House price

[eljefino]

The homes in many of the blue states are dropping in value, while they are skyrocketing in the red states. The property taxes in many blue state areas make them all but unaffordable. Especially after you tack on a nice fat mortgage payment. Young people find it too much of a financial struggle, when you have to fork out over a grand a month just for taxes.

I remember 30 years ago, you could sell your house in Chicago, and buy a nice "Golden Girls" style retirement house in Florida, for about half the price. Now it's almost the other way around. Taxes are astronomical in the blue states, and jobs are becoming scarce. Home values are taking a big hit as a direct result.

Maine's a blue state and going gangbusters... people moving here from more expensive COL places for WFH jobs. Our real estate is "very tight" like everywhere, as the existing on-the-ground jobs don't pay like WFH.

The state transitions from urban to rural and it's the urban part that's got near-zero housing stock for sale at any price. Absolutely gangbusters.

Taxes are middle-of-the-road. My 1600 sq ft, 2 acres house is a little under $2500/year.

 

[GON]

More legal immigrants needed to fill those jobs. Parents want better for there kids then they had. No parent wants there son swinging a hammer for 40 years to retirement. They want them educated making better money easier living and retired enjoying not crippled.

The adult employment participation rate in many parts of the USA is estimated to be under 60 percent. If anywhere accurate, plenty of available adults in the USA to fill vacant positions. May have to pay more, maybe substantially more....

 

[mightymousetech]

Sorry, gotta say, $500 apartment? What is this , 1976?

 

[Jack Watts]

Companies are leaving the rust belt, and California in droves, because the cost of doing business is becoming too high. Along with massive, out of control, government regulations. And they're all flocking to places like Arizona, Texas, and Tennessee. The housing market appears to be adjusting accordingly.

I want you to know that this business of "companies leaving California in droves" is a narrative that has existed for at least 35 years. I remember that "everyone was fleeing because of Jerry Brown" back in the early 80's"...

Anyone who actually lives in the state is witnessing a different reality.

Property values are up over 20% last year in the state (and the net increase is staggering compared to cheaper states). I own property there and I certainly haven't seen these massive losses I read about on the internet? Sure, some high-profile companies have moved their corporate headquarters for tax breaks. That's nothing new. California also leads the country in new business creation--by a lot. It's a very dynamic economy. Why some people keep rooting for it to fail just because it doesn't align with their personal politics is beyond me. Personally, that seems pretty un-American...

No question though, as businesses relocate to lower-cost areas, the prices in those places will increase. I also have property in the PNW, which incidentally has absorbed a ton of Silicon Valley employees (Google, Facebook, Oracle, Apple...this list goes on). And, ironically, everytime a business moves out of Seattle, the same narrative is bandied about "Seattle is dying due to the leftists ruining things!". Meanwhile, property values just keep going up, and while some people are moving out, even more are moving in...

 

[nickaluch]

The adult employment participation rate in many parts of the USA is estimated to be under 60 percent. If anywhere accurate, plenty of available adults in the USA to fill vacant positions. May have to pay more, maybe substantially more....

Living in the suburbs of NYC I can only say what I see. Only first generation immigrants are doing home improvements or building new houses for a living. Without these immigrants there would be no one to cut the lawns, fix your car, repair or build a home. Second third fourth generation people are now educated not interested in that type of work. I don't think more money is going to pull them in when they can sit in a air condition office making the same

 

[PandaBear]

The media mentions a worker shortage but there is a huge worker shortage in construction which they seldom bring up.

Part of the problem is todays parents, the education system and the building industry itself.

What parent today wants their high school kids not go to college and become a carpenter/work in the building trades?

With all the subbed out work in the construction industry to small companies with self employed or small crews, it is hard to get in the trade
and become skilled.

K-12 schools and parents have a heavy push towards prepping students for a collage education or else you are a loser and will struggle in life.

High school vocational programs have wanned and are often filled by the student that generally don't do well in school.
Years ago a student that excelled in trig would be in the carpentry vocational program.

The other part was, parents would rather their kids do easier work (less chances of injury) for the same or lesser amount of money. The other part was, without knowing the long term prospect of these jobs due to immigration parents would rather them take a desk job than competing with cheap import labors.

Maybe the vocational schools should target liberal art college grad after they can't find jobs for a while and have to pay back their student loans.

 

[PandaBear]

I sure hope so. Because it's going to be a long time before they ever see their money. A LOT of people went from $350K houses into apartments after the 2008 crash. Let's hope they apply a bit more common sense to their real estate purchases this time around. Although I'm not seeing it. I never would have paid what my house is currently priced at. It's just not worth it.

A lot, yes, but that's not the whole story. I bought at 2006 so I can tell you based on my observation, high income area has dropped about 10-20%, and the low income area has dropped about 70%. This is the reality that the risk tolerance of low income low networth people not being as high as the high income high networth people. The high networth people also loses money in stock market crashes but not the magnitude of impact felt as the low income low networth people losing their home.

Don't have a solution, but this is the nature of market economy and capitalism. If you don't like it you can move to Singapore where gov provide 85% of the middle class to low income housing, with strict regulation on ethnic distribution (to avoid creating slums), whip you if you graffiti, jail you if you try to fan racial hate speech, fine you if you try to smuggle chewing gum into the city and spit them on the sidewalk. Things are taken care of, you are taken care of, but that comes at the cost of you may not get rich from home appreciation or some personal freedom.

Like that? It's the other side of the coin.

 

[PandaBear]

I don't understand what is happening. 10 years ago, we had a national housing surplus, everyone was upside down, banks were eating hundreds of thousands of dollars on foreclosure losses and repossessions. Just 10 years ago. I had a house I had to nearly give away just 2 years ago in the mid-west. I owned it for a decade, and if you can believe it I took a massive loss on it. I refuse to even look at what it's worth now, probably 3x what I sold it for 2 years ago.

This economy is madness. I don't understand it.

10 years ago there was "financial engineering" some wall street bankers sold to the world that they found a way to eliminate risk in lending, which turns out to be a fluke because they were just hidden and held by the weakest link who finally went bankrupt. In the last 6 years we have a pandemic, a trade-war with China, a deportation of undocumented construction workers, and a work from home migration. What do you think would happen to your midwest town all of a sudden when people from NYC can live there and get 70% of the NYC salary?

Oh, we probably printed 50% the amount of USD / Federal debt in the last 2 years or so. Even if 1/2 of them are circulating oversea to dilute the effect we still would have 25% inflation just from that.

 

[PandaBear]

I want you to know that this business of "companies leaving California in droves" is a narrative that has existed for at least 35 years. I remember that "everyone was fleeing because of Jerry Brown" back in the early 80's"...

Anyone who actually lives in the state is witnessing a different reality.

Property values are up over 20% last year in the state (and the net increase is staggering compared to cheaper states). I own property there and I certainly haven't seen these massive losses I read about on the internet? Sure, some high-profile companies have moved their corporate headquarters for tax breaks. That's nothing new. California also leads the country in new business creation--by a lot. It's a very dynamic economy. Why some people keep rooting for it to fail just because it doesn't align with their personal politics is beyond me. Personally, that seems pretty un-American...

No question though, as businesses relocate to lower-cost areas, the prices in those places will increase. I also have property in the PNW, which incidentally has absorbed a ton of Silicon Valley employees (Google, Facebook, Oracle, Apple...this list goes on). And, ironically, everytime a business moves out of Seattle, the same narrative is bandied about "Seattle is dying due to the leftists ruining things!". Meanwhile, property values just keep going up, and while some people are moving out, even more are moving in...

The losers like Oracle and Seagates are moving out, but the big payers like Apple, Facebook, Google, Amazon are continuing to hire.

Seriously, a lot of those companies are just trying to save money because they know they are not growing and just want to cut payroll. If they are not moving out of California they might also move to China, India, Mexico, etc. I'm sure you wouldn't say USA sucks just because some factories are moving to China, India, Mexico, etc, no?

On the other hand, talents get recruited from low cost of living states and move to California all the time. My whole team of engineers from the fruit company came from Motorola in Chicargo because 1) even if CA is more expensive Apple pay them way more, and 2) Motorola was dying. It doesn't means California sucks or Chicago sucks, just business and capitalism.

 

[CharlesInCharge]

Living in the suburbs of NYC I can only say what I see. Only first generation immigrants are doing home improvements or building new houses for a living. Without these immigrants there would be no one to cut the lawns, fix your car, repair or build a home. Second third fourth generation people are now educated not interested in that type of work. I don't think more money is going to pull them in when they can sit in a air condition office making the same

Unfortunately these were the jobs (housekeeping, lawncare, construction, etc.) that used to give our teens and 20 somethings work and work ethic. Now they just lay around and do drugs and text on social media... The consequences of this shift is very bad.

 

[nickaluch]

It is completely insane. I'm seeing reversals happening in many parts of the country. For example, when we lived here in Lake Havasu back in the early 90's, I sold my home I had built in the Chicago suburbs, (Lake Zurich), for $201K. I purchased a home similar to what I have here now, brand new from the builder for $90K.

Fast forward to today, and that same home in Chicago is only worth around $435K, while the exact same home here is currently worth $545K. The killer are the property taxes. Here around $1,300 a year for a $500K home. There that $435K home has taxes well over $13,000.00 a year. Insane.

The homes in many of the blue states are dropping in value, while they are skyrocketing in the red states. The property taxes in many blue state areas make them all but unaffordable. Especially after you tack on a nice fat mortgage payment. Young people find it too much of a financial struggle, when you have to fork out over a grand a month just for taxes.

I remember 30 years ago, you could sell your house in Chicago, and buy a nice "Golden Girls" style retirement house in Florida, for about half the price. Now it's almost the other way around. Taxes are astronomical in the blue states, and jobs are becoming scarce. Home values are taking a big hit as a direct result.

Companies are leaving the rust belt, and California in droves, because the cost of doing business is becoming too high. Along with massive, out of control, government regulations. And they're all flocking to places like Arizona, Texas, and Tennessee. The housing market appears to be adjusting accordingly.

Im in a blue state of NY bought my house 10 years ago for 336k could sell it tomorrow for 800k in one day easily. Plenty of great jobs here if you're educated

 

[JeffKeryk]

People and companies in CA are leaving in droves? Not in Silicon Valley. Apple, Tesla, Google, Samsung and the rest continue to gobble up expensive commerial real estate and build build build. Property values continue to go up.
Lotta jobs here... From construction to Costco to high tech to you name it.

 

[nickaluch]

Unfortunately these were the jobs (housekeeping, lawncare, construction, etc.) that used to give our teens and 20 somethings work and work ethic. Now they just lay around and do drugs and text on social media... The consequences of this shift is very bad.

Teens building house's? I think you're giving out youth a bad wrap..My 3 daughters all had a little local job through highschool then went away to private college and worked during the summer. 2 graduated a few years ago highly successful so far little one still in college. All great girls I still believe in our youth.. But remember to have great successful kids parents need to be in the game involved when there young.

 

[AZjeff]

Billt you know our problem is rich Californicans coming here and paying too much for houses. Simple as that, no need to over think it.

 

[Wolf359]

None of that changes actual value. Overpriced is overpriced. Regardless of how you pay for it, or how it got there. And as I said, shortages NEVER last.

Just look at the last 2-1/2 years. Are you going to tell me if these kind of increases continue, that in another 5 years the market will bear an average upper middle class suburban home going for $2.5 to $4 million dollars? Not going to happen. Money is more difficult to accumulate than lumber and carpenters.

Basically boils down to supply and demand. People use to move around a lot more because it was always easy to find another home. Now you have factors like low supply and high demand. It's not that easy to build new construction, I think government regulation accounts for 1/4 of the price of a new home so it's not just the lumber and contractors. Plus with shortages of workers and inability to get permits or the length of time it takes to build something, there's less housing being built than the demand. This is sorta like fracking, they got burned last time so they're not jumping back into it so the upward march in prices continue. I think it will slow down once interest rates really start to go up. Standard debt to income ratio is 33 to 38%. If you use a 100k annual income, that gives you a $2750 a month mortgage payment at 33% DTI. A 400k mortgage works out to $1686.42 a month at a 3% interest rate on a 30 year mortgage. Pump that interest rate up to 7% and it goes to $2661.62. Now if you have couples making over 6 figures each, they can easily afford 5k+ monthly mortgages

 

[CharlesInCharge]

Teens building house's? I think you're giving out youth a bad wrap..My 3 daughters all had a little local job through highschool then went away to private college and worked during the summer. 2 graduated a few years ago highly successful so far little one still in college. All great girls I still believe in our youth.. But remember to have great successful kids parents need to be in the game involved when there young.

I was a teen mowing lawns. I was 18 and doing construction. So yeah, work ethic. Our youth lack it b/c we have farmed out jobs or automated them.

 

[PandaBear]

Unfortunately these were the jobs (housekeeping, lawncare, construction, etc.) that used to give our teens and 20 somethings work and work ethic. Now they just lay around and do drugs and text on social media... The consequences of this shift is very bad.

If a kid didn't get work ethics because there's no more McDonald's job and they end up doing drugs, it is the parents' fault.

Seriously, there are more kids these days working in different kinds of jobs, and many decided to take more classes to graduate early, it really depends on the parenting.

I was a teen mowing lawns. I was 18 and doing construction. So yeah, work ethic. Our youth lack it b/c we have farmed out jobs or automated them.

You did great, but that's not the norm. Just like you said most cars will last 30-40 years the statistics say otherwise.

 

[billt460]

I want you to know that this business of "companies leaving California in droves" is a narrative that has existed for at least 35 years.

Price a moving van, (U-Haul, Penske, Ryder, Enterprise), from L.A. or the bay area, to Texas. Then price one the other way around. There is a reason you'll pay over double for one to leave California.

 

[billt460]

Billt you know our problem is rich Californicans coming here and paying too much for houses. Simple as that, no need to over think it.

That is very true here. It's about the same as they did in Aspen, and places like Durango. In the Summer, you'll see almost as many California plates around town, as you will Arizona. (It's about a 50/50 coin toss when you see California plates on cars and trucks, when they're moving into a new house here).

In the Winter they pile in from everywhere. Alaska, Minnesota, New York, Canada, most anywhere it snows, just name it.

If it's a cold climate, they're here from there. The population here drops about 40% in the Summer. Except for the weekends, when the Californian's pile in. I don't mind it as most spread a lot of money around before they leave. All that really changes, is they're dragging big boats around, instead of 5th wheels.

I just wish they would leave their politics back there when they move here.

 

[billt460]

Unfortunately these were the jobs (housekeeping, lawncare, construction, etc.) that used to give our teens and 20 somethings work and work ethic. Now they just lay around and do drugs and text on social media... The consequences of this shift is very bad.

Don't forget the term "Trade School" is now referred to as a dirty word. Or something that only second class citizens attend. So instead they go into massive debt to get degrees, so they can hunt for jobs they can't find.