Economy The Western housing crisis

[EL CORINTHIAN]

Canada has very similar regulations in regards to housing that the US has and which inflate housing costs so honestly I remain skeptical that immigrants are the problem. Get rid of laws that prevent the building of anything other than single family detached homes and you'll see an improvement.

And do you think the smartest thing to do while we have these realities to contend with is to bring 400k immigrants that more or less centralize themselves in city centers where infrastructure is already exhausted?

Immigration isn't the central issue but it's adding fuel to the fire.

 

[Rob Battisti]

We need immigration. I’d like to see it controlled and incentivized for the best people around the world. Got a PhD? Degree in a STEM field? 2 years tax free and expedited green card process. We need to strictly shut our borders though.

This has very little to do with housing.

We also need to shut off hedge funds buying property. I’d force Blackrock to sell all their properties immediately.

 

[Jack V Savage]

But it also (case dependent) might not be a good investment for those tasked with building the additional supply then, right? Unless we're saying we want the government to actually provide that supply as opposed to just removing some of the obstacles they put in place that halts private entities from doing it.

Yeah, any investment can fail. With housing, if it gets overbuilt, that's bad for investors but good for everyone else. There are going to be times when it's not clear whether it's good or bad, and people will take risks or not. For a lot of areas now, the market is screaming for more supply, and it's illegal to provide it (or only recently became legal), and I think it's a no-brainer investment. Though shortages usually lead to gluts.

This is very simplified way to put it but: You have an area where theoretically almost everyone who wants to live there and needs housing has it. An investment group comes in and buys up a big % of that housing and raises rents, which obviously carries over and resets the market for everyone. Maybe that drives some current occupants away that they can't afford or don't want to pay the higher amounts. Some are replaced by new tenants, maybe all are if the area is desirable. Someone that would potentially come in and build more housing might look at the situation and say "Okay, the government removed some hurdles to building here. But my commodity costs are so high right now and money is so expensive that it's a bad investment for me to build because in order to be desirable I'd need to charge lower rents than people are paying now to entice them to move." So in theory (and likely in reality, SOMETIMES), just allowing more building would lead to less demand and stabilize pricing. But in some cases it's just not going to get it done because other obstacles can exist.

I don't think that that situation ever really happens, though. Doesn't fit my mental model of human behavior or market functioning. But stepping back a little, sure, it is possible for housing to be considered a bad investment and not be built as a result. That's not a market that has a shortage (much less a crisis, though).

 

[Jack V Savage]

We need immigration. I’d like to see it controlled and incentivized for the best people around the world. Got a PhD? Degree in a STEM field? 2 years tax free and expedited green card process. We need to strictly shut our borders though.

This has very little to do with housing.

We also need to shut off hedge funds buying property. I’d force Blackrock to sell all their properties immediately.

I would like if not for the last two sentences. I don't have any special concern for hedge funds buying property, but it just doesn't seem like something the gov't should be able to do.

 

[Rob Battisti]

I would like if not for the last two sentences. I don't have any special concern for hedge funds buying property, but it just doesn't seem like something the gov't should be able to do.

Okay, I’ll settle for saying they need to be disincentivized from buying more.

 

[Rob Battisti]

For a period of time, I advised on processes which impacted tens of thousands of immigrant technical workers. 9/10 loved America and desperately wanted to stay here. The hoops they had to jump through were insane. This was for a massive global company which meant we could afford the legal fees.

Small business CANT afford that. Which means innovation is stifled and value is lost.

I’d make obtaining an EAD so damn easy it wouldn’t even be funny. Id be in every single African country and pleading for their people to come here.

Edit: I say 9/10 just because we had a number of Chinese that were verifiably stealing IP to send back to China. So I guess more like 99/100.

 

[Islam Imamate]

Oh most definitely. There is so much red tape. But couple low and slow building starts with record breaking immigration numbers. What other outcome could there be?

If the building can keep up with the growth in population then the city benefits a lot from the added growth.

And do you think the smartest thing to do while we have these realities to contend with is to bring 400k immigrants that more or less centralize themselves in city centers where infrastructure is already exhausted?

Immigration isn't the central issue but it's adding fuel to the fire.

The smart thing to do would be to aggressively build housing rather than reduce immigration. I don't see why we have to accept that we can't build more housing when that's clearly the central issue here.

We need immigration. I’d like to see it controlled and incentivized for the best people around the world. Got a PhD? Degree in a STEM field? 2 years tax free and expedited green card process. We need to strictly shut our borders though.

This has very little to do with housing.

We also need to shut off hedge funds buying property. I’d force Blackrock to sell all their properties immediately.

Western countries are aging which means we will also need unskilled labor to fill needs in industries like agriculture and construction. Those people also bring lots of value and growth.

 

[Jack V Savage]

Okay, I’ll settle for saying they need to be disincentivized from buying more.

I'd make the deal (even the first one), but I still feel uneasy about it.

 

[mkess101]

Yeah, any investment can fail. With housing, if it gets overbuilt, that's bad for investors but good for everyone else. There are going to be times when it's not clear whether it's good or bad, and people will take risks or not. For a lot of areas now, the market is screaming for more supply, and it's illegal to provide it (or only recently became legal), and I think it's a no-brainer investment. Though shortages usually lead to gluts.



I don't think that that situation ever really happens, though. Doesn't fit my mental model of human behavior or market functioning. But stepping back a little, sure, it is possible for housing to be considered a bad investment and not be built as a result. That's not a market that has a shortage (much less a crisis, though).

I'd have agreed with you until commodities skyrocketed and interest rates shot up. Those two things happening have made builders (even where they have few hurdles to do projects) pump the brakes a lot. I know guys in that business, it's front of mind for them.

For sure much less likely in an area where there's a severe lack of inventory though, no doubt.

 

[Rob Battisti]

I'd make the deal (even the first one), but I still feel uneasy about it.

It’s not perfect

If the building can keep up with the growth in population then the city benefits a lot from the added growth.

The smart thing to do would be to aggressively build housing rather than reduce immigration. I don't see why we have to accept that we can't build more housing when that's clearly the central issue here.

Western countries are aging which means we will also need unskilled labor to fill needs in industries like agriculture and construction. Those people also bring lots of value and growth.

I wouldn’t restrict unskilled labor. I would just incentivize skilled labor as to prioritize it. I think there should be a huge number increase of seasonable and temporary workers from Mexico. I’ve said it often here, Mexicans are the best people in the world.

Id offer a pathway to citizenship for them as well far faster than what we have.

 

[ShadowRun]

That’s Bidenomics !

 

[Rob Battisti]

Overall, the demonization of immigrants from Mexico is wrong. I wish Mexico wasn’t so corrupt that we could make them our biggest trade partner and get out of China. I wish more than anything we could establish a strong North American alliance.

Instead we promote bigotry and division because it sells.

Step 1: Incentivize skill based immigration to the point of out competing any other nation.
Step 2: Create a strong southern border stopping illegal immigration
Step 3: Allow for expedited unskilled immigration with increased components of assimilation.
Step 4: Pour money into Mexico to defeat the cartels
Step 5: Have Mexico be the buffer country to stop Central American chain migration.

 

[method115]

Blackrock - One the US's largest investment firms buys hundreds of thousands of homes for rentals.


BlackRock – led by billionaire Laurence Fink – is purchasing entire neighborhoods and converting single-family homes into rentals; while in cities like Houston, investors like Fink account for one-quarter of the home purchasers.

Yea like half my subdivision is owned by a company renting them out. Homes are still selling well here though two homes just sold recently. One of them has my exact same layout and over 100k what I paid so I was happy to see that.

 

[Scerpi]

Yea like half my subdivision is owned by a company renting them out. Homes are still selling well here though two homes just sold recently. One of them has my exact same layout and over 100k what I paid so I was happy to see that.

Why? Rising home prices aren't inherently good. If you move, it's all relative. Unless you plan to move to an entirely different area with lower prices.

Increasing home prices mean...

1) Increased taxes
2) Increased insurance
3) Increase closing costs if you decided to move/sell.

I've gone through this twice now.. Once in Denver in the 90's and now it's happening here in Houston (and Texas). House values are starting to escalate quickly.

So what? If I move to take advantage, it just means I'm going from one over-valued home to another... Unless I'm renting. Which isn't great either.

As long as you're not under-water on a house when you need or want to sell, you're likely just making a laterial move with increased secondary costs I listed above. And taxes/insurance is money spent with zero return.

 

[Jack V Savage]

Overall, the demonization of immigrants from Mexico is wrong. I wish Mexico wasn’t so corrupt that we could make them our biggest trade partner and get out of China. I wish more than anything we could establish a strong North American alliance.

Mexico did become our biggest trading partner this year (Canada is almost tied, and China is third and falling).

 

[Rob Battisti]

Mexico did become our biggest trading partner this year (Canada is almost tied, and China is third and falling).

I knew they were close. I didn’t realize it happened.

 

[Rob Battisti]

That goods imported from China though — jeez.

https://www.visualcapitalist.com/us-largest-trading-partners-2022/

 

[CyberRubberDuck]

Most US Households Can't Afford a Median-Priced Home
https://www.costar.com/article/266860380/most-us-households-cant-afford-a-median-priced-home

Spoiler: Article

The National Association of Home Builders said nearly 30% of all U.S. households, or 39 million, cannot afford a home priced over $150,000 without exceeding one-third of their total household income.

Another 25.8 million households are unable to afford more than $250,000. So combined, 64.8 million — or nearly 50% — of the 132.5 million U.S. households can only pay up to $250,000 for a home.

But the median U.S. home actually costs far more, at almost $426,000. And 70%, or more than 93 million of all households, cannot afford that amount based on their current household income, according to the trade group, indicating steady demand for apartments.

Ireland's housing crisis: Millennials, a generation sacrificed
https://www.euronews.com/2023/07/06/irelands-housing-crisis-millennials-a-generation-sacrificed

Britain is facing a mortgage crisis. There are no easy answers
https://www.cnn.com/2023/06/23/economy/uk-mortgage-crisis-banks-meeting/index.html

As Canadian housing crisis rages on, is ‘financialization’ really to blame?
https://www.thestar.com/business/op...s-on-is-financialization-really-to-blame.html

Why France is facing a 'property crisis'
https://www.thelocal.fr/20230602/why-france-is-facing-a-property-crisis

Australian Housing Crisis: The High Price We’re Paying
https://www.forbes.com/advisor/au/property/high-cost-of-australian-housing/

In all the over populated smaller countries, let's keep letting immigrants from larger countries with totally different cultures just flood in "for a better life"........

 

[method115]

Why? Rising home prices aren't inherently good. If you move, it's all relative. Unless you plan to move to an entirely different area with lower prices.

Increasing home prices mean...

1) Increased taxes
2) Increased insurance
3) Increase closing costs if you decided to move/sell.

I've gone through this twice now.. Once in Denver in the 90's and now it's happening here in Houston (and Texas). House values are starting to escalate quickly.

So what? If I move to take advantage, it just means I'm going from one over-valued home to another... Unless I'm renting. Which isn't great either.

As long as you're not under-water on a house when you need or want to sell, you're likely just making a laterial move with increased secondary costs I listed above. And taxes/insurance is money spent with zero return.

The Houston\Texas area is growing so much though you can always move further out. So what I'll do is keep letting my home value increase and when I'm ready to retire I can sell it and just move way out from the city to another area that's growing but still cheap.

Basically I don't plan on moving until I retire. My wife is also possibly going to inherit her grandmothers house which is like 5-10 mins from Houston and is worth a ton. My wife wants to live in it since she likes living so close to the city but we will have to wait another two decades at least for that. First her mom gets it than she will get it.

Either way I'm in no rush to move.

 

[Scerpi]

I knew they were close. I didn’t realize it happened.

Well... China has almost completely shutdown several times for COVID for a few years now.