Housing Prices are Artificially Inflated Across the Country

[middle-aged mom]

Originally Posted by J746NEW

When foreigners are allowed to buy, it puts upward pressure on housing prices then.
The Chinese own millions of properties on the west coast.

Meanwhile, we have HOMELESS WORKING PEOPLE.

EVERY country in the world looks out for their own an have restrictions on who can own land when it comes to foreigners.

Very few countries restrict foreign investment.

Many countries will grant citizenship based on acquisition of real estate.

[zach_33]

Originally Posted by evilcart

and here is a link to the quote and a nice long term chart that shows historically you could not be more wrong with your 2 x income stuff.
Home price to income ratio - Updated Historical Chart | Longtermtrends

I like this chart. It seems to suggest 3.5x income is a historical equilibrium... maybe 2.5-3.0x going back pre-Reagan. That is way more leverage than I would be comfortable with living in the midwest, but seems in line with reality in large coastal cities. Question is, when we start hitting 4.0 or even 5.0x, why can't Joe average investor get in on a "short" hedge fund, to keep the market efficient? I do think we are in need of a major correction but the wild fluctuations of the past 15-20 years seem unlikely to abate.

[moneill]

Originally Posted by engineman

Y'all need to read up on supply and demand.

[middle-aged mom]

Originally Posted by dspguy

I know it is simple to just dismiss the problem as "supply and demand!" Yet, the problem goes deeper than that.

An average person with some extra cash can start an LLC and buy property to turn around and rent it to someone else. And that someone else might be forced to rent that property as opposed to purchasing it because the value of the property has gone up due to people buying homes simply to profit.

They can make all home expenses tax free - the mortgage, insurance, repairs, etc. They can claim up to 15% of their private home as a "business office" and write off 15% of their own mortgage, utilities, etc. If they claim they use their car to inspect these properties... they can write off the gas, the insurance, etc etc.

I'm not faulting people from taking advantage of all of these tax laws. No. I'm faulting the tax laws for putting us in the scenario where home prices are inflated.

If home prices were inflated due to there being more people than homes, that would be one thing. But we don't really have that. We simply have homes bought up to rent out to other people, preventing some people from affording that house so someone can turn a profit.

But that's capitalism.

There are no breaks on capital gains for non- owner occupied housing.

Home values are highest in very desirable locations because there are more buyers than housing inventory.
I believe NYC has the highest price per square foot, followed by some areas of California.

Same property would sell for a fraction in another location.

No shortage of so called affordable property all over the US.