Have We Hit The Top?

[Spooky]

14 minutes ago, gfp said:

 

You know how people get when the S&P goes down...  Don't neglect your daily dose of Wabuffo

https://twitter.com/wabuffo

 

Praise Wabuffo . I've been considering getting back on Twitter just for him.

 

Seems like a pretty good time to keep your head down and keep buying.

[Red Lion]

On 10/22/2023 at 8:58 AM, SharperDingaan said:

 

The economic/political solution to millennial's deferring house purchases, are fiscal programs financing post WWII quantities (after servicemen returned) of affordable new builds for the masses. Today's mansions become tough sells at current prices, when buyers have viable alternatives.

Just reading this again, I agree this is totally obvious and it should happen. If we were playing a game of civilization where I controlled everything that’s exactly what I would do. Probably use 3d printed concrete houses or something next gen like that. 
 

I’ll be shocked if it actually happens though in the next decade. If it looks like it’s starting en mass and at affordable price points of around 200-400k per unit after finishings I would really reconsider my housing investments.  

[UK]

35 minutes ago, Gregmal said:

Yea in a lot of ways this is all actually really similar to what occurred last year, even down to the monthly timing or it all. More or less nothing changed but people started screaming and guaranteeing recessions are imminent and those looking at “the market” can only seem to stare at Fang stocks. It’s all rather stupid and boring. Waiting for something real to happen. 

 

I agree. The only major difference this time is so far market is down only some 10 per cent (not yet fully) vs almost 30 per cent last year. Nothing special yet.

[Gregmal]

3 minutes ago, RedLion said:

Just reading this again, I agree this is totally obvious and it should happen. If we were playing a game of civilization where I controlled everything that’s exactly what I would do. Probably use 3d printed concrete houses or something next gen like that. 
 

I’ll be shocked if it actually happens though in the next decade. If it looks like it’s starting en mass and at affordable price points of around 200-400k per unit after finishings I would really reconsider my housing investments.  

Housing is the most obvious “this is ripe for disruption” market, and yet…it’s been almost impossible to disrupt. There’s a reason why, and that’s not changing anytime soon.

[Red Lion]

8 minutes ago, Gregmal said:

Housing is the most obvious “this is ripe for disruption” market, and yet…it’s been almost impossible to disrupt. There’s a reason why, and that’s not changing anytime soon.

I agree. NIMBY is seared onto the human psyche. At least the ones that already own homes. 
 

Plus the price of finishes is just ridiculous, and honestly there’s a lot of potential for those prices to continue going up in an onshoring world. Can you imagine buying solid hardwood flooring or stone slabs from the United States? 
 

Then literally unless we use robots, the labor costs are guaranteed to keep going up because we don’t have the skilled work force, we aren’t bringing in skilled construction immigrants (at least not on purpose), and the current generation has even less interest in construction than joining the military. 10x more kids that want to be lawyers than plumbers, and the plumbers can easily earn more money on average. 

Edited October 27, 2023 by RedLion

[Gregmal]

20 minutes ago, UK said:

market is down only some 10 per cent (not yet fully) vs almost 30 per cent last year

Not if you ignore the fangs stuff

[mattee2264]

It seems obvious to me that there is a lot of unutilised retail and office space as a result of the shift towards online retail and flexible/remote working patterns. Surely this could just be converted into flats?

 

Also when there is a housing crisis you should have disincentives against buy-to-let and foreigners using US property in big cities as effectively a bank account. 

 

But agree that those in power are property owners and have vested interests that make them want to keep house prices high. 

[Jaygo]

Nimbyism is a totally natural thing, we all want space and we want to shape our own worlds not shaped by someone else. In my former SFH we were a small home with a bit of land, A neighboring farm was developed into mega mansions of so little class and taste you would be astounded. 16000 sq ft of pure dick measuring, it was a mix of Victorian ornateness mixed with new rich/ middle eastern opulence. Every house had a copula (non functional of course) and covered porticos to the separate garages, gables, dormers, Fake copper that will never patina, everything black and sharp contrasted  colours as if earthen hues made you poor, flat roofs to scapegoat house height rules. Just pure shit. 

 

Housing as warm, dry roof over your head for a family is really not expensive to build. showing off via housing and the related morons on council with their outrageous dev fees is expensive. 

 

The rules are generally made by homeowners who no longer have growing families so these millennials are f..d if they dont take the rules into their owns hands.

 

I am forever a ladder pulling up NIMBY now and im under 40. 

[Jaygo]

To the above, my BF is building an infill, Demo permit is $18k, permit to remove old well and septic plus inspections  $9k

 

estimated building permit $87K as per plan. So over $100k to the city before he ever puts up a stick. Tell me how we are going to provide affordable housing and reboot our economy when the whole thing is set up as a giant racket. 

 

Ive said it before, canada is one giant cruise ship ( the nicest one ) owned by the TSX60 and the major developers. We have crazy immigration because they are considered customers and not citizens for the good of the country. Bell and Rogers need more wireless subscribers, Con Drain and Tacc are slowing down. How about 1.2 million new yearly customers for the cause, to say otherwise would be xenophobia these days. 

 

 

 

 

 

 

[Blugolds]

There are options that many explore. Social media either shows you the kid in the McManison…or the hipster in the “tiny house” who lives debt free. Both extremes. The tiny house movement is viable, affordable, but nobody dreams of living in a 8.5x22 footprint and those on the shows or social media have always “only been living in it for 6 mo” or so, I dont know that it is a long term solution for the majority. 

 

To compound the challenge, many municipalities dont really want small footprint homes to go in, covenants, requiring rezoning etc land prices high enough to make it not viable for someone looking for cheap housing even if the house is relatively “cheap” and mobile vs normal SFH. A lot of people dont want to live around these “fancy trailer parks”:Also, when looking at cost analysis of these tiny homes, if someone isn’t building themselves, they’re still pretty pricey in comparison to what you are actually getting with a normal SFH, that you can actually get a mortgage on for 30 years (in US) and will theoretically appreciate vs depreciation of a “fancy trailer home”. Utilities are basically fixed albeit smaller heating bills, still costs the same to put septic in and drill a well and many “Communities” charge lot rent. Often what seems like a cheap alternative really isnt that much different without the opportunity to appreciate and finance. Doesn’t seem like the juice is worth the squeeze. Living in something slightly bigger than a college dorm or prison cell, no matter how nice the finishes are vs a standard 2k sq ft SFH, sure you can maybe pay cash for the tiny home but monthly expenses aren’t much different. 

 

There really is no incentive for those with available means to create mass affordable housing. Period. My local area proposed an incentive plan for ADU in the city to increase affordable housing and then made it so restrictive via various means that it made it unattractive for anyone that wanted to actually make a decent return on the investment that everyone canceled their plans, at least the majority that I have talked to in area, including myself, we own a duplex that we rent out that happens to be on a double lot and had plans to build an ADU. One gal and her husband moved to the city to be closer to her parents from the west coast, she had experience with ADU, her husband is a GC and she is an architect/designer, had plans and permits and several projects waiting to go for themselves and clients, only to get the rug pulled out from under them. 

 

Everything comes full circle, increase affordable housing means allowing those who have the ability to rapidly provide quality options to make a decent return on that investment, when municipalities view major investors as evil or outsiders and make it so restrictive that it removes the incentives and whittles margins down to nothing, they dont bite. Individuals
(majority) cant do it themselves also because of said restrictions, rules, laws, permits, approvals without the volume and in-house expertise of the big players. But the big players want a decent return, like they are evidently getting on SFH, MFH, and apartments with high rents, otherwise why would they change course. 

 

Nobody is going to provide mass affordable housing out of the goodness of their heart, and if they ARE willing to do it for nothing or break even, they better be on the Forbes list, or they aren’t going to get very far. When local law makers realize this and start making it easier/quicker to get things done, increasing incentives and viewing investors as allies rather than opposition that might change but I dont think its going to happen on a significant scale any time soon. AND that is assuming that the majority of the population would even be willing to let go of their social media McMansion dreams. Nobody dreams of living in those 1950’s SFH with 1 car detached garage and 1100sq ft, the times have changed people expect more. Granite countertops, SS appliances, floor coverings, hardware, lighting etc all orders of magnitude more than even the 1980s. THe same with vehicles, look at pickups from the 1980’s, even 1990’s. Hand crank windows, bench seats, AM/FM radio maybe a tap player, regular cab, may or may not be 4x4, zero comforts. Now heated/cooled leather, crew cab is a must, 13” touch screen all have become expected. 

 

Avg consumer doesn’t want less, they want more, and they want more…affordably, and that just isn’t realistic. 

 

Rather than wondering how to increase affordable housing but mass producing cheaper homes etc if rates stay higher and people continue to have a hard time buying, similar to vehicles getting more expensive, recreational toys…they couldnt or didn’t want to stop increasing prices, and the consumer wanted the products even if they couldnt afford it, so what was the only string to pull? The term. 60mo max on vehicles increases to 72 or more, boats can go 15-20, when does the 30 years mortgage start to come into question? Why not 40-50? They go 35 in Japan and had heard longer in some instances. 

 

Edited October 27, 2023 by Blugolds11

[Gregmal]

The Fed and the Institutions buttfucking the middle class can be seen no clearer than what is your traditional starter home. You own one? Great. You got some equity. Good. We ll lend to you, against that equity for 10%. Or we ll cash you out at market. Don’t you dare get inspired though…waiting for you is the rental market where you can keep paying us. Or….well, that forever home you planned to buy now costs double what you had planned on and haha we got you because even if you want to get back into your starter home, it’s 50-75% more expensive on the monthly carry. So don’t get ambitious you peasant. 

[Jaygo]

6 minutes ago, Blugolds11 said:

Nobody dreams of living in those 1950’s SFH with 1 car detached garage and 1100sq ft

that's literally my current house. Its the best but I do want a bigger garage. Built in 1958 a ranch bungalow of 1100ft. Tiny bedrooms but a beautiful stone fireplace to read by and an ancient wet bar in the basement rec room to drink a beer and play floor hockey on the old parquet with the kids.  What else do you need?

 

 

[mattee2264]

US fiscal deficit $1.7TR. That probably goes a long way towards explaining resilience of the US economy compared to the ROW. That is a pretty massive fiscal deficit to be running when the economy is at full employment. By contrast 5% interest rates are pretty much neutral. So no surprise who is winning the tug of war. 

[Jaygo]

The veterans housing program is an example of what is possible. I dont think the powers that be have the same goals anymore. My tin foil hat side tells me that the goal is sticking people in condos in urban centres rather than SFH and nuclear family formation. 

[james22]

Prefab homes seem the obvious solution.

 

Automation should deliver higher quality and lower cost.

[SharperDingaan]

2 hours ago, RedLion said:

Just reading this again, I agree this is totally obvious and it should happen. If we were playing a game of civilization where I controlled everything that’s exactly what I would do. Probably use 3d printed concrete houses or something next gen like that. 
 

I’ll be shocked if it actually happens though in the next decade. If it looks like it’s starting en mass and at affordable price points of around 200-400k per unit after finishings I would really reconsider my housing investments.  

 

I think there will be a lot of bitching and skull-cracking, but it is pretty much inevitable. All across Canada, the young/retired, widows/widowers are becoming forcibly acquainted with either finding roommates or moving to a cheaper community. It's generating a lot of intense and multi-generational anger, the young/old are demanding change, and they have the numbers/energy to force it. Politicians either get with the program, or get replaced; not a bad thing.

 

A great many cities have dead malls, with good transport links. Demolish the malls, upgrade water/sewer, and replace with single floor towers of new 2-3 BR affordable housing. Same thing for the new towers of tiny 1-2 BR, and the great many C class buildings well past their useful lives. The towers themselves built under trades apprenticeship programs, financed under BoC 25-year low interest non-transferable mortgages, using domestic/imported labour willing to settle/learn. Get out of the way, or get replaced; your choice.  

 

You can still have the suburban/rural spacious SFH .. but it's largely something already existing, and sold by a downsizing boomer moving into a downtown tower of single floor 2-3 BR's. Boomers age in place, the 2nd/3rd BR's for the kids visits and live-in at the end of your time.

 

Quite a bit different to what many expect today ....

 

SD

 

 

Edited October 27, 2023 by SharperDingaan

[Castanza]

1 hour ago, SharperDingaan said:

 

I think there will be a lot of bitching and skull-cracking, but it is pretty much inevitable. All across Canada, the young/retired, widows/widowers are becoming forcibly acquainted with either finding roommates or moving to a cheaper community. It's generating a lot of intense and multi-generational anger, the young/old are demanding change, and they have the numbers/energy to force it. Politicians either get with the program, or get replaced; not a bad thing.

 

A great many cities have dead malls, with good transport links. Demolish the malls, upgrade water/sewer, and replace with single floor towers of new 2-3 BR affordable housing. Same thing for the new towers of tiny 1-2 BR, and the great many C class buildings well past their useful lives. The towers themselves built under trades apprenticeship programs, financed under BoC 25-year low interest non-transferable mortgages, using domestic/imported labour willing to settle/learn. Get out of the way, or get replaced; your choice.  

 

You can still have the suburban/rural spacious SFH .. but it's largely something already existing, and sold by a downsizing boomer moving into a downtown tower of single floor 2-3 BR's. Boomers age in place, the 2nd/3rd BR's for the kids visits and live-in at the end of your time.

 

Quite a bit different to what many expect today ....

 

SD

 

 

 

 

I'd rather be dead then move into complexes such as this. Between Europe and Canada I'll never understand why they move housing in this direction. Basically a prison if you ask me. To me if your country is popping up housing like this, it's time to re-evaluate your long term strategy....highlights long-term systemic risk. These are not homes...they are stalls with hay for the livestock citizens. 

[Red Lion]

Very interesting perspective SD. I see a continued demand for suburbia in American young people they’re just moving to more affordable sun belt states. But maybe they will shift to mass apartment living. 

[Blugolds]

Just now, RedLion said:

Very interesting perspective SD. I see a continued demand for suburbia in American young people they’re just moving to more affordable sun belt states. But maybe they will shift to mass apartment living. 

 

Wow, the American dream of….”apartment living”? Significant portion of the US population, working class, only path to any kind of financial win is derived from the “forced saving/investing” of a mortgage…if eventually even that is gone….

[changegonnacome]

1 hour ago, Blugolds11 said:

“forced saving/investing” of a mortgage…if eventually even that is gone….

 

B-REIT gets its way future grandpa & grandma six pack......will be only able to afford a two pack in retirement cause they'll need to make the rent at the end of the month.

 

Your spot on - the social contract for the middle class was kind of work hard, buy a home, save for retirement, social security....have the mortgage paid off by 60-ish.......live rent/mortgage free thereafter.......and where your retirement savings + social security gave you a nice-ish life for your last 15-20yrs on earth where you didnt worry about day to day expenses.

 

The math above completely breaks down if your paying rent in your 70's.

[Blugolds]

3 hours ago, Gregmal said:

The Fed and the Institutions buttfucking the middle class can be seen no clearer than what is your traditional starter home. You own one? Great. You got some equity. Good. We ll lend to you, against that equity for 10%. Or we ll cash you out at market. Don’t you dare get inspired though…waiting for you is the rental market where you can keep paying us. Or….well, that forever home you planned to buy now costs double what you had planned on and haha we got you because even if you want to get back into your starter home, it’s 50-75% more expensive on the monthly carry. So don’t get ambitious you peasant. 

 

Just like lotto winnings (aka sneak tax on the poor), Uncle Sam is the REAL winner. RE winners…. Realtors higher commissions the last couple years? Pssh, land owners? No, title companies? HA, lenders, nah, builders/remodelers? NOPE…Good ol’ Uncle Sam adjusting property taxes up and up (some in our area doubled) in perpetuity. 

 

Oh wait though, primary residence capital gains exclusion right? That’s great, unless you’re a single guy who already had equity in his property knocking on that $250k and now either pays the higher property taxes, or sells and pays the tax to Uncle Sam on the “new equity” value. Heads they win, tails you lose. 

 

Who do these things hit hardest? Middle/lower class. 

[Spekulatius]

There are some nice flats with community spaces in Europe., sort of like some college dorms here with common areas. If you don’t have kids, are single, or older and your kids are out of the house l then I don’t see why these are not an option.

Ideally, you got the advantage of urbanity (walkable city) and some community ( you can support each other). many are quite upscale too.

 

Inevitable we will run out of space for single family homes. Happened in Europe a long time ago and will happen in NA as well. So other solutions need to be found and one is going vertical.

 

It does not need to look like the pic that @Castanza showed.

[SharperDingaan]

4 hours ago, Castanza said:

I'd rather be dead then move into complexes such as this. Between Europe and Canada I'll never understand why they move housing in this direction. Basically a prison if you ask me. 

 

It is much more likely to be collections of 2-4 height limited very modern towers, replacing 1 in every 3 malls in suburbia; the limitation primarily being adequate water and sewer for the higher density. Biggest units aimed at boomers loosing mobility, needing everything on one floor, and someone else to do the maintenance. Everything else aimed at first time buyers, inclusive of a low cost BoC mortgage and a family tested, time limited (10 year) rental subsidy. Canada needs babies, and acts to help them along.

 

Not yet a popular sell in the development communities, but it's coming. There are only so many quarters of poor results they can tolerate, before they have to do something.

 

SD   

[Castanza]

2 minutes ago, Spekulatius said:

There are some nice flats with community spaces in Europe., sort of like some college dorms here with common areas. If you don’t have kids, are single, or older and your kids are out of the house l then I don’t see why these are not an option.

Ideally, you got the advantage of urbanity (walkable city) and some community ( you can support each other). many are quite upscale too.

 

Inevitable we will run out of space for single family homes. Happened in Europe a long time ago and will happen in NA as well. So other solutions need to be found and one is going vertical.

 

It does not need to look like the pic that @Castanza showed.

lol I shared a pic of the USSR…but the reality is these type of developments almost never get better over time unless they are in prime locations. Comparing them to college dorms doesn’t improve the attractiveness just saying. In my UPS days I delivered to enough tower like apartment complexes (some that look nice from the outside) to always find them trashy and smelly in a dozen different ways. There is only so much value you can squeeze out of those types of complexes unless they are top end in prime locations. 
 

The US isn’t going to run out of space for a long time. Technology and remote work will help propel smaller towns and cities forward imo. 

[ValueArb]

6 hours ago, SharperDingaan said:

A great many cities have dead malls, with good transport links. Demolish the malls, upgrade water/sewer, and replace with single floor towers of new 2-3 BR affordable housing.

 

Why can't you have suggested this while I still owned Seritage?