Housing Prices Are Booming in U.S. Cities

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FangKC
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Housing Prices Are Booming in U.S. Cities

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Housing Prices Are Booming in U.S. Cities — Just Not San Francisco or New York
Maybe you’ve heard: The pandemic is killing cities, fueling a rush to spacious houses in the suburbs. But beyond pricey New York and San Francisco, real estate demand is booming in downtowns across America.

From Pittsburgh to Detroit and Phoenix, condos and townhouses within stumbling distance of bars and restaurants are hot. Like the families now upgrading to bigger suburban homes, young white-collar workers are taking advantage of record-low mortgage rates and flexible remote-work policies to move to desirable cities with relative affordability.

Home prices in urban U.S. markets rose 15% in the three months through late January, slightly ahead of the annual pace in suburbia, according to data from brokerage Redfin, based on geographic designations developed by the Census Bureau. It’s a shift from early in the pandemic, when prices were lagging behind outer areas or even falling, a sign that Covid-19 vaccines are helping to fuel demand as nightlife makes its return.
...
https://www.bloomberg.com/news/articles ... -francisco
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Re: Housing Prices Are Booming in U.S. Cities

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Ranked: 30 cities where real estate investor activity was big in Q3
...
Investors made up 18.2% of all housing sales in Q3, also a record, Redfin found.

The data excludes some notable metro areas, including Dallas and Austin, Texas. Redfin typically analyzes home sales in the 50 most populous metro areas, but only included 40 metros in the Q3 report because of nondisclosure of sales prices in some counties.
...
Top 30 other markets.

Anaheim, CA
Atlanta, GA
Baltimore, MD
Charlotte, NC
Chicago, IL
Cincinnati, OH
Cleveland, OH
Columbus, OH
Denver, CO
Detroit, MI
Fort Lauderdale, FL
Jacksonville, FL
Las Vegas, NV
Los Angeles, CA
Miami, FL
Milwaukee, WI
Minneapolis, MN
Montgomery County, PA
Nashville, TN
Nassau County, NY
New Brunswick, NJ
New York, NY
Newark, NJ
Oakland, CA
Orlando, FL
Philadelphia, PA
Phoenix, AZ
Portland, OR
Providence, RI
Riverside, CA
Sacramento, CA
San Diego, CA
San Francisco, CA
San Jose, CA
Seattle, WA
Tampa, FL
Virginia Beach, VA
Warren, MI
Washington, DC
West Palm Beach, FL

https://www.bizjournals.com/kansascity ... 021-11-22
Investors made up 18.2% of all housing sales
...Many of the top metros have seen investor activity more than double in their respective housing market in the past year.
...
...On the whole, investors are paying more for homes, too. Despite homes in hot housing markets receiving dozens of bids over asking price, investors are frequently able to offer the most, and all cash with no contingencies.
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Phoenix, Atlanta, and Charlotte in the last quarter saw more than 30 percent of home purchases were from investors.

This is not good for affordability for people wanting to own their own homes -- or rent. So much of the market that is simply investment and speculation for rental housing drives up prices for everyone -- homeowners and renters alike. You have capital markets (who have cash to burn) competing with people who have to finance their houses and save large sums for down payments.

All the while, rents are skyrocketing in many markets, as is homelessness which some is because of skyrocketing rents outpacing tenant incomes.
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Re: Housing Prices Are Booming in U.S. Cities

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^Agree it's a serious problem for those looking to buy a home, especially first time home buyers who can't 'get an in'. For renters the impact is a mixed bag depending on market. When demand is higher than new supply can keep up with, of course rent goes up no matter what. When investors buy homes and shift to rental, it actually adds more rental supply and they tend to be upgraded. But some can also outsource to terrible landlords not good for the neighborhood.

An outcome of this is a new CRE trend brewing in the mobile home space as a reborn form of affordable single family housing. This isn't an urban friendly format but many parts of country are heading there. The hip tiny home movement sort of feeds into this and reduces past stigmas.
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Re: Housing Prices Are Booming in U.S. Cities

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Homes being built specifically for rental have also picked up, called SFR (single-family rental) industry. This report shows where KC fits in.

(Can supply a junk email to read)
https://www.yardimatrix.com/publication ... 96A8FD9BC8
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Re: Housing Prices Are Booming in U.S. Cities

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I think the cash capital markets are contributing to housing inflation because there are many parties who have so much cash on hand and are buying real estate to have a place to put it. Some of what I've read in the past is much of this is a result of the Trump tax cuts that benefitted mostly the top 5 percent of Americans -- the already really wealthy. All those tax savings produced huge sums of cash that needed to be invested in something. Many already had huge investments in the stock and bond markets and needed somewhere else to park money. I'm sure a lot of the real estate is being bundled and sold as investment products on Wall Street.

The concern I have is that these parties are only driving up the price of housing for people who actually need it to live in -- not as an investment. The other concern is that it might be creating a huge, permanent underclass of Americans who can only rent -- maybe all of their lives.
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Re: Housing Prices Are Booming in U.S. Cities

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^It's a valid concern. In the longer term as Boomers die off along with M's not as interested in breeding as much, we may end up with a surplus in housing, especially SFH in markets past their prime - unless immigration flood gates open. But the short term is a big problem so maybe some short term intervention makes sense.
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Re: Housing Prices Are Booming in U.S. Cities

Post by TheBigChuckbowski »

I'm not saying that hedge fund investors aren't a problem and won't potentially cause run-ups in the housing market in the future, it's just silly to try to blame the rise in housing prices on it now. Especially when the trends that caused housing prices to rise are so plainly obvious. Low for sale supply when the pandemic started combined with low interest rates that are still low and high construction costs that were already high pre-pandemic that got gasoline poured on due to supply chain issues. Of course that led to higher prices, how could it not? The investment coming in is a reaction to those conditions, not a cause of those conditions.

Same with rents, rents stagnated and dropped at the beginning of the pandemic and now they're rebounding to where they otherwise would've been. That looks dramatic in the short-term but zoom out and it's just a recovery.

The problem is the same now as it's been for the last decade+. Low supply. Low supply. Low supply. Why wouldn't investors come in and scoop up a low supply high demand asset when governments are not only not fixing the problem but often exacerbating it?
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Re: Housing Prices Are Booming in U.S. Cities

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Homeowner and Rental Vacancy Rates Declined During COVID-19 Pandemic
Housing vacancy rates — both for homeowner and rental housing — are at or near historic lows, according to the U.S. Census Bureau’s recently released Housing Vacancy Survey (HVS).

Vacancy rates for rental housing are lower than at any point during the 35-year period from 1985 until the start of the COVID-19 pandemic in early 2020. The vacancy rate for homeowner housing is lower than at any point from 1980 until early 2020.
...
https://www.census.gov/library/stories/ ... -lows.html
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Re: Housing Prices Are Booming in U.S. Cities

Post by herrfrank »

Another important "megatrend" is that the postwar housing boom -- the vast construction tracts from 1948 until the oil crash of 1974 -- those units are nearing their end-of-life. They were built cheaply, not like the more solid homes of the prewar period. The streetcar suburbs (Brookside, Plaza, northeast JoCo) will do fine as people there invest heavily in their homes, either maintenance or tear-down/ rebuild.

I suspect some suburbs, like Shawnee, central Overland Park, parts of Wyandotte, parts of the northland, some near-east suburbs too -- will actually see housing supply shrink. Even though the country has a demographic problem (both with family size and with natural repopulation), I don't see the housing supply situation improving. Especially not in the resort areas where people increasingly want to live.
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Re: Housing Prices Are Booming in U.S. Cities

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https://www.whitehouse.gov/briefing-ro ... ing-costs/

New from the White House today, a package of administration initiatives to increase housing supply.

HUD is going to update its codes to make it easier to build site manufactured homes. Also, rewarding places that change their zoning laws to promote density and transit oriented development
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