Real Estate Crash thread

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Originally Posted by liv2ski

Our first home cost was twice our annual gross incomes. Incomes have obviously not kept up to home prices hence the lack of younger people being able to buy.
Pay people a living fucking wage.

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People need to be paid a living wage…

But the housing cost issue is a supply issue.

Build more.

Nimby zoning + modern fire and energy code + litigious condo/apartment construction quality laws = stacked flats and other 4-12 unit apartment/condo designs are extinct.

Reverse those conditions (carefully) and open up the market so small business developers, designers, and contractors can build actually affordable housing - stacked flats and other simple 4-12 unit buildings in residential neighborhoods.


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There is no housing shortage. Prices are just too high. Record numbers of expired listings as failed sellers ponder becoming erstwhile landlords.

They’re might be a shortage of affordable housing based on median wages but there is no shelter shortage.

Nothing solves high prices like high prices. Another spike in long term rates should do it.

The cyclical of California RE inventory shows a peak around this time of year every year. It’s going to be interesting to see sales and inventory data through the end of this year. How desperate will sellers get?

If you are including California in your statement that there is no housing shortage, I am going to have to disagree with you.

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Originally Posted by J. Barron DeJong;[emoji[emoji6[emoji640

[emoji638]][emoji640][emoji639]][emoji638][emoji639][emoji[emoji6[emoji640][emoji638]][emoji640][emoji6[emoji640][emoji638]]][emoji[emoji6[emoji640][emoji638]][emoji640][emoji6[emoji640][emoji637]]][emoji[emoji6[emoji640][emoji638]][emoji640][emoji6[emoji640][emoji637]]][emoji6[emoji640][emoji637]]]If you are including California in your statement that there is no housing shortage, I am going to have to disagree with you.

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Why? There’s plenty of houses for sale and new multi family all over.

I am certain Nick understands the issue better than other commenters. $120 burgers? Typical dumb ass response for Mr Ignored. Based on my wages in 1984 and what a burger sold for ($2.50) today's $10 burger is pretty close to where it would be based on what I made back then.
The fact of the matter, at least in coastal CA, is the prices have far exceeded wage growth, It would be nice to see wages go up and prices come way down.

Several California cities were also among the 50 most populous metropolitan areas in the U.S. with the biggest imbalances between sellers and buyers in April, according to a recent Redfin study. These included Riverside (61.3 percent difference), Sacramento (44.9 percent), Los Angeles (44.8 percent), Anaheim (38.7 percent) and Oakland (36.2 percent).

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Originally Posted by 4matic

Why? There’s plenty of houses for sale and new multi family all over.

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LA passed a couple seemingly minor laws to allow building more market rate high density affordable housing and it sparked a boom that the mayor freaked out about and tamped down.

San Francisco has the oldest housing stock of any major city.

Oh, and while California is one of the richest states, it has one of the highest rates of homelessness. Southern states with drastically higher poverty rates than California have lower rates of homelessness... because they have more housing.

California laws have drastically limited the number of housing units being built, and specifically high density affordable housing.

Do you really think that more high-density housing would not have been built in SF, for example, if developers were allowed to build?

Or look at places like Palo Alto. There is virtually no high density housing, its all just single family homes for miles on end. That is not because developers are not willing to build higher density housing. It not because there are no more workers who want to move to Silicon Valley.

Or lastly, look at net migration. People are not leaving California because the weather, or the landscape, or the jobs all of a sudden suck. It is because housing is unaffordable, because there is a shortage.

-right now- there may be some housing available, but I would suggest that is a symptom of prices running up during Covid and then interest rates jumping up. Those two things will put a damper on demand. But I think it is crazy to suggest that over the past decade or two California has not had a housing shortage.

Like, come on now:

The state’s population has steadily grown, but it hasn’t been building new places for people to live at anything close to the same rate. It now ranks 49th in housing units per capita.

https://www.vox.com/cities-and-urban...housing-crisis

That article is seven years old. There are eight hundred condos for sale in frisco. Probably thousands more for rent. If prices come down there’s your affordable housing. No need to build more. If there’s no demand you can’t fix it with supply.

Although, the idea that prices come down and wages go up is pretty much fantasy. We need a complete reset like the Volker or even the GFC to help young people in the long run.

All the folks who left California for Austin? lol. I know people that went there and bought multiple properties thinking it was the next boom.

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Originally Posted by 4matic

All the folks who left California for Austin? lol. I know people that went there and bought multiple properties thinking it was the next boom.

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https://media.giphy.com/media/v1.Y2l...5BW0/giphy.gif

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Originally Posted by 4matic

That article is seven years old. There are eight hundred condos for sale in frisco. Probably thousands more for rent. If prices come down there’s your affordable housing. No need to build more. If there’s no demand you can’t fix it with supply. Although, the idea that prices come down and wages go up is pretty much fantasy. We need a complete reset like the Volker or even the GFC to help young people in the long run.

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And that article was using data from 2014, so yes, out of date. I should have used more current data. 2024 census showed California had 14,877,904 housing units, and a population of 39,431,263. That gives 377 units per 1000 people, which places California... 49th in the rankings still. But hey, we are closer to 48th!!!

https://www.politifact.com/factcheck...ousing-supply/

And there is net migration to other states from California (though international immigration has kept the overall CA population growing recently).

Housing is very famously a frictionless market where prices instantly adjust to match supply and demand...

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Originally Posted by nickwm21

modern fire code

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Genuinely curious, what parts specifically, are too strict/expensive?



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Originally Posted by zion zig zag

Genuinely curious, what parts specifically, are too strict/expensive?



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IBC and NFPA have evolved over the years to treat small apartment buildings like large commercial buildings. They used to be hardly any different than residential construction.

Today, a 10 unit apartment building vs a 3 unit townhome block would trigger:
- semi-combustible construction vs combustible
- Distributed fire alarm vs just local smokes
- fire sprinks
- multiple egress stairs
- elevators
- 2hr rated egress corridors vs just 1hr separation.

Code councils are working on it - but there needs to be a middle ground.


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nick has nailed it twice with his posts from yesterday

building codes
nimbys

in colorado developers are refusing to build condos because the laws changed ten years ago and gave owners more power to sue

and fuck fuck fuck insurance
I just got ass raped this year on liablity the list of things I'm not allowed to do is just stupid
I have no idea how tract home and multi family builders get insured my guess is they dump their company and form a new one every two years

Insurance will cause the next bubble to burst, it kinda is already around here. People's condo HOA's are doubling due to rising insurance costs because the companies need to spread out the costs associated with rampant natural disasters caused by climate change. It would suck to be stuck in a 40-50 year old condo with a $1100 HOA and nobody wants to buy it from you at almost any price above what you owe.

(not to get polyass) but I kinda think the states should let go of the reins and let the insurance companies freemarket that shit.

If you build in an area that floods or burns - the insurance SHOULD be expensive as fuck.


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Originally Posted by 4matic

All the folks who left California for Austin? lol. I know people that went there and bought multiple properties thinking it was the next boom.

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Two things are true about Austin. One, Austin, Texas is still experiencing population growth, though the rate of growth has slowed in recent years. While it's no longer the fastest-growing large metro area in the US, it remains one of the fastest-growing, and its population continues to increase. Second, the Austin housing market is currently experiencing falling prices, and a significant factor contributing to this is the substantial increase in housing construction. The city saw a surge in building, particularly of apartments, leading to a surplus of available housing:

"The chief reason behind Austin’s falling rents, real estate experts and housing advocates said, is a massive apartment building boom unmatched by any other major city in Texas or in the rest of the country."

https://www.texastribune.org/2025/01...rents-falling/

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Originally Posted by nickwm21

(not to get polyass) but I kinda think the states should let go of the reins and let the insurance companies freemarket that shit.

If you build in an area that floods or burns - the insurance SHOULD be expensive as fuck.


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I agree with this, doesn't make any sense to spend government money to prop up property values in flood plains. Shocking how Doge missed that opportunity to cut spending

this just popped up in my feed, could have swore kevo posted about these a bit back. Surprised at how spacious they look on video https://www.youtube.com/watch?v=xTGgMhSvGi0

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Originally Posted by nickwm21

IBC and NFPA have evolved over the years to treat small apartment buildings like large commercial buildings. They used to be hardly any different than residential construction. Today, a 10 unit apartment building vs a 3 unit townhome block would trigger: - semi-combustible construction vs combustible - Distributed fire alarm vs just local smokes - fire sprinks - multiple egress stairs - elevators - 2hr rated egress corridors vs just 1hr separation. Code councils are working on it - but there needs to be a middle ground. Sent from my iPhone using Tapatalk

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Having just vacated a 12 unit apartment building where we had multiple fire department visits to the building for fire alarms I'm personally glad there was a distributed fire alarm in the building to wake me and the family up so we could vacate from the 3rd floor without relying on my neighbors to go door knocking if somethign serious was going on. Most of it was false alarms due to kitchen type incidents, but still.

Point taken on the reglatory burden, but lots of safety/fire code is written in blood.

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Originally Posted by nickwm21

(not to get polyass) but I kinda think the states should let go of the reins and let the insurance companies freemarket that shit. If you build in an area that floods or burns - the insurance SHOULD be expensive as fuck. Sent from my iPhone using Tapatalk

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The wildfire one is particularly frustrating since people have been told for decades and decades that building in the WUI is risky and now it looks like we might be socializing the losses. I have to think that a sane government backed program would require aggressive Firewise type treatments to stay in the program.

I am curious what the mortgage companies are going to do if a significant chunk of homeowners with loans suddenly can't get insurance as required by their mortgage contract.
Does anyone know why widlfire insurance isn't an add on policy like flood, earthquake etc, but instead is attached to the general fire loss policy?

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Originally Posted by civilcoconut

The wildfire one is particularly frustrating since people have been told for decades and decades that building in the WUI is risky and now it looks like we might be socializing the losses. I have to think that a sane government backed program would require aggressive Firewise type treatments to stay in the program.

I am curious what the mortgage companies are going to do if a significant chunk of homeowners with loans suddenly can't get insurance as required by their mortgage contract.
Does anyone know why widlfire insurance isn't an add on policy like flood, earthquake etc, but instead is attached to the general fire loss policy?

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Wildfire losses are really only being socialized for homeowners in that insurance carriers are only allowed to charge a maximum of X for premium. Flood insurance on the other hand is subsidized.

Fire is always its own cause of loss, differentiating between a wildfire and standard fire loss would be a nightmare.

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Originally Posted by nickwm21

IBC and NFPA have evolved over the years to treat small apartment buildings like large commercial buildings. They used to be hardly any different than residential construction.

Today, a 10 unit apartment building vs a 3 unit townhome block would trigger:
- semi-combustible construction vs combustible
- Distributed fire alarm vs just local smokes
- fire sprinks
- multiple egress stairs
- elevators
- 2hr rated egress corridors vs just 1hr separation.

Code councils are working on it - but there needs to be a middle ground.


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Yeah a lot of things building code and you said fire code, but you knew that.

Anyway…you want to tell me you should stack units on top of each other with out a fire suppression system and without alarm? If the unit below me is on fire I want to know (alarm) and I want a chance at egress (suppression).

If you have a suppression system (13) you can do 1 hour rated corridors. Limited combustion construction comes into play at 5 stories, which seems reasonable.

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Originally Posted by zion zig zag

If the unit below me is on fire I want to know...and I want a chance at egress...

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pfft. pussy

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Originally Posted by zion zig zag

Yeah a lot of things building code and you said fire code, but you knew that.

Anyway…you want to tell me you should stack units on top of each other with out a fire suppression system and without alarm? If the unit below me is on fire I want to know (alarm) and I want a chance at egress (suppression).

If you have a suppression system (13) you can do 1 hour rated corridors. Limited combustion construction comes into play at 5 stories, which seems reasonable.

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No - maybe I misread your question. My original post was pointing out why those buildings aren’t built anymore and that if we can find a middle ground in code (and zoning, and defect litigation) then the market will build a ton of small multifamily and we have better housing affordability. Middle ground doesn’t mean walk everything back, but concessions need to be made. To your point, FLS is probably not the place to start… but it is certainly one of the pain points in making those developments pencil.


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I don't think the point is that the fire code is bad, just that it adds cost that gets passed to the buyer. For example: Here a three story duplex has to be sprinkled. This is a fairly efficient design for infill on steep lots with a garage and 2 stories above on a tight lot that that is a bit difficult to build on.

Its always finger pointing, but the powers that be have to be "right" and have no accountability. Two topics that I always bring up at the meetings are

1. Build Cost. Everyone want to blame this mythical developer. Pro tip: unless its a custom, there is a developer. Capital has to get paid. Infrastructure is expensive. Materials are expensive. So municipalities think they can do better. But they just add layers of inefficiency. So how we tax payer subsidized "affordable" that is available to 140%AMI and for a 2bed on one resident has to work locally 1300 hours per year and you can have 2x purchase price in "assets". So who do you think will "buy" those units.

2. Living Wage Jobs: fuck you is you are a small business owner (or corporate silent owner) or a government that want to pay $25/hr, no benefits a whine that you can't find help because of the housing issue. The working class tax base is paying the affordable housing taxes to support the shit bag chardonnay crowd. Got some balls, raise your prices, have staff that thive. At if that doesn't work, figure out a better way to have a $100k wake boat and 10weeks of vacation.

I don't think the point is that the fire code is bad, just that it adds cost that gets passed to the buyer. For example: Here a three story duplex has to be sprinkled. This is a fairly efficient design for infill on steep lots with a garage and 2 stories above on a tight lot that that is a bit difficult to build on.

Its always finger pointing, but the powers that be have to be "right" and have no accountability. Two topics that I always bring up at the meetings are

1. Build Cost. Everyone want to blame this mythical developer. Pro tip: unless its a custom, there is a developer. Capital has to get paid. Infrastructure is expensive. Materials are expensive. So municipalities think they can do better. But they just add layers of inefficiency. So how we tax payer subsidized "affordable" that is available to 140%AMI and for a 2bed on one resident has to work locally 1300 hours per year and you can have 2x purchase price in "assets". So who do you think will "buy" those units.

2. Living Wage Jobs: fuck you is you are a small business owner (or corporate silent owner) or a government that want to pay $25/hr, no benefits a whine that you can't find help because of the housing issue. The working class tax base is paying the affordable housing taxes to support the shit bag chardonnay crowd. Got some balls, raise your prices, have staff that thive. At if that doesn't work, figure out a better way to have a $100k wake boat and 10weeks of vacation.

If anyone lives on top of someone else, then it needs to be sprinklered. Some jurisdictions allow a [emoji637][emoji639]D system for the small duplex scenario which doesn’t require a separate fire line and is fairly inexpensive. The way around fire suppression is to build side by side per the IRC with fire walls between.


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Originally Posted by nickwm21

(not to get polyass) but I kinda think the states should let go of the reins and let the insurance companies freemarket that shit.

If you build in an area that floods or burns - the insurance SHOULD be expensive as fuck.


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I agree with the caveat that we need to improve the buyout programs, too. Risk profiles are affected by climate change, and I have significant sympathy for people who bought a house with a reasonable risk profile 30 years ago and it now reflects a substantial piece of their net worth.

I have less sympathy for someone who bought a place in Vermont that's flooded six times since Irene, but the reality in New England is that a lot of historical building patterns start to look pretty questionable as flood risk increases.

Most houses per capita in history right now. There is no shortage. Prices are too high.

Also: Homebuilders are slashing prices at the highest rate in 3 years.

You're smoking crack, there is a massive housing shortage, especially at lower price points. It's basic supply and demand stuff, and that's why prices are high. Just Google USA housing shortage- depending on the source it's estimated that we are 4.5-5 million units short.

Sure, houses per capita is up but to say there's no shortage ignores the fact that overall household size is down. Households with fewer kids, or no longer multi-generation adults, or even with no kids at all still need places to live. Household size can be more than one, household size can’t be less than one.

For example, imagine a small town with 1,000 people living in 250 houses. If another family of four moves in then the city must build another house for them. But if the average newcomer household size shrinks to 2 then the city needs two more houses to accommodate four more people. That's just to keep up with population growth. But then, if the town's average household size decreases the city also has a housing backlog to accommodate its existing native population.

Even if the town kicked out its immigrants it still wouldn't have enough housing even though its housing per capita went up. If the average household size shrunk to three the town would still need 83 more houses, or 250 more for two per house, just to serve the same size population

So… housing is not affordable because prices are high… I’m glad we figured that out.


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Originally Posted by neufox47

Wildfire losses are really only being socialized for homeowners in that insurance carriers are only allowed to charge a maximum of X for premium. Flood insurance on the other hand is subsidized.

Fire is always its own cause of loss, differentiating between a wildfire and standard fire loss would be a nightmare.

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They are also socialized by the fact that they are often caused by a utility (often a utility who has a mandate to provide service even if you build somewhere dumb). The responsible utility then has to both A) pay the excess costs for the huge percentage of people who are way underinsured, and B) pay back the insurance companies for some large fraction of what they had to pay out.

This is basically socialized because ultimately the rate payers pay it, and with utilities, pretty much everyone is a rate payer. Sure, shareholders can get wiped out first, but the citizens are the ones paying the bills.

And now it is also literally socialized in places where the government has created some sort of fund to help cover the utilities wildfire costs (because the government doesn’t want to have to approve rate increases and see utility bills explode either).