A massive number of people who are waiting for interest rates to drop will sell their equities to buy a house when it happens. IE, many couples are waiting for lower interest rates before buying a house.
This runs counter to current equities markets where hints of rate drops from the Fed will increase stock price.
It’s definitely an interesting theory.
Unless the theory is that institutional investors are doing the same, it's not that surprising.
I wonder how long people remain in such states. I feel like for something as big as house ownership you need to decide if you really want it and if you do just go for it. How much of your life are you prepared to spend on "getting ahead"? They say "life is what happens to you while you're making other plans".
Painful for people that do not expect significant further income increases.
The best recommendation is to _know_ the fundamentals of house prices. To know when buying is cheap and expensive.
Eg. in relative terms: buying a house at 30 Price/Rent makes it more affordable to rent - in such an environment, just rent. If the P/R falls to 15-20, then buy.
Housing can also be unaffordable in absolute terms such as wanting to live in down town San Fransisco. In this case people should strongly consider if they want to pay a premium for that locality.
We don't have to go longer back than 2013 to when it made sense to buy over renting - and that will return at some point.
Maybe we should invent a better system.
SF was more expensive, which is maybe why SV is the burbs.
The cool hippie art scene in SF was in the cheaper higher crime areas, as it usually is. Maybe we need to get those crime rates up to drive down housing costs.
It’s no longer really possible to bootstrap in the Bay Area unless you are doing something nuts like living on couches or cheap shitty boats. It’s too expensive even for modestly funded companies. It’s really just a place for big tech and lavishly funded ventures. If you don’t have a Saudi prince on the cap table your company is better off remote or in another city.
Ouch. Holding T-bills instead of equities for the last few years has been incredibly costly for this couple.
Their real mistake was thinking the housing market would crash, which while not impossible seemed unlikely to most observers.
Regardless, one should not hold cash in anticipation of a housing crash but in the anticipation of a buying opportunity.
Isn't the housing crash in question also the buying opportunity in question, for many people who have been priced out of the market?
Edit: I'm not implying this is a sound strategy. Just more of a reality.
A buying opportunity can arise in multiple ways: Eg. realizing that you are willing to move to a cheaper area.
There is plenty of well priced housing - just not on the soil people want it to be on. But in the end, not everyone can have the same address.
Put RV on it. Save.
Build utilities. Save.
Build tiny house. Save.
Expand house.
This is what poor people do in latin america, sans the RV. They just buy blocks as they can and add on to it.
This is also exactly what our family did, minus the 'expand' part. We could never afford to buy a house nor get access to credit but we could afford to build a tiny one on shithole land one brick at a time. The great thing is it also more or less works no matter how poor you are, if you die before it is complete your children can continue. Eventually after enough generations enough money is saved to have a house.
Now you could probably do this really far out in the boonies where it could be illegal, but also unenforced. My uncle lives in a log cabin built this way. But it's also extremely far away from civilization (aka: jobs with income, and luxuries like groceries and clean water).
You have to pick one of the places in the US with little to no codes / paperwork from the beginning. There are still quite a few of them left, but probably not places you have heard of.
electricity - private power company. But started on a small cheap generator.
sewage - private septic system (county allows you to DIY build them so could do this for next to nothing)
roads - For miles and miles they are all private dirt roads, but with easements to allow me to pass. The easements go miles until they connect to a county road in town. I first built my road with a shovel, hatchet, and ripping small trees out with a truck.
Nothing was provided by the government.
If you didn’t have enough finances to complete before you die the land would be lost to inheritance tax at that point in most of the western world.
Here's a nice website showing how to build a nice, modest home for under 50k. Too bad it's illegal. https://web.archive.org/web/20210216212333/https://www.irish...
Basically, as long as you allow other people to veto new construction, it is almost guaranteed that a few bitter fighters will devote their lives to stopping anything to be ever built again. Roads, trams, housing, anything at all. A veritable vetocracy, not too dissimilar from the legendary Polish-Lithuanian Commonwealth, where every noble could veto anything agreed upon by the Sejm by simply standing up and saying "I disagree".
The "community participation" ideal which looked very positive once turned out to empower the worst reactionaries.
The few countries that got this problem under control did so mostly by limiting the legal abilities of such people to throw wrenches into everything.
The problem with community participation is it can only work when significant numbers of people participate. Most people have too much in life as it is to get involved. On any given night there are 50 different events in my city I could go to - (knitting circle, bible studies, softball, DnD, book club, girl scouts, gymnastics...), plus I have my own hobbies at home I'm trying to work on: I don't have time to attend the community meetings as well - and neither does most people in my community. What is left with the "busy bodies" who decide to make time - but they don't represent the community and shouldn't get input (I went to one: Some women was asking a lot of questions on why the road department decided to not replace a road grader with 14900 hours on it even though the policy was replace it at 15000 hours - that is trying to micromanage the whole county as if the leaders are not competent to make decisions).
More constructive reasons like "there is not enough buses to the area" can be usually solved by reasonable compromise, but this sort of intense conservatism "wait until I am dead, then build something" cannot.
Like what asset could non-investment savvy people move their increasingly worthless savings into otherwise?
Investing in businesses bringing jobs and prosperity to their community, their people, their nation.
Or investing in their children to help them start out in life and not live as serfs.
But no, better to lock up all the money into non-producing assets and completely destroy the economy, progress and the birth rate.
There's a reason why during most of history, your welfare in age depended on your children or extending that to your community. Any other system simply eradicates the people participating in it, as we see right now with rapidly diminishing younger generations, to the benefit of the olds.
I don't see why people would be interested in investing in community businesses when I can't even guarantee I can live in that community long enough to see a benefit because I'm at the whim of the land owner and might have to just move somewhere else because I can't own anything.
Analogy is nonsense because you can’t sell the full bottle of water to someone else after drinking it.
Because of inflation. Your house is not producing any goods or services, as opposed to investments into the capitalist economy or taxes to the socialist economy.
Your association with NIMBYism as strictly economically motivated is a popular and recent one but the term predates and is much broader than that, and being purely motivated by historical preservation on a local level definitely is NIMBYism.
What you "spelled out" is not the generally understood definitions. I'm glad you're thinking for yourself, that's usually a good thing. Good on you!
That said, when using specific terms, it generally helps to use widely understood terms rather than your own definitons.
NIMBY[0]:
NIMBY (/ˈnɪmbi/, or nimby),[1] an acronym for the phrase "Not In My Back
Yard",[2][3] is *a characterization of opposition by residents to proposed real
estate development and infrastructure developments in their local area, as
well as support for strict land use regulations. It carries the connotation
that such residents are only opposing the development because it is close to
them and that they would tolerate or support it if it were built farther away.
The residents are often called nimbys, and their viewpoint is called nimbyism. *
The opposite movement is known as YIMBY for "yes in my back yard".[4]
Stock indices pretty much always neat inflation if you intend to hold your investments for more than 5-10 years.
I pretty firmly believe that high housing prices are destroying civilization. I don’t think that’s hyperbole. I’ve been fond of saying it’s the economic problem in much of the developed world. The, singular. Make housing inexpensive and most of the other stats look at least okay.
We need to choose between real estate equity and literally all other things.
False. Young people always find something to doom spiral about. They have been doing it all my life, and if you read old books you will see it go back much farther.
There are definitely downsides to renting such as landlord issues or missing out on mortgage subsidies, but maybe a higher proportion of renters could lead to improvements in affordability. And if the well-off are renting as well, there's also more hope for better legal protections for renters.
They say that because owning a home allows you to reduce your bills, but also more crucially and viscerally because owning a home allows you to be free and have a place that is truly yours to do with what you will. You can paint the walls, have a pet, host a party, knock down a wall and build an extension, do whatever you like to make your mark on it and the world. It's yours and if you will it, it always will be. It's a level of peace and security that's almost incomparible. There's a reason in most of history there was a distinction drawn between bonded peasants and freeholders.
This allows someone to quite concretely limit their housing costs in retirement (a large portion of anyone’s expenses!) in a way that is impossible in almost any other way. The only other similar types of deals are specific types of rent control in very limited metro areas.
That is huge.
Generally if you rent your share of property tax in the rent payment is higher than an equivalent house share would be Tenters don't see how property tax affects their rent and so they generally don't oppose property tax increases, if they even bother to vote which they are less likely to. To be fair, how tax affects tax is complex - rent is supply and demand first, things like taxes put a floor on prices and so affect supply but this means it is indirect and so hard to see even though it will catch up eventually.
"People don't say home ownership is important because it's an asset for retirement; if you sold it, you wouldn't have a home in retirement!"
It's very common in the USA. A married couple has some kids and buys a house big enough to accommodate them comfortably. 20ish years later, the kids have moved out and the parents don't need such a big house. They also are about to or have recently retired, and they would like to stretch their retirement money. Sell the big house, make a lot of money, and then buy a smaller, cheaper house. In the USA this pattern is pretty common.
[citation needed]
> The majority of retirees don't relocate. A 2015 analysis (the most cited historical data) from the U.S. Census Bureau’s American Community Survey showed that only about 5% of Americans age 55 and older move annually (local or long-distance).
[…]
> A more recent study, from Hire a Helper, showed that in 2024, only 22.7% of all retirees (both new and existing) moved, compared with 25.3% in the year before.
* https://www.kiplinger.com/retirement/retirement-planning/myt...
Lots of folks say they want/plan to downsize though:
* https://www.usatoday.com/story/money/2019/05/21/home-buying-...
And of the half that say they are moving, half (25% of total) "want their next home to be the same size as their current one, and 22% want it to be larger".
Sure you might need a new roof and insurance and taxes fluctuate but that’s a BIG BIG deal as anyone who’s rented and been at the mercy of markets can tell you.
This is even more true now as the rental market (like so many markets) is coming to be dominated by corporate landlord La using revenue extracting software.
He is doing very well.
Currently rental prices have to compete with how much effort a boomer wants to put into profiting from their second or third homes, a fair amount but most realize a stress free tenant is better than maximizing profit.
If you remove these independent landlords then it falls to a tiny group of giant orgs that then control the market and can charge whatever price they want.
https://www.populationpyramid.net/united-states-of-america/2...
It’ll spread around more when they die.
At least as this quotes “Millennials own less than two-thirds of the real estate Baby Boomers did at the same age”.
[https://www.visualcapitalist.com/sp/ter01-real-estate-owners...]
Seriously, the fact this comment is, so far, at the top is mind boggling.
It isn't, but it seems that way. If you pay your house off before/when you retire that means you live rent free (you still have property taxes and maintenance, but they are far cheaper than rent). Social security is the same either way. Your 401k and IRAs have maximum contributions and so again not having to pay rent means your retirement income is effectively higher.
A house as an appreciating asset is only good for retirement if/when you sell - but then you either need to invest that money and pay it out in rent which has also increased, or you need to buy a new house. There is also risk - if you go to a nursing home the house is treated special, but if you sell it the additional money is used to pay the nursing home before government kicks in. Which is to say that for retirement planning house values are meaningless.
An appreciating house is useful if like many people you "cash out refinance" I've seen many people refinance their house every few years to the current house value. They take very nice vacations paid for by the house increase in value. This is all good until they retire and now owe what the house is worth and so they are paying rent with their limited income.
Historically it's appreciated in the 2-5% range, which is roughly the same as inflation.
But then again. Now where home ownership is so financialized, people don't dare to do zit out of the ordinary, which again leads to boring cities.
Condos should be a lot more popular, especially for the young and old, but the fees are pretty much always ridiculous. The whole point is to spread out the maintence costs among many residents so they are trivial, instead condo fees are usually in the hundreds or thousands per month per unit for no apparent reason other than the landlord wants a big payday. It doesn’t cost millions per year to maintain some parking spots, a small unstaffed pool, a front desk, and building maintenance. It’s like paying rent on top of your mortgage.
Home ownership in the 1950s got you a shoebox. It was affordable. That's why so many got into the equity game. Larger expectations and larger returns have changed the landscape.
Condo expenses are what they are because taking care of a big building is expensive, but also because the condo board sometimes defers maintenance for many years or decades, and then the problems become expensive to fix.
Personally I think I'd rather rent than get a condo.
Ofc, if there is renovations those will be billed separately or funded by debt that I have to pay monthly. But still delta sounds just like someone doing something wrong...
The marginal cost of a home with 2 full bathrooms compared to just 1 bathroom is negligible, and the value and security gained from the convenience and redundancy is immense.
Also, even today, there are tons of small 1,500 sq ft homes on 2,000 sq ft lots built and sold in the western US. It just depends on the local market for land prices and demand for small homes.
I lived for a couple of years in a two bed/one bath apartment and the number of times I'd wake up having to use the restroom pretty badly and find my roommate was already in there was just too much.
I have some older neighborhoods around and it boggles my mind how many houses I find that are three, four, even five bedrooms with a single bathroom.
Upzoning allows the owner to build more than one residence on what was a single family property. This might include removing an existing home to build a duplex or triplex, dividing a house into a duplex, or building an accessory dwelling unit on the property.
Urban renewal was typically the government using eminent domain to raze whole neighborhoods to build low income apartment buildings or some such. This also might include using the "Tower in a park" architecture that was all the rage at the time, but a terrible urban form.
By the way, the whole point of streamlining permitting and zoning processes are to get rid of the unreasonable watering down of every proposal because as you state the end result is worse for everyone, aesthetics included.
Also it isn’t just about historic structures, there’s situation like that San Francisco Mission District strip-mall-esque laundromat steps from the BART station, that can’t be replaced because NIMBYs are afraid of “changing the neighborhood character.” If crap architecture like that ends up in the same historic bucket then whoever is declaring 80% of every city as being “historic” has done a disservice to anyone who wants to actually protect historic architecture by diluting the name for their anti-change cause.
Since I like sortition, here's a goofy idea... eminent domain should be of two sorts: adverse and voluntary. Voluntary is bought-and-done. Adverse means we pick some other property in a different part of the jurisdiction, at random, and also adversely posses it. To drive the point home, I'd bias the selection to be directly proportional to value, ie, the more valuable, the more likely to be selected. The lock up in the adverse possession should be no less than, say, 25 years, or the lockup on the original possession, whichever is longer.
An area doesn't need increased density or amenities for land values to go up. Here in the SF Bay Area, land values have exploded yet many neighborhoods have not changed in decades.
With urban areas routinely approaching or, even worse, outright exceeding 50% of net income going away for housing, that's setting a pretty high floor on wages and salaries, and that in turn drives up the price for domestic Things and Services.
And no, building housing will not solve the problem. At all. People keep whacking their cucumber over urbanisation because they deem it to be "cheaper" to provide essential utilities due to effects of scale/density - the problem is, space is still finite and denser housing costs more money to construct, especially once you build higher than the maximum usable height of a fire truck's ladder because now you need to invest into independent rescue/evacuation paths, and once you build above 10-ish (or less, depending on soil type and geological risks like earthquakes) stories you need to dig deep into the ground to build a foundation strong enough to keep the building from damaging during settling. Can't compromise on the fire safety regulations (otherwise all you get is a new Grenfell Tower style disaster), and you can't compromise with physics eithr.
Western countries need to build out essential infrastructure like broadband Internet, mobile phone service and public transit in rural and suburban areas. That's the only path that doesn't rely on utterly insane investments.
How can it be that people can enslave the young generation by the motivation that they were born first and therefore own all the land, but they can't do that with water? Ie: "We were born first and own all the water rights and you have to go into debt slavery the rest of your life if you want to drink water!" Makes just as much sense as the current situation.
Land is finite. As population grows, supply and demand dictate it will rise in value if you hold.
If you rent property that someone else would prefer to buy for habitation if made available at market rate, you’re benefiting at overall society’s expense. Similarly if you take units off the market as investment vehicles.
Productivity matters most in economics. Without it you’re just shifting money around. Owning as a middle man is essentially the opposite of productivity.
As rentals become the only option and a small percentage of land owners become the only housing option, we’re going to see a rise in wealthy untethered types who rent and move at will. Similarly, we’ll start seeing ghettos form in the scant land remaining after this fully plays out.
The problem is that you can’t tell an individual who had to go through hell to own a place, on the verge of a second home, not to rent instead of sell. This society is a hammer taking a chip out of every successful shoulder. “Why should I do society a favor when society did me none?” Is a common mindset that just exacerbates the issue.
We’re creating a resentful generation who feel disenfranchised and taken advantage of, and it’s only going to get worse. I fear for uprisings and surveillance states incoming.
For real solutions, bring back work from home. No need for dense housing when you’re not forced to live in a particular area.
Nitpick: There is a lot of land. We're not going to run out of it anytime soon. What we are consuming is 'good' land. That definition will depend on a lot of things, of course.
For instance, in Denver, there is a lot of land. It's just that all the land to the west is rugged mountains. Great, so all the land to the east then, plains, right? You can build houses all the way to Kansas! Yes, but all that land is filled with bentonite clay which expands 4x with water (yes really!). You can't build cheap and safe houses on it. So, land values increase as more people move to Denver, simple supply and demand.
This kind of thing is all over the world. You can build more houses just about anywhere, but making these houses safe, cheap, and where you actually want to live, that is the problem.
As the population shrinks nobody wants to risk sitting with unsellable houses. Which is a huge driver in the current real estate market.
What we are seeing to date is a transfer of wealth from the working class, the middle class, and the government to rich people at a rate that is unprecedented in human history. The rich are getting richer at an extremely high rate, and barely any country taxes wealth.
So what you get is multimillionaires and billionaires who get passive income of several million dollars per month. What are they going to do with that money? There is a rule that you should let your money work for you, and so rich people buy: assets, stock, shares.
That’s why the prices of all of these things go up despite living standards falling and falling for ordinary people. We have an asset price inflation, due to the enormous amount of money given to the ultra rich.
Housing prices will never go down unless you tax the rich. Regardless of zoning laws or what not.
Seems to me that capitalism, especially when unregulated as has been in the US since the late 70's/early 80's ultimately results in wealth concentrated somewhat in the top 10%, but especially the top 1%, while the bottom 90% sees their share of national wealth drop every lower.
It feels like we are entering a second guilded age, just like the late 1800's. Maybe a few world wars and a global depression will reset the board and we can start again.
The crisis is not necessarily availability, but affordability which is a consequence of inequality.
Yiu also have to step back and consider why people feel like the need to bundle up in the cities - if that a General lack of opportunity elsewhere due to inequality?
You are seeing a wound and saying: yep, that happened because the skin got damaged.
softwaredoug•5mo ago
In my town we spent 8 years of public involvement in rezoning to increase supply and density. Including several city council elections of pro-housing council members elected over more NIMBY ones.
Only to have it all screwed up by 2-3 households that sued, pausing the zoning and throwing a wrench into a lot of new housing construction.
I feel like there has to be an effort at all layers of government to solve this structural problem where a few homes can derail a democratic process.
grafmax•5mo ago
LastTrain•5mo ago
softwaredoug•5mo ago
IE:
The Impact of Zoning on Housing Affordability https://www.nber.org/papers/w8835
> we argue that high prices have little to do with conventional models with a free market for land. Instead, our evidence suggests that zoning and other land use controls, play the dominant role in making housing expensive.
grafmax•5mo ago
I found an argument in your paper but no such examples.
LastTrain•5mo ago
pgwhalen•5mo ago
https://www.lewis.ucla.edu/2024/12/11/83-local-effects-of-up...
LastTrain•5mo ago
pgwhalen•5mo ago
grafmax•5mo ago
softwaredoug•5mo ago
I think I another huge constraint is construction labor. Which is very tight right now.
I’m reminded we built the Empire State Building in 9 months. I see delays for single family homes causing it to take years.
lotsofpulp•5mo ago
Otherwise, tract homebuilders in the US have metrics of building a brand new house within 100 days.
The labor costs are high, but not that high that construction is delayed due to lack of labor. Land prices and clearing legal hurdles are the bigger problem.
Bjartr•5mo ago
enraged_camel•5mo ago
What you describe is not a structural problem. On the contrary, it is precisely how a constitutional, rule-of-law system is meant to work.
Democracy does not mean pure majority rule. Our system is a constitutional democracy. Majorities make policy, but minority rights and legal limits constrain how they do it. Courts are there to enforce these limits even when a policy is popular.
Judicial review is part of the design. Reviewing legislative and administrative actions for legality is a built-in check and balance, not a veto by randos. The courts exist to ensure the other branches do not skip required steps or exceed their authorities.
More specifically, the legal concept of "standing" prevents this from being arbitrary. In most contexts, you cannot sue just because you dislike a decision. You must show concrete injury, such as living next to an affected area. That's why a "few households" can file: they're the ones with legally cognizable stakes.
Now, I will grant that in places like California with decades of existing laws, NIMBYs have done an excellent job figuring out exactly what buttons to press and what levers to pull to get their way. But this is not a flaw in the system. It just means that they have read all the manuals (because they are very strong incentivized, financially, to do so) and are now using it competently, even if it is self-serving and sometimes even in bad faith. But other locales have figured out the solutions to this problem. The article gives one such example: Austin, TX.
throw0101a•5mo ago
> Democracy does not mean pure majority rule. Our system is a constitutional democracy. Majorities make policy, but minority rights and legal limits constrain how they do it. Courts are there to enforce these limits even when a policy is popular.
When the minority is 20-30 percent you may have a point, when it's 2-3 people then that's just obstructionism.
enraged_camel•5mo ago
cornholio•5mo ago
For example, all rules regarding single family occupancy - there is no gain society can possibility have from instituting such rules, and many countries do just fine without them.
But once you have them in place you have created a very strong incentive for incumbents to exclude others from diluting their access to public investments in the area, while also denying those people a political voice.
_DeadFred_•5mo ago
The ability for 2-3 households to sue to stop something like that where the government just steamrolls over zoning/etc because it benefits the government is hugely important.
A home is the biggest investment a person will make. It is also not easy to unwind from. Zoning is a promise by the government 'invest in this, we promise it will stay what you are purchasing'. A few home owners should definitely be able to force the government to keep that promise, and to keep their homes fit for purpose.
_DeadFred_•5mo ago