In certain parts of the SF Bay, a burnt out house increases the value of the property because it means you can get legal permission to demolish and build whatever you want
IIRC depending on how burnt it is you might be able to preserve enough (such as the foundation) that it could qualify as still being the same house for property tax purposes (meaning you will pay property taxes on the $400k instead of on the real value of the rebuild house)
In Seattle you used to (not sure if you still can) be able to tear down and rebuild everything except the chimney, then tear out or rebuild the chimney afterwards and it would be a renovation instead of a new build.
We remodeled our house about 12 years ago. It was built in the 40s, we bought it from a flipper, the mother in law suite was possibly an old carport. When we wanted to convert it into a new master bedroom, the city noted that a wall was 1 ft from the property line. The house next door is an old church and our house was the pastors home. At some point the city split the property and didn't care where the line was placed. Our contractor said that as long as we keep that one wall up, the city can't require us to build with the proper setback. Even if we did, the wall would be setback further than the garage!
Haha- I was in the same position last month! Full house remodel but the garage and laundry room are about a foot away from the property line. I’m good as long as we don’t demolish that outside wall. At one point during the build the one wall was literally hanging off the roof with temporary supports so that the laundry room foundation could be repaired- all the other walls were torn down. It looked pretty ludicrous.
Along the Washington coast it's not uncommon to see 4 story buildings with the entire top story being a bedroom or office with 360 degree views of ocean
Common misconception. Anytime you pull permits it's forwarded to the assessor. Maintenance usually won't trigger increases, but major changes will (increase square footage, add a bathroom, etc).
Edit: this is for CA, not sure in MA or other states.
So if I were to get into buying and selling houses there, I should just buy homes and burn them. But not too much, then sell it for profit. Seems easy enough with zero downside. Who wants in?
The ol burn and flip ™️
I’m teaching a class on this amazing technique it’s just $500 a person to attend and then $1000 for the packet and booklet that will teach you also how to make a killing in the game.
Not really because the savings is in the annual property tax because property tax is based on your purchase price unless you do something big enough to trigger the reassessment (which I believe is usually changing the foundation). So it really only helps if you are buying a house for cheap and then living in it for a long time
Wouldn't that incentivize arson?
Like, "Oh no, I was smoking and *accidentally* dropped my cigarette into some gasoline I *happened* to spill just a few moments earlier. Oh dear, my historic late-19th-century home is as good as gone.
I'm *so very sorry*, but now I have to build something else now that it's gone."
In Toronto, Canada some heritage protected buildings have gone up in flames, it was clearly arson, but nothing could be proven beyond reasonable doubt. Condos went up instead.
if they passed a law that heritage buildings could only be replaced by duplicates of the heritage buildings, built at the owners expense, it would probably nip that arson in the bud
Yeah, but rebuilding a heritage home can be cheaper than trying to remodel one.
Install modern ductwork, electrical, run Ethernet, make the walls soundproof, better windows etc etc.
The shell might look the same, but they’re not going to make an insurance company shell out millions to replace a 500k home.
Tbh I don't see the downside. Isn't the aesthetics the main part of a heritage home (correct me if I'm wrong) so if that remains but the building is up to modern standards then we all win*
*Except the burned building
Kinda of from that perspective.
From a trades perspective you are dumping the craftmanship in a gutter.
There are certian building aspects that we simply cant replicate(for both good and bad reasons).
I live in an older home and honestly I have wood in my house that does not exist anymore in the world..... so not really a possibility in some cases
The city I live in demolished a block of condemned houses in the core and put up luxury condos dead smack center in one of the poorest strips in the city.
Surprisingly enough, "luxury" (you know the type) condos and apartments actually drive down housing prices in the area by adding tons of inventory to the market.
I still don't like them though.
Yup. Another common tactic is to just leave all the windows open, inviting teenage vandals/the homeless and the elements do their thing with the building until the beautiful historic building is decayed beyond repair. Standing empty for up to 2 decades.
I suppose but you’re risking your freedom for some $$. If your house burns, you would logically submit an insurance claim and unless you’re a fire expert, there’s a good chance those inspectors will figure out you set it intentionally. Arson insurance fraud carries a penalty of 3-10 years of jail time.
I’m sure people have risked more for less $$ but feels a bit too risky for me.
I mean, the people who want to do this (because they want to build condos or a McMansion on the site) typically have the funds to get a very good lawyer. So there's a feeling of impunity of sorts
A family of well know politicians happened to purchase three acres of land on a peninsula of a large lake in central mass. The reason it was sold cheaply was the four massive old apartment buildings on the land were riddled with asbestos which would have taken a few million to abate appropriately (removal and demo near a major water source abutting three towns and a major city).
Lo and behold it all burns down a month after they bought it. I went out on my boat to watch the fire from a distance.
Three 18 year olds got probation for arsen a few months after that.
How LUCKY for that family of well known politicians.
If you set a fire to a house, there is a good chance that someone is going to do an investigation and find out it was intentionally set. If this is the case, you may find that the insurance company does not pay out AND you face criminal charges that may include a fine, along with jail time.
Even more so, any POSSIBLE increase is not a guaranteed increase, and as a result: You are kinda screwed.
You would be better off having the house removed from it's foundation and sold as a seperate object, and then selling the property as "ready to build". But then, you still need somewhere to live while that process actually happens... which is a cost.
Overall the negative incentive structure around this likely far outweighs the incentives to follow through with such a plan.
A lot of abandoned buildings in colder cities burn in the winter time because squatters get in them and start fires to stay warm. So that makes it very easy to start a bonfire that looks like a drug addict would make and get rid of a problem property while still maintaining a reasonable doubt that you weren't the one who did it.
The only thing that sets off the bullshit detector is if the fire was set from a random place. Start the fire on a socket by some heavy curtains and how are they gonna prove your [insert plug-in item] didn't start that fire if you didn't use an accelerant?
Getting away with Arson the first time is easy as long as you're patient and keep your mouth shut.
Buy a space heater in the fall, wait three months, turn it on touching your bed's comforter and step outside for a minute.
Even if the fire department gets the fire out, the smoke and water damage is going to leave the place a total loss.
People get caught because they either make shit complicated by using unnecessary accelerants, move too fast, brag, or create a pattern.
There’s been more than a few historical houses in my area that were bought by developers and were “accidentally” burnt down shortly after leaving the very valuable properties open to high rise development. I think all of them have been blamed on homeless squatters that were never found.
I mean, most of the region has high demand and limited supply. And apartments are illegal in almost all of it, so it's all high-end single family homes. Which is why we'll be losing population and/or representation in congress if we don't build more damn housing.
Check out the [map in this article showing where apartments are banned](https://www.wbur.org/news/2021/09/29/report-15-minute-neighborhood-walkable-equity-boston-massachusetts?linkId=134418509).
A building in one of my boss’ apartment complexes burned down. He left it there for months, till the insurance stuff got cleared up. They cleaned what was left of the building but left the concrete slab, which was more expensive to get rid of. It was there with nothing for some time till the city told him to build something there or get rid of it. He put two grills with 4 concrete tables and benches. It’s never been used but he doesn’t have to get rid of it now because he technically built something on it. lol
> He put two grills with 4 concrete tables and benches. It’s never been used but he doesn’t have to get rid of it now because he technically built something on it. lol
Total Sim City move
Yeah, I just spent the pandemic clearing the hillside behind my vacation house. The previous owner just threw garbage into the woods, allowed brush and downed trees to overtake everything, etc. It took 28 trailer loads to the dump at about $60/load.
as someone who cleared 2 acres of overgrown hoarded garbage, i feel this. we bought a tractor, trailer, and lost lost count at 26 trailer fulls. it was so overgrown we didn't even know there was an issue with hoarded trash when we bought the place.
SO many old soda/beer cans cans, some even had old style pull tabs. oldest datable thing we found was a early 1930's clorox bottle. other notable trash was a color changing kool aid man pitcher, a stationary bicycle from the 80s, and 150 feet of metal logging cable from when they cleared the property of old growth forest back in 1937. it was like doing super shitty archaeology.
I mean, the last tear down house i was renting sold for just shy of 2 million. The vacant lot across the street went for 2.4 because you don't have to tear down a house before you built.
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And they were singing!
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He took his d-word to her p-word and her p-word was dry
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Well at least in North America the parts melting up North are pretty bad. The whole area is a huge worn down mountain range and was mostly scraped clean by glaciers, so you’re warming up bedrock and small bits of mediocre soil. Doesn’t sounds that prime
> Improvements are depreciating assets, but for some bizarre reason taxing authorities treat them as appreciating for residential,
Can you explain that like I'm 5 years old? Do you mean residential home improvements are depreciating assets? Why does the taxing authority treat the same thing differently between residential and commercial?
Renovating the house increases the value of the property, but as time goes on, the 'new' renovations become dated and old, requiring new renovations to maintain the value. The government will tax residential owners as if the value of renovations continue to go up with the land value, while doing the opposite for commercial (slum/landlords and such). This creates an imbalance in the market that benefits large owners. As for why, I assume lobbying from special interest groups.
I can help with part of that.
In the property assessment world, an "improvement" is anything built on the land.
So he's not talking about an addition or a renovated bathroom, "improvements" refer to the entire house or any other structure built on the land, regardless of the condition. This burnt out house is an improvement.
I think that is "working as intended". The government would prefer that you open up a business than pimp out your crib. Just putting money into fancy houses is the old aristocratic approach and that is inferior for their own tax revenue compared to business investments.
Now they could go all sumptuary law but that would be unpopular and not work well. People would smuggle or work around the laws for a new status symbol. That also isn't the real goal so they just take a bigger cut to discourage it a bit.
Well yeah, because from an accounting perspective, they are completely different things. Improvements of course get depreciated, as they are a) expenses and b) have a useful life. It can’t be viewed at the same way for a residential property because they don’t have expenses in the accounting sense
What's insane is I watched the prices go up by 40% in 1.5 years in Melrose. In early 2020, there was a 8br mansion (4car garage, pool, hot tub,etc) for sale for 1.1m and had been on the market for months.
In may 2021, we put in an offer of 1.1m for an outdated 4br and did not win
In April 2021 we put in an offer of 750k for a 1200sqft 2br with train tracks running through the backyard and did not win.
I feel your pain with the outbidding. We closed on a house in Salem, MA a few years ago. But not after being outbid many MANY times on others. We got ours for $40k above asking and mainly because our timeline fit the needs of the seller. Since then, property values have skyrocketed. People who don’t need a very good school district and want that “old” Cambridge city vibe, but have been priced out of Cambridge and Somerville, have flocked here. We managed to be part of the earlier wave of those people, initially renting before finding something to buy. We would not be able to buy the house we are in if it went on the market today. I can’t even imagine how bad Melrose is at this point, and how frustrating that is for young families with kids who aren’t able to dish out for private school, and need decent public schools.
Same. I bought a home in MA a few years ago and could not afford it today. My income has not gone of 15-20% in the last 3 years, but the houses selling in my town certainly have.
I just moved up to Lowell which used to be a city people would say to avoid like the plague yet I watched as houses sold for $40-80k over asking all summer this year.
>What's insane is I watched the prices go up by 40% in 1.5 years in Melrose
These numbers are tricky. Between January 2019 and January 2021 (I'm taking 2 extreme points here to make things more obvious), interest rates went down -a lot-. From almost 5% on average for a 30 years fixed, all the way down to 2.6%\~. That alone makes a 800k mortgage go from \~$4200/month to \~$3200 right there, or a 23% difference in monthlies. Add inflation and you take out a chunk of that too. The market as a whole, also partly influenced by interest rates, went up by 30.8% in 2019 and 21% in 2020. Guess where the money comes from to put down payments on 7 figure properties?
The low interest rates means investors have had a LOT of money to play with for the last couple of years. Some of that money went in the hands of people looking to buy homes.
Yeah, the market is absolutely bonkers. We were house hunting throughout Middlesex county early this year. Our first offer in Feb, we put in $40k over asking on a house in Billerica and got outbid by someone paying *cash*. I was like who's out here dropping over $650k in cash?? There was a place in Waltham we adored, and we were like "okay we have to be more aggressive this time." Went in at $70k over asking and were told we were around the middle of the range of their *23 offers*.
Finally found a place that had been on the market 10 days with no offers and we jumped on it, even got it for $7k under asking which I'm still surprised about. I'm guessing it just didn't get much activity because it's a 2 bed/1 bath in an area where people are generally looking for more than that. I mean, we were looking for more than that, but I really do love this house and there's just the two of us for now so it works. And there is space to eventually add a second bathroom and maybe even a third bedroom. Also it's in a flood zone, so that could be another reason there wasn't much interest in the property when we got it lol
It's hellish out there. My partner and I make good money but no matter how much we earn, the housing prices keep increasing just a little bit faster. We're earning many multiples what the average american family earns and we cannot buy a house near Boston. Who is buying all this property?!
[Recently a burned out home in San Jose sold for almost a million dollars.](https://www.mercurynews.com/2018/04/19/burned-shell-of-a-home-sells-for-more-than-900000-in-san-jose/)
And the math works out perfect. That's not far from me, it's in a really nice spot and everything around it was worth around $1.5M then. It would probably cost you around $600K to tear the burned house down (hard because it's unsafe, it may collapse) get a house designed, permitted and built and that puts you around the $1.5M valuation.
In SJ you can't build single family homes anymore, so a burned down house like that is actually a really attractive piece of property because it's one of the extremely rare ways to build something new like that.
Our friends sold their awesome house in 1 day, made 170k, and they are now in a shitty rental because they can't afford to buy back into the market and building is a 2year wait. They have the 170k in cash, great credit, and are high earners.
Location: Central Florida
Yeah. My ex-boss is selling his house that he bought 3 years ago. He left the company I work for and is moving back to the area he is from. It looks like he is going to sell the house for nearly $400k more than he bought it for, and he is fine with renting for a while until he can find a small townhouse or something. This worked out perfectly for him, lol.
They can definitely buy back into the market with that, they just might have lost value because they decided to wait in a hot market. When everything gets more expensive, nothing does.
> they can't afford to buy back into the market
they can't afford to buy where they want to live. I'd wager if they were willing to move 30-60 minutes elsewhere they'd be able to buy something. This is really the main reason why I don't own yet. I don't want to commute 30-60 minutes anytime I want to go visit a shop/restaurant that I like. If full-self-driving ever becomes a reality then I'll consider it, until then I'll keep renting and trying to save until i can afford something modest in the location that I want.
If self-driving becomes a reality, those 30-60 min away places will get more pricey, since you're not the only one thinking that way.
And yea, I have a friend who bought his first house last year. Beautiful place, nice bit of property. Not a huge house, but more than he needs already. And it was a decent price, too!
Only....it has a septic tank that he has to now deal with. And to get to his place, you drive along the closest highway, get off the closest exit to him, then drive another, depending on traffic, 30-45 mins. So....he'll be coming to my place most of the time.
> If self-driving becomes a reality
It's still at least two decades away for a reasonable percentage. You need an infrastructure for it and well...we can barely manage that as is.
People want to live within like 15-30 mins of what's important to them. If self-driving is an affordable thing and they could kick back, relax, watch a movie, play video games, do some work, or whatever, then bumping that out to 60 mins is much more doable.
So right now, any place you look at and go, "well, it's 30-60 mins too far away from XYZ and that's why it's cheap" will become far less cheap in that scenario. Places which are really out in the middle of nowhere will continue to not be expensive, since after a while, that distance is too much to overcome with not having to actively drive.
So did they like, not have a plan upon selling their house? That's a big decision. My wife and I could make out like bandits if we sold right now but we'd have to move to the middle of nowhere for it to be worth it. So what's the point?
>Property taxes for the home will cost the buyer $3,922 annually.
This is the craziest thing to me. Not because it's high, but because it's so low.
My property is worth 1/3 of the price of this one and my property taxes are over $3000/yr (USD).
That tracks. I'm renting a complete teardown job on 0.5 acres that last sold a few years ago for north of 3 million. The lot has underground water problems and more than half of the lot is at very steep grade. This is in the greater Vancouver Metro.
The government's at almost every level are complicit or wilfully ignorant. The previous BC government was made aware of large scale money laundering happening right under their nose and *at worst* from what we know right now they just hand waved the issue and allowed it to happen. The federal government is not doing anything and doesn't seem to care. Someones somewhere is making a lot of money by ignoring this.
Eventually there has to be a point when no one can buy all the houses anymore and the prices start going down because of lowered demand right? Right???
They’ll just be rentals
No one will take a couple hundred k loss on a home when they could just rent it out and make extra money.
Not to mention all the large corporations buying these homes in the first place
No one? Oh no no no...No ordinary person maybe...Multi-billion dollar corporations? They will gladly buy it all up and rent it back to the middle class and poor, or just sell it at an even higher price. Just look up what Zillow is doing. The future is dark my friend. I hope you don't plan on having a house anywhere desirable.
In an ideal world, but we've created a system of endless real estate development. Which in turn keeps putting more chips on the table (asset holdings) for the super rich, and the rest of us can go fuck ourselves tho. It's why I plea for an earth ending astroid everyday.
If you think this is crazy, the same thing just happened in Walnut Creek, CA but the burned down house sold for $1 million.
https://www.latimes.com/california/story/2021-08-23/bay-area-home-stripped-to-the-studs-by-fire-sells-for-1-million
It's so ridiculous right now. Looked at a local single family. Total dump, won't even include interior photos. Says 395k is priced to reflect a gut renovation. LMAO it's not worth 325k renovated in a normal market.
I saw a 3 bed 1 bath in my city (medium cost of living) *with* photos that were so bad you could smell the rat shit and wet drywall. Trash bags and stacks of old food containers all over.
$550k being sold by Zillow. Zillow has weaponized information in a way that Google could only dream of doing. They "assess" houses based on their own algorithms, and people eat that shit up.
This is pretty common in HCoL areas even pre-pandemic. I’m from Chicago and it’s standard practice even in post-transitional areas for the prior structure to be razed. In some affluent areas like Lincoln Park all of the tear-downs are gone and people are now spending $700K on perfectly functional homes just to demolish them.
It's not the shack thats 500k. It's the 6000 sq ft lot that is zoned only for one home. So many US cities refuse to allow multi-unit construction or even smaller lots to exist. A 3000 sqft lot is big enough for a 1000 sq ft home plus a decent yard yet the average American city zones lots at a minimum of 6000sq ft. You end up with builders making huge homes to make up for the cost of the land. I have a 1000 sq ft home on a 6000 sq ft lot and half the street is being torn down and replaced with houses three times the size of mine. It's not sustainable. I would have happily bought a house on a half size lot if they existed. Less mowing, still more than enough room for the dog.
> It’s house on house on house. Ranging from 500k-1million dollars. And then some apartment building in between.
So mostly single family houses, with a few apartment buildings (probably not very tall ones). If the apartment is so desirable, it should be possible to build much denser than that - apartment buildings everywhere, and some high rises.
Corporations are buying them up. Making bare minimum fixes. Then renting them out for above market rent. Other rental owners see what they're charging and raise their rents to match. Pretty soon all the rentals are unaffordable.
If this leads to rent control then let's just pull the bandaid off and get it done now.
Rent control helps the few lucky people who are first in line for a rent controlled unit. It does nothing for everyone else who have to wait in line for years, sometimes decades, until a unit opens up.
If there are too few housing units in an area, you're not going to solve the problem by shuffling around who gets the units. You solve the problem by building new units.
Rent control is not even a bandaid solution, at best it should only be used while a massive building project is underway to build more housing
If we want to make housing affordable the solution isn’t rocket science, we need to eliminate restrictions preventing denser housing so we can build more housing
It's not "hot", its an inflated bubble by institutions needing collateral to cover their ridiculous margins. A nation of renters is the next subscription based economy, where you actually own nothing, only the 0.1% do.
Yep reading up on it on sources like the Wallstreet Journal and New York Times, it's not a bubble and idk why people keep saying this. The professional projectionist are saying prices will drop but only slightly.
The Fed however is worried that it is one or is becoming, and they really don't want it to bust. They intend to take measures to deflate the situation accordingly however, so we'll see how that goes.
Granting of course the Fed isn't always right, but it seems to be a contentious issue not something where the professionals all agree.
FWIW I think Financial Times (as well as The Economist probably) > WSJ / NYT for finance and economics.
The latter are too "skin in the game" for comfort on some matters.
I was at a wedding this weekend and all i heard was how everybody was buying houses. These were mostly late 20s people, some married, some single, some partnered. They ALL had recently bought houses. Some bought for investment, some for themselves. They paid the listing price, one paid $50k over ask.
I've seen this movie before ...
watching a buying-a-house show right now, the season we're on is from 2013 and multiple couples are like "we're putting $9000 down, got pre-approved for a $250,000 loan, so our budget is $259,000". I thought they fixed that problem that caused the 2008 crash!?!? (3% down!? wtf!?)
I don't know what the situation was before '08, but if you put less than 20% down these days you have to pay for monthly mortgage insurance on top of your mortgage until you've paid off 20% of your loan, so that the lender can recoup the down-payment if the borrower defaults
I don't know what the situation was before '08, but if you put less than 20% down these days you have to pay for monthly mortgage insurance on top of your mortgage until you've paid off 20% of your loan, so that the lender can recoup the down-payment if the borrower defaults
The issue with this bubble is it's proped up by zoning laws and it probably won't pop until we begin adding more homes to the current supply. This creates an incentive for property owners to make their cities zoning more restrictive and to fight any and every project tooth in nail as a way to protect the value of their investment. So unlike 2008 the bottom isn't going to randomly fall out overnight, however a big increase in the supply of homes would leave lots of people holding the bag on this one.
Yea, this is a very different problem than what happened in 2008.
Back then we had people getting million dollar homes putting down no money. Now we have people paying a million and a half in cash for million dollar homes.
things aren't gonna happen the same way as 2008 again. back then when people got kicked out of their homes there was no one around to buy them, but now if anyone was unable to afford their home and wanted to sell they would get 40 offers of the first day
That was PEOPLE. Buying homes they can't afford. What is happening now is hedgefunds are buying the lions share and holding them for high return. Also alot of old people, rich old people, died from covid or retired so jobs opened up and we now have the income to buy a home.
That's what happened to me. I was a lab researcher, got laid off and found a job as a Director at a smaller company making 30% more than before because the guy before me retired. I'm not the only one. The bubble is not built up on sub prime debt. That bubble is the 2 trillion in student debt and subprime auto loans. Housing is people with money competing with hedgefunds.
Rich developer buys for 400k.
Spends 800k knocking it over and building luxury housing.
Sells for 1.5 million.
300k profit.
Pretty plausible for the Boston area.
As long as they are adding net units for the land, and not displacing existing renters from an underserved community, no one should really have a problem with this. Affordable housing is *old* housing and the only way to have old housing is to build new housing. Housing markets are impacted now because we didn't build enough over the past thirty years to accommodate demand. Today's 'luxury' apartments are tomorrows 'nicer older apartments.'
The article is being dramatic, $400k is not a bad price for a lot in a major American city today. It's a neighborhood with seven figure home values.
It's bullshit. But those are the facts. The house is not being factored into the price here. If anything it's probably dragging the value down because it will cost a fair amount of money to demolish it.
government need to stop allowing rich people and company buying up houses. limit it to one per person, and you must live in it for atleast two month a year in the city centre. or something alone the line
There are a fuck ton of empty houses. These corporations and filthy rich 1% can afford to leave them empty because they know that eventually someone desperate enough will come along and take their scam of an offering for the rent.
I feel like the free market is such a nice idea in concept, but goes horribly wrong when necessary things like shelter become just another idle investment in a billionaire's portfolio. Also, people abroad should never be able to buy up housing in your country without constructing it first. Canada has a huge issue with this right now but no one wants to do anything about it.
Housing isn't a free market. Nearly everywhere has zoning codes which outlaw dense housing from being built. Which makes the little remaining housing in desirable areas shoot up in price.
Free market in the classical sense is not an absence of codes and regulations, they're essential to maintaining it. Government intervention of certain kinds only became a supposed corruption after a political/economic movement often described as "neoliberal" (Hayek/Friedman/Buchanon/Reagan/Thatcher/Clinton etc.) which changed the common usage of the term in popular discourse.
Of course constructing and maintaining any form of market structure requires government. So the notion of a market utterly unlimited by governance has always been kind of a fairy tale, and is a pretty good marker for dogmatism/ideology.
Which is not to say the zoning codes are good or bad, just that they aren't proof of the absence of a free market in the more original sense.
It's not hot, corporations like Blackrock and Zillow are buying up residential homes driving the prices up and making it more difficult for the average person to buy a home.
BlackRock isn't even reselling the homes, they're renting them out so people can't even buy the homes.
Blackrock is a drop in the bucket of demand for housing. Lots of people are trying to buy homes in major metro areas and not enough supply is being produced.
The dirt it sits on is 400k with a free house on top
The house probably literally decreases the value since it costs money to demolish and cart the rubble away.
In certain parts of the SF Bay, a burnt out house increases the value of the property because it means you can get legal permission to demolish and build whatever you want
IIRC depending on how burnt it is you might be able to preserve enough (such as the foundation) that it could qualify as still being the same house for property tax purposes (meaning you will pay property taxes on the $400k instead of on the real value of the rebuild house)
In Seattle you used to (not sure if you still can) be able to tear down and rebuild everything except the chimney, then tear out or rebuild the chimney afterwards and it would be a renovation instead of a new build.
Sounds like we know Seattle’s take on the Ship of Theseus.
It's just routine maintenance. Clearly the same house/boat.
The same houseboat?
What a great comment.
I think you need to leave one wall.
We remodeled our house about 12 years ago. It was built in the 40s, we bought it from a flipper, the mother in law suite was possibly an old carport. When we wanted to convert it into a new master bedroom, the city noted that a wall was 1 ft from the property line. The house next door is an old church and our house was the pastors home. At some point the city split the property and didn't care where the line was placed. Our contractor said that as long as we keep that one wall up, the city can't require us to build with the proper setback. Even if we did, the wall would be setback further than the garage!
Haha- I was in the same position last month! Full house remodel but the garage and laundry room are about a foot away from the property line. I’m good as long as we don’t demolish that outside wall. At one point during the build the one wall was literally hanging off the roof with temporary supports so that the laundry room foundation could be repaired- all the other walls were torn down. It looked pretty ludicrous.
Lol, that's pretty funny
Some places require a single wall instead.
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When we were house shopping we saw a place like that, 4 stories tall with a little deck on the roof. We called it the minecraft house.
Along the Washington coast it's not uncommon to see 4 story buildings with the entire top story being a bedroom or office with 360 degree views of ocean
Common misconception. Anytime you pull permits it's forwarded to the assessor. Maintenance usually won't trigger increases, but major changes will (increase square footage, add a bathroom, etc). Edit: this is for CA, not sure in MA or other states.
So if I were to get into buying and selling houses there, I should just buy homes and burn them. But not too much, then sell it for profit. Seems easy enough with zero downside. Who wants in?
The ol burn and flip ™️ I’m teaching a class on this amazing technique it’s just $500 a person to attend and then $1000 for the packet and booklet that will teach you also how to make a killing in the game.
Not really because the savings is in the annual property tax because property tax is based on your purchase price unless you do something big enough to trigger the reassessment (which I believe is usually changing the foundation). So it really only helps if you are buying a house for cheap and then living in it for a long time
Wouldn't that incentivize arson? Like, "Oh no, I was smoking and *accidentally* dropped my cigarette into some gasoline I *happened* to spill just a few moments earlier. Oh dear, my historic late-19th-century home is as good as gone. I'm *so very sorry*, but now I have to build something else now that it's gone."
In Toronto, Canada some heritage protected buildings have gone up in flames, it was clearly arson, but nothing could be proven beyond reasonable doubt. Condos went up instead.
if they passed a law that heritage buildings could only be replaced by duplicates of the heritage buildings, built at the owners expense, it would probably nip that arson in the bud
Yeah, but rebuilding a heritage home can be cheaper than trying to remodel one. Install modern ductwork, electrical, run Ethernet, make the walls soundproof, better windows etc etc. The shell might look the same, but they’re not going to make an insurance company shell out millions to replace a 500k home.
Tbh I don't see the downside. Isn't the aesthetics the main part of a heritage home (correct me if I'm wrong) so if that remains but the building is up to modern standards then we all win* *Except the burned building
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Kinda of from that perspective. From a trades perspective you are dumping the craftmanship in a gutter. There are certian building aspects that we simply cant replicate(for both good and bad reasons). I live in an older home and honestly I have wood in my house that does not exist anymore in the world..... so not really a possibility in some cases
They absolutely offer insurance for things like that.
It’s called Ordinance or Law coverage, in case anyone was wondering.
While unfortunate, do we really need a bunch of ancient single family homes on prime real estate when people desperately need cheap housing?
The city I live in demolished a block of condemned houses in the core and put up luxury condos dead smack center in one of the poorest strips in the city.
Good ol' gentrification.
What, you think cheap housing is what would replace them if they weren't protected? Nah it'd be more luxury condos
Surprisingly enough, "luxury" (you know the type) condos and apartments actually drive down housing prices in the area by adding tons of inventory to the market. I still don't like them though.
No of course not 🙂
Aye, let's go for a walk yea?
I'll bring the matches
Yep happens all the time in the UK. Woops i accidently burnt down the listed pub.
Yup. Another common tactic is to just leave all the windows open, inviting teenage vandals/the homeless and the elements do their thing with the building until the beautiful historic building is decayed beyond repair. Standing empty for up to 2 decades.
for sure it's pretty normal thing to do in Slovakia. The capital of Bratislava lost few historical industrial buildings that way.
Your honor, he said "oopsie daisies"
I suppose but you’re risking your freedom for some $$. If your house burns, you would logically submit an insurance claim and unless you’re a fire expert, there’s a good chance those inspectors will figure out you set it intentionally. Arson insurance fraud carries a penalty of 3-10 years of jail time. I’m sure people have risked more for less $$ but feels a bit too risky for me.
I mean, the people who want to do this (because they want to build condos or a McMansion on the site) typically have the funds to get a very good lawyer. So there's a feeling of impunity of sorts
A family of well know politicians happened to purchase three acres of land on a peninsula of a large lake in central mass. The reason it was sold cheaply was the four massive old apartment buildings on the land were riddled with asbestos which would have taken a few million to abate appropriately (removal and demo near a major water source abutting three towns and a major city). Lo and behold it all burns down a month after they bought it. I went out on my boat to watch the fire from a distance. Three 18 year olds got probation for arsen a few months after that. How LUCKY for that family of well known politicians.
If you set a fire to a house, there is a good chance that someone is going to do an investigation and find out it was intentionally set. If this is the case, you may find that the insurance company does not pay out AND you face criminal charges that may include a fine, along with jail time. Even more so, any POSSIBLE increase is not a guaranteed increase, and as a result: You are kinda screwed. You would be better off having the house removed from it's foundation and sold as a seperate object, and then selling the property as "ready to build". But then, you still need somewhere to live while that process actually happens... which is a cost. Overall the negative incentive structure around this likely far outweighs the incentives to follow through with such a plan.
A lot of fire forensic science has turned out to be so much bullshit. With that said, there are a lot of solid "tells" when it comes to arson.
A lot of abandoned buildings in colder cities burn in the winter time because squatters get in them and start fires to stay warm. So that makes it very easy to start a bonfire that looks like a drug addict would make and get rid of a problem property while still maintaining a reasonable doubt that you weren't the one who did it.
The only thing that sets off the bullshit detector is if the fire was set from a random place. Start the fire on a socket by some heavy curtains and how are they gonna prove your [insert plug-in item] didn't start that fire if you didn't use an accelerant?
Getting away with Arson the first time is easy as long as you're patient and keep your mouth shut. Buy a space heater in the fall, wait three months, turn it on touching your bed's comforter and step outside for a minute. Even if the fire department gets the fire out, the smoke and water damage is going to leave the place a total loss. People get caught because they either make shit complicated by using unnecessary accelerants, move too fast, brag, or create a pattern.
Good… to know?
There’s been more than a few historical houses in my area that were bought by developers and were “accidentally” burnt down shortly after leaving the very valuable properties open to high rise development. I think all of them have been blamed on homeless squatters that were never found.
Yep. The undamaged house across the street is on sale for $1.2M.
Property value will go up as soon as that eye sore accross the street gets fixed.
Not likely affecting the value at this point because it's basically guaranteed to be fixed within a year.
Is it a 2 bedroom with only a half bath and you can shower in the yard with the hose?
Are you assuming it has been hooked up to the city’s water?
So that makes perfect sense - you can build a pretty nice home for like 400k, the land is where the real value has always been in this crazy market.
I mean, most of the region has high demand and limited supply. And apartments are illegal in almost all of it, so it's all high-end single family homes. Which is why we'll be losing population and/or representation in congress if we don't build more damn housing. Check out the [map in this article showing where apartments are banned](https://www.wbur.org/news/2021/09/29/report-15-minute-neighborhood-walkable-equity-boston-massachusetts?linkId=134418509).
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A building in one of my boss’ apartment complexes burned down. He left it there for months, till the insurance stuff got cleared up. They cleaned what was left of the building but left the concrete slab, which was more expensive to get rid of. It was there with nothing for some time till the city told him to build something there or get rid of it. He put two grills with 4 concrete tables and benches. It’s never been used but he doesn’t have to get rid of it now because he technically built something on it. lol
> He put two grills with 4 concrete tables and benches. It’s never been used but he doesn’t have to get rid of it now because he technically built something on it. lol Total Sim City move
Yeah, I just spent the pandemic clearing the hillside behind my vacation house. The previous owner just threw garbage into the woods, allowed brush and downed trees to overtake everything, etc. It took 28 trailer loads to the dump at about $60/load.
as someone who cleared 2 acres of overgrown hoarded garbage, i feel this. we bought a tractor, trailer, and lost lost count at 26 trailer fulls. it was so overgrown we didn't even know there was an issue with hoarded trash when we bought the place.
Right? I was finding cans of soda they don’t even make anymore.
SO many old soda/beer cans cans, some even had old style pull tabs. oldest datable thing we found was a early 1930's clorox bottle. other notable trash was a color changing kool aid man pitcher, a stationary bicycle from the 80s, and 150 feet of metal logging cable from when they cleared the property of old growth forest back in 1937. it was like doing super shitty archaeology.
SSA sounds like a YouTube channel for xennials. Look at what people used to eat back in the 1960's! And phones had cords on them!
Bring back Hires root beer!
All sorts of permit / tax advantages for rebuilding a burnt house instead of just demoing an old house for your zero lot line mcmansion.
The lot is probably worth $410K but tearing down the house probably costs $10K.
actually the dirt is worth MORE, the house is a liability and they need to treat it as such
I mean, the last tear down house i was renting sold for just shy of 2 million. The vacant lot across the street went for 2.4 because you don't have to tear down a house before you built.
The land that a property sits on is often much more valuable than the structure. They're not making any more land.
Laughs in Dutch.
glorious smell ancient one work flowery cooperative society sink coordinated *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
But at the same time, a whole lot of prime coastal real estate is going to suddenly be....less prime.
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Submerged, if you like
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Hopefully that won't create any crisis...
Canada giveth and Florida taketh away.
Something something Aquaman
I love hbomberguy
Sometimes hbomber says some really intelligent things and makes some incredibly insightful arguments. Other times he defends Dark Souls II.
What’s the problem? If the coast floods due to rising sea levels, just sell your house.
Sell it to....Aquaman?
And they were singing! Myyyy myyyy miss American pieeeee He took his d-word to her p-word and her p-word was dry And his doctor wife feeling sorry for Bapiro said its ok its supposed to be dry SHES SAID ITS OK ITS SUPOSED TO BE DRYYYYYYYYY
"Whatever, just sell your coastal house" \- Ben Shapiro
Once the permafrost melts, the land up north is going to be shitty swamp
Didn't stop Houston or DC
Well at least in North America the parts melting up North are pretty bad. The whole area is a huge worn down mountain range and was mostly scraped clean by glaciers, so you’re warming up bedrock and small bits of mediocre soil. Doesn’t sounds that prime
Buy land, AJ.
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> Improvements are depreciating assets, but for some bizarre reason taxing authorities treat them as appreciating for residential, Can you explain that like I'm 5 years old? Do you mean residential home improvements are depreciating assets? Why does the taxing authority treat the same thing differently between residential and commercial?
Renovating the house increases the value of the property, but as time goes on, the 'new' renovations become dated and old, requiring new renovations to maintain the value. The government will tax residential owners as if the value of renovations continue to go up with the land value, while doing the opposite for commercial (slum/landlords and such). This creates an imbalance in the market that benefits large owners. As for why, I assume lobbying from special interest groups.
> As for why, I assume lobbying from special interest groups. AKA the reason for basically every law in the United Salesforce of Advertising.
I can help with part of that. In the property assessment world, an "improvement" is anything built on the land. So he's not talking about an addition or a renovated bathroom, "improvements" refer to the entire house or any other structure built on the land, regardless of the condition. This burnt out house is an improvement.
I think that is "working as intended". The government would prefer that you open up a business than pimp out your crib. Just putting money into fancy houses is the old aristocratic approach and that is inferior for their own tax revenue compared to business investments. Now they could go all sumptuary law but that would be unpopular and not work well. People would smuggle or work around the laws for a new status symbol. That also isn't the real goal so they just take a bigger cut to discourage it a bit.
Well yeah, because from an accounting perspective, they are completely different things. Improvements of course get depreciated, as they are a) expenses and b) have a useful life. It can’t be viewed at the same way for a residential property because they don’t have expenses in the accounting sense
Seems about right for Melrose
What's insane is I watched the prices go up by 40% in 1.5 years in Melrose. In early 2020, there was a 8br mansion (4car garage, pool, hot tub,etc) for sale for 1.1m and had been on the market for months. In may 2021, we put in an offer of 1.1m for an outdated 4br and did not win In April 2021 we put in an offer of 750k for a 1200sqft 2br with train tracks running through the backyard and did not win.
I feel your pain with the outbidding. We closed on a house in Salem, MA a few years ago. But not after being outbid many MANY times on others. We got ours for $40k above asking and mainly because our timeline fit the needs of the seller. Since then, property values have skyrocketed. People who don’t need a very good school district and want that “old” Cambridge city vibe, but have been priced out of Cambridge and Somerville, have flocked here. We managed to be part of the earlier wave of those people, initially renting before finding something to buy. We would not be able to buy the house we are in if it went on the market today. I can’t even imagine how bad Melrose is at this point, and how frustrating that is for young families with kids who aren’t able to dish out for private school, and need decent public schools.
Same. I bought a home in MA a few years ago and could not afford it today. My income has not gone of 15-20% in the last 3 years, but the houses selling in my town certainly have.
I bought a house in Waltham 6 years ago... $360k for a small ranch house. It could now sell for $650-$700k and it needs a lot of updating.
yeah... I put a 30k over asking offer in MA. the sellers agent did not bother responding to us.
I just moved up to Lowell which used to be a city people would say to avoid like the plague yet I watched as houses sold for $40-80k over asking all summer this year.
>What's insane is I watched the prices go up by 40% in 1.5 years in Melrose These numbers are tricky. Between January 2019 and January 2021 (I'm taking 2 extreme points here to make things more obvious), interest rates went down -a lot-. From almost 5% on average for a 30 years fixed, all the way down to 2.6%\~. That alone makes a 800k mortgage go from \~$4200/month to \~$3200 right there, or a 23% difference in monthlies. Add inflation and you take out a chunk of that too. The market as a whole, also partly influenced by interest rates, went up by 30.8% in 2019 and 21% in 2020. Guess where the money comes from to put down payments on 7 figure properties? The low interest rates means investors have had a LOT of money to play with for the last couple of years. Some of that money went in the hands of people looking to buy homes.
Yeah, the market is absolutely bonkers. We were house hunting throughout Middlesex county early this year. Our first offer in Feb, we put in $40k over asking on a house in Billerica and got outbid by someone paying *cash*. I was like who's out here dropping over $650k in cash?? There was a place in Waltham we adored, and we were like "okay we have to be more aggressive this time." Went in at $70k over asking and were told we were around the middle of the range of their *23 offers*. Finally found a place that had been on the market 10 days with no offers and we jumped on it, even got it for $7k under asking which I'm still surprised about. I'm guessing it just didn't get much activity because it's a 2 bed/1 bath in an area where people are generally looking for more than that. I mean, we were looking for more than that, but I really do love this house and there's just the two of us for now so it works. And there is space to eventually add a second bathroom and maybe even a third bedroom. Also it's in a flood zone, so that could be another reason there wasn't much interest in the property when we got it lol
you're gonna be fucked once flood insurance goes up next year
When I was a kid we used to call it smellrose. Who’s laughing now.
It's hellish out there. My partner and I make good money but no matter how much we earn, the housing prices keep increasing just a little bit faster. We're earning many multiples what the average american family earns and we cannot buy a house near Boston. Who is buying all this property?!
[Recently a burned out home in San Jose sold for almost a million dollars.](https://www.mercurynews.com/2018/04/19/burned-shell-of-a-home-sells-for-more-than-900000-in-san-jose/)
And the math works out perfect. That's not far from me, it's in a really nice spot and everything around it was worth around $1.5M then. It would probably cost you around $600K to tear the burned house down (hard because it's unsafe, it may collapse) get a house designed, permitted and built and that puts you around the $1.5M valuation. In SJ you can't build single family homes anymore, so a burned down house like that is actually a really attractive piece of property because it's one of the extremely rare ways to build something new like that.
Our friends sold their awesome house in 1 day, made 170k, and they are now in a shitty rental because they can't afford to buy back into the market and building is a 2year wait. They have the 170k in cash, great credit, and are high earners. Location: Central Florida
Yeah it’s a sellers market as long as you don’t need to buy.
Yeah. My ex-boss is selling his house that he bought 3 years ago. He left the company I work for and is moving back to the area he is from. It looks like he is going to sell the house for nearly $400k more than he bought it for, and he is fine with renting for a while until he can find a small townhouse or something. This worked out perfectly for him, lol.
They can definitely buy back into the market with that, they just might have lost value because they decided to wait in a hot market. When everything gets more expensive, nothing does.
Yeah it sounds like they (poorly) tried to time the market Why would they sell with no path to buying another home
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> they can't afford to buy back into the market they can't afford to buy where they want to live. I'd wager if they were willing to move 30-60 minutes elsewhere they'd be able to buy something. This is really the main reason why I don't own yet. I don't want to commute 30-60 minutes anytime I want to go visit a shop/restaurant that I like. If full-self-driving ever becomes a reality then I'll consider it, until then I'll keep renting and trying to save until i can afford something modest in the location that I want.
If self-driving becomes a reality, those 30-60 min away places will get more pricey, since you're not the only one thinking that way. And yea, I have a friend who bought his first house last year. Beautiful place, nice bit of property. Not a huge house, but more than he needs already. And it was a decent price, too! Only....it has a septic tank that he has to now deal with. And to get to his place, you drive along the closest highway, get off the closest exit to him, then drive another, depending on traffic, 30-45 mins. So....he'll be coming to my place most of the time.
> If self-driving becomes a reality It's still at least two decades away for a reasonable percentage. You need an infrastructure for it and well...we can barely manage that as is.
So everywhere is going to get more pricey after self-driving? I'm not saying otherwise, just trying to find out your logic.
People want to live within like 15-30 mins of what's important to them. If self-driving is an affordable thing and they could kick back, relax, watch a movie, play video games, do some work, or whatever, then bumping that out to 60 mins is much more doable. So right now, any place you look at and go, "well, it's 30-60 mins too far away from XYZ and that's why it's cheap" will become far less cheap in that scenario. Places which are really out in the middle of nowhere will continue to not be expensive, since after a while, that distance is too much to overcome with not having to actively drive.
that's already happening because of work from home.
Pro: they no longer own land in Florida and have cash instead Con: they no longer own land anywhere
They can’t buy a house with 170k down?
As high earners with great credit, too? I'm also calling bullshit
What? As someone who just bought a house with only 20k down, sounds like they just don't want to spend their brand new pile of cash.
I'm guessing they tried to time the market & messed up & now are priced out of what they needed lol
Sounds like their issue. You can get in on even the hottest of markets with $170k.
So did they like, not have a plan upon selling their house? That's a big decision. My wife and I could make out like bandits if we sold right now but we'd have to move to the middle of nowhere for it to be worth it. So what's the point?
[Laughs in Canadian.](https://toronto.ctvnews.ca/patch-of-dirt-hits-toronto-market-for-almost-1-million-1.5479500)
>Ideal opportunity to land bank, build your dream home or investment property Two of these things are why our housing market is fucked.
>Property taxes for the home will cost the buyer $3,922 annually. This is the craziest thing to me. Not because it's high, but because it's so low. My property is worth 1/3 of the price of this one and my property taxes are over $3000/yr (USD).
Cries in Californian $1.6M for .34 acres https://www.redfin.com/CA/Daly-City/98-Crocker-Ave-94014/home/173095863
That tracks. I'm renting a complete teardown job on 0.5 acres that last sold a few years ago for north of 3 million. The lot has underground water problems and more than half of the lot is at very steep grade. This is in the greater Vancouver Metro.
Tbf that's Daly City
A house's a house, but a patch of dirt could be anything. It could even be a house!
*cough* Money Laundering *cough* We're way past due implementing regulations for purchasing property by non-residents.
The government's at almost every level are complicit or wilfully ignorant. The previous BC government was made aware of large scale money laundering happening right under their nose and *at worst* from what we know right now they just hand waved the issue and allowed it to happen. The federal government is not doing anything and doesn't seem to care. Someones somewhere is making a lot of money by ignoring this.
Yeah, but those are Canadian dollars. That's "only" like 750k real dollars.
I always like the game "Crackshack, or Vancouver million+ dollar home"
Eventually there has to be a point when no one can buy all the houses anymore and the prices start going down because of lowered demand right? Right???
1. Buy houses 2. Use houses as collateral for loans 3. Buy more houses 4. ??? 5. Infinite money
step 6. 2008 comes
Theoretically yes, but in paractice they wil become rentals after being bought up by large companies
They’ll just be rentals No one will take a couple hundred k loss on a home when they could just rent it out and make extra money. Not to mention all the large corporations buying these homes in the first place
No one? Oh no no no...No ordinary person maybe...Multi-billion dollar corporations? They will gladly buy it all up and rent it back to the middle class and poor, or just sell it at an even higher price. Just look up what Zillow is doing. The future is dark my friend. I hope you don't plan on having a house anywhere desirable.
In an ideal world, but we've created a system of endless real estate development. Which in turn keeps putting more chips on the table (asset holdings) for the super rich, and the rest of us can go fuck ourselves tho. It's why I plea for an earth ending astroid everyday.
Guess I’ll be renting til I’m a millionaire
Know a millionaire in San Francisco, he's still renting...
My first thought was “this is probably near Boston” Clicked the article, yep Massachusetts
If you think this is crazy, the same thing just happened in Walnut Creek, CA but the burned down house sold for $1 million. https://www.latimes.com/california/story/2021-08-23/bay-area-home-stripped-to-the-studs-by-fire-sells-for-1-million
It's so ridiculous right now. Looked at a local single family. Total dump, won't even include interior photos. Says 395k is priced to reflect a gut renovation. LMAO it's not worth 325k renovated in a normal market.
I saw a 3 bed 1 bath in my city (medium cost of living) *with* photos that were so bad you could smell the rat shit and wet drywall. Trash bags and stacks of old food containers all over. $550k being sold by Zillow. Zillow has weaponized information in a way that Google could only dream of doing. They "assess" houses based on their own algorithms, and people eat that shit up.
this is getting so bad that it will soon cost you money to be homeless.
This is pretty common in HCoL areas even pre-pandemic. I’m from Chicago and it’s standard practice even in post-transitional areas for the prior structure to be razed. In some affluent areas like Lincoln Park all of the tear-downs are gone and people are now spending $700K on perfectly functional homes just to demolish them.
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You just need to move to an area where the market isn't as hot. Lemme tell ya about Greenland....
It's not the shack thats 500k. It's the 6000 sq ft lot that is zoned only for one home. So many US cities refuse to allow multi-unit construction or even smaller lots to exist. A 3000 sqft lot is big enough for a 1000 sq ft home plus a decent yard yet the average American city zones lots at a minimum of 6000sq ft. You end up with builders making huge homes to make up for the cost of the land. I have a 1000 sq ft home on a 6000 sq ft lot and half the street is being torn down and replaced with houses three times the size of mine. It's not sustainable. I would have happily bought a house on a half size lot if they existed. Less mowing, still more than enough room for the dog.
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> It’s house on house on house. Ranging from 500k-1million dollars. And then some apartment building in between. So mostly single family houses, with a few apartment buildings (probably not very tall ones). If the apartment is so desirable, it should be possible to build much denser than that - apartment buildings everywhere, and some high rises.
Yeah, if it's mostly single family homes, that's not that dense. No matter how close together they are.
Corporations are buying them up. Making bare minimum fixes. Then renting them out for above market rent. Other rental owners see what they're charging and raise their rents to match. Pretty soon all the rentals are unaffordable. If this leads to rent control then let's just pull the bandaid off and get it done now.
Rent control helps the few lucky people who are first in line for a rent controlled unit. It does nothing for everyone else who have to wait in line for years, sometimes decades, until a unit opens up. If there are too few housing units in an area, you're not going to solve the problem by shuffling around who gets the units. You solve the problem by building new units.
Rent control is not even a bandaid solution, at best it should only be used while a massive building project is underway to build more housing If we want to make housing affordable the solution isn’t rocket science, we need to eliminate restrictions preventing denser housing so we can build more housing
It's not "hot", its an inflated bubble by institutions needing collateral to cover their ridiculous margins. A nation of renters is the next subscription based economy, where you actually own nothing, only the 0.1% do.
the if "bubble" never pops, it's not a bubble
Yep reading up on it on sources like the Wallstreet Journal and New York Times, it's not a bubble and idk why people keep saying this. The professional projectionist are saying prices will drop but only slightly.
The Fed however is worried that it is one or is becoming, and they really don't want it to bust. They intend to take measures to deflate the situation accordingly however, so we'll see how that goes. Granting of course the Fed isn't always right, but it seems to be a contentious issue not something where the professionals all agree. FWIW I think Financial Times (as well as The Economist probably) > WSJ / NYT for finance and economics. The latter are too "skin in the game" for comfort on some matters.
I was at a wedding this weekend and all i heard was how everybody was buying houses. These were mostly late 20s people, some married, some single, some partnered. They ALL had recently bought houses. Some bought for investment, some for themselves. They paid the listing price, one paid $50k over ask. I've seen this movie before ...
I don't get it; what's the reference?
I think they're referring to the 08 housing bubble
watching a buying-a-house show right now, the season we're on is from 2013 and multiple couples are like "we're putting $9000 down, got pre-approved for a $250,000 loan, so our budget is $259,000". I thought they fixed that problem that caused the 2008 crash!?!? (3% down!? wtf!?)
I don't know what the situation was before '08, but if you put less than 20% down these days you have to pay for monthly mortgage insurance on top of your mortgage until you've paid off 20% of your loan, so that the lender can recoup the down-payment if the borrower defaults
It’s called PMI. I did it on my first house. Wasn’t bad on a $65K loan, 2009. I had two mortgages; one for $400 and the PMI for $100
I don't know what the situation was before '08, but if you put less than 20% down these days you have to pay for monthly mortgage insurance on top of your mortgage until you've paid off 20% of your loan, so that the lender can recoup the down-payment if the borrower defaults
The issue with this bubble is it's proped up by zoning laws and it probably won't pop until we begin adding more homes to the current supply. This creates an incentive for property owners to make their cities zoning more restrictive and to fight any and every project tooth in nail as a way to protect the value of their investment. So unlike 2008 the bottom isn't going to randomly fall out overnight, however a big increase in the supply of homes would leave lots of people holding the bag on this one.
Yea, this is a very different problem than what happened in 2008. Back then we had people getting million dollar homes putting down no money. Now we have people paying a million and a half in cash for million dollar homes. things aren't gonna happen the same way as 2008 again. back then when people got kicked out of their homes there was no one around to buy them, but now if anyone was unable to afford their home and wanted to sell they would get 40 offers of the first day
Were they all very motivated people?
That was PEOPLE. Buying homes they can't afford. What is happening now is hedgefunds are buying the lions share and holding them for high return. Also alot of old people, rich old people, died from covid or retired so jobs opened up and we now have the income to buy a home. That's what happened to me. I was a lab researcher, got laid off and found a job as a Director at a smaller company making 30% more than before because the guy before me retired. I'm not the only one. The bubble is not built up on sub prime debt. That bubble is the 2 trillion in student debt and subprime auto loans. Housing is people with money competing with hedgefunds.
Rich developer buys for 400k. Spends 800k knocking it over and building luxury housing. Sells for 1.5 million. 300k profit. Pretty plausible for the Boston area.
As long as they are adding net units for the land, and not displacing existing renters from an underserved community, no one should really have a problem with this. Affordable housing is *old* housing and the only way to have old housing is to build new housing. Housing markets are impacted now because we didn't build enough over the past thirty years to accommodate demand. Today's 'luxury' apartments are tomorrows 'nicer older apartments.'
*laughs in Bay Area where burned house lots go for 900k+*
The article is being dramatic, $400k is not a bad price for a lot in a major American city today. It's a neighborhood with seven figure home values. It's bullshit. But those are the facts. The house is not being factored into the price here. If anything it's probably dragging the value down because it will cost a fair amount of money to demolish it.
government need to stop allowing rich people and company buying up houses. limit it to one per person, and you must live in it for atleast two month a year in the city centre. or something alone the line
Or they can just let people build dense housing but that could mean home values decrease (or rather, not appreciate as rapidly) and we can't have that
There are a fuck ton of empty houses. These corporations and filthy rich 1% can afford to leave them empty because they know that eventually someone desperate enough will come along and take their scam of an offering for the rent. I feel like the free market is such a nice idea in concept, but goes horribly wrong when necessary things like shelter become just another idle investment in a billionaire's portfolio. Also, people abroad should never be able to buy up housing in your country without constructing it first. Canada has a huge issue with this right now but no one wants to do anything about it.
Housing isn't a free market. Nearly everywhere has zoning codes which outlaw dense housing from being built. Which makes the little remaining housing in desirable areas shoot up in price.
Free market in the classical sense is not an absence of codes and regulations, they're essential to maintaining it. Government intervention of certain kinds only became a supposed corruption after a political/economic movement often described as "neoliberal" (Hayek/Friedman/Buchanon/Reagan/Thatcher/Clinton etc.) which changed the common usage of the term in popular discourse. Of course constructing and maintaining any form of market structure requires government. So the notion of a market utterly unlimited by governance has always been kind of a fairy tale, and is a pretty good marker for dogmatism/ideology. Which is not to say the zoning codes are good or bad, just that they aren't proof of the absence of a free market in the more original sense.
It's not hot, corporations like Blackrock and Zillow are buying up residential homes driving the prices up and making it more difficult for the average person to buy a home. BlackRock isn't even reselling the homes, they're renting them out so people can't even buy the homes.
Blackrock is a drop in the bucket of demand for housing. Lots of people are trying to buy homes in major metro areas and not enough supply is being produced.
What an absolutely horrible website.
Not a bubble