Moral imperative for a housing crash... and permanent devaluation

[ygolo]

For context, a few months ago:

Realtors' Lobby Plows Political Cash into Efforts to Keep Rents Higher

The National Association of Realtors is fighting an array of attempts to provide relief to renters despite America's deepening housing crisis.

perfectunion.us

The Fed crashed the housing market. Builders and banks want help.

The housing slump is the economy’s biggest casualty so far from a series of Federal Reserve rate hikes designed to tame inflation.

www.politico.com

F the banks. Help the builders.

Society kinda needs bankers to lose big this round given what happened in 2008.

Builders need to be supported to incentivize building. Realtors can make up on volume what they lose in commission size.

Some realtors get it:

Maryland affordable housing is scarce, and realtors are lobbying for change - WTOP News

Freddie Mac and the National Association of Realtors estimate there is a housing shortage of around 120,000 units for Marylanders.

wtop.com

Edit:
Also, you may have notices price histories are disappearing from places like Zillow. Don't think this disappearance in transparency is an accident. When they were going up for no reason, they'll advertise it to stoke the hype. When they are dropping, bye-bye information.

 

[ygolo]

When the same exact material object (a home, in this case) becomes priced at triple the price after 3 years(of deteriotation), one has to question where that comes from.

You could say "we're not making new land". But that's more than a bit Malthusian.

Why Malthus Is Still Wrong

Why Malthus makes for bad science policy

www.scientificamerican.com

Example Malthusian reasoning:

...Malthusian reasoning that helping the poor only encourages them to have more children and thereby exacerbate poverty.

Remember that Malthus was mainly looking for ways to rationalize why equality was bad.

We're not making new oxygen either.

But that's why we improve our systems. Ultimately, this means more density when it comes to housing. It's ridiculously simple logic. More people, same land, means more density.

It's weird to see my sentiments echo'd simultaneously by George Carlin earlier and now Elon Musk?

Economist (and Elon Musk) blame NIMBYs for American decline | Fortune

Noah Smith calls America “The Build-Nothing Country” and traces America’s “shadow subsidy” all the way back to the 1970s.

fortune.com

 

[The Cat]

We've spent 40 years of non stop pop culture bombardment of a message of lowering our empathy. For the last 20ish years we've had access to it EVERYWHERE 26 hours a day 365 days a year, no down time, no breaks, no conclusion of the broadcast day. Life imitates art. Art is financed by patrons, in a perfect world the patron finances the artist because they recognise the value of the vision the artist brings into the world. The cycle of creation flourishes and muses elevate society at large. But it is as the humans say, a complicated situation in practice. Patrons have always commissioned artists, but when the patrons become the muses too, suddenly all your heroes are wealthy all your villains are poor and nobody can trust anybody. It's all in the script.

And the beat goes on...stuck on repeat.

​

 

[ygolo]

A number of resources are here at the housing justice library:

Zotero | Your personal research assistant

www.zotero.org

 

[ygolo]

Again, I am not a predictor, but these guys predicted the SVB failure.

A Big Deflationary Housing Wave Is Approaching

Investors are selling risk assets over fears of tighter monetary policy. Read more to find out why a deflationary housing wave is coming.

seekingalpha.com

Hopefully, we see it. It would be even better if it becomes permanent. Other non-human-need parts of the economy can continue to inflate. But housing(and other basic needs) ought to be put on a permanently deflationary trend.

I think a major key to this is platform leadership. Create a platform for building housing at exponential lower costs and basically own the entire market and transform humanity at the same time.

 

[ygolo]

This is ridiculous and why people rightfully feel like the system is rigged:

Discount Window, Federal Home Loan Bank Borrowing Spikes After SVB Failed

Banks across the country turned to the Federal Reserve’s discount window and the Federal Home Loan Bank system over the last week, borrowing the most since 2008 as panic spread among depositors. Banks borrowed $152.85 billion at the Fed on Wednesday, up from $4.58 billion a week before, according t

www.wsj.com

The fed raising interest rates are finally having an effect of potentially making housing affordable again, and people are getting bailed out instead!!

Let commercial real estate crash, it's been clearly dying anyways. As I posted before, it's clear the zoning and the land use style that came from that allowed there to be an affordability crisis in residential real estate at the same time as the commercial side dies.

You can bring that into balance with removal of zoning restrictions, allowing mixed use, and yes getting residential real estate to crash even harder.

But after Powell raising interest rates till things break leads to the corporate profits hurting instead of the larger job market (some issues in tech but that's it), they get a bailout.

Real estate needs to crash hard. Let it!

We can deal with debt cancellation for individual home owners when it comes time.

But all the speculators need to eat it, not get bailed out.

Let there be more runs on banks, don't prop up dead real estate assets. Insure the people who has insurance.

 

[ygolo]

California has come up with a shared appreciation, dream-for-all loan program:

Dream For All | Shared Appreciation Loan

The California Dream For All Shared Appreciation Loan is a down payment assistance program for first-time homebuyers to be used in conjunction with the Dream For All Conventional first mortgage for down payment and/or closing costs.

www.calhfa.ca.gov

I think this was cooked up by the real-estate lobby and NIMBYs to keep the home prices from crashing (which would be the natural thing).

This targeted so that the direct benefactors would be just the first time home buyers who could potentially be excluded due to down payment alone. There are plenty of people locked out of the 80%-150% of AMI. If home prices dropped, the whole ladder of people get homes. But now only a tiny fraction can get into home buying.

• People locked into tiny starter homes won't be able to move up, freezing up the supply further.
• People who would have been able to afford the down payment and the loan if the home dropped in price the equivalent 20% are still locked out.
• People avoiding moving closer to work mainly because of housing are also still locked in to their existing homes and locked out of new ones.

There are people thinking of getting married right now who may reconsider just for this. All this will do is get another generation of "haves" on the side of the home value NIMBYs.

For the people who take this, what happens if the assumption of housing always going up in price reverses? Are they still on the hook for the down payment? Can they subtract the depreciation?

If California can afford this, they could deal with home depreciation in some way as well.

edit: I think the intended indirect effect they are aiming for is to prop-up prices allowing speculators a pass.

 

[ygolo]

The U.S. housing market is holding up the best in the global correction—here's how far Goldman Sachs see global home prices falling

Goldman sees U.S. home prices having their second-biggest decline since World War II—but it's not even close to the Great Recession

fortune.com

With that much of a difference between other countries and the US, do we really think it's not either market manipulation, a bald-face lie, or just being incorrect?

It's funny how "there aren't enough houses" is once again the reason given for prices remaining high.

I understand that people feel the need to protect their home prices, and so will keep trying to prop them up by not letting supply back on the market, but prices aren't actual prosperity.

If the home prices crash, you still have your homes. What's changed is how much money you can trade your home for...and also how much you need for a new home. It's just inflation/deflation in housing...and remember people need homes to live in, not brag about or show off.

If equity becomes an issue, I feel like that's a much better place for governments to step in compared to what they're doing now.

Home price drops would unfreeze the supply. People could move closer to work, they could move into better school districts, people could just move.

But I suppose, protecting the "character of the neighborhood" (we know what that's code for) could be the real reason people don't want prices to drop.

I'm really hoping it's the number go up frenzy (it's the same as the crypto currency nonsense, and in my mind the cause of it) and not the "character" thing. The frenzy would be easier to stomach, but still problematic.

 

[Virtual ghost]

The U.S. housing market is holding up the best in the global correction—here's how far Goldman Sachs see global home prices falling

Goldman sees U.S. home prices having their second-biggest decline since World War II—but it's not even close to the Great Recession

fortune.com

With that much of a difference between other countries and the US, do we really think it's not either market manipulation, a bald-face lie, or just being incorrect? It's funny how "there aren't enough houses" is once again the reason given for prices remaining high.

To be honest I am curious about the videos that show decay of USA. In other words some people are driving around the country and showing abandoned or run down places. However the fact is that those videos are showing a huge amount of houses and buildings that aren't in that bad shape. So without not so large investment they can be livable places or sold to people who need a place at reasonable price. At face value the damage often looks terrible, however structural integrity seem to be fine in most cases. Someone just has to clean up the place.

 

[ygolo]

To be honest I am curious about the videos that show decay of USA. In other words some people are driving around the country and showing abandoned or run down places. However the fact is that those videos are showing a huge amount of houses and buildings that aren't in that bad shape. So without not so large investment they can be livable places or sold to people who need a place at reasonable price. At face value the damage often looks terrible, however structural integrity seem to be fine in most cases. Someone just has to clean up the place.

Seriously, with huge swaths of nearly fixed up real estate just laying idle, the housing "supply shortage" seems more like market manipulation.

 

[Virtual ghost]

Seriously, with huge swaths of nearly fixed up real estate just laying idle, the housing "supply shortage" seems more like market manipulation.

Yes and no, the problem is that you need jobs to make place truly livable. From what I understand the places like the posted ones happened due to deindustrialization and people had to move in order to be able to pay their bills. However now when many work from home and there is plenty of homeless it would be reasonable to start thinking about the places that are abandoned but fundamentally still functional and structurally stable. I am not from US and this seems like my general local strategy: If the place is abandoned they should either fix it or they should crash the building and build something completely new on that place. What is important since this way you don't get dead blocks and abandoned neighborhoods. Plus you don't have to expand city infrastructure since you are fixing bad parts instead of building some completely new neighborhoods. What overall can save plenty of money on the long run and remove abandoned places where shady people will gather (what again saves money in the end).

 

[ygolo]

In the US, some people will make it against zoning laws to demolish residential areas to have a place for commerce or industry and vice versa.

We had a whole section on how to build strong towns.

America's Growth Ponzi Scheme

The American pattern of development creates the illusion of wealth. Today we are in the process of seeing that illusion destroyed…and with it the prosperity we have come to take for granted.

www.strongtowns.org

_________________________
On a more general note:

The $300,000 starter home is going extinct: ‘A renter society not because of choice but because of force’

Housing economist Ali Wolf is worried by a growing "imbalance between the haves and have-nots in the economy."

fortune.com

 

[ygolo]

This is still where things are:

Monthly Report on Housing Affordability

ycharts.com

Meanwhile, speculators big and small are delighting in small changes calling prices "soaring".

Home prices soar suddenly after several months of declines

Home prices rose nationally for the first time in eight months in February amid continuing inventory challenges and relief in affordability leading to a rise in demand, according to data released M…

thehill.com

 

[ygolo]

Again, people are pedaling the story that the housing affordablity crisis is over, but there's a long history and a long way down to go there.

U.S. House Prices Are Rising Exponentially Faster Than Income (2021 Data)

Across the U.S., home prices have outpaced income. Our data reveals how the American dream of homeownership is becoming a nightmare.

www.realestatewitch.com

Here is a story that can highlight why home prices aren't falling like a rock:

Last gasp of the Me Generation: Boomers looking to retire are swarming the housing market

Sorry, millennials: For the first time in a decade, baby boomers represent the largest share of homebuyers as they search for their retirement pad.

www.businessinsider.com

Again, not just the US:

The UK government program they lament, help-to-buy, sounds a lot like the California's new program.

 

[ygolo]

Amazon Housing Equity Fund

www.amazonhousingequity.com

I don't know what this means. They've already paused applications.

 

[ygolo]

The information manipulation and gaming the system continues.

Notice now on FRED. The affordability index only goes as far back as 2022.

Housing Affordability Index (Fixed)

Graph and download economic data for Housing Affordability Index (Fixed) (FIXHAI) from Mar 2022 to Feb 2023 about fixed, housing, indexes, and USA.

fred.stlouisfed.org

Go to the National Association of Realtors directly, and there are scare tactics for reproduction of the data.

There is a change of how loans are going to be based on credit scores coming into effect on may 1st that some people are up-in-arms about.

Fannie Mae Announces New Loan-Level Price Adjustment Framework | Fannie Mae

Fannie Mae issued Lender Letter LL 2023-01, New Loan-level Price Adjustment Framework, to provide information about future changes to loan-level price adjustments (LLPAs) and an overall redesign of the LLPA matrix.

capitalmarkets.fanniemae.com

There's been a campaign obviously going on to get people to think the "correction is over", even though not much of anything really changed. All they're doing is trying to get people to flip their psychology.

The government people to trying to "fix" affordable housing seem to try anything other than simply subsidizing builders to build more housing. Too direct for them, I guess.

 

[ygolo]

I challenge people to find the home affordability index that goes all the way from 1950 through 2022.

It especially needs to show continuity between the dates, particularly including the time period between 2019 and 2022 (when we know the craziness happened)

 

[ygolo]

This was from last month, about the real reason for the back to office calls:

https://link.medium.com/GHp1ZOKGozb

About the commercial real estate bust coming out out earlier this year:

The coming commercial real estate crash that may never happen

The banking crisis seems to have been averted, the job market is still solid. Will commercial real estate really be the thing to crash the economy?

www.google.com

The excuses given for not converting offices to residences are given here:

Why empty offices aren't being turned into housing, despite lengthy vacancies

"There's a Goldilocks factor": Older offices can be too big or too small.

www.nbcnews.com

Imagine if long term, these buildings we converted to mixed use that can flexibly go back and forth between residential and commercial?

You could have residences with natural light in the exterior, and lab space, maker space, or coworking in the interior. You could create "startup incubator towers" in the heart of San Francisco.

IDK, but it's clear that not much creativity is expended on these ideas because powers that be want the status quo.

San Francisco residents are complaining that it's turning into "Gotham city", but putting in so little effort in conversion of long vacant commercial space to residential space.

 

[ygolo]

Home Price to Income Ratio - Updated Chart | Longtermtrends

Historically, an average house in the US cost around 5 times the yearly household income. The ratio in this chart divides the Case-Shiller Home Price Index by the US median annual household income.

www.longtermtrends.net

Here's the data on housing to pay, all the way through 2023, even after a slight "correction" (we can see why the NAR "affordability index" is a complete joke.)

Despite this, the financial media is saying things like this:

The housing market is shifting—just look at earnings published by 2 giant Fortune 500 homebuilders | Fortune

A pair of homebuilders on the Fortune 500 list, No. 124 D.R. Horton and No. 267 PulteGroup, just reported a big drop in cancellation rates

fortune.com

The End of an Era: Employers Retake Control

Power dynamics are pivoting from the employee to the employer, and it is going to be a tectonic reset for many employees who only know the employee-power version of the world.

www.forbes.com

One real slap in the face after:

Millennials and Gen Z can blame their loneliness on the housing crisis

The types of neighborhoods — walkable, dense, and green — that make it easier to connect with neighbors are often much more expensive to live in.

www.businessinsider.com

 

[ygolo]

This to me is more evidence that the real estate industry is colluding(not in a back-room style necessarily, but through signaling and opinion manipulation) .

Here are some generic websites that do reviews reviewing one of the biggest i-buyers (opendoor):
yelp(2 start average)
trustpilot (1.5 star average)
BBB (1.43 star average)
sitejabber (1.2 star average)

Here are the reviews on housing specific websites:
houzeo (4.4 star average)
realestatewitch (4.3 stars average)
clever real estate (4.3 starts average)

There are exceptions:
homeopenly (1 star average)

I don't know how you can trust this industry's projections at all.