Mortgage rates and the housing market

[4everwarriors]

Still waitin' on why startin' pitchin' isn't dat important, hey?

[The Sultan]

Still waitin' on why startin' pitchin' isn't dat important, hey?

https://www.muscoop.com/index.php?topic=65951.msg1672594#msg1672594

Nearly eight hours ago...

[lawdog77]

Sure you can. Why are you being so obstinate about this?

Why are you being so flippant? 80% of new homes in subdivisions have HOA's. It's not that easy to find affordable housing that doesn't have an HOA

[The Sultan]

Why are you being so flippant? 80% of new homes in subdivisions have HOA's. It's not that easy to find affordable housing that doesn't have an HOA

Why do you have to live in a new house in a subdivision?

[lawdog77]

Why do you have to live in a new house in a subdivision?

never said the house one buys has to be new, just that new homes being built have HOAs. So, if  one buys that home 5 years from now, there will be an HOA.  Thats what suburbia is turning into. Most people live in the suburbs now, according to the last census.

[The Sultan]

never said the house one buys has to be new, just that new homes being built have HOAs. So, if  one buys that home 5 years from now, there will be an HOA.  Thats what suburbia is turning into. Most people live in the suburbs now, according to the last census.

🙄🙄🙄

[cheebs09]

Isn't it just part of the equation when finding a house? Maybe I'm not understanding because of not having an HOA, but as long as you know up front, I don't see how you don't have a choice.

[CreightonWarrior]

Lucked out on mine. $60 a year and enough reasonable covenants to keep the neighborhood clean and quiet.

[MU82]

Every Saturday, the NYT e-newsletter has a feature showing three houses that can be bought at a certain price point in different parts of the country. Sometimes they are $3 million estates, sometimes $750,000 condos, etc etc etc. They rarely show what I would call "affordable" homes, though.

Well, this week featured houses in the $280K range in Minneapolis, Pittsburgh and Hagerstown Md. They were super-cute and in great shape, and I'd have been happy to live in any of them. I don't know anything about the neighborhoods the Pittsburgh and Hagerstown houses were in. But the Minneapolis house was in what was a nice little area near the Golden Valley border back when I lived in Minneapolis from 1985-94; I obviously have no idea if it's still a nice area.

https://www.nytimes.com/2024/08/14/realestate/280000-dollar-homes-minnesota-pennsylvania-maryland.html?

Just goes to show how local real estate is. Nice houses in or near big cities for under $300K are a dying breed, but they do still exist.

[Jay Bee]

Well, this week featured houses in the $280K range in Minneapolis, Pittsburgh and Hagerstown Md. They were super-cute and in great shape, and I'd have been happy to live in any of them. I don't know anything about the neighborhoods the Pittsburgh and Hagerstown houses were in. But the Minneapolis house was in what was a nice little area near the Golden Valley border back when I lived in Minneapolis from 1985-94; I obviously have no idea if it's still a nice area.

If you love crime, it's a fantastic area.

[real chili 83]

https://youtu.be/dkg6d0gwlc0

[Scoop Snoop]

In addition to high crime areas, there are a number of reasons for homes in some areas to be priced so low. Small cities/town where the primary employer has left are a major reason, I think. Cities like Youngstown Ohio are touted as having bargain priced homes. Why is that? The media often neglects to even mention the local economies and other factors, focusing only on the low prices.

What I wrote certainly does not preclude finding bargains. It's just far more likely that "there's a catch". Sometimes it is as simple as outrageous property taxes in relation to the home's cost. Other possibilities are failing school systems, decaying infrastructure, poor financial condition of the municipality, lack of business/employer investment, etc.

[Lennys Tap]

Ultra-rich = Rico
Rich = me

That's rich.

[MU82]

If you love crime, it's a fantastic area.

You'd know way better than I would because I haven't been there in a looooong time. When we lived in the Twin Cities, the area around Wirth Park was pretty nice.

[JWags85]

In addition to high crime areas, there are a number of reasons for homes in some areas to be priced so low. Small cities/town where the primary employer has left are a major reason, I think. Cities like Youngstown Ohio are touted as having bargain priced homes. Why is that? The media often neglects to even mention the local economies and other factors, focusing only on the low prices.

What I wrote certainly does not preclude finding bargains. It's just far more likely that "there's a catch". Sometimes it is as simple as outrageous property taxes in relation to the home's cost. Other possibilities are failing school systems, decaying infrastructure, poor financial condition of the municipality, lack of business/employer investment, etc.

Yep.  I have multiple friends from the Youngstown/Canton/Akron triangle whose parents moved out of nicer, fairly large houses to smaller places in Cleveland or Columbus adjacent cause the areas fell off so hard.

My "favorite" example is Springfield, OH.  3 of my closest friends from college grew up there.  Classic former blue collar manufacturing town that lost most of it over the last 30-40 years.  Right in between Columbus and Dayton so anything positive would go to the fringes of either.

Remember visiting in 2009-2010ish for a friend's wedding.  We drove through the nicest area in town that had legitimate mansions.  Not McMansions, but 10,000-12,000 SQF houses on large lots or windy drives.  A couple were for sale...not a single one had a listed price over $650,000.  These are houses that, at the time, would have easily been $1.5-$2MM houses in the notoriously reasonable priced suburbs of Cleveland or Cincinnati.   But the town was in a downward spiral, the schools stunk, and there was nothing to suggest things could get better.  I remember my friend telling me the nicest newer house we passed was a family who the father owned a company in the west suburbs of Columbus, but the wife was from Springfield and wanted to be close to her family...and the kids all went to private school 30 min west in Dayton.

[Scoop Snoop]

Thanks for expanding on what I posted Wags. The key often is that there is little. if any, chance that the homes will increase in value in the foreseeable future (other than possibly inflation, but even then...). Good luck on selling your bargain home.

On the southern boundary of Virginia/NC, a casino is being built, so the homes in the area are rebounding in value. Before that, they were "real bargains". They are still pretty cheap, but not as much as they were. My point obviously is that there simply has to be a solid economic base.

One other factor hurting small towns- the local hospitals are closing at a high rate. They are too expensive to keep open.

[dgies9156]

My "favorite" example is Springfield, OH.  3 of my closest friends from college grew up there.  Classic former blue collar manufacturing town that lost most of it over the last 30-40 years.  Right in between Columbus and Dayton so anything positive would go to the fringes of either.

Remember visiting in 2009-2010ish for a friend's wedding.  We drove through the nicest area in town that had legitimate mansions.  Not McMansions, but 10,000-12,000 SQF houses on large lots or windy drives.  A couple were for sale...not a single one had a listed price over $650,000.  These are houses that, at the time, would have easily been $1.5-$2MM houses in the notoriously reasonable priced suburbs of Cleveland or Cincinnati.   

Superior, WI is the same way. The long-time home of the local publisher in a fantastic neighborhood was for sale. Priced at $650,000. Would have been a $4 million or more home in Chicago.

Superior was my late parents hometown. It's everything Duluth isn't. It's been in economic recession since the end of World War II and the drivers of the local economy -- iron ore and timber -- have been declining since 1950. It's sad but unless a whole bunch of remote workers think Northwestern Wisconsin is nirvana, the area will continue to suffer. And, pricing for new homes will be well below national averages.

[MU82]

The lead item in today's NYT The Morning e-newsletter was about the lack of housing:

The housing crunch has been well documented in high-cost big cities, where rents and mortgages break the bank. Now it has moved into the rest of the country.

The culprit is too little housing, and it began two decades ago. In the three years leading up to the Great Recession, homebuilders started about two million homes a year. That number plunged during the crisis and never fully rebounded. Since 2010, builders have started about 1.1 million new homes a year on average — far below the 1.6 million needed to keep up with population growth. America is millions of homes behind, and it gets worse each year.

I spent a week this summer reporting in Kalamazoo, Mich., which isn't an obvious candidate for a housing crisis. But prices exploded as the supply of homes fell behind the need. Now even middle-class families earning six figures struggle to make ends meet there, and Michigan lawmakers are subsidizing developers who build for those residents. The Times published my article about it this morning.

In today's newsletter, I'll explain how this happened nationwide, why it could take a long time to fix and what policymakers are doing about it.

Skittish builders

Cities and states understand they have a housing problem. To increase the pace of construction, many have cut back regulatory barriers — like zoning and environmental rules — that make housing slow and expensive to build. Since 2018, for instance, states including California, Oregon, Montana and Arizona have passed laws to allow duplexes and small apartment buildings in neighborhoods that once contained only single-family homes.

But the nation's housing shortage isn't only about zoning in cities. For one thing, developers everywhere find it harder to raise money, and homeowners find it harder to get loans. That's because banks and the government, in a quest to prevent another housing bubble, have raised lending standards and made mortgages harder to get.

For another, builders simply aren't putting up subdivisions at the rate they once did. They're cautious about overbuilding after the losses they incurred in the 2008 crisis, and they've become reluctant to invest and expand before they know they have a winning hand.

For instance, many homebuilders moved away from off-the-shelf ("on spec") homes; now they prefer customers to prepay for properties before they're built. Land developers — companies that take a piece of dirt and add basic infrastructure like streets, plumbing and power, creating the lots where new homes are built — have also cut back. The number of vacant developed lots, or places where a homebuilder could start construction tomorrow, is still 40 percent below its pre-Great Recession level, said Ali Wolf, chief economist at Zonda, a data and consulting firm.

A generational problem

Most people aren't going to live in new houses. But the entire housing market still benefits from them.

That's because new homes tend to get cheaper as they age. Over time, this creates what housing wonks call "naturally occurring affordable housing," which is a polite way of saying places that are older and less nice. They're a huge piece of the affordability puzzle; they helped Kalamazoo remain affordable for middle-class households.

What's happened in Kalamazoo and around the country is that older, cheaper units have either fallen into uninhabitable disrepair or been sold to investors who rehab them and raise the rents. Rehabs like that are necessary, but without a constant pipeline of new construction, there aren't "new old" buildings for the millions of families who need lower rents.

To combat this, both Kalamazoo County and Michigan have expanded housing aid to middle-income households that used to be ineligible. The hope is that this and other subsidies will encourage builders to expand if they believe they'll find buyers and renters who can afford the homes they make.

It's part of a nationwide shift. Housing assistance used to focus on poverty. Now it's also becoming a middle-class support program. Shades of the same idea are in Vice President Kamala Harris's housing plan, which calls for assistance for both first-time home buyers and developers who build housing for them.

Cities and states are changing where and how housing is built; Republicans and Democrats agree on the urgency, and housing was a theme at both political conventions this summer. (Barack Obama and Bill Clinton mentioned it in their speeches this week.) But those changes will be measured in decades because we fell so far behind. In the meantime, millions of Americans are stuck.

[NCMUFan]

Superior, WI is the same way. The long-time home of the local publisher in a fantastic neighborhood was for sale. Priced at $650,000. Would have been a $4 million or more home in Chicago.

Superior was my late parents hometown. It's everything Duluth isn't. It's been in economic recession since the end of World War II and the drivers of the local economy -- iron ore and timber -- have been declining since 1950. It's sad but unless a whole bunch of remote workers think Northwestern Wisconsin is nirvana, the area will continue to suffer. And, pricing for new homes will be well below national averages.

Think Duluth and Superior are simply reflections of state governments in St. Paul and Madison?

[tower912]

No more so than Springfield or Youngstown Ohio.

[The Sultan]

Think Duluth and Superior are simply reflections of state governments in St. Paul and Madison?

Uh...no.

[Scoop Snoop]

Thanks for posting the NYT article, 82.

A few comments/opinions:

The allowing duplexes or small apartment buildings in areas that were zoned single family years earlier is, in my opinion, stealing equity from the owners of single family homes adjacent or nearby. I saw the results of this (an old "solution"-not a new one) in some nice neighborhoods Richmond that had beautiful, modestly priced older homes where the zoning rules were changed. The rezoning does NOT benefit the single family homeowners at all.

Regarding older homes-there was a program in Chicago way back in the '70s that I learned about that involved total rehabbing of older homes by contractors who agreed to take on a lot of building trade apprentices. Whether the state, feds, or city subsidized the program (maybe it was a combination of them) I do not know. The idea was to train Chicago residents in good paying jobs while reviving the homes. Often, the rehab was a "total gut job" so there was a lot of labor and training. The balance between materials and labor was very different than new construction. What was not to like about this idea?

[NCMUFan]

Uh...no.

Wouldn't put much stock in what a clown that goes by Hippie Satan would say.
I had lived in Wisconsin for 28 and Minnesota 11.  Only thing I can say about Wisconsin is that I wish I had lived there less and in Minnesota more.

[TAMU, Knower of Ball]

Wouldn't put much stock in what a clown that goes by Hippie Satan would say.
I had lived in Wisconsin for 28 and Minnesota 11.  Only thing I can say about Wisconsin is that I wish I had lived there less and in Minnesota more.

Having lived in both (Minnesota 7, Wisconsin 15 and counting), I think you're crazy but to each their own

[jesmu84]

Thanks for posting the NYT article, 82.

A few comments/opinions:

The allowing duplexes or small apartment buildings in areas that were zoned single family years earlier is, in my opinion, stealing equity from the owners of single family homes adjacent or nearby. I saw the results of this (an old "solution"-not a new one) in some nice neighborhoods Richmond that had beautiful, modestly priced older homes where the zoning rules were changed. The rezoning does NOT benefit the single family homeowners at all.

NIMBYism