Real Estate Crash thread

[neufox47]

I thought this podcast was interesting- "The Possible Collapse of the US Home Insurance Industry"

I expected a profile of a community in coastal Florida or a wildfire prone community in California, but allegedly a small town in Iowa is ground zero for insurance non-renewals.

CA and FL have state sponsored insurers of last resort (Citizens and Fair Plan). Iowa does not. Yet.

[mcski]

We use the Fair Plan for our place in Tahoe. Never heard of Citizens. I w heard fla insurers are fleeing that state as much as CA. This non insuring or massively increased premiums is not sustainable for most communities

[neufox47]

Citizens is the FL insurer.

Florida has the highest insurance rates in the country and Louisiana is the only state close. A HUDGE part of the problem is and was their regulations and how they let plaintiffs attorneys and public adjusters run rampant sucking the insurers dry. On the flip side FL has lax regulations that don’t effectively prevent insurers from popping up, sucking profit out, and going bankrupt in a bad event.

And of course it’s one of the most disaster prone states in the country.

Florida just doing Florida stuff.


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[Kevo]

Not specifically related to Real Estate but perhaps related to wider economic trends in general-

Palm Beach Housekeepers are Making $150k+ per year- https://www.cnbc.com/2024/05/23/palm...ve-demand.html

The going rate here in Teton Valley is roughly $45 per hour. A lot of the demand seems to be from short term rental owners who pass the cleaning costs onto the guests.

[skaredshtles]

Not specifically related to Real Estate but perhaps related to wider economic trends in general-

Palm Beach Housekeepers are Making $150k+ per year- https://www.cnbc.com/2024/05/23/palm...ve-demand.html

The going rate here in Teton Valley is roughly $45 per hour. A lot of the demand seems to be from short term rental owners who pass the cleaning costs onto the guests.

Odd they didn't mention the FL crackdown on migrants that is apparently driving the people that historically did these jobs away from the state.

FAFO?

[frorider]

https://www.theguardian.com/us-news/...land-ownership

For Allen, the owner of the feed store, the 2016 changes mean that he can’t retire to Montana, where his wife moved seven years ago.

Selling the store had always been Allen’s retirement plan. But since the new owner will not be able to transfer their lease or sell the business to recoup their investment, he hasn’t found a buyer. Meanwhile, his own lease has gone into holdover status: he continues to pay his rent and abides by the terms of his lease, but he can be evicted at will with 30 days’ notice.

Leases lapsing into holdover status have long been an issue, but between 2015 and 2023, more leases have gone into holdover than did before.

[anotherVTskibum]

NYTimes article on increasing homeowners' premiums, with Florida quote: "we're still in Hell, but it's not as hot"

https://www.nytimes.com/2024/05/29/b...smid=url-share

[skaredshtles]

NYTimes article on increasing homeowners' premiums, with Florida quote: "we're still in Hell, but it's not as hot"

https://www.nytimes.com/2024/05/29/b...smid=url-share

"The houses sold easily, but often to well-off cash buyers who could drop the insurance altogether because they did not have a mortgage that required them to carry it."

You suppose buyers are banking on the federal taxpayer picking up the bill when their uninsured abode gets destroyed by a hurricane?

[neufox47]

I’m not an expert on FEMA benefits to private homeowners but I believe the most significant thing you can get is a Stanford Grant which is capped at $33k.

More likely they are self insuring. If they are really wealthy they have a Captive Insurance Company that allows them to self insure with tax savings.


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[Conundrum]

If you insure your home with Auto Owners, expect a 16-25% increase in premium on any renewal after August. Also placing ACV on roofs over 16 years old and requiring pics of roof. Not location dependent.

[Toadman]

Snippet from NYT article on the struggles of buying a starter home or moving up from the starter home.

Twice as expensive
In the past, the starter home served as a bridge: Families just starting out would squeeze into a smaller home and build equity. With time, as their careers grew and their incomes increased, they cashed in the equity and moved to something bigger.

But now that process has hit a wall. “The trade-up buyer has just disappeared,” Sam Khater, chief economist of Freddie Mac, said.

A majority of homeowners — six out of 10 — have mortgages with interest rates that are locked at 4 percent or lower. With rates now hovering around 7 percent, most people who buy a home today will pay much more interest on their new mortgage.

Economists put it to me like this: If you were to sell your house today and buy an identical one across the street, your payment would double — and that’s before you factor in how much the house across the street has gone up in value. (Which is a lot: According to Redfin, home prices are at a record high.)

In Chicago, Chris and Alison Wentland told me about the predicament in which they found themselves. Last year, they decided to sell their townhouse in the Lincoln Park neighborhood. Their children, at 2 and 6, were sharing a room not much bigger than a walk-in closet, with their daughter’s bed pressing up against their toddler’s crib. They began looking for a four-bedroom.

They had purchased their townhouse in the low $500,000s, and would likely be able to sell it for $700,000. But getting that one extra bedroom in the popular Lincoln Park neighborhood would put their next home in the $1 million range. Despite having a sizable equity from their starter home, the higher rates and higher cost meant that their monthly payments would go from around $3,000 to at least $7,500, their real estate agent warned.

Nothing to buy
It has also become harder to buy your first home. Starter homes — defined as those that cost 75 percent or less of the median home price in a given market — have gone up faster in value than any other category of home.

The problem is being exacerbated not just by rising prices and high interest rates, which affect every tier of the housing market, but also by something more fundamental: The number of new entry-level homes being built has fallen off a cliff.

In the 1970s, more than 400,000 entry-level homes were built every year. By 2020, only 65,000 were built. One reason for the drop is the rising cost of materials; smaller homes just don’t pencil out for builders.

So the supply of starter homes is not being replenished — by builders or by the last generation moving out and selling. The first rung of the ladder of homeownership, long a key part of the American dream, has become especially hard to climb.

[neckdeep]

Not specifically related to Real Estate but perhaps related to wider economic trends in general-

Palm Beach Housekeepers are Making $150k+ per year- https://www.cnbc.com/2024/05/23/palm...ve-demand.html

The going rate here in Teton Valley is roughly $45 per hour. A lot of the demand seems to be from short term rental owners who pass the cleaning costs onto the guests.

Yep, tip of the iceberg. There's a downside to pricing out the labor force. For example, if you're paying housekeepers 3x what you pay the police force, you shouldn't be surprised when the deputies keep making the news for their incompetence and moral turpitude.

There's real trouble brewing in the county and municipal departments, none of which pay enough to rent here since nearly the entire rental market shifted to STRs. I got several friends who wake up every morning wondering if they still have employees. One buddy manages a key piece of infrastructure and they are fucked. Totally fucked.

The writing is on the wall over at the grocery store. That's the future. Dipshits and ex-convicts bussed in to do the work for below market rate.

[skaredshtles]

Yep, tip of the iceberg. There's a downside to pricing out the labor force. For example, if you're paying housekeepers 3x what you pay the police force, you shouldn't be surprised when the deputies keep quitting to become housekeepers.

Fixed!

[406]

Regarding the starter home NYT article, agree it is unfortunate more starter homes are not being built, but people will probably be better off in the long run stuck in their smaller than expected homes. Stay in the smaller house, invest the extra money and retire early, kids can share a room, is my approach.

Market still seems crazy in the San Diego, get the typical we will buy your house letters every week, but the one below is a new approach. I still can't figure out how people are running around with a million is cash, but didn't think to buy a few years ago when price was half. And why would investors think it is a good time to buy:

[skaredshtles]

Regarding the starter home NYT article, agree it is unfortunate more starter homes are not being built, but people will probably be better off in the long run stuck in their smaller than expected homes. Stay in the smaller house, invest the extra money and retire early, kids can share a room, is my approach.

TBH, I kinda wish that we'd stayed in our original house (1300sq ft) instead of moving to our current house (2200sq ft). It would have been a bit tight with 3 kids, but they're around for such a short time that it probably would have been fine.

And now that house would basically be the perfect size for just the wife and I.

Live and learn, as they say...

[Kevo]

Yep, tip of the iceberg. There's a downside to pricing out the labor force. For example, if you're paying housekeepers 3x what you pay the police force, you shouldn't be surprised when the deputies keep making the news for their incompetence and moral turpitude.

There's real trouble brewing in the county and municipal agencies, none of which pay enough to live here since nearly the entire rental market shifted to STRs. I got several friends who wake up every morning wondering if they still have employees. One buddy manages a key piece of infrastructure and they are fucked. Totally fucked.

The common denominator in the sheriff's department is mormonism. The sheriff is mormon. The deputy fired for stealing evidence is mormon. The deputy fired for jacking off in front of a dispatcher is mormon. The coach who was abusing and sexually assaulting kids who was protected by the sheriff is mormon. The entire department seems to be corrupt.

And yeah the lack of workforce housing is a major issue, along with the county not being able to have a lodging tax and the state not allowing the municipalities to collect on the lodging tax that the taxpayers voted for.

[neckdeep]

Ya, Lifford probably did as much to raise real estate prices around here as any one person could do.

Wake me up when the deputies go back to stealing drugs and cash from the evidence locker, banging underage girls, framing innocent people and just generally acting like they own the place. Cuz that shit did wonders for keeping the cost of living dirt cheap.

There was a time when most of the new people would never have seriously thought of actually living here. I believe that sentiment hit its peak in spectacular fashion when deputy Gutierrez summarily executed that kid's dog and made the national news for it.

[4matic]

No houses for sale now in my HOA village. The highest price ever paid one went in a few days and then a couple others fell.

[frorider]

Our little town got noticed by Politico: https://www.politico.com/news/2024/0...homes-00161375

[singlesline]

Our little town got noticed by Politico: https://www.politico.com/news/2024/0...homes-00161375

They are going to enforce it by spot auditing utility bills? Anyone who can afford a vacant second home in Tahoe can waste some energy keeping the hvac on and running water down the drain.

Set up a Bitcoin mining rig and keep it cool with water straight out of the tap…No tax, just wasted resources.

(For the record, I think such a tax is probably a good idea overall)

[Core Shot]

What the holy fuck. A vacancy tax?

I thought STR was the problem.

Around here which is seasonal there used to be so many off season rentals. But the courts won’t promptly evict 9 month renters anymore. So those units don’t exist. Whether the prime 3 months are owner occupied or STR. Yes STR have increased. I have a contractor friend that has a half dozen STR two bed homes that he refuses to rent off season. If the courts would do their job and sheriff evict on time for his STR income he would be able to help rent off season. Yeah it sucks to couch surf with friends or pay hotel rates for prime season but it used to exist.

[Foggy_Goggles]

I love me some Neckdeep commentary, dude is living it.

The municipal employment thing is, to me, the biggest indicator that the living wage problem isn't really viewed as a problem. I'm the Treasurer of our water and sewer district. All the socially concious second homeowners talk a big game until it's time to write the check. They are in favor of affordable housing, just not in their neighborhood. They are in favor of living wages, just not in their district.

"I think we should add 25% to the labor budget to become a premier employer. This would cost each homeowner about $XXX."

"Uh...I think thats a bit too much", "Oh, I thought you were in favor of living wages, my bad"

At the County level revenues 2023 to 2024 increased from $69million to $107million. And yeah, people bitch about taxes because that's what people do. So we've got the money to giver everyone a giant raise but no, its increase head county and make capital expenditures.

Now I don't pay Town of Winterpark taxes, but 2 snowcats, a couple apartment buildings, always more cops. Gotta fee the monster.

[S_jenks]

Our little town got noticed by Politico: https://www.politico.com/news/2024/0...homes-00161375

$3k for the first year, $6k each year after that is too low IMO. Should at least be doubled or tripled for a place like Tahoe.

Tell the rich fucks to either use it or lose it, lest they pay for the privilege.

[Mazderati]

Yup, 6k will create something to complain about while providing no meaningful disincentive.

[alpinevibes]

$3k for the first year, $6k each year after that is too low IMO. Should at least be doubled or tripled for a place like Tahoe.

Tell the rich fucks to either use it or lose it, lest they pay for the privilege.

Agreed. The vacancy tax is a hot topic around here (yet no elected official seems to want to carry its banner), but it needs to be a five-digit number to actually provoke action/reaction and fund something meaningful. $20k at 1000 households is a real amount of housing funding to start buying and building with. My affordable housing neighborhood was built with $80m for ~80 units and 150-200 people