The Real Estate Investing Thread

[KITNfury]

But, it’s not even debatable that it decreases the affordability of those homes.

that's Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!).  of course it doesn't.

1.  the demand for housing is unchanged, the supply is unchanged.
2.  it does not impose a restriction on the construction of new houses.
3.  corporations own a tiny proportion of sfhs.


why do people get irrationally outraged at the idea of sfhs as rentals, but do not feel the same about multifamily housing?  it's very strange.

I've actually learned how renting property out is unethical from lots of youngins on Twitter. It's a human right FFS!

[sys]

I literally said there isn't a realistic fix

that's almost stupider, tbh.  of course there's a realistic fix - reduce restrictions on the production of new housing.

[steve dave]

But, it’s not even debatable that it decreases the affordability of those homes.

that's Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!).  of course it doesn't.

1.  the demand for housing is unchanged, the supply is unchanged.
2.  it does not impose a restriction on the construction of new houses.
3.  corporations own a tiny proportion of sfhs.


why do people get irrationally outraged at the idea of sfhs as rentals, but do not feel the same about multifamily housing?  it's very strange.

Yes, agree with all this.


Sent from my iPhone using Tapatalk

[wetwillie]

I literally said there isn't a realistic fix

that's almost stupider, tbh.  of course there's a realistic fix - reduce restrictions on the production of new housing.

What kind of restrictions on new houses are preventing builders from constructing more of them?

[michigancat]

I literally said there isn't a realistic fix

that's almost stupider, tbh.  of course there's a realistic fix - reduce restrictions on the production of new housing.

I don't think that's politically realistic where it's most needed in the US. At least to remove restrictions in a way that would actually make a significant impact.

[KITNfury]

I literally said there isn't a realistic fix

that's almost stupider, tbh.  of course there's a realistic fix - reduce restrictions on the production of new housing.

What kind of restrictions on new houses are preventing builders from constructing more of them?

Depends where, but there can be many. One example is large set backs. It's obvious why this is "nice", but it drives up costs and reduces the quantity of houses.

[Kat Kid]

I literally said there isn't a realistic fix

that's almost stupider, tbh.  of course there's a realistic fix - reduce restrictions on the production of new housing.

What kind of restrictions on new houses are preventing builders from constructing more of them?

Depends where, but there can be many. One example is large set backs. It's obvious why this is "nice", but it drives up costs and reduces the quantity of houses.

this is a good one. people like the aesthetic of small, dense towns in europe (and in the US in older cities) but there is a relentless push for a 1950s suburban aesthetic for all.

I am not without blame, I live in suburban hell myself and it does have some positives, but it makes a lot of things really difficult and as someone that has followed some of these debates it is difficult to know what exactly is the right policy fix at the local/state/national level given the insane policy hurdles you face with entrenched real estate/homeowner interests at the smaller levels and the gridlock of national policy. I'm not sure i even know what would be workable if you had a magic wand and could just implement policy. I guess encouraging building and making more state owned housing would be where I would start, but state owned housing is pretty much a non-starter in this country so plenty of work to be done there.

[sys]

What kind of restrictions on new houses are preventing builders from constructing more of them?

zoning, permitting, required add ons that increase development costs.

[sys]

I don't think that's politically realistic where it's most needed in the US. At least to remove restrictions in a way that would actually make a significant impact.

When housing has a profit motive and the government doesn't guarantee housing for everyone, a housing crisis is kinda inevitable

there's nothing in your original statement about the current political realities in high-housing cost cities in the united states.  in fact, it makes a general claim, implicitly arguing that local particulars are not relevant to the outcome.

[michigancat]

I don't think that's politically realistic where it's most needed in the US. At least to remove restrictions in a way that would actually make a significant impact.

When housing has a profit motive and the government doesn't guarantee housing for everyone, a housing crisis is kinda inevitable

there's nothing in your original statement about the current political realities in high-housing cost cities in the united states.  in fact, it makes a general claim, implicitly arguing that local particulars are not relevant to the outcome.

Ok

Although the profits shape the politics (and vice versa)

[CNS]

Yet that is pretty much what has happened for several generations.

before we look at the data, i'd like to know how you think that is possible.  what is the mechanism?

oh well.

here's the data for the u.s.  go down to the case-shiller home price index vs. cpi chart for the u.s. and hit all to see the full time series.  you can see that until relatively recently, housing simply paced with inflation.  there's also a similar chart for the u.k. farther down.  kinda fun.

https://www.longtermtrends.net/home-price-vs-inflation/

Homes have always been a savings account that you get the dual benefit of being able to live in.  It makes is easier to create personal wealth than paying rent then saving whatever is left.

Addressing the issue of affordability, and looking at the graph you presented, wages vs home price is a different graph.  https://usafacts.org/data-projects/housing-vs-wages.  Houses have become more expensive while wages have lagged, making the house harder to get.  Thus making the above benefit harder to get.  I say this realizing that this isn't a clean issue and it isn't just a house affordability issue. 

[CNS]

What kind of restrictions on new houses are preventing builders from constructing more of them?

zoning, permitting, required add ons that increase development costs.

I can get behind some of the zoning, for instance R1 vs R2(or more) could maybe become the same zone rating, but there definitely needs to be some control so that we don't end up with industrial and residential mixed. 

I can get behind some of the permitting, but mostly the permitting(residentially) is to ensure that the home is designed to ensure the structure, sewage, etc will be sound.  The cost of permitting pays for the inspections to double check this.  This is definitely needed.

[wetwillie]

Is 3D printing houses a thing that’s feasible at scale?

[GregKSU1027]

Is 3D printing houses a thing that’s feasible at scale?

Waiting on Disney to put this at Epcot or NASA to 3D print houses for Mars.

[CNS]

Is 3D printing houses a thing that’s feasible at scale?

Not without sci-fi level of tech that we don’t have. They are doing it in a very basic way, but even then it’s just a wall and not all the crap that goes into that wall, connections of that crap to anything, all the fixtures, appliances, etc, and absolutely zero finishes. Basically, the current 3D print cuts out the framer having to frame the walls but makes the concrete guys job much more involved(the 3D printer I have read about is a concrete printer) and probably adds additional needed work to make the 3D product usable with all the other things.

The best way to expedite res building at this point would be to make large leaps in the prefab side. Make walls, ceilings, etc that can be brought to site easily, handled quickly, and set in place and connected in a highly repeatable manner. This still wouldn’t eliminate any major components of the work, but if enough of it was set in place, and enough volume existed, it could probably bring the labor cost down through the manufacturing process.  Basically like what Ford did for the car, rather than building your own car in your garage, but not as drastic as that.

We could also possibly build with things like tilt up concrete walls or precast walls shipped to site. I have no idea how that would compare to traditional framing as far as cost. Commercial loves it for its speed in getting a building built so that the biz can begin using the building really quickly.  Again, there would still be a crap ton of finishes, plumbing, electrical, etc.

[OB_Won]

But, it’s not even debatable that it decreases the affordability of those homes.

that's Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!).  of course it doesn't.

1.  the demand for housing is unchanged, the supply is unchanged.
2.  it does not impose a restriction on the construction of new houses.
3.  corporations own a tiny proportion of sfhs.


why do people get irrationally outraged at the idea of sfhs as rentals, but do not feel the same about multifamily housing?  it's very strange.

Yes, agree with all this.


Sent from my iPhone using Tapatalk

1.  The demand for housing is unchanged, the supply is unchanged. - that's just simply not true in some parts of the country. Yes, there is a finite # of home buyers in the US, but when corporations decided to get in the mix the demand for housing drastically increases when 1 entity wants to buy 100's of homes.

2. it does not impose a restriction on the construction of new houses. - No it doesn't, but it does take time and land to build, there are only so many builders, and the price of homes will continue to rise with demand. Also, many builders aren't even building homes for less than $300K any longer in major metros.

3. corporations own a tiny proportion of sfhs - again, that's simply not true. In DFW they purchased 43% of homes sold in 2021 and that trend still continues.

why do people get irrationally outraged at the idea of sfhs as rentals, but do not feel the same about multifamily housing? - I'm not outraged, but I feel bad for my child who will have to work/save much harder than we all did to buy a home. Also, sfhs is a means of generating wealth.

All these have a trickle down effect. If a corp buys a bunch of homes in a neighborhood with cash and above asking price, ALL homes in neighborhood just became more expensive. Once home prices/rents increase, apartments raise their prices as well. The DTI new homebuyers/renters are on the hook for increases a bunch.

https://cdn.nar.realtor/sites/default/files/documents/2022-impact-of-institutional-buyers-on-home-sales-and-single-family-rentals-05-12-2022.pdf

https://www.tpr.org/business/2022-06-14/investors-bought-nearly-a-third-of-all-homes-in-texas-last-year
"Nearly a third of all homes sold in Texas last year went to a company or corporation that paid in cash, according to a report from the National Association of Realtors."

https://housemethod.com/blog/are-big-companies-buying-up-single-family-homes/
"According to data reported by the PEW Trust and originally gathered by CoreLogic, as of 2022, investment companies take up about a quarter of the single-family home market. Specifically, investor purchases accounted for 22% of all American homes in 2022. This number slightly decreased from last year (2021), which sat at 24%, with 90,215 homes in the third quarter alone. Over the last decade, the number of investors purchasing homes has increased from 10% to 15% each year, except for 2020 to 2021, which, according to a study by Redfin, saw an increase of over 80%. So, yes, investment and residential real estate companies are purchasing more and more American homes each year."

[sys]

Homes have always been a savings account that you get the dual benefit of being able to live in.  It makes is easier to create personal wealth than paying rent then saving whatever is left.

Addressing the issue of affordability, and looking at the graph you presented, wages vs home price is a different graph.  https://usafacts.org/data-projects/housing-vs-wages.  Houses have become more expensive while wages have lagged, making the house harder to get.  Thus making the above benefit harder to get.  I say this realizing that this isn't a clean issue and it isn't just a house affordability issue.

agree with you that home ownership can be financially beneficial as a way to force savings.

on the wages v inflation thing, wages have far outpaced inflation over any longer time period.  that's how america became so crazy rich.  over the period in your graph, the difference btwn home inflation and cpi is much greater (ca. 75 points) than was the case for home inflation v wages (ca. 20 points).  of course lots of geographic variation as the article in your link details.

[sys]

but mostly the permitting(residentially) is to ensure that the home is designed to ensure the structure, sewage, etc will be sound.

that's the case for sfh's in urban areas where it is relatively easy to build, but not the case in cities that have managed to create housing crises by making it difficult to build and definitely not the case for multifamily construction in those areas.

[sys]

1.  The demand for housing is unchanged, the supply is unchanged. - that's just simply not true in some parts of the country. Yes, there is a finite # of home buyers in the US, but when corporations decided to get in the mix the demand for housing drastically increases when 1 entity wants to buy 100's of homes.

they don't leave the houses empty or pack them up and ship them elsewhere.  they rent the houses out.  no reduction in supply.

2. it does not impose a restriction on the construction of new houses. - No it doesn't, but it does take time and land to build, there are only so many builders, and the price of homes will continue to rise with demand. Also, many builders aren't even building homes for less than $300K any longer in major metros.

300k is probably about cost of construction (in a low land cost, low labor cost metro area) for an entry-level type sfh.  so yeah, resale prices aren't going to fall below that except in areas where no one wants to live.

3. corporations own a tiny proportion of sfhs - again, that's simply not true. In DFW they purchased 43% of homes sold in 2021 and that trend still continues.

there are certainly areas where it is a higher % than nationwide, but the % of homes sold in 2021 is also a tiny fraction of the number of homes that exist.

[CNS]

but mostly the permitting(residentially) is to ensure that the home is designed to ensure the structure, sewage, etc will be sound.

that's the case for sfh's in urban areas where it is relatively easy to build, but not the case in cities that have managed to create housing crises by making it difficult to build and definitely not the case for multifamily construction in those areas.

Having built a tower in a metro area, permitting is more important there.  The logistics are insane and the possibility of you rough ridin' up your neighbor's property, the general public, or the building you are building is infinitely higher.  The quantity of inspections needed to ensure a large metro building is being built safely and up to code(lots of arguments about code but baseline it reinforces best building practices) is wild.  The ability to harm other surrounding businesses with traffic issues(think large material delivery day after day after day) that can hugely negatively impact the coffee shop that no one can get to is a big issue.  The ability to harm the public(think city pedestrians and large cranes lifting all that large material being delivered day after day), is ever present.  The list is huge beyond that.  These things are all part of what the city reviews to ensure that the building is good to go and so is all those around the building.  It's hugely important. 

When people talk about permitting being part of the problem, it makes me curious what we should back off of and where do they think that will lead us?

[OB_Won]

1.  The demand for housing is unchanged, the supply is unchanged. - that's just simply not true in some parts of the country. Yes, there is a finite # of home buyers in the US, but when corporations decided to get in the mix the demand for housing drastically increases when 1 entity wants to buy 100's of homes.

they don't leave the houses empty or pack them up and ship them elsewhere.  they rent the houses out.  no reduction in supply.

Now tell me what happens to prices after demand drastically increases from multiple corps from all over the world bidding against each other for the same homes?

2. it does not impose a restriction on the construction of new houses. - No it doesn't, but it does take time and land to build, there are only so many builders, and the price of homes will continue to rise with demand. Also, many builders aren't even building homes for less than $300K any longer in major metros.

300k is probably about cost of construction (in a low land cost, low labor cost metro area) for an entry-level type sfh.  so yeah, resale prices aren't going to fall below that except in areas where no one wants to live.

The same homes that were $200-$250K three or four years ago are now $350-$400k. There is simply no way a median family can afford that without putting themselves in serious financial hardship. Therefore, they rent, and lose out on all the benefits they otherwise would have received from home ownership.

3. corporations own a tiny proportion of sfhs - again, that's simply not true. In DFW they purchased 43% of homes sold in 2021 and that trend still continues.

there are certainly areas where it is a higher % than nationwide, but the % of homes sold in 2021 is also a tiny fraction of the number of homes that exist.

It isn't just 2021. That's just when it shot up. Referring back to the last sentence of my previous post, "Over the last decade, the number of investors purchasing homes has increased from 10% to 15% each year, except for 2020 to 2021, which, according to a study by Redfin, saw an increase of over 80%. So, yes, investment and residential real estate companies are purchasing more and more American homes each year."

I think we may be arguing two different points. I think you're saying there are still plenty of homes to live in (purchase or rent). I'm saying there aren't plenty of affordable homes for median Americans to purchase.

[sys]

When people talk about permitting being part of the problem, it makes me curious what we should back off of and where do they think that will lead us?

https://therealdeal.com/sanfrancisco/2022/06/14/sf-housing-bottleneck-resi-entitlements-permits-take-longest-in-state/
https://therealdeal.com/sanfrancisco/2022/12/16/wait-times-for-building-permits-in-sf-stretches-into-years/
https://www.sfchronicle.com/opinion/openforum/article/sf-housing-development-red-tape-17815725.php

if you only read one of these, read the last one.

[CNS]

When people talk about permitting being part of the problem, it makes me curious what we should back off of and where do they think that will lead us?

https://therealdeal.com/sanfrancisco/2022/06/14/sf-housing-bottleneck-resi-entitlements-permits-take-longest-in-state/
https://therealdeal.com/sanfrancisco/2022/12/16/wait-times-for-building-permits-in-sf-stretches-into-years/
https://www.sfchronicle.com/opinion/openforum/article/sf-housing-development-red-tape-17815725.php

if you only read one of these, read the last one.

The last one is paywalled for me. 

The other two simply state that SF takes forever and doesn't explain why.  I would guess it is either corruption of those in the position to have the "discretionary" power or SF simply needs to hire more reviewers, more inspectors, and more of every single type of personnel that it takes to do the necessary work to get work permitted.   This is a personnel issue, I would bet, not a permit issue.

[sys]

The same homes that were $200-$250K 3 or 4 years ago are now $350-$400k. There is simply no way a median family can afford that without putting themselves in serious financial hardship. Therefore, they rent, and lose out on all the benefits they otherwise would have received from home ownership.

i mean yeah, in the last couple of years we've had inflation unprecedented within most of our lifetimes and the whole issue we're discussing is how housing costs have outpaced inflation over the last couple of decades.  but just as a point of accuracy, the median household income is 79k.  using 25-30% on housing, that puts "affordable" at ca. 300k at 6% interest and ca. 400k at 4% interest.

I think we may be arguing two different points. I think you're saying there are still plenty of homes to live in (purchase or rent). I'm saying there aren't plenty of affordable homes for median American's to purchase.

very true.  i think houses available to rent are part of the country's supply of housing.

[michigancat]

When people talk about permitting being part of the problem, it makes me curious what we should back off of and where do they think that will lead us?

https://therealdeal.com/sanfrancisco/2022/06/14/sf-housing-bottleneck-resi-entitlements-permits-take-longest-in-state/
https://therealdeal.com/sanfrancisco/2022/12/16/wait-times-for-building-permits-in-sf-stretches-into-years/
https://www.sfchronicle.com/opinion/openforum/article/sf-housing-development-red-tape-17815725.php

if you only read one of these, read the last one.

Much like having Diane Feinstein as their senator, this is what the people of San Francisco want