Housing market trash

[benXJ]

We're short 20mm+ houses.

There aren't 20mm people with 50k in their back pocket waiting for a house to be built. There aren't 20mm people that are homeless only because there aren't house available. Just because people 'want' a house vs a townhouse or apartment doesn't mean we are short. It's only because borrowing money was basically free. Raising interest rates will cool that and people will continue to live where they live. Oh, and close the southern border and shut off all immigration until we get our own house in order. Oh how I dream sometimes.

 

[shawn]

There aren't 20mm people with 50k in their back pocket waiting for a house to be built. There aren't 20mm people that are homeless only because there aren't house available. Just because people 'want' a house vs a townhouse or apartment doesn't mean we are short. It's only because borrowing money was basically free. Raising interest rates will cool that and people will continue to live where they live. Oh, and close the southern border and shut off all immigration until we get our own house in order. Oh how I dream sometimes.

No, we're short 20mm houses, not adjusted for population growth.

 

[awheelterd]

Oh, and close the Mason-Dixon border and shut off all immigration until we get our own house in order. Oh how I dream sometimes.

That alone would fix NC's housing market issues.

 

[DonYukon]

Took me an embarrassingly long time to figure out that was from the onion.

Even though you posted this . I DNR your comment and ended up reading half the article until I said HOLD UP

 

[ponykilr]

@shawn where does this info come from? I am not clear on what “short” means in this context and want to read more. I am admittedly not real estate savvy.

 

[shawn]

@shawn where does this info come from? I am not clear on what “short” means in this context and want to read more. I am admittedly not real estate savvy.

Lots of sources for this, but here's a pretty chart.

Then overlay that data with something like this:

Or for a different perspective, maybe something like this:

 

[DSM Turbos]

View attachment 370448

Lots of sources for this, but here's a pretty chart.

Then overlay that data with something like this:

View attachment 370449
Or for a different perspective, maybe something like this:

View attachment 370450

Doesn’t that assume the same percentage wants to own a home? There are plenty at least here that don’t and want to just rent in an urban environment.

 

[shawn]

Doesn’t that assume the same percentage wants to own a home? There are plenty at least here that don’t and want to just rent in an urban environment.

This includes apartments. We're short total places for people to live. This should be pretty apparent - think about the people you know that are living in a situation they would prefer not to be in (living with roommates/parents grandparents, etc) or moved because they couldn't find a place to live. This is super common in Raleigh, but it's an issue nationwide.

 

[UTfball68]

think about the people you know that are living in a situation they would prefer not to be in (living with roommates/parents grandparents, etc) or moved because they couldn't find a place to live

This is where the waters are always muddied for me. Most areas I’ve been in that aren’t a pretty major city (Raleigh/Charlotte, etc), people living with parents or roommates are the same ones demanding minimum wage gets increased. How does ‘lack of work ethic or valuable skills’ get quantified in those charts? Then when I was in Edenton, we lived in a mostly empty water front neighborhood that they’re still trying to fill because it’s a mostly depressed area that couldn’t afford it. Literally, only about 10 of the 75 properties were occupied at the time, and the developer has since built out another phase that still sits pretty empty. So how are $300k+ homes (at the time) sitting empty, trying to target the ‘second home crowd’, accounted for in those charts for an area that’s 45minutes from anything and you have hundreds of people competing for the cashier job at the local gas stations? It’s unrealistic to say ‘hey people living with parents in Raleigh, I found 65 $500k houses (todays market price) for you, with poor job prospects, but they’re there if you want them’.

Who wouldn’t want to wake up to this, gorgeous views and even a community pool. The question is can they afford it, or find a job to support it…

 

[GONOVRIT]

Well we closed on the sale of our house yesterday. Our realtor suggested upping the price $40k more than we had discussed in December. We listed it in March and had it under contract in about 48hrs for $19k OVER asking price. Buyers didn’t even want any repairs. Once again people wanting to gtfo of Charlotte out priced the locals.
Feel bad about that but we’re in Biden times man!

 

[justjeepin86]

Feel bad about that but we’re in Biden times man!

Sorry, but housing prices were nuts, well before Biden took office. No defending here, but that's the truth.

 

[shelby27604]

Congratulations @GONOVRIT ! The sale of our house in September allowed us to start a new chapter in life. Hope it does the same for you!

 

[shawn]

This is where the waters are always muddied for me. Most areas I’ve been in that aren’t a pretty major city (Raleigh/Charlotte, etc), people living with parents or roommates are the same ones demanding minimum wage gets increased. How does ‘lack of work ethic or valuable skills’ get quantified in those charts? Then when I was in Edenton, we lived in a mostly empty water front neighborhood that they’re still trying to fill because it’s a mostly depressed area that couldn’t afford it. Literally, only about 10 of the 75 properties were occupied at the time, and the developer has since built out another phase that still sits pretty empty. So how are $300k+ homes (at the time) sitting empty, trying to target the ‘second home crowd’, accounted for in those charts for an area that’s 45minutes from anything and you have hundreds of people competing for the cashier job at the local gas stations? It’s unrealistic to say ‘hey people living with parents in Raleigh, I found 65 $500k houses (todays market price) for you, with poor job prospects, but they’re there if you want them’.

"We spent the last decade under-building, creating a housing deficit of at least 20mm units nationwide."

Ben: "People have poor work ethic and can't afford a $500k house on their gas station cashier salary"

As for the unoccupied units, the current US SFR average is slightly above normal, but not abnormally so. It increases when the economy is good (people buy additional homes for investment, vacation homes, etc) and decreases when the economy is bad (people liquidate).

Look at it this way - we average a bit over 1mm new household creations every year. That's people moving out, starting families, etc. We lose about 200-400k houses per year to demolition. So we need to build about 1.5mm houses per year just to maintain the status quo. That ignores the Millennial population bubble and a lot of other factors, but makes for a good baseline. Even by those numbers, we're short 10mm places for people to live.

 

[benXJ]

Still not seeing these 10-20mm homeless?
Sure, there might be some in less than ideal living situations or wanting a place of their own, but that's always been the case.
I don't understand the reason why people are still flocking to Raleigh and Charlotte....it's no longer the 'great place to live' due to the unrestrained population explosion and ever increasing costs, traffic, crime, and open land destruction.

 

[GONOVRIT]

Sorry, but housing prices were nuts, well before Biden took office. No defending here, but that's the truth.

Sorry for what? The current administration Is Biden=Biden times, and right now the cost to build is inflated AF.

 

[UTfball68]

Look at it this way - we average a bit over 1mm new household creations every year. That's people moving out, starting families, etc. We lose about 200-400k houses per year to demolition. So we need to build about 1.5mm houses per year just to maintain the status quo. That ignores the Millennial population bubble and a lot of other factors, but makes for a good baseline. Even by those numbers, we're short 10mm places for people to live.

Mathematically I understand it…but I’ve never seen or heard someone say ‘man, there’s literally no houses for sale and hasn’t been one for sale for a long time’. It’s usually ‘man, that’s too expensive’ or ‘the house moved too fast’.

So I tend to fall in this camp:

Still not seeing these 10-20mm homeless?
Sure, there might be some in less than ideal living situations or wanting a place of their own, but that's always been the case.

Since I’ve never really cared to look, when is the last time new home construction supply has exceeded demand? Or has there always been a deficit and population growth is exacerbating the gap?

 

[benXJ]

I understand what he's saying....supply is way down, for a variety of reasons....and in the simplest terms, the costs are going up.

The places all these people are moving from must REALLY suck, cause they are ruining NC as fast as they can yet still come by the thousands.

 

[UTfball68]

I understand what he's saying....supply is way down, for a variety of reasons....and in the simplest terms, the costs are going up.

Yeah…I ‘get it’…but it feels like the same argument could be made about anything. There’s a car shortage, because every eligible driver doesn’t have a new car, some people have to share vehicles with a spouse, are driving 30yr old vehicles, some ride the bus, others use Uber, and some even ride a bike or walk…so there must be a vehicle shortage. I feel like there’s a socioeconomic variable there that needs to be assessed to normalize the data.

 

[DSM Turbos]

This includes apartments. We're short total places for people to live. This should be pretty apparent - think about the people you know that are living in a situation they would prefer not to be in (living with roommates/parents grandparents, etc) or moved because they couldn't find a place to live. This is super common in Raleigh, but it's an issue nationwide.

No need to bring Jess into this

Didn’t realize homes mean apartments also.

 

[rockcity]

Mathematically I understand it…but I’ve never seen or heard someone say ‘man, there’s literally no houses for sale and hasn’t been one for sale for a long time’. It’s usually ‘man, that’s too expensive’ or ‘the house moved too fast’.

So I tend to fall in this camp:


Since I’ve never really cared to look, when is the last time new home construction supply has exceeded demand? Or has there always been a deficit and population growth is exacerbating the gap?

Check out Pitt County. I think I saw last week there was a total of less than 45 homes for sale, including $20k condemned homes up to $800k homes, condos included. Most of those homes were $300k +, which in the Greenville market is the new typical average cost, up from about $225k a couple years ago.

There literally isn’t much, if anything, move in ready on the market under $170k in this area. When something g hits the market, you better react fast and make a great offer and you have cash and quick close to be competitive. Most people don’t have $200k+ cash laying around.


Oh, and the housing (financing) crash of 2008 hit a lot of builders and developers hard and vastly slowed building for quite a few years, very likely being a significant contributor to our current short supply of homes. If you look at the first pretty graph Shawn posted, since 2010 we have had a vast reduction in new housing, which is right in line with the 2008-2009 housing crash.

 

[UTfball68]

There literally isn’t much, if anything, move in ready on the market under $170k in this area. When something g hits the market, you better react fast and make a great offer and you have cash and quick close to be competitive. Most people don’t have $200k+ cash laying around.

Agreed and understood…which is why I’m saying it seems like there has to be a socioeconomic aspect that has to be accounted for to normalize the data. I’m not going to try to move to Ballantyne and then complain there’s nothing in my budget so there must be a shortage. I’d like a turn key rock bouncer for $5k, but they go quick for $15k and not uncommon to be $25-40k…does that mean there’s a shortage or that I’m too broke to afford the market especially over the last couple years? So how viable of an eligible buyer was I in the first place? My little sister wants her own place, but just got a job a couple months ago and is in the middle of her masters…she can’t really afford a place yet, but is she included in that 20mil shortage? Doesn’t matter if theres a surplus of homes and the house is only $1000 and mortgage payment is only a dollar, if she can’t afford it, she can’t afford it.

I’m not saying there’s not necessarily a housing shortage, just that there’s potentially a segment of data missing. Edit…similar to how employment numbers are normalized with/for eligible workers. And that’s ultimately what I’m legitimately asking, how is that accounted for, and how has that spread changed over time. I’m not arguing the straight math, that’s the easy part, but what variables are being considered?

 

[Futbalfantic]

And to add to that. Is it in the “hot” markets or nation wide.

 

[rockcity]

Mathematically I understand it…but I’ve never seen or heard someone say ‘man, there’s literally no houses for sale and hasn’t been one for sale for a long time’. It’s usually ‘man, that’s too expensive’ or ‘the house moved too fast’.

So I tend to fall in this camp:


Since I’ve never really cared to look, when is the last time new home construction supply has exceeded demand? Or has there always been a deficit and population growth is exacerbating the gap?

Agreed and understood…which is why I’m saying it seems like there has to be a socioeconomic aspect that has to be accounted for to normalize the data. I’m not going to try to move to Ballantyne and then complain there’s nothing in my budget so there must be a shortage. I’d like a turn key rock bouncer for $5k, but they go quick for $15k and not uncommon to be $25-40k…does that mean there’s a shortage or that I’m too broke to afford the market especially over the last couple years? So how viable of an eligible buyer was I in the first place? My little sister wants her own place, but just got a job a couple months ago and is in the middle of her masters…she can’t really afford a place yet, but is she included in that 20mil shortage? Doesn’t matter if theres a surplus of homes and the house is only $1000 and mortgage payment is only a dollar, if she can’t afford it, she can’t afford it.

I’m not saying there’s not necessarily a housing shortage, just that there’s potentially a segment of data missing. Edit…similar to how employment numbers are normalized with/for eligible workers. And that’s ultimately what I’m legitimately asking, how is that accounted for, and how has that spread changed over time. I’m not arguing the straight math, that’s the easy part, but what variables are being considered?

When I said there isn’t much under $170k, that includes $65k budget homes in the ghetto. Even those are going fast. You don’t have to have much $ to buy that.

And, housing shortage doesn’t affect just homeowners. Not everyone is owning a home. It is affecting investors where they can’t buy or build fast enough for the people that can’t afford to buy. I tried to buy a couple $50k places to rent out super cheap but they just go too quickly or for more than I’m willing to pay, mostly to other investors, not an owner-occupied buyer.

 

[UTfball68]

When I said there isn’t much under $170k, that includes $65k budget homes in the ghetto. Even those are going fast. You don’t have to have much $ to buy that.

And, housing shortage doesn’t affect just homeowners. Not everyone is owning a home. It is affecting investors where they can’t buy or build fast enough for the people that can’t afford to buy. I tried to buy a couple $50k places to rent out super cheap but they just go too quickly or for more than I’m willing to pay, mostly to other investors, not an owner-occupied buyer.

I appreciate the discussion, so I hope you don’t take it as argumentative…it’s legitimate curiosity on how the data is mined. Because I understand this point as well. So then I’d say, I know where 65 houses/townhomes are that have sat vacant for 5 years, they’re not $50k and they’re in a relatively depressed area…but they’re there. Similarly to the new vehicle shortage, Ford production was literally outpacing their sales…but they had a ‘shortage’. A shortage of what? What people could afford or wanted is the only legitimate discussion point I could come to on that topic. So how many other instances of 65 $500k homes are out there that investors say aren’t cheap enough or people can’t afford? There are lots of things out there that I want, but can’t afford, that doesn’t mean there’s a shortage. If the argument is there’s a shortage of ‘affordable’ housing…I can accept that no problem, but then define ‘affordable’. And what does that trend and gap look like historically?

Edit…and I understand I’m playing with basic principles of supply and demand…but every market has an equilibrium and saturation point, I’m just trying to understand what that is. I could just as easily say, the population has doubled in the last number of X years, so my burn gel market has increased to that same number, but that’s just not how it works, there are normalized variables.

 

[rockcity]

I appreciate the discussion, so I hope you don’t take it as argumentative…it’s legitimate curiosity on how the data is mined. Because I understand this point as well. So then I’d say, I know where 65 houses/townhomes are that have sat vacant for 5 years, they’re not $50k and they’re in a relatively depressed area…but they’re there. Similarly to the new vehicle shortage, Ford production was literally outpacing their sales…but they had a ‘shortage’. A shortage of what? What people could afford or wanted is the only legitimate discussion point I could come to on that topic. So how many other instances of 65 $500k homes are out there that investors say aren’t cheap enough or people can’t afford? There are lots of things out there that I want, but can’t afford, that doesn’t mean there’s a shortage. If the argument is there’s a shortage of ‘affordable’ housing…I can accept that no problem, but then define ‘affordable’. And what does that trend and gap look like historically?

Edit…and I understand I’m playing with basic principles of supply and demand…but every market has an equilibrium and saturation point, I’m just trying to understand what that is. I could just as easily say, the population has doubled in the last number of X years, so my burn gel market has increased to that same number, but that’s just not how it works, there are normalized variables.

Housing shortages, much like unemployment must be separated out by region.

Nationwide, we are 20mm houses short, but around your area, there may be a surplus of certain type of homes which don’t match the demographic that’s actually needs houses in your local.

If we build 20mm, $1mm homes, we will still have a housing shortage because not everyone is buying that $$$ home.

The shortage is overall, but is a mix of different types of homes, but likely mostly of median and below homes. That price point lends well to new buyers entering the market or renters that can’t afford their own house. In Greenville, there isn’t a population or jobs to support a $1mm house that will sell in 48 hours; it will sit for months. Charlotte and Raleigh are different; there are many more of those buyers and the house won’t sit as long.

So there really isn’t an easy answer to your question other than it depends. You can’t have a surplus of homes in a specific area, overpriced, and in an area where the population doesn’t exist (or doesn’t want to move to) to support those homes, and compare it to a national # and say there isn’t a shortage. You may have a surplus in your area but then there is an equally depressed market somewhere else. Like NYC, nationwide the unemployment rate is reasonable, but NYC has a rate twice that of the national average.