Great piece on 60 Minutes this evening, tackling the issue of housing affordability - both rent & ownership. Jacksonville was a significant piece of the segment.
Watch / read:
https://www.cbsnews.com/news/rising-rent-prices-60-minutes-2022-03-20/
Thanks for posting.
As the underlying issue, as stated in the segment, is a 4+ million housing unit shortage, it may take some years, but eventually, based on historical trends/cycles, housing supply should catch up or even exceed demand and all these investor driven companies may leave their shareholders holding the bag when prices level off or drop back.
This issue really should drive condo/townhome construction as multifamily construction is more affordable ownership, quicker to build out more units and can promote walkable neighborhoods (if done in urban areas), something else millennials seem to prefer. I am surprised we don't see more of that here vs. apartment construction in the urban core.
I will add that, specific to Jacksonville, home prices and rents here have lagged much of the rest of the country for decades so we may be playing catch up to some degree. Still, a bitter pill to swallow for tenants used to lower costs.
People don't realize that owning your own home in this country is largely a post-WW2 phenomenon. Federal involvement in the market turned a nation of renters into a nation of owners. That may not be the case much longer though.
I wouldn't be bit surprised if the bubble bursts in the near future (concerning inflated property value). We all remember on what happened in 2008. Florida has a history of erratic skyrocketing property values, only to have the bubble pop. Parts of the country like in the Midwest are much more stable concerning property value, in contrast to the very volatile Florida.
Quote from: I-10east on March 24, 2022, 08:45:27 PM
I wouldn't be bit surprised if the bubble bursts in the near future (concerning inflated property value). We all remember on what happened in 2008. Florida has a history of erratic skyrocketing property values, only to have the bubble pop. Parts of the country like in the Midwest are much more stable concerning property value, in contrast to the very volatile Florida.
The "experts" say this time is different from 2008. In 2008, the bubble was driven by very loose underwriting standards, and in some cases, almost no standards at all.
This time, standards are stricter and the bubble is being led by "insatiable" demand, particularly by millennials, the largest demographic group since the baby boom, who are in their prime home buying years of the 30's and 40's. This, on top of very restricted supply caused by the post-recession period of very few homes built compounded by the lack of resales (due to baby boomers holding on to their houses longer) and home building constraints arising from supply chain, labor and land issues.
The only real headwinds at this point would be rising mortgage rates which they are predicting will cool things down some but no enough for prices to go backwards.
^I've heard that as well, and I can tell you the supply chain shortages related to new construction are extremely real.
I'm certainly not an expert in this space but I can see a cooling but not a repeat of 2008.
Quote from: vicupstate on March 21, 2022, 07:54:33 AM
People don't realize that owning your own home in this country is largely a post-WW2 phenomenon. Federal involvement in the market turned a nation of renters into a nation of owners. That may not be the case much longer though.
I still think ownership is desired and will be achievable for the vast majority of people. Financially, we've structured laws to make it extremely advantageous for people and, until very recently, attainable in most markets. Right now prices are bananas but honestly they're bananas on the rental side too (As the 60 minutes piece pointed out).
There has to be a correction here - I don't see 2008 repeating itself for the reasons above but a cooling is inevitable.
That said, I do think that there needs to be something done about out-of-state institutional investors. I'm not sure the right mechanism to achieve this, but it needs to be less appealing for wall street types. I think I'd be in favor of a property tax surcharge for certain types of investment properties.
Quote from: Steve on March 25, 2022, 08:09:22 AM
Quote from: vicupstate on March 21, 2022, 07:54:33 AM
People don't realize that owning your own home in this country is largely a post-WW2 phenomenon. Federal involvement in the market turned a nation of renters into a nation of owners. That may not be the case much longer though.
I still think ownership is desired and will be achievable for the vast majority of people. Financially, we've structured laws to make it extremely advantageous for people and, until very recently, attainable in most markets. Right now prices are bananas but honestly they're bananas on the rental side too (As the 60 minutes piece pointed out).
There has to be a correction here - I don't see 2008 repeating itself for the reasons above but a cooling is inevitable.
That said, I do think that there needs to be something done about out-of-state institutional investors. I'm not sure the right mechanism to achieve this, but it needs to be less appealing for wall street types. I think I'd be in favor of a property tax surcharge for certain types of investment properties.
I definitely agree with most of what you said, especially the last part. I do question how attainable home ownership will be in the immediate future though. Also, as far as renting, a lot of rentals are mom and pop owners that own a small number of units. They are much more dependent on have the units rented, thus they are less likely to raise rents. Not only are interest rates rising for those kinds of investors, but the down payments have gone from 20% to 25% and now 30%. That is only going to reduce availability of rentals and also mean a higher percentage of institutional landlords.