I'm confused by the emphasis on an "all-cash offers". It conveys images of buyers lugging a suitcase full of cash to open houses, but as far as I know, it just means that the buyer isn't asking for a "financing contingency". Which is to say, they aren't asking for the ability to scuttle the deal without consequences if some 3rd party says they don't want to make a loan. The buyer still might be borrowing the money, they just aren't making the deal dependent on their ability to get a conventional mortgage.
Avoiding contingencies like this can be a good thing, since depending on the other contingencies it might make the deal more likely to go through, or to go through more quickly. But in most cases the buyer still has contingencies for inspections and probably a whole bunch of other things that will let them back out if they really want. Whether it's an "all-cash offer" or a standard mortgage, unless they are providing seller financing (rare), the same amount of money gets wired to the seller's back account at closing.
Am I missing something? Or is "all-case offer" in a headline indeed an empty phrase that usually signifies that the article is probably selling a false narrative based on misconceptions?
A more reliable and shorter escrow is of high value to sellers. Failed escrows break momentum on marketing and buyer interest and obviously cause major logistical frustrations for the seller.
Provided that a house draws competing offers, the everyday residential home buyer expecting to finance their mortgage needs to offer comparable or greater value in some other way, such as by making a substantially higher offer than the all-cash buyers. Many of these traditional buyers find it hard to anticipate how much higher their offer will need to be (the value of a more reliable escrow is subjective) and are often bidding mostly blind anyway. Further, affordability is already strained for most of these buyers and many shop by list price, unable to effectively compete in a bidding wars.
A high rate of all-cash offers usually correlates with a much more difficult and fatiguing home buying process for traditional in-community middle class buyers and sustained high prices. The article is basically just affirming that this dynamic currently (continues) to be at play in SoCal even as other markets soften.
It's a concession that is easy for people buying investments and difficult for people who are stretching to afford home ownership.
The highly regressive nature of housing appreciation has long drawn criticism, but the raft of policy choices that produce this outcome has historically been defended by the notion that most Americans benefit. Rich Americans benefit more, but most Americans own vs rent, so most Americans benefit, at least in nominal terms. Changes in the composition of demand are notable, and this is an indicator. When investment demand begins to exceed consumption demand, when most Americans do not benefit, there are electoral consequences to our democratic process that might signal a secular shift in those policy choices.
I have been told from a Realtor that this is happening in the East Coast anyway. A lot of millennial couples/families buying their first house with a gift/inheritance from boomer parents. The parents sold their house and used the money to help their children buy their first house. Sometimes all cash, but more often a big down payment (over 20%) to avoid having a large mortgage payment.
It could be just the lack of contingency as you say. But a quote from an agent is about not taking a loan, and I’ve personally seen that as well. All cash, meaning wire the whole amount from a personal account into escrow.
It doesn't have the same clickbait punch to say "homeowners with greater liquidity and access to loans." The title is supposed to convey rich people using their hoards of cash to push up housing prices.
You're missing something that many/most states have laws that the seller/buyer must disclose, not the price the house is sold for, but how much of a loan was issued for the house. If they are not disclosing this then it's likely they are committing a crime by not doing so. The fact we are seeing larger amounts of 'paid in full' on houses is a significant anomaly and represents a change in market dynamics, and all changes in market behavior should be monitored. For example when we saw leading up to 2008 crash the "interest only loans", it was predicted by a sizeable number of people that a crash was happening 'soon', and in which it did.
Of course this varies by state, so other laws can apply.
> many/most states have laws that the seller/buyer must disclose, not the price the house is sold for, but how much of a loan was issued for the house.
As far as I know, this is usually not true. Neither the buyer nor seller must disclose the existence of a loan on the property. For example, many loans are between family members who would prefer to keep them private, and the law allows that. Practically, however, any commercial lender (even a seller who offers financing) will record a mortgage with the county recorder so that he has priority in a foreclosure.
The sale price, however, usually is disclosed at least to the county assessor for property tax purposes. The exceptions would be where an heir inherits a property and the value is not reassessed.
Thanks, that would be a good theory that could be tested by comparing the number of houses sold with the number of loans reported, presuming constant levels of legal compliance. Do we see that? Perhaps we do, but the article seemed to focus on a real estate agent's anecdotes and impressions.
Also, would I be right to presume that this applies only to standard real estate loans? Are margin loans against stock required to be reported? Or private loans from parent to a child? I'd thought the reporting requirement had more to do with cases where the loan acts as a lien against the house.
Edit: Here's a Bogleheads thread that summarizes my understanding: https://www.bogleheads.org/forum/viewtopic.php?t=352355. It looks like in California markets (where the article is about) there are various companies that specialize in short term loans to enable "all cash offers".
It means at the very least that the buyer is affluent enough to have that kind of liquidity available. That's out of reach for a lot of people, but yeah, it does summon this image of suitcases full of cash unnecessarily. Maybe its the modern equivalent of that, with less criminal overtones?
In the Seattle market, it's common for competitive offers to waive the financing contingency, but to also include lender pre-approval info in the bid packet.
Not sure if I would consider that a cash offer; financing can still fall through and scuttle the deal.
If there's no financing contingency identified in the contract, and the buyer can't come up with the cash to close, then the buyer forfeits whatever deposit or earnest money they paid.
all-cash is standard lingo that means the buyer isn't taking a loan, which is what the majority of buyers do in a "normal" market
the whole article is about how the high interest rates aren't having the effect the fed wants on buyers bc buyers don't have a mortgage payment if they just have the cash available
This isn't true. There are lenders that will loan you money in a way that qualifies your offer as all-cash, even though you are still borrowing money with interest. I think the distinction is based on whether or not the borrowed money comes from a traditional mortgage.
Currently our house in a modest corner of So Cal is at a ridiculous valuation. I happen to like our house and I think it's nice, but it's not that nice, and this feels like a bubble getting bigger. I know there's a lot of controversy over Proposition 13 and its budgetary effects, but we'd be getting a whopping bill this year if it weren't in effect, and this is a factor not within our control.
The average salary for an RN in LA is around $90k, a dentist around $300k, a SWE at around $150k, Aerospace Eng at around $115k, Pharma Researcher at around $140k, etc.
If you've been working in a white collar industry for a decade, and your partner has as well, you'll end up being able to afford a pretty large down.
Ten years for a dual income to afford a down payment. Nuts. With ten years of savings I could buy two houses where I live, and I don't make that much. How people in CA stand it I don't know.
If you're Asian American (like me and a large proportion of White Collar Workers) your options are very few and far between.
Furthermore, it's very easy to find a job in these hubs, not just in Software but also in Hardware, Finance, Accounting, Pharma, Aerospace, and Government.
In addition, lots of people just like the weather. Polar vortexes, hurricanes, and snow does suck.
And finally, there are some people who might not feel as safe in Middle America due to their identity (racial, sexual, or gender).
This isn't to say that Middle America sucks (it doesn't), but people make rational choices about where they live, and it's insulting to say otherwise.
You have valid reasons to live where you live, and I listed those of mine and my peers.
I had a great time living outside the Bay Area, but at some point you do end up missing stuff from your culture.
It's similar to how you see so many NY transplants complaining about Pizza or Italian food in SF.
It's similar for me if I'm outside the West Coast.
Asians are not homogenous, and we have extreme levels of ethnic diversity, and most cities and towns in the West can accommodate for that level of Asian diversity.
Also, at some point it gets annoying when some cities might be ethnically diverse but only show off "Italian" or "Irish" pride (looking at you Boston) despite having way larger Brazilian, Dominican, Puerto Rican, or African American populations.
If Boston, Chicago, or NYC's image is always going to be intertwined with Italian-American, Irish-American, German-American, or <insert European community>-American, I got the message. And "Chinese" or "Indian" American doesn't cut it when the difference between someone from Xian and Changsha can be massive, or someone from Kashmir and Kanyakumari.
Thanks! If you wouldn't mind, could you email me at the address in my profile? I'd like to follow up on one of your previous comments, but I think it would be better by email.
> If Boston, Chicago, or NYC's image is always going to be intertwined with Italian-American, Irish-American, German-American, or <insert European community>-American, I got the message.
I can't comment on Chicago, and don't disagree about Boston, but your perception of NYC seems pretty off-base. NYC is extremely diverse. According to Wikipedia, "New York contains the highest total Asian population of any U.S. city proper." https://en.wikipedia.org/wiki/Asians_in_New_York_City
Likewise for the greater New York metropolitan area -- for example Jersey City is considered the most diverse city in the United States, and Bergen County has the largest percentage Korean population of any US county.
I've given this explanation before on HN - absolute numbers are relatively high, but the ethnic diversity of the Asian community in NYC is low.
Several smaller ethnic groups are not well represented in NYC.
Indian isn't a singular identity but dozens, same with Chinese, Pinoy, etc.
If there's a specific Asian subethnic cuisine or community you want to find, you will always find 3-4 options within commuting distance in the Bay Area, but never really in NYC.
For example, if I want authentic Uyghur samosas, I have 3 options in SF, but only 1 that recently opened in ALL of the NYC metro.
Same thing if I want Bihari style cuisine, or Pakhtun cuisine, or Central Vietnamese cuisine .... (you get the point)
This doesn't matter if you are a large ethnic group like Cantonese or Gujarati, of which there are tens of thousands here, but it does matter if you're a smaller subgroup or you wish to experience different subgroups.
On top of that, Asians are well represented outside the Bay Area in other areas in the West - I can go to small town California and not get treated as an "other" because they had a community of ranchers who moved from India 100 years ago or have a multigenerational Filipino community.
If you go to small towns in the East Coast, you absolutely do feel and get treated like the "other".
I don't need to worry about a racial abuse in a town like Visalia but I have been called slurs in similarly sized towns in Upstate New York.
At the end of the day, California is Minority-Majority, and the rest of the West is trending the same way. Perpetually being a minority like out East, Midwest, or South sucks.
If I or my family ever needs some form of support from the government or social services, I can safely assume that resources exist to meet our cultural needs, but the same cannot be said out east.
Furthermore, we are VERY well represented in all rungs of government and civil service out West, but it's not the same anywhere East.
It's like what Ali Wong said - SF is basically Asian Wakanda
OK, but there's an absolutely enormous difference between you saying this:
> Several smaller ethnic groups are not well represented in NYC
and this, which is what I'm disputing here:
> NYC's image is always going to be intertwined with Italian-American, Irish-American, German-American, or <insert European community>-American"
I don't think that statement about NYC's image is remotely accurate or fair.
> I have been called slurs in similarly sized towns in Upstate New York.
Upstate New York is multiple hours drive from NYC, and not considered part of the NYC metro area. Are you asserting that there are no places a similar distance from SF that will "other" people of color?
Edit to add:
> For example, if I want authentic Uyghur samosas, I have 3 options in SF, but only 1 that recently opened in ALL of the NYC metro
From a couple minutes of searching on Google, I see two options in Manhattan and at least four in Queens offering it as either samosa, samsa, or baked bun. Is this what you were referring to?
That sorting is a gift to the right wing. If we could get 100,000 or so people who are barely hanging on in blue states into affordable purple states, Donald a trump and the Republican Party as we know it would disappear like a bad dream.
Problem is, not enough city people dare to move to those areas, no matter how cheap they are. The areas' reputations precede them. I made the move from the Bay Area to a rural "red" area, but I can feel safe to do it because I'm white, straight, and appear non-threatening to the culture here. Even though I'm a flaming liberal, I can still kind of blend in. (Side note: It's amazing the kind of shit strangers will say to you out of the blue because they assume something about your politics because of your appearance.)
I wouldn't expect many of my South- and East-Asian engineering friends from the Bay Area to just YOLO and buy a house next door to me. Heck, I've asked some of them, and yes, the culture gap weighs heavily on their minds.
> It's amazing the kind of shit strangers will say to you out of the blue because they assume something about your politics
A US-based colleague reports that what he doesn't like about traveling north of the Mason-Dixon line is when certain people hear his accent and assume his politics match theirs.
(as to New Orleans: it has the reputation it does because the catholic french history makes it much less WASPy than neighbouring regions, in many ways)
My humble home purchased 6 years ago for $200k is now supposedly worth $350k. Ridiculous.
I'm drowning in offers from banks begging to refinance my home, but I got a ridiculously low rate during COVID and I refuse. Also I don't want to be underwater if the market ever comes to it's fucking senses.
People bitch about Prop 13, but it _does_ go up every year, but does not track the dumb valuation cycles in California.
There's a nice place nearish me that sold for like 3 million dollars, which is crazy, but the property tax is like $36000 a year. That seems crazy as well.
For those outside of CA: Prop 13's text says the following:
* require that properties be taxed at no more than 1 percent of their full cash value shown on the 1975-1976 assessment rolls and limit annual increases of assessed (taxable) value to the inflation rate or 2 percent, whichever was less. (this was the text of the prop in 1978)
* upon the transfer of properties, allow them to be reassessed at one percent of their sale price and reset the limit on annual increases of assessed value.
* prohibit the state legislature from enacting new taxes on the value or sale of properties.
* require a two-thirds vote of the state legislature to increase non-property taxes.
* require local governments to refer special taxes to the ballot and require a two-thirds vote of electors.
* make the state government responsible for distributing property tax revenue among local governments.
Meaning that if you bought your house in 1975 for the median price of $24,300, you'd pay 243 dollars. Now, the next year (ignoring inflation, because I can't get a good source for that), you'd pay 1.02X of that, so $247.86 in property tax (Tell me if I am wrong here!). In 2024, if you carry it all out, you'd be paying $641.23 in property tax.
Now, look at the median home price in California in 2024. Its $860,300. That growth rate between 1975 and 2024 is, on average, about 8.1% for the median home (again, tell me if I'm wrong here). If you bought the median home in 2024, you's then pay $8,630 in property tax.
So, if you've lived in your home since 1975, 1) good for you! Keep up whatever you're doing health-wise and 2) you're paying $7961.77 less than your next door neighbor that just bought the house. They are paying ~13.4X in taxes than you are. Not 13.4% more, but 1,340% more.
This issue has come up with my parents. They've lived in the house since 1978. Nice little place. Dad got it for ~70k and they pay about 650 for taxes these days. Mortgage was paid off years ago. The house next door has gone through about owners in about seven years. It's always young couples with maybe one kid and usually one more on the way. The houses go for about 1.1M now. So, they are paying about 11k in taxes. Then the mortgage comes along. Lets use a mortgage rate of 5% and assume they managed to get 20% down for the sake of argument here (it varies a lot, I know). Their mortgage is 57k a year, so with taxes about 68k a year, round it to a nice 70k a year with garbage and water and whatnot. Or about 5,800 a month. Versus my folks who are at about $200 a month. About a 29X difference. (I know I screwed up something here, sorry).
The very second there is any kind of wobble in their finances, these couples have to sell. There is no room for error with these young people. An accident, a plumbing problem, any kind of health issue. Boom, done.
My folks try to help out as they can, they baby sit sometimes, my Dad does a lot of free labor and lends out his tools, helps buy sod and supplies when he can, they cook for these couples too. The neighborhood tries to help the young folks out. But at nearly a 6k/mo drain, guys, there's not much you can really do. Fortunately the house only ever goes up in price, so when they do move out to live with family again they aren't underwater. But that just sets up the next young couple for another disaster too. It's honestly tragic.
That's pushing 50 years ago, and how many people does that apply to? More realistic is say I bought 15 years ago - my house is "worth" 2.5x that. Why do I need to pay 250% in taxes? Imagine now people on fixed incomes.
This works okay in states like Texas that have no income tax, but hardly applies to California tax rates..
Seeing this firsthand, Sold our house in southern California in mid 2022. Moved to another state and regretted it. Looking to buy back in our area(also looking at another area if we can't find something in socal). Both me and my Wife are extremely high earners(Staff FANG comp for me and HR Director salary for Wife) and we are shocked at how expensive things have become in our old city(not naming it as I don't want more people looking there!).
Basically when we bought there during the early stages of the pandemic(mid 2020) most decent/somewhat updated 3 br 2 bath houses were between $800k to $1.2M, with some really nice ones $1.4M to $1.6M. Now the same houses are $1.7M to $2.1M which is basically a doubling of prices, and oh you have 7% interest rates which make housing payments insane. The local wages do not support these housing prices and being a rational person myself it is quite frustrating.
Our realtor is saying alot of the offers(about 75%) she has been seeing are coming from either SF or SF bay area as things are falling apart up there and families want to get out while they can(this is what they are telling her). And alot of all cash buyers have beaten us in almost every offer we have made, so a decent amount of these buyers are from northern california.
I wonder why people think it's crazy for housing prices to go up in a short amount of time but don't think twice about the stock market going up more than that over the same time period.
I think people get confused by how this is possible because they only consider the wages required to buy a home when buyers in high cost areas have benefited from a doubling in their liquid net worth via stocks and other financial assets.
I mean it sounds great, until you spend everything you have on rent so you can't actually save up 20% to put down on a house during a crash (remember those times when prices fall and banks tighten up and stop giving out loans). Oh, and those same crashes are the times that people tend to lose jobs in mass, so getting a loan for a house would be impossible.
Anecdotes are cool and all, but they don't work when you apply them to mass population trends. In the meantime you have to have somewhere to live.
I'm saying that figuring out how long a peak is going to last, and how low the low actually gets is an effort that has bankrupted a lot of people. When it comes to housing it appears that time in market is more effective than timing the market in most places.
This article mentions a single-earner household with $160k income purchasing a $900k+ home.
Assuming this is with 20% or less down at current interest rates, this is bonkers. The term "house poor" is cliche, but I think it describes the position most California buyers are putting themselves in.
For comparison, our household income with RSU deltas is projected to be 500k this year. Half of that gets taxed away. I do not expect to make this much money forever. I'd be satisfied if we made this much for the next sixteen months, then took 50% paycuts.
We bought our home earlier this year, and we set our max price point based on what we could theoretically pool together from all of our liquid holdings and retirement, in a catastrophic situation where we both couldn't find work.
There's an obvious flaw here -- if things got really bad, liquid assets would be devalued, to the point where we may not be able to cover. We got around this by cutting our budget in half, and using what would have been a 40% downpayment for a 1.5 million dollar house to put 75% down on a $800,000 house. We now have a house that cannot be reasonably commuted from on a daily basis unless we leave at 4 in the morning, but we also won't be screwed if we lose our jobs.
I kind of regret buying. Our house immediately appraised for $30k over sale price, and is nearly $80k over a few months after closing. That would get eaten up by taxed and fees if we sold. I expect housing prices to crash after people run out of money sources to tap.
I have no way to prove this, but my impression is that most people with mortgages are buying more house than they can responsibly afford, and they are effectively gambling on not losing their incomes.
I think you are 100% spot on. The socal buyer right now is a mix of SF/norcal deep pocketed tech employees(see my other post on this article) and just folks that are extremely desperate to buy a house, ie. they are cashing out everything they have(pension/401k/stocks/other assets) and getting themselves into a very risky position. If the stock market or housing market were to tank you would end up in a situation where all your assets(remember that you cashed out everything) are tied into the house and it crashes in value and you could also lose your job so you lose everything(a very scary situation).
> We got around this by cutting our budget in half, and using what would have been a 40% downpayment for a 1.5 million dollar house to put 75% down on a $800,000 house.
Wow, that's wonderfully financially responsible. I'm glad you were able to do it, but I'm doubtful many people would be able to pull this off.
> I have no way to prove this, but my impression is that most people with mortgages are buying more house than they can responsibly afford, and they are effectively gambling on not losing their incomes.
I think they are definitely doing this, but I also think most people think assuming constant future income instead of a bug jump counts as being financially responsible.
What I fear is that many people instead are betting that they can make the payments for a couple years by hook or crook (undeclared personal loans and credit card advances) until interest rates fall and then they can refinance. If this projected drop in interest rates occurs, they come out way ahead. Real estate prices soar, and they can afford to stay. If it doesn't, house prices will drop, refinancing will be impossible, and there will be an awful lot of foreclosures of underwater mortgages in a couple years.
I mean, yes and no. It is true that people are overextending themselves, but there are not a lot of alternatives. To whit: the median home price to median household income ratio is the highest its been since the census started keeping track in 1947 [0]. Its worse than 2008, and like the article says, there are a lot of guardrails in place to prevent the wildly irresponsible borrowing that created that mess.
I think a potentially illuminating visualization would be to calculate what home sale percentile corresponds to a responsible use of the median household income (and vice versa) over the last 70 years, but that sounds like a really finicky calculation, so maybe not today.
Decades of policy designed to promote detached single family houses, discourage density, and make it easy to object to construction have combined with tax policy favoring stasis to create a political environment incredibly hostile to housing. This drives up the price of land significantly.
Yes, construction can be made cheaper. The current way to do this is by using pre-fabricated modules turned out by a factory. This reduces the cost and time of construction somewhat, but does nothing at all for the price of the land.
> promote detached single family houses, discourage density,
The cheapest housing in this country comprises primarily single-family homes in very low-density areas. These homes are substantially less expensive than the vast majority of dense urban bugman studio pods.
But yes, if you exclude flyover country because you regard farmers, ranchers, loggers, or steelworkers as subhuman (a common urban attitude), then your abject denial of reality makes sense.
Remaining in an urban hellhole is a choice. Bitching about the consequences of your choice, and blaming local policies for your own cost issues when you could literally just get out of there, is a whole level of solipsism I can't believe HN takes seriously.
Everything in life has tradeoffs. People complaining about a situation of their own making are simply unwilling to tolerate the "ick" of living among people who aren't fellow bugmen. And that's fine, but they need to own that they've chosen their place along the spectrum of tradeoffs and stop bitching about the choice they've made.
It's the ground they sit on. The land value of my house is 1.4M. The house itself, a near derelict built 100+ years ago is worth 90k.
While construction costs have increased, the actual building product is not the real problem here.
What flows from this though is the clear solution:
Subdivide the valuable land.
Take something worth 1.4M and divide it by more than 1.
Create a small apartment of several units on my land and you can generate a product that is cheaper than $1.5M.
So the core problem right now is that subdividing land and building apartments is largely banned in many places. Accordingly people are only able to buy very expensive plots of land.
(Now yes obviously if you subdivide land the value of the underlying land increases as one can generate more revenue from it, so there's some friction to price drops here, but much has been written about how ultimately this does result in a greater amount of cheaper end product in the grand scheme of things)
What use is your 3d printed house if you can not legally put it somewhere that people want to live (near real jobs, schools, amenities)? What are you going to do with it when the local, county, and state government decide there are only a handful of lots you can place one?
The price is mostly scarcity created by severely limiting what can be constructed through many layers of laws. You can’t cut through that with innovation.
It's primarily land. And there are (some) areas in the US that geography/etc. makes it hard to basically commute out of high cost of living areas (especially if you want to live urban). I live about an hour out of the nearest major city on multiple acres and my propery isn't Midwest cheap but it's pretty sane.
Some places its one, some places the other. Where I am, western Washington across Puget Sound from Seattle, its mostly the buildings. Here were my assessed values in 2008, 2016, and 2024:
Year Land Buildings
2008 82k 158k
2016 55k 149k
2024 94k 309k
Currently in the US (and I'm guessing most everywhere with high housing costs) the problem is that we don't build nearly enough housing. So simple supply / demand takes over at that point. There is way more demand than supply.
Add in the mortgage interest deduction (this raises prices because people can spend more than they would if they had to pay the tax on the interest); add in idiotic zoning laws / parking requirements in most urban areas of this country (40% of the buildings in Manhattan could not be built under the city's current zoning laws https://www.nytimes.com/interactive/2016/05/19/upshot/forty-....) and viola, you have super high housing costs.
The problems are easy to fix. Places like Tokyo have low housing costs compared to other cities of the same density. It can be accomplished, it's simply a matter of IF we'll do it. Given that homeowners and landowners have a gigantic portion of the assets in our world economy, I'm not hopeful that they'll ever willingly lower the price of assets for the good of society.
The population of Los Angeles has decreased in the last 5 years though, is the housing supply also decreasing? I don't understand how housing demand goes up as population goes down.
I mean, have you actually looked into building a house in one of those nobody lives places?
First question I have is "can you". You might get an outright no on attempting to build it there.
Next question is how long before you get permitting.
Even if you get permitting, what are the hookup fees for utilities. Doesn't do you any good if it costs a million for them to run a water pipe out to you.
>If it is expensive to build a house - could it be optimized, 3d-printed, automated in some way?
We 3D print houses now, and this doesn't reduce the price of the house any if at all. Things like electric and plumbing certification cost a ton and are not currently automatiable. And in general pre-manufactured is not allowed or extremely limited in most places.
I lost a lot of hope for US housing when I went to an upzoning hearing for the first time a few weeks ago. The amount of fear-mongering vitriol and hatred over a proposal to up zone an area near the neighborhood (not even in it) to allow for town homes was unbelievable. If someone had told me “I went to the meeting and someone said…” for half the things I heard there, I would not have believed them.
People, especially older people, in the US so vehemently hate the idea of building more housing that they are willing the brandish weapons and make threats in public. They’re willing to use racial slurs and amp each other up with wild claims about crime in new buildings. And if you go on the YIMBY side to most of these things your voice will be drowned by panicking people who think more, slightly denser housing within biking distance, is a literal threat to their lives.
US housing supply is going to be screwed as long as local communities have a real say in upzoning and project proposals.
This, this, this (plus zoning laws based off this).
I drive through a neighborhood in Baltimore County, Maryland where a number of the houses have these black and white signs, "Save the suburbs!" "No new light rail!"
The USA has a lot of unaddressed trauma around "others" and urban living. Plus a car infrastructure it heavily relies on to the detriment of all other modes of transportation. And stores that take up an enormous amount of square footage with cheap goods… and… and…
Yes, my parents helped fight off something like that in their neighborhood recently and I talked to them a bit about the dynamics of what was going on. Ultimately they felt like they wanted to support their neighbors who really didn't want this change.
I can't say I really blame them; they chose to live in the neighborhood because they liked it the way it was, and I've talked to other people who have similar feelings.
The want-to-be developer also came out looking like a villain to me after this, so I can't say that anyone really ends up looking good.
In the process of all this I did learn that the SFH they occupy now is actually zoned for up to 33 units in a multi-family situation, so I told them that as soon as I inherit the place, it's getting sold to the highest bidder.
Argh, you didn’t have to rub it in, la times. You could have just reported the statistics. You did not have to have a picture of the exact building where i was considering buying an apartment 15 yrs ago.
Edit never mind that seems to be a new development. I guess new development architecture is very unique.
Home prices are rising to unsustainable levels everywhere. Take a look at place where I grew up, Tracy, CA. The average home is 6x the average household income. Tracy is/was a sleepy town and it's unaffordable now.
I wonder if as population growth levels off in the U.S. over the next few decades the “not enough housing problem” sort of resolves itself. How’s the housing market in Japan?
The problem is not simply that there are literally not enough houses available, but rather that in a lot of cases, people cannot afford the houses that are available (I found one source that said 1.2 million vacant units in California, but I don't have the time to really evaluate that source), or that the available homes are in the wrong place. For the Bay Area set, that means that there are loads of houses in Tracy, or Modesto or Stockton, but if you need to work in San Jose, you're SOL. But if you've the median household income for the Bay Area (~$136k), then there are less than 3 dozen in the greater Bay Area (including as far out as Pittsburg), and you'd never get a loan on a lot of those because of the amount of work they need just to be habitable.
This mainly devolves to a widespread belief that housing should be an asset that appreciates faster than inflation, so people fight tooth and nail against anything that endangers their property values. Speculation has driven housing prices far past the limit of sustainability. There are even algorithms to drive rent (and therefore sale) prices up to "what the market will bear" [0] without any regard to the long-term consequences of this short-term profit seeking. Or rather, the long-term consequences (the concentration of property holdings into the hands of an ever smaller and ever wealthier group of people) look pretty fucking good to the people doing it.
It said levels off not declines. Most of the west has been leveling off and prices still increase. Although I was surprised that the US growth rate is lower than Canada
Meta: What is the purpose of hacker news? This really doesn’t seem relevant at all, yet I am seeing more and more posts like these that are not related to hacking or startups and only relevant to a portion of the community. Should they be flagged? That feels extreme. Yet these types of posts don’t feel in the spirit of this forum at all.
When I visit hacker news, I want to leave having learned more about computers and staying up to date with the tech industry. I’m not sure this post (and others like it) contribute to that feeling, but perhaps others feel a different way.
You have insurance companies pulling out because of fires, there is the earthquake risk and also highly likely water scarcity issues in 10-20years. Yearly "atmospheric river" and other unexpected water and flooding related crises are also getting worse at a place that isn't planned and prepared for that.
Are these investors looking to sell high very soon? Otherwise, it's a big gamble long term.
Earthquake risk and water scarcity are true, and these issues have been endemic, and they happen exactly at the major population centers / agricultural areas.
Real estate securitization drives speculative investing into highly leveraged markets. Put another way, unless interest rates are set to some absurdly high levels above 9.6% for 2 to 3 years... the gamblers will continue to externalize risk onto the taxpayers.
Won't ever happen even after 2008, as wealthy lobbyists will not willingly choose to lose asset valuation.
I now live in a city where a low-end house mortgage is 105% of average incomes. The people who understand negative amortization are already cashing out and leaving.
> average home now tops $5,500 — if you can put 20% down
$5500/mo for a 3 bedroom property with additional appreciation is a great deal in any market.
If you're in a white collar dual income household (as most of the US and especially Torrance, California which is mentioned in the article is becoming), this is relatively affordable.
You're anyhow paying $3500-4000 to rent a similar house or apartment, and paying the landlord's principal off.
Additional building is happening in California, but it's targeting this specific demographic now.
> $5500/mo for a 3 bedroom property with additional appreciation is a great deal in any market.
What are you smoking? This is insane even on two $150k salaries. It’s 60k a year on the mortgage alone, when your households total take home pay is under $200k.
Traditionally the guideline was that housing costs (rent, utilities, etc) shouldn't be above 30% of gross income. $66K / $300K is only 22%. So, I wouldn't call it insane.
I’m not sure where this $5500 figure came from but if you want a decent sized home in a good area with good schools there are not homes for sub $1m to be found.
$1.5m is a much more realistic sale price for a modest home in a good area, and with 20% down that’s more like $10k a month between mortgage and taxes and insurance.
It's SoCal - Torrance CA specifically as mentioned in the article. Prices are slightly lower because salaries are slightly lower (or maybe it's the other way around)
Except housing costs don’t stop beyond the $5500 on the mortgage. Add all the utilities, property taxes, insurance, and the monthly average of maintenance fees and it’ll probably be closer to $8-9k/mo.
Yes, that's why I wrote "(rent, utilities, etc)"... And for a rental, which is what my comment was in relation to, there are generally no property taxes or maintenance fees.
The kind of house going for $5500/mo mortgage in SoCal will be in a very affluent town like Irvine, where most households will be dual income white collar.
The article itself references Torrance, CA which has gentrified from working class Latino American and Asian American to upper middle class Asian American
Yea, my Irvine numbers are off. Torrance is becoming the next Irvine, due to a large Asian American community, decent schools, and relatively high paying employers nearby.
School district matters to Asian Americans, and Asian Americans skew in the highest income brackets in the US now, but we also prefer living in other AA neighborhoods because of cultural affinity.
Agreed that it's insane. The only people paying that for such a low bedroom count house are wealthy people who want location and specific schools. Add childcare to that, and you're close to $10,000 a month for just basic living. Only 5% of people can afford that. This is especially for the middle to slightly upper middle class (someone making $300,000 as a household) not being able to afford it, because they get absolutely hammered by the asinine tax structure, more than any other class percentage wise.
Even medium sized startups can pay a $500k TC for someone with a decade+ of experience (how else do you see so many L5 Engineers turned EMs or Tech Leads at startups after a bad review cycle)
It might be but you need to appreciate at least 15% over the time you buy it to beat closing costs and (likely in these markets) home prep costs/staging. If you know you’re going to be there 5 years it’s probably a safe bet, but the value appreciation in California has slowed quite a bit (or dropped, in the case of the bay area) so it’s not as safe as a bet as it was, especially considering rental prices are down and there’s probably a 10-30% premium to own.
Avoiding contingencies like this can be a good thing, since depending on the other contingencies it might make the deal more likely to go through, or to go through more quickly. But in most cases the buyer still has contingencies for inspections and probably a whole bunch of other things that will let them back out if they really want. Whether it's an "all-cash offer" or a standard mortgage, unless they are providing seller financing (rare), the same amount of money gets wired to the seller's back account at closing.
Am I missing something? Or is "all-case offer" in a headline indeed an empty phrase that usually signifies that the article is probably selling a false narrative based on misconceptions?
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