
A national housing crisis is brewing - spking
https://m.sfgate.com/news/article/A-national-housing-crisis-is-brewing-What-13505365.php
======
outside1234
The real housing crisis is the inability of cities like SF to approve
redevelopment projects to tear down single story structures and build
multistory structures as fast as is needed by the growth of the economy.

We might not like to admit this but part of this problem is us: people vote
against putting up an apartment complex across the street from them while
claiming that "affordable housing" should simultaneously exist. This leads to
all sorts of bad decisions like restricting this building, but when we do
build it, setting aside two apartments for "low income" occupants that is
intellectually dishonest at best.

~~~
Gibbon1
I always see this parroted. But there is two facts that come into play that
are ignored biy this bit of propaganda.

1\. It's not just housing but transportation infrastructure. Of which SF has
developed nothing other than the 3rd St light rail and the Central Subway.
After that there is _nothing_ in the pipeline. Which means nothing will be
built for the next 15-20 years.

2\. They are building new multifamily. Cost is about $700-1000 a square foot.
Unlike you I had a talk with my insurance agent. Guess what, _rebuilding_
costs between $600-1000 a square foot.

Really the solution is not more housing in SF but to move tech bro jobs
elsewhere more affordable. Like Detroit.

~~~
conanbatt
> Really the solution is not more housing in SF but to move tech bro jobs
> elsewhere more affordable. Like Detroit.

When the tech bro jobs leave, SF will be in dismay, it wont get better. SF
city spends 2,600U$S a month per household. If it were to lose its
corporate/sales tax revenues, it would have to cut spending aggressively, and
it will not make rent cheaper: it will make it unaffordable, exacerbating
unemployment which could lead to rising homeless ness.

SF is in a terribly delicate position right now, its just masked by a lot of
money.

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slenk
I feel like they are projecting SF's problem on the rest of the US.

In my city, affordable housing isn't available downtown, but it's not more
than a 10 minute bus ride away.

~~~
moorhosj
Aren’t you possibly doing the reverse with your anecdote?

The points raised: higher interests rates, higher construction costs, flat
home building stats, slower price growth, and historically low homeownership
rates are countrywide facts, not specific to San Fran.

~~~
mywittyname
But none of those indicate a lack of affordability, except home ownership
rates. In most states (31 of 50), the median household income can more than
afford a median mortgage.

[http://time.com/money/5355518/home-price-salary-every-
state/](http://time.com/money/5355518/home-price-salary-every-state/)

So I agree with the OP, the author of this article is unjustifiably projecting
the SF housing crisis onto the rest of the country.

~~~
jfoutz
Did you get that backwards?

Also, this map looks a lot like a population density map - it’s great housing
is cheap in Nebraska. But there’s just not many people there. I would say
Pennsylvania and Ohio might be worth looking at though.

> Indeed, only 19 states have an actual median income that tops the amount
> needed to buy a home: Alabama, Alaska, Arkansas, Indiana, Iowa, Kansas,
> Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio,
> Oklahoma, Pennsylvania, South Dakota, West Virginia, Wisconsin, Wyoming.

~~~
moorhosj
Pennsylvania and Ohio are interesting in that they contain many rust belt
towns devastated by de-industrialization. You can buy an affordable house in
Erie, PA or Youngstown, OH because the populations of those towns have fallen
as the jobs have left.

Doing this type of analysis state-by-state doesn't really tell the story as
you can't really live in Youngstown and work in Cleveland or live in Erie and
work in Pittsburgh.

~~~
Kihashi
FWIW, there are also plenty of affordable options that are in the Cleveland
metro area, too.

> Doing this type of analysis state-by-state doesn't really tell the story

Yeah. For example, that map does an average of property taxes, which is not
super great. Property taxes in some of the suburbs in Cleveland can be higher
than your mortgage.

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api
Brewing? We have had a national housing crisis since the bubble around 2005
made housing unthinkable to a generation and then the crash destroyed those
who did manage to wedge into an overpriced house. Since then we've reinflated
to sacrifice the young to the baby boomers, and now it looks like another
crash is looming. The housing market hasn't been sane in 20 years.

Brewing? Seriously? People wonder what is fueling populist rage and a desire
to basically fire everyone in any position of authority or expertise...

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jeletonskelly
A lot of young people are saddled with student loans that eat into their
budgets for things like housing. Obviously a lot of factors at play.

~~~
magduf
I think it'd really be better if young people stopped getting student loans,
and just didn't go to college, so they wouldn't have this problem. Eventually,
the problem of overpriced housing will correct itself.

~~~
ilikehurdles
By the same logic, if they keep at it, eventually wages will rise to
accommodate increased housing costs, and the problem corrects itself.

The problem is “eventually” has an unclear definition in both cases, and few
are willing to sacrifice their potential of attaining certain careers or
income in exchange for working low wage jobs waiting for a hypothetical future
correction of this inequality.

It’s hard to level existing residences in many historic cities and so housing
costs rise, yet people are still wanting the opportunities afforded by those
cities enough to sacrifice having better housing conditions elsewhere.

~~~
magduf
>It’s hard to level existing residences in many historic cities and so housing
costs rise, yet people are still wanting the opportunities afforded by those
cities enough to sacrifice having better housing conditions elsewhere.

We don't have historic cities in America. At best, we have a few small
historic districts, but everything else in the metro area is certainly not
historic. But they don't build enough housing anyway, because too many
Americans want McMansions instead of condos which are far more space-
efficient.

The Bay area is particularly awful since existing homeowners have too much
power (and local government has way too much power; local government should
have NO power to restrict development, that should be the state's decision)
and won't allow higher-density housing to be built as it affects their
property values. This is a uniquely American problem.

>The problem is “eventually” has an unclear definition in both cases, and few
are willing to sacrifice their potential of attaining certain careers or
income in exchange for working low wage jobs waiting for a hypothetical future
correction of this inequality.

My proposal is to just let the economy crash and take a couple of generations
to recover, so just worry about your kids or grandkids having a better future.
It's basically what's going to happen anyway, so you might as well not burden
yourself with student debt. The situation we have now is totally
unsustainable.

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olivermarks
[https://fred.stlouisfed.org/series/CSUSHPINSA](https://fred.stlouisfed.org/series/CSUSHPINSA)
Overpriced and due for a correction

~~~
epistasis
There's a couple reasons it could be over priced. If it's a bubble, then we
could be due for a correction. If it's a shortage, and it certainly looks more
like a shortage from my vantage point in California, there wont be a huge fall
in prices unless there's a large economic decline.

~~~
helen___keller
Probably both a bubble and a shortage.

I can't speak for California, but in Boston rents are high and mortgages to
sustain the same units are much much higher. Regardless of the existence of a
housing shortage, this is bubble economics.

In a zero-speculation environment, the total cost of homeownership should be
comparable to the cost of renting. Without speculation, market prices in
places like Boston mean investment properties are absolutely horrid
investments because they have little or no return (when you factor in the
total cost of managing the property and the opportunity cost of the capital
used to purchase the property). The fact that despite this most properties are
rented means that landowners are banking on rents rising to meet current
prices (or they aren't confident they can sell at current "market price" in a
short amount of time - real estate can't be easily liquidated with a click
like stocks can, plus there's tons of overhead costs involved in trying to
liquidate real estate)

Or to put it in other words, the high rents in boston reflect the current
housing shortage and the higher home prices in boston reflect the expected
continuation of the housing shortage (backed by the reality that population
here is increasing faster than housing is being built)

~~~
pjmorris
Actually, rents should not just be about equal to mortgages+maintenance but
higher, because they are more liquid - it's easier and cheaper to finish or
exit a lease than it is to sell a house, and that's worth something.

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bradleyjg
_Zandi is the chief economist at Moody 's Analytics._

Does Moody’s stand to benefit more or less directly from the policy changes
being advocated here?

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apearson
Non-mobile link: [https://www.sfgate.com/news/article/A-national-housing-
crisi...](https://www.sfgate.com/news/article/A-national-housing-crisis-is-
brewing-What-13505365.php)

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cherrygarcia
I don't know about SF (I have no first hand experience there) but I can say
that the market in the Boston area seems similarly overpriced and not very
sustainable. Maybe for some different reasons, maybe some are the same. It's
to the point where mediocre 3br suburban homes even far from the city are
500k+. It makes me very hesitant to purchase a home right now because I don't
see how the value could do much anything besides decrease from here. That's my
gut feeling. Would love to understand better how prices could continue to
increase still.

~~~
leongrado
Agreed. I recently moved from the Midwest to Boston and the housing and rent
prices are giving me major sticker shock. My rent has tripled and looking at
the housing prices, looks like they have too. Who's buying these 1 million
dollar homes?

~~~
shados
That's easy. Depending on the interest rate, condo fees, taxes, etc, a 1
million home is about $4500 (less when the interest rates were lower, I
think).

If you have a couple of DINKs, it's 2250 per person per month, or about
$27000/year. 150k/year per person, about 90-100k/year after tax, and that's
well under 30% of your take home pay.

I used round numbers and I'm probably off, but even if you have to tweak the
math, it's pretty easy to see where people are coming from.

When I was looking to buy in the area, a bunch of people looking at the open
houses were couples with both people sporting their
Amazon/Microsoft/Google/whatever backpacks or jackets.

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robterrin
Just going to leave this here:
[https://www.bloomberg.com/news/articles/2019-01-03/manhattan...](https://www.bloomberg.com/news/articles/2019-01-03/manhattan-
home-prices-fall-under-1-million-as-sellers-cut-deals)

I buy the story about rates and mobility falling in general, although I think
this a longer term trend.

Mostly, if wages stagnate, people don't buy homes. Not rocket science. Been
going on for nearly 50 years now.

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RickJWagner
I think there will be problems in housing, but not the problems this article
describes. (Yes, I am over 40. And no, a 5% mortgage is not remotely
problematic.)

With increased automation and wage stratification, there will be fewer jobs
and fewer good-paying ones to allow people to buy houses. The price of housing
has always marched upward, but it will get to the point where only the wealthy
can afford a house.

That's my guess, anyway. Time will tell.

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CHsurfer
Things aren't likely to get better soon, particularly for lower- and middle-
income households struggling to make the rent and become homeowners.

This sounds backwards. If housing prices stop going up, won’t it be easier to
make the jump from renter to buyer?

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forgingahead
Housing cannot be both an asset, and also affordable. Pick one.

