US Politics, April 2024: "Are You Better Off Today Than You Were <Checks Notes> Four Years Ago?"

I'd usually support clowning on these headlines, but I do think the economy is heading in a direction that will be a problem for Biden. Inflation is remaining stubbornly high, interest rates are too high, stocks recently peaked but are showing signs of shakiness. It might all improve but it might not.

rents have gone completely nuts for people. if they can even find a place to live that is decent since everyone wants to turn their rental into an air B&B. so high everywhere. and that's huge. as far as how people feel about the economy.

agreed

Yep, and mortgages are also impossible because rates are too high, you're basically gambling on the opportunity to refinance at some unknown point in the future.

I guess I don't understand that part, when we bought our house in 2001 it was 9%! now it's what, 5?

Also gas prices. My colleagues at work have been complaining about them lately so there’s a data point for you.

People paid double digit mortgage interest rates in the

Oh fudge..

I meant to conclude with: in the early 1980s. I’d be curious for a comparison between housing costs then and now, adjusted for inflation.

Avg rate for 30 year is around 7%, which is the highest it's been in over 20 years.

Sounds right, our first house (bought in 2003) I think had a 6% 15-year ARM. Mortgage rates have been practically nonexistent for a while now, or at least sub 3%. I think a lot of people got used to cheap money.

My parents bought my childhood home in 1980 with like a 16% mortgage rate, or something like that. Crazy.

yeah I think the problem is more about lagging wages than higher rates

mortgage rate is 7% right now for a 30 year mortgage.

oh didn't see moodles post

i think we pay...4% for our house? something like that. we bought it 12 years ago. 13 years ago. something like that.

same, except it was a refi, probably the same time period

The base problem isn't mortgage rates, but housing costs overall. Houses are too expensive, largely because near-zero interest rates have fueled the hoarding of houses as investments by the wealthy. The entire housing market has been badly warped by the refusal of Congress to supply sufficient spending stimulus after the financial crisis in 2008-09, leading the Fed to compensate via a give-away monetary policy of 'quantitative easing' combined with a zero interest rate.

The reason mortgage rates are a bigger political problem for Biden than the high cost of the house itself is mainly psychological. If you buy a house for $500,000 (that sold for $250,000 just a few years ago), the sales price feels like it equates to its intrinsic value, so you think you're getting $500,000 worth of house for your money. Paying a higher mortgage rate feel like money thrown into a bonfire.

there are very few rentals at any given time where i am and when there is they are 1500/2000 a month for 1br/2br and the pleasure of living in someone's converted attic or hundred year old duplex apartment. its too much. people don't make enough here. i would be so stressed if i had to find an apartment now where i live.

yeah same here, we are one of the worst rental markets in the country for our size

A realtor friend of ours broke some of it down like this:

-house prices got super high because those low interest rates allowed people to get more house for their money
-house prices remain super high in a lot of places because inventory is pretty low, which increases demand, despite the higher rates
-demand is being further inflated by millennials now settling down, starting families and buying homes, while at the same time boomers and retirees (because of those high prices) are sitting on their homes rather than downsizing (and freeing up inventory) because the value keeps going up (and yet, for the same reason, often not investing in upgrades, because the value of their properties is not linked to their condition)
-those relatively new to the job and housing market (Gen Z) face low inventory and high rates, making home ownership pretty unobtainable

I think those are some of the points she made.

I'd say that's an accurate description of our badly warped housing market.

hello from Miami!

-demand is being further inflated by millennials now settling down, starting families and buying homes, while at the same time boomers and retirees (because of those high prices) are sitting on their homes rather than downsizing (and freeing up inventory) because the value keeps going up (and yet, for the same reason, often not investing in upgrades, because the value of their properties is not linked to their condition)

Also because if you can't retire and move to Florida, there's no downgrading path to free up those houses. If you've still got to work there's nothing to buy in the same area if you sell your unnecessarily large raising a family house even if you want to get out from under the upkeep/property taxes.

Monthly rent in my area, even for older slightly tired apartment complexes, for the same type of dwelling unit with the same amenities, is frequently more than the mortgage my wife and I are paying for our condominium.

xxp my in-laws are doing exactly that. They have their second house just sitting on the market and are in no rush to sell until they get the amount they think it’s worth. It is completely impractical for them at their current health but they’re dead set at the moment.

Monthly rent in my area, even for older slightly tired apartment complexes, for the same type of dwelling unit with the same amenities, is frequently more than the mortgage my wife and I are paying for our condominium.

The average rent in Miami is about 150% higher than my mortgage

yeah, speaking of Florida, older people here in the east are not selling their house and getting that sweet condo in Boca. they can't afford to! so they sit in their big pile that is starting to fall apart and they don't fix it up because...they old? why bother? in the not that long ago past those people either moved down south, moved to a smaller place or condo, or died. now they live forever? which is nice. but there is nothing for people younger to buy. i mean, they own these houses. they can live in them forever. but there used to be some natural turnover in housing.

is that harsh? nothing against the olds. its not their fault. i'm sure they would rather be hanging at the beach playing pinochle.

i can't believe the prices here now. double. more than double. houses were so cheap. its nuts. its not exactly the lap of luxury here. it is for a certain kind of person though. someone who likes mud. and kombucha.

Houses are too expensive, largely because near-zero interest rates have fueled the hoarding of houses as investments by the wealthy.

This is a huge problem in Atlanta. These investment funds are pricing lower-income buyers out of the market. And, of course, rents are going up.

I looked up my house on Zillow and they have it estimated at nearly double what we bought it for. And even back then it was way too expensive for a house of its size.

My friend lost the midcentury bungalow she'd been renting for 15 years because a guy who was into commercial real estate came along and made cash offers to every house on her street - 2/3 sold out to him including her landlord. He slapped some paint on the houses, spruced up the yards and doubled rent.

is that harsh? nothing against the olds. its not their fault. i'm sure they would rather be hanging at the beach playing pinochle.

― scott seward, Saturday, April 13, 2024 4:44 PM (one hour ago) bookmarkflaglink

boomers pretty much ransacked the country so you're not off the mark.

Here in Australia a series of boomer governments have devised and then protected a thing called "negative gearing" where if someone buys an investment property, all of the interest payments can be deducted from their taxable income. It is now a normal middle class thing for that generation to own 2 or 3 properties since it's so cheap to do that. I can't imagine why the Aus housing market is overinflated and undersupplied, and people under 40 have no chance of owning.
Also - after that generation aged past 55 which used to be the earliest age where you can access your retirement fund, they then jacked it up to 65 so that my generation stays in the workforce to pay boomer pensions and healthcare costs.

I think mortgage interest is tax deductible in the US too. Can't say for sure; I would never want to own a house.

it is!

It’s deductible to a point (along with property tax), the max amount was significant reduced several years ago and it sucks

Pretty sure here in the US you cannot deduct the interest payments on the mortgage for an investment property, unlike what seems to be the deal in Australia.

If you have enough money to own investment property, you're guaranteed to be running some kind of tax avoidance scam, or having your accountant run one on your behalf, so it all washes out.

the amt of shit locked down by investment properties and second+ homes is an atrocity

I'd think the amount of very rich buying houses both direct and via funds for rentals is a huge part of the housing crunch in the US. You also have the whole culture of house flipping that has run rampant for the dream to be more wealthy for a couple of decades. This in many markets with the VRBO and AirBNB taking lots of properties out of the pool for people who need to live somewhere adding to the problem. Another one that I think is rampant here is that the very rich own up huge partials of 'farm land' which don't really have to actually do that much rich farming and yet get a huge discount on their property tax bill.

The ultra rich that own all these gargantuan horse farms and bourbon businesses have to be laughing their asses off at the peons while they pay pennies on the dollar for their land in KY. No wonder the schools and services are shit across this state. I am sure this type of rich scum legal tax dodging is probably rampant everywhere in the US, even more so the redder the state.

Pretty sure here in the US you cannot deduct the interest payments on the mortgage for an investment property, unlike what seems to be the deal in Australia.

Yeah. The Aus difference is that if the property makes a loss, the loss comes off the individual’s taxable income - so you can borrow a massive proportion of the property cost more easily, so the market gets inflated.

You can deduct rental losses here too but not directly from other income. You have to carry it over and deduct it against future profits from the same property IIUC.

If you have enough money to own investment property, you're guaranteed to be running some kind of tax avoidance scam, or having your accountant run one on your behalf, so it all washes out.

Lol, or you just live in the Midwest.

Xp: Trump limited the SALT (state and local tax) deduction and mortgage interest deduction, which was a big impact in many higher tax blue states where even a middle income person can easily go over the new limit, especially if they own a home and pay property tax. The SALT limit is only $10,000 and property taxes alone can be higher than that even on a very modest house, not to mention any state or local income tax you might pay. Trump also lowered the mortgage interest deduction cap from $1m in debt to $750k in debt, which is still relatively high even in blue states. Families buying homes that are $800k plus in price are still usually pretty well off, even if not automatically the 1%. The SALT deduction is the bigger problem.

This interview with the author of the new book Coming Out Republican: A History of the Gay Right may be of interest to some.

Thanks. A helluva read.

Totally unrelated, for those wondering where some politic poll numbers come from these days, check out this insanity (which imo affirms their uselessness):

https://cdn.bsky.app/img/feed_fullsize/plain/did:plc:iwjcgn5pt2krm2lmav2mdcyz/bafkreihsnod7tgv2sdpf5egtvbomyqd5jh7nbhadqdiqf2cvcv6h2zbd4u@jpeg

Yeah, I've pointed out the absurdity of that poll on Twitter. If you're getting a 1% response rate, just give up already.

About 28% of all U.S. homes with three or more bedrooms are owned by people between the ages of 60 and 78 living by themselves or with another adult, according to a Redfin analysis of 2022 census data. Millennials living with children own just 14% of these bigger homes. A recent Fannie Mae survey found that most Americans 60 and older don’t intend to ever move.

https://www.wsj.com/economy/housing/baby-boomers-big-homes-real-estate-inventory-3a047cb6