Please enable JS and disable any ad blocker Sign up for the Slatest to get the most insightful analysis The retired federal employee who owned it lived elsewhere and seemed mostly to use the property to store a whole bunch of his junk I would sometimes see him puttering around the library in our part of Arlington Though I would have preferred a neighbor who was friendly and present I was grateful that for some unfathomable reason he never sold the place—because the moment he did I knew exactly what would happen to that ranch house we started seeing men pulling up in very nice SUVs and walking around the lot’s cluttered backyard Because this was a change from the house’s usual foot traffic—teens daring other teens to sneak inside—we suspected the property had finally gone on the market arborists arrived to cut down half a dozen trees a guy driving an excavator knocked the house down and our yard was soon littered with old Penthouses and business correspondence from the 1980s A construction crew spent the spring and summer building a new house like all new houses in our suburban neighborhood the house is quite similar to nearly every other new house built in our neighborhood over the past few years built in a style I think of as the Giant White House They are giant—Hulk houses—swollen to the very limits of the legally allowed property setback They feature a mishmash of architectural features the peaked roof of a farmhouse with squared-off sections reminiscent of city townhomes Like the giant White House just down the road from us in Washington the Giant White House may be occupied by a Republican or a Democrat The house has five bedrooms and six baths and is 5,600 square feet it has top-end appliances and European Oak Select Grade hardwood and heated floors in the en suite bath and a wet bar in the basement If you drive through the Arlington of wherever you live you’ll surely see Giant White Houses sprouting on every cleared lot I’ve learned that the answer is more complicated than I’d imagined the slim margins of the spec-home industry with what a certain class of homebuyer even believes a house to be—whether they realize it or not American houses haven’t actually gotten much bigger over the past 25 years or so. The average new single-family home built in America in 2024 was 2,366 square feet, just slightly up from 2,223 square feet in 1999 But of course the Giant White House is not average. Built in an affluent suburb and meant for the wealthy, the GWH is far bigger. Houses over 4,000 square feet, like the one next door to us, make up 14 percent of the homes now built in the Northeast James McMullin owns MRE Homes a Northern Virginia developer that builds six or seven new homes a year “It’s a pet peeve with many people,” he told me What are those economics? Let’s follow the money at the GWH next door. Last year, a real estate agent named Jon DeHart, who runs a company called Homes From DeHart and they didn’t really know what to do,” he told me “They were grateful to have someone take the lead.” DeHart collected bids from several builders and the owner accepted an offer of $880,000 from MRE Homes if a little lower than typical for the neighborhood (We live on a busy street; teardowns on cul-de-sacs typically sell for more.) The lot, just over 10,000 square feet, was an attractive canvas for a big house. Arlington zoning allows setbacks of as little as 8 feet from the property line and the design created by McMullin’s contract architect goes right up to the edge The house’s footprint doesn’t take up the absolute maximum space—there’s still a decent-sized backyard—and that’s by design “They were able to use a large portion of the lot and then still afford to offer enough green space for future outdoor improvements.” To construct a house like this in Arlington these days and all the other ancillary costs are factored in the developer’s profit was more modest than I expected these projects are making anywhere from 8 to 15 percent,” he said you could take that money and just buy a bond the administrative burden—that all just increases every year.” The result: If a developer doesn’t absolutely maximize the square footage of the house he builds in this market The Giant White House, though, is not only giant in its floorplan—it’s giant vertically. It’s a trend that comes not from the suburbs but from the city. In recent decades, the loft—the converted warehouse, with its open spaces and high industrial ceilings—became popular in American cities, said Paul Preissner, an architect and professor at the University of Illinois–Chicago “Those kinds of preferences trickled out to homeowners and now everyone wants a cathedral-like ceiling.” “Drywall comes in 8-foot-by-4-foot sheets,” Preissner said an explanation for the typical 8-foot ceiling in a midcentury house like ours “But now they just cut drywall to custom size.” The GWH next to us features 10-foot ceilings on the first floor and 9-foot ceilings upstairs and in the basement I’m staring at the GWH’s above-grade basement Through the windows of the GWH’s dining room you’re looking down on the neighborhood through the upper branches of the lot’s few remaining trees Preissner told me that this kind of total disconnection from one’s neighbors is not a bug but a feature of this kind of house. “People want their second floor much higher up, to be removed from the street, for more privacy,” he said. He compared this “escalating preference” to cars getting bigger and bigger because it makes drivers feel insecure to be at the wheel of a sedan when everyone else has SUVs “want to be higher up so they’re not looked down upon.” The metastatic growth of the upper-middle-class house has led to a familiar term of art: the McMansion. Is the GWH a McMansion? I’d never really thought of it that way. I’m a frequent reader of McMansion Hell, the critic Kate Wagner’s caustic architecture blog they don’t sport a lot of the fripperies—the cornices the colonnades—that the ’90s monstrosities on Wagner’s site do When I called Wagner to ask about this, she urged me to think of the McMansion not as a style of house but as a type of house “What is communicated architecturally changes from era to era,” she said but all McMansions share a very specific logic: “the house as consumer product subject to a continuous series of upgrades,” growing bigger and bigger the more money you throw into it “It’s best understood as a house that is designed from the inside out in order to achieve specific social functions,” she said Enormous entertainment suites for movie-watching and restaurant-scaled kitchens all serve the same purpose Wagner said: “They interiorize amenities that you would once have had in social settings.” As the height of the McMansion offers a barrier against the community around you the McMansion’s sprawling layout renders the community unnecessary Even its windows are not designed for cross-breezes—no one expects you’ll ever open them they’re like these weird coolers,” Preissner said “They’re meant to be sealed.”) Even if it doesn’t feature turrets “Everybody paints everything white now,” sighed Paul Preissner when I sent him a photo of the Giant White House next door we’re gonna lose our mind if there’s red or orange or something.” “We’ve tested different color schemes and whatnot and it seems like white has been a fan favorite,” said Jon DeHart “We’re delivering a property that’s gonna appeal to the most people.” Given that the vast majority of houses in America are built on spec by developers home design naturally trends toward “a commonly agreed-upon design ideology that is the least offensive possible.” Or because you’d lose the three buyers who don’t like yellow.” Many of the design choices on GWHs—the white color scheme, the vertical board-and-batten siding, the tin roof—can be traced to the modern farmhouse trend and whose Fixer Upper TV show popularized the style among wealthy homeowners a decade ago the Gaineses down in Texas—all these people heavily influence the market that we’re dealing with,” said James McMullin “Maybe a different market is influenced by the New Yorker or something.” But the current GWH has moved just slightly beyond a pure modern farmhouse—its style is more complicated The whiteness of the home doesn’t only speak to the traditional white-painted rural farmhouse; it speaks to minimalism a style that has crept from the elite into the vernacular over recent years “The real social language of this color is cleanliness,” Preissner pointed out and the house’s lines—the sharp distinctions between white and black—give off an air of crisp “It started out as a kind of farmhouse look and now it’s a weird hodgepodge of minimalist things that are borrowed from farmhouse style about as maximalist as houses can be—should cop aspects of minimalist design is aesthetically confusing “Minimalism is a signifier of class,” Wagner said and people who had architect-designed houses Wagner sees a lot of what she calls “normie minimalism” in home design Are we stuck forever with the white house? Eli Tucker, a D.C.-area real estate agent, said that he’s seeing interiors—which once featured nothing but shiplap and hardwood—get a touch more homey and retro: “You might hang wallpaper in for example—and watched as those properties sat on the market for months “Everybody’s scared to make a mistake,” said Tucker When each new build is a seven-figure risk “Nobody wants to be the idiot who built the wrong thing and nobody likes it.” Eli Tucker thinks a lot about what real estate would look like if no one knew anything: “If a buyer showed up to a house had no idea what the house next door sold for Sellers and brokers and builders and buyers have access to reams of data and that data influences every step of the complicated series of transactions that result in a new house I wonder sometimes if the house next door is even a house at all In part that’s because something about a Giant White House’s design suggests the agglomeration of houselike details without actually adding up to an identifiable home “You used to be able to identify houses with some kind of language—Tudor When I showed him a photo of the house next door The left side of this GWH has a pitched roof and vertical siding; the middle is an entryway and porch set atop red brick stairs; the right side is a squared-off box, calling to mind the cheap, rectilinear 5-over-2 apartment construction filling city blocks “we used to have these flipbooks split into three parts You could put Boba Fett’s head on C3PO’s waist For a builder doing architecture for residential clients though he was far more upbeat.“The trend right now is a blend,” he said and there’s a strong contingent of people who love modern So by building a house that at least has the appearance of all those it speaks to all those interests.” When he saw the house’s design Kate Wagner of McMansion Hell argued that this architectural incoherence stems from the modern homebuyer’s saturation in Zillow and Redfin even Instagram—those are really media empires of the past,” she said the way people interact with architecture now is through real estate listings you’re better off just buying a brand-new house in an era when a home purchase is likely the most secure It is no longer simply the place where you live “I don’t think we think of the dream home anymore,” Wagner said “We now see houses primarily as vehicles for investment The best way to do that is if everything looks the same.” a sign appeared on the tiny front lawn of the place next door Though the Ring doorbell registered my presence no one answered; the open house hadn’t yet begun I let myself in and slipped blue cotton booties over my shoes As my footsteps echoed in its cavernous rooms I felt as though I was starring in an advertisement for the good life The broker had staged the house with attractive furniture in taupes and grays The walk-in pantry had its own sink and a second dishwasher the bedrooms looked ready for an influencer’s photo shoot It too was a product of the consumer trends of its time Developers opened up this part of Arlington in the 1950s working from the same three or four floor plans across a dozen square miles dotted here and there with just a few McMansion-y new builds Our house didn’t connote individuality any more than a GHW does; if anything it connoted that we fit in—that we lived in the same kind of house as lots of our neighbors every remaining little house in our part of Arlington is now a Giant White House waiting to happen the ubiquity of the Giant White House signifies a neighborhood evolving from one for the middle class to one for the sort of rich to one for the very rich We’ll do our part: Someday relatively soon we’ll sell our little house I hope some young family will want to buy it and live in it just as it is; more likely (Every week we get mail from them.) This perfectly good house where we raised two children and built a life The wind will scatter whatever it is that’s crammed into our basement—obsolete phone-charging cables probably—across our neighbors’ minuscule yards IMPLODED STOCKS Brick & Mortar Meltdown Inventories of completed new single-family houses for sale in February jumped by 34% year-over-year the highest since July 2009 during the Housing Bust and roughly where they’d been on the way up in February 2006 according to data from the Census Bureau today These are “spec houses” that were built without buyers lined up Homebuilders are motivated to sell this inventory of spec houses quickly because they’ve sunk a lot of capital into them this is a good thing: Bring on the new supply of essentially move-in-ready houses that builders really need to sell – more choices It’s competition for homeowners selling or thinking about selling their homes including their vacant homes they’d moved out of years ago but didn’t put on the market to ride up the price spike all the way But the publicly traded homebuilders have been singing the blues, and their shares have careened lower from their highs in September, for example, DR Horton [DHI] -33%, Lennar [LEN] -33%, KB Home [KBH] -34% Inventories of single-family houses for sale at all stages of construction in February was essentially unchanged at 494,000 houses up by 8.1% from the bloated levels a year ago Inventories of the past five months have been at the highest level since December 2007 inventories of new houses for sale at all stages of construction have been at record highs for months – at 290,000 to 304,000 houses for sale – having surpassed the highs of the Housing Bust for the first time ever in May inventory for sale of 296,000 houses was up by 6% from the already bloated levels a year ago is dominated by Texas and Florida (see map of the four Census regions at the top of the comments) It’s by far the largest market for new houses in the US: In February it accounted for 60% of new houses for sale in the US Massive incentives and lower prices by homebuilders have stimulated sales but this was still 38% higher than in 2019 Inventories of new houses for sale at all stages of construction rose to 120,000 houses in the West and up by 60% from 2019 (see map of Census Regions at the top of the comments below) accounted for 24% of the US inventory of new houses and for 20% of US sales of new houses But sales in the West fell by 14% year-over-year and by 25% from February 2019 Homebuilders need to sharpen their pencils to get this inventory moving: The South and West combined accounted for 84% of new house inventory and 86% of new house sales in the US The Midwest and the Northeast carve up amongst themselves the remaining 16% of the new-house inventory and 14% of new-house sales Some of the big states in those regions have lost population over the years and big new developments are not a big priority Inventory in the Midwest remained for the fourth month in a row at 47,000 new houses for sale up by 9.3% year-over-year and up by 15% from February 2019 Sales at about 6,000 houses in February were down from a year ago Caution with these small numbers of sales: Census rounds its sales estimates to the nearest 1,000: these “6,000” sales could mean anything between 5,501 and 6,499 Inventory in the Northeast rose to 31,000 new houses for sale up by 19% year-over-year and up by 11% from February 2019 Sales of about 2,000 houses in February were down from a year ago Even greater caution: There are minuscule sales figures rounded to the nearest 1,000 Sales of new houses at all stages of construction rose in February by 1.7% year-over-year driven by the sales increase in the South that more than made up for the drop in the West Things can happen that prevent contracts from closing such as not being able to get affordable insurance or financing falling through Homebuilders overall have been selling houses at a slower clip than they’ve been building them which is why inventory levels of new houses for sale in the US overall have continued to surge Supply at 8.4 months was up by 6% from a year ago and by 40% from February 2019 Thanks to the incentives, promos, lower prices, and mortgage-rate buydowns, sales of new houses have held up at decent levels – though they’re nothing to write home about – while sales of existing homes experienced the worst February since February 2009: Sales of completed houses rose 16% year-over-year in February to 29,000 houses and were up by 26% from February 2019 as builders have given up profit margins – some of the biggest have given up 2 to 4 percentage points from the fat margins a few years ago – to aggressively sell what they built The median contract price of new single-family houses at all stages of construction that sold in February fell to $414,500 January’s originally reported spike to $446,300 was revised down to $427,400 which irons out the random volatility and the revisions back where it had first been in April 2022 But note: these are contract prices that do not include the costs of the mortgage-rate buydowns (which show up on builders’ financial statements in gross margins as a cost) and certain incentives So these median prices are not a great reflection of  how aggressive actual pricing – including mortgage-rate buydowns and incentives – is in the market Enjoy reading WOLF STREET and want to support it Enter your email address to receive notifications of new articles by email Email to a friend It’s really funny to see how polar opposite the two sides are in terms of what this data can mean with a graph of this data and the headline is “Supply of New Houses for Sale Totals 500,000 the Highest Level Since 2008” then if you hop over to REbubblejerk which makes fun of the non-house humpers you see the same graph and this is the headline “Ignore the population increase guys Just find it really hilarious especially since both posts were on top of one another on my reddit feed Interesting to see the West went up quite a bit too but I am sure for some LA/OC/SoCal exceptionalism will set in and this “west” somehow doesn’t include those region…cause not in my hood… Despite the California optimism and sunny demeanor — surf’s up — high home prices have driven buyers OUT OF STATE to places like Phoenix and Seattle and will continue to do so as long as Californians dwell in a state of rapturous illusion and only the ultra-prosperous are paying those prices My parents (SF Bay area CA) have been looking to downsize into a single story as they get older There is indeed some new construction available in their area they are totally spooked by the possible uninsurability of these new houses which are invariably a little further out of town and more in the hills Looks like it’ll be a stair lift or elevator or something California is not optimistic and hardly sunny in their daily outlook Given the hunger for profits by the Silicon Valley sociopaths it’s understandable Realtors are really scumbags for being so greedy and have been forcing bidding wars in a market that should have never have gone so high when back when interest rates were at 2 percent the pushy realtor shoves it down there throat and overly agrees about the property when a person has even looked at them I am sickened that they fought rent control in California It is issue that was not their except it might hurt prices from going up Well rents are falling now so even though law didn’t pass See you greedy realtors if price would have stayed the same is better then bubble where nothing sells I would have say Trump had no busy getting involved with rates being cut when they overreacted with COVID 19 and these dirtbag realtors that really do not have a job with much of a skill except the fact that they know how to rip people off through illegal price gauging not supply and demand which it should be People stop believing these pics crap realtors Went to a random open house in my neighborhood – a place that I knew was crap and wanted to see for myself – just because a beautiful antique house I needed to see was open at the same time After I told the realtor I was a Lookie-Lou neighbor she actually said what people on here always say realtors say (but I thought was an exaggeration): “if you don’t buy now “But the publicly traded homebuilders have been singing the blues and their shares have careened lower from their highs in September We can pontificate about the morality of the US housing market making fresh highs in price while the sales set fresh lows The builders can’t sell their product at the ask price because the bid price is at the buyers affordability level that is at least forty pct lower That spells trouble for the retirees and their existing home prices I am old and am thinking about selling my house that I’ve owned for 30 years The last thing I’m worried about is making a profit on selling my home I would like to buy a more appropriate house for my age as opposed to this large family home now that my children who filled the space have left the nest How many new houses do you need to sell when the population stopped growing or is declining which is why there are so few new houses sold Inventories are rising even in the Northeast which means builders are building more than they can sell which is a sign of slow demand for new houses but I moved out of the NE years ago because the prices were too high for housing stock that was too old Don’t worry soon all those people fleeing high cost California and other high cost blue states will buy a lot of those homes I don’t think that the massive movement from those high cost states and those with cold Give it a year and let’s see what happens Warren Buffet once commented that annually about 1 million new homes are needed in the US on average to replace old / damaged homes and the demographics need of people moving and migrating Homes includes multifamily (apartments and condos) Total housing starts in 2024 were above 1.36 million housing units for the fifth year in a row: https://wolfstreet.com/2025/01/17/bring-on-the-supply-single-family-housing-starts-in-2024-rose-to-2nd-highest-in-17-years-amid-budding-glut-multifamily-starts-plunge-from-multidecade-boom-amid-oversupply-cre-depression/ A big reason the Big10 went on an acquisition spree the demographic trends of their core conference membership awful compared to the SEC These four Census Divisions cover the lower 48 Hawaii and Alaska are included in the “Pacific” region though Honolulu is included in my 33 “most splendid housing bubbles.” Time to return to ZIRP and get this inventory moving Time to lower prices further and get that inventory moving Time to let interest rates go up and create another FOMO panic to move the inventory That is what I’m concerned about what they are going to do I guess these projects builders want to keep their good workers/teams busy They can’t grow if they can’t build – profit for another day there are certainly a lot of new developments around where I live (north of Houston TX) and the houses are selling with appropriate builder discounts and goodies added Houses probably in the thousands being built Seems like most of the buyers are young families with small children and the vast majority are Hispanic Jobs are quite plentiful here and traffic is nuts during rush hour So I guess it’s all good around here I didn’t mention this in the article but Lennar paid 13% of its revenues in incentives in the last quarter roughly double from before the pandemic and the highest since 2009 which is trying to maintain its profit margins Those are the two approaches homebuilders are taking And their stock prices are imploding… Lennar just acquired the builder who built my 2 year old home last month (Rausch Coleman) They (Rausch) were in business for 65 years and have (had) several new home developments in process here Lennar is spreading its wings here in the area Lots of new builds and no price wars to speak of Theyre builing garbage and selling what they can at huge profits so got lots of room to discount em Probably ride the retirement wave as long as they can then prices may moderate Meanwhile rent seeking systems for the rest of em Banks still tighter lending standards seems like so might miss out on the big foreclosure crash n burn this time Everybody rails about how unaffordable homes are and then you get these goofballs that complain that new houses are built at a lower cost to fit realistic budgets people say all the time that the build quality has gone down (they don’t build em like they used to) and that the builders throw them up quickly and without attention to quality control that isn’t about building at lower costs The thing is builders like Lennar aren’t “throwing them up” Builders like Lennar hire local contractors and local inspectors are the ones that keep those contractors accountable The quality of any new build is location-dependent and has almost nothing to do with the home builder company It is extremely difficult to vet these contractors Almost none of them have Google reviews and those that do likely received fake 5* reviews from their employees and family Half the contractors that built my home don’t even have a website Then whatever local inspector you have is just a reflection of the local government They can range anywhere from inspectors that will sign off on anything to inspectors that follow local codes to a T “It is extremely difficult to vet these contractors.” they are in the home *building* business… I don’t doubt that you are mostly right about the big builders mostly using local contractors…but you sort of make it sound like those mega-builders ought to be held harmless for build quality (variation on “It is just so hard to find good help nowadays”) and that the mega-builders are almost an accidental/incidental participant in the process (who It is the mega builders *business* to find decent quality local contractors/police build quality/etc – not just cash an (enormous) check and vanish in a cloud of smoke 20 years of savings-destroying ZIRP made those builders incredibly rich and apparently irresponsible to the point of no longer understanding what their actual business is “Cutting corners?” You do NOT understand a thing about bringing costs down Bad workmanship was present in older buildings too It’s present everywhere because mistakes are made and sloppy work has always been part of it That’s no reason to have this elitist approach about houses You people are bitching about unaffordable houses i’m not talking about being snobbish about upscale buildings with reducing costs of new houses by using formica instead of granite or marble or whatever is expensive these days i’ve been to construction sites from lennar and horton they hire contractors who hire subcontractors hire illegal immigrants who don’t speak a word of english there’s nothing wrong with reducing costs by using less fancy materials and appliances So who else do you want to do the construction work??? There are also occasional building materials issues: remember Chinese drywall Some materials “advances” — whether for improved efficacy or for cost — don’t work out so well in the long-run These failures give a black eye to the industry and seem reprehensible in hindsight but really just represent “the market” trying to figure out the cost/performance optimum I am a retired engineer and owned seven houses all over the U.S We have lived in *expensive* houses in California and Connecticut One I built using my own cherry picked subs (Conn) What I learned is you have to have eyes on contractors and inspect their work to end up with a good product having built large oilfied facilities for years I sold the Big house and bought a “new build” in a respectable area as a downsize event Most used homes were in bad shape for the price I wanted to pay I am in the 8th decade of my life and really just wanted simplicity and no hassles with houses This 1,459 square foot single level house I bought is pretty nice for $175 per square foot It’s very energy efficient having a max $100 power bill in the hot Texas summer Heat in the winter is a $50 bill per month (natural gas) it’s roof is also built to survive a hurricane as there are hurricane straps in the framing Thew town I live in a nutty about conducting building inspections They were all over this builder at several stages of construction No issues were identified that could not be fixed that day I have had NO issues with anything that was installed Everything works and the house is pretty nice for the money and three native trees per the city requirements We also have new internet fiber into the development with speeds available up to 2.0 gigabyte/sec The only thing I made a mistake on is that I should have picked a smaller house say 1,200 square feet in size as I don’t need two rooms here Roman concrete still lives on to this day…think about it Prices are still this high with all the inventory When the fed lowers rates house prices are going to moon and mortgage rates spiked by 100 basis points “I can’t fathom how home prices can go up with affordability historically low.” the logic is that ZIRP 3.0 “solves” the affordability problem the same way that ZIRP 1.0 and 2.0 did (by destroying savers earning power in order to create the doomed illusion of affordability via manipulation of monthly mortgage payments downward so as to empower the idiotic increase in home prices far beyond Americans’ earning/repayment power) Fed action to lower its short term benchmark rates used to be viewed with alarm as it implied lack of inflation-fighting conviction hence driving up longer term interest rates I view that as the same lack of confidence in the Fed to fight inflation We should not be surprised when St rates go opposite of Lt rates as they’re impacted by different expectations Inventories are up but the quality of inventory is poor in the mid-priced range Sellers of existing houses are ridding themselves of rentals flood zone locations (at least as modeled by Flood Factor) and seemingly long vacant inventory held for appreciation Any decent “homes” are on the market only a few days and sold at or near asking even if the location is not the best Even houses at flood risk are going pending relatively fast if in a hot location — however starting to see more discount on asking price and often “back on the market at no fault of seller” The impact of recent floods and insurance company rates/denial of coverage Before you get too carried away with this not-in-my-area stuff this article had zero to do with existing homes And new-house inventory is up even in your area I don’t know how the rental market correlates with new home data sets but rentals in that space are plagued with all the sorts of extortions that come to life when demand exceeds supply… 8 million people on a small island…you do the math… Every year more people show up for the Dream Every year the same amount of people seem to be exiting the Dream the population of NYC has grown by about 24% That’s about 0.54% compound annual growth per year Per NYC Comptroller: Housing Units in 1980 were 2.9M except the market has figured out how to make the Dream more enticing but if it wasn’t for people like your son where the population was basically the same as in 1980 I picked 1980 because the NYC Comptroller’s data that I found only had data going back to 1980 load up your keyboard warrior shotgun and try again The moral of the story is that the population growth seems to match the housing unit growth What I was really trying to point out is that nothing seems to have changed in terms of population ratio to available housing units the demand has been equal for the time period shown the high rise boom in Midtown/Hudson Yards/Mega Towers have surely caused havoc in the NYC housing market Not to mention the newly opened train lines (Grand Central Madison) that did not really get a fair chance due to WFH and the newly planned rail expansions that are yet to come The current housing market is such that Mr Free Market is like Wyatt Earp in Tombstone when he says “You tell ’em I’m coming I can order 40 tiny houses off Amazon for $415k With starter home sales almost non-existent Skewing up the median price(math) of all sales Is house prices as measured as bad as it looks because the people buying those are flush with stock and bitcon gains The Case-Shiller Index exists for this reason though Wolf (rightfully) criticizes it for lagging It’s currently +4% YoY as of January Here are 5 reasons by I stopped using the Case-Shiller Home Price Index: The Case-Shiller index only covers 20 cities So it has a “20-city index” that underweights Texas (with only one market) So the 20-city index EXAGGERATED the housing bust price decline because Texas didn’t have a housing bust So the 20-city index is NOT a national index And do NOT confuse it with a national index the CS adds the data from the FHFA house price index which is based on prices from mortgages that have been securitized by Fannie Mae and Freddie Mac It doesn’t include data from sales where Fannie and Freddie mortgages were not involved (cash deals So this FHFA house price index is systematically skewed to Fannie and Freddie mortgages I have never ever used the “national” Case-Shiller index The CS indexes for the 20 cities are available only as index value with that value set at 100 for the year 2000; and not as dollar prices you have no idea how expensive they are in relationship to each other The CS was invented by three guys at a university in 1991 on a shoestring It was a huge advancement at the time over median prices The three guys – Case and Shiller being the two lead guys – formed a startup company and commercialized the index It has changed hands several times since then and now is part of S&P Neither the prior owners nor S&P invested in the index to gather data on more than the 20 cities and to use modern data collection technologies Zillow has invested billions of dollars to build its “Database of All homes,” and it continues to invest in it This database contains everything… property tax records data from the local Realtors associations (especially useful in Texas which is a non-disclosure state) It has everything the CS has (sales pairs) plus a gazillion more data points on individual properties in all markets The CS uses an algo to weight the sales pairs That is the shortcoming of the sales-pairs method You have to assign weights to the sales pairs a sales pair where the prior sale occurred a year ago is weighted heavily A sales pair where the prior sale occurred 20 years ago is weighted much less but these algo are just human-designed algos and so part of what you’re seeing is the calculation of these algos And I have seen it produce some strange results which is unforgivable with today’s data-gathering technologies I know you wrote about your decision to use Zillow instead of Case-Shiller before but maybe not with all these details succinctly stated I think about 16 people would find that interesting I don’t feel sorry for home builders that they will buy bitcoin with their cash and watch their stock sky rocket You’d think Homebuilders would have backed off by now; surely they have executives to predict this type of thing they could keep prices high or even go higher But I guess other builders would continue on and the ones who backed off would lose out But I would expect some under-the-radar collusion out of these companies… I sold bulk copper water tube years ago and we “priced accordingly” I love the homebuilders for piling on the supply That’s exactly what this housing market needs if they want to sell them and stay in business they can cut prices to where buyers cannot refuse I really don’t give a hoot about their stock prices Their business is to build homes and sell them for a profit Can’t sell something that doesn’t exist (putting Enron aside They take higher losses up front from old builds then the new pipeline of homes gets built cheaper Loss per home will hit a max at some point Then the losses should swing back and start to decrease they should find equilibrium and then come out the other side with some bruises they can start making money hand over fists selling for higher margins to future generations Some may go into negative territory at some point before they get out of this phase I’ve been riding motorcycles for 20 years and always admired KTM for their sheer performance but not so much for their maintenance costs When their inventories started to balloon I started keeping my eyes open for “deals” thinking that they would start cutting prices The price cuts never came and my idea of getting a new KTM at 50% off MSRP vanished What’s interesting is that they came out recently and actually admitted to “miscalculating demand” after COVID I’ve bought plenty of 2-3 year old Japanese bikes which were 40-60% off MSRP due to the Japanese misjudging demand The Japanese seemed to react quicker in the past I think the homebuilders have lots of tools at their disposal and hopefully their scars from Housing Bust #1 help them navigate the next 4-5 years there was an WSJ article on how the Government has essentially held back foreclosures from occuring since 2021….hundreds of thousands of subprime mortgages out there not being paid and the government re-allocating the bill to the end of the mortgage I wonder how the lack of existing foreclosure homes hitting the market from the bottom end has affected this supply and whether that would force the hand of many to drop prices It suited people’s political narratives and people are citing what they think it said though they have never read the article I have crushed this piece and people conclusions about it here several times already Basing any conclusion on this BS piece turns the conclusion into BS What is going on in housing cannot be viewed separate or independent of larger economic forces going on with the US and rest of world We are in a fourth turning period that is involving the US losing its unipolar status The new economic power of China as well as resource rich countries like Russia can no longer be ignored by the US if we want to maintain dollar hegemony Treasury and all else involved with economic goals are being forced to do things contrary to what has been done in the past or that we might predict This means there will be no QE in the future (IMO) and lowering of rates will also be unlikely as the US has lots of debt to sell in the coming months/years Housing will adjust to these new realities and it will be painful prices will slowly grind down from here as sellers will have to give in if they have to move I’m seeing this already on the ground in western NC Not moves downward that would compare with the craziness upward a few years back but signficant give ups in price with each seller as compared to the mentality that they went in with….housing prices always go up “such as not being able to get affordable insurance or financing falling through.“ Fires and floods are apparently a new thing and unable to be insured against by any major insurance company In my pock of la-la-land I don’t think there’s many spec homes going up I swear once the shovel hits the ground for the 4 seasons it’s a “look out below” moment… but I am just a Struggler The spike riders are starting to get nervous and people are cashing out all over the place from their ”used homes” (trying anyway) as people just want to park their money somewhere Prices are still ridiculously too high though “Fires and floods are apparently a new thing and unable to be insured against by any major insurance company?” Your access to this site has been limited by the site owner Your access to this service has been limited If you think you have been blocked in error contact the owner of this site for assistance If you see that it means you’re using a VPN that assigns you IP addresses that it assigned previously to comment spammers that got blocked Stop doing business with VPNs that do that or stop complaining about your IP address getting blocked https://wolfstreet.com/2025/02/24/dear-wolf-street-readers-are-you-using-a-vpn-heres-why-you-might-get-blocked-and-what-you-can-do-if-you-get-blocked/ Locally small town middle of nowhere Wyoming there has been a boom in construction and numbers of people move here Last year we even had the first classic model home subdivision open for business Prices starting at $420k….This year – work mostly ends for outfits like this through the winter – it’s prices starting at $380k People cant accept they missed the top and are determined to get those crazy prices It’s unpredictable how long it will take to break that fixed idea Probably it will take a rise in unemployment around here that forces people to sell for what they can get For now they are mostly aspirational sellers or maybe living through a couple of bitterly cold Wy winters will send a few homeowners packing What I would like to know is what the aggregate impact the open border policy of the last admin has been on the housing market If the native born population is low or zero gtowth,then the apparent increase in demand must be tied to international immigration I see many high density housing complexes in jax,fla A whole article on getting to the truth on that would be most helpful Huge amount of research would be needed though San Jose & Silicon Valley +67%; San Francisco metro +43% (highest April since at least 2016) Active Listings compared to April 2019: Jacksonville +23% The cashflow of Customs and Excise Taxes has nearly doubled in two months The millions of immigrants that arrived in 2021-2024 finally get picked up in the data for labor force and total employment Essential digital access to quality FT journalism on any device Complete digital access to quality FT journalism with expert analysis from industry leaders Complete digital access to quality analysis and expert insights complemented with our award-winning Weekend Print edition Terms & Conditions apply Discover all the plans currently available in your country See why over a million readers pay to read the Financial Times "skinny" houses built right next to each other Ripple Creek Homes owner Paul Harris wants to build them on a split lot at what is now 509 Benton Road of his neighbors — plus the Edmond Planning Commission complained they'd look like "some young guy's buck teeth." It would be "an insult to the entire neighborhood," said Paula Blackstock who lives catty-corner to the south of what is already an empty lot We ought to have some respect for the history of this neighborhood It would "take away the spirit of this neighborhood," said Lissie Teehee who lives across the street and said she raised her three children there "I've never lived in a neighborhood where I could walk so freely." More: Mixed-use Honeyfield planned for long-held Salyer family acreage at Covell and Kelly in Edmond Taylor, Blackstock and Teehee were among Benton Road residents who showed up at a recent Edmond Planning Commission meeting to oppose Ripple Creek Homes' request to split the 17,500-square-foot lot at 509 Benton into two equal smaller ones A single-story ranch had stood there since 1956 Harris bought the small house — 1,627 square feet — owned and occupied by the same family for decades He bought it to tear it down and build two larger ones in its place especially after city staff issued a demolition permit without question It now goes before the Edmond City Council on Monday More: No easy pavement plan: How bad are Edmond streets? How good? Can the city shoulder fixes? No neighbors in Clegern Place are claiming that building two new homes where one stood will increase storm water runoff and cause flooding No one even brought up the usual real estate development deal killer: the threat of lowered property values it just wouldn't be appropriate for this particular stretch of road in Clegern Place The early addition is bounded by Fink Park to the north and from S Rankin Street east to East Drive Harris said he was surprised to meet opposition He said he thought it would be a "non-issue," a chance "for two wonderful families to live in that community instead of one." But on top of voicing their concerns to the Planning Commission residents have posted yard signs declaring "NO SPLIT OF 509" up and down Benton Road because it is up to the Edmond City Council he said: "They do not get to tell us we can't build a two-story house More: Sales tax slump has Edmond locking in a no-growth city budget for 2025-26 That Harris wants to go two stories with two homes is what has people upset It also drew scrutiny from the Planning Commission What's your plan to make those new structures commensurate with those around them?" member Chip Winter asked Chase Wilkins a builder for Ripple Creek who represented the company before the commission March 4 "We try to build — we've built similar products on Fourth Street and we plan to do something similar to that," Wilkins said Tudor-style brick home in the 300 block of E Fourth Ripple Creek has it on offer for $1.2 million Commission Chairman Brian Blundell fretted over the small lots that would result from a split "I'm trying to figure out how we feel comfortable with something that's going to be quite a bit smaller and kind of creating a couple of lots that don't really appear to match the neighborhood." "We're just trying to fit two houses on there We're trying to bring two nice houses into the neighborhood where there was one 3,300 square feet (on each of the side-by-side lots)." More: Edmond exposes and expunges 'the good, the bad and the ugly' of its past as a sundown town the neighbor who envisioned the "buck teeth" look of two "tall said he was worried that a lot split at 509 Benton Road would set a precedent for other builders to come in it angles at the side," he said of his place on the northeast corner of Rankin and Benton "The reason is the Clegerns and the Rodkeys wanted corners open and wanted an open field "So our house and (one) north of us are at an angle so that whole thing had a little more spacious look (Splitting 509) will change the entire look and feel of this neighborhood." Blackstock said she's lived on Benton Road for 27 years and knows that homeowners throughout Clegern Place have renovated houses built decades ago but they've left the design of exteriors alone to maintain the neighborhood's character "This neighborhood is of historical value to the city of Edmond," she said the houses between Boulevard and Bryant and Second and Ninth create a very distinctive historical presence for this town you can tell which ones they are ― the '30s the houses that were built in the '50s and early '60s There is not one single two-story house in the 500 block of Benton Road." More: Not grounded: The Uncommon Ground Sculpture Park is taking off in Edmond, Oklahoma has been in business for 20-plus years building high-end luxury homes in Edmond Piedmont and Carlton Landing at Lake Eufaula Harris said he has no intention of "messing up" Clegern Place But he said he is in business and so he has to make money on his investment at 509 Benton Road we'll build (just) one (house)," Harris said rather than two at 2,500 to 2,800 square feet he said of his opponents: "They're not going to be happy with the result Staff writer Richard Mize covers Oklahoma County government and the city of Edmond. He previously covered housing, commercial real estate and related topics for the newspaper and Oklahoman.com, starting in 1999. Contact him at rmize@oklahoman.com It was another blockbuster year for Bucks County house real estate sales homeowners with equity were happy and buyers scrambled to make an offer on modest homes with giant price tags But no one topped the $14.5-million record price for a Bucks County house which was set in the spring of 2023 for a modern mansion in Solebury “In any price point, around $600,000 is the busiest. So that $575,000 to $650,000, they’re the ones still getting 15 or 20 offers per year," said Robin Kemmerer, a realtor who does most of her work in Lower Bucks especially in the lower part of the county where "We see these big houses going for $4 million we can all move into that one together.' And then they're gone within two or three days," she said Where are buyers finding the dough for such highly priced houses We went through a period of time where this kind of money came from lawsuits That period might be called "Late Boomer," as the baby boomers who acquired wealth die and leave it to their children who spend it on a dream home with $600,000 being the market's sweet spot But you can always dream of an estate house in the countryside We found the top five highest prices paid for a house in Bucks County this year 2024 real estate What's happening with Bucks County's housing market? Realtors report improving environment two limestone staircases with custom brass iron railings From the realtor’s description: “Indulge in the epitome of opulence with the award-winning Chateau two-story residence nestled in the heart of Bucks County … It's an idyllic setting for year-round enjoyment and entertaining This is not just a home; it's a masterpiece waiting to be experienced.” The Big One Sale of New Hope mansion could break Bucks County real estate record. What $14.5M gets you You can’t miss this beauty as you wind your way north on River Road along the Delaware. It looks like the digs of some faded Hollywood silent movie-era star. This palace was designed by William Lawrence Bottomley, who has his own Wiki page Bottomley spent 40 years designing high-end mansions His clientele were wealthy people who weren't well-known — call them ordinary rich people From the realtor: “Nestled along the picturesque banks of the Delaware River … this remarkable 7-acre estate stands as a testament to unparalleled luxury and timeless elegance Every facet of this property exudes a European charm that captivates the soul The façade of the European-style villa commands attention setting the stage for the opulence that lies within Step inside to discover a world of refined living spaces … Beyond the kitchen a glass conservatory beckons offering panoramic views of the tranquil Delaware River mornings are greeted with sunlight dancing across the waters and evenings invite quiet reflection as the sun dips below the horizon ....” a bank barn and lots of old Bucks County charm and lots of history that includes a “tavern/deed room.” If you always wanted the ultimate Bucks County farmhouse on property settled pre-American Revolution William Penn granted 1,000 acres along the river to Brit loyalist George Pownall in 1682 A belt of limestone on the property gave the place its original name From the realtor’s description: “Stone walls blue stone terraces and covered porches overlook meadows and sweeping lawn down to the stone bank barn … contains a handsome bar and original deeds to the property dating to 1710.” this estate is a step back in time — but with modern kitchen appliances From the realtor's description: “The family room is lined in windows and has French doors that open to a large bluestone patio with hillside and stream views .. A richly paneled library with stone fireplace and hidden bar opens through leaded-glass doors to a garden room with accordion doors that join the indoor and outdoor environments." two garages including a converted bank barn was built in the 1700s in the Jericho Valley That means it maintains its Bucks County stone farmhouse charm — but with stainless steel kitchen appliances and a whole-house generator for when the power cuts out The realtor’s pitch: “Down a long the main home on this exceptional estate … While maintaining its vintage features the home is finished in a sophisticated modern style with focus on enhancement of its natural features .. The entrance hallway immediately affords inviting vistas through a solarium/gallery to the outdoors.” JD Mullane can be reached at jmullane@couriertimes.com she revealed that her own Malibu bungalow had burned to the ground “God Bless all the brave men and women in our fire department who risked their lives in dangerous conditions.” The pair began building their own joint real estate empire in 2008 they have owned and sold homes in New York City we’ve rounded up some of the incredible places that Jay-Z and Beyoncé have called home also previously owned a residence in the same building but sold it in 2011 An aerial view of Indian Creek Island in Miami The power couple next paid a casual $400,000 a month to rent a 31,000-square-foot New England–style mansion in Bridgehampton The vacation home sat on 11.5 acres and was outfitted with all the necessities for a perfect summer getaway the home also offered a rock climbing wall including a primary suite that measured 2,800 square feet the estate was perfect for the whole family contemporary Holmby Hills estate with floor-to-ceiling glass sliders meaning that their search for the perfect West Coast pad continued La Villa Contenta as photographed during an event held there in 2011 Also of note: All of the windows and pocketing glass walls are bulletproof for the utmost security The couple continued their landmark year in 2017 with the purchase of a seven-bedroom seven-and-a-half-bathroom mansion in East Hampton the following month The Pond House is a 12,000-square-foot behemoth designed by renowned architect Stanford White The estate includes 203 feet of waterfront property and is adjacent to a massive 17-acre meadow preserve ensuring that the Carters have the utmost privacy the previous owner even rotated the house 90 degrees so that the living room now faces west toward the pond meaning that the family of five gets views of both stunning sunrises in the east and picturesque sunsets in the west renowned art collector Bill Bell and his wife Maria Bell 15 years to complete construction on the property Images reveal a stunning infinity pool that reflects the sky Ando’s trademark concrete angles and clean-lined exteriors Celebrity realtor Kurt Rappaport of the Westside Estate Agency represented both the buyers and seller The Studio Has Tons of A-List Cameos—Including Some of the Best Midcentury-Modern Architecture in LA 50 Cent’s Houses: Exploring the Rapper’s Over-The-Top Real Estate Portfolio The Full House Victorian in San Francisco Sells for $6 Million The Residence Offers a Peek Inside the White House—but What Really Goes Into Running the President’s Private Quarters? Severance Twists the Mundane Trappings of the Office Into a Mind-Bending Hellscape Inside Lana Condor’s Completely Transformed Dream Home Actor Walton Goggins and Director Nadia Conners Imagine a New Life in the Hudson Valley 5 Secrets of the SNL Sets You Probably Didn’t Know Not a subscriber? Join AD for print and digital access now Browse the AD PRO Directory to find an AD-approved design expert for your next project. Yesterday, we looked at the surge of new completed “spec” houses for sale and at the surge of new houses for sale at all stages of construction Now we’ll look at at new houses for sale in the four regions of the US see map below – has the most inventory of new houses ever surpassing even the astronomical levels on the eve of the Housing Bust new houses for sale in the South have surpassed the high of August 2006 there were 293,000 new houses for sale (compared to 291,000 in August 2006) the inventory of new houses for sale has further ballooned and in October reached 304,000 and has remained in that range through December (301,000) This is a massive amount of inventory of new houses for sale But sales of new houses in the South in 2024 edged down a hair from the prior year and was down by 13% from 2020 and by 9% from 2021 including mortgage-rate buydowns that homebuilders have been using to stimulate demand So it’s not that sales have collapsed like sales of existing homes – they haven’t – but that sales lagged far behind the speed with which homebuilders put inventory on the market over the past several years and now there’s this glut of houses for sale To iron out some of the big monthly squiggles the peak supply period is in November through January in this three-month average with supply having about doubled from the pre-pandemic range: Homebuilders offered incentives amounting to 10% of the sales price on average in Texas and Florida to get the inventory moving, according to the most recent Burns Homebuilder Survey And that’s clearly not enough to get the inventory moving In the West – the second largest Census region with a population of 80 million – a similar problem is piling up Inventory of new houses for sale surged to 119,000 not far below the peak in June 2007 early on in the Housing Bust But sales have been anemic in the West because prices are way too high While annual sales were up from the prior two years all three years were at the lower end of the scale with only 2008-2016 and 1990 and 1991 having been even lower So lots of inventory piling up and sluggish sales: Supply has therefore spiked to 11.3 months on a three-month-average basis There were only three brief periods with higher supply: The Northeast and Midwest are smaller in terms of the population and much much smaller in terms of the market for new single-family houses The regions are dominated by huge old cities particularly the Northeast with New York City and the cities and urban areas around them New construction is focused on multifamily to increase density and shorten commutes from the already unwieldy urban sprawl So there are only a few sales of new houses in those two regions But all of it is too small to really weigh on the national scale only 33,000 new houses were sold in all of 2024 but roughly in the range of the past 10 years The Census Bureau rounds sales on a monthly basis to the nearest 1,000 houses these rounded sales have been either 2,000 a month or 3,000 a month rounded We use annual sales here which would largely average out the big rounding errors of the monthly data Inventory in the Northeast has been zigzagging higher over the past few years During the worst moments during the Housing Bust This is just not a big market for new single-family houses that would expand the urban sprawl further sales of single-family houses in 2024 rose to 79,000: at 47,000 houses over the past three months and beyond that at the highest level since 2009 Supply exceeds 9 months on a three-month average basis Email to a friend Too bad when it comes to the West it kind of doesn’t apply to places like Irvine or Ladera Ranch Price is still insanely bonkers and people are still buying left and right (although less than 2022 mania) Holding out for hopes in any of the desirable SoCal markets for a decent correction feels like a fool’s errand and maybe just a pipe dream at least I don’t have to worry about the rise of homeowner insurance that will likely come soon and it will probably be more substantial than anyone budget for especially those that bought at a high price betting on refinance soon or living cost will stay relatively flat… what would break the market is cost to insure homes! The protagonist (who’s kinda an antagonist… anyway) knocks on a door in LA. they are doing an above shot of basically Altadena or the Palllisades and that whole neighborhood he’s in Oh yeah and no one may ever even find your body.” Like that’s pretty much the worst thing right you might die of the infections while you try to heal Drowning is pretty bad too or having a building fall on you… the eye of hurricane Milton went right over us so we got the front and back of the eye wall Ground readings showed 100 mph wind in our neighborhood The notion that those kind of winds in LA were pushing fire instead of rain is mind boggling there are a lot of people like you waiting for those same conditions to buy in those places I’m guessing that’s installing a solid floor on prices….for now I had been waiting for the same in Southern Marin Immensely frustrating to be right and yet it didn’t matter Sold my loft in San Francisco’s WSOMA in Sept 2021 and relocated out of state My SW Oregon property has appreciated only abit its a home and thats how I rationalize it…but sure glad I got out of SF when I did South of Market is a war zone and I lived at ground zero Oh but when you rent you are still paying for the insurance– although maybe if you rent MF the insurnace rates are lower Renter insurance vs Homeowner insurance rates are night and day even before this type of event You can argue that maybe the landlord will try to pass on the increase homeowner premium to the renter which is a valid to a certain extend but if you homeowner insurance jumps from $3k a year to $12k a year it will be pretty tough to past all that to the renter “if you homeowner insurance jumps from $3k a year to $12k a year it will be pretty tough to past all that to the renter” But if every landlord’s insurance is going up by the same amount… People seem to be migrating from the older fantasy land which used to be Florida or LA Since the physical injuries inflicted by the hurricanes and the fires on the people that experienced them where they don’t experience the catastrophic weather that occurs where it’s happening where they don’t experience the catastrophic weather..” like the mountains of North Carolina Rates will not drop much over the next few years insurance rates will go up significantly soon I would imagine that recent increased listings of existing/used homes in the south helps add on to the glut of new stuff for sale thus requiring even more enticements for new build sales Article today in several Cdn news feeds on snowbirds bailing from Florida and Arizona Weak cdn dollar and skyrocketing insurance and HOA fees prompting the moves One owner quoted that between insurance increases and maintenance it costs her $20K per year to keep a home in Florida Agents quoted as saying they are very busy with new listings on properties owned by snowbirds The gist of the article was the rush to list and sell is just beginning People are trying to sell while there are still buyers Nor is the departure strictly from stationary homes “The RV park that we’re in is normally full of Canadians and Americans from cold weather places,” he said from the Phoenix area I know the specific communities in AZ that would be affected Canadians and older retired sellers (or estates) keep prices from moving too high in the places away from employment hubs I wonder what the average hold time is on the properties I live in a Condo here in AZ and keep a close eye on my neighborhood so units that are listed reasonably still sell in a couple weeks Of course there are still dreamers looking for a bag holder but those listings just keep aging on the market I think that the current housing market is irrational So we can be confident that this cluster____ is not the result of an insane AI The new home inventory is important to median prices…but the existing SFH “for sale” inventory may be more important and I’m pretty sure that Wolf’s charts are still showing that those numbers are well below 2018/2019 levels active listings of existing homes have been at record highs for the past months compared to the same month in prior years in the data from Realtor.com which goes back to 2016 (fat red line in the chart below): Do you have similar inventory charts for CA i already posted TX some time ago in an article (but not that many people read it) https://wolfstreet.com/2024/11/05/inventory-of-existing-homes-in-texas-balloons-to-highest-in-many-years-prices-drift-lower-but-are-still-way-too-high/ do these stats include “Legacy Condos?” Owners have waived reserves and kicked the can down the road for 30 They all now need rebar replacement/remediation and new roofs for insurance if you can get it You can learn more about the stability of a $10 stock buy on HOOD or a $9k car on CarFax than you can on an $850k condo The metrics that include condos include ALL condos Something is going to have to break the stalemate between buyers and sellers who are both on strike new build inventory (at lower prices) can *slowly* break the jam Anything that adds supply weakens seller strength – that is why so many people are pissed about needlessly restrictive zoning – it artificially lowers supply I know many here think this is a frozen market That’s still a lot of homes trading hands Think of it like a levee in New Orleans during a 500 year torrential downpour The pressure of the increased volume (homes for sale) piling up against the levee builds and builds all the while everything seems unchanged on the other side of the levee…. until the pressure causes a catastrophic failure and the dam bursts NAR coming to the rescue by fixing the housing levee? That’s hilarious – it was difficult for me to stop laughing The NAR is probably shi**ing their pants right now realizing that they and all their real-tores are going to be homeless bums in the soup lines before long they’re putting silly putty in the massive hole in Hoover Dam as some would suggest that there has never been so many asset value bubbles inflated at the same time when the sudden or slow leak deflation of asset prices could cause an economic deflation I think that may be America’s future for the next decade the kids who have been saddled with the cost of the grand giveaways Not enough to divert them from whatever their doing While I know inventory levels for new homes are higher in the SE keep in mind the Natinal HBs have almost zero net debt This compares to 50 to 60% debt levels in 2008 Plus they are trying to maintain 20%+ profit margins All new builds are discounted about 10% from last summer’s prices with a two year mortgage rate buy-down Sold signs are popping up all over the place Welcome to Texas…tie your horse and check your gun “builders are going bonkers building small Thank God for LGI – one of maybe 5% of large SFH builders who didn’t use ZIRP as rocket fuel to rape and pillage via doubled pricing Somehow they managed the “Impossible” task of cost-effective construction I think it is a fair question to ask why the hell “build” “non-profits” like Habitat for Humanity have been (as far as I have been able to discover) completely MIA in terms of using internet technology to at least *aid* in restraining housing costs It is wonderful that they build and add supply (as much as their surprisingly large financial resources and industry connections might permit is another question…) but a long *lonnnnngggg* time ago they could have put online model take-off sheets (for their own builds!!) that would help educate/empower Americans to haggle with SFH sellers/contractors on material costs and at least contemplate owner-construction in the face of Builder price doubling/tripling (Powered by ZIRP) They had all the necessary info (to build the houses they did etc.) but for whatever reason H4H never saw fit to share that info online (very rarely I’ve seen local H4H organizations sort of inadvertently disclose pretty limited info along these lines – but the H4H mothership – which is a very well funded non-profit – has never remotely done anything like this) One would would think that the Texans are kicking ass and taking names but would you mind factoring the population raise from 2006ish “Months Supply” is a ratio that factors in sales and inventory they could be renters for all we know; sales do because sales are a reflection of demand That’s some chutzpah calling Wolf “bud.” I shuddered Here in 11570 it’s “To Da Moon” Yes I’m seeing new buildings going in all around me in Florida I think if people want a house they can pay the asking price That’s what happens when the currency tanks Your 2019 salary will look like a million 💵 millennials are now worth about $15.95 trillion the “median wealth of these younger people more than quadrupled” during this three-year period homeownership does not offer the same sort of safety cushion other investments do head of advice and planning at Wells Fargo you are really not going to monetize the increase in that asset even if I could get a newer house with more square feet cheaper I don’t want to be 45+ minutes outside of Tampa metro I’m not looking for the white picket fence lifestyle and my friends (albeit without kids of their own too) feel the same I suspect existing home prices will be stickier and higher for longer It took two years to get a small local town to allow a nearly 2 acre lot to be split up after I dozed a 1900s mega dump that nobody wanted Current owners are the root of the problem in many areas Another mega dump sits beside my dozed lot It has been for sale for years with no budge in price R told me ther are just too damn old and rich to care Kids will sell in a flash and eight nice small homes would easily fit an fifteen minutes from downtown Don’t hold your breath as it will take years for people to wake up These old owners would rather watch a property deteriorate than give a young man a chance StrongTowns.org talks about the long term economic impacts of suburban development that are bankrupting cities and the benefits of traditional Property taxes based on inflated valuation is inflation which is increasing at the reported rate of inflation increasing the cost of ownership A common tactic for assuming the value of poor peoples property is too raise the property taxes Old houses – at least any that are halfway decent – should not be torn down One can buy a soulless stick-and-plywood craphole anywhere in the States Your town must be dying if no one wants a big old house People would die for them in a thriving town https://www.ctvnews.ca/business/article/people-are-panicking-snowbirds-rush-to-sell-florida-homes-as-loonie-tanks/ god forbid…town) 50 to 100 miles north The US is *huge* and mostly empty – these re prices frenzies occur because everybody insists on absolutely optimal siting Tampa is cheaper than Miami and Jacksonville is cheaper than Tampa (Ie save a fortune by going inland a bit…the Beach is like Broadway you ain’t going to visiting it every day in real life so why pay double the price for unutilized privilege?) 10 minutes on Google maps should gut sunbird monomania And you know when the township hits double digit in population…a dollar general will be built That is a feature not a bug – the most common slam against smaller towns is the hassle of shopping (ie required driving) Every new Dollar General undercuts that objection The larger point is that moving even just 10 to 30 miles away from the “hottest” retiree metros can save large amounts of money (because the blind “gotta have it/gotta have it now” frenzy is what spikes prices) If buyers would just take a compass and draw a circle around the “gotta have it” mkt they would find out there are a *lot* of almost as good options for a lot less cost Austin where a 70% cost savings advantage got piddled away to a 30%-40% cost savings because incoming tech companies insisted on all moving into 1 or 2 tiny 1 sq mi “hot areas” while surrounded by dozens/hundreds of miles of much cheaper options If you built a 50 story skyscraper in Austin (now 65% empty) It’s not just an attraction to metro areas in general people of a certain age need reasonable drive times to doctors and hospitals They don’t put those out where there’s no one to serve That’s a question we ask as we’re looking what’s the ambulance response and drive time look like That’s a fair point – but brand new medical centers tend to get put on the *perimeter* of existing metros rather than the mostly built out more expensive urban cores (where traffic would hamper response times anyway) medical access has to be taken into account for retirees – that is a reasonable enough consideration So maybe 10-15 miles out from a metro perimeter rather than 60+ coastal) metros have medical centers as well there are a lot of options that aren’t Miami/WPB expensive All you need is a Walmart Supercenter and a hospital Then be within a 100 miles of a big city for entertainment 100 miles between Dallas TX and Oklahoma City both directions but these are the kind of places I scope out You wouldn’t necessarily be unsafe – as long as you don’t make a spectacle of yourself There are plenty of hotspots for expats (we’ve been exploring those as well) that offer lower cost of living with excellent medical care One thing I think doesn’t get discussed enough it the growing world-wide opposition to migration it’s happening in almost every country as people relocate for a better standard of living if you are considering a off continent move look at what’s going on politically very closely This will get worse as certain resources become more scarce as scarcity brings out the worst in people There could be a lot of empty house in Mexico and South America from all the people migration the past 4 or 5 years gotta catch a flight soon or be priced out forever I will maintain my position until they decline The focus is on affordability amid the uncertainty in the employment market I plan to wait out the decline before making any commitments as long as every drop in stocks like nvidia is seen as a buying opportunity I often post a lot of unrelated content since I’m not a finance expert but I will keep an eye on the obvious topic: NVIDIA I appreciate the insights and narratives shared by everyone That hurricane hit just south of the major population center of Miami and hit in a relatively poor undeveloped part of South Florida where there were mostly cheap homes and little commercial infrastructure Every home in it’s path was destroyed I would not buy a property down there with this risk hanging over your investment Why would a major subtraction of housing stock melt the market down where prices are rising (and will rise a lot more The Florida Building Code was enacted after Andrew Hurricanes will continue to wipe away crap built in the 70s and 80s but anything built after 2000 has stood up well to hurricanes you are losing shingles but not your roof decking in a hurricane now Andrew wiped so many houses away because once your roof deck is compromised Not to minimize what people went through in the flood zones but if you’re house is up to modern code the winds were just not a problem as long as your hurricane shutters were up or you had impact glass Definitely don’t buy a house in flood zone A unless it’s a second house The wind blew a cigarette butt can into the pool Insurance companies defrauded homeowners after the hurricanes in Florida and elsewhere If the damage was cause by wind they said it was caused by the storm surge they said it didn’t cover storm surge No matter what they had the insurance companies didn’t cover it If they were covered then the insurance companies didn’t have the money to pay out all the claims or paid some of them and pulled out of the State or stayed and raised the rates on everyone else left there Too bad we can’t get all those razed forests back there are >10x more new homes being sold than the northeast But are there 10x as many people Perhaps that’s why prices are so stubborn here Tomorrow we’re getting snow and then a flash freeze in Boston Wouldn’t you rather live in the south Not sure how I missed the question mark at the end of the second line there… There are not 10x as many people in the South as in the Northeast There are 133 million people in the South and 58 million people in the Northeast prices are stubborn but they’re coming down in the South I’ve already shown you the charts of existing-home prices of the Texas cities with Austin prices having dropped about 20% from mid-2022 “Tomorrow we’re getting snow and then a flash freeze in Boston Wouldn’t you rather live in the south?” You can always put more clothes on in Boston and get out and have some fun You can’t keep taking clothes off in Florida I lived in new england for 38 years and now 10+ in FL You can shift your time of day in the summer and still get great temps in FL (until 10 am and after 6 pm) If you shift your time of day in January in Boston Drive around at 7 am or 7 pm and see all the athletic activity – runners If I had to give up January in FL or August in FL I would give up January (we were freezing last week!) I wish more folks would consider moving to southern cities that seem to have considerably more available housing inventory per capita Boston is already too crowded and there’s nowhere to build… they have a different kind of oppressive government — not to mention nearly every new build comes with an oppressive HOA A lot of people were furious when they lost their homes during the last bust I heard a few stories of people gutting the homes they lost – taking all light fixtures I was shown a home that was a bi-level home The people who lost this home turned on an upstairs faucet Very timely as I am in the south and looking to expand my rentals so we are getting back into a zone where adding another investment property may make sense but we are definitely getting back into reasonable territory The surplus of new houses for sale in the South surpassing levels seen during the housing bust is a clear indicator of shifting market dynamics While it reflects overconstruction or slowed demand in certain areas it also opens opportunities for buyers seeking better deals the near-glut in the West underscores the need for better market balance with potential lessons to be learned about sustainable development and aligning housing supply with regional demand you mention sfh in the north east and expanding the urban sprawl further My experience here is the sfh construction is tear downs The current preference seems to be to tear down an sfh and put a couple of townhouses in its place Or (less often but still common) to refurb an old sfh into a 2-3 unit mfh Old sfh homes being replaced with duplexes and quads Tearing down a SFH and replacing it with another SFH doesn’t add to the supply It’s good for GDP but doesn’t add housing Tearing down a SFH and replacing it with multifamily or with a bunch of townhouses on the same property… that adds to supply So if you tear down 1 house on a big property and build 8 townhouses on the same property I’m just wondering if tear downs are included in the “new single family houses for sale” in the article and also whether townhouse units are considered single family houses Winter in Phoenix – finally got some rain There are open houses and lots of cars in front of them It’s going to be a slow grind of price/time until everything is in balance again Mortgages aren’t going under 6.5 for a long time Each individual house will change hands at exactly the right number for that buyer and that seller Or sure – maybe things will crash and it will be $385 in three years..but are you willing to rent and wait to find out Rent prices are dropping all over the southwest/mountain west Here in Denver we got a 5.4% yoy decrease in rent prices as of December This typically is a leading indicator of a bust “FOMO crowd that watched housing prices runup over the last decade due to artificially low interest rates They’ve gotta buy before prices double again (I hear this a lot out of people in their early 30s)” Sadly FOMO doesn’t seem to ever subside in our society until perhaps external factor force the FOMO peeps from spending. Right now there are lines of people camping out Microcenter waiting for a 5090 video that will cost $2k to $2.7K a pop and people are lining up as if this is food ration This is one example of people’s willingness to buy no matter what as long as they think they still have the means There is plenty of money still sloshing around in the U.S EAT (Chilli’s) blew away earnings and of course a bunch of other restuarant stocks took off too That new build chart in the Northeast is the problem here Everytime a new build project here comes up and months supply is the highest in the nation Where do you propose they build more homes Bulldoze the state forests and wildlife sanctuaries small townhouse projects maybe 12 each time. and both were knocked down because of “Character” Also a apartment complex that was fought tooth and nail. “both were knocked down because of “Character”” For example Dedham has a density of 2150/sq mi and Wellseley has 2900/sq mi Is the inventory ballooning because new home buyers are backing out of contracts with the large builders The multi family developments are now in the process of grinding to a halt The next recession will solve all these over-priced housing problems Of course we don’t know when it will occur We are betting on within the next two years Market hates instability and this administration is serving up a lot of it making the house of cards even more precarious once we sell we can rent for as long as we need to Sorry but the recession has been forever canceled as we have seen so many “predictions” fail miserably in the last couple of years Tough pills to swallow for the bears but maybe this is the new paradigm and this time is different. Couple with the threat from the top guy on gunning after interest rates cut and more juicing of the market any inflation be damn…Yeah I know that supposedly Fed Chair can’t be fired but his term is up soon enough and also I get the feeling that rules and law aren’t as much of a showstopper as they once were… I was not predicting when we would have a recession I know everyone likes a good real estate story and this may be common but when it happens in your family it is different My Aunt passed away a year ago and lived in Raleigh NC She bought a ranch house in the 70’s for around 55k inside the beltway The house was sold for the lot because the builder that bought it was going to demolish the house and build one for his family his wife (So he said) decided she did not want to move Builder sold house to another builder for 1,350k with in a month The executor in charge of the estate trusted a real estate friend of my Aunt’s when trying to price the house/lot I think the executor got taken advantage of There is probably a lesson to be learned from this story rents have gone up ten times faster than renters incomes median home prices have gone up by 423 percent while the median household income went up by 216 percent I disagree – home prices are indeed too high the prices of everything *else* will go up too You still need to afford food while saving up for that down payment They have to move inventory with all those hard costs already in the ground in their subdivisions…discounts will become larger and passed on to their finance arms but those margins are shrinking rapidly…maybe breakeven soon with higher borrowing costs… I am interested in better following along with the data data – is that the same as the “newressales” excel on the census .gov website then your first chart should be using the data in worksheet ‘Table 1 – Sold and For Sale’ Thank you very much and interesting article I’m sure the listings vary substantially at the state level too (FL vs You can download all the data here from the Census Bureau’s interactive site that lets you choose time period https://www.census.gov/econ/currentdata/dbsearch?programCode=RESSALES I am very interested in the geographic differences in the housing market Pretty much read my mind after I read the last one We made some money in 10-11 in central FL and have watched it ever since we sold I evenly invested here in the Midwest and hold some of them still as long-term rentals How closely does the housing market follow supply and demand can a strong correlation coefficient be derived My guess is it is less than 70% correlated… but somebody prove me wrong or wolf do your bs rant thing 😀 Bring on the supply of new houses: Unsold inventory for sale of completed new single-family houses has spiked by about 50% from the peaks of 2018 and 2019 and by nearly 50% year-over-year to 124,000 houses in December Homebuilders need to sell this inventory of “spec houses” quickly because they’ve sunk a lot of capital into it and because they’re continuing to build at a faster clip than they’re selling them because they want to run growth-businesses and please Wall Street thereby adding to the pile on a monthly basis But they’re also selling them at a robust pace by motivating buyers with lower prices and huge incentives including very costly mortgage-rate buydowns that eat into their still fat profit margins They obviously haven’t done nearly enough to trim their inventories that continue to balloon and they’ll have to bring prices and payments down further to stimulate more demand move-in ready inventory of spec houses for sale is good news for the overall housing market whose biggest problem is that existing homes are now way overpriced after the 50% price explosion between 2020 and 2022 This surge of completed inventory for sale should help brush aside the zombie-like undying real-estate hype about the “housing shortage,” that has been spread for eons by the real estate industry and its trolls in an effort to keep driving up prices And that lack of “affordable” existing homes can be fixed by the collapsed demand for existing homes whose sales in 2024 plunged to the lowest levels since 1995 There is a buyers’ strike in effect because prices are way too high And lower prices will bring out the buyers Unsold inventories for sale at all stages of construction – from not yet started to completed – rose by 10% from the already bloated levels a year ago Big publicly traded homebuilders have to build and sell homes regardless of the market because they have to keep their businesses intact and growing and they have to please Wall Street to keep their shares from tanking and they’re throwing in other incentives at a substantial expense to them to maintain sales volume by taking share away from the resale market The costs of the mortgage-rate buydowns and some other incentives are included in the gross profit margins of the home builders and are therefore reflected on homebuilders’ financial statements D.R. Horton, the largest homebuilder in the US, in its Q4 quarterly filing with the SEC on January 23 lined out its strategy in dealing with this market: higher incentives (including the costs of mortgage rate buydowns) its operating margin and net income dropped in this market where demand for existing homes has withered “We remain focused on managing the pricing incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand To adjust to changes in market conditions during recent years we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers We expect our incentive levels to remain elevated assuming similar market conditions and no significant changes in mortgage interest rates.” “Our pre-tax operating margin was 14.6% compared to 16.1% [a year ago] “Net income was $851.9 million in the three months ended December 31 2024 compared to $955.7 million in the prior year period.” And incentives were “elevated” and are expected to stay that way: “We expect our incentive levels to remain elevated Total incentives that builders are offering on unsold houses for sale has reached 10% of the selling price in Florida and Texas, and 7% for the US overall, according to the most recent Burns Homebuilder Survey, of which Rick Palacios Jr., Director of Research at John Burns Research & Consulting, posted this chart on X: The costs of the mortgage-rate buydowns and incentives are not reflected in the prices written into the sales contracts when customers buy these homes though they’re included in the profit margins of the homebuilders and discussed in their financial disclosures The Census Bureau tracks these contract prices and while they have fallen quite a bit from the peak in late 2022 they do not include these incentives that effectively reduce the price of these homes the median contract price would have fallen quite a bit further The median contract price of new single-family houses sold at all stages of construction – a super-volatile figure that jumps randomly up and down and is often revised sharply – jumped to $427,000 in December and is down by over 7% from its peak in October 2022 (blue in the chart below) which irons out most of the month-to-month zigzags and includes the revisions down by nearly 5% from its peak in October 2022 The six-month average shows the multi-year trend these contract prices do not include the substantial costs to homebuilders of mortgage rate buydowns and other incentives Sales of completed houses – propped up by incentives and lower prices – rose by 12% year-over-year in December Sales of new houses at all stages of construction rising by 2.6% year-over-year to 683,000 houses unlike sales of existing single-family houses: By contrast, sales of existing single-family houses in 2024 and 2023 plunged to 2008 levels, the worst since 1995 because prices were way too high which triggered this enormous demand destruction Prices of new houses versus existing houses the median contract price (six-month average) of new houses exceeded the median price of existing houses (six-month average) all of the time with new houses being usually 5-30% more expensive than existing houses This scenario changed when the median price of new houses began to decline these contract prices do not include the incentives and costs of mortgage rate buydowns effective prices are substantially lower than those of equivalent existing houses which explains why homebuilders’ sales have been solid while sales of existing homes have plunged as some buyers shifted from buying existing homes to new homes Email to a friend I am patiently waiting for this existing home price drop of which you speak only the ones who are distressed are willing to cut prices Some see the handwriting on the wall and are listing lower right at the start I’d bet we see big influx of homes at ridiculous prices in the spring and a bunch of those just sit there NAR will blame interest rates and talk about how much appreciation they expect to see in 2025 (shorthand for “buy now before you are priced out”) By mid summer there will be deafening wails of interest rates killing the market and demands from the administration to lower rates Meanwhile the distressed sellers who MUST sell That resets comps and slowly drops expectations In some big cities (I don’t track smaller cities) prices have already dropped by the double digits: https://wolfstreet.com/2025/01/19/the-big-cities-with-the-biggest-price-declines-of-single-family-houses-or-condos-from-their-peaks-from-9-to-21/ Minus the inflation of the past 4 years and real prices have dropped quite a bit The stock market bubble popping will do wonders for you nvidia and some other tech companies got crushed but investors “rotated” in staples like johnson and johnson there are too many investors who think all money should always be invested in stocks for them to ever fall much “…for them to ever fall much” = “this time it’s different” = most expensive four words ever and i feel like all of my schooling is irrelevant but what will it take to break this manic “buy the dip” no matter how bad the valuations The reality is that they have fallen and all signs point to them falling again and soon We’ll keep our money as long as it takes for the craziness to end Pretending we are under a new set of rules won’t make anything sustainable many of us have been awestruck by gravity not kicking in for several years now remember the saying “the market can stay irrational longer than you can remain solvent.” Not so sure if the 2025 tech stock market bubble pop would drop home prices In 2000 when the dot com bubble popped and Nasdaq lost 75% I know a lot of people at that time who said they were swearing off stocks and were moving money out of the stock market and putting into a home foreign investors held the largest single block including rules that generally exempt capital gains of foreign investors and only lightly tax their dividends Thus only 25% is held in taxable liquid accounts Most IRA and 401k holders are buy and hold people What will drop house prices is extra supply and high prices just like the HB1 People do not need stocks but they need shelter the difference is that a lot more of perceived “wealth” is based on stocks today Look up the median home price to median household income ratio of 2000 and then today Then list them both and in the same sentence tell me that you don’t think home prices will drop when the bubble pops because they didn’t in the year 2000 More and more industries have become oligarchs There are fewer mom and pop small businesses 27% of the the lowest 1/4 percentile owned a home The same will happen with the median income percentage who will own a home say they target the $100k to $200k family incomes and the number of people in this range is still growing They are also building a lot of apartments that are targeted for the median income and lower families Considering we have not recovered from the rate at which we were building houses during the financial crisis in 2007-2008 you definitely have an expectation like we’re going to have some big crash and I’m sorry to disappoint you but it doesn’t look like that’s going to happen It might be more like a slower discount that happens over time but by waiting you are probably going to do yourself more a disservice by losing out on potential equity than anything else Anyone holding out right now is probably being smart Nvidia lost $0.6 Trillion in value in a single day – a world record If you take the top 3 semiconductor stocks then close to a Trillion imaginary bucks wiped out in a day But if you look at a three-year chart of NVDA Have longer term calls in double-short Nvidia etf (NVD) I am so out there that some contracts have open interest of 1 it is becoming painfully clear that (compared to DeepSeek) our geniuses here (Meta etc) found the dumbest and most brute-force ways of doing AI Why wouldn’t they; they have untold $billions to burn on moar Nvidia chips They thought they were building moats around their businesses But they were building mainframes and DeepSeek just came out with the first powerful mini (ala Sun Microsystems) Still waiting for the first PC to explode the market China has several million more engineers than the US now; no one can come close to them on cost DeepSink was a small team of several hundred and $5 million China politburo also fully supports it’s tech industry – complete synergy that NVDA is does not have a moat around AI engineers There are a lot of smart people out there and when big profits are involved I have to believe a more efficient and less energy intensive solution will also replace BTC at some point Technology is always improving and BTC is just just software code and files Many of these new houses are built so far from the employment centers that people are not willing to pay top dollar and then endure a long commute After the pandemic ended traffic has gotten intolerable as people had shunned public transportation during the pandemic The traffic issue are much worse than prior to the pandemic Many people are now have to got back to their offices 5 days and 40 hours per week Buying existing homes in the city and close in suburbs may be more attractive option than buying a new home in the far out suburbs I see a lot of For Sale signs at the exits leading into some of these new developments That has been my conjecture about this unsold housing inventory as well New homes are mostly large scale developments very far away or else relegated to areas like the Hunters Point Shipyard There’s probably a good reason why they’re going unsold You people have got to get it out of your mind that single-family houses are being built in the urban cores of the most densely populated cities in the US What they’re building is multifamily (condo and rentals) in big buildings and towers Density at the urban core (multifamily) always increases unless you shut down immigration and stop having kids And urban sprawl (single-family) always increases unless you shut down immigration and stop having kids there probably hasn’t been a new single-family house in a hundred years They tear down a low-rise and replace it with a tower The short time we lived there (brand-new tower on 1st Ave and 90th) they did that to two old low-rise buildings across the street and six months later there were two big residential towers in their place nearly all of what is getting built is multifamily someone includes a few townhouses in a larger new development Just about the only new single-family dwellings are ADUs in a backyard and the occasional teardown that is getting replaced if you want to buy a new single-family house Does a single family home that is torn down to the studs and rebuilt consider a “new home” for the purpose of these discussions or does it have to be down to the foundation Your instincts seem like they’re on target here– I know in Housing Bust 1 a lot of the new far-out homes (i.e San Bernadino County) got completely crushed Seems reasonable that the further the distance a home is from the kinds of jobs that could pay the mortgage A friend in real estate is feeling the pain Scoffs at the new construction and their 1,700 sq ft homes He’s been in the business 5 decades and can’t sell the overpriced behemoths of yesteryear I would say your friend and others who have done well thru the years can change careers if needed,perhaps “learn to program?” Good plumbers are cleaning up like hedge fund managers It takes 4 years to get a plumbing license Need to tell your friend that he needs a better understanding of market dynamics His clients need to lower their list prices…by a lot “Big publicly traded homebuilders have to build and sell homes regardless of the market because they have to keep their businesses intact and growing and they have to please Wall Street to keep their shares from tanking” Mostly I agree – but what happened during 2010 through 2016 The *really* important question is what happened to this dynamic from 2002 to 2006 (ZIRP 1.0 – “The Beast is Born”) – builders could have moved a *ton* of new supply product at 2003 sales prices (ZIRP supercharging affordability – Fed’s presumed plan) But the builders went another direction (and the Fed went brain dead) – ginning up massive margin McMansions at double the 2003 prices (but at 2003 volumes…) exploiting ZIRP to keep monthly mtg payments constant The builders got filthy rich and the country got RRE implosion 1.0 (2008 edition) History is going to be aghast and agog at the inability of DC and the Fed to see the immediate and poisonous effects of ZIRP…and fail to course correct (in any way) for years and Bernanke got a Nobel prize in economics in 2022 Bernanke didn’t understand what he was doing He lacked an adequate knowledge of money and central banking Bernanke will be called “Zimbabwe Ben” He deserves it – the pure DC/academic arrogance of “We have a technology called a printing press…” is going to go down in history just like Weimar “cleverness” or “permanent high plateau” It really is mind boggling how the Fed could not see (within 2 years) how ZIRP (both pre and post 2009) was *not* mainly stimulating volume increases in the production of homes (thereby hiking *employment*) but mainly just enabling the *huge* expansion of homebuilder profit margins (via ZIRP powering the McMansion McMorons and other speculative idiocies) The standard excuse is that “there is only one interest rate” (not really *many* *many* different types of ZIRP course modification could have been planned/experimented with/tried – but the Fed kept bankers’ hours (as it were) and turned off their eyeballs and brains once they turned on the printing press I do agree they will go down in history looking like idiots It’s funny because they know bad monetary policy creates asset bubbles I sympathize with DC/Fed (I know it never seems like it) they (fairly foolishly) try to kinda/sorta centrally manage (mismanage…) a nation of 330 million people using a smallish handful of tools which they make ever smaller by ideologically taking certain tools off the table (cough cough reconsider perpetual war drums and delusions of global pseudo-empire they add a sort of air of inarguable inerrancy to their policy pronouncements (relying upon a historically corrupted media to almost never call out the Emperor for dropping his shorts) especially post full fiat) to a government that has continually slid downwards (as manifested in a Federal debt-to-GDP in accelerating excess of 100%) and yet finds it almost impossible to course correct on clearly failed policies (20 years of ME wars refusal to effectively police multi-decade subsidy recipients in medicine refusal to tax on a level adequate to fund foregoing policy delusions 1mm plus units over 30 years old out of 1.5 mm total it also surged in 20,21 on existing inventory structurally looks like a 40 percent drop to realistically bring on buyers reserve funds and insurance in hurricane prone areas 2x maybec3x increase in monthly hoa… Gaz — I’m a 40 cents on the current $ price for one (wide ocean view With Florida HOAs having already increased 2-3x and more increases guaranteed very high and unknown assessments guaranteed with many existing owners unable to pay those I wouldn’t pay 20K for a nice oceanfront condo at the moment I can’t see anything changing my opinion David: Wisconsin has benefit of “sharing” risk from Florida and California Since everything is now for profit (especially the nonprofit and mutual companies) the risk “sharing” is just offloading and profit taking has completely lost the plot of protection and benefits from being a mandatory service (even when disaster is gobbling up the leftovers I’m a huge fan of the not so big house idea I hope that the current trends stick around I shake my head when i walk through some of these 3,000 + square foot homes from the 90’s The amount of wasted space is amazing and the egress and ingress is often oddly routed such that it takes you through a tiny mudroom off the garage or something Packages used to “disappear” from my parents house when I was younger only to be discovered on the neglected front entry some time later I often wonder what will become of these bigger homes as they age and the floor plans make little sense for the way we live today I’ll find out in the not too distant future I guess supply and demand will have it’s say i shake my head at 4000 sf houses with 4 bedrooms and enormous common areas that nobody uses with a lot of people working at least sometimes from home it’s important to have more rooms that people can have quiet Now that we’re down to one remaining to fledge We’ll still need that many bedrooms through since we both work from home and each want our own office I get why to split them up (so you can have a nice space for guests and a lived in space for the mess that kids create) but I don’t see us needing that in our “retirement” house who wants to heat and cool all that extra space what’s the point of a 30 * 20 ft master i also would rather have a tool/work room than a formal living room but seems i’m in the minority then moved up to 2300 sq ft for their teenage years “i shake my head at 4000 sf houses with 4 bedrooms and enormous common areas that nobody uses.” Very much reminds me of the dying British Aristocracy that got bankrupted by their country estates (looked amazing – think Downton Abbey – but cost a fortune to maintain with very few free market revenue opportunities Also – home sizes zoomed for a while there (from 1500 sf starter in the 1980’s to 3000 sf McMansion post 2000) even as actual family sizes were collapsing (from 4 in the 60’s to 3 in the 80’s to 2.5 in the 90’s to 2 in the aughts to 0-1 going forward…) And yet 4+ bedroom McMansions are still frequently the focus of new builder efforts Who are these exactly *for* – if not “undocumented” extended stay motels (see California) I wouldn’t be surprised at all if heavily levered real estate interests aren’t a lot of the “money” behind the undocumented explosion/fighting deportations Wolf doesn’t like links and I don’t have a source for this but the average home size tripled from the 1950’s 1950s: The average new home sold for $82,098 It had 983 square feet of floor space and a household size of 3.37 people Homes had more shower space than sleep space: 1.5 bedrooms and 2.35 bathrooms The most popular colors for kitchen appliances were canary yellow and petal pink 1960s: The average new-home size grew to 1,200 square feet giving its 3.33 residents a spacious 360 square feet of room apiece The bedroom-bathroom ratio flipped from the previous decade Turquoise and coppertone were the appliance colors of choice 1970s: Homes continued to get bigger — an average of 1,500 square feet each person luxuriated in 478 square feet of personal space Kitchen appliances achieved an iconic color balance: avocado and harvest gold 1980s: The average amount of space per household resident more than doubled in a generation to 630 square feet (a total of 1,740 square feet for a household of 2.76 people) The average price more than doubled since the ’50s as well Television sets per household totaled 1.57 Kitchen appliances eased back on the color schemes to almond and beige 1990s: The average new home sold for $268,055 It had 2,080 square feet of floor space and a household size of 2.63 people or 791 square feet per person — enough to make those luxurious accommodations in the 1970s look positively skimpy black was the favorite color for appliances The number of bedrooms and bathrooms were little changed from the 1960s: three and two 2000s: The amount of square feet per person continued its inexorable climb now at 865 (2,266 total square feet for a household of 2.62 people) The number of television sets per household reached two for the first time Black appliances gave way to stainless steel — a sign of the new millennium 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household 2,392 total square feet) — three times the space afforded in the 1950s Television sets per household jumped to 2.93 while kitchen appliances held steady with stainless-steel finishes All those historical prices have to be in 2024 dollars my wife and I just retired from the Northeast back to the Dallas north suburbs We are “down sizing” from a 6,000 square foot home (had three kids now empty nesters) to a 3,500 square foot home in the process Rented a home for one year while we searched The North Dallas area we are returning to was built out in the late 80’s and 90’s to find a house with floor plan that was not a bunch of “wasted space” and “oddly routed” When we walked into the house we are currently under contract for it was immediately obvious that the original owners had overridden the standard McMansion floor plan and built a floor plan that had common sense House was unique for the area and fairly priced The vast majority of houses we saw had horrible floors plans …typing this from a 960 sqft 3/1… What’s the simple take away in the discrepancy between homes completed and homes in all stages of construction Basically all stages of construction now is up near housing bubble 1.0 levels (06-08 timeframe) yet completed numbers are quite a bit lower compared to 06-08 days More permitting/delays/slower construction process now vs back then Completed houses for sale are very high and surging I’m not worried about empty lots where they haven’t started construction yet because they haven’t put a lot of capital into them yet in 2006 – 2007 a lot of to be build homes were being sold to individual for speculation before construction started and they would flip them when completed Builders were having to limit buyers to the number they could contract for When the music stopped all these houses flooded the market There is a significant lag effect between “starts” and “completions” but you do ask a good question (despite some pooh-poohing from others) there seems to be a fairly sizeable number of homes that somehow got started yet never actually showed up as finished (per the G’s definitions) That really matters since inflated “starts” may dissuade *real* starts that could have added to *real* supply – mitigating the 20-25% rent explosion in 2021-22 The missing “completions” issue has been discussed over at the Mish blog I delete this BS because I don’t want to waste my time crushing it manually there seems to be a fairly sizeable number of homes that somehow got started yet never actually showed up as finished.” And then you go on building your conspiracy theory on this BS According to the government data that you despise so much which provides this data on starts and completions: it’s just easier and more fun to traffic in ignorant conspiracy BS Sorry I didn’t mean to get you guys into a conspiracy theory argument Or is this differential between the two unique in 2024 It’s hard because today’s data is emerging as we speak And 20 years ago I was skateboarding during recess Wish these downward prices would come to New Jersey Sellers on Zillow have erased the Zestimate history from most all of the listings to hide the $300k price they paid 5 years ago You can’t erase the data from the county assessor’s records though It’s an ecommerce site that doesn’t sell anything My wife loves the online shopping for real estate I’m curious if you have more data on their mortgage rate buydowns They started doing them maybe 1-2 years ago and I imagine they did them by buying interest rate hedges You mentioned before most of these buydowns were usually for ~5 years or so If they expected rates to have come down substantially by now they may not have hedged fully for the entire 5 years If their hedges don’t provide protection for current rates for the full term of their buydowns then they might end up unhedged and facing the full cost of the difference in interest rates I wouldn’t be surprised if some of the lenders skimped on their hedges in order to goose their annual profits for that year and may end up having to pay the piper if interest rates don’t come down in the upcoming years… (a double whammy of increased costs and fewer people refinancing since rates are still high) Horton’s interest-rate hedges for their mortgage-rate buy-downs blew up in Q4 2023 they talked a little bit more about mortgage-rate buydowns in the conference call for Q4 2023 to explain the loss they took on their hedges They said that just about everything around these mortgage-rate buydowns is essentially a trade secret But they also said that many of them are PERMANENT buydowns https://wolfstreet.com/2024/01/24/d-r-horton-sheds-some-light-on-the-massive-costs-of-mortgage-rate-buydowns-as-a-hedge-went-awry-stock-tanks/ Average incentive for some builders (Lennar disclosed 10%) reflects the costs of the mortgage rate buydowns plus the incentives they give to cash buyers So it seems close enough to guess that if the average incentive for a builder is 10% of the sales price then the cost of the mortgage-rate buydown for sales that come with a mortgage would be about 10% of the sales price And cash buyers get 10% in other incentives People trying to sell their houses at these insane prices When you get your new property tax assessments or they see what the next house they’re going to buy costs and need/want to clear that much to be able to do it When was the last time you sold a car or something looked at the comps and then said “nah I’ll list mine 15% lower.” Like never I’m 64 and have only had to get rid of 3 of them I usually get several hundred thousand miles out of a car Hit the big row of car dealers in town and drove from dealer to dealer until one gave me a cash offer drove 4 cars until they literally died on the road or my kids wrecked them Driving two Toyotas now with cumulative age of 40 years and 350K miles my annual cost of car ownership based on depreciation of the vehicle is about as low as it can be and my guess is these two cars have another 10 years in them doesn’t sound like you’re intentionally selling it for 15% less than you could Ok so you guys and your car anecdotes is saying that you happily sell stuff below market price if the market will pay me xx amount for my car or house I don’t consider myself overly greedy for it either buying a house for 600,000 in 2018 and expecting to get 1,500,000 today is the definition of greed At some point we should find the bag holders “Expecting” to get $X is not greed A well-known realtor around here likes to joke about sellers “well I’m not going to GIVE it away.” I’m not old enough but I saw the bag holders in 2000s 2008 – 11 and I’m sure I’ll see some of the bag holders in 2025 – 2030 from all the real estate we sold I already see one that bought and now is renting the home at a loss because they overpaid and tried to sell due to some issues with-in a year Paper gains mean nothing unless you make a sale to realize those gains and it bears repeating that prices are set at the margins people might feel rich because of their assets going up but if any signfiicant number of them tried to sell at the same time it’s paradoxical how high prices depend on very few people selling to realize the gains from those high prices People want to sell it for what it’s worth Yes maybe they are stupid and wrong and they will soon have to get with the times and adjust their price but I don’t know that everyone just woke up greedy here They were trained that homes are worth way more and they are rich They will now need to be trained that things also go down in value with property taxes and insurance the monthly but is probably over 5x what I pay in rent “When you get your new property tax assessments…” You realize these insane property tax assessments are part of what’s driving the bubble Price x Quantity = total revenue (10 units sold x 50 dollars a unit = 500 dollar revenue) Number of houses sold x price is definitely less But double the monthly payment or more x half the units sold means… revenue is still high for… some entities A lot of us thought houses prices would adjust down because of the monthly payment jump But… I guess someone is still making money I wonder if this angle of observation can provide some light on what and who drives the housing market mortgage lenders – it’d be interesting to understand the impact on these entities I’d heard the housing market years ago described as a strata of plankton to whales What’s happened to the various strata – have the plankton been killed off lower priced Kia volumes have collapsed but low volume high priced Bentleys are still moving briskly If I wanted to move up to what I wanted pre-2020 at today’s prices my payment would increase 300% I just don’t know where people are getting to The money to do these transactions has not gone up enough to justify the increase in prices I guess people are just paying more as a percentage of their income if they are buying in this market “This surge of completed inventory for sale should help brush aside the zombie-like undying real-estate hype about the “housing shortage,” that has been spread for eons by the real estate industry and its trolls in an effort to keep driving up prices.” I still see realtors out there talking about 6 months supply being the “norm” and the steadily increasing months of supply is nothing to be concerned about If you were to factor in the incentives & rate buy downs into the contract prices new home prices may be down over 20% from their peak in 2022 One of the things I keep trying to tell people on social media and elsewhere is to not allow these housing developments to buy down their rates and make sure that they actually lower the price of the house If they won’t do that then walk away and find another house One of the things that this is doing is hurting the housing market because instead of those lower priced homes posting and then new sales being based off of those new comparables they are propping up home prices artificially by writing them down on the back end Also paying a higher price for the house means that your property taxes will likely be higher as well The only one it really benefits is the company selling the house New houses are getting smaller and more affordable but what’s the pricing like on a sq footage basis Prices of materials have plunged since 2022 lots of stuff has gotten cheaper since 2022 The homebuilders are talking about this stuff during their earnings calls The current housing market in the US is the United States’ FrankenMonster It is kept alive by devious means and gives the appearance of a healthy economy – we have a middle class of millionaires (the million or millions being inflated home values) The reality is that FrankenMonster’s veins are filled with formaldehyde and his eyes are sewn open FrankenMonster is very close to or past his expiration date as a magician’s prop It looks like the price of existing homes would need to be in the $340,000 to $380,000 range to stay within the historic relative value to new homes (which are now worth around $390,000 to $400,000 when factoring in incentives) So new homes need to drop 10% to 20% for sales volumes to climb Well that’s convenient because your pricing levels are easily achieved with a small adjustment in their profit margin numbers there will be 5-10 years without appreciation The good news in that is it wrings the speculators out of the system I’d be fine if our next house never appreciated we’re not speculating or intending to use the equity to buy another Limited appreciation means the buyers are people who want to live there and stay there for a long time New home sales are less than 10% of sales in the real estate market There is no shortage of supply of homes as many baby boomers continue to downsize like me The problem is a mismatch between home prices and first time buyers This is further exacerbated by the interest rates which were artificially low from 2016 until 2023 carried a mortgage with 10.5% interest for a 30 year loan People looking for rates to drop into 3 to 4 percent range are unrealistic you can either refinance or sell and move to your next house “New home sales are less than 10% of sales in the real estate market.” I gave you both charts: new SF house sales in 2024: 683,000 Existing SF house sales in 2024: 3.67 million New house sales = 15.7% of total house sales We were trapped in that turn until 2015 when we sold for a loss Biting the bullet is the worst financial advice you can give someone You’re literally telling them to overextend themselves for less than they want If less people “bit the bullet” the rich would be less rich Biting the bullet perpetuates problems and pretends that it’s just how it has to be Educating people and understanding that there is no shortage of homes and simply bad policies Boomers like us are ready to downsize but the prices even for smaller homes are way out of sanity Why downsize and pay the same for the house we have now We can just stay where we are at – which is why the boomers aren’t selling rates aren’t going anywhere for a while that means prices have to come down until price discovery with a buyer happens Nobody out there at this point is waiting on rates We could downsize to half the house we have now but the following reasons hold us back If we sold our current house with commissions (6%) we still couldn’t pay cash for an overpriced smaller house We’d need to take on a new mortgage a few years before retirement Sitting on a 3% mortgage has that advantage The Fed were geniuses to motivate people to stay in a house they can afford instead of flooding the market with sellers We had 11 people stay with us comfortably over the holidays A smaller house would not cover this so putting family up into hotels or AirBnB at $200-$400 per night would be required and cramming in seating for meals would be a challenge These sound like 1st World problems but why would I pay more for a lower quality of life same for us …and for a lot of boomers They run the numbers and decide to stay in their large homes We’d probably consider doing that except ours is a two story and hubby and I want a no stairs lifestyle for our aging knees We also want to get out of Southern California and never have to consider what the traffic on the 405 looks like again We will sell this summer and then rent while prices cool down further up the coast I just hope it holds until I have this last one ready Why are mortgage rates buydowns and incentives more popular than simply decreasing the price by a corresponding amount it provides the comps to support existing pricing Also fills the coffers of the local property tax people they’re dropping the price on all of them as that information is public Rate adjustments and other incentives are not public so they can change them as the market changes the games corporations play to defeat price-finding we have to wait for the prices of existing homes to keep coming down There is a calculation behind this strategy Most 30-year mortgages get paid off after a few years The average life of a 30-year mortgage is about 7 years or they refi (including cash-out because they need the money to do a project) and the old mortgage gets paid off and eventually the old mortgage gets paid off by the bank So homebuilders can figure that the bought-down mortgage on average lives only 7-8 years So the cost of buying down the mortgage is a monthly cost and if the mortgage gets paid off after 7 years which is a much smaller amount than a 30-year amount that amount with counterparties taking the other side of the bet So are permanent mortgage-rate buydown on average might cost $40,000 to the homebuilder if the mortgage is paid off within 7-8 years So if the builder cuts the price by $40,000 the payment at a market mortgage rate would be substantially higher than the payment with a buydown The auto industry has done this successfully for eons to sell new vehicles (such as “0% financing,” or “1.99% financing,” or subsidized leases and they offer cash incentives at equivalent cost to cash buyers) “home price appreciation does seem to track very closely with bank reserves at The Fed (6mo lag)” Housing Affordability Index (Fixed) (FIXHAI) are mainly held by the top of the wealth distribution QE might disproportionately benefit that part of the distribution.” If you go out 20 miles from DC to a suburb where Ms Swamp gets a hair treatment you see dozens of Real Estate signs for new homes up for sale at big sale prices If you go into central city crime ridden DC you see no ‘FOR SALE SIGNS” When one of these 19th Century homes go up for sale as they are the only housing that first time homeowners can afford Today’s Paper#masthead-section-label, #masthead-bar-one { display: none }Trump Administration By Margot Sanger-Katz and Alicia Parlapiano Share full articleThe House passed a budget Thursday that is different in major ways from the version it passed in February It would allow Republicans to cut taxes by more trim spending by less and increase the federal debt by far more The budget itself is spare on policy details But Congress still needs to write specific legislation that follows its basic instructions if it wants to achieve President Trump’s goal of reshaping taxes and spending through “one big Here’s what’s in the budget — and how it differs from the previous version Both budgets would extend parts of the 2017 Trump tax cuts But the new version would allow lawmakers to make the cuts lasting while the earlier version would require them to expire again in 10 years the new version could increase federal deficits and debts by much more after 2034 To make lasting tax cuts possible, the new budget uses an unconventional accounting maneuver known as the “current policy baseline,” which assumes the 2017 tax cuts don’t expire after this year even though the law that created them says they will It’s still unclear whether the move complies with the Senate’s special rules for budget legislation but lawmakers decided to use the baseline without consulting the Senate rules expert in advance Both budgets would allow Congress to make additional tax cuts The new version allows for larger cuts and increases the chances that Republicans will adopt expensive tax policies favored by President Trump The old version of the budget required extensive spending cuts, up to $2 trillion, with a large share assigned to the House committee that oversees the Medicaid program though congressional leaders say they still intend to pass substantial spending cuts as part of their final legislation House conservatives who are concerned about the federal debt objected to this vagueness and declined to vote for the resolution until Speaker Mike Johnson and the Senate majority leader the process will cut federal spending by at least $1.5 trillion over a decade and the more flexible targets could make it easier to avoid major cuts without upending the entire bill The old budget called for increased spending on defense and border security The new budget would allow larger increases Potential debt effects include higher interest payments could add nearly $7 trillion to the debt over the next 10 years including interest That high number reflects the uncertainty of the spending cuts Lawmakers will probably choose to cut spending by more than $4 billion over the decade There is one major sign that lawmakers expect to increase the deficit more with this version: It would raise the debt ceiling by a larger amount than the February version The debt ceiling limits how much money the federal government is allowed to borrow Republicans want to pass a major package of policy changes using a special reconciliation process that could pass without any Democratic votes in the Senate The budget lays out the required targets for that process Share full articleSource: Committee for a Responsible Federal Budget (budget estimates) Unsold inventory for sale of completed new houses spiked by 57% year-over-year to 124,000 houses in November the highest since June 2009 during the depth of the Housing Bust when homebuilders stuck with a huge pile of completed houses amid plunging demand Homebuilders are trying to find buyers for these completed “spec” houses by piling on incentives they haven’t done nearly enough to trim their bloated inventories and they’ll have to do a lot more to bring those prices and payments down essentially move-in ready supply is good news for the overall housing market and not for homeowners that want to sell an existing property These “spec houses” will need to be sold quickly because builders have sunk a lot of capital into them and because builders are continuing to build at a faster clip than they’re selling them – though they’re selling them at a pretty good clip – thereby adding to the pile on a monthly basis This is the situation that Lennar warned about last week Homebuilders’ efforts to sell these completed houses will pressure prices down further Lennar expects that the average sales price (including incentives) of homes it delivers this quarter will be down by about 16% from two years ago Lennar’s stock price has tanked by about 28% over the past three months Unsold inventories for sale at all stages of construction – from not yet started to completed – rose by 8.1% from the already bloated levels a year ago Big homebuilders cannot sit out this market they have to build and sell homes because that’s their business and they have to keep their businesses intact and keep their shares from tanking and throwing in other incentives at a substantial expense to them – just to maintain sales volume by taking share away from homeowners that want to sell an existing property sales volume is now below the targets that the big builders communicated earlier this year The issue for them is that prices are still way too high The median contract price of new single-family houses sold at all stages of construction dropped to $402,600 in November the lowest since September 2021 (blue in the chart below) which irons out the month-to-month zigzags and includes the revisions down by 5.1% from its peak in October 2022 These contract prices do not include the substantial costs to homebuilders of mortgage rate buydowns and other incentives So here comes Lennar, one of the biggest homebuilders in the US. When it reported earnings on December 18 for its fiscal Q4 ended November 30 “Consistent with our strategy of matching sales pace with production and margin in order to re-ignite sales and actively manage inventory levels,” it said A 16% drop in the average sales price (net of incentives) from the peak: Gross margin guidance for the current quarter got slashed to 19.0%-19.25% as incentives and lower prices are beginning to bite And Lennar said it will not provide gross margin guidance for its full fiscal year “until we have a better sense of market conditions as the year unfolds.” Sales of completed houses – supported by incentives and lower prices – are up about 14% from a year ago unlike sales of existing single-family houses where demand has withered because sellers are clinging to those too-high prices Annual sales of new houses in 2024 – based on the first 11 months of current sales data plus WOLF STREET’s estimate for December – rose slightly to 681,000 houses a decent level and roughly on par with 2019 and higher than any of the prior 11 years: By contrast, sales of existing single-family houses in 2024 fell to the lowest level since 1995, according to sales figures by the National Association of Realtors through November plus WOLF STREET’s estimate for December (historical data via YCharts) the median contract price (six-month average) of new houses exceeded the median price of existing houses nearly all of the time with new houses being usually 10% to 30% more expensive than existing houses the Census Bureau collects contract prices which do not include the incentives and costs of mortgage rate buydowns But with mortgage-rate buydowns and other incentives included the monthly payments of new houses are now out-competing monthly payments of existing houses which explains why homebuilders’ sales have held up reasonably well as some buyers shifted from existing homes to new homes Email to a friend What does this information portend for the widely discussed housing shortage across the US “Housing shortage” is a BS propaganda term used by the RE industry and its trolls to drive prices higher There is no shortage of homes on the market for sale But prices are too high – that’s the problem So ignoring for now the huge new supply of multifamily (condos and rentals) coming on the market or already on the market… Here is the supply of existing homes (red line for 2024) only Nov 2018 had a slightly higher supply https://wolfstreet.com/2024/12/19/home-sellers-home-buyers-and-brokers-getting-used-to-the-new-normal-old-normal-6-7-mortgages/ I guess that squashes the CRE conversion idea and new supply is always good in bringing down prices and rents this new supply will be in central business districts which is great because central business districts are dead at night and this will put some much-needed life into them only a small number of office towers can be converted to housing But malls are easy to “convert” because they’re easy to bulldoze and have so much parking space Stonestown Mall in San Francisco is being redeveloped into 3,000 housing units and a walkable main-street type of shopping and restaurant area with a multiplex and big supermarket (in the old Macy’s department store) The impracticality of CRE conversions is what kills the CRE conversion idea It is an extremely naive idea that some people seem to refuse to let go of Same thing here with the basically-dead Sunrise Mall near Sacramento The city plans to demolish and redevlope it into a walkable mixed use thing once they can find a developer who wants to do it When will prices actually fall to affordable levels I’ve been thinking about this…if new homes are too expensive to construct to make a real profit that means that homebuilders need to build them for cheaper To build them cheaper that means they need to pay less for their raw materials or pay less for their labor I think employees may balk and they won’t be able to hire enough workers to build homes If they can’t build homes at a profit If enough new home builders go out of business that means there is less supply on the market But the prices are already too high for middle class workers There are many ways of reducing the costs of building a house including by shrinking the builder’s profit margin And that’s precisely what they’re doing right now Automakers can live just fine on 5-6% margins and grocery stores on 1-2% So I’m thinking they can get squeezed a bit more and still do alright They’ve just been taking advantage of their pricing power that customers (home price) & workers (labor) have allotted them When push comes to shove for the big homebuilders they can stop paying executive bonuses… they have all sorts of ways of trimming their own fat There is another way to make homes more affordable: Make them smaller I think they call it “tiny McMansion” now As long as it has a stable to park the horse Thanks to zirp and fed mbs they cranked up prices to nosebleed levels and made an absolute killing on a commodity A major part of the ridiculous price increases are materials that were jacked up during Covid had a 100 percent price increase from Anderson and Pella My distributor said they literally doubled their pricing simply because they could and have not *yet* had to lower them–still enjoying the fat increases As builder inventory continues to build and they slow down construction a 1000 gallon propane tank pre Covid was $3000 I don’t believe the price of steel doubled It seems the only product that has followed market dynamics is lumber All this is near and dear to me because I am completing my house I started in 2022 Two-three years ago you were lucky to even be able to order concrete I think those prices have been coming down They will follow everything else when things truly start sliding And the subs who wouldn’t return calls the past 3-4 years will be begging for new jobs Oh they can operate at smaller margins and they will Same company operated at 5.8% in 2006 and -30% in 2007 So you can do the math and where that put the current 400k home pricewise And that’s assuming they don’t shift how they operate or slash costs simultaneously If you cut out their profits suddenly the new home only costs 320k I’ve seen some exciting stuff with 3D house printing that should be able to lower costs I think the big answer is to get developers to make smaller homes They build these huge 3000sf+ homes to pad their margins when what we really need is starter homes in the 1000-1500sf range Is it available houses for sale or available houses for a sale at a certain price point I’ve noticed that inventory is up in the area I live but still significantly higher than I want to pay “bottom line fewer houses will be built..” They’re building more houses than there is demand for 2024 was the third highest in new house sales since 2007 Do you have a geographic breakdown of unsold inventory for sale of completed new houses If it’s concentrated in a handful of markets I would think it would be hard to make generalized conclusions from this data I live in upstate NY where the national homebuilders are not as active and we haven’t seen the glut of new supply there is never a glut of new supply in “my area.” Every housing article brings out those not-in-my-area comments There are 29,000 new single-family houses for sale in the Northeast (from NJ and PA on up) in November That’s the reality of the past few decades New single-family development takes place further out you will never see any single-family construction though they’re plenty of towers being built People who live in Manhattan choose to pay a huge premium to live there and they choose to live in larger buildings and they often pay millions and sometimes tens of millions for a condo or co-op even in the Northeast with its big dense cities there is still 29,000 new single-family houses for sale You ramble like you sniffed too much lead paint back in the day I don’t even understand half of the point you’re trying to drive home Lead paint is only dangerous if it’s eaten “Housing shortage” is also a BS propaganda term used by developers and their YIMBY Millennial/GenZ trolls to push pro-developer policies through local/state governments while rent algorithms keep rental units off the market and prices high RealPage’s corporate motto: ‘Collusion is just an Illusion!’ Wolf’s explanation sounds more plausible Sellers of anything would always want to show/cause scarcity to get people to buy stuff at a higher price The charts tell a different story if you go back further but they showed 10 months supply of existing homes back then It’s still relatively low now at 3 months even after a year suppressed by interest rates You are definitely correct that new builds are the best buy out there today with all the incentives Existing home prices have inflated about 4-5% this year and are projected to go up at about average rates again next year Houses don’t cost too much and there is no housing shortage There is excessive amount of capital looking for things to do (build buy and rent) and an insufficient amount of wages to purchase basic needs The biggest single-family investors have become net sellers of houses They cannot make those prices work with the rents they’re getting their building their own build-to-rent developments where hundreds of nice rental houses are in one development with a central leasing and maintenance office They’re super-popular with the renters of choice that have above median incomes and could buy My city’s market was hit hard by the Too Big to Fail institutional investors buying up 30%-40% of inventory between 21′ and 23′ but the price of the 3br/2ba ballooned out of reach for the middle class natives Somehow prices stay high while the average posting to close is starting to stretch past the 6 month-1 year range at this point (along with multiple price cuts before a contract) We are actually reaching a glut of supply but it doesn’t matter when everyone wants $220k+ for a 3br house in a market with a median income around $45k/yr it’s a bit like the labor shortage we hear about as well there’s a shortage of potential employees interested in the work available at the wages offered there’s a shortage of buyers interested in the properties available at the prices offered an enigma as to what the employer or seller should do (maybe free coffee at work or better cookies at the open house) Amazingly the peak to trough on new units chart…but we are an empire of bubbles another president who was an actor with a scripted career from birth…the elites same old scripted empire…MC The employer and seller should tell Congress to stop destructive policies like deficit spending and never again do QE not through bad stimulus and that will give businesses the best chance at stability and longevity The height of the housing bubble had 199,000 units compared to the current 124,000 units Bankrate reports the average FHA rate of 6.4% in 2006 & 2007 compared to current FHA average rates in the high 6s & low 7s most builders are paying for rate buydowns with fixed FHA rates ranging from 3.99% – 5.99% and still covering some of the closing costs The population is larger now vs 2008 and January is the beginning of the buying season and it runs through July This “glut” of homes (75,000 short of the 2008 levels) will disappear by Feb The analytical data is about 60 days behind Get ready to see reports of “Inventory Homes cleared out in December 2024” around Feb 2025 It takes on average 4 months to builders to build a home so get ready to see an increase in permits for Jan & Feb vs the last few months There is a lot to unpack when it comes to housing but it’s doubtful there will be a large price decrease due to the inflation we just went through (yes lumber is down but everything else is up) and easy access to no cost 3.99% – 5.99% rates when buying new that’s not what the big homebuilders are saying You should listen to their earnings calls and earnings warnings and slashed guidance for the coming quarters I told you Lennar’s outlook in this article you didn’t make it past the first word of the headline – “glut” was a troll trigger it’s a bit like the labor shortage we hear about as well Homeowners only like high prices if they can liquidate their home and fetch those prices The only beneficiaries here of high prices are those locked into low rates Everyone else is struggling with affordability and high home prices also effect rent affordability So if you’re cool with the situation it’s probably only because you’ve paid off your home or have a low rate locked in there’s an important factor that you’re leaving out here and it’s known as opportunity sometimes referred to as the American dream Most people would like opportunity to return for the average person It’s more than just poor people who are uncomfortable with the current situation I think you’re overlooking the wealth effect and HELOCs Don’t forget higher property taxes and higher homeowners insurance People really only benefit from the higher prices if they can sell without having to buy another equivalent at the same inflated prices higher prices *literally* cost me more money so in end mortgage payment needs to stay same as pre-covid $1,200 month “I don’t think there’s a problem with housing prices being high.” homeowners like higher prices and for prices to go higher and they like feeing richer every day when they look on Zillow They’re already disappointed in a bunch of cities but are still gloating in others This homeowner also does /not/ like higher prices and is in fact appeling his city’s recent re-assessment because there’s no way the damn house is worth that much I would love to see my home value get cut in half opportunity once again exists for everyone else and it changes nothing for me (I still will reside in the same exact box) It only changes my ‘net worth’ I could care less what the market price of my primary residence is If the number goes up or down it doesn’t matter If it was sold I’d pay transaction cost and would be able to get something similar High or low number makes no difference until you consider insurance and property taxes My insurance has more than doubled in the last 4 years Property taxes have gone up 40% over the same period I bought this house to live in and to die in I don’t care what anyone else thinks it’s worth If We sell for less than appraised Tax & Insurance Should be Forced To Replace our Loss Back To Us Many of us renters are forced to rent due to the cost of purchasing being so astronomically higher At risk of repeating what others are saying I own my own home but do NOT like higher prices I get my property tax statement and my insurance bill and feel decidedly less rich This bears repeating: higher prices impose COSTS The only homeowners who benefit from high prices are people who sell an expensive house in one area and buy a much nicer house in a lower cost area “we’re providing all these services and have not raised tax rates” (though nobody who pays taxes is actually fooled by this) Locally the crap areas with run down houses are starting to break in price No more does a tear down home 2 hrs from civilization demand nose bleed prices There is no shortage of overpriced homes still I’ve seen 2-3 houses in the past month or two I don’t immediately scoff at But they are in low desirability areas and in bad shape But the prices are at least starting to reflect that Anything in a decent area is still way over priced for local wages I’ve been studying the market in the Dallas area for years now and starting to see softening and seeing more and more back on the market listings and they are setting on redfin a lot longer I think we’re going to have a repeat of 2008-2010 2008-2010 involved a full-on run on the banking system triggering the Great Recession and housing price collapse We’re missing that ingredient for the moment at least I expect that ingredient to be a loss of confidence and pulling back on spending and purchases due partly to a stock market decline in 2025 that eventually becomes a new bear market for a longer period of time than we’ve come to expect in recent years with all the attendant issues that can cause Yes but home prices are still going down over time albeit slowly @Canazei Yeah that’s one of the obvious scenarios that even the MSM has occasionally been talking about I think the other one would be an insurance crisis The increasing rate of natural disasters multiplied by increasing replacement cost is creating a huge amount of “negative value” in the system that everyone has an incentive to ignore until they can’t anymore – and then it becomes a case of trying to be the first one out the door The new administration is going to do everything they can to worsen both of those problems because they too are in denial about it but there has been some recent modelling which says that if we don’t do anything about this situation the end result is likely to be a wave of municipal bankrucies as local governments are forced to absorb these losses without sufficient reimbursement Even if your house survives that isn’t great for property values MW: 10-year Treasury yield ends at 7-month high to kick off holiday-shortened week The yield on the 10-yr has not finished going higher Let’s not forget that yield and price are inversely related in other words bonds are in a nasty bear market after a prolonged bull market the 10-yr UST will hit 5.5% and perhaps higher before this is over This does not include the possibility of Trump making matters much worse with his brash and unsophisticated approach to governing Lots of government debt piling up in short end of bond market where interest rates the lowest but this is debt needs to constantly be refinanced This is like a giant snow ball rolling forward in the US bond market because it is constantly being added to as we borrow more money What happens to US home prices if we see 8-10 percent again Perhaps both housing prices and inflation will come down and we will have Wall Street cry babies have been scared mongering that higher rates are disastrous but nothing of that sort happened in last 2 years MW: Stock market will find it hard to rally unless the dollar and bonds calm down I had the option of choosing a new build and and older 2000s house My agent was an old friend so we were able to speak candidly about much of the process I will say that I opted for the older house based on what I saw in the new builds I was able to lift the granite countertop of it’s platform with one hand Doors were not level and floors creaked across the entire upper portion of the home I am not saying that the Housing Bubble 1 era homes are much better but the craftsmanship of the new home was just atrocious I was going to ask about hedonic adjustments new construction — shoddier or not — is subject to newer storm-related building codes Is there an adjustment in stats (one way or the other) designed to neutralize the changing nature of the product The decision between new-build and pre-existing home is muddy The two key expenses in Florida is the ground floor has to be concrete block construction if within a certain distance from the ocean or a river all roofs have to have the rafters attached to the frame (or block) in a way that it won’t detach in high winds and all roofs have to have some type of plastic sheeting between the roof and shingles so that if the shingles blow off the water won’t penetrate the house (as much) These things will add thousands to the price of a new build but in the context of the overall price of a home You’re paying for 70 degrees in January and the beach because they were not secured to the house with metal braces Saw the same shoddy construction at a relative’s new home How could any educated person buy such a piece of s$hit there is no “adjustment in stats” (prices) for changes in building codes either buying here or somewhere back north (or halfback) I can’t decide if it’s wiser to buy DR Horton crap with impact windows and a rate buydown OR buy something older (but post 1995) that might be built better – albeit at an overinflated price with higher interest rates There are some crazy stories about DR Horton builds… do some googling before making an investment SFR prices have basically doubled over the 5 to 6 years As far as I concerned prices need to drop by close to half to make sense for most buyers One of the huge problems in the local market is the number of short term rentals and corporate owned homes short term rentals account for 25% of SFRs and the percentage would be higher if not for city zoning DM: Veteran hedge fund boss reveals America’s fatal flaw ‘that will lead to a crash next year’… and why parabolic prices are a red alert A market expert has warned that America’s ‘fatal flaw’ could lead to a market crash in 2025 America’s ‘addiction to government debt’ is its fatal flaw – and could lead to a stock market crash said attempts to rein in the debt – now at a record $36 billion – will eventually weaken economic growth who is chairman of Rockefeller International and worked at Morgan Stanley for 25 years made the comments in a column for the Financial Times but have read that apparently Warren Buffett has a larger than normal proportion of his portfolio in cash lately “Things may be getting frothy in equities.” Based on just about any longstanding stock valuation metric we’re in the midst of the 1st or 2nd bubbliest US equity market ever For some metrics — we’ve even blown past 1999 it’s not the Mag 7 skewing everything Mag 7 gets the attention because their valuations are particularly extreme As just one of many many many examples: Sherwin-Williams — a 158 year old PAINT MANUFACTURER — has a 35 PE and be greedy only when others are fearful.” just think of the new paint colors AI can think up for Sherwin Williams I actually like Sharma as a comtrarian thinker Prices went straight up and now inventory sits Nothing that lower prices won’t fix So many facets of the housing market have already crashed Only matter of time before prices become un-stuck in the stratosphere Falling house prices could be one of the negative factors for the market sentiment in 2025 We had near all time record valuations in the market in December 2024 I am curious if we will see some selling in January for tax reasons something that just exists in theory to me Our good land up here around our cities was taken long time ago Granted there is a lot of wide open space on the map in other parts of the country but people buying these new homes need to be near cities that people want to be in and by all appearances these are large tracts of housing at the fringes of already sprawling urban areas Could the fact that old home prices are not pushing down in line with new home prices also mean that there’s some kind of lower desirability of new home locations That builders are just pumping these things out but there’s some diminishing returns in location quality Just asking a question and hope that somebody that lives in one of these areas can expand on that I have no specific knowledge of this situation Very happy to live in a rural area far away from this garbage construction If you look on google maps at suburbs of any flyover city you’ll see entire new neighborhoods being built This is what the big builders are building – not single properties scattered across existing neighborhoods or protected forest or other conservation land Sure you could easily build a new neighborhood in the middle of nowhere Maine but where are you going to find buyers for them Rural parts of ME / NH / VT aren’t exactly high-income areas like this just aren’t seeing the same downward pressure on existing home prices – at least not yet Earlier this year I toured homes being constructed in southwest Dallas about a 30-min drive to downtown with no traffic It did not have the northeast feel whatsoever I would’ve preferred to live closer to the city but the existing home prices were more than a new home There were some additional benefits of the locations of the neighborhoods I toured not in a flood plain (actually a couple were the top elevation of local topography and at the fringes of the metro area—such that a 5 mile drive south would bring one to cattle ranch after cattle ranch Great for what I thought would be raising kids There was high desirability in those neighborhoods People touring left and right back in March 2024 The value proposition of DFW vs elsewhere is totally different $1 in one location is totally different than the same $1 elsewhere which is impossible to decide because everyone values different attributes differently I lived in Central Jersey during high school we watched farm land get turned into single family developments by Centex Homes One 2 minute search and I found lots of communities being built by DR Horton in NJ These are not communities with 3,000 homes like you would see in other places in the country and there are 600+ towns all with their own codes and regulations this reply of mine above was meant to be to Kent’s post above regarding the “missing ingredient” Somehow I messed it up on my phone browser when I used a back button and it appears I replied to the wrong comment here WSJ: Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners Ballooning expenses rewrite the math of homeownership Soaring costs for home insurance and property taxes are busting homeowners’ budgets Insurers have pushed big rate increases because of losses from natural disasters and rising costs to repair homes have lifted property taxes for many homeowners These ballooning expenses are rewriting the math of homeownership 32% of the average single-family mortgage payment went to property taxes and home insurance the highest rate ever for data going back to 2014 taxes and insurance make up more than half of the monthly mortgage payment for 9% of single-family mortgages That is up from less than 4% at the end of 2014 Rising taxes and insurance premiums intensify the lack of affordability home buyers already face because of record-high home prices and elevated mortgage rates Those deterrents have led many home shoppers to give up this year putting sales of existing homes on pace for their worst year since 1995 I’ve seen some of the new developments Lennar is building First you complain that you cannot afford a house because it’s too expensive; and when someone builds a house that you could afford This whining sense of entitlement really gets old What you want is a beautiful mansion in an expensive area of an expensive city without commute Seen some of the homes Lennar is building in San Diego…..packed in communities like sardines right next to a freeway Move in ready for 1.2mil dollars; 1900sq feet Sure putting a dent in those San Diego home prices bwahahaha That home here in south Texas would be $250 K But you can’t drive for a peaceful hike in the Sierra (or if you don’t want to go that far Gorgonio or San Jacinto) or drive twenty minutes to the coast to go surf And adding to the already biblical traffic I am in San Diego own a house with decent size front and back yard If I can I’d move into a house with little yard Big yard big lot looks good on paper but the maintenance is too much 😑 A large lot just increases property taxes and landscaping maintenance costs They could care less how close they are together–none of them have kids anyway so noise not as issue Density just means feasibility of convenient services like food delivery So with selling prices higher than marginal cost to produce thereby squeezing prices until marginal revenue equals marginal cost for the marginal home builder So many home owners complain that higher home prices mean higher insurance rates and higher property taxes But how much of this increase can you guys offset by tax breaks then is your mortgage + tax + insurance – tax breaks LESS THAN mortgages at 5% or more then you are not so bad off compared to others PS – If you take tax breaks on your home payments then you are really taking govt hand outs i.e you are not really the capitalist that you think you are The tax breaks you get have to be made up elsewhere either by higher taxes on someone else or by issuing more debt i.e Of course tax breaks for homeowners and landlords shift tax burden onto other taxpayers Specifically — they shift the burden onto future generations (with interest) via the federal deficit it’s a federal government handout — a transfer from future generations to current homeowners / landlords “But how much of this increase can you guys offset by tax breaks ?” rising insurance and taxes impact homeowners depending on local rent price restrictions tenants will foot the rising bill in their monthly rent payment and thought I might have to pass on an increase this coming spring depending on our property tax assessment In cities large landlords also play with parking fees Absconding with a damage deposit is common as most tenants cannot do the fight to get it returned I have been building on and off for most of my working life I get a decent break on price from one lumber supplier but nothing like the big contractors get major players have their own captive suppliers and even do their own trucking to save on costs This reduction is never passed on to purchasers A large company has their own sub-trade divisions and they move them around from project to project living away expenses are borne by the crew (workers) themselves Houses are far too expensive for many reasons In addition I blame agents and the selling process for a lot of this but I know kids who got into an RE agent career in their early twenties and think 6 figure incomes are normal Many know absolutely NOTHING about construction or building quality and the buyer pays for it all in the price When I bought my first home 45 years ago I paid 2X my yearly salary for the privilege My down payment was an affordable 15% which was easily saved on my very modest income The same house today would cost me at least 10X of what an adjusted for inflation salary is for the same job many many things have changed to increase sale prices but I do know for certain my wages never increased 10X adjusted and the increasing zeros on money cows expectations People need to lower their expectations on housing even a shit box and fix it up….then pay it off asap Start small and modest and live within your means especially with housing our biggest single living expense how come there are so many more advertisements on TV saying they’d buy any home i called up one of these guys for fun and they told me they can write me a check tomorrow and I was delighted they would write you a check 30 percent the market price I think there’s a housing shortage in some of America’s most prosperous cities like NYC Because local governments make it illiegal to build new housing artificially Combine government mandates scarcity with fancy tech jobs that pay average workers what CEOs make in some countries and you have skyrocketing prices of even decrepit homes that would get bulldozed anywhere else in the USA And clearly in the states where housing is legal builders are matching housing supply with demand everyone is just being too greedy to match their sales price with what the buyer can actually afford in a 7% mortgage environment This would not be true if the inventory is super low and buyers are rushing to buy in I hear two things refuting WR price drop articles. not in my neighborhood and real estate is local WR does a better job of explaining these myths away “I think there’s a housing shortage in some of America’s most prosperous cities like NYC and Wolf’s backyard of the bay area.” we’ve got housing coming out of our ears and they’re still ADDING a few thousand new housing units every year and prices have dropped to levels first seen in February 2018 Why do people keep spreading stupid “housing shortage” BS The problem is that prices have been manipulated up to levels that are not sustainable And here is the San Francisco Metropolitan Statistical Area: Whether it’s the supply argument or the demand argument I sit in what some call “mortgage jail” with a 2.75% mortgage The base price for any house is the cost of the land and the cost of permits and fees for the builders The base price of a house is what a willing and able buyer will pay for it It seems like the limit has been reached in certain markets I’m wondering what an affordable is — is it a percent of family income or related to savings the cumulative inflation we’ve all experienced since 2020 really distorts one edge we’ve seen an explosion in wealth effect from insane equities and the everything bubble partly because there’s no realistic baseline anymore Sellers want unrealistic high prices and buyers want unrealistic low prices but equilibrium isn’t in the horizon — until prices crash The classic measure of affordability compares household income to the monthly costs of the mortgage (assuming x% down-payment) The Atlanta Fed has a “Home Ownership Affordability Monitor” for the US and by metro (using local income and costs) https://www.atlantafed.org/center-for-housing-and-policy/data-and-tools/home-ownership-affordability-monitor the unaffordability index went up to a similar level to the housing bubble #1 but seems they’re being extremely generous in their assumptions regarding the reality of costs over the past four years — they seem to be suggesting that there was just a brief period when homes were unaffordable — and during the msft several years the affordability factor has been a cake walk I’m increasing inclined to believe the vast majority of government data is overly subjective and unreliable I seriously get a better interpretation of real data by visiting Planet Wolf and your overall balanced insight On top of it these big builders operate their own mortgage companies that are only interested in packaging then as MBS to be sold on the market they simply start packaging more mortgages to sell They aren’t going under even in times like this that would put small builders under A general rule of capitalism: after the shortage Even diamonds are going down in price after the laboratories pierced the de beers cartel The Saudis couldn’t wipe out shale oil producers Why it’s a bad idea to buy with borrowed money during a run up Hopefully wage inflation will fix the used housing market over time but considering our corporate overlords will even engage in illegal behavior to keep wage inflation down It’s a bit depressing reading the “soak the landlords with taxes” comments here here are some realities about buying an older nominally affordable home in a flyover city Let’s use the Kansas City MO/KS SMSA as an example Most of the more affordable properties are on the Missouri side Not that since 2022 most of the median income folks could afford to buy one of them Most of these homes date back to the 1920s to 1940s a house basically needs to be at 200 amps.) So a rental owner will be upgrading the electrical system Must have GFCI protected circuits and in some cases Electrical redo on such a home going to cost between $10K and 20K Unless the roof is less than 15 years old (way less) Because no insurer will insure your roof if it is older than 15 years old even if it is a “30 year roof.”) There goes another $12K-15K reroofing costs are more reasonable.) Odds are the older home has an older HVAC – maybe on its last legs and almost certainly undersized for the home almost certainly you’ll be putting in new appliances Paint it all (primer plus two coats of interior on the walls and one Probably need window blinds all around (a few $K) Scope the sewer lines and if you are lucky All in now at about $75K to bring that cute 1920s prairie craftsman style home to solid rent-able standards you still can find some homes around KC MO for $125K that aren’t in the ‘hood) you are now into it for $200,000 You’ve got a 7.5% fixed rate 30 year mortgage and they are NOT cheaper that a personal home loan Even with reasonable flyover country taxes and insurance you are paying $1,199 (call it $1,200) a month for PITI That does not include any set asides for maintenance and between occupancy repaint and repairs Will your house value out in an appraisal at $200K Maybe you only hit $190,000 in your after rehab appraisal and you are negative ($10K) right off the start It will take just over four years of $200/month cash flow (50 months) that $1200 a year in additional rent for make ready and between occupant repairs You’ll want a full house interior paint job each time incidentally.) There will be some stuff to fix $1500 a month rent is about average for the KC MO area these days for a house like that It is an “unaffordable” home for the renters They cannot come up with enough money to buy such a place and a 6.8% 30 year fixed loan (current market rate) because they have not yet done any of the repairs you did – like that new roof) their monthly mortgage payment (PITI) would be $1,222 That’s without mortgage insurance (which if they are lower middle class folks with typical lower middle class blue collar incomes the lender will almost certainly insist on) they could be living in a much nicer place and not ever have to worry about maintenance costs And still have that almost $19K down payment AND the closing costs (several thousand bucks for sure – we didn’t discuss those costs at all) in their pockets still the “greedy” landlord is $10K in the hole won’t start breaking even on actual cash flow for over four years and assumes all maintenance costs and between occupancy costs the “greedy” landlord does own $90K equity in a $190K valued property And has a $100,000 30 year mortgage to pay off If that “overvalued” property sinks in value to say the “greedy” landlord now has only $40K in equity (remember the “greedy” landlord dropped $100K of actual money into the property at the start of all this) and still has a $100,000 mortgage to pay off there are tax write offs associated with rehab costs and write offs on the interest cost of the loan But some of the readers think those should be taken away an attractive prairie craftsman style older property has been saved for several more decades of life And the rental residents have been given the opportunity to live in a fully remodeled solid home – something they were proud to come home to – rather than just a trashed out slumlord property But there’s no “cash value” to that hold and rent operation even remotely profitable.) maybe some of those older homes will become slightly more profitable to buy It’s still going to cost about $75K to get them fixed up If inflation does not continue to drive up those costs and good luck trying to find any lender who will cut you a mortgage for any sum under $133K loan amount Basically no mortgage lenders will loan less than that these days and they sure want any commercial buyers to have at least 30% equity in the deal I haven’t covered closing costs in any of this It’s all too easy to blame “greedy landlords” on “too high” rental costs or on “driving up the price of housing.” Until you actually start to pencil out the real numbers when silly things like facts get thrown into the mix 80 year old house that cost $125,000 before rehab And is NOT in a “bad neighborhood.” The median cost of a home in the Kansas City MO area last month was $275,000 they have to do what it takes to build and sell homes to keep their businesses intact and keep their shares from tanking and throwing in other incentives at a substantial expense to them Some demand has shifted to new houses from existing houses whose sales have plunged to the lowest levels since 1995 because their too-high prices have triggered large-scale demand destruction But inventories of new houses have been piling up and then there’s this sales issue in October with spec houses Unsold inventories of new single-family houses at all stages of construction – from not yet started to completed – jumped by 9.3% year-over-year to 492,000 houses Unsold inventory of completed new houses spiked by 53% year-over-year to 116,000 houses the highest since July 2009 during the depth of the Housing Bust when homebuilders were trying to survive These completed “spec houses” are essentially move-in ready But builders haven’t found buyers for them yet — and they will need to pretty quickly because they have sunk a lot of capital into these completed houses The surge in inventory is a good thing for the housing market Since builders have tied up a lot of capital in spec houses Rising inventory of completed houses encourages builders to lower prices and offer deals which will help resolve the mindboggling dislocations in prices that we’ve seen across the housing market Sales of completed houses plunged 25% month-to-month in October to 21,000 houses perhaps hurricane-related in the crucial South If this doesn’t reverse over the next few months homebuilders will need to start some serious price cutting to get their inventory moving Months’ supply of completed houses spiked to 5.5 months at the current rate of sales Supply spiked because sales plunged and inventory surged This level of supply of spec houses provides a strong motivation for homebuilders to offer deals: Sales of new single-family houses at all stages of construction inched up to about 59,000 in October from 57,000 in September and were up by 7.3% year-over-year sales of new houses at all stages of construction rose by 3.3% from the same period in 2023 we estimate that sales for the whole year will come in at 686,000 houses The median contract price of new single-family houses at all stages of construction spikes and plunges month to month in a random non-seasonal way and it comes with big revisions after the fact (blue in the chart below) We had a similar spike in October 2022 to the all-time high of $460,300 which irons out much of the month-to-month volatility down by 3.9% from its peak in October 2022 Note that these contract prices do not include the substantial costs to homebuilders of mortgage rate buydowns and other incentives For example, Lennar disclosed that in Q3 the costs of its mortgage-rate buydowns and other incentives jumped by 32% year-over-year to $48,100 per house it sold in Q3 So this median price is only a partial measure of the pricing of new houses: new houses were between 10% and 30% more expensive than existing houses This changed in 2021 and then again this year Email to a friend The housing market seems to be taking on a 2006-2007 vibe… Some regional markets and housing types have started falling – faster – while others are still holding up It’s not so obvious in last 5 years but it looks like there used to be a seasonality in months’ supply prior to the GFC Be interesting to see how much of the current spike “sticks” and where the next low is We are on our sailboat near Myrtle Beach for the winter The amount of new construction in the area is beyond description There are over 2000 new build listings and 1000s more under construction And yesterday we drove by a new build site that will have 300+ homes where they are just starting to clear the land I was just in the Wilmington and Wrightsville Beach area My cousin works for a large drywall supply company Do you feel this coastal area is overheated? The prices seem a lot more affordable per square foot versus Austin 3 years QT burrows it’s way through our economy The mantra of the natives is “Watch for the lag effect” I can see why they thought in July 1929 that it was impossible for the stock market to ever go down again I understand why bears capitulate at the very end I think there is a “retirement economy” which is almost independent from the general economy Many retirees are sitting pretty— with bloated retirement account balances and paid-off homes which have had massive appreciation And they are also getting decent interest on their cash holdings So places like Myrtle Beach and other vacation/retirement communities may continue to grow and outperform everywhere else The outperformance you mention may continue until a stock market correction interrupts the pretty resting place retirees currently occupy As the late Marty Zweig pointed out in the 1990’s 40%+ corrections in the Dow Industrials Average occur about every 10 years Into every retirement some rain must fall… OR perhaps it continues until more hurricanes trash the place retirees will feel the generational need to “batten down the hatches!” You should run with that concept of a “Retirement Economy!” I think you are spot on There has probably always been a “Retirement Economy,” but the current one seems to be in fantastic financial shape This appears to be part of what’s keeping condo prices from falling very much in our region — there’s a steady increase in aging retirees who are moving out of their single family homes in favour of condos I don’t know what the average stay for them in a condo is before they either die in place or are forced into a second move to a care facility but there is some sort of regular turnover of this sort if my mother’s building is any indication At least in our region (Ontario Golden Horseshoe) these buyers don’t seem to be terribly price sensitive and the turnover seems to be driving a thriving condo renovation (I mean individual units Wilmington sorta makes sense – especially given the increasing Florida blowback (basically FL prices got way too high People/developers are looking for semi-nice winter weather (not Florida nice but not NYC/Boston crappy) at a price point that won’t cripple them financially So interest is going incrementally north from Florida Saw it with the incredible 2022-2023 surge in Charleston newbie RRE speculators burn out individual emerging markets very quickly (far overpay Charleston is a prime example of this – so is Austin (in a different context) Expert tip – if the appeal of your emerging mkt is that it is 25-33% the cost of CA or NYC/Boston…don’t bid prices up so that the local market is just 50%-65% of CA or NYC/Boston…you destroy most of the point of people relocating People/businesses want to *save* money by relocating…not just get almost-as-ripped-off-in-a-somewhat-less-ideal-place So Wilmington makes sense – I don’t think it has *ever* seen much of a relocation boom But the truth is there are still multiple GA/SC/NC coastal sites (and slightly inland ones) that can provide excellent value with much better weather than NYC/Boston So long as RRE newbies don’t go from paying 1x to 1.5-2x in the span of a month >But the truth is there are still multiple GA/SC/NC coastal sites Four years ago I moved away from Northeast as I thought I found a quiet and peaceful spot 40 min from Raleigh NC and bought a house in a development literally in between corn and tobacco fields Four years later we have traffic backed up for half a mile in some spots and construction on every corner (and even more construction planned on paper for 2025-2030) This is not even remotely what I’ve been picturing in my mind four years back Many of my friends in NC/SC have the same sentiment A lot of folks jokingly see Wake county turning into “mini-NJ” both from the pricing point and from the overall vibe Just yesterday my former coworker who I haven’t spoken to in ages l told me she can’t keep up with the development and is already eyeing more rural areas with acreage for when her kids are done with school in 4-5 years As a Raleigh native I’ve heard this story so many times What did you think the corn and tobacco fields wouldn’t be developed I remember when Crabtree was in the outer suburbs Briar Creek was all hunting land and farms Development will continue to get pushed out 540 is like being in the nascar 500 at Daytona Cars come in on the right and immediately want to pass everyone on the left and do 110 mph not to mention ride your bumper the whole way “Expert tip – if the appeal of your emerging mkt is that it is 25-33% the cost of CA or NYC/Boston…don’t bid prices up so that the local market is just 50%-65% of CA or NYC/Boston” Do you believe there is some central authority controlling real estate prices in Charleston If we instead take the premise that Charleston has thousands of individual then your pro-tip is essentially “throw a bunch of money out the window so the stranger buying your home gets an even bigger cost-of-living cut” i am not sure what would motivate Charleston sellers to forego a large sum like that You need to create a chart showing the price of new houses with all discounts in there The true price of a new house is actually probably closer to 370k and shows the true value of new house over existing and accentuates the unreasonable price levels of existing homes The problem is where they are and how unwilling younger generations are to endure the shortest of commutes See the huge rise is delivery meal services justified on the back of “not wasting time” and “finding time in hectic schedules) aka playing videogames I can make a lot more money doing my job as a car & truck accident lawyer than shopping for groceries And I wouldn’t say I’m particularly younger then watching television with my husband at night that’s well-earned and necessary relaxation time The younger generation requires two incomes and works longer hours than any other generation just to get by Throw a young child in the mix and they literally have more hectic schedules doomed levels of housing inflation have badly hurt younger generations financially There have been similar bad times in the past (1979-82) but they weren’t as desperately blindly engineered as purposefully by the Fed/DC (the 2004-2022 Long Night of ZIRP) Older SFH owners have almost entirely *benefitted* from this – so they are eagerly blind to the harm/anger caused DC policy has turned the housing market into a manic-depressive casino for the last 20 years Glad to see the pushback on Billy McD’s non-sequitur of a reply to Adam’s very good suggestion on the chart with incentives Even if it’s a squishy dashed line on that other chart as an estimate I generally find these sorts of personal critiques unhelpful and kind of cringe and the only reasonable response is the classic So many people have so much free time on their hands but refuse to do anything useful with it that they sit around doom scrolling or thinking about the (lack of) meaning of life the younger people make all kinds of money and then act like they’re poor and have been wronged That is very much “an old man yelling at clouds” comment I am the younger generation he’s talking about brainless trash that couldn’t start a fire with a match and a full can of gas let greedy corporations take advantage of us and freak out and cry when things don’t go our way We can’t form good relationships with the opposite sex because we have so much hate for anyone who thinks slightly different than us even if we claim to be inclusive of others who are physically different We lie on social media to show off or else we feel pathetic for not keeping up with those who do We get investing advice from insurance hawkers on TikTok and don’t realize that’s wong and would be too lazy to do so if we could often paying more for the delivery service than the food because we’re just that lazy Sometimes we even let the food sit in the lobby of our apartment building because we’re too depressed and mortified to be seen by ourselves out fetching it like a loser The only way we can leave the house is in Pajamas and Crocs and often just let him go in the house because we’re bored with walking him The mortgage rate buy-downs negate the effect of interest rate increases Presumably builders would prefer to hold their apparent selling prices and pay for incentives rather than drop prices then raise them again when rates fall The unsold housing inventory may be getting too big to sustain this strategy Some builders around here (south Texas) have dropped prices 10% across the board AND are still offering financing incentives These are “starter” SFH’s that sell for around $175/sq Once significant price drops are implemented the whole thing begins a repricing downward spiral If I sell my house 30k under market to move it It’s like a bad AI headline: The One Trick Builders and Realtors Hate “Once significant price drops are implemented the whole thing begins a repricing downward spiral.” it is much easier for the builders to try and BS the *next* potential buyer to pay the phony “market” price price discrimination in college tuitions… Offering incentives rather than a lower price makes it harder for the buyer to become a seller and thereby compete with the builder The incentives go away upon resale while the higher mortgage balance inhibits price cutting upon resale That is a really good insight that I hadn’t thought of before Sounds extremely similar to new car “incentives” 1) Jack up primary transaction prices up by manipulating monthly payments down and 2) also restricting secondary mkt supply by retroactively jacking prices up (financing incentives go bye bye) From an accounting perspective it might also be that the rate buydowns are an incentive expense whereas a reduction in selling price could impact the value of the inventory (e.g houses) on the company’s balance sheet Maybe Wolf accounting extraordinaire could correct this assertion and sales prices don’t impact inventory unless sales prices plunge below inventory cost Builders are still making gross margins of 20% So it makes no difference on the inventory valuation whether the builder gives a discount on the sale or throws in a freebee Builders take the upgrades they give away (incentives) to the construction costs of the house and therefore make a smaller profit on the sales price These upgrades (incentives) are just part of the construction costs of the house But builders track them separately for memo purposes so they know and some break them out on their quarterly financials including the costs of the hedges that are involved are taken straight against the gross profit margin This is how DR Horton described the accounting during the earnings call after their hedges had blown up a year ago and trigged a substantial charge (write-down of the hedges) Maybe a very small condo with no parking or someplace in city limits where I would need to drive to get basic necessities Those are not really something I would invest in long term Rent is outrageous for a place with a washer and dryer and a parking space Meanwhile in my building I would guesstimate half if the condo units are completely empty some having not been occupied for years Wall Street vultures having snapped them up long ago Politicians say we need more “affordable” housing but I don’t qualify for any of that Yeah you should be aiming for an affordable subsidized condo if you are making under 200k and you can only afford a 5 figure DP with 400k saved for DP to get decent market rate condo Of course if you have that much for a DP why you wouldn’t keep it in the stock market and make some sweet dividends is beyond me I presume lots of marriages have issues only resolved with remolding projects to keep the mind occupied I guess you can move to Chico and get your yard There’s a development near me in San Diego starting at $2.3M for a normal 5 bedroom home At current rates that would be around ~$20K per month I rent a house right next to the development for $4600 The new homes are nice but Lennar is smoking crack thinking people will pay that much for a tract home in the SD desert I don’t think a 5 bedroom home is “normal” new 3-4 bedroom homes with small yards start at $1.4M+ Townhouses with 3-4 bedrooms start at $1.25M Five bedrooms might sound like overkill until you do the math spare bedroom (all our family is out of town and they don’t like sleeping on couches) and our 5th bedroom is my office (full time WFH) Probably half the houses in our neighborhood have 4 or 5 bedrooms @Duck – you like the extra 3 bedrooms but by prior generations’ standards none are essential… you just proved Randy’s point BG- by prior generations standards most of the conveniences we have today are not essential Prior generations of my family were proud that their children had more than they did As for what is “essential” that is decided by each person individually according to their circumstances The statement “no one needs five bedrooms” is provably false Plenty of us have decided that we do – regardless of whether others think it’s really necessary or that we could probably get by with less Agreed…the median family size in the US for a long time was 2.6 people – so 2 or 3 bedrooms got the job done And birth rates have been cratering post Housing Implosion 1.0/Baby Boom retirements So we could see median household sizes of 2.0-2.2 (or lower if illegal immigration is dealt with at all after 40 years of “efforts”) So 5 bedrooms doesn’t make a lot of sense…outside of the McMansions for McMorons trend of last 25 years A buddy in Chicago listed his 2 BR condo in the high $500s (record high for the building) over the weekend and has two competing all cash offers at or over list Has nothing to do with single-family spec homes but just making the point that even at nationally high inventory levels real estate is very local Daughter just sold a SFH home in IL for under $200M NE of St Louis metro This was more than double what she paid some years past You’d think they’d want Malibu with that kinda cash ;) Here in the western suburbs of Chicago we see lots of new construction going on Not sure about what’s actually selling though Builders might have better luck selling if they wouldn’t build houses less than ten feet apart I prefer not having a neighbor who can easily spit into my window from his window Local government allows close together houses since the tax revenue is increased for more homes on a large parcel This works if infrastructure can handle it (water and builders are trying to meet that demand by building at lower price points precisely to make homes more affordable including smaller floorplates and smaller properties complaining about not enough space between houses People who want to spend extra money can always buy a house But that’s not the problem this housing market has The problem this market has is that houses have gotten too expensive At first I thought it was a typo but I’ve now seen you use the term “floorplate’ more than once Is that spell check run amok or some term I’ve just never heard before It can be spelled with a space or as one word Nothing cures high prices like high prices What they are doing is trying to maximize profit given the available space to build They are clearly not building for affordability by building the largest possible square foot structures on as small a plot as they can get away with If they were building to meet the demand of affordability they would build smaller homes on those small plots 1000-1200 square foot homes would serve that demand better than 2000+ square foot homes Just read the quarterly earnings statements of the homebuilders You will see that Lennar’s average sales price dropped about 6% yoy to $422,000 in Q3 2024 from $448,000 in Q3 2023 — smaller homes and cheaper finishes because that’s where the demand is Lennar’s gross margins dropped by nearly 2 percentage points in Q3 YOY They’re in the business of selling homes If they can’t sell because prices are too high and they’re throwing incentives into the mix and giving up profit margin It is mixing profitability per square foot versus saleablity (how fast the houses were going to sell) In the place with the new construction we were looking at there was a weird cross street at the back of the subdivision They were bigger than average a d the builder was charging a big premium for the lots The same street was divided up into 5 smaller lots Smaller than the average for the rest of the subdivision Initially the builder was trying to get premium money by offering bigger lots When the market turned against them they adjusted and went to smaller lots for less The builder probably makes a little less money overall (building an extra house costs a lot in upfront capital) but those 5 houses were more likely to move quicker than the 4 that would be built in the same space Price point matters in this market so they adapted In Phoenix the infill boom has led to boxy two story houses shoehorned into odd “behind the gas station” corner developments where 15-20 houses sit arranged on maybe 3 acres (after room for a narrow road and “green space”) The code must require 3 feet on each side for access with a minor gap to prevent sound transmission and give the appearance of SFHs You’re not going to open your side window blinds for the view or sit in your 8 foot deep back yard for any length of time People buy these houses to live on the inside Maybe they’ll change hands every 2-3 years as people try to move up the property ladder Do you think you are projecting your requirements on to others I know lots of people who love on such homes for a long time simply because they do not care about the size of their yard Florida Home Sales Plunge As Sunshine State Becomes Less Desirable We keep hoping beachfront prices will come in line with the risk of buying them now Many near the beach houses are still selling way too high The few select beachfront houses we’ve been watching (and will continue only watching forever unless the prices massively drop) are just sitting there collecting dust with stubborn owners I been saying the same thing for 4 years now Lots of wealth still being generated in the U.S maybe all those NIL millionaire college and football players are buying beach front property as investments inventory is still zero because the new homes for sale are butt ugly (open concept split entry and no basement in neighborhoods with small lots and on a flood plain) Recently I booked a new house with $285 sqft from builder 4 years old homes are listing $325 sqft and above Builder are giving lots of incentives to sell the houses is it available on a region by region basis What’s available by regions are two things: “Sales at all stages of construction” and “Inventory at all stages of construction.” is “completed houses for sale” and “completed houses sold,” and that data is not available by region the sales figures are very small by region and rounded to the nearest 1,000 and so this sales data by region is useless This data set has enough problems on a national basis with revisions and random volatility Subdividing it further makes these issues much worse It’s just not the kind of data that’s useful for smaller geographic areas and waive all the incentives/mortgage buydown/etc. if you sell it to me for $48k under asking” But I was thinking of 48k off a median 420k house – numbers pulled from the article I can’t imagine them doing that in any place super desirable From Lennar’s quarterly report linked in the article: Is there correlation with the location home builders are doing most of the new home building and where prices have fallen the most/fastest I bet if you look at the inventory and sales price for existing homes that are considered starter homes… I bet there is not much if any price drops Does Wolf eat Shichimenco this time of year This issue is that after your three price drops obviously the sales price is still way too high Buyers look at everything in their price range if your house doesn’t compare favorably They cannot get approved because the prices are currently WAY TOO HIGH based on nearly everyone’s income Bring back 2008 bc that’s what’s needed So instead of “I got mine” now it’s “I’m gonna get mine” Don’t worry about the massive amount of pain this would cause to millions of people who did nothing to cause the current mess You need to bake cookies right before a showing For those wondering about “shichimencho” it means turkey in Japanese The Japanese celebrate “kinro Kansha no Hi” every November 23 They don’t eat turkey like Americans do So…..happy Kinro Kansha no Hi… Since buyers look to still be on strike as both prices and rates are still far too high I would expect to see builders considering smaller a sub 1000 Square foot single family home meeting the German passive house energy efficiency standard would likely be quite attractive to singles and couples without children Energy bills would be only a few hundred for an entire year or heating and cooling A lot of builders need to go bankrupt or slash their profits and people who bought in the last several years need to lose a lot of money Those who bought long ago need to give up their fantasy home values then they qualify for whatever amount of mortgage They don’t qualify for seller’s fantasy prices And those with cash mostly are being patient and have no need to buy But there’s no way we are risking a purchase in what is obviously a declining market Probably better in the long run bc we keep our options open We are also investors but today’s prices will not cash flow so that’s definitely out What Florida Coast and area are you looking in All Florida coastal communities are not created equal “ A lot of builders need to go bankrupt or slash their profits and people who bought in the last several years need to lose a lot of money.” I hope we never have to live in the world you’re proposing Let’s blow up the whole thing so you can “cash flow” that vacation house you always dreamed of The homebuilder monopolisation is going to enable higher prices for longer See this substack by Matt Stoller to learn more It doesn’t matter what prices homebuilders want It’s the buyers that set the transaction price And homebuilders ran into that: buyers refused to buy at those prices in the second half of 2022 and sales plunged and FORCED homebuilders to come down Even if it’s just one nationwide builder they have to price them where demand is or they don’t sell houses but they cannot sell if they don’t price them where demand is I have seen young buyers capitulate after several years of waiting for “normal” prices because their growing young families were bursting at the seams in their small apartments Household formation can only be postponed for a short while These are not buyers at any price or buyers by choice Housing is an essential commodity and I think the supply is managed pretty well by builders and other industry players Agreed that there are some areas which have high demand or limited land But to have prices ratcheting up and then exploding across the entire country where there is no shortage of land like they have done since the GR this is only possible if the supply was “managed” by industry players For a free market to operate in real estate where there are a few million buyers every year there should be at least a few thousand big builders we have a handful of big builders like Lennar and maybe hundreds of really tiny ones Jump in the there and become a big builder Should be easy if there’s a need for thousands Perhaps a loan of a few billion from one of the big builders would get you started Those buyers who capitulated for whatever reason are the problem In my market buyers want to capitulate and buy at these prices desperately they can’t afford and on top of this they can rent the same home for 5k vs 10k to buy Hence prices are going done with historically low volume and increasing inventory “Market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market.” You don’t seem to know the very definition of a free market I am going to ask you your definition of “free market” Any reasonable answer you come up with can easily be painted as a manipulated market should the government regulate fraud (i.e insuring one barrel of oil sold is 1 barrel of actual oil and not a 1/2 barrel of oil and 1/2 seawater) If you believe i the government doing basic fraud regulation then you no longer believe in a free market is among the most absolutely free markets in the real world Sure they might not meet some crazy ideological libertarian definition of a free market that doesn’t exist anywhere but my point is to make it a real world discussion and not some theoretical how many angels are dancing on the head of a pin BS a free market requires many buyers and sellers with no or low barriers to entry People don’t realize that home builders are not really in the house selling business the difference between 12% and 15% profit is not as important as time on market etc up front and carry that cost until a house sells it is very expensive for a builder to start and stop construction Ideally they want a backlog where they can have workers come in and always have something to do they have a choice of either telling the workers to stay home (meaning they might look for other jobs and never come back) or to start to build unsold lots where the builder carries the cost of construction until the eventual sale so they will just sell lots for what they can get for them just to keep the line moving The alternative is to tell workers to stay home and then not be available when times are better Keep the line moving is what the builders want to do in uncertain times like now I don’t think it’s fair that they can offer these high dollar incentives that aren’t reflected in the sales prices it has kept new home sales prices artificially inflated They want to preserve the illusion of high prices so they can ratchet them up from that higher base as soon as they see some demand pick up A true free market with lots of suppliers/builders will make these tactics transparent I made a comment above exploring the same thing I think it’s about perception: builders want you to percieve that you’re getting a 420k house for “only” 372k with the incentives… but if they just lowered the price to 372k then it’s no longer a 420k house… Kind of like how electronics mfgrs never lower MSRP – they just put an item on perpetual rebate until it’s discontinued and then release next year’s model at the same or higher price Forgot my “i before e except after c” rule… Just like there’s a place to enter in concessions in the multiple listing service when a sale takes place there needs to be a place to enter in “incentives/rate by downs” as a dollar amount What is preventing you from buying land and becoming a home builder You literally do not understand what free market means Rrgulstion is required unordered to bring about greater transparency in a free market yet you most likely do not think regulation means a free market It is very clear and transparent what home builders (like Lenner) are doing from looking at their regulated SEC statements It is clear they are using incentives to get higher sales prices This is not something homebuilders are doing but how the Census Bureau collects the data They collect the contract prices written into the sales agreements The incentives come out of the profit margins of the builders and you can see them on their financial statements Each publicly traded builder in their quarterly earnings reports discloses all kinds of data on their sales But the Census doesn’t collect that data in this article I mentioned Lennar’s per-house incentive spend and linked their quarterly report I don’t know how similar it is in other states prices rose until the median income qualified for a mortgage on the median house with similar balance at the other percentiles Then mortgage rates spiked and prices stayed where they were (actually Now you need more like a 75-80th percentile income for the median house with similar imbalance across the spectrum but I think that’s now exhausted and the simple mathematics is starting to dominate Either rates are going to have to come down or house prices are He will push for control of everything and our institutions haven’t done a wonderful job so far of having a spine What implications for the housing market of Trumps projected policies such as mass deportations which will decrease demand and shrink the sectors labour market Govt/Trump/FED can’t really control the mortgage rates without any serious repercussions despite FED cutting rates by 75 bps so far I raised rents in the late summer an average of 11% How many illegal citizens do you think are buying houses buying a house requires a person to create a paper trail with the government and spend lots of money for an asset that could easily get taken away from them Rent and mortgage as % of median income on new transactions has spiked so that it is essentially @50-70% instead of the historical 30-35% Last time this happened was 2005-2008 where the sellers tried to hold the floor but it gave way I don’t hope for things to swing one way or the other but it is interesting and vulnerable by the distribution of bids that I received too replace two air conditioner units The first bid by the TV recommended firm was $68000 The next TV recommended came in at 48 grand Finally we found an honest guy who did the job for a reasonable amount Why would you bother with TV recommended brands You are correct about that 75-80th percentile Tribune ran a story last week that showed unaffordability in very single county in the state In no county could the median income family afford a median price home no matter how low the median was in some cow (or coal) counties some would say was the father of the FDR New Deal The retirement economy thought is interesting one can make the argument that there is less sensitivity to price and rates They can also hold houses that they want to sell on the market longer As one is delivered ever closer to the mortal coil Money becomes less valuable in one’s personal list of accomplishments To what degree is this new housing coming up inside existing urban footprints vs just outside vs way outside There are home builders just outside the SF Bay Area building up a storm These communities are relatively affordable but at least 60-120 minutes by car to the major job centers I can only imagine what insurance or infrastructure limitations exist for these communities Are other new home communities around the country similar or are they more closely integrated to the existing metro area The home builders should join the buyers strike Building a spec house that won’t sell is expensive Well the first step is to make all federally sponsored or guaranteed loans would be transferable to a new buyer a better step would be to get rid of all federally sponsored or guaranteed loans the Case Shiller home price index has risen 53% But disposable personal income has just risen by 32% Homes have become less affordable along with lower inventories Bernanke bankrupt half the home builders during the GFC creating this shortage Powell has recently exacerbated this out-of-balance condition You had me until you besmirched the evil genius of Bernanke whose hypothesis was imposed suppression of the interest rate structure I submit that the housing price bubble is an artifact of ZIRP policy during which the federal reserve expanded their balance sheet with scant regard for the victims while bowing too the …… I think there’s more factors needed to interpret those home inventory data Unless you can prove that EVERY SINGLE HOUSE has only ONE occupant Some would say that is common too the looniest wild creature Six years ago I was interested in buying a 1,850 sq ft 3bd 2-car garage house that was listed for $320k The exact same house is now on the market for $680k The base monthly payment went from around $2,200 per month to $5,300 Today’s lack of affordability is going to have a profound impact on our economy going forward 6 years ago the S&P was about 2900 (before correcting to 2500) and is just under 6000 today Either everything has been a great investment or the green pieces of paper are worth about half The discrepancy between the bid and the ask price of the asset I was just going to add that the health of the housing market is one symptom as to the overall health of the domestic economy Context matters when it comes to elections hair standing up on the back of my neck feeling that every asset category is overpriced by a huge amount and the collapse of the edifice is likely too resolve in a manner that ordinary citizens pay the price The commenter who said no one cares about fairness is wrong on two counts: many do highly prize fairness; and as for it not being immoral if it’s unfair that’s usually the definition of immorality This actually reinforced your overall point New home inventory growing is indeed a dire situation Homebuilders are very reluctant to lay out capital they do not need to they won’t build a house until they have a buyer for it Their workers are busy elsewhere so there is no need to start a new house before it is sold Do they slow down the building of new homes (which means laying off workers which can make it harder to ramp up if demand picks up or do they continue to build houses despite them yet being sold (keeping the workers busy) You slow production by laying off your newest/worst workers but you also continue to build homes hoping they will sell positively hate building a home without a buyer but are generally tolerable to responsible builders Floating the construction cost of a new home is brutal They are paying labor with only hope of recouping it in the future That can quickly get crazy expensive for a builder So the fact that inventory of new homes is jumping drastically should be a huge red flag for both investors and buyers of new homes Unless things suddenly change (which there is no reason to think they will) homebuilders will probably soon drastically slow the building of new homes and look to dump existing inventory for whatever they can reasonably get Homebuilders do not price anchor like homeowners do Better to get something better than holding a declining asset for years So the fact that new hime inventory is increasing is a huge red flag for existing home prices People of existing homes who are motivated to sell are going to have a ton of competition from builders looking to dump houses at any price one of the things that was important to is was high ceilings on the first level The new houses we looked at had this as an option for an extra $15,000 – $20,000 If it would ha e been cheaper we might have bought there 9 months ago the builder was offering 10 foot ceilings for free the difference between the first floor having 8 foot versus 10 foot ceilings is negligible The builders were making huge margins on those who wanted higher ceilings on the first floor yet it is clear that they are doing everything they can to move product However they are running out of tricks so the only thing left is margins They will try and dump whatever product they have built That is going to have huge implications for the overall housing market I am part of the “Retirement Economy” looking to follow grandkids to the Austin Tx area Last week visiting we saw hundreds of new home construction projects Can anyone comment on this particular regional situation Love reading your articles and comments in the chat Very helpful to understand the current situation as we are watching and will be moving mid next year Just saw a posting of home with a total of 7 price reduction 2 times removal of listing over last 7 months Original posting had a listed price of ~$630k and current listed price is $505k Today’s Paper#masthead-section-label, #masthead-bar-one { display: none }The Hunt for … By Michele LernerMarch 27 Share full articleAfter decades of nomadic land-based living a couple decided to search for a fishing vessel that could take them on their next journey Donn and Alexandra Calder are comfortable in small spaces The couple share an adventurous spirit and an eagerness to live in new places which is how they wound up moving to a motorboat “The most recent place we lived was in Albuquerque where we had this great house that we fixed up within walking distance of museums and restaurants,” Mrs “But after a few years we were thinking about what we wanted to do next.” [Did you recently buy a home? We want to hear from you. Email: thehunt@nytimes.com] lived together in the Lake Tahoe area of California in their 20s then reconnected after a decade apart when they both moved to the San Francisco area (“We lived in a loft above a garage that was so tiny you could kiss a person on the toilet from the kitchen,” Mrs where they were caretakers for second homes and Mr The next stop was “a little casita” in Palm Springs They moved to Albuquerque when the summers got too hot in Palm Springs for their dogs “We’ve spent time on boats with friends in Australia and other places,” he said we have a camper that we use often to explore other places.” It was that sense of adventure “After 20 years as contractors and caretakers of big houses we could see the burnout factor people experience when they own a big property,” Mrs “We like to be hands-on and fix things ourselves Calder’s experience as a boat builder and remodeler plus a budget of $350,000 in cash from the sale of their Albuquerque home the couple scoured the internet for boats that met their requirements “We knew we wanted a trawler” — a commercial fishing boat that uses nets — “because of their stability and seaworthiness,” Mrs “We also zeroed in on boats built by Arthur DeFever because we knew they had good We like boats where the galley is on the same level as the living spaces Some boats have the galley on a lower level the Calders wanted a motorboat so they could safely and comfortably manage long journeys without additional crew members “We decided a 49-foot trawler would work well for the two of us and our two dogs with two staterooms so we could have guests and a cruising range of at least 1,000 miles,” Mr “We also wanted a boat with stabilizers that make it easier to handle rough seas because old trawlers tend to roll in big seas Adding those could cost $80,000 to $100,000.” The Calders found multiple DeFever boats online in Southern California and along the East Coast so they traveled to see some in person before narrowing their options this 53-foot trawler anchored in Marina del Rey including a dishwasher and a SubZero refrigerator There was a washer-dryer in the main living area “The boat was gorgeous and really swanky,” Mr though it hadn’t been out on the water very much and he thought the engines and electronics might need some work Recent updates included new inverter batteries and a charger with solar panels It included a large bow with a bow thruster and stabilizer that made it safer in heavy seas But it had been lived in for a long time and needed work “The raised wheelhouse is like an office or another living space plus someone could sleep there if we had an extra guest,” Mrs The $189,000 price tag would leave budget space for renovations This 49-foot trawler from 2003 was docked in Annapolis and initially priced at $380,000 — too much air-conditioning and new electronic equipment though some of it was more opulent than they needed with more outdoor space for fishing and dining And being on the East Coast rather than in California would make it easier to visit Mrs Find out what happened next by answering these two questions: An earlier version of this article misspelled Mr The asking price for the yacht the couple purchased was $335,000 Inventory of new completed houses jumped to 99,000 houses in July and about triple the inventory during the price-spike era of March 2021 through June 2022 Sales of completed houses jumped by 27% year-over-year to 28,000 houses the unsold inventory of completed houses translates into a healthy 3.5 months of supply These speculative houses are essentially move-in ready builders have tied up lots of capital in them and that inventory is encouraging builders to throw more incentives and mortgage-rate buydowns into the mix This buildup of spec houses is exactly what the entire housing market needs the most to tamp down on prices Inventories of houses in all stages of construction – from not yet started to completed – remained at about 466,000 houses for the third month in a row along with August-October 2022 the highest since 2008 Homebuilders sold about 64,000 houses in July up by 6.7% year-over-year and by 12% from July 2019 The seasonally adjusted annual rate of new house sales jumped by 10.6% in July from June The big publicly traded homebuilders have figured out how to deal with this market Unlike homeowners sitting on vacant houses they cannot outwait this market (though a small builder might try that) Big builders have to build and sell houses to keep their revenues flowing and they’re building at an even better clip with unsold completed houses on the market now piling up though it’s a risky calculation for homebuilders Homebuyers who are frustrated with trying to buy an existing house can go out and make a deal for a move-in ready new house at a lower-than-market mortgage rate that the homebuilder bought down Sales of new houses as a percentage of existing house sales in July jumped to 20.7% the highest since 2005 (except for the lockdown spike in June 2020) as some buyers have shifted from existing houses to new houses This aggressiveness by homebuilders will help tamp down prices as it adds supply to the overall housing market even as demand for existing houses has plunged and the costs of mortgage-rate buydowns are not included here The median price of new houses (based on contract prices) is subject to large monthly up-and-down squiggles that are often heavily revised so we focus on the three-month moving average of the median price and irons out some of the monthly squiggles This three-month average of the median price of sales contracts ticked up to $418,300 in July and down by 5.4% from the peak in October 2022: By comparison, the three-month-average median price of new houses (red in the chart below) is roughly $10,000 lower than the median price of existing single-family houses the median price of existing houses will drop for the rest of the year (blue): Email to a friend This will definitely help move the pricing needle in the right direction for areas with lots of new build Noooo…we want a President who kicked us in the teeth by asking his buddies in Congress to kill a bipartisan immigration bill Because we love two-faced politicians who will rail against immigrants yet not do anything about it he should have done something during in his four years in office People in some states may benefit from more inventory Looking at national averages doesn’t tell the whole story I just read that tariffs on Canadian lumber have increased and I expect supply may be disrupted due to rail strikes A few of the US objectors to tariffs are US Home Builders Association and US Bed Framers “We don’t want no gnarly boards sawed from piney wood pecker poles” But it is fact that the US is not self- sufficient in high quality construction grade lumber from slow growing conifers like spruce backstopped ALL deposits when SVP imploded Apparently asset price protection is part of governments objectives In this quasi-freemarket we live in it’s best to load up on debt/assets because there is no risk Well anyway I refuse to leverage my 6 figure income for a shack in El Cajon should not have its hands in so many things They’re heavily incentivized to do so by debt and fear of losses The government spent many years making those burdens easier Lowering rates at the apex of the biggest everything mania in the history of the world with inflation still way beyond the FED’s “target” of 2% (which should be illegal in and of itself) will be the most reckless move in FED history It will reignite inflation and the speculative orgy which has finally started to wobble the 70s 80s were something to behold…. Pretty sure the smart folks are headin US back to the future…… Don’t forget the crazy high level of fiscal spending above tax revenue the crazy low federal tax rates relative to federal expenditures the vast majority of which is NON-discretionary Contrary to the talking points of our wealthy/corporate overlords (and their lackey politicians) the United States has among the lowest taxes as a percentage of GDP among developed nations Our budget deficits are at least as much of a revenue issue as they are a spending issue the boomer generation has underinvested in our nation’s future and passed on the bill for what very little investment was made on to future generations through budget deficits Tax receipts in the US are at record highs… and the associated wealth effect increases tax revenues It’s going to be difficult when the wealth effect evaporates You lower the administered rates and drain reserves simultaneously The price of money is the reciprocal of the price level I thought the market had learned its lesson called “Double Bubble.” I thought The market has learned not to overvalue assets….” Then 2007-09 happened Here we are now in the “everything bubble,” arguably history’s greatest ever overvaluation of assets Some are still arguing that the valuations can be justified The collapse of bubble #3 will surely be epic and will cut ✂ across all asset classes except probably commodities which have largely been too cheap and affordable for too long Bubba: for those of us who were just being born in the 80s could you please elaborate how history is repeating itself we need emergency .75 rate cut now..we can let Nvidia fall below 3T market cap. WS and MSM are now back on the 4 rate cuts narrative after Pow Pow speech…go figure…rinse and repeat…hopium is like McClain…diehard Just saw this article in Bloomberg: Major Central Banks Now Aligned as Powell Signals Fed Cuts Ahead They are hell-bent on keeping asset prices high even if it means starving the young and the poor It’s time to start protesting outside the Eccles Building with an iron maiden with Jerome Powell’s name on it  “FED is completely transparent.” Many lucky enough to have a paid off home (nothing extravagant) The idea that inflation somehow benefits the wealthy is wrong Inflation only benefits government bureaucrats and politicians Tell that to all the Billionaires QE created Who are wealthy by all measures vs their constituents democracy has sold out to the highest bidder all under the guise of freedom and security (which are oxymoronic notions) The politicians and bureaucrats who benefit are upper middle class college graduates who lack the skills to become billionaires unless the wealthy are smart and sell off their inflated assets (like Mr Buffett) Most of the wealthy will be hurt by the popping of bubble #3 as everything they invest in will be or already is deflating the fed manipulates markets to remove the boom bust. no more bust opportunities for citizens who work hard and save to get ahead It would happen if the news media would not be owned by the overlords I don’t think the Government needs any help from the Fed in destroying the dollar That’s what you’d do – if you’re a private banking cartel that exists purely to service the rich Where I live a new detached house is like 3 million dollars and on a stamp sized lot of something like 40 x 80 feet If prices drop I’ll buy at the bottom That 4 bedroom next door finally sold after being on the market a while the owners are a family as predicted ( walking distance to school) The block over has a flipper just sitting on their property “The block over has a flipper just sitting on their property This is exactly why there is not a housing “shortage.” Instead from Blackrock all the way down to the green-eyed mom and pop buying up nearly every house that hits the market as an “investment property,” fully expecting that the combination of inflation + the appetites of greater fools + FOMO exceeds the building’s carrying cost and natural depreciation hence why this unending mania is now “normal” and ingrained deeply into the culture If this market ever drops on a nominal basis (big IF) for an extended period there’s going to be an avalanche of houses that no one wants to pay for Smiling faces also because of market gains and treasury gains a lot of smiles will be lost up ahead by the slaughter house I am one of those Mom and Pop landlords that bought seven properties between 2008 and 2013 All of them are now paid off so I don’t have to really work anymore riiiiiiiight……everybody’s independently wealthy on the internet You might want to sell and put money in t bills That’s funny the cost guru clark Howard got into being a landlord the last recession and he hated it so much he swore it off And he takes calls from poor people all day long there will be false starts on the recovery side That was quite an expensive time if I remember correctly Houses near me were asking 100’s of thousands over what they eventually fell to for a couple years And on the way Congress knew to get rid of almost all tax deductions for homeowners Builders have been deeply discounting and using rate buy downs for 2 years The discounts not show up when the sale is reported So a 50@k house with a 50k discount and a 4% rate gets reported as a 500k sale And the mortgage rate discount further brings down the payment But none of that helps in bringing down the median or average price in a geography from a reporting perspective Sellers need to see prices falling to encourage them to list and/or reduce price Buyers need to see prices falling to get them interested Actual unemployment/underemployment and honesty from the BLS would help more than this Let’s see what happens when unemployment hits 5% and then 6% What the article says is that what builders are doing — lower prices rate buydowns while building massive supply — will help bring down prices of EXISTING homes because homeowners have to compete with builders Are you able to see the new house inventory by state Which areas are more affected by the increased inventory and which are affected the least The whole article is about new single-family houses new houses come with a long-term warranty priced in The discounts show up in the earnings calls If you look up on Zillow a town called Surf City in North Carolina you will see roughly 80% of the recently sold homes are from a DR Horton subdivision New builds are taking demand from existing homes Until we get a 30% cut in the markets and higher interest rates housing prices are staying where they are or are headed up again…and inflation is about to take off again too…but don’t worry 15% is what inflation will eat the dollar in that time So the bottom may meet your falling house prices and party on to new highs I was in my new development sales office today to say hi to the salesman that sold me my new house a year ago This phase is closing out by year end and two new phases are starting construction nearby These are starter homes selling at about $175/sq.ft Builder is offering a buy down in mortgage rates over 5 years to come out at 6% They bought a “block of mortgage money” he said He did mention that if the FED lowers rates and mortgages fall further they will start moving new build prices up accordingly They moved prices down to stimulate demand But the big thing they did was buying down mortgage rates That will go away if mortgage rates drop far enough They will still offer other incentives and price their pile of inventory to move it They’re sitting on big inventories and raising prices in this environment is only something that a salesman would say lol if only the purchase of a Lexus suv was the barometer of a healthy minded and economically sound individual In this case it is by a salesman of sticks and land therefore it is as a suit is to a businessman You can get 20 years out of it if serviced regularly it’s really just a Toyota that costs almost twice as much Price per square foot is ridiculously high I guess I’ll be staying in my apartment Builder down the street is furiously putting up 6 homes on a lot and prepping the much bigger lot across the street 2 of the 6 were framed and have plywood roofing in less than 3 weeks I suspect prices when finished will still be 3-4x my rent The insurance premium increases are getting annoying tbh Remind me to buy their company stocks so I can ebb their flow Where I live you can’t find anything for less than about $1,000 a square foot Resale studio condos start at $1,000 a square foot Now….those are bubble prices for sure What I remember back in the housing crisis of the 80s is that when new home inventories got too large “bulk buyers” (the term used by builders) showed up from overseas to firm up the sales with cash The prices need to be controlled to stop sales from crashing the mortgage book of the banks and lenders (comparables) Everything will be done to save the comparables “… stop sales from crashing the mortgage book of the banks and lenders (comparables).” Most of the mortgages on these new houses are sold to government entities and turned into Agency MBS No one cares if the taxpayer loses money on these mortgages No one will do anything to stop the taxpayer from losing money Is there a limit to how much in losses the taxpayers is on the hook for 100% of losses or 100% of the capital the feds have invested in Fannie and Freddie It would be interesting to see how the impact of new homes competing with existing homes plays out market by market not competitive with existing homes because of drive time but smaller markets or retirement markets this is probably less important The builders competing with homeowners debate could be reframed as suburban homes (existing) vs exurban homes (new construction) The prospect of commuting 50 minutes each way might nudge a buyer to purchase an existing home Now share active inventory of new and existing homes going back to 2006 My charts here in this article of new home inventories go back to 2002 Why do you want me to shorten the time line to 2006 Because they’re overleveraged and need housing to keep going up so they want to try to disprove every metric as “meaningless.” In many urban areas there are very few new homes available for sale This is true in the Swamp and neighboring close in suburbs Many new homes being built are located far out from the jobs in the Central City This is never mentioned in the comments on Wolf’s articles on this subject So all the arguments in these posts about the advantages of purchasing new homes and getting a great deal with buydowns etc from builders falls on deaf ears as far as I am concerned new homes built in the urban areas and nearby suburbs (via teardowns) in the area where I live close to the jobs and public transportation to get you to the jobs are snapped up at full price and show no sign of slowing down the pace of sales Realtors are glad to point this out in the many solicitations they send you in the mail Inflation in housing is alive and well and getting worse If you want to buy something new in a city core you’re likely going to look further away from the core and commute we appraised a well built recently renovated brick rambler in Silver Spring MD just over the DC line that was convenient to public transportation with a metro subway station within walking distance The price per square foot was calculated at $1,300/sq foot That’s some serious housing inflation The Veteran that bought the house was doing a high five when the appraisal came in at the contract price Single family home new construction in my neck of the woods are all over 1 million while existing homes are generally in the 600k-1.5 million range All new construction is focused on high end luxury mcmansions (luring the endless pool of wealthy MA buyers) Inventory has now risen high enough for 2 whole pages on realtor.com (in a town of 25k people) The new construction boom is highly geographically dependant and for sure will put strong downward pressure on home prices in markets with high volumes of new builds I suspect this will be less an issue in New England and moreso a feature of the boom towns in the South and West (FL Some of the price declines we’re already seeing in these markets will likely continue to gain momentum Most of the undeveloped land here is protected forest and conservation land You’re never going to see an entire new subdivision of new builds those in the midwest and south Kamala Harris plans to build 3,000,000 housing units If materialized in construction of all stages will exceed the 2006 peak Until then home builders will be cautious The banks will force them to liquidated inventory and cut cost Completed and available for sale will decline This industry will be on hold waiting for Kamala Name the last election promise that ever came to be Elections promised are about getting elected then back to business as normal I know those that break promises point to the other side or within the party but a study of several large initiatives disproves that Ruling classes and their large patrons are very happy with status quo I’ve been in a deep dive in RE for years and I look at RE prices all over the nation And then I compare the want ads to see what jobs are available and what wages are being paid to fuel these insane prices And I can say with 100% certainty that everywhere I look RE is completely out of whack It’s not jobs and incomes that are driving home prices I can’t believe my fortune I live in a brand new home that has depreciated 36% from 2019! living the life I wanted and that was not possible before And I’m happy to be free of my stocks But the treasury can use it to pay for Wolfs T-bills Here is what I read in the Bulgarian press I know this article is not about the Fed but when will your article come out about the speech of Powell “Federal Reserve Chairman Jerome Powell said the time has come for the central bank to cut its key interest rate So Powell reiterated expectations that central bankers would begin lowering borrowing costs next month and made clear he intended to prevent further cooling in the labor market “The time has come to adjust policy,” Powell said Friday in a speech at the Fed’s annual conference in Jackson Hole and the timing and pace of interest rate cuts will depend on incoming data the evolving outlook and the balance of risks.” it’s clear to me that the fed won’t tolerate any recession that’s why it’s lowering rates even when unemployment is only a small problem Pass legislation to prevent ownership of more than X homes in Y area and you would break the monopoly pricing power that industrial homeowners have as well as force the ibuyers to be in and out of markets if they want to continue operating in a desired area I suspect this would fix our fake “supply” problem overnight Anti-monopoly laws are there for consumers but there has been no enforcement in the housing market Monopoly pricing is rampant all over the place people just can’t afford what’s available for sale You are proposing a draconian solution to an imaginary problem I defy you to demonstrate the existence of the monopoly pricing power that you pretend exists But if you look at the Case Shiller home price index – in Jan 2020 it was 212.4 and in May 2024 it was 323.48 Building is going to have to accelerate to make any kind of a dent It’s almost like the fed’s massively increased balance sheet forced up prices of all risk assets since 2020 funneling wealth from the bottom to the top at a furious rate Amazing how few people (outside of these circles) realize that Never underestimate the number of mouthbreathers out there I consider having a home is a place to live Owning a home can also be a money pit… my city (SF Peninsula) had Existing home inventory built up In last 3 days all of them went into Pending I went to Open house yesterday and Listing Agent had same BS personally I will stay out of this crazy Market and I know one city doesn’t represent broader picture But point is as long as there are Idiots out there who can afford to put down Payment and Buy house at those Crazy prices we wont see any much correction in Housing Market Stocks and Crypto has given FALSE confidence to Many Govts and FED come to rescue many times… Sales of new single-family houses at all stages of construction rose by 7.3% year-over-year to about 59,000 houses in September This was also up by 7.3% from September 2019 Homebuilders are building and selling houses at a brisk pace and mortgage-rate buydowns that are costly for builders but that make new houses often less costly for buyers on a monthly basis than equivalent existing houses sales of new houses at all stages of construction rose by 3.2% from the same period in 2023 Using this increase as a factor applied to the remaining three months of 2024 we estimate that sales for the whole year will grow by 2.9% from 2023 far higher than any of the years between 2008 and 2018 but below the heady free-money years of 2020 and 2021 But homeowners who are thinking of selling have been clinging to their aspirational prices, and so inventories of existing homes are piling up, supply is spiking as sales have wilted. The year 2024 is on track to produce the lowest sales of existing homes since 1995 And demand has shifted from existing homes to new construction as homebuilders are taking advantage of homeowners’ refusal to adjust their pricing to reality Inventory of new completed houses jumped by 49% year-over-year to 110,000 houses the highest number of houses since August 2009 when homebuilders were trying to survive the Housing Bust Sales of these “spec houses” account for about half of total sales the other half being houses in various stages of construction rather than having to wait for months before they can move in But builders have tied up a lot of capital in spec houses This buildup of spec houses is a big positive for the overall housing market – the bigger the inventory of spec houses the better – it will help resolve the massive dislocations in prices that have befallen the housing market But it puts the squeeze on homebuilders’ margins Sales of completed new houses jumped by 29% year-over-year to 27,000 houses (not seasonally adjusted) as homebuilders motivated buyers with lower prices and mortgage-rate buydowns that are costly for homebuilders But they’re not selling them as fast as they’re building them and supply of spec houses has risen to 4.1 months at the current rate of sales but more than double from where it was two years ago supply exploded to 11 months at the worst moments Inventories of houses at all stages of construction – from not yet started to completed – rose to 473,000 houses having eked past the highs in the fall of 2022 The median contract price of new single-family houses at all stages of construction is a volatile metric with big monthly revisions (blue in the chart below) the August price was revised down by $10,530 today which irons out the month-to-month squiggles and revisions – to see the trends (red in the chart below) The six-month average ticked down to $418,000 the lowest since May 2022 and down by 4.3% from the peak in October 2022 and they do not include the substantial costs to homebuilders of mortgage rate buydowns and other incentives – which are big values for buyers We’ll look at homebuilder Lennar in a moment Lennar disclosed in its Q3 quarterly filings that sales incentives including mortgage-rate buydowns and free upgrades cost on average $48,100 per house it sold in Q3 a 32% jump in incentive costs from a year ago ($36,400 on average per house Lennar’s average sales price dropped 5.8% year-over-year to $422,000 per home Those prices are reflected in the contract prices by the Census Bureau But homebuyers got $48,100 in additional incentives as part of the deal including the costs of the mortgage rate buydowns a value that wasn’t reflected in the contract prices by the Census Bureau It was reflected on Lennar’s income statement though and gross margin was squeezed by 2 percentage points compared to a year ago These are big benefits to buyers of new houses that end up producing a lower monthly payment and a nicer house even as sales of existing homes have wilted Contract prices of new houses (which do not include the benefits to buyers of mortgage-rate buydowns and other incentives) have eased down from the peak (red in the chart below) But the median price of existing single-family houses is still completely out of whack though it dropped along seasonal patterns (blue) after a 50% jump in two-and-a-half years are far too high The big homebuilders have figured out how to deal with this market Unlike homeowners sitting on vacant houses waiting for lower mortgage rates or whatever builders have to build and sell houses to keep their revenues flowing and to keep their businesses intact This long-term chart shows just how unusual this situation is The median price of new houses was substantially higher than that of existing houses even during the Housing Bust Email to a friend I took a quick look at Lennar’s 8/31/2024 10Q quarterly financial statements filed with the SEC even with incentives increasing 32% from the prior year to $48,100 they have been able to raise their earnings per share from the prior year They still have a lot of room to add additional incentives and drop prices more builders have lots of room left to get very aggressive with their pricing and incentives to keep volume high There are numerous mention of the word house but no mention of what kind of house Here’s your help: Listen to the Rolling Stones song “You can’t always get what you want.” My all-time favorite especially recommended for people who grew up always getting what they wanted and read the lyrics that display on the screen of the video https://www.youtube.com/watch?v=Ef9QnZVpVd8 (“but if you try sometimes you might just find that you get what you need.”) If there is demand for mansions with pools If there is demand for houses people can afford But if you try sometimes you might just find that you get what you need.” I would be curious to see data on the $/sqft of the new homes plotted along with the average selling price I travel all the time and interview new home builders in all the cities What I learned is the higher priced builders sell their unbuilt land to builders like DR Horton They also put sold signs on spec homes to make them appear busy/ more desirable have 50% cancellations in some areas and I’ve seen new build here in SD county adjusted from 1.5M to 1.2M with more incentives available still I’d hate to be the guy who bought the last 1.5M bc that rate buydowm will adjust in a year or two and his new neighbor will be paying 20% less for the same home I quit working with buyers last year for the most part I will not encourage people to buy in the This market small realtors in SD who cares more about people than money why aren’t all the angry people that comment here (DC etc.) upset with the builders for taking too much profit Seems as irrational as their other complaints They wouldn’t be doing this if it wasn’t for the massive inflation of the past five years It’s not their fault that people FOMOed What this tells me that if a home builder can offer all these incentives and still make profit If the homebuilders are offering incentives and still make a profit than home prices are still too high How many companies do you think will build houses if they don’t make a profit You might want to ask yourself why very highly leveraged purchases (houses college tuitions…) seem to be the primary markets where the alleged “sticker price” is actually well in excess of actual “acceptable price” (price at which *some* transactions manage to get closed – which are also presumably profitable per your own observation) my sense is that high leverage transactions (grossly facilitated by the G’s interest rate manipulations) 1) Allows vast inflation of sticker prices (wholly divorced from production costs) through the artificial creation of lower/stable monthly amortization costs – with the residual default risk sold off to 3rd parties (who are simultaneously being starved of yield in the savings markets) 2) Those leverage-inflated sticker prices leave a *huge* amount of room for sellers to discount to the hardest-negotiating buyers – and *still* make more-than-decent profits That why’s $50k worth of incentives are possible…because the home builders are marking up SFH prices $200k-$250k above their production costs 3) But the whole inflation/price volatility w*orehouse is made possible due to the Fed’s stangulation of honest interest rates So who should regulate how much profit is “too much” for a private business Why not go after the healthcare industry for pulling the same $hit Market has been in bed with all sorts of folks and is no longer run by “We the People.” It certainly varies by industry (look at tech and antitrust rulings globally) Regarding construction it’s local and regional regulations that can skew the market Now certain builders favor different areas based on regulations and codes In my community there’s all sorts of governing bodies that weigh in Historical preservation and environmental regulations (“green” building codes) make it costly for many things Economies of scale have always existed but the Big Boys are incentivized to a great degree as they’re able to build neighborhoods whereas the little guy can only build a few homes at a time the “more productive” companies (BIG) are given advantages and enabled to grow bigger and shut out competitors Builders don’t set prices the market does They compete against existing homes so they need to stay in line with existing home prices or they’ll be priced out They’d be much more if builders didn’t continue to add supply to the market Perhaps new builds are not available in their markets I dont know a lot about it but if I learned that any builders had lobbied or maybe still do lobby for the govt to buy mbs which fortunately for the whole country isnt happening now then I wouldnt be too impressed with the builders Our subdivision typically has two builders paired in each section Lennar worked hard to keep an inventory of spec homes Ryland wouldn’t start building until they had a contract in place Lennar sold out our section months after we moved in while Ryland took another two years There is a cost to holding inventory but there is also a cost to inaction So Lennar is throwing down 11.4% of their gross margin to buydown rates for buyers and they still have more than 22% gross margin A third of their gross margin is going to buydown mortgage rates And this has been going on now for probably 3 years And people wonder why new homes are still overpriced despite a decent drop taking the cream off the top but this is the new normal with approaching $2T in deficit spending which is extraordinarily buoyant to the economy I really hope with see a continued acceleration of core inflation that spills over into headline by January It’s late 70s / early 80’s all over again I mean compared to many industries that pretty slim I can’t imagine Wall Street investors would accept margins much lower than that Retailers are around 1% to 3% net profit margins Grocery stores are 1%-2% net profit margins existing homes sell within days when properly priced while new construction homes sit on the market for 3+ months so mortgage buy downs are not a factor and they typically close in 2-3 weeks a 20-year-old house across the street was listed for $1,795,000 and closed three weeks later for $1,845,000 cash sale Similar sized new constructions are priced about $2,500,000 and sit on the market for 3-4 months before closing I’d hardly call a neighborhood with 1.5M+ houses a “subdivision?” What did it look like before the division I had occasion too visit such a sterile neighborhood and I was thankful I didn’t live there You obviously don’t live in coastal California 69% cash sales doesn’t sound representative of the national single family home market But hey yeah if I drive up to Vail or Aspen the majority of those are cash sales and well above the $2.5M price point This shows that builders cannot unilaterally increase prices why didn’t you also do a 6mma for existing houses The median price of existing houses peaks in June and bottoms in January and all the 6-month average does is shift the peaks and valleys by three months but shifted and with slightly rounded corners The median price of new houses however is hugely volatile in a random manner I really appreciate the comment about existing home sales Sellers got too used to the price increases during the pandemic I unfortunately had to sell a property in California in 2023 for a loss I didn’t want to wait to find out prices wouldn’t increase and continue to pay high property taxes and insurance I wonder how much builders pay for land and for construction the average sales price was $442,000 with $48,000 in incentives This makes Lennar’s averages sales price $394,000 cost of doing business and you get their profit laying out $400,000 would lose me about $20,000 in interest this year (and the same next year $20,000 is about what I pay in annual rent and I don’t have to deal with maintenance It would not bother me much if the place burned down or is destroyed by a hurricane or earthquake If that sort of stuff happened to a house I owned Builders pay a lot less than what you’re thinking for the land These are typically larger developments with 1,000s of homes So typically they’re buying 100s of acres so their price per lot is extremely low You then factor in concessions from towns for roads It’s the other factors that are hard to control especially after COVID Labor and Materials wreaked havoc for a while The “contract price” is written into the contract which is what the Census Bureau uses for its price data Lennar includes the cost of the mortgage rate buydowns and other incentives in its gross margin calculations it’s still a very healthy gross margin But that’s not what the Census Bureau tracks It tracks the selling price in the contract And that’s what the data is based on Their net margin is 7-8% so they are not pocketing 22% covid really broke a lot of things and help set some weird new records…record low mortgage rates in history record how price increase in short duration and if I read that chart correctly also another record when new home price is less than used home (if I read it wrong New home is nice and if it’s cheaper with more incentive even better but a major downside is I think most new builds now come with HOA requirement…part of the appeal of owning a non-condo/townhouse is not to pay HOA or be subjugated to some insane HOA board members making up crazy rules for people living in metro part of SoCal or NorCal new build is much less of a factor so really can’t take advantage of this as much Just go 50 Miles away from coast in socal and you have plethora of new builds. I want to move away from coast in next few years The concern with moving away from the coasts in SoCal is wildfire risk seems to increase significantly with each mile as you travel eastward Fire risk in CA has more to do with local topography you can have a horrendous fire in places like the Oakland hills whereas a place like Modesto isn’t really at any fire risk The uk has an ongoing issue with house builders making their properties leasehold – which basically means very long term rental with automatic renewal rights – and flogging their customers by boosting the “ground rents” unreasonable amounts every year It’s the first thing I think of when I see these hoa fees The other problem with HOAs is the people in charge overpaying their brother in law to mow your lawn Or just overpaying someone else because they’re stupid Can anyone tell me if some HOAs don’t let you plant trees because it increases yard maintenance costs Ours specifically states you have to have three trees in your front yard and even has a list of which ones are acceptable My biggest problem is their micromanagement I got a compliance letter after replacing my fence in kind They said I didn’t ask for permission I told them permission wasn’t required because I was maintaining an existing asset and that they should be sending a letter to the neighbor down the street whose fence was falling down cheap flood insurance and your neighbors are MAGA lunatics… Data support this narrative of economics in telling the story That’s why I visit Wolfstreetgood data and narrative The comments section is quite entertaining as well that the big home builders are basically unregulated banks or essentially the equivalent of financial conduits that manage money foremost and then subcontract labor to efficient crews That’s a very simplified concept— but what stands out is the financial leverage and flexibility these players have in this housing war As we watch existing homes pile up in an epic train wreck these monster builders are going to morph the housing downturn As existing homes engage in mass denial and wage a long term strike these building vampires are going to suck potential buyers into their graveyards The existing home Frankensteins will be left in the wind like ghosts,in forgotten ghost towns but one advantage existing homeowners have over new home builders is location Existing lines are generally in more sought after areas Homes were originally built there for a reason In many cities new homebuilders are building far away from city centers Granted the power of this advantage may vary Production homes (aka tract homes) do not hold their value You get what you pay for is a statement of fact Many bedroom community neighborhoods fall victim to suburban poverty And don’t get sucked into the “Keep up with the Jones” square footage game Build a reasonably sized house that you will utilize the majority of spaces most of the time In my northern California town new build prices are plunging and incentives growing In addition the locations are outlying and thus closer to the fire zones I’m feeling better and better about not being seduced by the newness and buying my 1955 bungalow in early 2020 New homes are built so close together you can spit from your bedroom window into your neighbor’s bedroom Much of the benefit of not sharing a wall (condos) goes away when there’s only a few feet between your wall and your neighbors I live in a newly built home of 1,459 sq.ft. There are about 20 homes on my street (a cul-de-sac) I am in a quiet area (low traffic) and two miles from anything I need Everything here is NEW and under warranty for 5 – 10 years (A/C There are NO rentals on my street and in the entire subdivision Our HOA fees are $500 annually and their “job” is to maintain the common areas and write “tickets” for folks that are keeping their lawn cut and landscaping visually acceptable and is around $900 – $1,000 /month for me (house is paid off) and that cost includes all utilities I still cut my own grass which takes 30 minutes if I am taking my time The outside of the house is brick and Hardiplank which is low maintenance These new places can be a good deal if you want inexpensive living What will the future hold for this piece of real estate I own but there are thousands of these starter homes being built and they seem to get sold and people are happy at the cost to buy and own one There’s more to living than worrying about whether or not the “value” of your house is going up or down I can move into a 55+ age apartment complex near me with other old sick people for about $2,000/ month (one 750 sq I am not going to move in with my daughter and her husband “Our HOA fees are $500 annually and their “job” is to maintain the common areas and write “tickets” for folks that are NOT keeping their lawn cut and landscaping visually acceptable.” People all over these comments are whining about how expensive and unaffordable houses are and then you come along and tell people to not buy a new house that they could actually afford because it might have cheap windows and be in a neighborhood where prices might not soar in the future What kind of bullshit advice are you people giving to struggling homebuyers looking for affordability and then warning about the houses people could afford being too cheap The bullshit gets knee-deep around here from time to time “You can’t always get what you want.” My all-time favorite (“but if you try sometimes you might just find that you get what you need.”) I live in a very sleepy midwest/Appalachian metro New homes are built on top of each other here too It is very cost efficient for the builders and buyers line up for them I had a top window contractor out to my home and he demonstrated builders of these tract homes put the cheapest pile of s$it energy inefficient windows in these homes to maximize profits Showed the energy loss right in my living room The cost to replace all these crap windows can run 10 to $20K right out of the box Then you’ve got all the other cheap crap they put into these homes Be careful when you compare home value based on square footage Some of these monster homes going up around me are a real joke and I see more contractors in front of the homes making repairs to all the defects than were there to build the home in the first place (Raleigh) works for Lennar as a Purchasing Agent buying building materials Let me say that she says for ALL Lennar homes (low end or otherwise) they get the same low quality materials They most certainly don’t install Anderson (or other brand) top quality windows in their builds with probably all the very large home builders you have to build it yourself (Indy builder I’ve done this before and it’s a gigantic hassle and costs roughly 25% more than you thought it would And that’s money you will not get back in a sale I’ll just repeat it here: Listen to the Rolling Stones song then when there is news of houses selling at reasonable prices you complain about the cheap construction I detect a pattern: you complaining no matter what the circumstances The argument can be made there will be issues with every new or existing home Home built before the 80s lots of asbestos risks to consider if you want to remodel More recent but not new homes the roof is probably coming up on the end of its useful life Old homes – electric issues and probably don’t have energy efficient heating and cooling systems or appliances My current 26 year old production home has been selling for 3X what I paid for it I think you may be full of the stuff that makes the grass grow green Presumably the mortgage and down payment amounts are based on the contract price But since that includes the cost of the buydown the true value of the home as a now “existing” home is less So if changed economic circumstances force the new owners to sell any time soon they’ll be unable to sell it as an existing home in competition with the builder they just bought form unless they There goes a substantial piece of their equity perhaps all of it if they used some incentive program to get in with a small down payment Prop taxes are also based on the pre-incentive selling price you are ABSOLUTELY correct in everything you said It’s good that new homes are coming on-line in competition with a stubbornly high-priced alternative Already lived-in homes remain at near record highs and they seem to think they live in their own pricing universe The only problem is that many new homes come with miniature-sized backyards if you have kids and want them to play around With inflation rising and the wealth gap increasing in this country people need a place to live and raise their families inefficient house with a 1/2 acre backyard We (family of four at the time) had a big house on three acres when we lived in Connecticut That was too much to take care of as I was working long hours and going to school at night to get my advanced degree Depending on where you are in your life cycle there are plenty of housing choices and not one size fits all and those are the ones I always picture in my head Kids shouldn’t be outside they should be inside learning how to use AI and has bought Pilot and made it available to all professors and students thus rendering it futile to grade any papers submitted that were typed rather than hand-written in class Green – …what’s your take on the big Morlock U./Eloi State game this year These new sub divisions have got pretty good well maintained parks They play video games inside and meet their friends over discord The housing market is an example of the paradox of the Capitalist epistemology What happens when selling and buying are at an impasse The greedy rich trap the proletariat on the renting treadmill I think that Capitalism’s flaw is that through its use of blind competition as the driver for everything it ends up valuing everything only in the negative sense (“what did it cost to make this?”) as opposed to the positive sense (“what benefit does this have to society?”) the source of that negative value isn’t labor time like Marx said It’s one layer of abstraction below that: the power to demand something in return where value is added to something and which also incidentally tends to benefit society But that power can also come from scarcity where there is a stock of finite natural resources and that gives you the same power without the same societal benefit That’s what gives people the ability to be greedy but greed is only the proximate cause of the increasing prices Those prices represent a tremendous amount of “wealth” that’s been created – wealth of a highly peculiar variety when viewed from the perspective of anyone who doesn’t have a stake in it Of course that’s not the whole story; that are also speculative feedback effects adding to the problem as well as a lot of moral hazard coming from the government once the prices become so high that the market is “too big to fail” Slightly off topic but I saw an interview with David Marsh (former FED governor hope I got his name right) on CNBC – it was quite interesting Wondering what the braintrust here thinks of him as the CNBC hosts were mentioning him as a distant future FED chair candidate With housing being one of the main asset classes that has benefited from 25 years of favorable FED policy via ZIRP QE etc this guest did not sound as if he thought any of it was a good idea He even sounded as though he thought the FED had become political during that time frame and was risking its credibility with all of the errors and inflation OK you have my attention with your claim that a potential governor of the Fed repudiated the Fed policy going back to the beginning of the monetarist experiment Kevin Warsh stated the Fed’s theory of inflation has not been clear I did not hear him say they had become political an unanchored Fed is a risk in a few ways is what he implied …to paraphrase The serious nature of the problem with the Fed’s actions messaging ,pivoting is the general theme of his interview He didn’t say FED is political but he hinted something like this His take was: FED always say they are data dependent then what was the data FED rely on to cut rates by 50bps instead of 25 bps Housing prices and stock market prices play absolutely zero role in FED rate setting decisions The election will change the nature of the stimulus reflecting the current bookie’s line the most important segment of society is the 90 pct of citizens that are not being well represented Bubbles are in the eye of the beholder until they burst I travel a lot and notice that neighborhoods with older homes seem to have more old cars and trash that accumulates over time out front especially the front reduces the curb appeal it really presents an opportunity for young people to buy with sweat equity as part of the deal maybe old people living in old houses will tug at the heart strings of the young lambs who overpay because their not tough enough Did you ever notice that people are hoarders Even seen the insides of a garage that has the cars parked outside of it and it’s because the garage becomes and “junk storage” room One of these junkyard dog Realtors sent a flyer in the mail advertising one of these newly completed monster homes to out of state buyers from California The house was built with the minimum 7 feet between the neighboring monster home The flyer was photo shopped using AI Next-gen Adobe Photoshop software showing dense forest on both sides of the house they were shocked to find the houses were right on top of each other These Realtors will do anything to make a buck and mislead out of state buyers I really like the waterfront properties that have the water photoshopped blue Anybody who would buy a house ‘sight-unseen’ is out of their phucking minds the first thing to do is type the address into Google Earth if it is near a garbage dump or train tracks or an airport I have eliminated many houses by doing this Simply check out the property using Google maps Google Earth has more features that I like to use than Google Maps You can actually go back in time and see how the area has changed See if the newly built house is sitting on what once was a gas station Reminds me of a house I onced looked at that was photographed with a ultra-wide angle lens It made the interior look much bigger than it actually was I love the house my parents bought when they retired and moved to Country Manor in Delray Beach Florida The house was advertised in flyers with a canal in the back of the property where you could dock a boat What they got instead of a canal was a DITCH full of weeds One of them called the marketers of the development and the realtors that sold them the property “cocksuckers” A few years later they widened Military road right into peoples backyards My old man held it for 20 years and sold it for a loss when he moved “Can’t you understand what’s happening here Don’t you see what’s happening Because we’re panicky and he’s not We’ve got to have faith in each other” The home buyers in this post-pandemic housing war are a herd of people flowing away from the stark reality of stupid-high home valuations locked into the belief that there’s a pent-up tsunami of buyers bidding up prices That game of chicken and the collision play into the hands of home builders that can take advantage of this slow-witted battle Even though home builders are seeing margins drop buys more time for home builders to exploit this anomaly this anomaly probably causes a downdraft for everyone involved in the pandemic bubble — which is why the reluctant buyers who remain patient — will be the winners in this war It’s likely these slow witted buyers are patiently watching their cash grow in safe places like money market funds: “It’s not until rates fall below 3 percent that people start to pull money out of money market funds,” Peter G And I don’t see any big movement from money market funds into the stock market.” The Federal Reserve tracks money fund flows from institutions — corporations that use the funds for paying short-term expenses or as a holding facility in between stock and bond market trades whenever the Fed has lowered interest rates cash has rapidly flowed into money funds — far more rapidly than when the Fed has either raised rates or left them unchanged That may be because banks tend to lower their already paltry savings rates more rapidly than money market funds do — making the funds more attractive on a relative basis because they’re a lot like the home builders who can’t afford to play this waiting game— the margins and profits declining will eventually show up in earnings declining The banks are obviously a barometer for liquidity and it’s obvious they want to lower yields back to zero — this is very definitely a time to remain patient and watch all these greedy players flounder I wonder if the NEW vs Existing home “price crossover” is a sort of “death cross” As you mentioned the home builder will capitalize whatever it takes Does this begin to create gravity for the rest of the housing purchase market what does it take to create a “race to the bottom?” Some form of liquidity call medical costs (with the assumption that the “existing” homes that are vacant are owned by an older demographic on average?) Only if existing home owners need to seller If they can pull the house off the market and wait there’s not a big immediate effect Only really wealthy people don’t care about that Most people get tired of it after a while and want to stop the bleeding We were lucky enough to sell our single family existing home back in August 2023 we didn’t think it was “worth” some huge astronomical amount so we didn’t hold out for a higher offer In Canada new homes are about 50 percent higher in price than existing homes Some of that is because of the harmonized sales tax I like how the housing prices basically track the money supply expansion perfectly Of course I still have to listen to this idiot Powell get on TV and say things like “it’s because people moving to the suburbs” and “um actually technically the fed doesn’t target home prices” Going into the Fed cut election week will be entertaining for mortgage rate confusion global period of exasperation in wondering what makes sense and how to prepare for uncertainty — perhaps shocks and new risk I suspect the buyer strike for existing Hines is spilling into new home sales as everyone and their grandmother examine the roulette wheel It’s almost laughable that the Fed can’t win with a soft landing narrative at the next meeting — the day after election when any move either way will be misinterpreted — and the more likely move to do nothing also makes them look like pikers — selling the neutral rate and R* is a perfect way to acknowledge they have no clue as to what’s going on — let alone how the post inauguration timeline plays out Their tea leaves are as good as those of home builders or buyers out in strike The odds look great that mortgage rates will stay higher for longer As for the global bet on nividia surging higher and higher as everything else goes lower — good luck on that outcome “ Swaps traders are pricing 20 basis points of easing for the Fed’s meeting in November Traders now price 39 basis points for this year’s final two Fed meetings raising the prospect of the central bank skipping one meeting a view that has gained ground in the wake of a strong employment report for September” because of rich idiots bidding against each other I hope this will end at some point the way it should This is the reason many sellers holding out for prices they aspire economy is on fire fat least for upper middle class and above I have many friends on the lower income strata which has none of the above other than paltry increase in wages but other things have increased so much their increase in wages have not kept up home prices have almost double in my region For the past couple of years wages have greatly outpaced inflation Furthermore these wage increases have been among the lower levels of the economy Tech workers are doing worse than McDonald’s workers in terms of wage increases Mick is agonizing over the ever-increasing prices “You can’t always get what you want The tract home builders are marketing quality—which is total fake value BS these new homes provide shelter and maybe are next to great schools expect these types of homes to build equity if developers build 1,000 new ones behind them in the next few years Living in single-family homes in central city neighborhoods has become an unattainable privilege for young and old alike Most people are likely to use 20 percent of their living space 80 percent of the time the convenience factor) and better construction ultimately drive real value “Most people are likely to use 20 percent of their living space 80 percent of the time and commute to the office once a week by walking 15 minutes then you’ve got good use of the home People are not all stupid and you do not understand their motivation you have to understand the customer aka the buyer and what they are looking for If used home sellers understood their partners across the aisle companies like Lennar are eating their lunch but not everyone can afford $2.4MM+ for a updated house in my area I talked to the sales person at this development and they are targeting tech workers The whole neighborhood is almost all tech workers with their Telsa or two This what they can afford and still be near work etc They want 10 years of basically maintenance free house The decision marker is usually the wife and she wants brand new house that nobody lived in This subdivision is 85% sold out and they are fire selling the rest to close up shop and move on These poor used home owners with delusions of high value are just sad they are trying to comp it as the new homes I really want a 2400 sqft built in the 80’s with crappy updates versus a brand new home 89 days later and time to renew the listing or pull it off the market and raise the price for the spring in the city and maybe better transit and “location” but stairs and hearing the next door neighbors fucking those production homes will not deliver significant value via increased equity Don’t expect an investment windfall when it sells Lennar knows it will compete with the 1000 homes it built 10 years earlier It’s almost akin to planned obsolescence If central city neighborhood real estate prices are stagnant the outskirts communities aren’t increasing in value either MW: 10-year US Treasury yield ends with biggest six-week climb in a year as consumer sentiment rises My back goes out far too often and I’m laying around spending too much time scanning financial stuff one of my favorite chart gurus says the 10YUST yield has recently broken out of a downward trend line that goes back to the 80s and this is happening as the term premium is expanding apparently that’s based on old voodoo from The Adrian is how rising home inventory for new and used homes will fit with higher mortgage rates and weaker demand — especially going into winter said the best time to make an offer on a house or land the epic election amplifies the concept of crazy — crazy overbought mkts with yields unexpectedly rising fast — VIX at 20 today I think 2025 is the year everyone has egg on their faces — everyone that doesn’t believe in inflation I’ve been playing with stock charts and their $move only goes back a few years — but the index is at 128 which isn’t screaming too loud and Vix anemic around 20 I don’t think either index will be predictive here My main curiosity is relationships to gold and Spx — most assets absolutely hate when the 10yr heads towards 5% — and that’s looking like it’ll be part of the election trade Even though everybody dismisses treasuries as pointless The 10yr fast acceleration after the Fed cut is actually epic we’ll be looking at Shiva the great destroyer by mid November— especially with another rate cut (or in December) but it seemed somewhat immune around October 2022 so I don’t think bitcoin had been through much realistic stress yet Right now the election trade is pushing everything higher on overbought exuberance — but the main feature of a 5+ 10y is its ability to bring valuation into focus It’s very binary and clear — and exposes stupid risk “their $move only goes back a few years” The Move Index data/charts that I can see go back to 2003 And it’s historically fairly high right now “gross margin was squeezed by 2 percentage points compared to a year ago They cut every corner they can and provide near useless warranties to get these profit margins Wolf reports on Canadian real estate and I see on the internet that there have been some spectacular bankruptcies in Toronto of megaunit developments I live in a mature Detroit suburb where development space similar to adjoining cities is limited to repurposed sites such as no longer needed schools There has been a spate of small-time would-be condominium developers trying their hands as developers of small single sites with projects shoehorned into single family neighborhoods The units are touted as luxury with tiny pools and gyms with insufficient parking There are the inevitable zoning fights with tax hungry city governments siding with inexperienced developers against their citizens City governments love the beautiful computer-generated images and refuse to evaluate the experience and financial strength of the developer Some approved projects never get started and some projects once started It seems unlikely that small time developers will be able to cut prices or offer mortgage buy downs The concern of nearby residents is that conversion to low-income housing will be a remedy for unsellable developments but failure of city governments to do financial due diligence of would-be developers puts communities at risk Footnote tidbits: can these housing monsters keep earnings higher for longer Lennar’s earnings are expected to grow from $14.18 per share to $16.04 per share in the next year “What’s different about this quarter is how high valuations are At a forward price-to-earnings ratio (P/E) of 22 That’s the consensus estimate for S&P 500 EPS in 2025 We would consider a 2% cut in estimates to around $270 to be the base case — remember estimates almost always come down as companies report results“ “A large chunk of S&P 500 EPS growth in the third quarter 3.3 points of S&P 500 EPS growth contribution — essentially all of it — is coming from the Mag 7.” “Of the S&P 500’s anticipated EPS of $60.26 in the third quarter more than half is seen coming from the info tech sector” If home prices were 48k sales might pick up That might take federal and or State legislation though becoming NNW and decreasing to less than 5 mph. becoming NNW and decreasing to less than 5 mph Larger houses on smaller lots have become increasingly common and are reshaping the look of fast-growing South Carolina Johns Crossing development on Johns Island A 1969 aerial view shows the Forest Lawn neighborhood in Goose Creek New single-family homes line a street in the Carolina Park subdivision on the northern edge of Mount Pleasant in 2017 located within one of the fastest-growing areas in Berkeley County The Cane Bay Plantation development in Berkeley County Johns Crossing neighborhood on Johns Island Esteban Ocampo and a carpentry crew install siding on a house in Carolina Park Large homes on small lots can result in little space between the neighboring houses Small duplexes used to line Vincent Drive in Mount Pleasant sits next to a row of eight townhomes under construction nearly two-thirds of new houses sit on one-fifth of an acre American families flocked to modest new houses with relatively large yards when the shift to suburban living took hold in the 1950s new houses became much larger and properties ever smaller It's an ongoing national trend and one that's reshaping South Carolina where a rush of residential development goes hand in hand with having the highest population growth rate of any state The average new house is more than twice the size of those built in the 1950s but they sit on less land. The percentage of new houses in the U.S. built on a fifth of an acre or less hit a record high in 2023 — nearly 65 percent — even as home prices marched higher “I think we’re going to hit a breaking point at some point," said Ward Mungo a past president of the Charleston Homebuilders Association who owns Ward Mungo Construction “I think we’re going to get to the point where consumers say We’re driving an hour to work and we have no yard,' " he said In the 1950s just 10 percent of new houses built in Charleston County were more than 2,000 square feet **All values have been rounded to the nearest integer Some homebuyers like the low maintenance of a small yard but many have small yards because that's what was available at a price they could afford The one-fifth-acre lots common today often mean there's little space — maybe 20 to 30 feet — between neighbors' houses "We would have preferred more yard area to provide separation from adjoining neighbors who have similar-size lots," said Robert Heath who bought a newly built 2,363-square-foot house on a fifth of an acre in Mount Pleasant in 2016 our adjoining neighbors are very considerate and accommodating."   Local rules typically dictate how small a lot is allowed to be and how close to a property's edges a building can sit but are usually silent on the size of a house Larger houses on small lots are one outcome Mount Pleasant was one of the fastest-growing cities in the nation and became the fourth-largest in South Carolina as a result Such rapid growth is now being seen in other parts of the state where modern homebuilding trends are reshaping the landscape In the older neighborhoods of Mount Pleasant the small single-story homes built in the 1950s through 1970 are a common sight but they are increasingly being torn down and replaced with larger homes The more recently developed parts of town sport large subdivisions full of large houses Wendy Walker bought a three-bedroom 1.5-bath ranch-style house in the 1980s one that's typical of 1960s-era construction in the Charleston area "I have a big yard on a tidal creek with two huge laurel oaks "I can't even imagine raising a family without that backyard to grow children in." Mount Pleasant had about 30,000 residents when Walker bought her house "It's been hard to watch my little town become what it is today and to imagine the future here," she said "Homes that stood since the '50s and '60s .. Many of those older homes are being sold for the land they sit upon, then they are demolished “We have people come in who tear down a small ranch (house) and want to build a 5,000-square-foot house," said Michele Reed "When you pay $1 million or $1.5 million for the land Terri Puiggari and her husband recently bought a classic example of a 1950s house in the oldest part of the town a 1,140-square-foot ranch on a modest corner lot They aren't tearing down the original house but are adding an addition that roughly triples its size but not like some of these mega-mansions I can see from my upstairs," Puiggari said "The problem is the price of the lots," Puiggari said "The one across the street just sold for $1.2 million and they’re going to scrape (demolish) it." Mungo said the cost of making a house larger is relatively less expensive than the cost of buying more property and that's driving the homebuilding dynamic seen in newer subdivisions There's also a profit motive, said Chris Mothorpe who chairs the Economics Department at College of Charleston “If I was a builder — builders are out to maximize their profits is to put as many houses on it as I can," he said Home construction industry publication Builder reported in July that since the 2005-06 housing boom there have been "dramatic shifts toward smaller lots" and rising land prices were cited as a key reason for one-fifth-acre lots accounting for nearly two-thirds of new home sites A property 65 feet wide and 134 feet deep would be about one-fifth of an acre The National Association of Home Builders said the percentage of lots that small had never exceeded 50 percent until 2011. And smaller lots tend to be in faster-growing states, with the South Atlantic states having the lowest median lot size east of the Mississippi River The association said the growing use of small lots has "continued despite the pandemic-triggered suburban flight and presumed shifts in preferences toward more spacious living." The association said "attempts to make new homes more affordable" was one reason for the small parcels the average house has grown larger with each passing decade even as fewer people occupied them and according to the National Association of Realtors 70 percent of homebuyers had no children under 18 in the household Still, 45 percent of new homes were built with at least four bedrooms The shift toward larger houses began to take hold in the 1960s it made spending time indoors more pleasant "By the late 1960s, most new homes had central air conditioning, and window air conditioners were more affordable than ever, fueling population growth in hot-weather states like Arizona and Florida," the U.S. Department of Energy said Indoor entertainment that didn't exist in earlier decades — large-screen televisions the internet — came along in the 1980s and 1990s and gave people more reasons to stay inside “You’ve seen the societal trend where people are less neighborly now," said Mothorpe Of course, there are always exceptions. The development in Mount Pleasant with the largest single-family homes on the smallest lots is I'On which was built in the late 1990s in a new-urbanist style that mimics parts of downtown Charleston and Savannah in a 3,600-square-foot house on a tenth of an acre “‘I’m very (physically) close to my neighbors but that’s fine because I didn’t want a big yard," he said As chairman of the town's Board of Zoning Appeals Wood sees lots of applications to replace small houses in other parts of town with larger ones and people seeking exceptions to the town's rules if they don't have enough land for the house they hope to build “I think a lot of people would like to live in walkable neighborhoods where there’s a grocery store or a pub nearby," said Professor Andrew Kaczynski director of the Built Environment and Community Health Laboratory at the University of South Carolina He said large yards offer space for socialization physical activity and enjoyment of the outdoors "If you are now lacking those spaces on your personal property kids might be suffering from (missing) the positive effects that may have provided," Kaczynski said “The lack of private outdoor space that you might have previously had in your yard we need to compensate for that with communal spaces like a library or park or even a grocery store." smaller properties can shrink the distance a person might need to walk or bike to reach a friend's home the fact that you can just walk down the street and talk to neighbors on their front porches," said Wood the size of new houses began to rapidly increase in the 1980s as people moving in from other states prompted a flood of new development The state's population has increased 72 percent since 1980 Charleston County was among several counties on the leading edge of the explosive growth A Post and Courier analysis of the county's property records database helps illustrate what happened More than half of the first-wave suburban homes in the Charleston area were less than 1,200 square feet and sat on a quarter-acre of land By 2021 the median new house size was 2,650 square feet Chart shows median finished area and lot size of homes in Charleston County from 1950 to 2022 Median finished square footage of a house by decade Median lot size has been decreasing since its peak in the 1980s Median finished square footage of homes more than doubled in seven decades it’s happening everywhere," said Tim Keane the city of Charleston's top planning official "If you go to Byrnes Downs (in West Ashley) there are small lots just across the Ashley River from Charleston Most properties range from one-seventh to one-quarter of an acre and the original homes were in some cases less than 1,000 square feet Local governments could raise their minimum lot sizes for single-family homes Large lot size requirements have also been used to protect the rural character of areas such as Wadmalaw Island where Charleston County has required 15 acres for one home (or 3 acres Awendaw, a small town immediately north of Mount Pleasant, has been considering nearly doubling the amount of land required to build a single-family home Requiring more land for the same amount of housing can be a recipe for suburban sprawl and could raise the cost of housing because more land would be required “We do talk about these things," Reed said "Typically you want to see the higher densities in the core rural areas could be mandated to have large ones — it's the transitional suburban areas in between where more questions tend to arise “Whether it’s better to have a bigger lot or a smaller lot really depends on where it is," Keane said what are we trying to have all this add up to?" he said Design is more important than "just a distribution of rights He's among many housing officials and experts calling for more "missing middle" housing such as duplexes accessory dwellings and small apartment buildings Reed said that in some older neighborhoods duplexes co-exist with single-family homes individual houses range from quite small to very large and there's shopping and entertainment within walking distance of many homes is a commercial area near the main road entrance and hundreds of large single-family homes on relatively small lots in the interior "Builders build what they project people will buy," said Mothorpe Kay Tucker Addis lives in the oldest part of Mount Pleasant and she wonders: "What drives this need to have 5,000-square-foot homes with media centers and large pools?" "Like many who grew up in the '50s and '60s 1.5-bath home without air conditioning on a 50-by-100-foot lot," she said "Two parents and two kids — the norm for the time "We had a picnic table and swing set in the backyard," said Addis As people from other states continue to pour into South Carolina the demand for new housing will continue apace And what form that housing takes will largely be guided by the dry and technical language of local zoning codes and development rules The Post and Courier is exploring the challenges ahead and the solutions being tested as rapid growth and development continue to reshape South Carolina To read more stories in the Boom & Balance series about growth and development, go to postandcourier.com/boomandbalance News tips/online questions: newstips@postandcourier.com Delivery/subscription questions: subserve@postandcourier.com Your browser is out of date and potentially vulnerable to security risks.We recommend switching to one of the following browsers: Two homes have been built at the National Gallery of Victoria to show how space can be used lazily – and smartly Australians now build and live in the biggest homes in the world our houses have more than doubled in size – from 100 sq metres to 236 sq metres – while the number of people living in them has declined And this month a 236 sq metre house has sprouted up in the back garden of the National Gallery of Victoria There are no bedrooms or bathrooms inside – in fact just a labyrinth of windowless walls that feel dark and oppressive opening out on another house – this one 50 sq metres – that feels like a sudden respite it feels roomier with its high ceilings and a beautiful play of shadow and light coming through slotted pine walls “What if I told you that you could buy that for $100,000?” he says Sometimes you have got to make the choice that actually works for all parts of your life.” Sign up for the fun stuff with our rundown of must-reads, pop culture and tips for the weekend, every Saturday morning Australia has a housing crisis overlapping with a cost-of-living crisis and a climate crisis – and the lack of house-size options between tiny and enormous must be urgently addressed to help with all three “The biggest houses in the world don’t help with cost of living And it definitely doesn’t solve a climate crisis – we’ve got the biggest carbon footprint per capita outside of the Middle East and oil-producing nations.” McLeod is keen to stress that he is not ordering people to downsize; Home Truth is an opportunity to stand in two very differently sized houses and really feel how space can be used smartly, and appreciate how design makes our lives more environmental, more convenient and more beautiful. Free newsletterCatch up on the fun stuff with Guardian Australia's culture and lifestyle rundown of pop culture, trends and tips Read more“If people want a second bathroom rather than a back yard “I’m not saying that someone living in a 236 sq metre house should move into a 50 sq metre house – this is not about judgment this is what that much space actually looks like.” Australia’s houses ballooned in the 1980s, a decade that saw shifts in financial deregulation and housing policy as well as a new era of individualisation. Within the home, people began wanting more space: home offices, spare bedrooms, rooms for each kid. Housing became a source of wealth rather than a human right which meant houses got bigger while our gardens got smaller and less biodiverse But when an extra bathroom could add $50,000 to the value of your house “It was Menzies’ great vision that we would be a nation of homeowners and governments have tried to incentivise that through taxation,” McLeod says “But take capital gains – people in other parts of the world can’t believe that you can buy a house for $1m here sell it for $2m and you don’t pay tax on it You’re incentivised to buy the most expensive house and play a stupid game.” ‘It is a horrible time for some but also an incredible time’ … Jeremy McLeod of Breathe Architecture Photograph: Eugene HylandIt’s not as though Australia hasn’t been innovative with housing before McLeod points to the RVIA Small Homes Service launched in 1947 by the architect Robin Boyd which allowed Victorians to buy beautifully designed plans for houses under 100 sq metres for just £5 (about $400 today) About 5,000 homes were built from SHS plans “To this day, they’re still some of the greatest houses in Melbourne,” McLeod adds “Australia has done great affordable housing that was beautiful and thoughtful While many of us may feel exhausted and depressed about the state of housing in Australia McLeod is optimistic that we are on the precipice of great change “It is a horrible time for some but also an incredible time,” he says “I don’t think there’s ever been a time that I can remember that is so ripe for innovation in housing Home Truth by Breathe will be on display at NGV International in Melbourne until April We talk a lot about “home prices in the US” – rising or falling or whatever, as if the US were one monolithic market. But the US spans a vast number of housing markets that all dance to their own drummer, though they all share some underlying themes. The long-running Wolf Street series, The Most Splendid Housing Bubbles of America currently charts 33 of the largest metropolitan areas with the highest home prices Some cover parts of several states and comprise multiple counties So here are the largest cities – not metros – with the biggest price declines from their respective peaks in 2021 for single-family houses and separately for condos and co-ops The double-digit decliners: For single-family houses 4 of those cities have price declines between 15% and 19% from their respective peaks in mid-2022 6 of these cities have price declines between 12% and 21% These prices here are seasonally adjusted and a three-month moving average to iron out the month-to-month squiggles They’re part of the Zillow Home Value Index (ZHVI) data The metrics include: price decline from their peak prices are only back where they’d first been during the price explosion in June 2021 Prices are back where they’d first been in October 2020 Between June 2012 and the peak in May 2022 which wiped out a portion of the city in August 2005 coincided with the beginning of the housing bust Prices are now back to where they had first been in mid-2018 Condo prices had doubled in the four years between 2012 and 2016 condo sales are the majority of the market Got a little bit of excitement going on in here the surge in bond and leveraged loan deals and all the other things that produce huge bonuses for Wall Street workers Email to a friend Once the economy goes into a recession depression they’re going to come way a lot further down I told Wolf to buy $TRUMP coin yesterday and he would be up 200% today if he did Interestingly the crypto reserve the Trump bros want the US to create is not about anything strategic from the US perspective but rather to create a price floor for crypto Of course many of them will be thrilled to have someone to take their bit coin off their hands too Well considering the activity currently in the mantle leading to a new mini ice age (polar vortex activity biggest sign) you may be buying crypto soon A travesty that our leadership and government has been willing to regulate these products the crypto scene (or at least most of it) is Tulipmania 2.0 Trump has put himself at some serious political risk when the bubble finally bursts “maybe I shouldn’t have put my life savings into Fartcoin chasing after my neighbor who made a 30x return in a month with that coin.” Rather And they’ll start at the most visible proponent of crypto IDK Florida panhandle looking pretty frosty today ;-) please be so kind as to post the Portland Single Family Chart “I will buy crypto after hell freezes over” And so is large parts of the US at the moment But I would not recommend to buy any fake coin as currently advertised and hold it except for Musical Chair purpose : when you sell something and be paid in some fake coin you immediately sell those or buy something with value and do not ‘HODL’ a.k.a I have been making fun of fake coins from the beginning but the fact they don’t have an intrinsic value might actually be a blessing especially to solve the trade imbalances China or Europe with USD and the receiver will keep those USD for a rainy day or turn them into treasuries But they do not buy anything at this moment resulting in a trade inbalance Now say we pay them with utterly worthless $Trump coins The seller may accept them but will be very motivated to get rid of those things as soon as possible So will immediately buy something with value or a future value like a delivery of oil or gas or a 10 year subscription to netflix So the worthless $Trump coins will bounce back and the receiver of those will exchange them immediately for something useful and not HODL them So the bottom line is that those fake coins may afterall have a use to facilitate group bartering between multiple parties We have all been blinded by the rediculous hodl and ponzi speculation of those things but as grease for trade it may have a future have imagined the possible outcomes like something with a needle that pricks the engorged asset bubbles The most common aspect of all these big city markets seems to be Blue…they all range from mild to extremely liberal political strongholds The economic effects of politics on business policy employment and income plays out in the housing market in real time in that homes tripled in value over about a 10 to 12 year window Based on a very similar scenario in the late 70’s to the early 80’s I’d say all these places are going to see dramatically declining prices over the next few years Where the US is right now reminds me of the oh crap scary feeling on a roller coaster and the bottom is still down a lot further away!! but it appears a lot of these folks will be economically devastated in the near future Blue areas are now a refuge from the retrograde social agenda currently in play as of this morning but that cheap tends to come with all sorts of restrictions and outright hostility at the state level that half the country isn’t interested in living with Large portions of the country are voting with their feet which sets up some ugly dynamics when you look at national policy and provides some real heartburn for national manufacturers (see also California emissions standards) A balkanized country is not a united country The people who will get crushed are speculators who overbought and aren’t reading the room Price declines for STR will make anyone too close to the edge fall off if your rental equation can’t handle a decline in either price or volume I am going to be following this type of internal migration story with interest I read on some political boards that many Dems feel trapped in their red states because either they can’t afford to move to some of the more expensive blue states or family obligations and such keep them there But as the screws tighten in the coming attempt at implementing the handmaid’s tale and xtian nationalism in the silly states that are receptive to that nonsense I expect to see more migration of this type from those who can afford it California may become interesting that way – the less expensive central valley and far northern counties that are currently red or red leaning may get an influx of Dems from other states who cannot afford housing in the blue urban areas but may be able to in these areas of California but which I’ll observe to see what unfolds chronicling the repetitive behavior of human beings across centuries That is one answer to the question that requires continuous updating is a gift that is given when the day is done America is the least dirty shirt in laundry pile of monetarist experimentation The roaring 20s redux coming to a country near you but history is apparently not Americans’ strong suit Following the roaring 20s came the stock market crash of 1929 the Smoot-Hawley Tariff of 1930 and the failure of the Kreditanstalt Bank in Vienna in 1931 Can anyone guess the major political event in Europe in 1932 I definitely agree that history is not America’s strong suit I think you’re just saying large metropolitan areas are statistically more democratic Which is just pointing out a rural vs urban divide and doesn’t really have anything to do with anything here Not sure the politics of these towns is germane to the real estate market these towns just got particularly bubbly in the recent past What is clear to see in most of these charts is that prices almost tripled in most places from their lows in 2011-2012 to their new highs in 2023 We’re talking housing – a basic human need We’re not talking cryptos or some other speculative investment This makes working class people much poorer and the recipients of home payments and property taxes richer Housing so far has made a very minor correction back to sane valuation levels The elite billionaires and Forbes 500 millionaires are the 21st century “Marie Antoinettes” running the country and they are completely clueless about the real state of our economy I fear things are going to get much worse it’s going to have to get a LOT worse before it gets better and the pandemic response was almost zero interest rates policy is designed in a way to enrich the property investor class while putting working class and lower middle class Canadians at a huge disadvantage The owners of Toronto and Vancouver property vote against more housing supply yet vote for increased “population growth” in order for them to pack several families into a basement charging extortionate rent Houses which went for C$300,000 in the middle of York Region were selling for almost C$2.3 million at the early 2022 peak Toronto’s housing supply has increased considerably in the past quarter century but it has taken the form of condos and townhouses The central city was built up years before that If you want to buy a single family home there The house I grew up in came into the family in 1929 for C$1,250 it was listed on a real estate web site for C$1.7 million I recognized the exterior but not the interior which had been totally upgraded Toronto residents do not get to vote for or against new housing But the high cost of housing in Toronto and Vancouver has helped bring down Justin Trudeau’s political career I don’t believe so for reasons I posted earlier I still think this rise was the result of slow building recovery and the rise of Airbnb slowing taking millions of units off the market and turning them into hotels Cities in Florida because of changing building codes and the insurance crisis have had to make expensive upgrades just for hurricane mitigation When you add renovations to old bath and kitchens it is big bucks I picked up a cheap cash out in the fall of 2020 and spent easily $250+ My neighbors across the street just completed new tile roof Zillow pricing is totally inadequate in Florida’s market because they have no way of pricing upgrades when comparing identical models I did all of the above upgrades plus 3 new baths My house it priced 400k under current market price when comparing resent sales I would love to downsize and sell my family home to a family But capital gains on primary residence are holding many people back because they have no place to go I think it is the capital gains TAXES not the capital gains that are holding people back The exemption from capital gains taxes has not increased since 1997 Two of my very senior neighbors are now in assisted living facilities or nursing homes their former homes will transfer to older relatives with no estate or capital gains taxes it is a problem that affects us all which generates potential political energy that may have prevented the tragic message of the asset inflation charts Prices for overpriced assets have not noticeably come down I sense they may be hanging on by their finger nails A decade-long central bank policy of rate repression resulting in a decade-long moonshot in real estate prices (at least in these metro areas) peaking when the monetary authority takes 3 of its five fingers off the scale That (un-elected) policy-setting committee is one powerful group Imagine how much worse it would be if we left it up to an election by the ignorant proletariat Let’s have sound money and we don’t need the Fed I agree and suggest that the discrepancy between the cost of living and the median wage is not just political but constitutionally against the common defense 96 pct of the people we interact with have less than the 400K income level that the group think DC Congress has determined is at the verge of economic inconvience most of them make less than 40 dollars per hour which computes for an annual salary of about 80 grand The New Orleans single family homes are priced at the level of NOLA condos I don’t see this happening in the other big cities Never mind… looks like the same chart was used for both single family and condos for New Orleans The condo chart for New Orleans is now posted that is surprising condos are quite a bit more expensive than single family homes Condo fees in my town are often around $1000 per month on top of the $1000+ in taxes per month and especially when people know these fees are soaring Does someone get a fee for setting up and keeping the fund where these funds are held HOA fees also apply to houses that are in a HOA But houses without HOA have homeowners insurance and property taxes and that affects HOAs as well as houses without HOA Insurance has gotten so expensive because of the risks and because of the replacement costs for insurers that have shot up by 50% or more over a few years and doubled over a few more years in many places Many HOAs in my area also cover exterior expenses like painting a buyer needs to know what the age and state of those covered components are and what reserves have been banked to cover them the monthly fee level is relatively meaningless My main issue while not wanting a house within in HOA was the often had unreasonable and often abtritrary rules No cars overnight on the street or garbage cans are not bad guidelines but unreasonable if militantly enforced with high fines The deal breaker with me was noise which wasn’t connected to city or county laws but if somebody complained I do see where an HOA can keep home values up and add value so to each their own It is nice to not have any of those fees and just have property tax and home,/flood insurance which is about 10K a year on a 600K house I wouldn’t mind the fees if they were reasonable If I were running the HOA the only rules would be around basic maintenance of yard & house and no RV I like those detailed rules to keep others from trashing the ‘hood with poor taste and clutter and it would be awesome if there were some fairly strict standards Utterly baffling to me how Americans are so prideful in individual freedoms but will live somewhere that will force them to pay money and won’t let them paint their front door a different color or they potentially get a lien placed on the very home they live in and pay for I rented a room from a guy for a year or so in an HOA community and I mean never will I live on an HOA again I’d rather be living in a camper pulled by my truck and stuff my few things in a storage unit than do that again Busybody boomers with nothing to do but legally stalk and harass people over the dumbest bullshit ever It snowed while you were at work and you didn’t have the snow shoveled off your driveway within 2 hours You opened the hood on a vehicle to fill your washer fluid You mowed the grass and some of the clippings didn’t get completely vacuumed up into the bagger and turned brown A windstorm came through and blew your garbage can over in the middle of the night Water bill is expensive so you set the sprinklers to water once in the morning and not twice a day The old fellow I was renting from paid 550 dollars a month as a base HOA fee He got popped for 100-150 dollar fines every month if not more often The gated community was full of people flying Gadsden flags from their trucks and would have 3% bumper stickers and regale the world with the coming communist regime in the US It sure seemed to me like they were living in a communist dictatorship as it was Nevermind the 1.5mil dollar home made with spackled walls because the dryrock work was so poor you couldn’t paint it smooth or the HOA blowing 100k dollars every summer to “seal the asphalt” so it looked new and shiny black instead of like dull asphalt If you would like to get the WOLF STREET email updates you will get an email each time I publish an article The email has the headline and subtitle of the article and the link to the article https://wolfstreet.com/sign-up-here-for-wolf-street-email-updates/ With an HOA you don’t really own your home “I do see where an HOA can keep home values up” I should be able to lower my assessment by trashing the front yard But I don’t think it works like that The HOA is like a lean holder on the property with rights that at the extreme gained possession of an incalcitrant homeowners home Soon we may wake up and realize that it is the unregulated judicial branch that is the constitution’s worst enemy which many people don’t put aside for say their single family home A lot of folks think of HOA fees as something completely additional to owning a property they can cover a lot of what a single family property owner would have to pay for out of pocket anyway “they can cover a lot of what a single family property owner would have to pay for out of pocket anyway.” How is that different than renting and having the landlord fix stuff I don’t mean the legal difference – the practical If you see some rotting wood under your siding can you fix it yourself or are you required to call someone Can you smoke on your property and have overnight guests Many leases I’ve signed have these restrictions a do many HOAs But “owning” with an HOA seems like the worst of both worlds A bunch of rules to follow and you still have to mow your own lawn There’s not a more depressive feeling than driving past the abandoned assets in your neighbors yard with no one to tell them too clean it up The only motive that would induced American citizens to agree to pay for the HOA service They also manage the subdivision common garden if they have determined that you have no juice and are in violation against the limit of weeds that volunteer in my wife’s never chemicals long term experiment Just to pick a random city for example: per the charts in this article the mean price for a SFH in Oakland CA was pushing $1MM in 2022 the median income in the same city in the same year was $94k and change the ratio of average home price : average salary is 10:1 In my mind the only explanation is the speculative purchase of homes by whoever (individuals “home price : average salary is 10:1 A big part of it is the buyers are not 10:1 lots of retirees who bought ages ago for a fraction of this price may appear to be 10:1 or 30:1 but they’re more like 3:1 (or whatever) vs their cost to live there now Too many people focus on this average income / average price ratio It isn’t meaningless but it’s not a very good measure of anything I think a better measure would be whether workers with say 10 years of experience can afford an entry level home I’d argue that income based indicators have less applicability in desirable areas it’s more about how much savings and wealth you have Wealth has concentrated as a result of monetary policy “The federal government made $2.6 trillion in funds available to respond to COVID-19 and spent $1.6 trillion of that in fiscal year 2020.” That is a total of $4.2 Trillion It did not just go “poof” and disappear The money ended up in somebody’s bank account Pity the poor souls who now have all that new money Of course they are going to go out and buy assets (like houses and stocks) Found new numbers on how much was spent on covid the federal government authorized an unprecedented $5 trillion in pandemic response spending The majority of the prime recipients of this funding were located in the United States approximately 2,000 prime recipients in 177 foreign countries received a total of $6.4 billion.” Source was “Pandemic Oversight by US gov ” 2,000 prime recipients in 177 foreign countries received a total of $6.4 billion.” what makes them 2,000 foreigners i don’t care how much it has come down in the bay area Could say -50% for all i care its still unaffordable Also this isn’t even the truth of reality in the bay area You’re crazy if you think that a single family house in the bay area is comparable to a single family house in any other city Literally talking about a house that has to be torn down and completely rebuilt to live in the thing If you’re in any ratio of 3:1 or higher then the truth is you can’t afford a house cause you’ll never beat out any of these cash buyers (Contractors or tech companies just buying up land to own it) My manager used to laugh at me when I told him i was saving for a house in the bay area he said the prices of houses were going up faster than my salary “Could say -50% for all i care its still unaffordable” Everyone likes to make these judgments based on their situation To everyone who buys (and there are plenty who have been) it is by definition “affordable” Everyone who can’t buy declares them “unaffordable” My guess is this statement has to do with median salary to median home price Yes there’s always the rich who can buy anything But the median to median is a bogus and unrealistic expectation Of coarse it is hardly random which sounds the alarm that economic mischief is afoot Especially given your evidence of the inequality in our society which exceeds all previous episodes of concentrated wealth in the nation’s history Really important information for people to see and understand Double and triple tops in some of these markets and others Real estate speculation is bad for humanity Things will change when there is finally a recognition that a house is actually a financial burden and not an investment A financial burden accepted by millions and millions of folks who desire a place to provide shelter and a place to build a nest for the raising of their offspring due to the nonsense put out by the National Association of Realtors and equally nonsensible programs that show house flippers getting rich has it been thought of as investment grade activity The conduct of our fellow citizens falling for this nonsense is best described in Charles Mackay’s famous book “extraordinary popular delusions and the madness of crowds” but like everything it depends on where and when you bought Selling my house 20 years ago and downsizing away allowed me to retire in my fifties As I write this I am looking at trumpeter swans floating by on the river I live on This place has never been a rental and never will be Our last place was the home that my children grew up in The people I sold it to had a young child when they moved in A house is much more than an investment in the same way that a meaningful career is much more than just a job It’s important that you enjoy and thrive in a place where you spend most of your living hours My daughter and son in law have paid off their modest home this year This will set them up financially for the rest of their lives so instead they paid off a home along the way for about the same monthly cost i think you’re making the same point housing wouldn’t have gone up the way it has if people were buying it to raise families as you did and as the couple you sold to did how many houses sat vacant during the 2021-2023 madness as people didn’t want to sell and lose another 2% of appreciation each month that’s the mentality that needs to change nobody should get rich buying residential real estate The question I have is whose paying the mortgage on all those This quote applies to the current real estate markets think in herds; it will be seen that they go mad in herds while they only recover their senses slowly Extraordinary Popular Delusions and the Madness of Crowds If 100 goes up 38% to 138 and then drops 19% you have lost about $26 and are only up $12 After four long years of waiting for prices to come down my spouse and I have decided to stay in our current (paid off ) home paying more and getting less if we bought a home right now Me think the “Weimar Boy” lost control of 10 bond yield…I expect mortgage rates will stay above 7% long enough for the drunken sailor to realize spending 2/3 of their net income on house mortgage Exactly the reason boomers aren’t leaving there existing homes that and a bunch still have adult children living with them because rents are so high We’re selling 24 hours after the last one moves out That’s one of the main reasons I am still in a family sized house living in less than a notable portion of the available area calibrated to compensate for the dour propensity of age Been looking for a house to buy but prices are still insane and my rent is only $500/month Just like the circumstances that led to the fires in LA were a designed failure so too is the US economy and markets being set up for the same type of conflagration The scum running this country have done everything to make the cancer patient look like a super model and only the most foolish are buying it and the funny thing is that speculators are now all over bonds with complex highly leveraged risky trades Is there a searchable database showcasing these same datapoints/dates across the top 100 U.S what strikes me is how far the prices have too fall to entice buyers And how refractory to a price decline that the housing market is and I’ve noticed that the house flipper has taken one of the properties off the market The property next door is the next flip; they probably bought both houses at the same time—I should do some research on that They asked for $1 million in a neighborhood with an average value of around $750,000 This neighborhood is quiet but far from the 1m dollar range in value I would rather live in a small apartment in SF than a single-family house in Oakland Living in Oakland around 2011 was a great experience Jobs were hard to come by but housing was cheap and plentiful The city was clean and (relatively) peaceful and the residents were happy Then the range rovers started to move in and I left soon after Now I go back and the whole city looks like a warzone It’s unbelievable how much can change in 12 years If there was ever a time to buy property in Oakland I was too focused on starting a family and did not understand finance I would have purchased a rundown home in a good neighborhood and made it my own Now that my ability to afford a home has diminished I struggle to see the value in buying overpriced properties in this city There are areas with homeless encampments where hygiene is clearly lacking and visible drug use is every day I’m not blaming anyone for the city’s conditions but it has been mismanaged for several years It was already here in one form or another The cause of all this seems to be the 2% mortgage free money bonanza in 2020-21 But why did that tidal wave of cash wash over every market except for San Francisco and New York that barely registered a blip Shouldn’t the money supply & inflation impact all markets somewhat equally it was also the belief that people would be able to work remotely forever there were always a lot of people who wanted to live in idaho and people took their high salaries from chicago and the bay area and brought them elsewhere leading to the “low inventory” meme prices previously were based on the incomes in the area the “law of one price” i learned in university years ago kicked in and housing prices in desirable markets like the ones i named up above reset to the incomes from the highest cost of living areas as people are realizing fully remote is not here to stay people taking their big city salary and buying a home in Boise or Austin or Park City The Fed inflation of home values from 2020 to 2023 was very broad but the spike hit biggest in the “Zoomtowns” places that were appealing to a lot of people but didn’t have the incomes to sustain high housing prices which makes the situation look worse than it actually is There was a large inflation about 4 years ago including a general increase in both prices and wages (because wages are prices) If you printed those graphs in real terms then the increase would be much less dramatic condo prices in San Francisco are only up about 7.5% in real terms since late 2003 A 7.5% increase over 21 years is not that much Bear in mind that the minimum wage in California has increased by more over the same period If you’re a fairly low-wage worker making 20% over the minimum wage then a condo in San Francisco is much CHEAPER now than it was in late 2003 If you inflation-adjust falling prices they look even more terrible We had close to 20% cumulative CPI inflation since Jan 2021 So the price fell by 20% and there was 20% inflation you lost close to 40% of the purchasing power of the house These home price charts ARE INFLATION INDICES They measure how many dollars it takes to buy the property It’s conceptual nonsense to inflation-adjust inflation indices it measures the rate of change of consumer prices Houses and condos are not consumer items; they’re assets and these charts ARE INFLATION INDICES of home prices There have also been large swings in mortgage rates over the same period Most 1st-time homebuyers take out a 30-year mortgage and are looking for a monthly payment they can afford After adjusting for both mortgage rates and inflation the monthly payment for an SF condo is not much different from what it was in 2016 and there hasn’t been much of a decline If you adjust for both inflation and mortgage rates then you’d get the following prices for a comparable SF condo: These figures are approximate because I estimated some prices by looking at graphs visually Of course you can argue that we shouldn’t adjust for inflation and mortgage rates the point I’m making is that the situation is not the same as it was in 2007 prices had shot up despite increasing interest rates That degree of unaffordability has never been reached since then The graph showing a housing bubble which is dramatically larger this time (2016-2022) is partly an artifact of inflation The recent dramatic decline in prices is largely caused by increasing interest rates unlike 2009-2012 when prices crashed despite declining interest rates There has also been a 19% increase in median household wages since 2004 If you adjust for this also then prices are only 9.9% higher now in SF than they were in 2004 I agree with you that there has been a second bubble Affordability has not gotten as bad as in 2007 and people can pay their mortgages to a much greater extent The Atlanta Fed has an interactive model you can go play with affordability really is the ultimate driver of home prices with temporary peaks due to greed and valleys due to fear thrown in I look to experiences at car dealerships for some insight into human nature and how that translates to home prices Many times dealers will try to negotiate in terms of monthly payments rather than the price of the car or the price of the extended warranty why would they do that if it didn’t work You want that shiny beautiful car that you think you can’t afford let’s get you an affordable monthly payment and it will come with an extended warranty for just $x more per month It works because they know you want that fully loaded beautiful truck that you think is out of reach and they provide an option that can make it a reality for you people that want to buy a house will buy it if the monthly payment is affordable and if the affordability gets better due to perhaps lower interest rates or higher wages then they will buy a nicer house because now they can afford it And if you provide them a negative amortization loan that cuts their mortgage payment in half then they go for two or more houses like in 2005-2007 and become “real estate investors” or buy a Mc Mansion on a hill and feel on top of the world Bloomberg: Home sales stall with 7% mortgages… I’m surprised to see these price declines in Washington D.C If it’s true I think its due to the lack of affordability since mortgage rates went up after June 2022 With government workers now being forced to work back in their offices (new Executive order) I believe a lot of them will think twice about suddenly incurring a long commute The new administration’s employees may like to be closer to the employment which should boost demand for city housing “I’m surprised to see these price declines in Washington D.C.” Washington DC has been hit hard by the pandemic aftermath About 40% of the small businesses have closed WFH has decimated the downtown area businesses which depend on foot traffic I’ve never seen a decline like this in my entire time here No one wants to go downtown unless you have to With the changover in administration a lot of Federal appointees Most of them are Dems many who who prefer city living So look for a housing glut in DC to materialize further depressing RE prices there while the suburbs will flourish Any metro-wide average price data is very misleading as Wolf’s data is already showing I’ve had a change in heart since my last post I would bet that with the new administration pushing for Washington D.C We’ve definitely reached rock bottom here While most of the new Republican appointees will chose to live in Northern Virginia vs Washington D.C there are still a lot of contractors and people who are not connected with the adminstration who will chose to live in the city once things turn around I’m still waiting for an example of a new-issue CD with a 5% coupon You’ve claimed these exist but I can’t find them just rolled over my 1 year 100K CD this week I will go in and ask them what the new rate is The other day I went on Zillow for the first time in a couple of months My focus is in the Coachella Valley (Palm Springs – Palm Desert area) The market in the Valley has been on fire for the past 5 years with many nice but still affordable homes (previously around $300K) now selling for 2x+ from just a few years ago The Valley attracts a huge amount of tourists and became a hot spot for AirBnB property owners and SFR REITs and hedge funds I was somewhat amazed to see a lot of listings with large price reductions The housing market here in the desert is opposite that in most other US markets since the winter is our busy season due to tourism I found it interesting to see numerous $20K and even $50k price cuts It will be interesting to see if the number of NOD and foreclosures will start climbing soon We are now tracking another small mid-century hotel in Palm Springs with a recent NOD which one is performing the best in terms of a steady upward progression We believe everyone should be able to make financial decisions with confidence And while our site doesn’t feature every company or financial product available on the market the information we provide and the tools we create are objective See how far your homebuying budget could take you. Enter your income, monthly debt payments, and available cash for a down payment into our home affordability calculator, and we’ll crunch the numbers for you. Enter the minimum amount you must pay each month toward debts, such as credit cards and student loans, to avoid penalties. Do not include any current mortgage payments in this number.Recurring expenses (monthly)Recurring bills or obligations that take up a significant amount of your budget, like childcare or tuition payments.Loan infoDown payment (0%)Interest rateLoan term30 years15 yearsShow Other Costs NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.4.5 NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.Min. credit score 620620 NBKC offers conventional loans for as little as 3% down. NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.Min. credit score 500500 New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois. NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.4.0 NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.Min. credit score 580580 First-time home buyers may qualify for 3% down mortgages at Rocket. NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.5.0 Veterans United offers VA loans for as little as 0% down. On VA loans, NBKC offers down payments as low as 0%. Rate offers conventional loans with as little as 3% down. Rocket Mortgage offers conventional mortgages with as little as 1% down. NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.Min. credit score 640640 NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.Min. credit score 670670 NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.Min. credit score 680680 Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners Fact CheckedHow is this page expert verified NerdWallet's content is fact-checked for accuracy It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible Kate Wood + more To calculate how much house you can afford car loan and student loan payments) and the amount of savings available for a down payment Mortgage rate: We automatically provide today's average 30-year fixed interest rate for a conventional loan If you've been quoted an interest rate by a lender The average isn't specific to you: A lender is going to offer you a mortgage interest rate based on key financial factors like debt Lenders generally offer their lowest available interest rates to borrowers with the highest credit scores Costs of homeownership: You might also want to adjust the additional expenses we include — like property taxes and homeowners insurance — to more fully account for those homeownership costs We calculate these costs based on national averages If you're hoping to buy a home in an area where you'll probably want to increase that value Debts and expenses: Bear in mind that these results are estimates based on your input Our math for what's affordable — or what's a stretch — may not fit with how those figures feel for you If you know you have major monthly expenses that aren't debts (childcare is a prime example) a number that's affordable on paper could be a serious stretch IRL Adding those expenses to the "monthly debt payments" field could bring that number down to earth if buying a home would allow you to ditch ultra-high rent payments a home price that appears aggressive could feel just right for you Our calculator uses a 36% debt-to-income ratio If you're wondering where that 36% threshold for housing expenses comes from This states that you shouldn’t spend more than 28% of your gross (or pre-tax) monthly income on home-related costs and no more than 36% on total debts (including your mortgage your monthly housing expenses shouldn’t exceed $1,540 multiply your pre-tax monthly income by 0.28 say you take on a home loan with that $1,540 mortgage payment and you've got another $500 in debt payments or other expenses Your total monthly debts and expenses would now be $2,040 Dividing that number by monthly pre-tax income — again That's pushing a bit past the 28/36 rule's guidelines for total debts Monthly debt payments totaling $1,980 — just $60 less — would be in that 36% sweet spot The 28/36 rule is a broadly accepted starting point for determining home affordability but you’ll still want to take your entire financial situation into account when considering how much house you can afford Mortgage lenders tend to focus on your DTI as an important metric for calculating the amount of money you can borrow DTI compares your total monthly debts (for example including insurance and property tax payments) to your monthly pre-tax income is $2,000 a month and you have a monthly household income of $6,600 before taxes Generally, housing expenses shouldn’t exceed 28% of your monthly income — there's that 28/26 rule again. Depending on your credit score and the type of mortgage you're getting You can also reverse the process to find a comfortable housing budget by multiplying your income by your desired DTI ratio a $6,600 monthly gross income would allow a mortgage payment of $1,848 to achieve a 28% DTI Sometimes loan officers will start right in with “Let's see how much you could borrow,” prepared to dazzle you with a high number But the amount you could borrow doesn't necessarily translate to how much you can comfortably afford Know what monthly payment could work for you before you start talking to lenders This will help you keep things rooted in reality especially if you know you've got hefty monthly expenses that aren't debts — think stuff like daycare » MORE: Calculate your DTI ratio but there are other factors you can consider when you're thinking about home affordability This is the amount of money you have available to make a down payment and cover closing costs Some lenders may want you to have enough cash on hand to cover a few months' worth of mortgage payments think about other monthly obligations or bills you might have That could include expenses like childcare or groceries as well as money goals you may have set for yourself like putting a certain amount toward retirement each month Homeownership expenses. You'll have costs that go beyond your monthly mortgage payment as a homeowner you'll probably incur no matter where you live (unless they're included in your rent) Those numbers could shift: Heating and cooling a house will likely cost more than an apartment You may want to budget for emergency expenses and regular upkeep Credit profile. Your credit score and the amount of debt you owe influence a lender’s view of you as a borrower. Those factors will help determine how much money you can borrow and the mortgage interest rate you’ll earn Want a quick way to determine how much house you can afford on a $40,000 household income? $60,000? $100,000 or more? Use our mortgage income calculator to examine different scenarios mortgage rate and the down payment you expect to make you can see how much monthly or annual income you would need — and even how much a lender might qualify you to borrow That calculator also answers the question from another angle: What salary do I need to buy a $300,000 house It’s another way to get comfortable with the home buying power you may already have To calculate how much house you can afford, we’ve made the assumption that you're buying a home with a conventional loan more than three-quarters of home loans were conventional loans With a military connection, you may qualify for a VA loan Mortgages backed by the Department of Veterans Affairs typically don’t require a down payment VA loans do have some limitations — for example, these loans can only be used to purchase primary residences. You'll also pay a funding fee in order to get the loan. To see what you could afford with a VA loan, use our VA loan calculator - Abby Badach Doyle You will probably notice that any home affordability calculation includes an estimate of the mortgage interest rate you will be charged our default is to show you today's average interest rate for a 30-year The interest rate you're quoted will be relative to a lender's base rate on the day that you apply. A higher credit score steady income and a solid down payment should put you at the lower end of the lender's current rate offerings Weaker financials and a lower credit score likely mean a lender will apply a larger margin to their base rate — lenders will want a higher interest rate for what they perceive as a riskier loan Won’t affect your credit score» MORE: How to get the best mortgage rate » MORE FOR CANADIAN READERS: Mortgage affordability calculator 2024We may earn a commission from links on this page.Start SlideshowStart SlideshowImage: Feverpitched (iStock by Getty Images)There are many factors to take into account when buying a home: location cost and — especially for people hoping to grow their families — size the median square footage of newly built homes was on the decline between 2015 and 2020 But even as square footage decreased in the short term there has been a decades-long increase in the areas of single family homes The median single family home built in 2020 had a floor area of 2,261 square feet a 4.2% increase from 2010 and a 9.9% increase from 2000 The size of the median single family home reached a peak of 2,467 square feet in 2015 before declining to the 2020 median a change that experts attributed to the economy’s slow recovery following the financial crisis the dip in the economy actually led to an increase in both the size and the quality of new homes being built during this period “When you look at the characteristics overall of the new homes that were started between ‘09 and ‘15 you’ll see that homes got bigger and bigger and they were more loaded with amenities year after year steadily between ’09 and 2015,” Quint told Business Insider In spite of these decade-by-decade increases it is not the United States that leads the world in large “The ranking is based on average square footage but the study also takes into consideration average household size per country as well as data for percentage of households by living members, overcrowding rate and percentage of homeowners,” the Perfect Rug report explained. Continue reading to see which countries have the largest single-family homes. List slidesNo. 5: MaltaList slidesNo. 5: MaltaImage: Sylvain Sonnet (iStock by Getty Images)Malta has the world’s fifth-largest homes, with an average size of 1,722 square feet. The average household size is 2.85 people and 81.9% of the population are homeowners. List slidesNo. 4: CanadaList slidesNo. 4: CanadaImage: rawfile redux (iStock by Getty Images)The average Canadian home is 1,948 square feet, while 66.5% of Canadians are homeowners. The average household size is 2.45 people. List slidesNo. 3: United StatesList slidesNo. 3: United StatesImage: Alexander Spatari (iStock by Getty Images)American homes are 2,164 square feet on average, making them the third largest in the world. The average household size is 2.49 people, while 65.9% of Americans are homeowners. List slidesNo. 2: New ZealandList slidesNo. 2: New ZealandImage: Scott E Barbour (iStock by Getty Images)Houses in New Zealand are 2,174 square feet, on average, while 64.5% of Kiwis are homeowners. The average household size is 2.67 people. List slidesNo. 1: AustraliaList slidesNo 1: AustraliaImage: Kieran Stone (iStock by Getty Images) New Zealand’s neighbor Australia has the largest average house size in the world with 66.3% of the population owning their own homes Use these cool Minecraft house designs as inspiration for your newest build Looking for Minecraft house ideas? Minecraft shows no sign of slowing down any time soon If you're looking to build your perfect Minecraft house ahead of the movie release or to take advantage of the 1.21.4 update we have you covered with a range of house ideas and designs below We've compiled a list of 47 of the best Minecraft house ideas we've ever come across below Each of these homes has a link to a YouTube video where you can watch the house being built and follow along you can simply have a scroll through a wide range of beautiful builds that include Japanese pagodas To save you some trouble sifting through the smörgåsbord of house designs on offer we've popped them into some handy categories below Whether you're after a starter house or something more elaborate click on your preference to be directed to your new home If you're after inspiration for other architectural projects besides houses, be sure to check out our list of things to build in Minecraft! We've also got dedicated guides for Minecraft tower ideas and Minecraft castle ideas When launching into a brand new seed the first few days in Minecraft are crucial you'll likely need a strong starter house to keep you going before you endeavour to build something more 'luxury' orientated Below we've gathered simple but efficient house ideas to help you get started and then a few more designs to expand upon those when you have the materials to do so If you want your first survival home to have more of a cabin-y vibe, then YouTuber WiederDude has put together a quaint and compact starter house made from oak and birch wood It's amazing how powerful a simple fence encircling a balcony can be in elevating an otherwise very straightforward home If you want to set up home in the Mangrove Swamp, then YouTuber Folli has created a lovely looking starter house out of materials found in the biome rustic house that strikes me as the perfect base to build far from your main home Zaypixel's lovely little starter house is made from nothing more complicated than spruce and oak wood and a little bit of deepslate (which you can easily substitute for cobblestone if you'd prefer) The finished product is an easy to build but very idyllic looking house that would look perfect in the middle of a lush flower forest In stark contrast to the previous compact house, next up is this towering home built by JUNS MAB Architecture Tutorial This home looks like it was built to be the ultimate base of operations with multiple floors for all your needs and carefully crafted and bordered windows All of these elements add up to ensure the build is a striking image on the horizon A farmhouse can be just the thing to maximise your efficiency in Minecraft and keep your character with a steady supply of food and materials you could just throw some crops together but having your own organised farmstead is a comfort after a hard day mining for ancient treasures This beautifully designed farmhouse, once again built by JUNS MAB Architecture Tutorial, is a cut above most other Minecraft farmhouses thanks to the modular raised design of its little square farms. There's also plenty of room inside the foundations for later expansion, and you could even house a mineshaft all the way down to Diamond level Zaypixel is great at creating idyllic-looking scenes and this large two-storey farmhouse is no exception and stone bricks makes this a fairly simple build in terms of materials but details such as the vines growing up the sides and the lanterns hanging from the edges of the roof all turn this farmhouse into one most definitely worth living in If you've already built your farmhouse and want to continue living a charming Minecraft countryside life, why not go for something wind-powered with this rustic windmill? Zaypixel has devised a great tutorial that's easy-to-follow and features creative usage of wool and smooth quartz stairs to form the windmill blades The end result is a building that looks instantly inviting - and also sustainable Whether you want something that fits a whimsical vibe or you want to see something from your favourite fantasy genres recreated in Minecraft the following builds are truly something special The aptly named Minecraft Fantasy Builds channel put together a video on how to build their grand fantasy house from start to finish The roofing is particularly good on this build and I love the archway balcony peeking out over the top garden It looks like the perfect place to just relax and gaze out at the landscape all around you If you're after inspiration for a slightly larger base, then take a look at this marvellous fantasy mansion from YouTuber BigTonyMC This painstakingly crafted manor is made from logs and stone bricks but the real strength is in the little details and the excellent clock faces in the towers all combine to make this house a real feast for the eyes This lovely brick-roofed fairytale cottage from BigTonyMC really feels like it could house either the innocent protagonist or the seemingly pleasant but actually evil villain that you'll find in any Brothers Grimm fable and is the perfect inspiration for anyone who wants to give their home more of a fairytale feel Grandeur and scale isn't for everyone, and YouTuber Goldrobin's Hobbit Hole is a good shout for players who dream of living in a compact starter home where everything is in easy reach For full effect you'll need to recreate the Shire with a good foresty hill for the Hobbit Hole to poke out from Zaypixel is back this time with the ideal home for a reclusive and powerful spellcaster This wizard tower home is made from stone bricks and it appears as though it's stood for millenia This is the perfect build for someone who wants a tall Transitioning from wizardry to witchcraft, YouTuber PlatinumThief has put together a squat and wonderfully creepy-looking witch house for players who want to embrace their inner occultist and do a spot of Minecraft potion brewing The prismarine roof may give survival players a bit of trouble but otherwise this is a very easily imitable house for newbies looking to start their Minecraft adventure Just make sure you find a nice swamp in which to set up shop If you want to go one step further from a simple witch house, try this full-on Haunted House for size, made by ThaMango As one of the new structures featured in a very cool video coinciding with Minecraft's 1.21.4 update the Haunted House is an excellent way to make use of the latest bricks provided in the new Pale Garden biome The grey textures and gloomy vibe are perfect for constructing a manor fit for the Addams Family or any other equally creepy collection of ghoulish residents that you might be able to imagine Another creative house built by DiddiHD this one flies the infamous black and white skull and crossbones of piracy This pirate base is made almost entirely from various kinds of wood but the intricacy of its layout and structure provides a lot of hidden depth and complexity If you're a water sign with a penchant for seeking out coastal views Through clever architectural design and carefully placed (we presume strengthened) glass these houses are sure to leave you beach-ready If a life of yo-ho-ho piracy isn't enough for you, maybe it's time to truly embrace the Seven Seas with this underwater house by JUNS MAB Architecture Tutorial this should probably be named an On-the-water House this is a wild work that's sure to challenge any experienced builder and is filled with lots of neat gimmicks in its contours including chests and lanterns throughout the walls - perfect for hiding and displaying that ill-acquired pirate booty Okay, so you've built a partially submerged house. Now it's time to take it to the next level and make it circular! ManDooMiN's creative Ultimate Circle Underwater House - described as "a house from the future" - features a degree of cosiness that's less pirate more "mermaid who wants to settle down and have a cup of saltwater tea." Half of this structure is submerged and there's even a porthole-style opening perfect for piloting and parking your boat If you loved creating container houses in Subnautica, then this Underwater Base build by IrieGenie may be for you With the exception of an above-ground porch almost all of the build is submerged underwater and boasts 360-degree views so you can watch the squids and other sealife as they float on by The detached rooms of the build look as though it could be a research facility of some kind but once you take a closer look inside add the inside fish tank and lose yourself in the moral conundrum of keeping fish as pets whilst living underwater If Grand Designs is more your jam then consider the following house builds The cubic nature of Minecraft lends itself well to the ultra-sleek and minimalist vibes of modern architecture If you want to live out your dream of living in a Malibu mansion in the middle of nowhere If you want to build something in line with modern sensibilities, YouTuber IrieGenie has put together a lovely design complete with a pool out front and granite as well as the more affordable stone and sandstone blocks - but the results are exquisite Here's another beautiful modern house design by YouTuber OSHACRA Though the primary materials are quartz and concrete and a layer of grass on the rooftops to add tonnes of depth and character to the build This spacious modern-style house from JINTUBE looks fabulous not just from the outside but also from within A lot of work has clearly gone into putting together each individual room of the house so it's great inspiration both for architects and interior designers alike Stripped logs are among my favourite building materials these days, and they're used to great effect to create this unusual take on a modern-style house, made primarily from wood of different kinds. This lovely creation by SheepGG has just the right amount of space and touches of flora around the sides to turn it into a wonderfully welcoming abode What can I say; people love the modern housing style. All those clean corners and non-symmetrical layouts make for a striking and pleasant place to call one's own. If you want inspiration for a dwelling that gives you enough room for every single one of your needs and more, then this mansion by IrieGenie is a great starting point for inspiration JUNS MAB Architecture Tutorial gets another shoutout for their simple but effective modern house design with a line of concrete that snakes back and forth up the sides of the house separating the glass walls of each floor and making the whole thing look far more attractive than if it were all just glass Sometimes all that's needed to make a house look great is a good unified colour scheme. The above home was built by YouTuber Kam The Builder and a whole heck of a lot of pink both inside and out Let's face it, pink is hot. Particularly when combined with white, glass, and wood in the correct quantities. This take on the pink modern house comes to you from YouTuber GAMES and their tutorial video shows you exactly how to put together every block of this lovely little home from the raised plant area out front to the impressively designed living room and bathroom found inside Have you had enough pink yet? If you're a fan of the Barbie movie, then presumably you can never get enough, and YouTuber Brookella is here to satisfy your desires with a Barbie Dream House that looks just like the one in the film and all the beautiful decor you need to be pretty in pink Rizzial's easy-to-follow video walkthrough shows you how to put together a picturesque suburban house It reminds me quite a bit of the Simpsons house It's a great build for those who want their home to be less magnificent and more quirky Here's another option from ManDooMiN - a shimmering tower that stuns with a rooftop garden The final result is a thoroughly stylish piece of Minecraft architecture that's sure to stand tall above the landscape of any server drawing wows from every player who sees it Following the 3-tier trend, this stylish 3-floor design is another hit from ManDooMiN and is perfect for players who want an achievable yet striking abode with lots of modern touches to set it apart from the more traditional rustic Minecraft house aesthetic This spectacular house, made by Kinu combines modern sensibilities and a super clean black and white look that's infinitely flexible and never out of place This house could work in a suburb that just touches the forest or it could also work as a private getaway that's in tune with nature without disturbing it Or it could be that unaffordable dream house for everyone who likes strong colours and dreams of multiple floors this Pale Oak House is one I'd love to live in and it's a great use of the style provided via the 1.21.4 Pale Gardens biome It's no secret that Japanese architecture is some of the most pretty in the world Minka farmhouses and the elite Shoin guest halls reserved for the military and samurai Here is a sampling of a few of our favourites to try in Minecraft Japanese-style architecture is very popular amongst Minecraft builders, and YouTuber BlueBits has you covered with a spacious home which makes use of a variety of interesting block types and doodads All of these blend together to create a very detailed and good-looking house for any Minecraft player to emulate and the idyllic bamboo garden surroundings only elevate this peaceful domicile to true zen qualities If you'd rather build something a little simpler than the above example, YouTuber Cortezerino gives us this understated design for a Japanese-style village house. Small in stature, the combination of nether brick roofs, stripped logs, and dark fences make it an eye-catching abode despite its size, and a welcome addition to any Minecraft village Folli is back with an incredibly comprehensive 90 minute video showing you how to put together a fabulously intricate house inspired by Japanese architecture Instead of the tall pagoda featured in SheepGG's build and might be a better choice if you're looking for a building project with less verticality The prismarine blocks used to create the roofing are especially nice and provide a striking contrast against the dark wooden walls This category handles mainly wooden structures that embrace the rustic nature of Minecraft If you've dreamed of living the simple life in your own cabin in the woods (with fewer monsters hopefully) then these next few builds may be for you Who hasn't felt a desire to live in a log cabin in the middle of nowhere at least once in their lives? Greg Builds has released a tutorial on how to make that dream come true with their excellent Minecraft wooden cabin and some glass to create everything you can see above Another easily buildable house for any survival mode Minecraft player, this is a small but attractive home made out of wood and stone bricks by One Team on YouTube There's nothing particularly fancy going on here - just a well-designed little house brimming with charm Of all the Folli builds featured on this list It's far less grandiose than many of other homes here but I just love the design of this wide wooden build with the staircase leading up and over the middle separating the taller half from the shorter and doubling as a nice balcony on the top floor I'm stealing this design for my next Minecraft house for sure For another home that blends faultlessly into the landscape, try this lovely mountainside house by JUNS MAB Architecture Tutorial as inspiration The two glass circles provide a lovely look into the idyllic interior from the outside as well as allowing all that lovely natural sunlight into the home during the day What's more exciting than building upwards to tower heights Doomsday prep in style with these underground builds made with glass-top ceilings to give your inhabitants mega views of the Overworld build these styles atop your favourite cave systems and live but a stone's throw away from all the secrets that the game has to offer Another compact build from Folli this Minecraft house is sunk into the ground with stairs leading up onto the surface at each of the cardinal directions with plenty of room for expansion downwards if you'd like to take this design as inspiration for a slightly larger house Perhaps a ladder that leads down into a more expansive storage area would be a welcome addition If all of the builds here - even the other underground houses listed above - are too ostentatious, then take a look at this underground house built by YouTuber Spudetti good when you just want something small and functional that nonetheless looks appealing to passersby It strikes me as the perfect home away from home a quick and easy forward base to build when your true home is too far away There's something about taking a natural structure and welding it with something man-made that's infinitely satisfying If you're looking for your next elven Lothlórien abode or simply wish to make the treehouse of your childhood dreams For all you Minecraft players who want a base surrounded by bark and leaves, this chunky treehouse from YouTuber Shock Frost is a great starting point for inspiration This build requires you to create not only the house but also the tree from scratch but the result is a nicely structured and aesthetically pleasing home with plenty of space inside for all your needs DiddiHD has put together another treehouse build this one even larger and located in the middle of a jungle It's much more sporadic with the placement of its living areas as though the house has grown over time along with the tree For our last treehouse to end us on a literal high, we have another towering design by YouTuber 6tenstudio What's different about this structure is its modern twist with white floors and glass panes used in place of fences to make the artificial elements really stand out from its natural foundation then follow the video tutorial to recreate this foliage-laden hideout for yourself No part of this website or its content may be reproduced without the copyright owner's permission Rock Paper Shotgun is a registered trademark of Gamer Network Limited The architecture professor on homes with more bathrooms than occupants – and how the Sydney metro might renew confidence in the benefits of good design What most annoys you in terms of trends and features of new Australian homes? Just that. Trends and features over fundamentals. Acres of carpet in giant open plan living spaces, more bathrooms than occupants in any house, a fascination with surface rather than substance, poor construction and any house that does not genuinely attempt to connect to its landscape or context are all bugbears of mine. Read moreI think our houses are generally too big; they are We’d benefit enormously by cutting maybe 20% out of most new builds more intensely designed homes that are personal and quirky than large spaces I do think this is something that is changing though Are you seeing any trends in Australian homes which excite you The first is the refocusing on materials in light of environmental performance which is changing the texture and geometry of our homes in interesting and exciting ways the application of new materials into construction as a result of trying to improve environmental performance Both these bring with them a refocusing on the craft of construction and a need to rethink building processes precisely because they are not typical So it’s not just banging up a frame on a slab Anthony Burke says a home is about ‘more than the pragmatics of life’ Photograph: Dean BradleyYou know a beautifully made home when you see it – actually That kind of building craft does not have to be big or ostentatious I think architects and homeowners are searching for this through design with new energy but I feel what our homes mean to us is changing after that experience How will Australian homes need to adapt to be livable for the long-term future Is this kind of adaptation happening fast enough I think we’re at the start of maybe 20 years of experimentation and innovation in architecture at the moment simply because we can’t keep on with business as usual the external pressures on the Australian home building for different family profiles (multigenerational ageing population) are there and driving new thinking the changing climate and the move to work from home all requiring real change in the way we think about the Australian home Read moreThis kind of adaptation is under way – perhaps not quick enough but the trailblazers are out there all around Australia working this out for the rest of us What do you think defines excellent residential architecture Excellent residential architecture to me is about creating inspiring contexts for the lives lived within The best architecture subtly orients our attention to the things that matter and in this sense its job is to foreground our relationships; with nature and turn them into something beautiful to experience every day the recent public response to Sydney’s new metro has been overwhelming and incredibly positive What does this say about how public architecture can make people feel The Sydney metro has been a wonderful success An unusual coming together of real needs being met political will across complex stakeholders aligning and a commitment to a quality design approach which has resulted in such a great outcome that has been broadly recognised by the public I do think people are looking for serious change in the approach to the environment around us, and yes, there is an appetite to see design charting new approaches to our public domain. We want to be excited by our shared spaces and I think we’re exploring again the possibilities of what the city could be, much like the attitude at the beginning of the 20th century, and again in the 50s, but this time under the pressures of climate and culture. How does Australia fare, internationally, in terms of its attitude to and investment in public architecture? Read morePerhaps in this respect we’re still suffering from the Sydney Opera House experience – a truly extraordinary world class building that took a heavy political toll on all involved with media coverage at the time all about cost overruns That political lesson has not been forgotten 50 years later more often than not we end up with safe mediocre design buildings we’ll use but not be inspired by or love in a way we should There are some exceptions which I can think of but we need more confidence in Australia about the public benefits of good design I’m optimistic the success of the metro will boost this type of thinking The new season of Grand Designs Australia starts on Thursday 10 October on ABC Stanley Tiny Homes shuns overly complicated features to focus on the basics: providing a compact tiny house that offers enough space for two people and is easy to tow The dwelling also has a relatively low price tag to match The Rogue is based on a double-axle trailer and has a length of 20 ft (6 m). This is definitely on the small side for a North American model and should make it far easier to tow around than the Pisgah It's finished in black metal and cedar shake siding Power comes from a standard RV-style hookup but those looking to cut the cord and live a truly nomadic lifestyle will want to add a solar panel setup too The interior of this one is spread over two floors It's kept a comfortable temperature with a mini split air-conditioning system and a single glass door provides access to the living area as well as a large window enabling lots of light to permeate within and includes a four-burner propane-powered stove The Rogue's bathroom is reached from the kitchen using a barn-style door however Stanley Tiny Homes has managed to squeeze in a composting toilet which is accessed by a staircase (without integrated storage for a change) and is a typical loft-style tiny house space with a low ceiling It has a couple of windows and enough space for a double bed The Rogue tiny house starts at US$85,000, which is on the cheaper side nowadays for a North American tiny house – albeit not the cheapest we've seen – and is envisioned as a rental property guest house Source: Stanley Tiny Homes Affleck has come a long way from his days living with his bestie and has now seen his fair share of multimillion-dollar homes Here’s a highlight reel of some of Ben Affleck’s houses The Affleck home was also about two blocks away from Damon’s home It was granted city landmark status not because of its two former A-list residents but because it embodies whimsical storybook-style architecture with multiple gables Egasse said he drew inspiration from “Norman lines” of the Vikings and that Saxony and Northern Italian designs informed the exterior The uniquely executed asymmetrical curves and arches “are all geometrically related in order to create an ensemble of harmonious lines suggestive of spiritual truths,” which equates to a uniquely straight-out-of-a-fairytale aesthetic and people are very respectful of people’s privacy,” Affleck once said about the neighborhood a 6,360-square-foot Greek Revival–style main house reflective of typical antebellum plantation houses; Oyster Cottage a 10,000-square-foot camp-style structure with six bunk-style bedrooms and two main suites; and Summer House a structure with screened in living and dining spaces and interior and exterior fireplaces for shrimp boils The couple moved out in 2009 when Garner sold the historic property for $6.25 million Affleck paid $19 million for the ultimate bachelor pad in 2018 The newly built East Coast traditional-style mansion which was a few blocks from Garner’s new home in the Pacific Palisades spanned 13,000 square feet and had seven bedrooms and nine bathrooms scattered throughout The property came packed with luxe amenities like a guest cottage It also sat across the street from the neighborhood’s posh Riviera Country Club The Argo star sold the property for $28.5 million in October of 2022 promptly after his summer nuptials to Lopez The sale was the neighborhood’s third-highest for the year up until that point The mega-mansion Affleck and Lopez purchased in 2023 Love celebrity homes? Shop some of our favorites from Diplo, Sofía Vergara, Sienna Miller and more. gray-and-white mansion is perfectly walled behind mature trees and shrubs Ivies crawl up the walls of the 6,200-square-foot home’s façade with French doors that open up to a central pool The rustic interior is filled with vaulted wood-beam ceilings and numerous fireplaces that are in stark contrast to the slick Alabama's Timbercraft Tiny Homes has carved out a niche in the small living movement with its luxurious cottage-like models, such as the Teton The Big Sky follows a similar rustic aesthetic and features a spacious interior that sleeps up to four people The Big Sky is based on a quint-axle trailer and has a length of 41.4 ft (12.62 m), so is definitely on the larger side, even for a North American tiny house. It's based on the firm's previous Denali but with some changes inspired by western Montana architecture and the exterior is finished in western cedar and horizontal metal siding Its interior measures 399 sq ft (37 sq m) and is finished in shiplap walls with hardwood floors and a tongue and groove ceiling The main entrance opens onto the L-shaped kitchen The example model shown includes a breakfast bar for two people plus an oven and propane-powered four-burner stove The living room is adjacent and looks relatively spacious thanks to its high ceiling and generous glazing French doors that can open up to the outside – there can also be a porch area installed here too The Big Sky's kitchen joins onto a hallway that in turn connects to a bathroom as well as a stacked washing machine and dryer Over at the opposite end of the home from the living room is the master bedroom it offers the benefit of having ample headroom to stand upright and it hosts a king-size bed with integrated storage space plus a large closet and a stained black feature wall The Big Sky can optionally have a second loft bedroom installed This is accessed by staircase from the same hallway that connects to the master bedroom and is a typical loft-style tiny house space with a low ceiling that sleeps one or two more people We've no word on the price of this exact model though Timbercraft Tiny Homes' prices start at US$104,000 Source: Timbercraft Tiny Homes Empty-nest baby boomers own nearly 3 in 10 (28.2%) large U.S That’s twice as many as millennials with kids who own just 14.2% of the country’s large homes Gen Zers with kids own almost none (0.3%) of them An additional 7.5% of the country’s large homes are owned by baby boomers with households of three adults or more; this category likely consists mostly of adult children living with their boomer parents Census data from 2022 (the most recent year for which data is available) that breaks down the share of three-bedroom-plus homes owned and occupied by each generation The three household types are as follows: 1 or 2 adults total living in the home; neither are minor children (for boomers we refer to this category as “empty nesters”) 3 or more adults total living in the home; none are minor children and households where adults are living with their minor children Redfin also broke down the share of three-bedroom-plus homes rented by each generation; that information is below Adult Gen Zers were 19-25 years old in 2022 See the end of this report for more details on methodology Baby boomers own an outsized share of large homes for several reasons “There’s unlikely to be a flood of large homes hitting the market anytime soon,” said Redfin Senior Economist Sheharyar Bokhari empty nesters are the most likely group to sell big homes and downsize: They no longer have children living at home and don’t need as much space The problem for younger families who wish their parents’ generation would list their big homes: Boomers don’t have much motivation to sell and the bulk of boomers are only in their 60s still young enough that they can take care of themselves and their home without help some boomers are ready to downsize into a condo or move somewhere new for retirement and the mortgage-rate lock-in effect is starting to ease–so even though there won’t be a flood of inventory Many young families are renting large homes in the meantime Millennials with kids take up one-quarter (24.8%) of the three-bedroom-plus rentals in the U.S. the largest share of any generational category followed by millennials without kids (11.6%) Empty-nest baby boomers take up the next-highest-share (11.4%) of three-bedroom-plus rentals We discussed the share of large homes owned by each generation and household type above we’ll discuss the share of each generation and household type that owns large homes Empty-nest baby boomers are almost twice as likely as millennial families to own three-bedroom-plus homes Nearly half (45.5%) ) of one-to-two-person boomer households own large homes Just over one-quarter (27%) of households consisting of millennials with kids own large homes and roughly 3% of Gen Zers with kids own them Some young families rent large homes: Roughly 1 in 10 (9.3%)  millennial-with-kid households live in three-bedroom-plus rentals Other millennials live with family or roommates millennials (whether they have kids or not) roughly 17% of them live with a family member in a home that family member owns or rents–most likely their parents Another 10% live in a home owned or rented by someone they’re not related to–most likely a roommate Seven in 10 are the head of their own household Who owns large homes has changed over the last decade empty nesters of the silent generation (who were 67-84 at the time) took up 16% of three-bedroom-plus homes That’s a smaller share than Gen Xers (who were 32-47 at the time) with kids But one thing has remained the same over time: Baby boomers with no kids living at home take up the lion’s share of big houses empty-nest boomers (who were then 48-66) owned and occupied 26.4% of three-bedroom-plus homes in the U.S. Empty-nest baby boomers take up the biggest share of large homes in relatively affordable Rust Belt and southern metros Baby boomers with one or two people in the household take up roughly one-third of three-bedroom-plus homes in Pittsburgh Demographics are one reason why Pittsburgh tops this list; the metro skews older: Baby boomers make up 40% of Pittsburgh’s households a far higher share than Gen Xers (27%) or millennials (20%) Empty nesters own at least 20% of large homes everywhere in the country They take up the smallest share of three-bedroom-plus homes in popular migration destinations and California metros: Riverside Young families take up the smallest share of large homes in coastal California and Florida where large homes tend to be more expensive and the largest share in relatively affordable inland metros–but nowhere do millennials with kids take up more than 18% of them Just about one of every 10 three-bedroom-plus homes are owned and occupied by millennials with kids in Los Angeles (9.4%) ) Millennials with kids have the largest share in Indianapolis This report is based  on a Redfin analysis of U.S Census American Community Survey micro data from 2022 (the most recent year for which this data is available) that breaks down the share of three-bedroom-plus homes owned and occupied by each generation Redfin also broke down the share of three-bedroom-plus homes rented by each generation Gen Zers were 19-25 years old in 2022 (only adult Gen Zers were included) millennials were 26-41 Gen Xers were 42-57 Dana Anderson writes about the numbers behind real estate trends Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster For more information about working with a Redfin real estate agent to buy or sell a home Sheharyar’s research focuses on better understanding the housing market for audiences inside and outside of Redfin he created commercial real estate sale and rental price indices at the MIT Center for Real Estate He has also done research on consumer decisions and behavioral biases in real estate pricing Sheharyar holds a PhD from MIT in Urban and Real Estate Studies By submitting your email you agree to Redfin’s Terms of Use and Privacy Policy Canada Updated January 2020: By searching, you agree to the Terms of Use, and Privacy Policy REDFIN IS COMMITTED TO AND ABIDES BY THE FAIR HOUSING ACT AND EQUAL OPPORTUNITY ACT. READ REDFIN’S FAIR HOUSING POLICY NY Standard Operating Procedures TREC: Info About Brokerage Services, Consumer Protection Notice please call Redfin Customer Support for help at 1-844-759-7732 — Virginia Beach residents Sylvia and Eric Hawkins built a big life “We were working achieving the American dream living in a 3000 square foot home But the taste of success wasn’t as sweet as they had anticipated “We were like two ships passing in the night not monetarily but emotionally it cost to maintain that lifestyle.” said Eric Virginia Beach city leaders plan to address issue during a camping trip to Cape Charles on the Eastern Shore So we extended another day because we were enjoying each other we were enjoying the environment we were enjoying the small space,” said Eric bought two RV’s and checked in to the KOA campground in Virginia Beach Their friends and family thought they were crazy loan officer share advice for navigating current housing market “You gotta not care what people think and you can’t live with other peoples’ fears,” said Hawkins Their two kids who were still at home weren’t thrilled with the idea of living in a campground “It's like leading people to a place they don’t want to go but they are happy when they get there They learned that home is where you make it,” said Hawkins In 3000 square feet you can fall to neutral corners Watch: Norfolk Airbnb host appreciates change in indoor security camera policy the couple wanted to share what they’d learned with others “We always felt like 'lets build a tiny house village so we’d live there and as well as show people and let them experience what we felt,” So they put pictures of a tiny house village on their vision board Watch: Local groups fight to bring tiny homes to Norfolk's homeless population “This used to be an auto court back in the ‘30’s and at that time 14 tiny houses here,” said Eric Watch: Local groups make progress on tiny homes for the homeless I mean trees had engulfed most if not all of these houses,” he said They went live on Airbnb in 2022 and the response to their tiny homes was big They’ve garnered nearly 21 thousand Instagram followers with one of their videos getting more than two million views “If you want a small town charm and that small town feel but have all the modern amenities Cape Charles checks all those boxes,” said Eric While many guests come for the beach and parks The couple holds seminars on the topic. The next one is September 28 and 29th. https://www.eventbrite.com/e/talkin-tiny-festival-an-open-house-experience-at-cape-charles-tiny-livin-tickets-968652615047 https://www.capecharlestinylivin.com/ The number of big houses being listed on the property website has gone up by a double-digit percentage across most regions of Great Britain There has been a surge in big houses appearing on the property market amid speculation about tax rises in the Budget CGT currently applies to second homes, properties that come with large grounds, and sales of inherited properties IHT is already likely to apply to estates that include big homes Changes to either tax could have significant financial implications for their owners they may be trying to cash out before any increases come in.  Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE Don't miss the latest investment and personal finances news plus money-saving tips with our free twice-daily newsletter The property listing website’s analysis specifically focused on top-rung activity between 3 and 9 September This category includes four-bedroom detached houses and properties with five or more bedrooms.  It found the number of larger homes coming to the market in Great Britain was 15% higher compared to the same period last year Over the previous week (27 August to 2 September) the top end of the market had been up just 3% The early September spike was most pronounced in the East of England where the number of big properties coming to the market was 21% higher against the year North West and West Midlands (both +19%) all saw similarly large increases with Yorkshire and the Humber seeing a small rise of 4% Every other region saw a double-digit increase the Prime Minister warned that the Budget is “going to be painful” He added that the wealthiest people "should bear the heavier burden" suggesting tax hikes could be specifically aimed at those with big assets The figures also tie in with a drop-off in mortgage rates The website’s weekly deals tracker showed the average five-year rate for those with a 40% deposit (the sort of amount a high-end buyer could stump up) now sits at 3.97% Rates for high-deposit mortgages are tracking roughly a percentage point higher Rightmove’s property expert Tim Bannister stated that the findings marked a significant shift in market activity He said: “Throughout this year we have typically been seeing more activity at the top-end compared with last year as movers in this sector were hit with peak mortgage rates and lower availability of homes to choose from the trend we were seeing is more smaller and mass-market homes coming to market for sale but in just the last week we’ve seen a flurry of activity at the top-end again Some of the lowest mortgage rates since before the mini-Budget are now available for those with a large deposit and a mooted increase in capital gains tax is also likely to be contributing to decision making right now.” The site suggested the trend could continue as a greater choice of homes for sale in a particular part of the market tends to encourage other homeowners in that sector to consider selling insights and expert analysis from our award-winning MoneyWeek team to help you understand what really matters when it comes to your finances Henry SandercockHenry Sandercock has spent more than eight years as a journalist covering a wide variety of beats Having studied for an MA in journalism at the University of Kent he started his career in the garden of England as a reporter for local TV channel KMTV Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine but also on major BBC Radio 4 programmes like The World at One he covered fresh foods for respected magazine The Grocer for two years After moving to NationalWorld.com - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis becoming the title’s money editor in early 2023 He covered everything from the energy crisis to scams New zoning bylaw limits floor area for residential construction Edgartown residents have served notice that they want to block the growth of McMansions that have increasingly appeared along the historic town’s waterfront and elsewhere including additions to existing residential structures cannot result in 10,000 square feet of floor area in total on a lot The so-called big house bill passed 132 to 35 at the April 9 town meeting Town officials said Edgartown has seen an increase in lots with oversize homes or multiple accessory structures that have been highly resource-consumptive Construction permitted prior to the meeting will be exempt from the new size limits This amendment stems from a vote last year to address climate change in Edgartown Voters at the 2023 town meeting approved $75,000 to fund a review and update of town zoning bylaws in an effort to help the town cope with the effects of climate change Other Vineyard towns previously approved limits on home sizes a member of Edgartown’s zoning bylaw review committee told The Times that especially large homes pose climate and energy concerns from a construction and electric point of view,” said Livingston Large homes draw lots of energy when they keep their heat and air conditioning on all year “These large houses are using an enormous amount of resources,” Livingston said “We need to shrink our carbon footprint.” The bylaw notes that the larger homes affect the environment in other ways as well The “larger residential structures and multiple accessory structures” end up “disturbing more land area altering the flow of stormwater and recharge of groundwater and typically consuming more energy and water,” it reads Livingston said the recent growth of large homes and outbuildings on residential lots has been “just amazing.” “A whole lot gets covered with buildings There are exceptions to the 10,000-square-foot maximum A total of 12,000 square feet may be permitted if fossil fuels are only used to power a backup generator if all the buildings are connected to the town sewer or use an enhanced nitrogen-removal septic system and if all the driveways and parking lots have permeable surfaces And two uses are exempt from the bylaw — accessory structures used only for agriculture and cluster developments permitted under town zoning bylaws The big-house zoning bylaw took effect immediately after it was approved at the town meeting She added that the amendment will also be subject to future review by state Attorney General Andrea Campbell Simple-make these large homes rely solely on clean energy A big house creates jobs,promotes the Island economy they do not use local services like the school systems The assessments used by the towns for property taxes are determined by a yearly sales analysis that is done using a formula that looks at neighboring or similar properties huge houses tend to reset higher the taxable value of ALL the houses in similar neighborhoods but a good idea is what Mark proposed – make them go solar… Crazy left wing ideas to tell people how to live eat and everything a person would like to do Lets get rid of the golf course’s have you seen the clear cutting at Farm Neck and what about fuel fired boats as well that will help slow things down here Barry and Bubba wouldn’t have anywhere to cut their side deals The MV Times comment policy requires first and last name for all comments Queensland first-home buyers can receive a full stamp duty concession on new homes providing an opportunity to get onto the property ladder with less upfront cash Following an announcement in February 2025 Queensland’s new stamp duty concession has officially commenced for first-home buyers these buyers could receive a stamp duty waiver for properties valued under $700,000 and a concessional rate for homes up to $800,000 Now, any first-home buyer who buys a new home to live in or vacant land to build a home can apply for a full transfer duty concession removing the threshold entirely for new homes Queenslanders building their first home won’t pay a single cent in stamp duty,” Queensland premier David Crisafulli said “This is just one of the ways we’re delivering a place to call home for more Queenslanders by also unlocking the land needed for new housing and kick-starting new housing developments with the infrastructure they need.”   While this new legislation will bring savings to many first-home buyers across the state for different types of new homes we take a look at what exactly the new rules mean who is eligible for the concession and what they require from applicants First-home buyers in Queensland can now claim a full stamp duty concession for new homes First-home buyers can claim a first home (new home) concession for stamp duty when buying a new home or substantially renovated home as their first residence A new home is one that hasn’t been previously occupied or sold as a place of residence This includes off-the-plan properties and vacant land on which to build a new house It can also be a substantially renovated home has not been previously occupied or sold as a place of residence There is no value cap for the home and land If there is any additional land that isn’t part of the residence Applicants don’t need to be Australian citizens or permanent residents to claim the concession but they must meet certain eligibility criteria To be eligible for the first home (new home) concession If an applicant is a foreign person, additional foreign acquirer duty may apply If there are two or more purchasers of the property not every person needs to qualify for one concession or apply for the same concession one person can claim a first home (new home) concession and the other In these cases, applicants can use the government’s transfer duty calculator to determine what will be paid with mixed concessions The Queensland government has also provided a home concession eligibility tester for any applicant to check eligibility Once an applicant has claimed the first home (new home) concession there are certain requirements they must meet acquirers can’t sell or transfer any part of the property but afterwards a partial concession may apply if the property is sold or transferred within one year Purchasers also can’t rent or lease any part of the property before they move in if the lease arrangement starts on or before 10 September 2024 purchasers must wait one year before doing so The concession is only available for residential land If purchasers buy land that includes non-residential land such as farming they need to provide a valuation of the residential land portion This will then receive the concession benefit and duty will then be payable on the non-residential land portion The concession does not apply to knockdown rebuilds which involves buying and demolishing an existing home before building a new house on the land this is because that arrangement would be to buy an existing home purchasers might be eligible for a first home concession Are you interested in buying or building a new home? 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By accessing or using our platform, you agree to our Terms of Use. we're suddenly mired in an architectural nightmare Bailey McInnes first noticed the house during one of her lunch hours little craftsman homes that dot her Northern Virginia neighborhood The homes she passes share a lot of similarities — brick and wood details that suggest someone put in a lot of time and care a century ago she noticed something new: One of the homes was gone McInnes assumed the builder must have a captivating vision for the vacant plot was a "monstrosity." The facade was an awkward mess of windows and cheap-looking wood panels The previous home's gently sloping roof had been replaced with an imposing cliff You can probably guess the color: blinding white with black trim the signature look favored by investors and HGTV aficionados this cycle of replacement kept happening again and again who is 25 years old and works in public health But she often commiserates with others who share similar frustrations "People who have little to no experience are able to look in their neighborhoods and be like 'What is happening here?'" McInnes told me Recently she posted a video on her YouTube channel in which she phrased the question more bluntly: "Why are homes so 'ugly' now?" These days it seems like every freshly built house comes with a standard feature: a whole bunch of haters many Americans grumble about the stifling blandness of the cookie-cutter home the shameless excess of the suburban McMansion And that's just the view from the front lawn and you'll likely encounter a mix of white walls copied and pasted from an episode of "Property Brothers." Most people agree that America needs more houses but nobody seems all that thrilled with the ones being built But there's a reason for this nagging discontent with new homes an unconscious response to big problems with how these houses are built and even larger flaws in the American dream itself The cute craftsman and midcentury homes on younger generations' mood boards are relics of a time when land was cheap and local builders accounted for the lion's share of new construction Now development lots are almost prohibitively expensive and the soaring cost of materials is forcing builders to cut back on bedrock design necessities and pleasing architectural flourishes The new economics favor large-production builders focused on scale while a mess of micromanage-y local rules is driving up costs and forcing homes into cookie-cutter territory The blame for America's architectural nightmare Homes look this way because they're not just places where we live — they're also supposed to help us get rich We're supposed to think of homeownership not as a means of putting a roof over our heads but as an investment that will one day provide a massive windfall When every part of the homebuilding process is executed with an eye toward the bottom line this is the result: a mix of trend-chasing eyesores and sterile subdivisions "There's this trade-off that's increasingly happening," McInnes told me Stepping into a community of new homes can sometimes feel like an eerie nightmare The structures themselves are haphazard arrays of garage but only in small patches that echo a sturdier past A few variations of floor plans add some texture to the neighborhood but paint shades are the main differentiators the scenario makes for a decent horror movie some builders are trying to break this mold the forces conspiring to make homes expensive and aesthetically distasteful are too powerful to resist "Builders are struggling to produce something that reaches the moderate-income level and that may be where you get some pushback as far as ugliness and scale-back," James Wentling an architect and the author of "Designing a Place Called Home," a thick volume on the past "That's probably where you may be getting cookie cutter all that kind of thing — which they have to do The primary driver for the move toward mediocrity is cost — land Prices for building materials are up a staggering 38% since early 2020 according to the Bureau of Labor Statistics compared with a 10% rise from 2016 to 2020 New homes are roughly five times as expensive to build compared with 1980 according to price indexes from the Census Bureau construction costs for the typical new home came in at $392,241 a survey by the National Association of Home Builders found This all trickles down into the final sale price enough for a 10% profit for the builders when you factor in marketing expenses and the sales commissions paid to real-estate brokers builders and architects have almost no choice but to streamline or opt for cheaper design elements Homes built 50 or 100 years ago were primarily brick or wood — high-quality stuff that offers a comforting Those materials are used more sparingly nowadays Just 25% of new-home exteriors last year were made of wood or brick Builders have turned to vinyl siding or fiber cement more affordable options that may last longer and are often easier to maintain but can contribute to a cheaper feel and other quality finishes have pretty much disappeared from modest homes and can be found only in "upscale" products Those kinds of "charming details," as Wentling calls them in his book require craftsmanship-intensive labor that's pretty much impossible to rationalize when speed and volume are the name of the game developers are even cutting back on basics like the number and size of windows and "making homes boxier," as noted in a 2024 trend report from the housing-research firm John Burns Research and Consulting "I think they are downscaling them a bit to keep the price down," Peter Dennehy the senior vice president of consulting at John Burns "But that's against the backdrop of five buyers for every home." Builders aren't just grappling with more costly materials, pricey land, and the headaches of finding enough workers They're also up against a complex web of local zoning and building codes that drag down projects and force them to make trade-offs that leave new homes looking bland Regulations account for one-quarter of the costs of building a new home Local governments can dictate everything from the size of lots to the materials used and builders have no choice but to bend to their demands requiring builders to spend time parsing local rules instead of focusing on all the other stuff that goes into getting a home off the ground the homebuilding industry has shifted from a fragmented collection of local builders to one increasingly dominated by large "production builders." The 100 largest home builders in the US sold roughly half of all new single-family homes in 2022 up from a little more than one-third two decades prior Most of those gains came from the growth of just two companies a paper from Harvard's Joint Center for Housing Studies found Those two giants were responsible for almost two-thirds of that increase in market share Because of all the local red tape that slows down homebuilding the industry probably won't ever be as concentrated as But the growth of the big guys is yet another reason more homes are starting to look and feel the same according to one estimate from Realtor.com But there's something else holding us back In a country obsessed with preserving property values an architecture critic at The Nation and creator of the blog McMansion Hell remembers a time before the Great Recession when the owners of suburban behemoths were obsessed with stockpiling amenities — a jacuzzi tub The homes might be wacky and chaotic and destined to fall out of vogue but at least they reflected some customization she's noticed a shift toward another dispiriting trend Homes now just feel "primed for resale" with their neutral tones and the shiplap farmhouse look that everyone's into right now everyone is constantly peering into their neighbors' homes The house-flipper mentality — renovate cheaply and inoffensively — has gone mainstream "It's not necessarily about creating a house that is for somebody's particular taste but for it to be seamless as an asset," Wagner told me "People become more and more self-conscious about the way that their houses are viewed We're all kind of temporarily embarrassed real-estate investors This kind of thinking extends up and down the value chain Builders need to finish homes quickly while targeting the broadest demographic possible which means they're pulling home plans off the shelf and constructing the final product without any input from the eventual buyer want to emulate the looks they see on HGTV shows and inside the homes around their neighborhoods "The house is almost just like liquid capital," Wagner told me "It can't be offensive; it can't break the mold The grumblings over the state of home design aren't just coming from haters looking for something to hate They reflect both the tough economics of the building business and a homeownership mindset that's fixated on resale values the dismayed YouTuber in Northern Virginia James Rodriguez is a senior reporter on Business Insider's Discourse team Register to Drapers to read ONE FREE article and a FREE digital edition Here’s a full list of our subscriber benefits: Check if you already have access from your company or university Get full access to all the fashion industry news and intelligence you need Browse the archive of more than 55,000 articles read the daily and weekly newsletters in full and gain priority access to Drapers events Anytime I pass a ginormous house on the road I always picture what life would be like if that was mine I dreamed about a huge house and the excitement that comes along with it That's too many rooms to clean and way too much space to decorate That doesn't mean I don't like to look You can drive through the wealthy parts of Connecticut and see some absolutely gorgeous homes where are the biggest homes in the country 24/7 Wall St. recently put together a list of the largest homes in America and it took me by surprise to see that many were not far at all from Greater Danbury Coming in at number 15 was the Woodlea home located in Briarcliff Manor The house is 70,000 square feet and has a total of 140 rooms Imagine all of the decorating you would need to do Danbury to Briarcliff Manor is only a 45 minute drive Number 14 was the Idle Hour home which is also located in New York. The house is 70,000 square feet and was once owned by the Vanderbuilt family. Coming in at Number 12 is the Indian Neck Hall home which is 75,000 square feet. According to the article The 6th largest house in America is the Arden House which was built in Harriman The house is 97,188 square feet and is now used as a conference center with 97 guest rooms the home is only about an hour from Danbury Coming in at the third largest house in America is the famous Oheka Castle It's 109,000 square feet and one of the largest homes in New York State The Oheka Castle is about 2 hours and 15 minutes from Danbury the second largest house in the entire country is the Fair Field Home located in Sagaponack The house is 110,000 square feet and was built in 2003 needed its own power plant because it was so large It's about a 3 hour and 20 minute drive from Danbury If you ever have a day where you just want to go for a drive I recommend going to drive by some of these places since they're not far away I'm sure you will be completely stunned I stick to my point before, I can't imagine anyone cleaning or decorating a home that's thousands and thousands of square feet. But hey, if you have more money than you know what to do with, have at it. To see the full list of the largest homes in America, you can view it here That's a lot of square feet and a lot of rooms.\nRead More 24/7 Wall St. recently put together a list of the largest homes in America Number 14 was the Idle Hour home which is also located in New York. The house is 70,000 square feet and was once owned by the Vanderbuilt family. Coming in at Number 12 is the Indian Neck Hall home which is 75,000 square feet. According to the article I stick to my point before, I can't imagine anyone cleaning or decorating a home that's thousands and thousands of square feet. But hey, if you have more money than you know what to do with, have at it. To see the full list of the largest homes in America, you can view it here Have you ever wondered about those charming street-level unit entrances you see in many prewar apartment buildings The ones often surrounded by flowering shrubbery They’re called maisonettes - French for ‘little houses’ - and were intended as doctors’ office suites when these buildings were constructed a century ago maisonettes have served as both commercial and residential spaces Those conversions continue to take place today “The term maisonette typically refers to a ground floor apartment with a separate street entrance,” says Hal Coopersmith a partner with Coopersmith and Coopersmith and may have different interpretations in different areas.”  These units were often included in the design of buildings to provide the landlord with additional non-residential rental income at a time when residential rents were heavily regulated Physicians and other medical providers were the preferred tenants and the maisonettes’ street entrances provided private access to patients while at the same time limiting non-resident traffic through the main building entrance and lobby the inclusion of maisonette units hinged on how a given building’s lot was zoned “Zoning in New York is typically by the building “How individual units may be used within a building may be dictated by the governing documents of the building particular use of all buildings and the units within them must comply with the Department of Buildings (DOB) regulations and will be indicated on the certificate of occupancy.” demand for maisonette space changed.  Doctors now are less likely to be in single-practice situations and in new doorman buildings that offer more security During the co-op conversion boom in the 1980s many maisonette units were converted to residential use but plenty of maisonettes are still occupied by offices in many parts of the city (they’re particularly Manhattan’s Upper East and Upper West Sides So what’s involved in going from commercial to residential use “Property owners looking to convert real estate from one use to another in New York will want to review their zoning designation That includes the building’s governing documents All of these requirements can be amended in certain circumstances.  “a property owner could petition to have the lot rezoned for residential use if not already permitted under the zoning designation though this can be a lengthy and costly process or after successfully rezoning a lot for residential use the unit owner would be required to submit architectural plans to the department of buildings for approval Depending on the legal structure of the building and its ownership different types of approvals may be required in the rezoning and permitting process if the unit is part of condominium building the condominium’s board of managers may have approval rights for each step in the process.” This is as true today as it was in the past.  The benefits of converting a commercial unit to residential use should be clear to anyone familiar with the nearly-always-hot NYC housing market Maisonette apartments tend to be larger than average and sometimes are even duplexes - making them feel like mini-townhouses the owner might have their office or studio on the ground floor or front of the unit ground-floor units don’t boast sweeping views and can be subject to street noise.   “Converting from residential back to commercial would not be particularly different from converting commercial to residential - the same considerations would apply since the building code requirements tend to be stricter for residential units since commercial unit owners tend to be subject to less regulation generally.” The time for these projects could vary widely depending on a number of factors CooperatorNews.com is an online edition of CooperatorNews New York newspaper The publication serves the co-op and condo community with thousands of free articles on management but try telling that to Australians designing their dream homes A new exhibition now aims to start a conversation around why we all want big with a new exhibition asking the question: could smaller be better Home Truth by Melbourne-based architecture and design studio Breathe is the winner of the NGV Architecture Commission 2024 with audiences invited to enter through a grand garage of the larger dwelling to navigate a maze of corridors and rooms before arriving in a 50m2 timber haven offers a reflective space where visitors can imagine an alternative housing future NGV's senior curator of Contemporary Art "We are told that big houses are a better investment look out into the garden and reflect that smaller may actually be better that less could be more if it was done beautifully."  Mr McEoin added that Home Truth doesn't aim to judge or lecture people on big houses – which can be ideal for multi-generational or big families "We simply want them to consider the ethical and ecological impact of very large houses and to envision new and sustainable ways of building homes – and the positive lifestyle changes smaller homes may enable."    The space allows visitors to consider an alternative housing future explained Sydney-based architect Andrew Donaldson minimise environmental impact and create a better quality of life "Housing construction is high in carbon emissions so we have an obligation to build smaller," Mr Donaldson said community-focused housing is also good for us socially and the looking after of people in the community."  A garage and larger dwelling with a maze of corridors and rooms surround a 50m2 timber haven Picture: Installation view of the 2024 NGV Architecture Commission: Home Truth by Breathe photo by Derek Swalwell Architectus principal Oliver Mayger said we need to get more creative with smaller spaces "We are designing homes that can be adaptable and multi-functional change with our needs and requirements throughout the day and allow us to ‘live better in fewer rooms’," he said more socially and environmentally sustainable use of land and resources and is more in tune with our lifestyles and mixed-use cities."  also draws from Melbourne’s 20th-century housing solutions such as the terrace houses of the 1900s that promoted density and community and the small-scale Cairo apartment complex in Fitzroy "Families lived quite happily in much smaller houses in Australia in the 1960s And we had bigger gardens," Mr McEoin said Our fascination with large homes began in the post-war era when space was abundant and costs were low we've become obsessed with supersized homes "They're become part of our culture and identity so financially we try to put as much as we can into them."  Architects have seen a shift toward smaller home designs due to budget Mr Donaldson said he's already seeing a shift towards smaller home designs "Homes are about 40% more expensive to build than before the pandemic so projects with similar budgets have to halve "And as younger Australians design homes ecological concerns are coming to the fore."  He believes homes will – and should – continue to shrink "At the moment there's still a choice based on financials but the ecological limitations of large houses are becoming clearer we shouldn't be building anything new instead reconfiguring and repurposing existing structures to make them smaller to accommodate more families."  Shifting away from the desire for large homes is a challenge our lifestyles have adapted to larger homes Kids play inside rather than on the streets "We do everything in our homes now," Mr McEoin said This shift has led to increased separation both from our communities and also within our families "Children now spend more time in individual bedrooms rather than in shared spaces So the way we live is influenced by the houses we live in "And there's a sense that this may not be all that it purports to be."  The NGV Architecture Commission 2024: Home Truth will be on display from 13 November 2024 to April 2025 at NGV International