Heh-heh-heh…yeah, according to zoning laws, LOTS of things are impossible! One of my neighbors, a construction foreman, was unemployed for a long stretch. He put new siding on his house…including the third bedroom he added on TO THE FRONT OF THE HOUSE! …and zoning didn’t notice. No matter what we neighbors think individually about each other, we’re all united in our quest to increase or property values. He’s an asshole, but he’s our asshole, and F#@k the zoning department.
Zoning Officer: “How many people live here?”
Rooming House Proprietor: “Eleven.”
Zoning Officer: “That’s Too many unrelated people in one house.”
Rooming House Proprietor: “Who says we’re unrelated? Prove it, ‘Five-O’.”
I have a rather vague feeling that the higher-price low-interest-rate equilibrium we are in is actually significantly worse for regular people than the lower-price high-interest-rate equilibrium of 35 and more years ago.
It seems like the current situation punishes failing to keep up a lot more, and rewards managing to get modestly ahead a lot less.
But probably a lot more important to how home owners ‘feel’ is that those who bought houses in the low-price high-interest era received a massive windfall when we shifted to the high-price low-interest environment.
I bought my tiny shithole in 2006…and it’s still a tiny shithole*. A windfall isn’t a windfall if you insist on living in your own little slice of Hell instead of selling it, which, I couldn’t afford to do. Selling it wouldn’t get me anywhere because the selling price of my shithole would just equal the buying price of a different, but equally awful shithole. In order to leverage myself into my Fortress of Squalitude, I took on mortgage payments that were more than 60% of my monthly income. I still ate just fine (non-negotiable for me); but.no cable, no cellphone, no vacations, no luxuries, and no vices.
Eh…if you’re not a speculator, all of this is academic.
From a real estate agent’s perspective, I did everything backwards: I blew off ‘curb appeal’ and shot the wad on insulation and landscaping. I didn’t ‘reduce’ my utility costs, I DESTROYED them! …but none of that counts toward property values. It was all about my cost savings and comfort, which doesn’t show on the outside.
No discussion here of how things like AirBnB have affected housing? I’d guess that they’re both driving up demand and prices and driving down supply of residences, but no idea how much of the trend could be due to that, or what other factors are involved.
…not compared to now. Interest rates were (for other people*) in the 6+% range and the local real estate market was considered to be hot. I live in Denver, my house is now getting taxed like it doubled in value since 2006.Denver is the red line in the graph below:
I used a ‘portfolio loan’ instead of a conventional mortgage, and was paying 4%. That’s when a bank doesn’t re-sell it to a larger bank or gov’t entity. My shithole, ironically, was never part of the subprime REIT market.
I was under the impression that because home prices are unrelated to anything like construction costs and whatnot, and are basically determined by buyers’ willingness to pay (which is in turn a result of monthly payments plus competitive bidding for a given neighborhood), that low interest rates are a rather important causal factor in housing prices?
When you place an index of 100 at year 2000, you only have to inflate that a little over 3.5 percent per year to get to 170+ in 2015.
If these really are the hottest markets in the US, it looks as if they are priced now at what a “reasonable” rate of increase would have led to, if the bubble and bust had not intervened.
Yeah, I couldn’t get any graphs that were up to Denver’s 2018 prices - maybe they all ran out of ink…
I did just spend the last ten days clearing out a house belonging to a pair of real estate agents. They have multiple houses in multiple states, so they sold their Denver home to move full-time into their San Francisco home. It sold for 3.2 million, in a neighborhood where the ‘big money’ athletes and politicians live. They sold out of Denver because they think we’ve peaked, but that California is due for a rebound. Lots of people have opinions, but when two genuine experts bet a few million dollars on their opinion…
Yeah but I hate that explanation. Partly cos a lot of crap right wing economists I hate are paid to try and get rid of zoning laws. But also partly cos its not really zoning per se but the congestion costs of long commutes. If you have better, cheaper more efficient public transport, you wouldnt have to have denser urban districts. So as much as zoning is a factor, so is under investment in transportation and mass transit.
I think you are absolutely right. Rents are “Economic Rent” to say the downright obvious. They are not driven by an absolute of value but rather by what can be extracted from the tenant. If the tenant can pay more then rents will rise. So I would argue that lowering taxes has also been a substantial contributor to increased rents.
And might I just add that Republican economists should be beaten on the soles of their feet for their terrible sins. Yeah, I’m looking at you Greg “Wank-eew” Mankiw
Let me guess…either Cherry Hills or Castle Pines? These areas never peak. That’s like saying Beverly Hills is due for a correction. Not an apt comparison.
I’m been in Denver area since the 80’s and it’s true that the median house price has gone insane here in the past 8-9 years. But I thought they peaked back in 2006 only to see the crash a few years later. Now values are back to around what they were 10 years ago and I’m fortunate to be in a position to cash out and take the profits.
I bought my first shit box house in central Denver back in 1995 for $69,000 and that same house is now worth $420k. I guess I should’ve kept it - although I expect to do very well with my current house.
Unfortunately I think the secret is out about Colorado as I’ve never seen the influx of new arrivals like I’ve seen lately. I don’t think this trend will be reversing anytime soon.
So close…Cherry Creek - and the house was rented out to Janet Elway when they separated! It’s only one block North and West of the shopping district, it might be reaching the tipping point of getting bulldozed for a snotty strip mall.
Oh, we’ve sailed right on past 2006 prices, now. My shit box house is in the neighborhood that joke map labels ‘Loose Chihuahuas’. Damn, but those jokesters were apt!
But don’t bet about the ‘foreigners’ from out-of-state not leaving. Remember how we thought we’d never get rid of the Texans? And then we were overrun with Californians? I call those tree-killing, pipe-busting sub-zero winters ‘Reset Winters’ - the climate reminds us why we’re in the long-run a Zone 5, and not our short-term Zone 7 that lulls people into thinking we’re ‘just like home’. A Reset Winter flushes out the riff-raff, leaving the bitter and stubborn that have deep roots.
A little story…back in 1987 my parents were looking at a place near there. Right across from the Country Club (Speer & Downing) and the sellers wanted $289,000. Fortunately they had the foresight to buy a condo in LoDo instead (before Coors Field, Pepsi Center and Elitch’s went in) for about the same price. It’s now worth more than that Cherry Creek house.
LoDo in the 80’s: [sotto voce] “Walk faster and turn your ring under.”
LoDo now: [sotto voce] “Oh, cripes…another beardy hipster vaping his way down the sidewalk…”
