Real Estate Crash thread

[liv2ski]

Everything depends on location. In San Diego we are fully built out, so the only solution is to allow higher density housing. The builder pays the fees and passes them on to the buyers, same as it has always been. Where's all the water will come from, is another issue. Desalination plants? (a problem unto themselves)

The fact of the matter is there are just a bunch of people between LA, Orange, the I.E., Riverside and San Diego counties. Having water for everyone is a challenge all municipal planners have to deal with.

[Pow4Brains]

+1 on the entire post - nailed it.

X2.

The number of people just starting to enter the workforce that expect/demand a six figure salary is dumbfounding. Most of the applicants I deal with are applying for jobs in an industry where no tangible hard good is provided. Cray.

[Lindahl]

What industries?

[Iowagriz]

Good posts and conversation. I hadn't even thought of water rights being a factor (wasn't where I grew up).

Article this morning on Whitefish affordable housing plans - http://flatheadbeacon.com/2017/11/07...-housing-plan/

[Benny Profane]

I disagree as my kids are a classic example. I encouraged them to move an hour out of San Diego to Temecula to get a property at half the price. Both said "no fuckin way". Why leave where it is nice to buy where you won't be as happy?
I don't think many people will do that, like maybe 10%. With the high cost of land all the builders can do is build more dense housing (4 homes where a SFR once stood) if they can get the permits to do so.

The exurbs will become our new ghettos.

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[Benny Profane]

Really Benny? You said clear as day that you think most HELOCS that were taken out over 10 years ago are under water. There are very few loans today under water unless something happened to the property.

You are right about student loans being a drawdown on the economy though.

The idea that I am the 1% or have a trust fund is laughable. My Dad worked construction, my mom was a teacher. My grandma was a single mom in the 40s-70s and worked in a factory. Grandpa on the other side
worked construction. There is no family money. All of them lived in a trailer at one point in their life. I'm not self made, but I am the product of 2 generations who tried to make their kids lives better than their own.



Edit - Glademaster nailed it. The solution to high priced housing is to increase supply. Restricting demand is a bandaid that starts an infection of NIMBY. You want cheap places to stay in mountain towns or anywhere? Allow people to build a bunch of 2 and 3 bed triple deckers and fourplexes on small lots. This shit isnt complicated until city hall via NIMBYists get involved.

Listen, we could argue either way forever, but, neither of us have clear, solid data to point to. It's not as clearcut as the "first mortgage", or actual home price market. But, you have to accept something. For the first time in our history, probably any housing market history, trillions of dollars of loans were taken out of the equity value of our market. Never happened before. Now, don't you think many many of those loans are still out there, still festering, and will be for a decade or two? They didn't just vanish. They were 15-30 year term. Not everyone who is obligated to them live in hot markets.

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[yeahman]

Hey, Helena is a great town, I've always been impressed visiting. Despite a few local smug douchebags, the people are humble and friendly.

Jeez.

Sorry bro, I apologize for that. I'm not sure smug is the right word, but I am consciously grateful every day that a place like this exists for me to live in. Took me 18 years of living in Montana to figure that out. It's a personal thing, I just like a chill vibe, and that can't include a destination ski resort on the edge of town.

But that said, for my money Helena has a pretty good central location for hitting a good variety of ski areas. So I wouldn't say that skiing isn't important to me, actually it is very important. I just want affordable housing and good jobs too. I know you understand what I'm saying.

[shroom]

X2.

The number of people just starting to enter the workforce that expect/demand a six figure salary is dumbfounding. Most of the applicants I deal with are applying for jobs in an industry where no tangible hard good is provided. Cray.

hahahaha

software, lindahl.

[Pow4Brains]

What industries?

Customer service, construction management and enginerding mostly.

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[Pow4Brains]

hahahaha

software, lindahl.

Heh.

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[muted]

Sorry bro, I apologize for that. I'm not sure smug is the right word, but I am consciously grateful every day that a place like this exists for me to live in. Took me 18 years of living in Montana to figure that out. It's a personal thing, I just like a chill vibe, and that can't include a destination ski resort on the edge of town.

But that said, for my money Helena has a pretty good central location for hitting a good variety of ski areas. So I wouldn't say that skiing isn't important to me, actually it is very important. I just want affordable housing and good jobs too. I know you understand what I'm saying.

I understand what yer saying now, yes...no worries. I came in hot as usual, whoops. Helena has a lot to offer. Better weather, better biking, better prices than Bozeman...but I can't drive that far to ski, but that's just me. A mountain town without many skiers does sound like heaven though. Helena is a gem for certain types.

[summit]

@foggy_goggles great information and points there... it really does put a crimp in the "just build a shitton of efficiency studios" solution. Water rights are a huge deal and limiting factor. (If I wanted to be well off, I'd become a water rights attorney)

It is more expensive than anyone considers and then you throw infrastructure requirements on top of it. Local example I'm not sure what traffic and other infrastructure requirements will end up resulting from 500-750 extra residents in new high density west Keystone West Hills and Wintergreen developments under construction.

@Tips^Up apart from Open Space buying up developable land, it is intersting to browse the county GIS and see just how many massive tracks of empty developable land are being sat on by the ski corps... looking around Keystone area, Vail owns hundreds and hundreds of acres that are empty.

[BFD]

I understand what yer saying now, yes...no worries. I came in hot as usual, whoops. Helena has a lot to offer. Better weather, better biking, better prices than Bozeman...but I can't drive that far to ski, but that's just me. A mountain town without many skiers does sound like heaven though. Helena is a gem for certain types.

maybe all types
https://shareblue.com/in-stunning-tr...t-black-mayor/

[Lindahl]

hahahaha

software, lindahl.

Probably just busting my balls, but...

I provided for a hell of a lot of hard goods when I did that for satellites, spaceships, jets, audio/video electronics, and phone infrastructure (base stations, switching centers, etc). Currently I’m more or less in the banking/finance world. It was cool producing hard goods and all, but I’ll keep producing intangible goods as long as they keep paying me a metric fuckton more (and its still really fun and interesting work, just not as cool from the outside).

[FussyDutchman]

The truth is actually somewhere in between. The worst parts of the bubble (inland empire, parts of South Florida, etc) are indeed still under water. There are also huge swathes of the flat part of the US that have barely budged in the past 10 yrs, though to your point, those homes did not see major bubble appreciation.

There is still a fairly massive NPL market with LTVs well above 90 and often above 100. Many of these loans Re-perform due to mods or an improving economy, but the house is still either underwater or close to it.

That said, the nation has massively underinvested in housing in the past 10 yrs. Unless rates go up too fast or the economy takes a nose dive, demand for affordable housing is likely to drive millennials to those same exurbs and third tier cities that are underwater, thus driving those prices up.

Sure, there are still specific areas that have higher concentrations of negative equity but they are a relatively small percentage of the overall market, mainly due to price appreciation in the last 5yrs, especially in the hard hit areas you mention in south FL which benefited from a huge influx of foreign $ buying at distressed prices.

The NPL market is still sizable but the vast majority of that supply is coming from the GSEs and HUD. Most of the large national and super regional banks have long sold off their NPL loans and many are actually now buyers of distressed pools. Even the GSE pools (a couple totaling $3b+ sold recently) are steadily seeing current loan to values coming down in to the 80's where a year+ ago many of the government sales had values that were high 90's or 100%+. Same with the re-performing pools which are in very high demand for fund buyers due to the relatively low re-default rates and increasing securitization opportunities available.

I agree with your comment about affordable housing being an issue. Many who had the ability to buy in some of the heavily hit markets were able to get great deals but most did not have that luxury since loan standards were tightened so far that they shut out otherwise, qualified buyers. More first time buyers were forced to continue renting and will likely have trouble entering the market as rates rise in the future. Credit reform is something that has been needed for many years and we are finally starting to see new ways of evaluating a borrowers credit worthiness and not relying on the current scoring system that leaves the vast majority of Americans unable to enter the housing market because their scores are too low to qualify.

[fastfred]

@Tips^Up apart from Open Space buying up developable land, it is intersting to browse the county GIS and see just how many massive tracks of empty developable land are being sat on by the ski corps... looking around Keystone area, Vail owns hundreds and hundreds of acres that are empty.

yup

one of my favorite realtor lines is "we're running out of develop able land"

total bullshit in summit county, summit will easily be able to double if not triple the total units available (condos and single family houses), I use copper as an example, copper mtn has been plated out for full development and approved by the county, they can double the number of units that have already been built, that's alot of possible growth

[fastfred]

W
Reason #1: Rampant, toxic NIMBYism.

Reason #2: Ironically titled "Community Development" departments populated by anti-development control freaks who run roughshod over the rights of property owners and who seem to think it is their directive to minimize opportunities for self-determination within their jurisdictions (i.e. only being in favor of deed restricted development and palatial estates, while rabidly dismissing proposals for mid-range free market housing development).

Reason #3: Onerous, burdensome Land Use and Zoning codes which make the possibility of mid-range free market development on any scale about as likely as North Korea sending someone to the moon. For example, there are several counties in the Colorado High Country, where the most recently adopted land use codes explicitly ban the creation of any new residential lots smaller than 5 acres. You can consolidate small lots into 5+ acre parcels, but new subdivisions aren't really an option in many places. You can't buy 500 acres of sagebrush 15-20 miles north of Silverthorne and turn it into 400 single family lots.

Reason #4: The high cost of construction in many mountain communities.
4A: Materials costs are higher, as outlined above by GB. We regularly see remodel projects with valuations in the $400-750/square foot range.

4B: Many mountain communities have strict requirements w/r/t Zoning and Engineering regulations, which contribute to ballooning project costs for seemingly simple projects (i.e. You go to put a new paver patio in your backyard, and need to hire a Civil Engineer to produce a Grading and Drainage report for you, and depending upon changes to your pervious/impervious ratio, you may need to add a drywell or some sort of onsite detention/treatment. Or in the case of a new development, perhaps the project goes through 4 or 5 or 6 rounds of review before it's approved, every round requiring revisions by your design team. That's cost overrun city before you even get a shovel in the dirt).

4C: The permit review process is often slow, and very expensive. Yes, that's the cost of doing business, but how many people in this thread have gone to pull a permit to remodel their kitchen, and had the process take 6 months, cost $20,000 and require a survey? In the case of larger projects, fees due to the municipality can run into the seven figures pretty easily.

I'm of the opinion that there is demand for mid-range free market housing on the periphery of many of Colorado's ski towns, and that it is the expense, time and general onerousness of the review process for those projects, that plays a large part in killing them. It's easier for big construction firms to build deed restricted projects where they often receive waivers for a lot of the fees associated with the review process, may receive priority review, and generally have their hands held through the process from permit application to CO, or for more specialized guys to build $5,000,000 SFR's at a rate of one every 2-3 years.

There needs to be more free market development, and more development friendly policies, or the people who provide essential services to these communities will drift away until you really are left with towns like Benny describes, full of millionaires and skids, with nary anyone in between. And yes, with it will come some strip malls, chain stores and things that aren't perfectly in sync with a bucolic mountain town, but they are things that make areas livable. Colorado is growing, and you aren't going to put a stop to that, so there needs to be intelligent growth, not just tree huggers and those who have already bought in screaming "NO!"

My 3 cents

#1: yup, seems like the more money you have the more free time you have the bigger asshole nimby you are

#2 yup, dealing with planners is a joke, pretty much boils down to how many hand jobs you are willing to give and if they are having their period this week or not

#3 maybe, silverthorne has annexed whatever that land is outside of town, where they are buildling complete shit box 750k houses, can't remember the name, the development is a mess and I feel for whoever is buying those piles of crap, the developer then decided to build a village out there too, high density, shitty little local houses, all approved by the town of silverthorne, meanwhile silverthorne has been desperatly trying to build a "downtown" core. yet they go ahead and allow this crappy development three or so miles from downtown to happen, who the fuck is in charge of these decisions

#4 yup, High cost of construction, ha ha ha, people are fucking idtiots, the number of workers has shrunk so bad in the past few years it's unreal. No more mexicans immigrating, white kids don't want to work hard, cost of living in a ski town or commuting has shafted the average worker, and a majority of people moving to ski towns young and old don't have to work, I've got a bag of dicks on my payroll, way too many of them and they are actual employees none of this subcontractor bullshit, people shit their pants when they get a price from me, and I've had to explain how much labor costs and they still don't get it, they think some dickfag with a couple tools living in a mountain resort town should get 12 bucks an hr, It costs me $9.00 and change per hr per person right off the top before anything happens, so almost 500 dollars a day is pissed into the wind for all the bullshit, my lowest guy gets 25 an hr my highest paid guy gets 40 bucks an hr. payroll every two weeks is a nut, meanwhile I'm at home jerking off to porn on my computer

#4b&c permits, zoning, engineering, you name it is all part of the game, it's pretty basic stuff to me now, it's actually easy, step one, step two, step three, I've watched so many homeowner and "contractors" try to figure out the maze I start laughing, it's pretty simple, I can do it with my eyes closed now, people just shit themselves when I say 10k will get us started another 25k will cover my bullshit and then we can actually start doing something, for example my average 2 bath, 2-3 bedroom, one kitchen, 1500 sq ft full condo remodel runs 150k - 250k. Additions and houses go full retard. Was meeting with someone this summer and I started talking square foot costs, they both literally gasped for air, $75.00 sq ft is money just pissed away. I pride myself on being as expensive as I can but the results and process are top, for example I charge $20.00 sq ft for floor tile install minus the tile. Plus my 22% contractor mark up on top. Go buy a house in indiana if you can't afford it.

Need to smoke another bowl and drive around some more.

[Harry]

I love fastfred.

[Toadman]

Everything depends on location. In San Diego we are fully built out, so the only solution is to allow higher density housing. The builder pays the fees and passes them on to the buyers, same as it has always been. Where's all the water will come from, is another issue. Desalination plants? (a problem unto themselves)

The fact of the matter is there are just a bunch of people between LA, Orange, the I.E., Riverside and San Diego counties. Having water for everyone is a challenge all municipal planners have to deal with.

Over water bungalows!

[Norseman]

I love fastfred.

Yep, dude is an honest marksman

[summit]

Over water bungalows!

Under water bungalows!

[goldenboy]

4 part newspaper editorial from Pagosa Springs, comparing their housing needs to the Gunnison valley- it's pretty interesting stuff: http://pagosadailypost.com/2017/11/0...d-be-part-one/

[Name Redacted]

4 part newspaper editorial from Pagosa Springs, comparing their housing needs to the Gunnison valley- it's pretty interesting stuff: http://pagosadailypost.com/2017/11/0...d-be-part-one/

They really spent $35K on a survey to find this out?:
"What we see here is a survey done of “families planning to move” within the Gunnison Valley. 77 percent said they would prefer to move into a “Single-family home.” 9 percent said they would prefer a “Tiny house,” defined as a house under 600 square feet."

No shit. I would "Prefer" to own a SFH across the street from Red Lady please. I could have taken their $35K and told them that.

[summit]

They really spent $35K on a survey to find this out?:
No shit. I would "Prefer" to own a SFH across the street from Red Lady please. I could have taken their $35K and told them that.

Hah! Kind of like when the Summit Daily puts up an article that says "statistics show most drivers speed!!!" Except without the wasted $35K

[shroom]

Probably just busting my balls, but...

I provided for a hell of a lot of hard goods when I did that for satellites, spaceships, jets, audio/video electronics, and phone infrastructure (base stations, switching centers, etc). Currently I’m more or less in the banking/finance world. It was cool producing hard goods and all, but I’ll keep producing intangible goods as long as they keep paying me a metric fuckton more (and its still really fun and interesting work, just not as cool from the outside).

i was definitely busting your balls, just cause i thought you were a software guy.

i had incorrectly assumed he was referring to software, given the description. it was apparently more of a dig on the youth of today.