The real housing crisis is one of quantity

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The REAL housing crisis is that TOO MANY of them are being built every day, bad mortgages or not. Mindless overpopulation (75 million annually, worldwide) is treated as natural. Nature is treated as expendable.
People go about their business, talking about money and investments, as if the land itself is infinite. They always claim there's "plenty of land" but won't say relative to what. Unaffected acreage decreases literally each second.
http://images.google.com/images?hl=en&q=human+footprint+map
"Economic growth" means more people and less nature each day, with money creating a false measure of value in the process. A true housing "bubble" is an entire round hill covered with them.
Real estate developers use money made from cannibalized land to cannibalize even more land. The word FINITE is missing from too many vocabularies.
E.A.
http://enough_already.tripod.com /
Housing starts are a leading indicator of mindless growth.
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i agree, greed drove the industry and now many houses are sitting empty, no one to buy and too many people losing homes they had, almost seems pre-determined to cause this current problem, all seems to be blamed on the housing market, but there are many other factors involved, every market has been inflated, oil companies claiming they are losing money, grocery stores, etc. and yes, too many homes were built but that is not the economies problem really, the cost of everything has soared, where will this end? and to what end? and why?
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Rose wrote:

It won't end. It is the natural cycle of things. It's a buyer's market now and in a year or two it'll be a seller's market again. All markets fluctuate up and down. Sometimes it's severe and sometimes just minor.
--
Art

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Rose wrote:

The key to understanding the housing bubble is understanding what drives up land prices. The OP is correct in saying that new construction was over done. The reason is rising land value, but why did land values double and redouble since the 1980's?
In our system, the financial sector has no problem creating funds for inflating land value. In fact, in a rising land market, mortgage lenders KNOW they can write home purchase checks without ANY real money on hand. They KNOW that real estate sellers will put ALL the money right back into buying other land.
Land prices rise because they are rising. All it takes is a small push like a drop in property taxes, capital gains taxes, or a drop in interest rates and it's off to the races. The upturn in land prices means this capital gains opportunity will be reflected in even higher land prices.
And so it goes until everybody is mortgage debted up to their eyeballs. At this point all it takes is one little bitty ol economic nastiness that reduces the ability to make those big mortgage payments. A war or a sudden jump in oil prices works nicely. Then the whole thing comes down with a crash.
Land prices cannot level off smoothly. As soon as they stop rising, they have to fall and fall hard. This is because a big part of land price is about the future investment payoff that buyers expect in a rising land market. No more expected price appreciation, no more price premium.
Mark M.
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The Shiller home price index shows home prices in the 20 major urban areas rose a real 21% during the 15 years 1987-2002 -- a tad more than 1% a year.
So much for "double and double again".
This is entirely consistent with Shiller's data showing home price appreciation barely exceeding inflation, appreciating by about 0.5% real per year, for the last century.
Which is entirely consistent with USDA/NASS price index of all farmland in the US, which shows land prices across the great bulk of the US barely matching inflation, appreciating by about 0.5% real per year, for the last century.
These indices show land value hasn't doubled even once in the last 100 years, much less gone "double and double again" since the 1980s.
Georgists. ;-)
There's their world and there's ours.
Put your money in land, then do nothing as a landowner but wait for it to appreciate in value ... and die broke. ;-(
As to the home price boom, it has been *world wide* -- Britain, France, Spain, Australia, New Zealand, China, all around the globe, and in several foreign nations it's been much *bigger* than in the US -- and it has all happened everywhere simultaneously in the last six years.
So a different explanation is called for, other than repitition of ye olde fact-free Georgist creed.
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RogerDodger wrote:

Yours and Shiller's? LOL
Real estate price appreciation barely matching inflation? What a joke.
http://video.google.com/videoplay?docid=-2757699799528285056
Mark M.

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wrote:

I proved years ago that the Shiller index is designed to hide land value increases.
See if you can figure out how before I explain it to you. It will be a good test of your willingness and ability actually to think for a change. I'm not hopeful.

Georgists are at least willing to know the facts.

LOL! As if everyone reading this doesn't know landowners who have sat on land and made out like bandits!

Of course, your claims are all false. Japan had its big land boom in the 70s and 80s, and has experienced no significant housing price inflation in the last several years. Certainly there have been housing booms in a number of countries, but that's simply because the same factors have been operating, especially cheap credit and extravagant subsidies to landowning.

"Fact-free" would be a good description of a land price index that shows real land prices not doubling in 100 years.
-- Roy L
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E.A. Enough already. Take your dribble someplace else. You have a long history is alt.planning.urban. You're a troll. And you're not even good at that. Stop your cross posting. Better yet, stop your posting.
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I like the thread so far. Only one stayed in the context you presented. The other 2 went with the money synopsis thing, went somewhere else instead of addressing the issues you presented. Kinda like politics.
See if I can even it out 50/50 for now (most won't address overpopulation anyway, so its for now).
All our big problems are a of an ever increasing population nature. Both nationwide and world-wide. The economy relies on a contigent of an ever increasing population as starters. As population slows, the only alternative is to take more from the current population. As the finite is understood. Either way, we pay.
--
Dave

Hypocrisy. Big SUV, filament lights on all night. You think your neighbor
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On Apr 19, 10:05pm, "Dioclese" <NONE> wrote:

Dave, love your Hypocrisy. Lets add home that consume 80-90% more than they sould at present. With the progress of the buildign science we should soon be able to easly get the net consumption to Zero.
Yes I do practice what I preach. I drive a hybrid, my electric bill has been a -$100 each of the last 6 years (yes that is a minus). My highest gas bill las winter was around $80 and that is at $1.49 a therm (CCF). My house is a modest 1,500 sq ft for two people. Each year I do another project to reduce our usage. Since the house is built it gets harder to fix the rest of the items. In new construction it would have beed easy and inexpensice to fix.
Andy
Think, Whole House Performance, it is the right thing to do....
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What housing crisis are you writing about?
Your Malthus style arguments never did reflect reality. Many European countries aren't having a reproductive rate that is sufficient to sustain their population.
-- Ron
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Depends which country you are in.
Here in the UK we can't build houses fast enough. The government won't release land for building, so prices are sky high and people need to borrow a large multiple of their salary to afford one. Agricultural land (without permission to build a house) sells for perhaps $20,000 a UK acre compared to perhaps $2,000,000 an acre for land with permission to build houses.
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I disagree.
It's not how many but what type of housing. It's part of a built in market inefficiency There are plenty of houses for the very rich. However, there are very few options for the working poor. Because there is a higher profit to be made making housing for the very rich all the builders made houses for the very rich. Because there is a very low propfit for making housing for the working poor all the builders avoid making housing for the average working stiff. Unfortunately this led to a glut of overpriced homes because the world doesn't have enough rich people and a lack of affordable homes for the average working family.... this environment encourages/forces average family into a housing market where they must +buy up+ to afford housing often forcing them to extend their credit to buy a place to live...this inturn creates a financial market full of risky instruments. All it takes is inflationary pressures or a a recession to cause these risky instruments to fail en mass. -
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Can you support your points below, or are you just throwing out you opinion?
wrote:

I disagree.
It's not how many but what type of housing. It's part of a built in market inefficiency There are plenty of houses for the very rich. However, there are very few options for the working poor. Because there is a higher profit to be made making housing for the very rich all the builders made houses for the very rich. Because there is a very low propfit for making housing for the working poor all the builders avoid making housing for the average working stiff. Unfortunately this led to a glut of overpriced homes because the world doesn't have enough rich people and a lack of affordable homes for the average working family.... this environment encourages/forces average family into a housing market where they must +buy up+ to afford housing often forcing them to extend their credit to buy a place to live...this inturn creates a financial market full of risky instruments. All it takes is inflationary pressures or a a recession to cause these risky instruments to fail en mass. -
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wrote:

Oh no! I hope you don't think I'm ranting... (9_9)
My points are an empircal observation. I'm involved in urban planning and local governing affairs
I occassionally testify at government hearings as well....
Locally builders have been able to opt out of building affordable housing units ( until recently) by paying into Affordable housing Fund. Developers could make much more money by just opting out of building affording housing units. However, the fund generated by this opt out fee has never been enough for the local government to build any new affordable housing projects/complexes ( especially with rising land prices and higher construction cost). Since new affordable housing units are now even more costlier to make than in the past -- builders when they do make them also can only make a few of them. Thus there hasn't been much in additional affordable housing construction in my county for about 20 years. Only recently the law was revised such that builder/developers are now required to build Moderatedly Priced Dwelling Units (MPDUs) and may NOT opt out -- but since new construction permits has gone bust - this might be a case of closing the barn door after the cows have left.
At the local level, I've also witnessed residents from local communities resist the inclusion of MPDUs near their communities because they fear it would decrease the value of their homes.
The lack of new affordable housing construction would not be such a severe problem if it weren't for the lost of current affordable housing. The currently the bulk of affordable housing consist of local apartment complexes but the current housing/real estate trend has been of the conversion of these apartments ( which have affordable rents) to luxury condos (which require a large amount of capital but have high monthy fees) . So you not only have the failure to create an adequate supply of new affordable housing units but you have the lost of existing affordable housing units. Luxury condos provide a higher profit margin than affordable co-ops - So Co-ops are not very popular here. One of the initiatives being advocated recently here is to stop the loss of older affordable housing units by using the affordable housing fund to buying apartments that provide affordable housing units that would otherwise be converted into condoniums.
While housing cost have dropped - they are still very high especially when considering the interest being charge on the mortgage. It seems to me that the people who have (re)financed their homes in my region in the last 3 years who are mainly at risk with respect to this currently troubling financial climate. I've heard that atleast some of the current troubles have to do with loans generated by mortgage brokers and the lack of verification( of financial data by) financial institutions. The main reason for this financial subterfuge is to make a mortgage/home affordable (or appear to be more affordable ).
I've notice in my community that most of the housing assistance has gone to single parent families, e.g. a mom with atleast one child. I've also notice that many households in my locale ( the Washington DC Metro Areas ) often solve the demand for higher housing cost by having multiple earners.

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wrote:

Oh no! I hope you don't think I'm ranting... (9_9)
My points are an empircal observation. I'm involved in urban planning and local governing affairs
I occassionally testify at government hearings as well....
Locally builders have been able to opt out of building affordable housing units ( until recently) by paying into Affordable housing Fund.
--

Developers have prices artifically raised by governmental rules which limit
"sprawl" and thus force housing prices up to many times replacment costs.
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Zoning restriction can actually reduce the overall cost of making new housing available by limiting the cost of infrastructure and required services (roads, mass transit, utilities, sidewalks, schools, libraries, fire/rescue services, polices ) necessary to support the additional housing and businesses. One of the major reasons for the support of "Smart Growth" policies is to reduce the need for additional roads and schools - major infrastructure cost to the local/state government. This makes a more far more efficient use of current infrastructure and should help control local taxes (e.g. property tax, income tax, and other associated fees charged by local governments.
While limiting the region where new housing construction can take place doesn't necessarily increase the cost of housing per unit or per capita - the economic does dictate the type of housing that can be built - so instead of building single family mansion with a three car garage, luxury townhomes or condos are built.
The cost per housing unit starts to go when a multi-family dwelling unit goes over five stories high and must use concrete and steel. In addition, the cost per housing unit also increases if there is any type of structure parking facility built for it.
While governments may set requirements that increase the cost of building residential home, e.g. requiring a developer to build a community center or public library, that doesn't mean the developer ends up meeting those requirements. This is exactly what happen in Clarksburg, Maryland inwhich several developers had failed provide/build the things they promised. So not only did residents pay a premium to live there but the developers left them with a bunch of empty promises.
I agree that government regulations can incraease the up front cost of housing. New local laws just passed now require new single family houses to be more energy efficient ( Energy Star/LEED ) - while this would decrease the cost of operating a home given the rise in energy cost - it would make the initial cost of owning a new home more expensive.
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*** Zoning restriction can actually reduce the overall cost of *** making new housing available by limiting the cost of *** infrastructure and required services (roads, mass transit, *** utilities, sidewalks, schools, libraries, fire/rescue services, *** polices ) necessary to support the additional housing and businesses.
On what planet?
*** One of *** the major reasons for the support of "Smart Growth" policies *** is to reduce the need for additional roads and schools - *** major infrastructure cost to the local/state government. This *** makes a more far more efficient use of current infrastructure *** and should help control local taxes (e.g. property tax, income *** tax, and other associated fees charged by local governments.
Roads and appurtenant items are built by the developer about 98% of the time.
Try again.
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Like New York City has low housing costs because of its zoning procedures. Large cities have large taxes.

You mean smart growth applies to sex too? Gosh, that is new one. Fewer schools due to smart growth? Ok.
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wrote:

Yours.
Who builds a road is irrelevant - so called Smart Growth government policies is focusing on reducing the cost and demands of economic development by making more efficient use of current existing infrastructures and services. Economic growth not has a capital improvement cost component but an on-going operational service cost component. Developers may come and go but the government and the community remains.
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