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Thread: Why is There a Housing Crisis?

  1. Top | #21
    Cyborg with a Tiara
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    Quote Originally Posted by Toni View Post
    I love the idea of doing a ‘city year’ to see if we’d like it, as well as some years of traveling. I’d also looove to do a lake house year as well, but that lies in the realm of fantasy as we do not now and are very unlikely to ever own a lake house.
    You can rent lake houses for a year. PM me if you’re ever seriously looking.

  2. Top | #22
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    Quote Originally Posted by Rhea View Post
    There’s talk of bidding wars and price hikes and building material shortages all over the place. I’ve read a bunch of repting on it, but curious what folks here think

    What’s causing the housing crunch? What causes it in your region versus other people’s regions?
    Its inflation and as prices continue to rise more people will be willing to sell their homes. It is hard to believe but their price still hasn't reached a high enough value yet. When it does, there will be more homes on the market and more builders putting up homes even with expensive lumber.

    I have been a landlord over 40 years and until now have never seen a market where home prices AND rents rise at the same time. What usually happens is the interest rate gets low enough, then the renters start buying homes and that causes rents to become lower due to them not wanting to rent. But with today's inflation, we are seeing both home prices and rents on the rise at least in my region (St. Louis).

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    Loony Running The Asylum ZiprHead's Avatar
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    The combination of covid and just-in-time manufacturing techniques left a huge hole in stockpile reserves. Until we climb out of that hole, things are going to be a good bit more expensive. At least such things being expensive is incentive to get the raw materials processed.
    When conservatives realize they cannot win democratically, they will not abandon conservatism. They will abandon democracy.

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    Veteran Member TV and credit cards's Avatar
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    Quote Originally Posted by ZiprHead View Post
    The combination of covid and just-in-time manufacturing techniques left a huge hole in stockpile reserves. Until we climb out of that hole, things are going to be a good bit more expensive. At least such things being expensive is incentive to get the raw materials processed.
    Steel is going to be stuck in the doldrums for some time. There are older US plants that are not being brought back on line due to the high cost of doing so, emissions concerns, and new plants being built but are many months away from being operational. I read US manufacturers have stopped taking orders until the end of summer just to get caught up. Biden is said to be considering dropping the Trump tariffs but the cost of importing steel would still be high as it is expensive everywhere and shipping costs have gone through the roof.
    Meanwhile, new homes can’t be certified and sold until fixtures builders are waiting on come in.
    Around here, folks should look to the older suburbs built in the fifties and sixties. There’s good value in these smaller bungalows and ranch homes and pretty good inventory. Everyone wants new, I guess. No one wants a home with one bathroom. Three bedrooms and one bath worked for we family of five. Now everyone wants these monstrosities. Your friendly estate agent tells folks to buy all the house they can afford when they should be buying all the house they need. Yeah, listen to your real estate agent. She’s an expert.

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    Super Moderator Bronzeage's Avatar
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    Quote Originally Posted by Rhea View Post
    There’s talk of bidding wars and price hikes and building material shortages all over the place. I’ve read a bunch of repting on it, but curious what folks here think

    What’s causing the housing crunch? What causes it in your region versus other people’s regions?
    I was in Lowes this afternoon. A 2x4 construction stud which would have cost me about $4 a year ago, is now $13.82. There didn't seem to be a shortage of them and at that price, I'm was surprised to see four pallets in stock.

    I have been working with Habitat for Humanity for 29 years. I worked on the last house they rehabbed in Baton Rouge. At that point, there was a shortage of suitable older houses and remodeling costs started to approach the cost of new construction. Since then, it's been all new houses, from the slab up. A Habitat House is generally built for sixty to seventy percent of the cost of a standard house. This is done through volume buying of material(all houses are the same), donated material(surplus from commercial builders and discontinued stock from manufacturers) and lots of volunteer labor. Our project always starts in September and I'm not sure if we will be working this fall. There's no point to building a low cost house at a premium price.

    "New housing starts" dropped like a hammer off a ladder in 2020 and started to recover in 2021. The same effect was felt in all the industries which supply the housing industry, so materials are expensive. There aren't enough houses for the people who want to buy(can afford a house) and this drives up the price. To compound this problem, when builders cannot meet demand, they will concentrate on the most profitable demand. This means the newest homes will be high end and middle to low income people are not going to find anything in their price range.

  6. Top | #26
    the baby-eater
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    Quote Originally Posted by Rhea View Post
    There’s talk of bidding wars and price hikes and building material shortages all over the place. I’ve read a bunch of repting on it, but curious what folks here think

    What’s causing the housing crunch? What causes it in your region versus other people’s regions?
    From what I understand, the housing market is different in the US than it is down here in Australia, but I believe the housing market suffers from similar problems in both countries. The main difference is that US houses prices took a brief nosedive for a few years following the subprime lending crisis of 2007-08, whereas Australia's houses prices remained stable.

    The problem plaguing housing in Australia, and certainly many other countries, is that some people are buying houses because they need somewhere to live, and other people are buying houses because they want to collect rent and profit from increases in the value of those properties.

    These investors create problems for wannabe homeowners in a number of ways: firstly, they compete for housing stock, which pushes up the prices of houses. This makes modest houses entirely unaffordable in many suburbs, even for dual-income families. Secondly, investors do not put their houses up for sale unless they expect to make a profit. So instead of a housing market driven by homeowners who regularly buying and sell as their needs change, we have a market where many of the property owners withhold keep their properties off of the market until prices increases enough to bring them an satisfactory profit. This artificial scarcity both reduces the number of houses that homeowners can buy and increases the prices that they must pay for the limited stock that's available.

    Some analysts, such as the Grattan Institute, have suggested that the housing market suffers from a lack of supply, which could be alleviated by building more urban sprawl or increasing housing density. This makes sense - more supply should bring prices down - but it ignores the fact that capitalists are deliberately restricting supply in existing residential areas in order to increase their profits. In Australia the government also gives generous tax concessions to investors (negative gearing, discounts on capital gains tax), which gives them further incentives to buy and hold onto housing stock.

    This crisis, or crunch, or whatever you want to call it, has been in the making for decades, long before the pandemic. And things can only continue one way: investors will own an increasing share of the housing stock, putting home ownership out of reach for most people in the suburbs. A few people are going to get really fucking rich at everyone else's expense.

    As far as I'm concerned, these investors are nothing more than a class of blood-sucking parasites who collect rent money and offer nothing of value in return.

  7. Top | #27
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    Quote Originally Posted by bigfield View Post
    As far as I'm concerned, these investors are nothing more than a class of blood-sucking parasites who collect rent money and offer nothing of value in return.
    Thats about where I see it. "Leveraging that which you have against people so as to have more" is one of the primary, most fundamental acts of evil in this world, if there is anything that can be considered "evil". It is twisting people for the love of things. I love things, don't get me wrong. It's just that I don't believe in leveraging people except to remove leverage. "Wide is the mouth of Mammon, and rarely do you know you are in it until he swallows."

  8. Top | #28
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    Quote Originally Posted by bigfield View Post
    Quote Originally Posted by Rhea View Post
    There’s talk of bidding wars and price hikes and building material shortages all over the place. I’ve read a bunch of repting on it, but curious what folks here think

    What’s causing the housing crunch? What causes it in your region versus other people’s regions?
    From what I understand, the housing market is different in the US than it is down here in Australia, but I believe the housing market suffers from similar problems in both countries. The main difference is that US houses prices took a brief nosedive for a few years following the subprime lending crisis of 2007-08, whereas Australia's houses prices remained stable.

    The problem plaguing housing in Australia, and certainly many other countries, is that some people are buying houses because they need somewhere to live, and other people are buying houses because they want to collect rent and profit from increases in the value of those properties.

    These investors create problems for wannabe homeowners in a number of ways: firstly, they compete for housing stock, which pushes up the prices of houses. This makes modest houses entirely unaffordable in many suburbs, even for dual-income families. Secondly, investors do not put their houses up for sale unless they expect to make a profit. So instead of a housing market driven by homeowners who regularly buying and sell as their needs change, we have a market where many of the property owners withhold keep their properties off of the market until prices increases enough to bring them an satisfactory profit. This artificial scarcity both reduces the number of houses that homeowners can buy and increases the prices that they must pay for the limited stock that's available.

    Some analysts, such as the Grattan Institute, have suggested that the housing market suffers from a lack of supply, which could be alleviated by building more urban sprawl or increasing housing density. This makes sense - more supply should bring prices down - but it ignores the fact that capitalists are deliberately restricting supply in existing residential areas in order to increase their profits. In Australia the government also gives generous tax concessions to investors (negative gearing, discounts on capital gains tax), which gives them further incentives to buy and hold onto housing stock.

    This crisis, or crunch, or whatever you want to call it, has been in the making for decades, long before the pandemic. And things can only continue one way: investors will own an increasing share of the housing stock, putting home ownership out of reach for most people in the suburbs. A few people are going to get really fucking rich at everyone else's expense.

    As far as I'm concerned, these investors are nothing more than a class of blood-sucking parasites who collect rent money and offer nothing of value in return.
    Well, discounting or lowering capital gains taxes increases the incentive to sell properties, not hold them. IOW, when capital gains taxes goes up, there is an incentive to buy and hold in order to avoid the taxes. Secondly, RE investors offer a valued service by offering housing to people who either can't afford the monthly D/S (which is usually significantly higher than rent) or they don't have the credit history to buy a home. Often times people also need to rent because they don't intend to stay in a location for very long. They move around due to their job. You shouldn't buy a home unless you plan to live there 5 years or more (as a rule of thumb).

  9. Top | #29
    the baby-eater
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    Quote Originally Posted by Harry Bosch View Post
    Well, discounting or lowering capital gains taxes increases the incentive to sell properties, not hold them. IOW, when capital gains taxes goes up, there is an incentive to buy and hold in order to avoid the taxes.
    Discounting capital gains taxes increases the incentive for investors to sell properties...and then buy even more properties because there's more profit to be made.

    Quote Originally Posted by Harry Bosch View Post
    Secondly, RE investors offer a valued service by offering housing to people who either can't afford the monthly D/S (which is usually significantly higher than rent) or they don't have the credit history to buy a home. Often times people also need to rent because they don't intend to stay in a location for very long. They move around due to their job. You shouldn't buy a home unless you plan to live there 5 years or more (as a rule of thumb).
    You make a good point, and I'll have to moderate my view of investors.

    Slightly.

    The problem I'm seeing, and have lived, is that there are vast numbers of people stuck in rentals for long periods because they cannot get finance to buy a house. The average rental price in the outer suburbs is significantly higher than what I'm currently paying on my mortgage, even though I only bought my house last year. There are very few properties available to rent to people who can't afford a home loan. A lot of people are simply stuck in a rent trap where they are pouring huge amounts of money into rent because they can't afford to save up for their own home. The houses with cheapish rent are also tiny houses too small for a family, and/or decrepit shitholes, because investors around here spend as little as possible on maintaining their properties.

    The people moving around due to their job are a tiny group compared to the tenants who have been priced out of the housing market. And I would venture that many of those people moving around for work are in careers that pay more than the median income. Investors aren't providing a valued service to these workers, or to anyone for that matter, by jacking up the rents on closet-sized apartments and suburban two-bedders that haven't been renovated since they were built in the 70's.

    I could see an argument being made for a tiny fraction of housing being rented out to transient workers, but that isn't what's happening in the housing market. Instead, we've got greedy fucks buying up housing that should be in the hands of people, both middle class and working class, who are trying to put down roots.

  10. Top | #30
    Veteran Member Canard DuJour's Avatar
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    The current spike is down to Covid-related supply problems.

    The chronic affordability problem is down to neoliberal monetary policy plus finite supply of land:




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