Well, there is hope for CA. They really need to pass that bill to overturn local zoning within X miles of transit at least.
Yes though, the situation in NYC is enraging to me. All everyone ever talks about is how high their rent is and how bad the housing prices are and then as soon as anyone attempts to build more housing so that prices will go down they go balls out trying to block it under the guise that increasing the supply of something increases its price. (?!?) I think the idea is that the government needs to build massive amounts of public housing as if we didn't try that in the past (and in some cases the present).
They seem to think this because new housing is expensive but that's like saying building new cars makes cars more expensive. In reality rich people buy new cars and then less wealthy people buy the used cars the rich person just turned in. Same applies to houses.
To some extent, low interest rates do boost the actual prices people are willing (and can) pay for housing because as you said, people buy based on the monthly payment not the price of the house.
The idea of 'affordable housing' in this context is dumb to me. New housing is not supposed to be affordable for the most part in the same way that most new cars are not affordable. New housing is meant to increase the sum total of housing stock.That said, during the 1970s around here tons and tons of cheap ranch houses were built for boomers to live in, followed by their mortgages being inflated away. The cheap house construction was probably a larger factor though. Now everyone seems to fight tooth and nail to kill any "affordable housing" projects from being built in my area. And these affordable housing projects are all like 300K condos.
Interest rates on savings are below actual inflation. I'm paying the banks to hold my savings.You seem to be claiming that monetary policy over the last few decades has been bad for savers, which I took as criticism of low interest rates. Generally speaking though inflation has been much too low for at least the last 12-13 years or so, which benefits savers.
So I guess my question is how you think monetary policy hurt you if you don't have debt.
Why would wages not keep up? Inflation mostly comes from times of full employment where wages are rising rapidly.
Depends. Some closing costs are fixed like attorney's fees, others are a percentage of the value of the home. This means, broadly speaking, as home prices increase closing costs as a percentage of the sale decline. So sure, when home prices go up your closing costs go up but only by a small fraction of the extra money you get. To illustrate I'll offer you a deal: You can choose for me to give you $100 but you have to give me $3 back or I can give you $200 but have to give me $6 of it back. Which do you choose?
As far as property taxes go yes, they do go up. Again though, these increases are caused by you owning an asset that has dramatically increased in value! If your property taxes go up that means you have tons more money available to you!
I think this is mostly due to years of propaganda from rich people but I genuinely don't understand why people dislike inflation. If you have a mortgage inflation is your friend. If you have credit card debt inflation is your friend. The vast majority of Americans have these things.
NY also needs a law that overturns local control near rail stations. No reason to have only fields of parking lots and SFHs adjacent to commuter rail stations. Building thousands of units along Metro North and LIRR stations can only help.Well, there is hope for CA. They really need to pass that bill to overturn local zoning within X miles of transit at least.
Yes though, the situation in NYC is enraging to me. All everyone ever talks about is how high their rent is and how bad the housing prices are and then as soon as anyone attempts to build more housing so that prices will go down they go balls out trying to block it under the guise that increasing the supply of something increases its price. (?!?) I think the idea is that the government needs to build massive amounts of public housing as if we didn't try that in the past (and in some cases the present).
They seem to think this because new housing is expensive but that's like saying building new cars makes cars more expensive. In reality rich people buy new cars and then less wealthy people buy the used cars the rich person just turned in. Same applies to houses.
Yeah, from my understanding in Manhattan rent prices have cratered due to all the rich people who normally lived there leaving town while everything was closed. I suspect this will be relatively short lived however, so good news for your sister!My sister lives in Manhattan and back in the fall she moved from Washington Heights to down town back to Wall Street area. She ended up paying $1000 less in rent with the move and its rent controlled.
I think she's paying 2K a month, doorman\gym\rent controlled in a historic building.
What part of NYC are you in?
Insurance and taxes are higher on the 150k, though. They would also have to a 30k down payment instead of 20k to avoid PMI. Also higher closing costs, and more exposed to drops in prices when rates go back up.Gotta stop using the government to ban housing construction then! If people want to see an actual decrease in housing costs that's the answer.
Cheap money increases the dollar value of homes but doesn’t increase the actual monthly burden of owning them because people target rent equivalence and not dollar value for the most part. For example if a house costs $100,000 at 5% interest the monthly mortgage cost is $537. If a house costs $150,000 at 2% the monthly mortgage cost is close to the same at $554. Is the second homeowner really worse off?
This is how low interest rates inject money into the economy.
NY also needs a law that overturns local control near rail stations. No reason to have only fields of parking lots and SFHs adjacent to commuter rail stations. Building thousands of units along Metro North and LIRR stations can only help.
This is highly over simplified. House price inflation is happening now at historically low employment. No way wages are growing this year.
The vast majority of the large closing costs are percentage based. Closing costs occur on both ends of the transaction too. So when I'm buying I'd much rather give you $100 and $3.
Also as prices go up, down payments get smaller so someone that could've put 20% down a year ago now might get stuck paying PMI and likely get other worse terms.
Again you are completely ignoring the purchasing side. If I buy a house today that costs 10% more than last year I have to pay 10% higher property taxes. I have zero extra equity in that house, probably less actually.
I already know how you feel about long term owners so I won't debate that side right now.
It's because most people's real expenses exceed inflation numbers. Housing, cars, education and health care all have inflated at far more than stated inflation rates, meanwhile wages have barely kept up over the last 20 years. Inflating away you credit card debt doesn't do much for you when your expenses vs income ratio keeps increasing and you're paying 20% on it.
Housing inflation is great for people that got in 40 years so when you could afford a decent house on median income, it's terrible for people getting in now.
Insurance and taxes are higher on the 150k, though. They would also have to a 30k down payment instead of 20k to avoid PMI. Also higher closing costs, and more exposed to drops in prices when rates go back up.
I agree with you that more density is needed.
Peak NY is spending 15 billion on LIRR projects and most land use around LIRR stations looks like this with little prospect for change
I grew up in that area and used that station a ton. It's absolutely ridiculous that it looks like that still. Put up a parking garage or two for the drivers, and redevelop the rest for TOD. What's worse than what that photo shows, is that just outside that area, it's all SFH for residential stuff. It's not a mystery to me as to why LI is losing young people.Peak NY is spending 15 billion on LIRR projects and most land use around LIRR stations looks like this with little prospect for change
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Yeah, from my understanding in Manhattan rent prices have cratered due to all the rich people who normally lived there leaving town while everything was closed. I suspect this will be relatively short lived however, so good news for your sister!
I'm not sure what sort of apartment your sister has (my guess is a studio?) That would be an incredible deal for Brooklyn though, looking at some two bedrooms in Windsor Terrace and they are around $2,500/month for ones that are at least decent and they have no doorman and no gym.
You forgot to add in the part where the same project would cost like $5 billion in the UK or France and then when asked why it was triple the price in New York the officials just shrug and say they don't know.
As to the first part, my guess would be become some wages - especially those of "unskilled" workers - are either truly stagnant (in which case you're losing money each year) or only keep pace with inflation at best. And of course wages in general haven't kept pace with inflation or productivity.Rich people have assets, yes. Rich people are also net creditors. (where is the loan money for your house coming from, after all?) The average American is a net debtor but rich people are net creditors. Inflation helps debtors (average people) and hurts creditors (rich people).
Inflation has been extremely, worryingly low since at least 2008 or so. During that time who did better, rich people or poor people?
Well that's the thing though - with inflation wages generally go up as well. I'm not sure why people think inflation means wages are stagnant.
What DOESN'T go up is fixed rate debt like mortgages or student loans. Since average people have lots of fixed rate debt like this inflation helps them out big time. If you owed $500k on your house right now and in this next year inflation was 4% instead of 1% it's like you paid off $15,000 extra in mortgage principal. Not bad, huh. Imagine how pissed the person who loaned you that money is though, you get to pay them back in dollars that are worth a lot less than the ones they loaned you.
My one question to people here is if inflation is bad for regular people but good for rich people then why do rich people fight so hard to ensure inflation doesn't happen? Do they not know what you know?
Hmm, beats the hell out of me. My wife and I work in downtown Brooklyn so the Bronx and Queens aren't really viable options. A lot of my friends live in Park Slope and nearby and are routinely paying $3,500 and more for their apartments. I just can't justify doing that.My other sister lives in Brooklyn. However, they are dinks in their 30's. He's a lawyer and she's in the medical field. They pay up in the 3's for their apartment. However, they just bought a house upstate. They are going to Airb&b it for now and eventually escape.
Brooklyn is nuts between all the bags of cash immigrants, trust fund kids having mom and dad pay for stuff and the Hasid discretely pushing people out.
What about Bronx and Queens?
As to the first part, my guess would be become some wages - especially those of "unskilled" workers - are either truly stagnant (in which case you're losing money each year) or only keep pace with inflation at best. And of course wages in general haven't kept pace with inflation or productivity.
[As far as your mortgage example, yes inflation hurts the lender since you're paying them back with dollars that are worth less each year compared to the previous.
Among workers with a bachelor’s or advanced degree, wages at the 10th, 50th , and 90th percentiles rose in real terms between 1979 and 2019, with increases of 6.9%, 15.2%, and 42.1%, respectively (Table 2), suggesting rising demand for college-educated workers (that is not offset by rising supply of such workers), improved bargaining conditions for them, or both.
Over the same period, wages declined markedly at the 10th, 50th, and 90th percentiles for workers with a high school diploma (or equivalent) or less education, suggesting increasingly few labor market opportunities for lesseducated workers, a decrease in wage bargaining power, or both. The median wage for high-school-educated workers fell by 11.1%, whereasthe wage at the 10th and 90th percentiles fell by 5.4% and 8.3%, respectively (Table 2).
On the purchasing side, you pay loan origination fees, which have been percentage based on every mortgage I've ever gotten. Title insurance is also generally percentage based. Insurance and tax prepays are also roughly percentage based.See my other post - I agree with you on down payment but the rest is already factored into the price and percentage based closing costs are paid by the seller.
That was a long time ago. Will that really happen again? JFK was shot dead, but his VP took over, hardly a revolution.No seriously I think they want us all to be indentured servants for as long as we live. And thats fine except sooner or later the servants are gonna revolt and start lopping off heads ala Louis the sixteenth.
On the purchasing side, you pay loan origination fees, which have been percentage based on every mortgage I've ever gotten. Title insurance is also generally percentage based. Insurance and tax prepays are also roughly percentage based.
ETA: You are also replacing a variable expense with fixed expenses. If I over pay my mortgage I pay less total interest. Overpaying does nothing to lower taxes, insurance, or total principle.
On the purchasing side, you pay loan origination fees, which have been percentage based on every mortgage I've ever gotten. Title insurance is also generally percentage based. Insurance and tax prepays are also roughly percentage based.
ETA: You are also replacing a variable expense with fixed expenses. If I over pay my mortgage I pay less total interest. Overpaying does nothing to lower taxes, insurance, or total principle.
Umm, wat?That was a long time ago. Will that really happen again? JFK was shot dead, but his VP took over, hardly a revolution.