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Put a hard stop to the purchasing of homes by corporations/businesses and people with no intention of living in them.
You should need proof of intention to live in the home within a reasonable amount of time after the purchase in order to make the sale. The flipping of homes for profit by those with cash and more money is a detriment to the market and the american dream for the rest of the population trying to get a foothold.
The problem isn't necessarily flipping houses, if the ones doing the flipping really are improving the property and are able to refurbish old properties to be more appealing. If they put in the work, they deserve to make money off of that - but they only make their money if they sell.
The problem is corporations who buy up housing stock, with no immediate plans to resell. They view houses like a commodity, and if they constrain supply in certain areas they can artificially create profit. This profit, though, comes at the expense of everyone who is looking for a home at the time.
I think the solution is for localities to step in and crank up property taxes for residential units that are not either occupied or actively on the market. Once a company keeps a property off the market for a year, make it much more painful for them to hold it for another year.
House flippers are incentivized not to make good, long term, sustainable, or efficient home improvements. Their only incentive is to make a house more sellable upon initial inspection, house flipping is a bad practice I would argue far more often than not.
The problem is housing as an investment like a stock. They should be commodities.
house flipping is a bad practice
I spent the last year looking for a house to buy, and since it took me a year I got to see many of the shit-bucket houses I was looking at (since they were in my price range) get bought up and "flipped" - which usually amounted to just some paint slapped on everything and those fucking grey fake wood vinyl planks that everybody loves these days put down everywhere - and then resold for absurd prices. I respect people that do a good job of renovating houses, but most of these flippers aren't doing that.
Inherently, flipping houses is about increasing the price of the home. This directly relates to the article by making more houses further out of range of more people.
Hard agree. Also they can slap a really big transfer tax on non-owner occupied as well.
Non-owner occupied properties already aren't eligible for the capital gains exclusion. I guess we could make unoccupied houses subject to regular income tax instead of capital gains tax rates would further discourage empty houses. That, and higher property taxes would probably be enough.
All agreed except the localities bit. These smaller cities councilmen are too cheap to bribe. A $1,000 check will have them hanging on your every word. I've seen it with my own eyes. Probably best bumped up to state level.
But yes, we should ban corporations at some well-defined point. I mean, what if I incorporate myself? Now I can't buy another house?
Rather than a hard stop, I think it would be a good idea to significantly increase taxes on real estate no one is actively living in, and use the proceeds to subsidize construction of new housing.
This seems to be the most reasonable. Disincentiivize multiple property ownership rather than outright ban it. The ones who can eat the cost will pay taxes and the rest will just bow out of the market.
But housing is a need and people will keep paying any price to not be homeless, this feels like it leads to massive corporations still owning all of them and paying large taxes they can eat short term and raise to massive prices of rent. Maybe they dump some stock but I'm just not sure it does much other than diversify smaller investors that used property for assets
Rather than a hard stop, I think it would be a good idea to significantly increase taxes on real estate no one is actively living in, and use the proceeds to subsidize construction of new housing.
An alternative is to replace property tax with a land tax. That way instead of penalizing people for building more housing, they are penalized for holding onto land that could be used to house more people (or whatever other use is in mind).
You’re essentially talking about decommodification of housing, which is the only correct answer. It is necessarily impossible for a house to be both affordable and a good investment, and the current status quo means that housing will be used as an investment. Whatever mechanism used to fix the housing affordability problem will require that housing no longer be subject to commodity market forces.
To add to that, put a limit on airBNBs and similar, you can only have one. Corporations are buying homes and small apartments for that too.
I live in a touristy area and literally everything is getting turned into AirBnBs. It’s a huge problem because the people who actually live here have nowhere to live now
It’s gotten out of control. I would say one in ten houses in my neighborhood are airBNBs.
It's disgusting because airbnbs in my area can have 50% occupancy and do better than a long term, meaning for about 180 days of the year that housing is just artificially decreased supply.
$200/night * 15 days = $3k/mo
How about expropriation of these homes instead of just a half assed "can we put a pause on capitalism guys?" You realize what the problem is. No more half measures, Walter
First step is seizing the ones they already bought, at gunpoint if they resist
As for "the market and the american dream", lol. lmao, even
Death to America
well that doesn't sound like free market capitalism!
This situation has turned into a real cock for so many people.
The place I got my mortgage through sends out emails regularly with updates on my home value, current rates, and other assorted stuff. I originally bought this house at the tail end of 2020. It's not the best house around, still needs work, but it had the room we needed, was in our budget (220), and the payment was low because the rate was great (2.75). Our original plan was stay here a bit, get rid of some debt, and then maybe try to find what we'd like to be our forever home, wherever that may be (we're 44).
That idea went south in a hurry. What once probably wouldn't have been worth sinking extra money into to fix, may now be the only choice. The aforementioned newsletter has a section where it shows what you could "save" at current rates by refinancing or taking cash out. The most recent one said I could "save" -$213400, meaning if we refinanced to take cash out to fix things up right now, it would cost us the entire price of the home yet again, on top of what the home and interest will already cost. Where a home in the 400's was achievable before, our home in the 200s would nearly not be now.
I feel terrible for people having to try to achieve home ownership at this point, or probably for the rest of the decade. On the one hand, I understand how fortunate I am to have gotten in when I did, and to have a home period; on the other, like many, I'm now essentially trapped, which has the ripple effect of keeping both rates and prices high because most people aren't going to trade a sub-3% mortgage for 7%+, assuming they can even find a place to go at this point.
Add in corporations branching out into a new area to do their level best to eliminate the concept of ownership for the majority of people, and politicians focusing on the more serious global issues like who goes in which bathroom, and my hope for the future couldn't be squashed any further if you put it in a hydraulic press.
Real estate will crash, eventually. Hard to predict exactly when and why, but if history is any guide, a market crash eventually is practically inevitable. It could conceivably happen relatively quickly for any number of reasons, but crash it will.
That doesn't necessarily mean it will become readily affordable - when real estate goes south, a lot of other stuff will be crashing with it. History books are full of monumental calamity. There's no reason to expect that to change.
This time is different. The new business model isn't selling homes - it's single family rental.
I coordinate all development projects in one of the fastest-growing cities in the county, and 100% of new single-family projects proposed since 2021 have been build-for-rent.
Why sell someone a house when you can rent it to them forever AND increase the price every year.
Practically all housing development is financed with borrowed money against the property. Given the build-to rent model, the party at the end of the cashflow stream relies on rent checks being paid every month to remain solvent. When the rents stop being collected, at some critical point, some loan that is reliant upon that rental stream will default. When that happens, the properties are called in by the borrower and auctioned off at foreclosure.
Now yes, the major lenders, developers and speculators will spread their risk as much as possible by diversifying their portfolios and try not to be caught short by a problem in any specific market. But when there is a some kind of macroeconomic shock, ALL the markets will suddenly contract and be flooded with foreclosed properties and other rapidly depreciating assets. That's more-or-less what happened in 2007. Massive liquidity injections and historically low interest rates supposedly saved us from a prolonged financial catastrophe then - but there were still a LOT of foreclosures. I also think we are still seeing that situation playing out today. Current housing markets are unsustainable in a climate of higher interest rates. This will all come crashing down, probably sooner than most people expect. When it happens, it happens fast - and of course the reasons will seem obvious with hindsight.
By the way, perhaps you're being ironic - "This time is different" is the defining catchphrase when looking at historical financial crashes: https://www.economist.com/media/pdf/this-time-is-different-reinhart-e.pdf
The housing market isn't going to crash. New homes aren't going to flood the market and demand for homes will not fall. As long as we have a growing population the price of homes will also increase.
Yes, there is finite supply and ever-growing demand, however the price of real estate ultimately reflects both the buyer and lender's confidence that the mortgage payment will be met. This can be affected not only by interest rates but by labor market conditions and other factors.
If there is a sudden surge in interest rates in response to some kind of inflationary shock, or the credit market becomes suddenly much more restrictive in terms of lending standards, then housing prices will most certainly fall, simply because the pool of potential buyers at a given price level is smaller.
When pressures on the housing market are coupled with leveraged loans on variable rates going upside down, people will begin dumping their real estate investments. These factors compound to cause a sharp reduction in price. In 2007-8 metro home prices declined up to 50% from their earlier peaks - but seem to have increased about 200% since the bottom, roughly, to where they are today That's quite a considerable appreciation and seems unlikely to be sustained. Maybe I'm wrong - we're just shooting the shit on Lemmy - but looking at what's happened before, real estate seems overheated - but it may well keep on boiling for all I know.
And corporations will be right there to buy it all up and further make it worse.
It should be fucking illegal for corporations to own single-family homes, full stop.
It's more than homes. Groceries have rocketed up in price. Cars are also unaffordable. Business people crowing about how great the (phantom) economy is are going to be leaping out of windows by next year. That's when "the economy" will catch up to the fact that if no one can afford to buy anything then there is no economy.
I live on social security disability, about 1100$ a month.
A combo meal at McDonald's is 12$.
2 combo meals a day from a fast food restaurant would completely wipe out my budget. No money for rent. No phone bill. No water or electric money. No money for garbage removal. The idea of a car is laughable. There wouldn't even be enough for a bus pass.
It's been a real struggle. After all the inflation hikes of 2022, they only raised my payments 50$ a month.
They simply don't care about the people voting for them more than the companies bankrolling their campaigns that earn their paychecks. It's that simple.
I feel for you.
I'm in an average family earning average wages. Maintaining our standard of living is now at least $500 more a month, and that's just from utilities, rent, and groceries (!). I've cancelled everything streaming aside from Youtube. We don't eat out any longer, because that's easily jumped at least $30 a meal for a family of four. Depending on your point of view, we were fortunate enough to have things we could cut back on that weren't essentials.
I grew up fairly poor and by all metrics my family is better off, but it certainly doesn't feel like it at times. I've had more month left at the end of my money more times than I'd care to admit.
I have no idea how those who were "just getting by" are continuing to do so.
The only difference between a citizen and a serf is the right of ownership. This is the "freedom" people fought and died for. Welcome to Neo Feudal America where you will own nothing and you will be happy about it because complainers go to the gas chambers. Remember to go get your "Real ID" and passports because you are in the process of being tied to the land too.
Growing up, learning history, I always wondered how average people went from the freedoms of the citizens of Rome to feudal serfs barely more than slaves. I never thought I would get to learn first hand.
Americans would probably have a lot more freedom if they didn't normalize getting into debt. You can save a lot of money if you never pay anyone interest.
Oh fuck off I missed owning a home because I was too afraid of debt. It's impossible for most to save enough cash for a house outright especially with how insanely the prices inflate
Can confirm, I only have a low rate mortgage and otherwise no debt. I bought my cars with cash, worked my way through school, etc, and I have a comfortable savings. We're not rich, we just don't piss away our money to interest.
Honestly, if you can avoid credit card interest and make an average income, you can probably afford a home by your 30s in most of the US.
I don't think that's even remotely the case for the vast majority of the workforce. It takes an incredible position of privelege to think otherwise.
For the average US citizen, they have a spare ~$200/month (see my comment history for context) the median US home price is $420,385 according to redfin. That means your closing costs (4%) + minimum down payment (3.5%) for an FHA loan would be (.075 * 420385) $31,528 which would take 157 months assuming you had no emergencies or extra expenses at all. Leaving you destitute to pay your mortgage on a home which will have inevitably increased in price since you started saving.
It's a pipe dream for most US citizens, everyone has surprise expenses. People lose jobs, people buy things for leisure (what's the point of living if you don't?) Once they spend their 13 years of perfectly saved money to buy the average house, how do they afford the inevitable expenses? Save another 13 years to pay for another roof? Unfortunately now they have a mortgage which will be more expensive than their rent.
So I'm getting closer to 30 so I think this relates to me and my experience well to share.
I've been paid a pretty reasonable pay middle class+ generally just shy of that perfect $70,000 of legend on average. Managed to pay off my absurd credit card debt from college and stopped payments on my college loans. I don't have a car I bile to get around and am generally frugal and had my company helping pay for a lot my stuff
I had about $11,000 pre COVID and that was practically all wiped out during the worst of it because Florida didn't believe in unemployment. At which point I was 26ish.
I think pre COVID I may have actually managed to hit over $30,000 by early 30s enough to actually put down on a house.
I now make over $70,000 a year... I have saved about $2,000 this last year living the same frugal life, still no car, still no debt payments really... I don't think your math works anymore. It's so completely soul crushing now how fast I went from doing ok to being in a gutter.
I don't really have any idea of owning a home for the rest of my life. Even making enough money to potentially get close seems impossibly out of reach.
I feel like I should just claim homes that are empty at this point.
You bought it as an investment but nobody is renting it since you're letting your rentee pay your bills? Looks like this is my property now.
This is partially why "squatters' rights" was a law. Live in a home for a certain number of years, and it's legally yours if the "owner" suddenly shows up and tries to kick you out. It also had to do with banks selling property that people already owned, but that's just another form of corporate skullduggery.
It's worse than the headline says. The study set 71k as the average US income for a single person...
Which is the official household number. The actual single income average is 50-60k.
If I had to move to my current area now, my rent would be around 50% of my income, and that's with a job that used to be able to support the whole nuclear family bullshit as little as 20 years ago. I'm like $2k below median family income by myself.
Researchers examined the median home prices last year for roughly 575 U.S. counties and found that home prices in 99% of those areas are beyond the reach of the average income earner, who makes $71,214 a year, according to ATTOM.
This sounds like they compared the national mean income to local median home prices which honestly probably makes 99% too generous, it's probably closer to 100% unless the article is explaining what they did poorly.
The lowest cost of living areas are going to be the ones where these houses are most affordable but they're also lower income areas normally and a normal person isn't pulling 71k a year in middle of nowhere Tennessee or whatever.
Mao please come back.
Wow, I just bought a house three months ago, I guess I’m part of the 1%. #feelsweird
Lemmy leans tech and higher income, so yeah, I'd expect a higher proportion.
Well yeah, the average American is broke. And the average house is expensive. Give me whatever funding this study receives because this shit didn't need one.
This is the best summary I could come up with:
The typical American cannot afford to buy a home in a growing number of communities across the nation, according to common lending standards.
"The dynamics influencing the U.S. housing market appear to continuously work against everyday Americans, potentially to the point where they could start to have a significant impact on home prices," ATTOM CEO Rob Barber said in a statement Thursday.
ATTOM's data adds to a growing body of real estate research in recent years that highlights the lack of affordable housing .
Factoring in a mortgage payment, homeowners insurance and property taxes, the typical home priced today would require 35% of someone's annual wages, ATTOM said.
Cities with the most unaffordable homes include Los Angeles, Chicago, Phoenix, San Diego and Orange County, California, ATTOM said.
Communities surrounding Cleveland, Detroit, Houston, Philadelphia or Pittsburgh have the most affordable homes compared with median salaries for residents there, according to the firm.
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