 4 bedroom, 2 bath home in Wayne, and are paying only slightly more per month than we were paying for a 1 bedroom, 1 bath apartment in Hackensack.
Saving up for a down payment is the single biggest roadblock to homeownership. Policymakers shouldn't be focused on market forces resulting in McMansions being built on Cape Cod lots; they should be focusing on helping those who would be great homeowners but for a lack of a 20% down payment.
That particular example isn't crony capitalism; that's money laundering.
Crony capitalism is a huge problem, but not really as it relates to the housing market. The biggest problem with the NJ housing market is the fact that renters can't save up for a down payment. When a renter pays rent, they're paying: 1) their landlord's mortgage, 2) the landlord's property taxes and insurance, plus HOA/condo fees, 3) a small amount for general upkeep and maintenance, 4) possible administrative overhead, and 5) profit. Renters can pay all of those above items, so of course your average renter could afford items 1-3 if they simply had money for a down payment.
My wife and I bought a home in February 2018 for $350,000. We've put in less than 20k of work into the home since. We put 12.5% down (avoided PMI too). We are in the process of refinancing now, and got the appraisal back at $410k. My wife and I accumulated $60,000 in equity in 2.5 years, and it wouldn't have been possible but for my wife being well off and having money saved from her grandmother's inheritance. We bought a 4 bedroom, 2 bath home in Wayne, and are paying only slightly more per month than we were paying for a 1 bedroom, 1 bath apartment in Hackensack.
Saving up for a down payment is the single biggest roadblock to homeownership. Policymakers shouldn't be focused on market forces resulting in McMansions being built on Cape Cod lots; they should be focusing on helping those who would be great homeowners but for a lack of a 20% down payment.
You don’t HAVE to have 20% for a down payment. Even outside of FHA, you can get a conventional mortgage with just 5% down (at least pre-pandemic, I honestly haven’t checked lately). You can even get a lender-paid PMI mortgage at a slightly higher rate to help lower that monthly expense.
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