I think people think they don’t like condos. I currently live in a condo I own and while not without challenges overall I like it. I think people have unrealistic pessimism for hoas. In Seattle there are a ton for town homes being built, split lot and connected, most without any hoa. When they need work I bet you’ll see a lot of neighbors suing neighbors to fix and replace shared elements. I would never move into shared living space that didn’t have some sort of hoa to manage any the shared space.
Do you have kids? Among my friends group there was a very stark change in home-type preference between when people were childless and when they had kids.
I do not. But I have neighbors who do. My wife also grew up in a condo. Every living situation has different trade offs. Maybe condos don’t work for some people. I think for most people, particularly young people they make a great first home.
I think people have unrealistic pessimism for hoas
I dunno, while I'm in no real rush to paint them all with a broad brush, there's certainly some validity to the some of the ire towards HOAs that the HOAs themselves rightly earned. The one I'm under certainly has. They wont be missed.
My wife and I live in a townhome and we hate it. The noise through the walls, especially if you have inconsiderate neighbors, is a huge pain and you have essentially zero control over it.
It is surprisingly easy to mess up things. In "condo" I rent, noise is from balcony or the hallway. And the renovated bathroom. All other walls perfectly decent for most of the time...
Ofc, occasional loud situations, but that is no different from monsters that have parties outside their house.
I think a lot of modern construction sucks. My condo was built in 1980 and I almost never hear my neighbors. It is also a fairly well designed building where both vertical and horizontal neighbors have aligned spaces for sleeping eating and living. Along with side shard walls being used for closets and bathrooms.
My townhome is actually an old WW2 military hospital that got gutted in the 90's and turned into townhomes. I can hardly hear anything from outside since it was apparently built to survive bombing, but the walls between units allow a ton of sound through.
My apartment (what Americans would call a condo I think) was built in 2019 and I never hear a sound. Have tested playing loud music and I can’t hear it at all from the hallway. It just depends on how much the developers cared when they built it.
As someone living in a condo with and hoa I completely disagree. I get yearly budgets, bi-yearly building inspection reports. The hoa has a fiduciary responsibility to the building and is required by law not to let things decay. Without the hoa communal living wouldn’t work, and not everyone can have a single family home, especially in urban centers.
I think this heavily depends on your local regulations.
My grandparents had a condo once and because the people in the association didn't want to pay, they endlessly deferred maintenance until it was 40K a unit. All because they didn't want to fix leaky windows 10 years beforehand.
My home city is filled with examples of this kick it to the next year approach to maintenance.
Most people are that way. They view a bucket as a solution to water dripping in through the roof.
Trust me, I do - I have experience of living in a condo and it's subpar to a detached house.
Don't get me wrong, I've been living in condos for the last 8 years in various places and it's doable - it can even be nice. But I'd never buy a condo: I'd just spend more or move to a cheaper location where I can afford a detached house with a large plot.
Having a private garden is great, not crossing people when getting home is great, not hearing people around you is great, not having to deal with the useless administration is great, not having to pay them fees is great.
The thing that bothers me the most about where I live is that even detached houses don't tend to have big plots (makes sense in a developer driven market: buy a ton of land and cram as many houses as you can in there), so you're still too close to other houses.
I understand it's a luxury but it's one I'm happy to put all my money in
Shared living spaces require more coordination with neighbors, either directly or through an HOA. I don't like coordination, so shared spaces are not my preference. Having to run important repairs through a consensus process makes things take longer and become more expensive.
If you can't coordinate with your neighbors directly, and resort to the courts, you're likely to end up in the same place when you can't coordinate with your neighbors as HOA. Although, sometimes, having established procedures can smooth things over.
Single family detached homes without an HOA may not scale (probably doesn't), as you say in another comment, but that doesn't mean we only think we don't like the options that would scale. I haven't lived in a condo, or in an HOA, because I have had choices and I'm not going to pick a choice I've got enough information to determine I'll dislike.
> I'm not going to pick a choice I've got enough information to determine I'll dislike.
You've been duped by the loud anti-HOA crowd and their scary stories, then. For most people, living in a condo is hassle-free. It's cheaper to be many when doing repairs. And someone else coordinates everything so one doesn't have to think about maintenance.
> And someone else coordinates everything so one doesn't have to think about maintenance.
Is that someone else going to move my stuff out of the way when the repairmen come to fix the ceiling under the leaky roof? Will that someone else actually let me know when they'll be swinging by? Will they use a quality repairperson or their cousin? Will it take them so long to get someone out to fix the roof, that more rooms need ceiling repair? How are we paying for this coordinator's time?
Roof will probably not leak nearly as often as in a house, as stuff is being actively maintained. I've never had to think about the roof or the walls, the heating, the water, garbage, etc. So one still comes out way ahead.
But yeah, no one can stop you from dreaming up weird scenarios in your head. Doesn't mean you have a point, though..
I like my condo. Even though part of why I live in one is cost, another part is that I hate dealing with maintenance. I think it would've been a big transition to go from apartment living, where none of that is my problem, to a house where I'd have to coordinate roofers, gardeners, pool guy, etc. By living in a condo I can outsource a lot of those problems to the HOA, and (in theory, maybe not in practice) benefit from economies of scale
A lot of people have a big chunk of their net worth tied up into home equity because it's sort of the "ordained" path to building wealth for the middle class - condos don't see similar appreciation, get hit harder in downturns and are one of the last types of properties to recover in value afterwards.
Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see plenty more condos.
> condos don't see similar appreciation, get hit harder in downturns and are one of the last types of properties to recover in value afterwards.
This is fine. I don't buy a condo with the hope of recouping my money. I buy a condo to have a roof over my head. I couldn't care less if my condo loses 80% of its value. It would lower my property tax bill in fact. I don't expect a ROI > 0 for the furniture either.
For my retirement, I contribute to a 401k and a Roth IRA.
If all you want is a roof over your head, why not rent? It's less risky. You may well find yourself caring if your condo loses 80% of its value if you need to sell it and you can't repay the loan.
Old-age poverty is indeed a policy problem, but housing policy isn't really the way to address it. (Meanwhile you look at places like the Villages in Florida, where you are required to own a car because nothing is within walking distance, no social club, no grocery story, no physician, there's going to be a huge amount of pain in the future.)
The alternative is to tie up a significant amount of money into a home. In Germany, ~12% of the purchase price is lost to fees. A lot more is lost to interest. Some more is lost to things that are normally included in your rent. Oh and you need to pay for maintenance. You need to take care of maintenance.
To illustrate my point, most German landlords fail to beat inflation. Some 20% are losing money.
The homeowners I know chose a slightly worse location, because they couldn't afford to buy in the places where they actually want to live. Since a mortgage is a 30 year affair, they bought more than they currently need. They end up paying more and getting less (for now). Inflation and rising rents will work in their favour eventually, but it's far enough in the future to make me question the move.
I meant to write about buying a home in Germany (I write about adulting in Germany), and the conclusions from my extensive research are the following:
- Buying a home is not a financial decision, it's a lifestyle decision
- Everyone who writes about buying a home has a financial incentive to recommend buying a home
- Home ownership is also throwing a lot of money away: closing fees, taxes, interests, maintenance, opportunity cost...
I'm not so sure that buying is always a bad decision. I live in Berlin, and see where you are coming from. Germany has strong tenant protection laws, and you generally don't get much or any freedom when buying an apartment in a building. You can't change the layout as you'd like, for example, due to load-bearing walls.
However, in terms of building equity (not to become a small-time landlord), buying an apartment is a safe bet - the housing market has been in a bull market for a long time, and the last few years have been especially good. I suspect we're closer to a long-term top than many think, but that's another matter. Even if the market crashes, your house remains yours and keeps providing shelter. On top of that, selling is tax-advantaged whereas stocks aren't.
A part of your payments will indeed build equity, but over 30 years of payments, most of it won't (see previous comment).
If the market crashes, your house will not remain yours if you can't afford making payments. If things go south, I see unavoidable payments and illiquid assets as a liability, not an asset.
Selling is indeed tax-advantaged after a few years though. That's a good point.
The main pro for me is that it's a hedge against rent prices and inflation. However that's assuming that housing prices are reasonable, and that there are no better investments.
> Home ownership is also throwing a lot of money away
It doesn't matter how much overhead it has in a vacuum. What matters is how much goes to overhead when compared to renting, which is the only other choice (other than being homeless).
depending on your local housing market, it could be much more risky. where i live, for the last few years renting has carried the real possibility of being unable to find a place to live, for any amount of money, when your lease ends.
the big upside to a condo is that nobody is going to kick you out.
The building could collapse, be condemned, there could be any number of natural disasters. You can end up in a situation where you owe a lot of money on the mortgage, interest rates move up, and the value drops, so now you can’t move.
If something major fails with the building, a repair bill could be so large that you have to take out another mortgage to pay for it, no matter your current financial situation.
Plenty of significant problems with condos that can force you to be kicked out.
Most of all, incentives are misaligned. Condos are designed to be marketed and sold. I’ve lived in several high end condos, as well as high end apartment buildings, and the apartment buildings always were built better and didn’t have weird custom made shit breaking.
SFHs burn down, are destroyed by floods or landslides. Termites may lead to hidden damage that leads to thousands of dollars in repair bills. On and on... All of the risks you list for condo owners exist for homeowners as well. A diligent homeowner may have more control over preventing/limiting some issues but sometimes stuff happens. As far as I know it is impossible to insure against every threat to ones home (landslides for instance) at any price.
Is it always less risky? What happens when the price of apartments triples or quadruples over the years but your income stagnates or even goes down? You’d better have rent control, which is generally a bad economic policy overall, and you’d better love your apartment because you will be stuck there. When I lived in SF, many of my older neighbors were in this situation.
If you own and can afford your fixed-rate mortgage, you are much less likely to be in this situation, or worse, homeless.
Regulating big rent increases for existing tenants isn't a bad economic policy if you compensate through other means ( e.g. you ensure there's a path to homeownership for those tenants, so they don't stay forever, and that new housing stock for affordable rent is added frequently).
In France there's a maximum amount you can increase a tenant's rent with, defined yearly based on market prices. Combined with one of the most popular investment vehicles, which is a buy new ( thus incentivising construction) to rent (at defined affordable prices) programme which gets you tax breaks for 10 years, and after that most people usually sell. Alongside that cities are mandated by law to have a certain percentage of "social"(affordable) housing available, so when private construction adds housing stock, cities have to add on top of it. That helps keep renting affordable while also making sure new construction appears.
Renting is very risky, and also more expensive than a condo that loses value.
The US has almost no tenant protections except for a few urban areas that passed municipal laws. I would prefer to rent if it provided almost as much protection as homeowning, and if it weren't so financially disincentivized in the US.
IMHO we need to eliminate the capital gains exemptions for homes, and also add on local capital gains taxes in addition to federal, to disincentivize real estate speculation.
Property tax is based on the municipality's budget. If your assessed value goes down, your property tax rate would go up while your final bill would remain relatively the same.
Single family homes offer dominion over your housing, where condos come with a variety of complexities. Unless condo laws are improved, I wouldn’t want one. Condo regulations about noise, guests, pets, children. Some actually try to ban children. Buying and sells is complicated by the association’s finances, which depends on other people. This naturally leads to maintenance issues. Look as the surf side building collapse. Then there are problems when a small group owns a large share of the building. Eg corruption in the contracting process, not to mention forced buyouts. The quality of the construction can often be deficient (wood).
So, there are real differences aside from the lack of a yard.
Unless you're in CA, where an SFH just means that your municipality is the HOA instead. In places with sensible governments and less NIMBYism, the SFH offers the advantages you describe.
For the same reason it can't do public transit, high-speed rail, affordable healthcare and education for the masses, etc. (Insert a bunch of vague and debunkable excuses here like the size of the country(Russia, China)).
There's a big difference between a project like Surfside and a townhome condominium.
Also banning children is illegal in the U.S. unless you have a 55 or older community.
I don't know why you wouldn't desire rules about noise if your home is attached to another home where loud neighbors would bother you.
But at any rate that concern has nothing to do with condominiums, your HOA in a planned development with detached housing can also serve you noise complaints.
The quality of construction has nothing to do with whether the project is a condo. Unless you think single- family detached homes can't have bad construction.
> I don't know why you wouldn't desire rules about noise if your home is attached to another home where loud neighbors would bother you.
The level and type of noise that reaches nuisance levels is highly subjective, which leads to conflict between neighbors. You also have no control over your neighbors, so you might be able to practice your guitar for a decade and then suddenly your neighbors move and the new ones don't appreciate the sound as much.
It's the same issue all of these types of organizations have; HOAs suffer from the same problems. The rules tend to be defined by those most sensitive to them, who are generally those the most willing to waste a bunch of their own time screwing around with the HOA/condo association.
I personally refuse to own a condo or HOA home. It's worth it to me to exchange the equity for renting and being able to get out easily if I want to. I also find "ownership" to be a bit of a misnomer for either type of housing, since the rules can be arbitrarily changed and they can place a lien on your home. You live there at the grace of the HOA/condo community.
Depending on state law and the requirements of the condo bylaws major changes in the condo rules in many projects require a supermajority of residents to vote in favor of such a change, so rule changes aren't necessarily something that can be easily or arbitrarily changed for important aspects of the project.
Yeah, but then it's on me to run a counter-campaign to preserve rights that I already have.
I get the reasons why those processes exist, especially for condos, but it's just not for me. I grew up in a rural area, so my idea of ownership is probably tainted by space being a non-factor and enforcement of any kind of laws, much less non-governmental ones, being sparse.
I'm hanging on to hope that remote work will become a major factor in the job market so that I can move back to the country without having to resort to the rural IT job market.
It's true that condos as a class don't appreciate but if you buy one in the right gentrifying area they can be a fantastic deal. Some condos in Austin Texas have increased 400% in price in the past 5-6 years. Particularly in zips 78741 and 78704.
It depends on where the condo is. My condo in Boston has increased in value 2.5 times in the 20 years I've owned it. My friend's home in a wealthy suburb of Boston increased by 40% in almost the same amount of time. That's taking into account the last two years of the pandemic where we saw housing price increases slow or stop in the city while suburban prices rose much more quickly. Before that, the difference in appreciation was even greater.
My parents condo in Manhattan, which they bought 45 years ago, has probably appreciated close to two orders of magnitude.
I'm in cambridge MA and our condos are about the same appreciation, even though the building needs some love.
I think overseas buyers, who like the fact that an association takes care of the repairs and services like these type of properties. Even those that moved and rented have ended up selling to those that have never seen the property except in photos. Our building has no rules about %owners living in the building so its gone from about 80% 20 years ago to 30%.
I think this comment just proved that condos don't appreciate as fast as single family homes or townhomes.
In certain cities in the US, single family homes have gone up 2.5x in the last 5 years & sometimes even less than that.
Phoenix, Las Vegas, Miami, Mountain View are some examples
If you looked at appreciation over 20 years in those cities (sans Mountain View), it might come out to less than 2.5X even if the last 5 years it was, especially when inflation is accounted for. Phoenix in particular:
This graph only goes up to 2019, so it is probably higher now, but that is one heck of a drop.
Also, it isn't strange that a lower cost market appreciates faster than a higher price one. If say houses were $100k in Phoenix after the crash in 2008, now they are $400k, that is 4X! At the same time, a $1 million dollar house in Boston after the crash is only $1.4 or 1.5 million now, only 1.5X.
Yes. Condos are like a hybrid of apartments and SFHs, with mostly the downsides of both. In terms of affordability, they are often are the first opportunity for those wanting a SFH. But like you say, their risk/reward scenario is skewed heavily towards the risk.
> A lot of people have a big chunk of their net worth tied up into home equity because it's sort of the "ordained" path to building wealth for the middle class
The flipside is that a lot of people spend a big chunk of their lifetime earnings on rent with no return simply because the barrier of entry to home ownership is so high.
I agree that housing shouldn’t be an investment first or by default and I agree that condos would be an excellent vehicle to bring more into home ownership by lowering the cost of entry.
> Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see plenty more condos.
This happens in Japan, but happens mainly as a result of:
a. No one sees real estate as a sure shot after the excess of the 80s.
b. Declining population means even Tokyo has a lot of extra housing.
c. It is easy to rebuild housing, so people rarely buy "used" homes, leaving on the land as a real estate vehicle for appreciation (the structure is overhead). Condos are almost worthless speculative assets in that sense.
Considering china is still very rural that doesn’t seem surprising. But China is still in their 1980s Japan phase where real estate in Shanghai is worth more than all of California.
Yes, and often those cities will be torn down before they are actually used. It’s all good: turns out demolition also counts as positive GDP in their statistics.
Tokyo’s population has constantly risen, even as japan’s has fallen. Tokyo has inexpensive housing because they’ve allowed people to build it. You can compare the chart of new housing growth in Tokyo versus Paris, London and NY, and Tokyo blows them out of the water.
Yes, but not explosively so, and increasing density of built structures means prices haven’t really risen much.
Don’t count new housing growth in Tokyo if you aren’t counting housing destruction as well, otherwise the numbers aren’t comparable to other cities (where new housing usually means “new” housing, not just rebuilt housing).
> Between 1956 and 1986, the price of land increased by as much as 5,000 per cent in Japan. At the peak of the bubble economy, Tokyo real estate could sell for as much as US$139,000 per square foot, which was nearly 350 times as much as equivalent space in Manhattan. By that reckoning, the Imperial Palace in Tokyo was worth as much as the entire US state of California.
The Japanese property market was worth four times more than the US property market
C is the really important piece of the puzzle here. Tokyo allows for a lot of building because zoning and codes are more permissive.
But. From when I lived there, my general observation was that in exchange for keeping the cost of the house fixed, rising property values is dealt with by making property lots smaller. Where 1 house stood now stands 2.
I would like to add
D. apartments are plentiful and cheap. I paid ~300USD a month for a small apartment in an outer suburb of a mediumish city. I was making ~2500USD a month.
Sounds like the real estate developers are making the rational choice here--we could make these deregulations that the Urban Institute are pushing for but they never stop to entertain the possibility that this is probably a symptom of the American wealth inequality curve.
While it would be nice if more people could get a first foothold in real estate ownership & wealth-building by buying a share of a condo building, they just aren't quite there yet on the wealth curve.
No, it doesn’t. Or at least it depends on where. What the Bay Area needs is more genuine family housing, not small 2BR condos. If the condos were majority 3+ BR I’d have a different opinion. But they aren’t: it’s very hard to find good quality condo housing suitable for a 2-child family that isn’t roughly the same as or more than my 7-figure net worth in cost.
Just need strong regulation. All house builders want to make lots of small apartments, as that often gives a higher price per square meter of flooring. But the local government should aim for it being a mix.
The only reason it gives them a higher price per squarefoot is that building is so constrained. If there were adequate built space, the smaller apartments wolud be less desirable and maybe even go for less per square foot.
It all does come down to strong regulation, but instead of strong regulation to limit building, we should have strong regulation to prohibit hoarding and underuse of land.
Unpopular opinion: IMHO single family homes are an idea whose time passed, at least in big urban areas.
While the "American Dream" is to own a home with a backyard, it is logically easier if everyone lived in highrise condos and apartments in urban areas.
Homes would be cheaper, since you could scale up and not just out (e.g. avoid urban sprawl). Not to mention lower gas costs and we don't need to cut down as many trees to build homes.
My mom owns a home (which I rent the downstairs, it's cheaper for me), and it has a big backyard. That in expensive Seattle. Combine that with tens of thousands of homes (if not hundreds) and you have a lot of wasted land.
A lot of the housing problem isn't Amazon or Big Tech, its single-family zoning. Today's cities need high rise buildings to accommodate everyone.
Almost nobody, having had the pleasure of living in even a modest SFH, would prefer to be packed in like sardines the way modern high-rise buildings do.
It's possible to make high density housing that doesn't feel like that, but it's not as profitable so developers don't. That's why the vast majority of high-rise condos are one and two bedroom shoeboxes instead of spacious three (or more) bedroom homes. We won't get to that point until we either force developers to do it with regulations or good incentives, or if the government does it.
> packed in like sardines the way modern high-rise buildings do.
> but it's not as profitable so developers don't.
Developers can only build what is legal, and the size and allowed uses are dictated almost entirely by planners. And in places with discretionary approval, other power brokers like landowners and non-profits that turn out the vote for city council members get to make most of the decisions about what is built.
It's a fallacy to think that the only thing that could be built are homes for sardines.
Had lived only in single family houses up until I moved to an apartment in the middle of the city and wow, the quality of life bump was astounding. Being able to just walk to anything you need, not owning a car, having so many high end places to eat at and entertainment venues to visit, the huge security benefit of being above ground level, being at the centre of public transport so friends can visit easily.
So many benefits with so little downsides. I can’t ever imagine going back to a detached house.
Ok but the same floorspace my $500k apt has costs about $1M as a townhouse in the same area. If you want _more_ space then you are looking at $2M or more. Sure, I'd love a house in the city. I'll put it next to my boat and Ferrari.
You could just do a lot of 4-5 story buildings like in Paris. Building up too high has its downsides because it requires more space on the ground, plus a good percentage of space (30-40%) in a high-rise isn't actually usable living space.
Most places don't need high-rise condos everywhere when low-rise condos in a dense neighborhood orientation would work out great.
The US is blessed with plenty of space for single family homes. Sure you’ll pay out the nose for one in SF or other major cities, but it’s an option.
I’ve lived in dense cities where single family homes are out of reach for everyone but the top 0.1%. People get used to it, but condo living kinda sucks.
Elephant in the room for family sized units is competition from groups of single professionals. Until these people can get their own small homes, they’re going to squeeze together into whatever they can find.
In my country (with a birth rate approaching 1.00), we have allowed an excess of immigrants to make up for the difference. As a result, we have a deficit of an estimated 1.2 million homes. The price of housing ain't going anywhere, especially since most Western democracies seem to have lost total control of their economies, in terms of supply chains and inflation.
The housing market also needs more row houses. Those have fewer of the disadvantages of condos but unfortunately they're illegal to build in most (almost all?) parts of the US.
In Seattle there are a ton for town homes being built, split lot and connected, most without any hoa. When they need work I bet you’ll see a lot of neighbors suing neighbors to fix and replace shared elements. I would never move into shared living space that didn’t have some sort of hoa to manage any the shared space.
I'm not sure what you're describing but a traditional row house doesn't share any elements or living space. It's on a small rectangular lot facing the street and has its own walls that directly about the walls of houses on each side with no setback. Shared space like the street and sidewalk are owned by the city.
(Edit: there are also of course row house duplexes that would share a roof, front stairs, etc... But many are single family homes).
If you look closely when walking around a neighborhood of row houses you'll find that they don't actually share side walls. Each row house has its own exterior walls with siding / exterior finish that may end up directly adjacent to the next house's exterior wall. This is apparent in areas where one row house has been torn down or is larger than its neighbor. Of course sound and fire might travel through these more easily but they share no structural elements.
For an example of what I mean, take a look at SF's Outer Sunset district on street view.
Edit: it's possible that terminology and construction methods vary a bit between cities so all I can say is that you can certainly build a row of houses that share no structural elements.
I would call those townhouses, it's probably just a regional thing.
The row houses I'm thinking about are in Philadelphia, and I think most other east coast cities. Occasionally you'll see one with the neighboring house(es) demolished, and there are usually remaining bricks from the missing house on the now exterior wall.
Has anyone built a new rowhouse, like those in Philly, since the end of WWII? Serious question. I don't think they are allowed anywhere in the US anymore. Existing ones are grandfathered in.
> The housing market also needs more row houses. Those have fewer of the disadvantages of condos but unfortunately they're illegal to build in most (almost all?) parts of the US.
Row houses? You mean townhouses? That's the same thing as condos (shared structure, HOAs), with all the drawbacks.
Nothing illegal about them, tons and tons of those are being built in the bay area.
Let's say you have a 3% mortgage and the interest component on your loan is 20% lower than the rent you're paying on a similar property.
Sounds like a no brainer, until you consider the opportunity cost of carrying the repayment part. It's earning (really saving) you 3%/yr instead of the 5-10% you could earn long term in the stock market.
Sure if house prices rise just 1% a year, the equity you're building is nice, but that is not guaranteed going forward, especially when you're buying in to an area where median house prices could already be 10x median earnings.
Most people are bad at saving and investing, so housing acts like a forced savings account.
People won't be investing the difference between rent and their mortgage, they'll be using it for other expenses. Especially for anyone that's at the median or below, you're not making enough to actually save much, so the mechanism here is effective.
The most important thing is that a mortgaged house is a hedge against rent inflation, as it locks in a flat housing payment for the next 30 years. Then when you're paid off and you retire , you only have to worry about maintenance + property tax, which is cheaper than the mortgage ever was.
In Seattle there are a ton for town homes being built, split lot and connected, most without any hoa. When they need work I bet you’ll see a lot of neighbors suing neighbors to fix and replace shared elements. I would never move into shared living space that didn’t have some sort of hoa to manage any the shared space.
As someone with an interest in the Seattle market, I'm wondering if one should consider Mercer Island preferable to Seattle to rent or purchase a residence. Do you have any insight?
Very different places. Lived downtown for 15 years. Never been to Mercer island as it pretty much only residential and hard to access. Those can be good or bad depending on the person.
Lots of FUD in this thread, but I guess it depends on where one lives? My experience with things mentioned here:
My condo is noiseless. The codes in my country are strict on this. I got families with children all around me, only hear them when sitting on my balcony during summer. And codes in general makes sure that buying a modern condo is safe. Here it's 5 years where the builder has to fix stuff that's not as it should. (Just avoid buying from small shell companies, but that goes for houses as well)
Not having to care for anything but the inside is nice. Pay a small amount each month that takes care of everything. No crazy HOA stories, actually never heard of things like that here. Being 100 families in this block, actually gives us lots of power when it comes to negotiation, the fixed start-up costs for repairs etc are split over so many. My parents spend at least 10x the amount of money I do caring for their house, while I don't even have to think about it.
Price of condos here has increased much more than houses, as it's central and not possible to build that many more. Can't see why a condo inherently should appreciate less than a house? If there is demand there is demand.
> Can't see why a condo inherently should appreciate less than a house? If there is demand there is demand.
Probably depends on city maturity. In most North American cities, there is plenty of room for more condos. In your case, it is not possible to build more condos either.
There is some overhead in a condo. But the shared common stuff is much cheaper. Roofs and heating systems. He had a special asssement. $1500 for a new boiler (35 units) My friend in a house replaced theirs for thousands because it was old being and some of the pipes and everything needed replacing.. Plus its easier when the management company deals with it, but you pay a bit for that.
>Can't see why a condo inherently should appreciate less than a house?
People shop for monthly payment and not for the sticker price. On a condo the payment includes the HOA fee so for the same monthly payment you can get a more expensive house than a condo. As the property grows older and becomes more expensive to maintain, the HOA fees raise to reflect this and that reflects on the appreciation speed too.
I'm in the process of moving to Boston and it's utter insanity. Housing here is like something out of Kafka novel. Now I empathize with my friends who lived in SF pre-covid. Build, Build, Build!!
I do think it's important now more than ever with remote work to build more duplex / 3 bedroom condos. I'm 33 and I have no desire to move out to the burbs, but marrying and starting a family in a 2 bedroom condo isn't totally appealing to me.
> starting a family in a 2 bedroom condo isn't totally appealing to me.
I think the main issue is not the condo itself but where the condo is.
From my experience living in an apartment but with walkable area around me and several large parks within walking distance felt very much equivalent in life quality than now living in a house with a garden. If anything large park areas are usually a lot more interesting for kids than your garden.
I do think urban planning should incentivize "village" building. For x square meters of construction you must build y square meters of green spaces and z square meters of local commerce. Otherwise you just get Truman show suburbs.
Condos have all the downsides of apartments and home ownership combined. They're the trolley of homes. Where the trolley has the downsides of the train and the bus combined.
With a condo I pay to own it, but also pay a monthly HOA fee forever, and I can only do approved modifications, but I'm also responsible for anything that breaks.
If I own property I should be allowed to install a giant mailbox on a whim, or break a whole in the wall because I dreamt there was treasure in it.
If I have to pay monthly and follow someone else's rules, I shouldn't have to finance and organize maintenance on my own.
As for the trolley analogy, it gives up the capacity of the train, but can't drive around an accident like a bus.
> As for the trolley analogy, it gives up the capacity of the train, but can't drive around an accident like a bus.
A trolley(bus) is just a bus with overhead wires for electricity. It's more eco-friendly and cheaper than buses ( in the long term), and it requires drastically less infrastructure than trams or other forms of rail because there's no rails to build and maintain. Oh and it's close to silent.
Said in another way, it's useful in certain scenarios where you don't need the capacity of a tram or heavier method of transportation but still don't want to pollute/depend on fossil fuels. Battery-powered buses are starting to change that equation but i have no idea which one is more interesting ( in price vs flexibility ( the batteries need to be charged, and replaced after some time; overhead wires need little maintenance)).
It’s all the benefits of living in an a great area at a low cost without the negatives of renting. You don’t have some asshole coming in to inspect every x weeks and complaining that the stove is slightly blackened. Don’t have to worry about having to move if you don’t want to, can hang pictures / TVs, get to put your monthly payments in to an asset rather than someone else’s profit, etc.
Condos have wired risks like you can’t rent them out due to hoa so in in down markets you can’t move or are forced to liquidate. You can get assessed large amounts when stuff breaks and you can get hit with huge hoa dues if your neighbors aren’t paying.
The free market lets actors choose what's best for them at the expense of the group. For example the recreationally remote are bankrupting American towns, and using up far more land and resources than sensible. This also have an environmental impact, but that argument tends to fall on deaf ears among free market proponents.
While I acknowledge absolute free market may result in tragedy of the commons in many scenarios, you gave a pretty poor counterexample
American towns are going bankrupt because federal/state subsidies (e.g. the Highway Act) allowed them to make inefficient decisions like creating financially unsustainable suburbs instead of intensifying urban areas
The problem is that free market is deciding and it's deciding that returns on providing stores of wealth to the very, very, very rich are greatest and as such that crowds out investment in places to actually....live.
If you're looking for a wealth store fungibility is a net positive. McMansions and standardized condos are known quantities that can be valued accordingly.
The scarcity is driven by land being untaxed. There is very little cost any more to treating property as a bitcoin-like store of wealth. This is partly why there 1.5 million empty homes - 3x the number of homeless.
China has a similar problem which is why it has ghost cities - thats where the hoarding instinct channeled wealth.
Zoning laws are a red herring. They're the worst enemy of the property developer building yet more luxury condos to be shoved into a hedge fund's real estate portfolio but they dont address the underlying cause of not enough property.
We hear about it a lot because property developers have lots of money a significant financial incentive to drive public opinion, but that doesnt make it true.
Drive up either property taxes or institute a land value tax and the instinct to hoard property as a bitcoin like store of wealth will collapse, freeing up land for real people to live on.
Where? Source? If you were talking about the recent article about empty Canadian empty homes, it was already debunked since it includes cottages, student rentals, and unsold homes on the market.
It's also illogical an investor would leave empty homes unrented for prolonged period of time if rent could be collected.
> China has a similar problem which is why it has ghost cities - thats where the hoarding instinct channeled wealth.
Real estate in China is only reliable asset to invest in. The government also strongly encourages real estate as majority of public revenue comes from land transfer tax.
Nobody invests in the stockmarket unless they are high up in the CCP since they can literally destroy entire industries without oversight i.e. recent education/tech stocks losing their entire valuation overnight
> Zoning laws are a red herring. They're the worst enemy of the property developer building yet more luxury condos to be shoved into a hedge fund's real estate portfolio but they dont address the underlying cause of not enough property.
An investor trying to artificially pump up the price of an easily replaceable commodity will eventually will eventually run out of liquidity and everything will self correct. Thanks to zoning laws, the rate of new construction fails to meet demand. Even now, the demand for 1br condos are still unmet and why it's the only thing that gets built whenever developers win permits for dense non-SFH construction.
It's almost as if after you waste a lot of time and money fighting NIMBYs you'd want to build whatever provides the highest profit margins.
Without zoning laws, eventually the 1br demand will taper out and developers will need to build other unmet demands like 3br low rises to stay in business.
The article gets into some technical rules consequences that are fresh and interesting relative to the usual zoning and NIMBYism discussions. I think they would apply to markets where developer interest, rather than a planning commission, is the limiting factor.
- Condo projects are uniquely sensitive to credit availability for first time buyers. Shifting credit towards established buyers naturally shifts housing starts towards SFHs since that is what established buyers want. I would imagine this would also be at play in the disappearance of starter houses.
- Developer warranty encourages HOAs to become involved in litigation right as the building starts to be occupied. You can’t get a mortgage in a building with ongoing HOA litigation. Once the developer has sold enough units to generate a lawsuit but not enough units to cover his costs, he gets stuck in limbo squatting on inventory until the lawsuit settles. You could imagine ways of fulfilling both intents without such an unfortunate interaction.
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[ 190 ms ] story [ 3394 ms ] threadI dunno, while I'm in no real rush to paint them all with a broad brush, there's certainly some validity to the some of the ire towards HOAs that the HOAs themselves rightly earned. The one I'm under certainly has. They wont be missed.
Apparently no one cares enough so we ate the cost of re routing. Fuck HOA’s
Ofc, occasional loud situations, but that is no different from monsters that have parties outside their house.
You are at the mercy of the average members of your group and the average person let’s things decay until it falls down around them.
My grandparents had a condo once and because the people in the association didn't want to pay, they endlessly deferred maintenance until it was 40K a unit. All because they didn't want to fix leaky windows 10 years beforehand.
My home city is filled with examples of this kick it to the next year approach to maintenance.
Most people are that way. They view a bucket as a solution to water dripping in through the roof.
Having a private garden is great, not crossing people when getting home is great, not hearing people around you is great, not having to deal with the useless administration is great, not having to pay them fees is great.
The thing that bothers me the most about where I live is that even detached houses don't tend to have big plots (makes sense in a developer driven market: buy a ton of land and cram as many houses as you can in there), so you're still too close to other houses.
I understand it's a luxury but it's one I'm happy to put all my money in
If you can't coordinate with your neighbors directly, and resort to the courts, you're likely to end up in the same place when you can't coordinate with your neighbors as HOA. Although, sometimes, having established procedures can smooth things over.
Single family detached homes without an HOA may not scale (probably doesn't), as you say in another comment, but that doesn't mean we only think we don't like the options that would scale. I haven't lived in a condo, or in an HOA, because I have had choices and I'm not going to pick a choice I've got enough information to determine I'll dislike.
You've been duped by the loud anti-HOA crowd and their scary stories, then. For most people, living in a condo is hassle-free. It's cheaper to be many when doing repairs. And someone else coordinates everything so one doesn't have to think about maintenance.
Is that someone else going to move my stuff out of the way when the repairmen come to fix the ceiling under the leaky roof? Will that someone else actually let me know when they'll be swinging by? Will they use a quality repairperson or their cousin? Will it take them so long to get someone out to fix the roof, that more rooms need ceiling repair? How are we paying for this coordinator's time?
Oops, I wasn't supposed to think about this.
But yeah, no one can stop you from dreaming up weird scenarios in your head. Doesn't mean you have a point, though..
1) They don't appreciate like houses do (and depreciate faster than houses do).
2) A lot of "condos" are converted apartment buildings. This sucks because the construction is much worse (hardly any sound dampening, etc.).
Start incentivizing treating housing as, you know, a place to live rather than a financial instrument and you'll see plenty more condos.
This is fine. I don't buy a condo with the hope of recouping my money. I buy a condo to have a roof over my head. I couldn't care less if my condo loses 80% of its value. It would lower my property tax bill in fact. I don't expect a ROI > 0 for the furniture either.
For my retirement, I contribute to a 401k and a Roth IRA.
To illustrate my point, most German landlords fail to beat inflation. Some 20% are losing money.
The homeowners I know chose a slightly worse location, because they couldn't afford to buy in the places where they actually want to live. Since a mortgage is a 30 year affair, they bought more than they currently need. They end up paying more and getting less (for now). Inflation and rising rents will work in their favour eventually, but it's far enough in the future to make me question the move.
I meant to write about buying a home in Germany (I write about adulting in Germany), and the conclusions from my extensive research are the following:
- Buying a home is not a financial decision, it's a lifestyle decision
- Everyone who writes about buying a home has a financial incentive to recommend buying a home
- Home ownership is also throwing a lot of money away: closing fees, taxes, interests, maintenance, opportunity cost...
However, in terms of building equity (not to become a small-time landlord), buying an apartment is a safe bet - the housing market has been in a bull market for a long time, and the last few years have been especially good. I suspect we're closer to a long-term top than many think, but that's another matter. Even if the market crashes, your house remains yours and keeps providing shelter. On top of that, selling is tax-advantaged whereas stocks aren't.
If the market crashes, your house will not remain yours if you can't afford making payments. If things go south, I see unavoidable payments and illiquid assets as a liability, not an asset.
Selling is indeed tax-advantaged after a few years though. That's a good point.
The main pro for me is that it's a hedge against rent prices and inflation. However that's assuming that housing prices are reasonable, and that there are no better investments.
It doesn't matter how much overhead it has in a vacuum. What matters is how much goes to overhead when compared to renting, which is the only other choice (other than being homeless).
depending on your local housing market, it could be much more risky. where i live, for the last few years renting has carried the real possibility of being unable to find a place to live, for any amount of money, when your lease ends.
the big upside to a condo is that nobody is going to kick you out.
If something major fails with the building, a repair bill could be so large that you have to take out another mortgage to pay for it, no matter your current financial situation.
Plenty of significant problems with condos that can force you to be kicked out.
Most of all, incentives are misaligned. Condos are designed to be marketed and sold. I’ve lived in several high end condos, as well as high end apartment buildings, and the apartment buildings always were built better and didn’t have weird custom made shit breaking.
If you own and can afford your fixed-rate mortgage, you are much less likely to be in this situation, or worse, homeless.
In France there's a maximum amount you can increase a tenant's rent with, defined yearly based on market prices. Combined with one of the most popular investment vehicles, which is a buy new ( thus incentivising construction) to rent (at defined affordable prices) programme which gets you tax breaks for 10 years, and after that most people usually sell. Alongside that cities are mandated by law to have a certain percentage of "social"(affordable) housing available, so when private construction adds housing stock, cities have to add on top of it. That helps keep renting affordable while also making sure new construction appears.
The US has almost no tenant protections except for a few urban areas that passed municipal laws. I would prefer to rent if it provided almost as much protection as homeowning, and if it weren't so financially disincentivized in the US.
IMHO we need to eliminate the capital gains exemptions for homes, and also add on local capital gains taxes in addition to federal, to disincentivize real estate speculation.
Renting is far more risky. You never know when and how much it will increase every year.
If you buy something (condo, or house) you now know what your "rent" will be for the next 30 years, it's never going up.
So, there are real differences aside from the lack of a yard.
Also banning children is illegal in the U.S. unless you have a 55 or older community.
I don't know why you wouldn't desire rules about noise if your home is attached to another home where loud neighbors would bother you.
But at any rate that concern has nothing to do with condominiums, your HOA in a planned development with detached housing can also serve you noise complaints.
The quality of construction has nothing to do with whether the project is a condo. Unless you think single- family detached homes can't have bad construction.
The level and type of noise that reaches nuisance levels is highly subjective, which leads to conflict between neighbors. You also have no control over your neighbors, so you might be able to practice your guitar for a decade and then suddenly your neighbors move and the new ones don't appreciate the sound as much.
It's the same issue all of these types of organizations have; HOAs suffer from the same problems. The rules tend to be defined by those most sensitive to them, who are generally those the most willing to waste a bunch of their own time screwing around with the HOA/condo association.
I personally refuse to own a condo or HOA home. It's worth it to me to exchange the equity for renting and being able to get out easily if I want to. I also find "ownership" to be a bit of a misnomer for either type of housing, since the rules can be arbitrarily changed and they can place a lien on your home. You live there at the grace of the HOA/condo community.
I get the reasons why those processes exist, especially for condos, but it's just not for me. I grew up in a rural area, so my idea of ownership is probably tainted by space being a non-factor and enforcement of any kind of laws, much less non-governmental ones, being sparse.
I'm hanging on to hope that remote work will become a major factor in the job market so that I can move back to the country without having to resort to the rural IT job market.
It depends on where the condo is. My condo in Boston has increased in value 2.5 times in the 20 years I've owned it. My friend's home in a wealthy suburb of Boston increased by 40% in almost the same amount of time. That's taking into account the last two years of the pandemic where we saw housing price increases slow or stop in the city while suburban prices rose much more quickly. Before that, the difference in appreciation was even greater.
My parents condo in Manhattan, which they bought 45 years ago, has probably appreciated close to two orders of magnitude.
I think overseas buyers, who like the fact that an association takes care of the repairs and services like these type of properties. Even those that moved and rented have ended up selling to those that have never seen the property except in photos. Our building has no rules about %owners living in the building so its gone from about 80% 20 years ago to 30%.
https://i0.wp.com/arizonarealestatenotebook.com/wp-content/u...
This graph only goes up to 2019, so it is probably higher now, but that is one heck of a drop.
Also, it isn't strange that a lower cost market appreciates faster than a higher price one. If say houses were $100k in Phoenix after the crash in 2008, now they are $400k, that is 4X! At the same time, a $1 million dollar house in Boston after the crash is only $1.4 or 1.5 million now, only 1.5X.
The flipside is that a lot of people spend a big chunk of their lifetime earnings on rent with no return simply because the barrier of entry to home ownership is so high.
I agree that housing shouldn’t be an investment first or by default and I agree that condos would be an excellent vehicle to bring more into home ownership by lowering the cost of entry.
This happens in Japan, but happens mainly as a result of:
a. No one sees real estate as a sure shot after the excess of the 80s.
b. Declining population means even Tokyo has a lot of extra housing.
c. It is easy to rebuild housing, so people rarely buy "used" homes, leaving on the land as a real estate vehicle for appreciation (the structure is overhead). Condos are almost worthless speculative assets in that sense.
Developers will often skimp on construction quality as a result, since they know that nobody will actually be living in them.
Thats just a link to a page on ghost cities.
Don’t count new housing growth in Tokyo if you aren’t counting housing destruction as well, otherwise the numbers aren’t comparable to other cities (where new housing usually means “new” housing, not just rebuilt housing).
That sounds ominous. Are there good comparisons of how excessive the real estate market is in the US today vs. Japan during the 80s?
https://www.scmp.com/magazines/style/news-trends/article/309...
But. From when I lived there, my general observation was that in exchange for keeping the cost of the house fixed, rising property values is dealt with by making property lots smaller. Where 1 house stood now stands 2.
I would like to add
D. apartments are plentiful and cheap. I paid ~300USD a month for a small apartment in an outer suburb of a mediumish city. I was making ~2500USD a month.
While it would be nice if more people could get a first foothold in real estate ownership & wealth-building by buying a share of a condo building, they just aren't quite there yet on the wealth curve.
It all does come down to strong regulation, but instead of strong regulation to limit building, we should have strong regulation to prohibit hoarding and underuse of land.
You realize that just makes them even more expensive?
While the "American Dream" is to own a home with a backyard, it is logically easier if everyone lived in highrise condos and apartments in urban areas.
Homes would be cheaper, since you could scale up and not just out (e.g. avoid urban sprawl). Not to mention lower gas costs and we don't need to cut down as many trees to build homes.
My mom owns a home (which I rent the downstairs, it's cheaper for me), and it has a big backyard. That in expensive Seattle. Combine that with tens of thousands of homes (if not hundreds) and you have a lot of wasted land.
A lot of the housing problem isn't Amazon or Big Tech, its single-family zoning. Today's cities need high rise buildings to accommodate everyone.
It's possible to make high density housing that doesn't feel like that, but it's not as profitable so developers don't. That's why the vast majority of high-rise condos are one and two bedroom shoeboxes instead of spacious three (or more) bedroom homes. We won't get to that point until we either force developers to do it with regulations or good incentives, or if the government does it.
> but it's not as profitable so developers don't.
Developers can only build what is legal, and the size and allowed uses are dictated almost entirely by planners. And in places with discretionary approval, other power brokers like landowners and non-profits that turn out the vote for city council members get to make most of the decisions about what is built.
It's a fallacy to think that the only thing that could be built are homes for sardines.
So many benefits with so little downsides. I can’t ever imagine going back to a detached house.
Most places don't need high-rise condos everywhere when low-rise condos in a dense neighborhood orientation would work out great.
The US is blessed with plenty of space for single family homes. Sure you’ll pay out the nose for one in SF or other major cities, but it’s an option.
I’ve lived in dense cities where single family homes are out of reach for everyone but the top 0.1%. People get used to it, but condo living kinda sucks.
Presumably, if there was less exclusive single-family-home zoning, there’d be more incentive for family-suitable condos to be built.
https://www.google.com/maps/@38.0148717,-122.2775613,3a,75y,...
(Edit: there are also of course row house duplexes that would share a roof, front stairs, etc... But many are single family homes).
For an example of what I mean, take a look at SF's Outer Sunset district on street view.
Edit: it's possible that terminology and construction methods vary a bit between cities so all I can say is that you can certainly build a row of houses that share no structural elements.
The row houses I'm thinking about are in Philadelphia, and I think most other east coast cities. Occasionally you'll see one with the neighboring house(es) demolished, and there are usually remaining bricks from the missing house on the now exterior wall.
But SF has its own classification of “fully detached” which specifies a minimum space between homes.
https://thefrontsteps.com/2021/11/08/detached-home-san-franc...
Rowhouses typically share walls.
Row houses? You mean townhouses? That's the same thing as condos (shared structure, HOAs), with all the drawbacks.
Nothing illegal about them, tons and tons of those are being built in the bay area.
Once you have an HOA you don’t own your home in the way you would otherwise.
At that point I would start doing the math carefully about buying versus rent + investing.
Renting has the huge luxury of being able to leave with minimal hassle, and not deal with any maintenance.
Let's say you have a 3% mortgage and the interest component on your loan is 20% lower than the rent you're paying on a similar property.
Sounds like a no brainer, until you consider the opportunity cost of carrying the repayment part. It's earning (really saving) you 3%/yr instead of the 5-10% you could earn long term in the stock market.
Sure if house prices rise just 1% a year, the equity you're building is nice, but that is not guaranteed going forward, especially when you're buying in to an area where median house prices could already be 10x median earnings.
People won't be investing the difference between rent and their mortgage, they'll be using it for other expenses. Especially for anyone that's at the median or below, you're not making enough to actually save much, so the mechanism here is effective.
The most important thing is that a mortgaged house is a hedge against rent inflation, as it locks in a flat housing payment for the next 30 years. Then when you're paid off and you retire , you only have to worry about maintenance + property tax, which is cheaper than the mortgage ever was.
My condo is noiseless. The codes in my country are strict on this. I got families with children all around me, only hear them when sitting on my balcony during summer. And codes in general makes sure that buying a modern condo is safe. Here it's 5 years where the builder has to fix stuff that's not as it should. (Just avoid buying from small shell companies, but that goes for houses as well)
Not having to care for anything but the inside is nice. Pay a small amount each month that takes care of everything. No crazy HOA stories, actually never heard of things like that here. Being 100 families in this block, actually gives us lots of power when it comes to negotiation, the fixed start-up costs for repairs etc are split over so many. My parents spend at least 10x the amount of money I do caring for their house, while I don't even have to think about it.
Price of condos here has increased much more than houses, as it's central and not possible to build that many more. Can't see why a condo inherently should appreciate less than a house? If there is demand there is demand.
Probably depends on city maturity. In most North American cities, there is plenty of room for more condos. In your case, it is not possible to build more condos either.
People shop for monthly payment and not for the sticker price. On a condo the payment includes the HOA fee so for the same monthly payment you can get a more expensive house than a condo. As the property grows older and becomes more expensive to maintain, the HOA fees raise to reflect this and that reflects on the appreciation speed too.
I do think it's important now more than ever with remote work to build more duplex / 3 bedroom condos. I'm 33 and I have no desire to move out to the burbs, but marrying and starting a family in a 2 bedroom condo isn't totally appealing to me.
I think the main issue is not the condo itself but where the condo is.
From my experience living in an apartment but with walkable area around me and several large parks within walking distance felt very much equivalent in life quality than now living in a house with a garden. If anything large park areas are usually a lot more interesting for kids than your garden.
I do think urban planning should incentivize "village" building. For x square meters of construction you must build y square meters of green spaces and z square meters of local commerce. Otherwise you just get Truman show suburbs.
With a condo I pay to own it, but also pay a monthly HOA fee forever, and I can only do approved modifications, but I'm also responsible for anything that breaks.
If I own property I should be allowed to install a giant mailbox on a whim, or break a whole in the wall because I dreamt there was treasure in it.
If I have to pay monthly and follow someone else's rules, I shouldn't have to finance and organize maintenance on my own.
As for the trolley analogy, it gives up the capacity of the train, but can't drive around an accident like a bus.
A trolley(bus) is just a bus with overhead wires for electricity. It's more eco-friendly and cheaper than buses ( in the long term), and it requires drastically less infrastructure than trams or other forms of rail because there's no rails to build and maintain. Oh and it's close to silent.
Said in another way, it's useful in certain scenarios where you don't need the capacity of a tram or heavier method of transportation but still don't want to pollute/depend on fossil fuels. Battery-powered buses are starting to change that equation but i have no idea which one is more interesting ( in price vs flexibility ( the batteries need to be charged, and replaced after some time; overhead wires need little maintenance)).
Not everyone wants to chose between a 2000sqft McMansion or a 500sqft shoebox in the sky
American towns are going bankrupt because federal/state subsidies (e.g. the Highway Act) allowed them to make inefficient decisions like creating financially unsustainable suburbs instead of intensifying urban areas
If you're looking for a wealth store fungibility is a net positive. McMansions and standardized condos are known quantities that can be valued accordingly.
Make it legal to build more supply then speculation will move onto other assets
China has a similar problem which is why it has ghost cities - thats where the hoarding instinct channeled wealth.
Zoning laws are a red herring. They're the worst enemy of the property developer building yet more luxury condos to be shoved into a hedge fund's real estate portfolio but they dont address the underlying cause of not enough property.
We hear about it a lot because property developers have lots of money a significant financial incentive to drive public opinion, but that doesnt make it true.
Drive up either property taxes or institute a land value tax and the instinct to hoard property as a bitcoin like store of wealth will collapse, freeing up land for real people to live on.
Where? Source? If you were talking about the recent article about empty Canadian empty homes, it was already debunked since it includes cottages, student rentals, and unsold homes on the market.
It's also illogical an investor would leave empty homes unrented for prolonged period of time if rent could be collected.
> China has a similar problem which is why it has ghost cities - thats where the hoarding instinct channeled wealth.
Real estate in China is only reliable asset to invest in. The government also strongly encourages real estate as majority of public revenue comes from land transfer tax.
Nobody invests in the stockmarket unless they are high up in the CCP since they can literally destroy entire industries without oversight i.e. recent education/tech stocks losing their entire valuation overnight
> Zoning laws are a red herring. They're the worst enemy of the property developer building yet more luxury condos to be shoved into a hedge fund's real estate portfolio but they dont address the underlying cause of not enough property.
An investor trying to artificially pump up the price of an easily replaceable commodity will eventually will eventually run out of liquidity and everything will self correct. Thanks to zoning laws, the rate of new construction fails to meet demand. Even now, the demand for 1br condos are still unmet and why it's the only thing that gets built whenever developers win permits for dense non-SFH construction.
It's almost as if after you waste a lot of time and money fighting NIMBYs you'd want to build whatever provides the highest profit margins.
Without zoning laws, eventually the 1br demand will taper out and developers will need to build other unmet demands like 3br low rises to stay in business.
- Condo projects are uniquely sensitive to credit availability for first time buyers. Shifting credit towards established buyers naturally shifts housing starts towards SFHs since that is what established buyers want. I would imagine this would also be at play in the disappearance of starter houses.
- Developer warranty encourages HOAs to become involved in litigation right as the building starts to be occupied. You can’t get a mortgage in a building with ongoing HOA litigation. Once the developer has sold enough units to generate a lawsuit but not enough units to cover his costs, he gets stuck in limbo squatting on inventory until the lawsuit settles. You could imagine ways of fulfilling both intents without such an unfortunate interaction.