A bit misleading. New Privately Owned Housing Units Started have merely bounced back to an already suppressed market from the Great Recession housing bubble crash which hit all-time lows. [1]
Growth is good, return to baseline is good, but this was already a largely suppressed market. Housing supply needs to improve much more than this to be a major indicator of growth. We are currently at 1982 and 1991 levels.
New Privately Owned Housing Units starts are at all time lows historically on average, again largely from the Great Recession. Good news, but not some massive gain.
Doesn't seem misleading to me. I think most readers would take it in context of the COVID pandemic, not all time highs. Plus, is pre-Great Recession a good benchmark? That housing market was buoyed by a lot of bad subprime mortgages. Of course it was bigger.
What's really misleading, at least based on the comments here, is that this spike was driven by a drastic increase in multi-family (5+ unit) starts. Near the start of the pandemic in the US, these starts hit their highest level since 1985: https://fred.stlouisfed.org/graph/?id=HOUST1F,HOUST5F,HOUST2...,
>What's really misleading, at least based on the comments here, is that this spike was driven by a drastic increase in multi-family (5+ unit) starts.
... so COVID-19 somehow helped the YIMBY movement get apartment buildings permitted for bloody once? This is... great news, albeit without any clear causal connection between one thing and another.
What would be good would be single family homes being built and sold to people instead of anything being built to extract yet more rent from an already failing middle and lower class.
> albeit without any clear causal connection between one thing and another.
No clear causal connection? How about more capital available to businesses than basically ever before?
People in their mid-30s who put off having kids and buying a house because they couldn't afford it until just now. Bunch of people born 1982-1986 are just now putting their lives together after riding out 2008. The 1984/5 years were an especially large class. People 1982/3 are just now starting to age out of their prime childbearing years ("biological clock").
I was quoted on a 30 year fixed rate mortgage at 2.62% APR with no pre-payment penalty (locked in at the mortage dip). Plan to pay it off in a fraction of the time, but it gives quite a safety net at such a low rate I couldn't pass it up.
15 year mortgages were even lower (2.38% APR at the time) but I didn't want to gamble too much with COVID uncertainties (for all we know this pandemic could ride on 2-5 years).
If you're fairly financially solid and looking at real-estate, it's not a terrible time. My agent also offered a COVID plan free which declares my agent's agency will re-list and resell the property for me at no cost should I desire within one year (obviously, I'd lose any difference in value should the the market value decline, but if things get truly nasty, I can likely bounce out before the market adapts given how quick sell turnover rates are here). No closing costs would be charged under this case (obviously any require renovations would be my liability).
I should add that my mortage will be less than what I'm currently paying in rent... and in pretty solid tech hub that isn't SF.
Why would you pay it off early? Can't you find a better return elsewhere? Even if you think the S&P 500 is currently overvalued, the dividend yield is 1.8%.
It makes sense to buy if you plan to stay in an area long term. But, I would be wary buying if you expect to move geographically or outgrow a home within a 5-10 year horizon. If you stay local, your next home will likely rise and fall with your current home.
That's not for sure. Low interest rates drive prices up or prop prices up. To find the ideal time to buy you have to know the future: if rates are higher than they're going to be, you can buy at a lower price now and then refinance when rates drop. Of course, knowing if/when rates are going to drop is the hard part.
This is spot on, housing prices around this area have increased in some cases to insane levels but they were increasing already pre-pandemic.
Overall, with a lot of research and searching, I found a good buy under a very special set of circumstances (at least I hope--there could be hidden issues but I've been very thorough). Some other homes have inflated to ridiculous price points around the area (as if they weren't already incredibly high).
It's always a balance looking at interest rates and price, so you have to be careful. Also, there's nothing saying the pandemic won't completely gut the economy and housing market in this area for years to come or even indefinitely. It's possible rates could drop lower. I'm currently betting that in the long 30 year run, it won't, for a variety of other situational reasons. YMMV.
The vast majority of median and higher income earners have been untouched by the economic damage from the pandemic. Those are the prime home buyers and they still have their jobs and purchasing power intact. The Covid recession is not a normal recession and it's nothing like the great recession (which widely hit jobs in every economic tier). Now they're being handed record low mortgage rates, which is prompting the buying.
The economy is rather aggressively recovering. Unless the US has to do a full lockdown again, it's likely to continue to recover gradually. That makes sense given the recession was induced by a forced shutdown, it wasn't caused by eg the business cycle or the crash of an epic asset bubble (as in the great recession).
There is no great reason to think median and higher income jobs will be hammered while the economy is in recovery mode (and lower income job openings are also soaring).
The US is back up to 5.8 million job openings, up from around 5 million at the bottom. By contrast, at the bottom of the great recession there were only ~2.3 million job openings. This recession has been a far weaker hit to the overall job market, very sharp and short as one would expect from a temporary forced shutdown.
Americans are finally doing what they should have been doing months ago - wearing masks, social distancing better, being more pragmatic regarding the pandemic, which has resulted in the case numbers being cut in half from the peak five weeks ago (along with a correlating large plunge in hospitalizations). If people ingrain that behavior, it'll be very helpful through the Winter, when the Covid mortality rate is likely to spike higher (ie it may help avoid another full lockdown, better bridging the economy from here to a vaccine). There is an old quip (possibly incorrectly attributed to Winston Churchill) about Americans eventually doing the right thing after trying everything else, that appears to again apply with the pandemic.
I'm bullish on the economy. Outside of tourism and live entertainment, I don't see any industry taking a massive hit. I'd even say that tourism will bounce back much faster than expectations.
Over the last few weeks, I've realized that people are okay with the risk in exchange for getting back their normal lives. Six months into the pandemic, it's also clear that while it is serious, it isn't the civilization ending pandemic we initially thought it was.
i don't think you understand how broad the word "tourism" is. in march, worldwide air travel was down almost 95%. even now it's still down about 60-75%.
these are staggering numbers, that have and will have staggering effects. think how many people go into building, maintaining and flying a simple airbus 320. everyone from airbus, to its engineers, suppliers, everyone on delta, etc., is absolutely impacted if that plane is not flying.
this trickles down into private travel which hits even more well paying jobs that build/maintain/support/fly those aircraft.
travel is simply not some dumpy motel in some dumpy town going out of business, travel/tourism has tremendous implications.
Yeah, every single academic conference has gone virtual for the entire year. I can't leave the state and come back without having to quarantine for two weeks. Long-distance travel is down.
From what I've seen, all going well most professional events business (and a great deal of other business travel) is completely shutdown for the next 12 months. That will have huge downstream effects.
> it isn't the civilization ending pandemic we initially thought it was
If you look at the USA age distribution of 65+, the death rate of those above 65+, and assume 50% only get it because herd immunity we're talking about ~4M deaths.
Yes, not civilization ending but Losing >1% of your population isn't something to just brush off either.
Of course if there's a vaccine then it'll be much better but this is just the USA and now think on a global scale.
Not all countries will be able to afford the vaccine, not all countries will be able to get access to it in time, not all countries will be able to produce it by themselves at scale, etc.
Let it sink in what a 1% population loss looks like on a global scale, 78M deaths.
I think this is why the markets have been so bullish. How much financially better do developed countries with retirement plans look if they didn't have to pay out ~7% less of all retirement payments.
The recession was caused by a pandemic, not a forced shutdown. Even if you want to point at lockdowns as the cause, it is an empirical fact that the decrease in public foot traffic happened prior to any lockdown and continues for a large % of the population. The pandemic didn't disappear and people getting sick will continue to drag on the economy until it's manageable.
> Even if you want to point at lockdowns as the cause, it is an empirical fact that the decrease in public foot traffic happened prior to any lockdown and continues for a large % of the population. The pandemic didn't disappear and people getting sick will continue to drag on the economy until it's manageable.
Look at how people are behaving in states that re-opened. Given the clear evidence of human behavior it is ridiculous to assert that a recession caused by the pandemic alone would have been as bad as the recession caused by government-enforced lockdowns. People are not acting like they are afraid. Maybe they are being stupid but that's not the point -- the point is that consumers are acting like there is no virus, and it was the government lockdown, not consumer behavior, that really hurt businesses. People were living normal lives until the day the lockdowns started, and they resumed living the same way the day the lockdowns ended, despite the clear risks to their health.
> There is no great reason to think median and higher income jobs will be hammered while the economy is in recovery mode (and lower income job openings are also soaring).
That's a big brush statement considering we've never done a shutdown like this before. Sure, it can inch back but consumer confidence is essential. It's difficult to imagine confidence growing when approx half the population is going to be sold a vision of unrest, distrust, mismanagement, and so on.
A self-fulfilling prophecy isn't out of the question.
In my (large, Canadian) city they're predicting 50% or more of the local businesses failing by the end of summer / early-fall -- which isnt' far away. If the current trends continue that number may be closer to 55-60%.
Many of the business that re-opened (food, gyms, retail) are getting terrible levels of foot traffic, and several have shuttered after a couple of months of struggling. At first it was mostly local places that were already kind of marginal -- RIP my greasy local pizza place -- but now we've been seeing Starbucks Red Robin, and other chains shutting down their branches.
Eventually this is going to start cutting into real estate, ad revenue, and other white collar gigs -- some of the stories I've seen on HN reflect that.
There may not be a gigantic explosion in the stock market a la 1929 or 2008, it may just be slowly withering on the vine until you look around and realize everyone is broke. Stocks are still soaring, but 1/4-1/3 of my apartment complex neighbors are unemployed.
It's not about biting. You're allowed to feel however you want. It's unproductive and shitty to make drive by vague observations. I'm not even commenting on whether or not the feelings are valid, I'm commenting on the silly behavior that was posting "So far."
You have an opinion backed by real data. That's fine. Your post has value and advances a conversation.
The people with money who are leaving big cities permanently. (At least some of whom would have done so anyway but pretty much anyone who was contemplating such a move in the next five years and can do so is pushing up the timetable.)
If supply isn't there It'll be interesting to see if demand waits, or returns to its status quo.
I live in central NJ, approx 75 mins by train from NYC and 60 mins to PHL. There is a small new development in my area of approx 20+ units. Best I can tell, these homes are struggling to be sold.
I assume, given the apparent amount of new construction, that there are certain patterns in what various groups of buyers are looking for that may not be well-met by current inventory.
I assume people moving from the city to the 'burbs and those moving to rural/small town locations possibly 2-3 hours from a big city are fairly distinct groups.
I'm in northern NJ, about 50 minutes from NYC (65 to my job). Houses here are selling like crazy. It's a pretty, diverse, liberal area that's bringing in a lot of people leaving NYC/Brooklyn. Both my neighbors sold in the last 3 months.
Lots of people leaving, but since their properties sold it also means that people are, by definition, also buying and moving in. The key is not "how many people are leaving" but the net outflow.
I think there would be a more serious problem if property owners are trying to leave the city but cannot sell their units. But the property sales volume (i.e. completed closings) seem to be picking up again[1] in the city.
If the number of sales are picking up again after prices have dropped so dramatically then I view the uptick in demand as a positive sign that aspiring property owners have found new market clearing prices and are willing to move into the city.
I'd be much more alarmed if the prices kept/keep dropping further.
I'm in South Jersey and it's the total opposite. I have two friends in the process of buying a home, and all of the homes they look at are immediately sold, sometimes with bidding wars.
I just bought as well. Closed in the past month. 2.875% on a 30-year fixed jumbo with no prepayment penalty.
It’s our first home. We were planning on waiting for things to bottom out at 12-24 months after the start of the recession and were passively looking. The perfect home came on the market. Super unique. Unlikely to find another one like it. It’s the kind of home that retains value and sells fast due to uniqueness. It was only on the market for less than a week.
It’s in Seattle. Massive windows with view of Lake Washington and Rainier and so much privatcy that I can walk around anywhere in the house naked without pulling any blinds.
Whether the pandemic rages on and we’re stuck at home or everything springs back to life in downtown Seattle, my partner and I are going to be very comfortable and we have room to start a family or take in my aging father or her nephew once he’s old enough to move out.
The calculus for waiting was lowering housing prices but you also need to factor that your rent will be buying your landlord’s home during that time. Two years worth of rent for us was going to be over $120k. If we lose $100k worth of value by buying ~1.5 years early, it’s a wash.
I, too, am wondering how people are affording these houses. I'm not "filthy rich", but my income hasn't changed significantly in the last 15 years. I don't know others who feel they have had significant income increases either.
OTOH, in my area (semi-rural Ohio) these new houses are costing at least 1.75X (and some _much_ more) what similar houses cost 15 years ago. Stuff that went for $120 - $150K 15 years ago is running north of $250K now.
I mean that the folks living in a house that's appreciated a lot may want to cash out their equity, adding another buyer and a bunch of money to the market.
That magnitude of price increase translates to about ~3.5% annualized increase, which seems indicative of a relatively healthy inflation adjustment. Many parts of the Midwest have been accustomed to stagnant home prices due to decades of economic underinvestment and declining population. For a variety of reasons, this is turning around.
From the article:
"The big gains came from the construction of apartments and condominiums, which soared 56.7%. But single-family home construction ticked up, too, by 8.2%."
So, nice solid growth in the "buying these houses" part of the sector, but by far bigger growth in the "people need to live somewhere" sector of apartments (which I am guessing is the bigger part of the apts-and-condos segment).
Some states stopped construction during the shutdown. Nearly everywhere is now allowing it, so activity surges to catch up. I know of no evidence that births slowed during the shutdown, and the deaths weren't enough to meaningfully impact demand for a place to live.
So, it's good news, but ought not to be surprising. Also from the article:
"...these are the kind of gains seen after storms/hurricanes"
Well, yeah, and the pandemic is in many respects more like a hurricane than it is like an economic recession.
I wouldn't expect to start seeing evidence for a COVID baby bust, or the lack of one, for a good few months yet. Of obvious necessity, birth rate is about a nine-month trailing indicator.
So, supposedly, widespread power outages lead to measurable baby boomlets, rather than busts. With all outside forms of entertainment closed, I wouldn't count on there being a baby bust at all.
Intuitively, I'd expect a substantive difference between a "we've just got to get through this and everything is fine" power outage - complete with cookouts! Can't let what's in the freezer go to waste - and the calendar-melting, interpersonally isolated anxiety hell and economic collapse, then un-collapse, then maybe collapse again? of COVID. Power outages also have much precedent in the living memory of the US, crucially including that things really will go back to normal again - while pandemics lack any such cultural familiarity. Just that uncertainty all by itself I'd expect to depress birth rate somewhat, nine months hence. (Not to mention, how do you even social distance in bed with somebody? If you're married or live-in partners, then sure, but I have to figure booty calls have plummeted lately, and that's also not a pattern you'd expect to see in a blackout.)
All in all - yeah, people have time on their hands in both cases, but they're not otherwise very comparable, and I feel like, in the much higher-anxiety environment of the latter, it's considerably less likely that people will opt to pass some of that time by boning down - and on top of that, safety measures foreclose a considerable range of opportunities for doing so in the first place. That said, we'll know pretty well one way or the other by probably January or February, so for anyone not trying to front-run the diaper and formula markets, the uncertainty of the moment is probably fairly bearable.
Fwiw, some Brookings economists found not wholly dissimilar reason to predict a very measurable bust, along with an interesting aside on rates of conception during and around the various waves of the 1918 flu. I don't know whether I entirely buy their analysis, but it's at least not absurd on its face; make of it what you like. https://www.brookings.edu/research/half-a-million-fewer-chil...
I would think 1957 and 1968 would be more comparable, since, to say the least, there was a lot of other stuff going on in 1918 that might impact that (like the husband is away at war). Of course, I'm sure there was a lot going on in 1957 and 1968 too, but not to 1918 levels.
But, you're right, we'll know soon enough. Lockdown lasted a lot longer than power outages, also.
I don’t mean this in a bad way at all. I’m just surprised that it’s a return to normal vs growth. Where I live though you can build with 3% down. I was surprised to see the remaining lots in my development sell out quickly.
There are 10 homes being built within a quarter mile radius of me here in the mountains of Utah. These lots have stood empty for decades, with one or two homes going up per year. It makes no sense to me why they are all building now. Two of these homes are literally some of the largest homes I've ever seen in person. One is 10,000 sq ft, one is 20,000 sq ft.
Unfortunately, with very few exceptions, they're all being built by retired "empty nesters". My wife and I are always hopeful that families with young kids will move in so they can be friends with our children. But wealthy rural communities are pretty inaccessible to young couples starting families.
Funny, while so many in this community are discussing moving out into cheap rural areas, I'm longing for neighbors my age and friends for my kids and weighing moving to a city.
I think it's easy to overlook that aspect, people are focused on the upsides and it doesn't even occur to them they might not have any neighbors under sixty.
I'm not sure wealth is the key barrier. Rather, if a parent ranks school quality & neighborhood playmates highly when buying a house, they will wind up close to good schools. I've seen this in action myself- I lived all over the place, rural, urban, suburban, for ten years and saw virtually no children. Then I moved within sight of a good school, and now kids of all ages are a constant presence outside. Quite a few of my neighbors could easily afford to live in a lavish rural mountain mansion, but have told me point blank they live here for their kids.
Empty nester or not, 20,000 square feet seems extremely impractical. How do you keep it clean? Why pay excessive heating/cooling expenses? How much will you spend on furnishings? Will you even use at least half the rooms on any regular basis? Clearly, these homes aren't status symbols; as you mention, they're in rural communities where nobody is appreciating them besides the 2 people living in them. Consider me quite confused as well.
Nobody buying a house like that does significant housework themselves. It usually starts with a paid landscaping service, then interior cleaning service (to clean furnishings picked out by an interior designer), then cooks, etc. I know families who pay photographers to take regular "candid" pictures to post on Instagram. I wouldn't be surprised to find out that at least one of my acquaintances has hired a house manager to deal with all the other hired help. And I don't know anybody in a 20,000sf home.
> nobody is appreciating them
Probably not the case. Or maybe day to day, but I'm sure they have plenty of visitors whenever they want. This is also the realm of people who have at least a 1/8 share of a private plane (including pilot) in their budget, and fly across the country on a whim.
It's a very different world up there, where there's never any serious question of needing to work and money is little more than a way to keep score. Anyone who doesn't realize we've already returned to Gilded Age levels of separation between the aristocracy and the rest of us hasn't been paying attention.
Maybe left coast money is different than east coast old money but you're deluding yourself if you think that the waterfront houses on long island and cape cod are (when occupied) visited by more than a maid and landscaper who come by once a week. The kids run their own Instagrams. The interior "design" is usually done by whichever one of the house occupants cares to do it.
I did say "whenever they want" didn't I? Oh yes, look at that, I did. There doesn't have to be a constant stream of visitors for a house to serve a purpose as a status symbol. An occasional visitor will do, as long as they'll tell others what a fine place you have. Holidays are the true test. Magazine photographers are also welcome, but won't be allowed to spend the night.
BTW, I live in Massachusetts. When you assume...
Edited to respond to parent's context-changing edit:
> The kids run their own Instagrams. The interior "design"
If that's the milieu you're thinking of, you're talking about something very different than what either I or GP were.
>I did say "whenever they want" didn't I? Oh yes, look at that, I did.
Forgive me for not seeing why how often someone entertains company is relevant. That's more of a personal thing about how you run your life and really has nothing to do with wealth. Some people have friends over all the time. some don't. It doesn't really have to do with money. The idea of a photographer (or influencer for that matter) sharing pictures of your house would just be absurd to the overwhelming majority of these people. The only context I can see it being palatable is if you just had some work done and one of the relevant parties wants to take pictures for their marketing material.
I know it doesn't fit the "new gilded age" narrative you're trying to spin here but these people live much like the professional suburban middle class who live in the Boston and NYC areas. They just do it with stupid high dollar amounts and without having to pick and choose where to be cheap. If they want a $5k status symbol couch in their living room, they buy that. If they don't care they go sit on the couches at some furniture store and pick whichever one they happen to like.
>BTW, I live in Massachusetts. When you assume...
I'm a masshole too and I'm firmly of the opinion that it's not something anyone should be proud of.
If you're so in tune with how things are here than why isn't your opinion better informed? You're coming across as some Lexington Karen complaining about those dastardly Kochs and Kennedys down on the Cape. The average pharma exec or hedge fund manager isn't living in a different world. They're just living in a more expensive one.
>If that's the milieu you're thinking of, you're talking about something very different than what either I or GP were.
So then explain what you're talking about. I used to hang out with these people (and still hang out with the ones I'm friends with). Based on my experience your statements thus far contain overwhelmingly more falsehood than truth.
We're clearly talking about different groups of people. You say "the idea of a photographer" would be absurd among "these people" - meaning people you know, but I was pretty clear that I was talking about people I know. Not fictions. Real people, with whom I have shared drinks and laughs. Seems awfully presumptuous of you to act as though your concept of "rich" must be universal and others' lived experience with a different level of "rich" must be imaginary. With your "left coast" and "Lexington Karen" stereotyping, it rather seems that you are the one who's talking about caricatures instead of facts.
> I'm a masshole
I live in Massachusetts, but your statement also involves personality traits I don't have. Please don't project.
Maybe one of the rooms is really big. It could be a velodrome, a baseball field, or a speed skating rink.
In a rural area near me, somebody built a big luxury "house" with an unfinished interior. It was not for living; the building was dedicated to growing illegal drugs.
Funny you mention this. We’re a family with young kids building a new home in Idaho. We’re escaping CA and worried our neighbors will be just other CA transplants.
We’re trying to find a place where people are different than what we experienced in California — small/no families, workaholics, tech obsessed, “progressive”...
Unfortunately California is exporting its people in droves to the most desirable smaller cities in other states right now, overwhelming their local cultures and politics. It really is very destructive and sad to witness. In my experience, CA transplants don’t respect the existing cultures and politics of other places, but rather look down upon them and aggressively try to reprogram them into the same thing they left behind.
This is exactly what happened to Seattle between 2005-2020, basically SF-ifying a sleepy town in the northwest. We will simply be seeing the same thing play out in a much faster and in a more widespread manner in the 2020s.
A californian, a texan, and an oregonian are sitting around a campfire drinking.
Suddenly, the texan throws his half-drunk Jack Daniels bottle in the air, unslings his Colt, and shatters it with two shots. "What'd you do that for?" ask the two others. "Felt like it. Where I come from, we've got plenty of whiskey."
A little while later the californian throws his half-drunk Chardonnay bottle in the air, whips out his Glock, and shoots it as well. "What'd you do that for?" ask the two others. "Dude. Where I come from, we've got plenty of vineyards."
Finally the oregonian throws his half-drunk Hank's bottle in the air, picks up his shotgun, and fires both barrels into the californian, before catching the bottle again. "What'd you do that for?" asks the texan, blanching. "Where I come from, we've got plenty of californians."
With regard to "look down upon them and aggressively try to reprogram them into the same thing they left behind", consider the eponymous https://en.wikipedia.org/wiki/Chief_Seattle et.al.
As far as I can tell, looking at the last 6'000 years, cities with economic exports have tended to generate cultural exports in their hinterlands.
The trope I've been seeing for most of my adult life is someone moving from Boston or NYC to a picturesque town in New Hampshire or Vermont, building an out-of-scale out-of-character McMansion, then:
"Now, nobody else move here or change a thing!"
There is no disdain like that of the older transplants for the newer. IMX the real life-long residents of a place tend to be more laissez-faire about it.
Transplants. What a parochial term! It is so interesting that the sentiment is so common in America: natives > transplants. Having lived in places where there are lots of foreigners, I find this aspect of America intriguing.
> It is so interesting that the sentiment is so common in America: natives > transplants.
It's common globally. Cultures and peoples have always prioritized their own.
A typical 15th century small town French person associated with his village more than his country, and he associated more with his country than with England. Tribalism and cultural identity are nothing new.
I've lived in a few big cities across the world and I've only ever been welcomed as a foreigner. NYC is the only American city that's like that, really.
I think maybe it's because the Bay Area doesn't actually have any big cities, it doesn't quite have that effect.
Then again, if I think about it, the times I spent in each of these places was when the Internet culture wars weren't so prevalent, so maybe it's just that right now everyone is in a big war on the Internet.
People in real life are quite nice in the Bay and I know lots of natives - none of whom make a big deal out of it. But online...ugh.
> People in real life are quite nice in the Bay and I know lots of natives - none of whom make a big deal out of it. But online...ugh.
People rarely say unpleasant things directly to someone in real life, even if they're thinking it. Plenty of people don't like their bosses, but they know better than to directly say it.
I disagree that it is narrow minded, if that’s what you mean. Many people want a space for their culture and way of life to thrive. When that is threatened or eliminated, it can be devastating. It’s a loss of identity and belonging and a space to call their own. Does every place really need to be another vanilla progressive west coast clone?
To me what is surprising is that people are willing to accept that cultural erasure is a problem in contexts like colonization or gentrification of poor neighborhoods in urban areas, but can’t accept that the same applies to other people and places. It feels a bit like that empathy only exists for favored causes and groups.
Sounds like a bit of an exaggeration. Nobody's trying to erase anyone's culture. If a few Californians move to your rural town to get away from the Bay Area, how does that affect you? Besides them spending their money locally in your town and local businesses, that is. I'm currently in the Bay Area but will one day be a rural non-Californian. I don't want to erase your culture--I just want to afford a decent sized parcel of land without wildfires. What are some tips that would stop me from inadvertently erasing someone's culture?
Easy, my parents lived here and we were planning on having children soon. We figured we could either live close to my office in a much smaller home, or have a longer commute in a larger home, and be 2 minutes away from my parents for babysitting. The only downside is the neighbors are all old. We're literally closer in age to our neighbors teenage children than we are to any of our neighbors.
I could have moved into a 10,000 square foot house in Utah but wouldn’t want to normalize that for my kids. Why not just a regular family suburb somewhere? You don’t have to go all the way to the city life to get neighbors with kids.
We don't live in 10,000 sq ft, that's just what my new neighbors are building. A lot of it came down to cost. Right now we're in a large home on a large lot in the woods up in the mountains. For the same money I could have been closer to my office in a home half the size with no yard. Some of this dilemma was caused by anomalies in the market at the time we were shopping. People in suburban areas were listing their houses for FAR above market and no one was buying, the stalemate lasted a while and pushed us rural.
This is what is happening here in the Netherlands. 10 years ago we wanted a house in a specific neighborhood and it was just out of reach financially. Now I make twice as much and it is still out of reach. We are also considering going more rural, prices are just insane now in and around the cities. But we have hardly any building going on, when a house hits the market sometimes 20-40 couples line up and they make one offer blindly, usually well above what the sellers asked for. It's pretty frustrating, soon started will no longer be able to find a house.
In one of the previous housing bubbles (in the run up to the GFC) we had friends who were making offers on properties here in Scotland that were 70% over the asking price and still failing to buy something.
I wouldn't worry about it too much, as long as you don't totally insulate them from the downsides. I grew up (age 5-17) in an 8k square foot house. Then I moved into a 2k sqft house and have since lived in smaller, and I much prefer smaller homes. Less to clean, fewer places for stuff to accumulate and get lost, generally "cozier".. The only thing I'd really take back is the ping pong table in the basement.
What really makes me concerned is what the after effects are going to look like. What happens to housing prices after this is all over? When people realize their impulsive buys were a mistake. When foreclosures and evictions sweep the country. We are in this strange period where people are not yet feeling the extent of the potential economic impact, and I fear for what will happen in two or three years.
Why is it an absolute given that the economy is definitely going to flop? As the days pass I'm convinced more and more that the general economy (and the 1 or 2% of people who are directly benefited by it) will do just fine, even though the majority of the population is jobless and moneyless. This will finally lay bare that the contribution from the majority of the working population is quite optional for the GDP or any measure of economic productivity, and push comes to shove, the institutions (factories, offices) will start realising they can maintain or even increase productivity without involving the majority of the population in the process. Hence the people who have the money now (and are hence in positions that don't necessarily get lost in this process) are likely to continue prospering, while the people who are losing jobs and houses are never going to get them replaced.
The reason Apple's share price is booming is because "consumers" are buying their products so their earnings were great. Many of them probably spending printed stimulus money. Same for Amazon.
There is really no magic here except the illusion of unlimited money through quantitative easing.
The QE is the only thing holding things together, if that stops, everyone is going down the same drain to poop town.
Edit: I should also mention many investors are probably putting a lot of money into Apple as it's seen as a safe haven for equities right now.
Apple earnings haven't really improved much in the past 5 years. Their EBITDA is essentially flat. They just buy back their shares aggressively and have a ton of cash. Also a lot of big holders (like Buffett) that aren't going to just drop the stock, so there is a limited supply with people chasing it.
Small businesses are getting killed because the government deemed most of them "non-essential" so big boxes and eCommerce were the only things available, so of course Amazon, Walmart, Target, etc are all doing incredibly well. Their small competition was killed off. This pandemic has definitely worsened the transfer of wealth from the small hands to the large hands, and it's 100% the government's fault.
side question , but do you happen to have any resources explaining what could be the limit to unlimited QE and what precise series of event will be triggered when that limit is reached ( knowing that everyone is doing the same at the moment, from us to eu to cn).
Like the other poster mentioned, we don't really know.
I'm not an economist, just an interested investor and from my understanding, using QE on this scale is just an easy short term solution to a longer term, hard problem.
Printing money like this has never really been done before on this scale, but the fear is that "printing money" like this will potentially lead to very bad debt and hyperinflation inflation crisis (maybe already started).
The limitations of QE aren't entirely known, but will be known as more money is printed and money becomes more worthless.
Will having a lot of "monopoly money" in circulation be a problem? Time will tell; however there have been many examples where hyper inflation has caused economies to fail, such as Venezuela recently and the Roman Empire in the past.
The US Federal Reserve should probably be careful with their actions because they wouldn't be the first country to run into dire issues doing this.
What I fear is, the people at the top of the US are blinded by greed and the desire to be reelected and aren't concerned about the lessons of history.
QE isn't really the same as direct money printing. Most of the money seems to find its way into financial markets rather than directly into peoples pockets. So people will see their retirement accounts or stock holdings doing OK and maybe even cash some in to spend, or at a minimum make them feel comfortable with their current level of expenditure.
But we've had QE for over a decade in various amounts and it didn't lead to inflation, unless there's direct monetisation (the fed prints money and gives it to the government to spend in an unlimited fashion) I'm not sure why the situation would change.
Inflation has been most focused in assets and investments. The government has gone at great lengths not to count these in their inflation measures, but all that QE going into stocks and housing bidding wars can’t be a good thing in the long term.
have you seen what is happening in healthcare? Do you have kids in college? Have you tried to buy a residence in a large urban area like seattle, nyc, miami?
Have seen what is happening to food package sizes ij most american supermarkets? Do you know the increasing rate of us retirees is no longer flocking to fl, but abroad? Do you realize that it is no longer possible for a working class family to sustain itself with 1 breadwinner? Do you wonder why?
Just because tech , internet, and freight efficiencies are keeping in check in some sectors of the economy doesnt mean there is no inflation.
We are heading into the lost decades of japan
Welcome to salaryman life , where you live in a shoebox amd expect no asset accumulation for the rest of your life
I tend to believe Ray Dalio's theory about the long term debt cycle but we will see how it pans out. If the oracle of Omaha is still of any value it also signals tough times ahead
This. There is an election coming up, and (not trying to get political here, but) it is likely that a shift in power will occur. The current administration is trying to prop things up just long enough to set up a huge crash just after they lose power. It’s a fake recovery.
I've been thinking along those same lines. Basically feels like we're returning to a form of feudalism, with a rather established aristocracy and nobility already in place.
I'm just waiting for the financially ailing counties to start selling themselves in their totality to corporations and those corporations begin providing employment in exchange for literal cradle-to-grave services.
The seignorialism aspect of feudalism is now absent though: the lord needed peasants to work his lands. This new ruling class doesn't need the labor of the growing unemployed and forgotten class - only their consumption.
The lords need some work done, but they're making sure people earn as little as possible, have zero ties, and no transferable skills. I'm thinking of McJobs; zero-hour contracts, contractors, gig economy work, that kinda thing.
That's the way of it, because automation makes things cost less, but only the things that get automated. But if things cost less then you can pay people less. So what happens is that all the money goes to the places with artificial scarcity.
We don't have meaningful scarcity anymore, not for the essentials anyway. There is a finite amount of land but not a finite amount of housing units, because you can build arbitrarily many of them on top of each other. We can produce more food than people have any need to eat and producers then spend rather a lot of money convincing them to buy more than that. Medicine is only genuinely scarce to the extent that it's limited by labor availability, which means labor should move there and drive down the price unless something is constraining it.
But if you can make something like housing or medicine artificially scarce, you can suck all the surplus out of everybody's paycheck. And that's the problem.
Can you name one industry where labor is truly no longer needed, where it once was (in recent times)?
Maybe an example of a person who makes a large some of money through having zero employees where they used to have many and where those people were replaced with automation and completely obsoleted.
Not challenging you, I'm just interested in your theory.
Pocket calculators. Paper calendars. Film cameras and film development labs. Alarm clocks. Analog telephones, one for every room. Pens and paper and correction fluid and typewriters and typewriter ribbons and typewriter repair service, as physical things that required labor to exist.
A phone/computer replaces all of those, but it's one product instead of hundreds. It doesn't take anywhere near the labor to produce as all of those things once did.
I would say IT is an industry that made itself, as well as other industries greatly reduce the number of employees.
Not quite zero employees but numbers were reduced greatly, ie accounting. Example: accounting, before you needed a team of accountants for a mid level enterprise, not sometimes even one is sufficient.
> Because I'm constantly gobsmacked by inefficiencies and companies that have too many people involved in achieving simple goals?
That is also true, by no means I am implying that. There is a lot of inefficiency in many companies, but at the same time what took X people in the past now takes X-Y people for many sectors, ie accounting.
Another good example is website creation and development for Small-Medium Enterprise. In the 90-s/2000s you had to pay someone to create a website for you, where now there are countless website builders, some of which are really great.
> Here’s the thing: from where I live, the world has drifted away. We aren’t precarious, we’re unnecessary. The money has gone to the top. The wages have gone to the top. The recovery has gone to the top. And what’s worst of all, everybody who matters seems basically pretty okay with that. The new bright sparks, cheerfully referred to as “Young Gods” believe themselves to be the honest winners in a new invent-or-die economy, and are busily planning to escape into space or acquire superpowers, and instead of worrying about this, the talking heads on TV tell you its all a good thing- don’t worry, the recession’s over and everything’s better now, and technology is TOTES AMAZEBALLS!
> even though the majority of the population is jobless and moneyless
Unemployment is high, but much lower than the initial surge from coronavirus. It's likely we're still seeing significant hour/shift reduction, but as lockdown measures relax that will mostly let up or those workers will shift to different fields.
We are seeing things shift away from brick and mortars, but that isn't new just accelerated. It seems like ecommerce is eating everyones lunch now.
That’s easy - the ones with the money. If the wealth divides, so will the product offferings from those companies. A bit of an inconvenient truth for many of us.
So that implies that when companies keep the same revenue, their offering will become more expensive (Nobody needs 5 iPhones).
This also implies that the ones that are able to buy an iPhone, will pay significantly more for it. Which will make the ones that can afford it even more narrow.
There is something wrong with the reasoning that losing a big part of the market has no influence on companies and consumers that are still able to afford things. This impacts everyone, there is no question about that. Maybe some more than others, but everyone will feel it.
You could categorise lots of zero hour contracts and self employed folks as jobless and moneyless. I would say that most people living from paycheck to paychek are moneyless.
The economy as a whole? Probably not, because it's more measured according to the country's whole GDP and stock market instead of personal tragedies like getting evicted or bankrupted.
(disclaimer: not an economist, just a dude in an armchair with an Opinion)
What makes you think these are impulsive buys? As people get older and, especially as they have families, there's always been a tendency to move to the suburbs/exurbs if they weren't there already. The main difference today is that big cities have tended to be attractive to young professionals to a degree that they really weren't 25 years ago.
The pandemic has probably accelerated a migration that would have happened anyway--but arguably slowed down the new grads moving into cities to replace them.
Right. So where suburban homes are ticking up, urban living spaces are going to contract. Then does the contraction (i.e., lower prices and more choice) trigger people to not leave urban areas?
A lot of different factors come into play which I certainly don't claim to be able to predict--and will likely vary by city.
On the one hand, lower prices make urban areas/city cores relatively more attractive for those who want to live there. (I doubt living in the cores of top cities is ever going to be cheap; it wasn't in Manhattan in the 1980s.)
On the other hand, there may well be less need to be in a city for certain jobs. Furthermore, if city services are a mess, crime is up, and a lot of the restaurants and small businesses are closed, urban living may be less attractive.
In April Credit Suisse released their outlook on the real estate market in Switzerland, I think their views can be broadly applied to the US as well though.
"Low mortgage interest rates mean that home ownership is currently cheaper than renting...and would rule out the prospect of a significant increase in defaults... This is due to the low mortgage interest burden seen in recent years, as well as the fact that financing requirements have been tightened on several occasions. Specifically, this means a majority of home owners are unlikely to have any difficulty servicing their mortgage debt in the event of a temporary reduction in their income" (https://www.credit-suisse.com/ch/en/articles/private-banking...).
I think the thesis still holds up for owner-occupied homes. Residential, luxury, and commercial property market is a different story, although it seems that residential has bounced back, not sure about luxury, and commercial has gotten destroyed and is why Amazon is buying it up for cheap.
> When people realize their impulsive buys were a mistake.
I think it's unfair to assume people are panic buying houses. The people I know that have purchased a house in the last six months would have purchased a home regardless of the pandemic. In addition, the threat of inflation is real and having a stable housing cost can help with inflation.
Well the question is also where would you best put your money? As possibly devalued currency or bubble-territory index fund?Building a house requires resources whose price may rise up precipitously in the future, eg. energy, the oil major stopped looking and renewables are not there yet for a long while at our consumption levels...
Difficult to know. Diversifying won’t get max returns but also won’t get max losses. A range of ETF’s (Global markets and bonds), real estate, bitcoin, and cash might be a starting point.
jesus... that is such a negative way of looking at things.
i'm glad that prices and interest rates are finally at a level that people can purchase a home. now hopefully these people have learned from others mistakes in 2007 and only buy a house that they can afford which usually means that your whole MIT payment (mortage + taxes + insursure) never goes above 25% of your monthly net income. things got crazy in 2007 when people were committing 50% or more of the monthly net income to their home payment in hopes that they could flip it in a year or so for a big profit. while this is fine for an investment property that you don't care about getting foreclosed, you never have that mindset with your primary residence.
> while this is fine for an investment property that you don't care about getting foreclosed
No, getting into a risky, speculative, highly leveraged position that takes more than half your monthly income just to service the interest is not a good idea, period.
This was not simply a case of people being otherwise shrewd investors, making only the small mistake of making the object of their speculation their residence.
We’re going to see a lot of mathematically correct but potentially misleading headlines as things start to tick back up during the recovery.
If you tell the average person “X dropped by 50%.” And then next month “X surged by 50%” they’d think it dropped and is back to where it started, not that in reality “X surged by 50% actually means it’s still down by 25% from where it was.”
A lot of this going on at the moment giving either intentional or unintentional impressions of what’s actually happening.
Millennials are over the inner-city lifestyle and are sick of paying rents higher than mortgage payments. Seeing their cities destroyed and become more dangerous over the past few months was the straw that broke the camels back. I predict most large cities will get worse over the next 10 years as businesses follow the millennials to the suburbs.
Sure I can see this, another thing is that cities suck in America. Just take a vacation to Europe and just wake up and go get a coffee and live your life getting around the city. Take the bus there and then come back to almost all major US metros and try to take the bus. European cities also feel much much safer, probably because the bottom 10% of their population in terms of income have simple access to some kind of safety net.
We only have a small handful of cities in the country that can even compare to this on any level. That's why young people would leave cities, because the cities aren't built for living in.
The source article is about a month-over-month increase in home construction. Speculation about how much millennials hate the "inner-city lifestyle" or how bad cities will get over the next decade seems both inflammatory and off topic.
correct, the only reason people live near major urban centers is jobs. everything else about those areas is terrible for families, taxes, quality of life, space, traffic, schools, pollution, etc..I could go on forever. Now that WFH culture has taken over, there is no reason to live in a big city. young kids straight out of high school/college may still start out in a big city but once it is time to start a family they'll move out.
This puts everything in much better context, especially the time series plot. It seems home starts / permits were already increasing from July 2019 - Dec 2019, matching the July 2020 levels. So the better question might be: why that surge?
No mention of record-low interest rates on the 10Y and 30Y - held in place by a Fed terrified of erring on the downside. Officials swear it's not yield curve control, but of course it is.
There's nothing magical going on. Housing purchases are made with debt. If you suppress the price of debt, you increase demand for houses.
Read some of the articles written about the real estate boom prior to 2008. They also left out the minor detail of panicked policy makers juicing the money supply.
I don't see this changing no matter who wins the White House in November. I used to laugh at people who said that the Fed was going to work at lowering interest rates as much as possible in order to promote economic growth and inflate away the debt. I'm not laughing at those people anymore.
Nah, before it becomes real MMT we have to actually keep up the trend of taking the cheap money and spending it fiscally, not just giving out cheap loans. Right now we've got the HEROES Act stalled in the Senate and the CARES Act has largely run out, so we're back to Great Recession era "haha money printer go brrr".
I'd go a step further and say that MMT is about borrowing for structural deficits. There's nothing MMT about Keynesian stimulus in 2008 or 2020; where things went off the rails was governments running large deficits during the boom years of 2015-2019 (when they should instead have been saving for 2020).
I would argue that we crossed that rubicon in 2008 with the bailouts, but I completely agree with you that it's going to be quite an interesting decade.
It's a good point but back in March the coronavirus was less understood. We didn't know that they were less likely to spread outdoors. We didn't know if the virus was really airborne or not. We didn't know masks helped because they were commonly spread by droplets. (Ok, a lot of the world did, but America didn't.)
If road constructions had to be done in groups (likely?) then it was putting construction workers in front of an unknown set of risks. I think we understand all those things a little better now so in retrospect it may have been a good idea.
They didn't state any theories on why we're seeing an increase. Is it people spending their vacation money on their home since they can't go anywhere? Is it because they're working from home now and can't stand looking at that fix/upgrade they've been putting off forever?
My belief is that many renters who have the means to buy a house but have been putting it off have now decided to look for homes because they are stuck in their rental all day and can't do with it what they want. Also, many people are moving to other cities now that they can work remote, and a certain percentage of these people will purchase new homes. These cause a shortage of inventory, so the response is to build homes.
Furthermore, interest rates are very low and there is a perception that this won't last, so people are scrambling to get a loan.
I believe this because I am one of those people and I know several others in similar situations. I'm in escrow right now.
This is true, I'm waiting to buy (cash, no mortgage) still, not enough owner bankruptcies yet for me. I can wait until things can no longer operate under "extend and pretend".
Making a cash offer is a good idea (gives seller assurance since there’s no reliance on a mortgage going through) but in today’s climate of low interest rates would be a poor move financially.
Imagine a $500k house. If you paid cash then you save interest payments and you could invest that into other things. But paying $100k and keeping the other $400k to invest will out perform the former strategy considering today’s interest rates of 3%.
If rates go way up then home asking prices will fall and a cash purpose begins to make more sense. But they haven’t for nearly 40 years. And there’s more money than ever out there which means there is less demand to borrow it which means interest rates continue to fall as the bid drops since there are so many eager lenders.
Declining the financing contingency makes your offer _amlost_ as good as cash. Yes, everyone not in the Bay Area is going to say “that’s crazy why would you do that”—-only way to make a competitive offer. Never going to have an offer accepted if you don’t waive finance contingency.
Yeah that's my main point. Where I live too is very competitive with most homes getting 4-5 offers after a week or 2 of showing. So of course buyers are encouraged to do everything to make their offer appear as good as possible. Waiving repairs, going far above ask, etc. But waiving the finance contingency is always the best thing you can do and allows you to either pretty much guarantee your offer will be accepted without waiving other things like repairs, etc.
A lot of the advantages of deducting mortgage interest and state property taxes are no longer the benefit they once were:
* historically low interest rates in the last ten years means the actual amount of interest you're paying each month vs principle is not that high.
* Tax Cuts and Jobs Act reduced the amount of property tax deductions that were typically available in HCOL blue states like NY and California.
* Standard deduction increase (also part of Tax Cuts and Jobs Act) was increased so high that many would be now be better off not even bothering to itemize deductions, even if they had a mortgage.
When I was thinking of buying in about 2017, I did the math, and due to the low interest rates and the lack of any other deductions, neither mortgage interest nor state property taxes would have been high enough to offset the standard deduction. In effect, not a single tax advantage would be available to me with buying a house vs just continuing to rent.
It depends on where you're buying and/or how much you're borrowing. If married you can borrow up to $750k for write-off purposes. Being close to this means with today's interest rates you'll be paying about $20k-$25k or so in interest payments the first 10 years or so. Couple this with property tax and/or income taxes maxed at 10k and now you're around $35k or so. And perhaps you've made some charitable donations and work from home and now you're looking at $40k. So you need to be on the higher end for it beat out the standard deduction.
Honestly, the tax cuts really benefit people in this situation. Your effective tax rate is much lower than before and although you only get a piece of the property/income tax write-offs, it might make for lower effective taxes.
In terms of buying VS renting, although I bought a home I still think renting makes a whole lot of sense for a lot of people. Buying a home is expensive in terms of furnishing it, customizing it, etc. But also in selling it and related expenses.
Imagine your home can be sold for 900k. Around 6% ($54k) of that is going to be taken away from an agent. You'll probably be buying a new home so you have to factor in closing costs for the new mortgage, assume $15k and then moving expenses, etc and you're looking at $75k-$80k. So unless your home has appreciated to cover these costs, you're losing potentially significant money. A renter doesn't have to face this at all and likely pays less in rent than the mortgage and property taxes would be.
Buying a home makes sense if you plan on living in it 10 years or more in many cases I believe. By then you'll likely get back anything you've put into it and have built decent equity. The best part of buying is that as time goes on, your monthly payment begins to look like a bargain as rents and home prices continue to rise - once again, about 10 years in.
I've been working remote for 5 years, and I live in ~90m2 apt in jakarta paying what i had to pay to live in a 3 bdr apt in boston with 2 other grown men… made enough long tail risk on HY trash, going into the "pandemic", and will make more again when the bottom falls out and load up on all the garbage for ~8.5 cents on the dollar (current amount of HY that is collateralized coming due within then next 4.5-5 years).
I hope it goes on longer, more time to build up more leverage selling trash to folks who believe oft repeated things as if they were the word of god.
No worries, before i worked in finance (wrote code/developed models to trade futures on daily tf for a firm in RI for about a year), I was only vaguely aware of some of these things
> long tail risk: assets that have problems that take a long time to affect the price
Not necessarily, could be any asset or derivative that could be susceptible to experiencing large declines in return relative to normal conditions during certain periods of time
> HY: high yield, meaning they change quickly in price by large percentages and can make more money quickly
No, high yield bonds. Avg yield on 4.5-5 year maturing ones right now is about 6%. Or at least the 1217 cusips I track ASOF mon close.
> trash: low priced stocks for crappy companies
Not just stocks, but yes
> garbage: same thing
^^^
> collateralized HY coming due: investments backed by assets that will default
about 91.8% of HY bonds coming due in 4.5-5 years are not backed by any collateral. "Will default" is subjective, but my work has about 61% have a good chance of default (from ratings, current price of the bonds, 10-q/10k data available), not including liquidity premiums/discounts for people who "want out now", not including leverage actors take when buying/lending such now like they do.
> leverage: money
Borrowing money in order to increase ones exposure (or contracts that act as such), larger returns/drawdowns are expected if (not) managed properly compared to not borrowing to finance a position (or buying the underlying out right in cash).
> "oft repeated things": aphorisms about finance that are often wrong
Under the efficient market hypothesis, if the prices are dropping because of many bankruptcies forcing a sale, you will also feel that the price is not worth buying, or if there's actually little to low risk, then the price would get bid up by many buyers (assuming all buyers are perfectly rational).
It sounds like it’s a big deal, and it’s been all over the media, yet US housing starts are still below the levels seem in February 2020, so it’s more a return to normal than anything.
Lumber prices always peak in summer because professional and amateur construction both peak in summer. The fact that people are calling into meetings on mute while building their decks is increasing demand even further.
The areas that are burning are not really large timber producers. The CZU fire is largely in protected state & county parks. The SCU and LNU fires are largely in ranch grassland & chaparral, frequently used for grazing cattle.
Christmas season may be a bust though - a lot of the Christmas tree farms in the Bay Area are in areas threatened by the CZU fire.
Most of the timber production in California comes from way up north, in the Eureka area and in the Sierra Nevadas. This area is somewhat resistant to fires since it gets so much more moisture and precipitation.
My guess, people are moving away from the cities out to the suburbs because the great thing about the cities are all the social events, restaurants, and activities which are mostly shutdown and a lot of people don't need commute to work since they work remote now. So might as well move out from an apartment into a bigger house. Then there might also be a fear of higher crime, taxes, etc
This theory doesn't make a lot of sense to me, I've heard it a few times though. Why would someone buy a house away from the city during a temporary pandemic shutdown, assuming when things eventually open up again more in say max a year or two, they will need/want to be back in the city? I mean permanent remote work is one thing, I guess, but everything else that has 'gone away' hopefully will not be that way permanently (?)
> assuming when things eventually open up again more in say max a year or two, they will need/want to be back in the city?
Well, I do not have a huge sample to drive any conclusions.
But I know a couple whose adult children live in other parts of the world (one in Miami, the other in London).
So the couple is choosing, finally, to sell their NY city home and move to south east Florida closer to one of the children.
Largerly, besides emotional reasons (lack of feeling secure, feeling of being unwanted, feeling of being robbed by local taxes, wanting to be closer to their children) -- they no longer see that their home price will continue to go up to justify sitting there as an 'investment vehicle'.
They are closer to retirement age, so their needs, perhaps are different then others.
They also do not want their children, under any circumstance to move back to NY city or NJ.
Not sure that I buy the theory either at the macro level, but I think one thing I have personally seen/heard of is people who are now realizing how much they don't like the city life (even when things are open) and the pandemic is the straw to break the camel's back here and convince them to go elsewhere to try something else. The key is that it's not temporary for them.
Even the people that are there for work and already knew their city reality may also be realizing their gained happiness out of the city is worth more than the financial boost of their job in the city.
People buy gas guzzlers because they want them and the dip in gas prices makes the TCO calculation something they can convince the other decision-maker in their household is a battle that's not worth picking.
Where you live is a compromise. With the city benifet gone but not the suburban ones the suburbs look attractive to people who are on the fence anyway.
I'll be very surprised if things get much better anytime soon, certainly not before the end of the year. Maybe two years from now... but I wouldn't bet on it. I live in a city where some questionable calls were made with regard to rioters, so I'm eager to put some distance between that and myself.
I think the argument is that it's displaced consumption, where people who would normally have waited for the perfect time to pull the trigger are now all moving at once.
Rent prices are sky-high, there's social unrest in large cities, interest rates are crazy low, and many companies are now ok with remote working. It's a good time to invest in the suburbs if you can find a decent price.
Companies going public in droves. Surges in housing construction. What kind of economy is this? The Fed may find itself needing to raise interest rates before the end of the year.
QE results in strange market dynamics. As the safe assets are bought up by the central banks with newly created money, there is an excess of cash in the system, which needs somewhere to go.
do you have a source for Norway and Sweden's herd immunity? From one day ago:
> Critics say even Tegnell’s most optimistic forecasts for Sweden are still a long way from the critical 60% to 70% goal required for herd immunity to have a chance at working, and save the lives of the elderly and those with underlying conditions — those most vulnerable members of the population. [1]
Yeah but I wonder if you truly need 60-70% for herd immunity in such a spread out place like Sweden. Even stockholm is very wide, completely different than a place like NYC.
Stockholm population density is greater than San Diego and Phoenix Denver and San Antonio.
They're still Europeans bro. They packed them in tight there.
Are you just making stuff up to try to discredit things that disagree with your view?
You were right about one thing.
Due to cross-reactivity with other common cold coronaviruses giving previous immunity, they're speculating you only need between 10 to 30% of the population infected with covid to develop herd immunity.
Single-digit weekly deaths for a population of 10 million and extremely minimal restrictive measures, major cities with population densities equal to San Diego Phoenix Denver, temperature somewhat similar to San Francisco or Seattle.
There is no other logical explanation.
I'm sure you'll try to come up with something hand wavy though since it disagrees with your narrative.
You can continue to be afraid if you want. If I were you I would pay particular attention to the sensational news articles that highlight when cases are increasing and then also look at the data and notice that America has been decreasing in cases for weeks straight and ask yourself why hasnt the news media reported this remarkable development?
Mark my words America is heading towards herd immunity as long as we stay this course, and this will be all over by the end of the year.
People staying at home more time, want to improve their current space, around my neighborhood people started rebuilding decks and doing remodeling. Local home depot traffic defienetly spiked
Same in my country. There has been a surge of people at the hardware stores buying supplies to repair/improve their homes as a way to pass the time when you no longer can travel.
I guess they put their travel money into home improvements.
Well there's interest rates from the Fed, and then there's mortgage rates. Since there's a higher default risk from mortgages than government debt, I think housing interest rates could rise again, they are at historic lows right now, although the fed funds rate as you say has been trapped near zero. While the mortgage rate is usually tied in with the value of the 10 year bond, it seemingly has done interesting things recently now that the 10 year bond is so low that a bank wouldn't cover it's default risk with that rate.
My wife and I started building a new house late last year. When covid hit early this year, I really worried about how the sale of our then-current home would go.
Luckily, the local real estate market stayed strong. We sold the house about 30 days before we moved into the new place in July-- above asking price! It felt like a miracle.
It felt like the last parts of the new house took forever. Appliances, lights, etc. took a long time to arrive. Window blinds took several months. (All this affected by covid, we are told.)
I feel bad for people who have houses under construction now. I'm told the wait for materials is much worse (!)
Growth is good, return to baseline is good, but this was already a largely suppressed market. Housing supply needs to improve much more than this to be a major indicator of growth. We are currently at 1982 and 1991 levels.
New Privately Owned Housing Units starts are at all time lows historically on average, again largely from the Great Recession. Good news, but not some massive gain.
[1] https://fred.stlouisfed.org/series/HOUST