Do you, readers, think it’s possible?
I want to be optimistic but I believe that without very specific efforts to disempower private equity this won’t happen. Blackrock and others are vacuuming up properties like crazy. But if anybody sees a positive path forward, please share your thinking.
Speaking about housing, year 2008 called and wants its market crash back:
I don’t see it happening, because private equity OWNS all the people making the decisions.
But heck yeah, if getting up and saying some stupid ritual formula every time a public official says something in public was a clear step toward any kind of distributism, I’m onboard. Say all the dumb things you need to say, create all the weird legal fictions you have to create, whatever. I’m in. Nothing to lose.
-ethyl
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The most plausible hypotheses include:
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Clarissa
“Boomer, of course. What is wrong with these people…”
No, they are fools with complete ignorance of not only the historic, but the current Native Indian situation; they have never been in a reserve, are mostly MC/UMC White, largely female/weak males assuming moral superiority, a mindless herd heavily laced with misplaced compassion, but most definitely, not restricted to Boomers.
Kid, I apologise for the rant, but been there, done that —far too many times ;-D
No, that’s fine. I find such people painfully tiresome. Their stupid self-righteousness always gets to me.
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The problem is that several(many?) generations of Indians also know little of their history, and what little is remembered is largely vicdumbhood. Hunting/ gathering is a tough life, even here on the Coast, mass slavery developed to process/store the periodic fishery resources. Care to guess what this ceremonial tool was, and why and when it was used ;-D
https://www.britishmuseum.org/collection/object/E_Am-6784
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The peak of institutional purchasing of residences was ’22, and since then, the Big Boys have been unloading their portfolios. It matters not, whether that starter home you want was bought by a large investment bank, or your wealthier competitor who went to law school. The issue isn’t demand, but rather supply.
The states with the most expensive housing (West Coast, etc.) are the states that won’t let builders build or landlords rent. They have the strictest standards as to where you can build, what you can build, and how you must build it. There’s way more land in Oregon than Missouri, but in Oregon building anything is almost impossible because our ideologues insist you must build with the “urban growth boundary”, and meet so many minimum “standards”. Rentals must meet almost impossible to comply with “habitability” standards (‘vermin free at all times’…just try keeping an old farmhouse free from all mice and carpenter ants), builders must pay enormous ‘system development charges’, ad nauseum. Oregon had no housing shortage (bought my first Eugene hillside home for $37,500 in ’75, now “worth” $605,000! says Realtor.com) before 1973 when we enacted statewide ‘land use planning’ and the Oregon Residential Landlord Tenant Act. As Pogo said: “We have met the enemy, and he is us”.
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The problem is that unraveling this mess will take political will, a lot of effort, and a serious amount of time. It won’t happen before the midterms. And so the panicky feelings awakened by the prospect of the midterms invite harebrained schemes like 50-year mortgages and handing mortgages out in the pre-2008-era conditions. This ends up making things worse and on and on we go.
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…and it will require sacrificing the hallucinatory equity of boomer homeowners.
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Oregon also busses Os Marginals any who try to escape living with free-range feral humans, and lawfares any communities or even whole counties that attempt to address the problem
See the Supremes Grants Pass, OR decision and subsequent State actions)
Living anywhere safe enough not to pay the crime tax in money or blood is mad expensive.
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Once again: the US, right now, has the highest ratio ever of houses to people.
Supply. Is. Not. The. Problem.
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Just because the US has lots of “underused” homes (elderly widow living in 3 bedroom home she raised their kids in), which distorts the ratio of homes to occupants, leading to your misunderstanding of the law of supply and demand, does not mean supply is not the problem.
Price is an indicator of the inbalance between supply and demand. My Eugene,OR home, built in 1950, wouldn’t have increased in market price 16 times from ’75, when we bought it for $37.5k, until now, if demand did not far exceed supply.
Here’s another issue that complicates supply and demand. Once you’ve bought, you won’t be able to make any significant repairs. Even if you can fix it with your own hands, it’s impossible to find parts for “outdated” 10yo fixtures. So everybody wants to buy what was built 3 years ago. But once you buy it (at ruinous costs), it becomes unfixable and outdated in a few years. And then again you are trapped.
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““outdated” 10yo fixtures. So everybody wants to buy what was built 3 years ago”
Another piece of the HGTV puzzle falls into place… in addition to making people unhappy with their current houses (and gaslighting them about how great awful gray ‘open floor plans’ are, it’s to sell them on the idea of permanent impermanence….
Houses with planned obsolecence…. I hate the scam economy so much….
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I found out that just to update the bathrooms in my 25yo house would cost what the entire house cost 10 years ago. Because “oh, this doesn’t exist anymore. We have to rip out both the shower and the bathroom, and that means also removing the sink. And part of the wall”. All I need is a new shower, and apparently that will cost $70,000 because everything else needs to go at the same time.
And before people suggest that we DIY it, this would mean N quitting his job. Which he doesn’t want to do. He recently entered a new field, which means hundreds of hours of study. He’s looking for a new job. There’s no likelihood of him ditching all that and getting into shower installment business.
As for the open floor plans, they are very stupid and I hate them. Why are they so popular? I really don’t get it.
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Pet theory: open floor plans go hand in hand with people not cooking anymore. If you cook, open plan just means a film of grease on everything, and you always feel insecure about your actual working kitchen being visible to guests.
ergo: open plans are for people who never cook.
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This is probably why I hate the open plan. I cook a lot and I don’t understand why the sounds and the smells of cooking need to interfere with the business of everybody who is on the first floor. Also, if you run the dishwasher, it drowns out the sound of everything else around you.
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” open floor plans, they are very stupid and I hate them. Why are they so popular? “
So they can become unfashionable in a few years and everybody will be rushing to put in walls so the kitchen and living areas don’t bleed into each other.
The HGTV dream is a house under constant radical updates.
Same principle as clothes fashions where the ideal is a style that quickly becomes irritating and has to be replaced with something else.
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I actually do not mind an open floor plan. I grew up in a an apartment with a teeny tiny kitchen that made it hard for a person to move in it. Somehow, we all converged to it anyway… All places I lived in the US had an open kitchen. It is still small (that’s actually why I think the open floor plans are popular as they mask how small the kitchens really are), but it does not feel as closed in and I can interact with my family who hang around when I am cooking. I am part of my child doing homework, playing instruments, my husband stopping for a chat, all while I cook or wash dishes. I actually like it. Although, I would not be opposed to having a large closed kitchen that would comfortably accommodate more than one person in it.
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It’s also homeowners insurance. In a perfectly functional house that has had no updates or renos in the last 30 years (just repairs), I can 100% guarantee that the inspector will find four things that will cause the insurance company to say NO. And that means it doesn’t qualify for a mortgage.
Even though the original homeowners bought the house with a mortgage, with the exact same specs.
-ethyl
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This is fixable. The problem is that the people who could fix it (mortgage and insurance brokers) do not want to fix it– fixing this problem would lower prices.
At my end of the market WE DO NOT GIVE A FLYING FART about outdated fixtures. We would happily buy a house with one working electrical outlet, where nothing had been updated since the fifties.
But nobody will let us.
In a sane market, that house would be super cheap, and we could pay cash for it and then embark on the tedious process of gradual renovation, as we saved up money for it. But We don’t have a sane market. We have a market where everybody thinks their pile of sticks is worth $150k even if it has trees growing through the living room floor, and won’t settle for anything less.
The reasons for that are many, but a huge one is FHA loans. Without “rehab loans” backed by the government, the price on houses that “need some work” would plummet instantly. Instead, FHA allows people to pay too much for a crappy house, and then borrow a ton of money on top of that, at a very low interest rate, to do repairs.
The problem is, the repairs are an awful deal. You are *required* to pay a contractor to do them, even if it’s stuff you are perfectly capable of doing yourself, so this cuts out 100% of honest, financially responsible people from this market.
The people who most need FHA loans, do not benefit from them.
The reason we can’t do anything about this, is because if we let prices collapse on houses that need work (insurance companies keep their own list of things that they won’t insure a house for: rust on the water heater, broken tiles on the floor, single pane windows, half-done reno on the second bathroom… all of these will make a house un-insurable, and thus unqualified for a traditional mortgage), it will also pull down prices on houses that are in good shape.
And that panics investors and boomers. We can’t panic investors and boomers, because investors and boomers matter more than the rest of us.
Boomers worked hard, bought when the market is low, and now enjoy eternally-increasing equity that they can borrow from to go on a cruise or get a hip replacement. But suggest for one millisecond, that young people today should be able to buy under the same conditions they did… instant shrieking. YOUNG PEOPLE TODAY ARE JUST LAZY!!!
Literally no in-between, where it’s great that you own your house, but maybe other people should get that chance too, and also a house shouldn’t be a magic piggy bank that money just appears in every year when you say the magic words “real estate appreciation” and knock three times on the kitchen cabinet, eh?
It’s not the old widow with empty bedrooms, living her modest life in a familiar house, that’s the problem. It’s the ones borrowing from their home equity to support their retirement lifestyle. If prices fall, the magic piggy bank loses its magic.
And investors.
Sure, the big investors may be slowly divesting, and not as huge a part of the market as you’d think from the press. That doesn’t change the part where, for working class people trying to buy working class houses in working class neighborhoods, we are losing out to smalltime REIbro investors running BRRR scams and doing occupancy fraud 100% of the time. Just because it’s not a problem in your Upper Middle neighborhood in White Suburbia doesn’t mean it’s not a problem.
And it’s the same problem with these assholes: the problem is big enough, that if you fix the problem PRICES WOULD COME DOWN. More important: they’d come down dramatically in exactly the working-class markets where it is so desperately needed. But nobody in charge wants that, because it would have knock-on effects that bring prices down in the classier markets next. And boomers and investors would be mad.
And boomers and investors count more than the rest of us.
-ethyl
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TL:DR: It’s not supply. It’s that 100% of our policies on this are oriented toward KEEPING PRICES HIGH.
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As much as I would like to start with the phrase “The problem is” it’s not exactly accurate. What we have here with housing is a Gordan’s Knot of problems, issues, and other factors all tangled together. This is why no one can find a simple solution to the issue. Any simple solution tends to make half a dozen matters connected to it even worse.
I feel that it is likely that in the end one of three paths will prove victorious.
The first being that prices continue to rise uncontrollably until 999 of every 1,000 families cannot afford to even rent and wind up being serfs. Except Serfs were not taxes nearly as heavily, and the gender issues were fine which meant they could find wives to marry. Which means if this route wins, people will have better tech, but be much worse off than the serfs of yesteryear.
The second path is complete collapse. In this case the currency shatters and suddenly the Weimar Republic had a better currency system than us. If this takes place no one will own anything because none of us will be able to afford anything besides bread. Forget families or houses.
The third path is the Rapture takes place and the time of Jacob’s Troubles begin. According to the bible you can expect a 1/4th of the population to die from war, starvation, illness, and starving animals. Then further on a 1/3rd of the remaining people are killed by the fallen angels. Add that to those who were Raptured, and the huge number of those who came to Jesus and were killed for his name and suddenly the population is much smaller. Then after all the death and destruction Jesus returns and the survivors rebuild. At which point land ownership and restrictive building laws are not really an issue anymore.
The thing is we really are in a bit of a bind. The main two forces driving prices up so high is the Money Printing by the Federal Reserve and the hidden taxes put on properties.
The Federal Reserve prints money every year, that is the 2% average inflation the news always talks about. The thing is every time another chunk of dollars is added to the total supply, the average dollar can buy just a bit less. The reason the government allows this is that this influx of cash goes to the government first who can then spend it. This is great for the government in the short term, because it can be used to purchase foreign goods, buy votes, pay for projects, pay of debts….. nope I couldn’t go two seconds without laughing at the last one. They don’t pay their debts, they just keep paying the interest not the principal.
The thing is this inflation never goes down. Huge chunks of dollars are not removed, which means every year your money goes 2% less far than the year before. Please note, that 2% is on average. Take the last 5 years. Some of those we have close to 20-30% inflation. That extra did not go away. So here is an example.
Year 1 Total Dollars $100 Worth $100, yearly inflation 2% (Dollar Worth reduced by $2)
Year 2 Total Dollars $100 Worth $98, yearly inflation 5% (Dollar Worth reduced by $4.9)
Year 3 Total Dollars $100 Worth $93.1, yearly inflation 2% (Dollar Worth reduced by $1.86)
So the the amount of dollars you have has not changed, but what you can afford keeps going down every year. This means if you put 2025 money and prices into 1913 money and prices. Well we effectively make roughly 95% less than what people made in 1913 when the Federal Reserve started. Prices on goods have lowered over the years, but the inflation keeps chewing away at the value of our money which is why it feels increasingly like everything is too expensive.
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The second main driving force is the hidden tax on real estate. I am not talking about the Property Tax or the Insurance. Both of which are ridiculous.
No what I am talking about is the driving force that causes your property tax to go up. That being the school bond debts. So the way it works is your property tax has several line items. School, County, Sales Tax, City Tax, etc.
One of those is School Tax. So basically what happens is public schools take out a loan or a bond to pay for the retirement accounts of those who work in education. This loan or bond is supposed to be paid off from public property taxes. Which again should be illegal and is definitely unethical.
Regardless that is how it is supposed to work. Over the last year or so it has been found out, first in Texas and then later in numerous other states that the school boards were not actually paying those loans or bond off. Instead they keep taking out new ones. Now the School section of your property taxes has some calculation where it takes the amount outstanding in payment for those loans and then spreads that out depending upon size of property to the tax payers in a district or country.
When the loans are not payed back and new ones are opened, this means you are being taxed twice, and it keeps growing if those loans are not repaid and more taken out.
From what I understand the price is given by the taxing authorities to what your property is worth is calculated from several factors. One of them is how much money is owed by the school board. Effectively to make sure those loans are payed off, they have to increase the worth of your property, which in turn increases both the regular property tax, as well as the size loans the school board bonds can have which are then increased because they owe money, and the cycle continues.
There is a country in Texas with 9,000 homes where the average income is $35K it is a very poor area. It is projected that in the next year or two none of them will be able to live there because the property taxes are now sitting close to 30K a house a year due to this issue.
Please note, not all areas are doing this, but apparently it is a wide enough problem that it has been uncovered in multiple states.
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As for the original post. I doubt the so called land claims will cause prices to drop. Confusion yes, potential riots yes. Price drop not a chance.
Just because some bleeding heart traitor decided that the Indians now own this land, does not change the fact that said land was either won in war, by trading, or purchasing.
Nor does the ruling mean that the ownership of the land for the last 200-ish years suddenly changes.
If, and I do mean if. The equivalent of the supreme court for Canada decides to rule in favor of the Indians, then the Canadian government is opened to be sued by every person living on those lands, as well as ever family who lived on that land for the last 200 years for illegal property tax collection, plus interest for every year after they were taxed. They might also be able to claim abandoned property and declare it “squatters rights” as the left liked to say. 200 years of abandonment is quite a long time.
It is simply nonsense, basically it is something allowed through to distract people from the abysmal job the current government is doing. Don’t expect anything to come of it.
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A conservative literary critic and college professor
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