Why Are Single Family Housing Starts so Sluggish?

[ncbill]

You can keep your SFRs.

After being the oldest kid stuck with doing all the outside maintenance on the above I've been very happy living in a townhouse for the last 20+ years.

Most residents here are older couples who buy after the kids move out of their large SFR.

I see higher density, multi-family builds as the future of housing, especially given the relatively high price historically that SFRs have risen to over the last couple of decades.

 

[indiajust]

I can think of lots of reasons:


Employment instability. If I am going leveraged long on RE with a 30 year note, I need to be confident I can make those payments. STEM jobs don't provide the stability to make that promise. Nor do many other professions.

Taxes: Most of New England has cruel property taxes. You don't really own the property, you rent it from the government.
Regulations: The only reason prices climb is that supply is constrained by zoning. Zoning and fees artificially restrict the supply and prop up prices. We enrich existing homeowners by starving the next generation. It costs over $200k in fees to build air in SF. Eat the children.
Demographics: As the baby boom becomes the death boom, all that housing inventory is put on the market. Not necessarily in the right places for new growth.
Debt: We buried a generation in largely useless overpriced and subsidized government loans. They got an education all right. Good and hard. Eat the children.
Lifestyle: A mobile and migrant lifestyle does not favor RE.
Risk: RE ownership is not a stable asset class. You might build wealth, or you might get wiped out entirely. Roll the dice and find out.

Recent History: Once bitten, twice shy. We are only 10 years from the wrecking ball that US RE threw into the global markets.

Investing Returns: Personal real estate is a lifestyle decision. Not an investment. I have money in REIT's and MLP's, which I use to rent.
Corruption: All the student loan debt and most of the RE mortgage debt is rolled up into FedGov. Total government ownership is capitalism? What does communism look like? Feels like the ruling class in DC is monetizing the rest of the country.
Personal chaos: I lost 2 relationships and a career to RE. No other asset class can wreck your life like RE. You don't live in a portfolio.


One size does not fit all. My dream is FI, the RE is retire early, not real estate.

 

[ShokWaveRider]

If I am going leveraged long on RE with a 30 year note, I need to be confident I can make those payments.

RE ownership is not a stable asset class.

We are only 10 years from the wrecking ball that US RE threw into the global markets.

All the student loan debt and most of the RE mortgage debt is rolled up into FedGov. Total government ownership is capitalism?

RE is retire early, not real estate.

RE is retire early, not real estate?

 

[omni550]

Lifestyles are changing.

People are more mobile, less likely to stay where they were raised

There's far less of the "get-married at 20-22 and start a family". More "hang out with friends, have a kidlet or two while staying single or divorced" or get married much later (at least for a while) and have a traditional family.

Long-term employment or a one-company career (for STEM or other degrees) is less expected as big companies are no longer "loyal" to their employees and employees also feel free to job-hop. Easier to do with all the online resources such as Linked-In.

Staying in touch is cheap...expensive long distance phone calls (remember when the Ma Bell rates dropped after 11 PM) are no more. You can call/videochat for free globally; the internet can have anyone eyeball-to-eyeball with you 24/7 for free via Skye/Facetime/Zoom etc.

Travel is cheap...gas at $2.50/gal or cross-country flights for $300-400 and sometimes much less (Spirit/Frontier/WOW anyone?)

The digital age makes it possible to work from most anywhere, depending on the type of work you do. And many millennials are making $$ in ways that simply didn't exist before...being an "influencer " on social media, posting videos on any subject on YouTube that garner eyeballs and $$ from ads. It's much more common for some younger folks to have several income streams.

Millennials seem disenchanted with the lives their Boomer folks led and are choosing "different"...being more flexible, agile, and often content with fewer amassed trappings (house, car, collectibles, etc.)...and wanting more "experiences" (which may include renting "trappings"..travel/high end homes/clothes/handbags/shoes/vacation houses/cars but also "doing good"-type work/travel).

Much of this precludes staying-put with a big mortgage.

omni

 

[imoldernu]

Sidenote:
There are between 16,000,000 and 18,000,000 vacant homes in the U.S.

... and about 600,000 homeless persons.

 

[haha]

Sidenote:
There are between 16,000,000 and 18,000,000 vacant homes in the U.S.

... and about 600,000 homeless persons.

You likely do not come into contact with these homeless people in your daily life. I do, and I agree that this condition is a tragedy. But short of raising taxes very high and creating a class of salaried wardens to oversee any dwelling that is offered to the homeless, I can't see what could be done about it.

If you owned a vacant house would you want it destroyed as quickly as possible, meanwhile subjecting you to lots of interesting liability? Or would you perhaps board it up if you could not get rid of it at some acceptable price?

Much of America is economically obsolete. That is why there is much vacant housing in one place and very high rents in another place where people can find better jobs.

Ha