I just looked it up and we have 125 million houses in the U.S. and 301 million people. On average there are 2.5 people in one house, and now maybe more. 301/125 is 2.4 people per household. So we have complete satuation in houses. Each 2.5 household can have a 2.4 house. So the demand should be zero. There should be no appreciation or depreciation at all from baseline. Until appreciation reaches zero there is no need to buy at all. Now many of these households are underwater, and that means that there should be no appreciation in that asset whatsoever. Next, they all bounce the banks and trade houses on short sales, never fearing being priced out of the market at all. So 1960's prices + inflation, one sec I'll get the factor. A $30,000 dollar house appreciated 4%/year for 52 years is $230,277.55. So in most of the country you can buy a 1800 square foot house for 1/4 million, so you're good to buy there, but any more and you're paying way too much. This should put to bed the arguement over whether to buy or not in your area.
Just how many houses do we need
By jan Follow Thu, 20 Sep 2012, 9:14am 8,227 views 114 comments
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Dublin, CA
michaelsch says
You can write off the interest on your student loans, although admittedly most of the time it ain't much if your income is significantly higher than your student loan interest. Regarding other types of interest, I don't think that it would be a good idean to allow people to write off credit card interest since they mostly charge depreciating assets with hardly any or no resale value on the cards - these charges eventually make consumers poor to the point that the economy runs the risk of entering into a recession.
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Corning, NY
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jan says
Pittsburgh is pretty stable. There was no bubble there. Thankfully, nobody thought they could get rich flipping shacks in Homestead.
And most of the "post-industrial collapse" happened back in the 80's. Compared to other Rust Belt areas, Pittsburgh is doing ok. The higher-education/healthcare rackets are keeping the city alive, at least for now. Plus there's the shale gas, which will give the area some steady economic activity for a decade or more.
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McKeesport, PA
We are always behind the rest of the country by a few years, people are just really stubborn here. Fashion etc. is the same way. And we have a form of communism here in pennsylvania, so everybody is either in tech, nursing, or teaching. Everything else is a $10/hour job. And our state government is corrupt and bankrupt. We didn't have the boom everyone else did.
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McKeesport, PA
LOL flipping shacks in Homestead...I can hear the realtor now... you have a great view from this house now that the mill is gone.
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Idyllwild, CA
Derrill I have been a real estate investor for 40 years, I bought my first apartment building at 19. Do not teach your grandmother how to suck an egg. I do not pay retail. In any market there is money to be made if you know what you are doing. If you had bothered to read the blog posts I refered to above you would know that in general I think the average person in the average market should not buy. Each market is different.
Personally of the 8 houses I plan to sell I will lose money on one of them.
If I was younger I would, if I could get the right pricing, buy a 4 plex or less, move in one unit, and get the stupid interest rates available for owner occupied and rent the rest of the units. In many markets, Springfield, mo, Riverside, Ca, it would be difficult not to make money. In other areas it would be a mistake, it depends on the market.
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McKeesport, PA
God look at that chart! That's more managed than bernie madoff's ponzi scheem! Real charts don't move that way!
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Corning, NY
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jan,
Upstate NY makes Pittsburgh seem like a boomtown! If you think PA is bankrupt/communist, try living here! ;-)
NY state doesn't even allow fracking. Just over the border in PA, they're drilling like crazy.
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Corning, NY
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jan says
And it's close to Kennywood.
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McKeesport, PA
That's a pump and dump chart!
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Corning, NY
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Darrell,
That chart says Phoenix, not Pittsburgh.
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McKeesport, PA
Oh no, it's not seasonally adjusted for winter! That's what it is, nobody goes out in winter if they don't have to. Can anyone find a year over year for pittsburgh?
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Darrell In Phoenix says
Got it, thanks.
Wow that seasonal cycle is amazing.
Note to self: if buying in Pittsburgh, wait until winter.
Not too suprising, since Pittsburgh goes from "wow, this weather is fantastic" to "I can't believe I live here with no sunshine" and back, every 6 months.
But darrell, that chart seems to back up my claim of price stability in Pittsburgh, other than the predictable seasonal cycle.
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McKeesport, PA
.Showing average listing price for Pittsburgh, week ending Sep 12Average listing price | Average sales price | Median sales price | Average price/sqft | Trulia popularity
Map View: Neighborhood ZIP
Perry SouthImagery ©2012 TerraMetrics, Map data ©2012 Google - Terms of UseAvg. listing price for
Pittsburgh
week ending Sep 12$178K and up$159K to $178K$140K to $159K$115K to $140K$96K to $115K$76K to $96K$76K and below .
Pittsburgh neighborhoods Avg. listing priceWeek ending Sep 12 Avg. sales priceJun-Aug '12 Median sales priceJun-Aug '12 Price per sqftJun-Aug '12 Trulia popularityWeek ending Sep 12
Name Amount w-o-w Amount y-o-y Amount y-o-y Amount y-o-y Rank
Polish Hill $942,250 - $138,675 225.0% $117,600 161.3% $106 221.2% 55
Herrs Island $699,000 - $505,000 -2.4% $505,000 -2.4% $179 -11.8% 58
Squirrel Hill North $575,666 -8.3% $476,032 -11.7% $419,500 -6.4% $193 12.9% 19
Downtown $565,708 -2.2% $299,688 25.1% $157,500 -37.0% $161 26.8% 3
East Liberty $531,067 -0.3% $185,375 20.9% $200,750 54.4% $83 18.6% 39
Point Breeze $508,142 -1.1% $370,350 30.3% $301,000 15.2% $165 10.0% 12
South Shore $485,000 - - - - - - - 79
Allegheny-West $476,383 105.0% $280,000 60.0% - - $85 70.0% 32
Strip District $471,033 8.5% $355,000 - $355,000 - $185 - 42
Central Oakland $427,500 - - - - - - - 68
North Oakland $394,993 -0.2% $310,938 40.7% $285,625 51.5% $134 -3.6% 29
Bluff $377,471 -23.4% - - - - - - 56
Highland Park $370,525 -2.4% $241,027 3.1% $210,000 - $101 -8.2% 8
Upper Lawrenceville $364,207 1.0% $82,622 17.9% $54,000 -18.2% $63 10.5% 36
Elliot $355,456 -0.1% $47,175 -18.0% $37,500 -34.8% $47 42.4% 47
Squirrel Hill South $352,997 0.2% $303,344 12.0% $265,000 10.4% $156 19.1% 18
Shadyside $352,848 1.1% $326,748 5.2% $285,500 8.3% $172 15.4% 5
Crawford Roberts Hill $325,786 - $151,000 - $151,000 - $172 - 61
Larimer $298,300 - - - - - - - 67
Southside Flats $290,095 -1.9% $212,918 16.4% $225,672 30.8% $143 10.9% 1
Mount Washington $276,223 0.8% $194,047 83.1% $157,500 90.9% $112 60.0% 2
Lower Lawrenceville $275,099 0.8% $254,600 65.4% $254,600 41.4% $118 16.8% 11
Bloomfield $272,805 -0.7% $165,055 14.4% $127,250 1.1% $88 14.3% 10
Point Breeze North $269,538 -3.4% $170,425 15.3% $163,500 36.3% $86 43.3% 31
Duquesne Heights $264,600 2.5% $171,933 17.5% $134,950 12.5% $116 39.8% 16
Regent Square $234,307 -3.5% $265,814 -20.4% $250,100 -21.4% $158 0.6% 34
Central Lawrenceville $223,762 7.2% $128,067 -2.4% $101,500 -18.8% $86 8.9% 6
Troy Hill $220,600 91.7% $87,713 108.2% $78,140 101.7% $67 139.3% 37
East Hills $219,257 - $65,000 18.5% $65,000 4.8% $52 -10.3% 65
Southside Slopes $202,044 -10.4% $173,150 33.8% $162,000 16.5% $108 -12.9% 13
Central Northside $195,340 0.5% $171,255 0.3% $151,500 -10.9% $125 30.2% 4
Manchester $191,523 -0.2% $180,975 39.4% $182,000 82.0% $76 28.8% 26
East Allegheny $178,906 -0.5% $94,667 -21.9% $60,000 -50.5% $52 4.0% 33
Banksville $156,609 1.3% $114,567 -14.8% $117,750 4.3% $82 -12.8% 38
Swisshelm Park $153,155 -7.0% $140,117 -16.8% $133,100 -29.9% $96 - 40
Hazelwood $152,543 2.2% $79,020 - $35,000 - $63 - 48
California-Kirkbride $151,357 -31.0% - - - - - - 69
Greenfield $141,337 1.2% $128,644 0.5% $127,000 2.5% $91 13.7% 14
Morningside $130,357 -5.8% $162,100 30.8% $155,000 46.2% $103 39.2% 35
Middle Hill $127,483 2.8% - - - - - - 57
Westwood $127,377 3.9% $102,712 -13.8% $85,750 -12.1% $78 -17.0% 20
Bedford Dwellings $125,000 - $95,000 - $95,000 - $31 - 72
Stanton Heights $120,594 -0.5% $119,944 51.0% $124,500 64.8% $84 50.0% 25
Lincoln-Lemington-Belmar $119,924 -4.3% - - - - - - 43
Allentown $110,744 - $65,000 17.5% $65,000 - $59 43.9% 52
Brookline $108,137 1.4% $97,685 39.9% $96,900 42.5% $66 26.9% 24
Garfield $105,502 -4.2% $106,119 76.9% $69,500 15.8% $32 52.4% 27
Oakwood $104,660 - $93,900 - $93,900 - $51 - 50
Overbrook $104,292 0.4% $78,650 -2.6% $84,950 5.2% $58 - 54
West Oakland $98,000 - $112,000 31.9% $112,000 31.9% $104 38.7% 60
Crafton Heights $97,286 -2.3% $97,667 41.1% $85,250 26.3% $69 25.5% 23
Ridgement $96,134 -18.3% $78,500 -31.6% $78,500 -31.6% $93 -4.1% 59
Summer Hill $94,057 4.8% - - - - - - 63
Lincoln Place $92,870 1.8% $79,557 12.5% $70,000 -1.8% $65 30.0% 28
Upper Hill $89,326 -1.0% $77,000 -0.1% $55,000 -28.7% $46 64.3% 49
Marshall-Shadeland $89,160 -1.3% $65,700 19.2% - - $42 - 17
Windgap $89,106 4.6% $93,850 28.6% $93,850 28.6% $52 20.9% 46
Spring Hill City View $88,646 3.6% $62,625 89.0% $39,000 17.7% $26 18.2% 30
Beechville $88,604 1.3% $64,839 -9.2% $64,000 -12.6% $45 -8.2% 21
Bon Air $86,921 -2.2% $74,500 - $74,500 - $85 - 53
Brighton Heights $86,037 -0.5% $116,056 20.2% $112,500 26.4% $66 11.9% 7
Carrick $72,682 1.2% $67,043 0.4% $65,500 2.3% $45 -13.5% 9
Perry North $65,517 -1.3% $57,686 -46.7% $34,900 -64.6% $38 -24.0% 51
Fairywood $65,000 - - - - - - - 81
Chartiers $62,250 - $90,000 - $90,000 - $74 - 70
Fineview $60,888 -1.5% - - - - - - 45
New Homestead $59,900 - $106,000 - $106,000 - $58 - 80
South Oakland $57,095 -1.2% $110,921 -2.7% $100,000 -6.3% $83 -4.6% 62
Perry South $57,043 -6.3% $53,312 46.1% $51,875 42.1% $37 85.0% 41
Sheraden $54,075 1.7% $61,214 -2.6% $49,000 -2.0% $37 -15.9% 15
Knoxville $49,397 -4.8% $31,000 -71.3% $31,000 -71.3% $22 - 22
Homewood North $45,000 - - - - - - - 77
Hays $42,950 - $35,000 - $35,000 - $34 - 73
Arlington $42,233 -2.4% - - - - - - 44
Saint Clair $39,900 8.3% - - - - - - -
Esplen $35,693 -3.8% - - - - - - 64
Homewood West $34,600 - $30,000 - $30,000 - $13 - 78
Beltzhoover $32,525 - $34,000 - $34,000 - $19 - 76
Homewood South $31,250 - $54,000 -58.5% $54,000 -58.5% $39 - 75
Chateau - - - - - - - - -
Terrace Village - - - - - - - - -
West End - - - - - - - - 71
Mount Lebanon - - - - - - - - -
Scott Township - - - - - - - - -
Mount Oliver - - - - - - - - -
Spring Garden - - - - - - - - -
Northview Heights - - - - - - - - 82
Friendship - - $195,500 -9.5% $195,500 -9.5% $71 -15.5% 66
East Carnegie - - - - - - - - -
Allegheny Center - - $106,250 112.5% $106,250 112.5% $179 616.0% 74
Arlington Heights - - - - - - - - -
Brunots Island - - - - - - - - -
Glen Hazel - - - - - - - - -
Lincoln-Belmar - - - - - - - - -
Mt. Oliver - - - - - - - - -
Northshore - - - - - - - - -
St. Clair - - - - - - - - -
See home prices and popularity trends in Pittsburgh, PA by neighborhood or ZIP—sort by average listing price, average sales price, median sales price, average price/sqft and search popularity. Choose between seeing the actual prices or year-over-year (y-o-y) percentage changes on the map.
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McKeesport, PA
freek80
That's why they call em snowbirds, if you can afford it your in florida october to april.
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Corning, NY
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too much text!
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Idyllwild, CA
Derrill, I have purchased property and double escrowed it and made $50,000 profit on the same day I bought it. I do not pay retail.
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Pleasanton, CA
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jan says
So a 1.2 million 2/2 dollar condo in SF with HOA fees of $800/mth is overpriced? Seriously?
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McKeesport, PA
sorry freak80 yeah it wrapped and lost meaning.
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South Pasadena, CA
pkennedy says
Actually, that's an interesting argument.
On the one hand, during the housing bubble there was a huge number of housing overbuilt, after that we lost a lot of jobs but not as many homes.
On the other hand, most of these bubble housing is in remote areas where people should not live at all, so you can't really call them vacant homes the way you do not call vacant homes the 19th century ghost towns.
So, in the long run your argument is valid. It isnt't clear to me how much of new homes we really need. However, there is definitely a lot of new construction in the most desirable areas.
For example looking around in Pasadena I can see lots of new condo and rental complexes built in central parts of the city in the last 5-8 years (i.e. since they opened a light rail line here) They replaced some old and dirty small businesses, repair places, retail stores etc. Many of them have a high vacancy rate but their rental prices are very high, like $2400/mo for a 2br 2bth "luxury" appt. Looks like it still pays off, since they keep building more.
Here is a good example of several block just south of the old town Pasadena and at the walking distance to the light rail station.
http://goo.gl/maps/8M5d1
Most of what you see here are new large appartment buildings, some condos and some rentals and they keep building more. You may see the whole block completely cleared and the construction started there.
Also an interesting view of the nearby light rail station: http://goo.gl/maps/kuNBI
One may see that all around the station there are new appartment buildings (with the exception of a restaurant, a prking structure On the NE of the block and some retail on first floor). It's harder to see that most of the block to the east of arroyo pkway are new condos, just built in the last couple of years.
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San Francisco, CA
michaelsch says
Those are the rules and people follow them.
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San Francisco, CA
Calculation, discussion at very bottom might be helfpul to this thread
http://www.ritholtz.com/blog/2012/07/us-housing-inventory-requiring-deleveraging-30-million-units/
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Pleasanton, CA
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pkennedy says
With the jobs market suffering you can be sure the immigration will slow. Don't believe everything that Buffet says. He wasn't a buying into the high tech area because he didn't believe the valuations. Only the last few years did he give IBM, Apple, Microsoft, etc. the credit they deserve.
Buffet is cool and calculating, but he is not much different than any of us. He is human. I'm pretty sure if we stopped building homes in this country as of now, people would find other means of lodging. Living with parents, friends, etc.
As immigration slows this picture will just get worse for housing.
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Redwood City, CA
The population in the US has been pretty steady. There is no dip, and there the death rate isn't increasing. Baby boomers will likely live into their late 80's or 90's. The US can control it's population with immigration and it's clear that it's done a very good job.
http://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=country:US&dl=en&hl=en&q=us+population
The population is increasing, we lose 600K houses per year to age, and our historic vacancy rates are within the norm.
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RentingForHalfTheCost says
It may be decades before this happens. The US like many countries limit their immigration quota, Still, the wait is anywhere from a few years to 20. There's 4-5 million on the waiting list and based on the make-up of the country, it will only get worst.
In other words, no chance immigration will slow in a material way unless the government limits the quota. That is not going to happen, If anything, the quota will increase at the same historical rate.
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Pleasanton, CA
Premium
SFace says
There is always a chance. Read the book "The next 100 years" by George Friedman. In it he predicts that immigrants will be a hotly contested commodity in many developed countries. Everyone is counting on the ability to grow their tax base by controlling immigration levels. However, with the world population growth starting to slow and eventually turning negative, this whole picture will change. We are already seeing signs of the slowing in the developed countries.
USA used to be the dream place for many people. Hollywood glorified this American dream. Like the striving actress that went to LA to make it big only to succumb to turning tricks to get by, such has happened to many immigrants here. Traveling half way around the world only to find yourself standing at Home Depot begging for work is no dream.
Bottom line: if US can not get its job market out of the IC unit then you will see its effect on immigration. Thinking something is always there is akin to housing prices only go up! Just wishful thinking.
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Corning, NY
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RentingForHalfTheCost says
Well put.
And even with an influx of immigrants, how many $400k houses will they be buying with their $1/hour salaries?
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New Lenox, IL
freak80 says
In chicago, they will take a single family house and turn it into a 3 flat. Take my word on it ... I lived in chicago for 8 years... sold in a Short sale, and saw most homes on the block go that way... ... hauling in drywall and recycled appliances...but we're not supposed to tell that to anyone... Shhhhh @:^|
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Corning, NY
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There aren't any immigrants in Corning. At least none from Mexico/Latin America. I don't think I've seen a single person of hispanic origin around here...seriously. Compared to the rest of the country, it's pretty surreal.
Lots of dirt-poor white folk, though...
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Pleasanton, CA
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jan says
Your forgetting your opportunity costs which can be huge in the BA. Having that amount of money tied up in a depreciating asset can be very destructive to your wealth. Just saying...
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Pleasanton, CA
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pkennedy says
Yah, Buffet can never be wrong. The difference being that he can lose 94% and still be richer than any of us.
http://www.bloomberg.com/news/2012-09-25/buffett-backed-byd-s-target-cut-by-94-by-clsa-on-outlook.html
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Baltimore, MD
jan says
Are you sure it's that way in the whole state or just not in the Philadelphia metro area?
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How many "houses" do we need:
Say you have 5 closets full of clothing & 5 family members.
If each family member needs 1 closet full of clothing, no more clothing is needed, right?
.
HOWEVER:
2 closets= only coats (and half are fur...)
1 closet = only hats (half are open-top visors)
1 closet = only pants (half are size 34x38 khaki Dockers)
1 closet = everything else - shirts, socks, underwear, shoes...
(BTW one of the closets is actually in the unfinished attic, behind the Christmas stuff.)
Total number of closets with clothes - ok
The mix of clothes within these closets - NOT ok.
What to do....????
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BTW I'm in Florida..The inappropriate mix may not exist to the same degree elsewhere - but it's definitely an issue here.
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McKeesport, PA
Your forgetting your opportunity costs which can be huge in the BA. Having that amount of money tied up in a depreciating asset can be very destructive to your wealth. Just saying...
yes i know, but we have a roof over our heads.
Are you sure it's that way in the whole state or just not in the Philadelphia metro area? whole state
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Corning, NY
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zzyzzx says
Pennsylvania is Philadelphia and Pittsburgh, with Alabama in-between.
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McKeesport, PA
freak80, you are making no sense at all.
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Corning, NY
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jan says
It's a quote from James Carville. And pretty accurate I think.
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Pleasanton, CA
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jan says
I do as well. Renting also puts a roof up there. ;)
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South Pasadena, CA
SFace says
You are talking about two different things:
The immigration of professionals vs the immigration of unskilled workes.
The later only looks for immediate payments level. The former considers the overall quality of life, the opportunities for professional growth and satisfaction; all these not only for themselves but for their children as well.
The immigration of professionals bottomed out in GWB years. Actually, I personally know several families, which at that time went back to their countries of origin: to Germany, Italy, and Russia. Some of them after several decades in USA and with kids born and raised here. I am talking about software, chemical, production engineers. BTW, some of them are coming back now with the crisis(es) in Europe.
The unskilled immigration depends on basic living conditions in various countries vs in USA (though percieved rather than real conditions). With current economic growth in Mexico it's obvious we will have only the absolute bottom of their population willing to immigrate to USA. Such immigration in turn may affect only the absolute bottom of the housing market.
The professional immigration though, that may affect the high end of housing market is still neglectable.
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South Pasadena, CA
RentingForHalfTheCost says
You know what, I only have a ceiling over my head. Roof is what the tenants upstairs have over theirs.