[nek]

(12-09-2017 02:47 PM)kosko Wrote:  

There isn't a perfect example of this but would be a blend of Tokyo, Istanbul, Barcelona, Paris and Copenhagen.

What elements from each city would you be borrowing? This is interesting.

[captain_shane]

(02-27-2018 10:15 AM)Samseau Wrote:  

The number 1 reason not to buy housing right now is that we're in a bubble. Way cheaper to pay rent now and buy property once prices decline by a solid 50-75% (which is where they belong).

Where are you talking about? 50-75% downturn is substantial, and if that happens I wouldn't worry about buying a house, I'd be worried about the apocalypse.

Prices in coastal cities will continue to rise as long as we allow foreigners to buy properties. And prices will always rise, simply because politicians want increased taxes on higher prices.

[Repo]

(03-03-2018 01:39 PM)captain_shane Wrote:  

(02-27-2018 10:15 AM)Samseau Wrote:  

The number 1 reason not to buy housing right now is that we're in a bubble. Way cheaper to pay rent now and buy property once prices decline by a solid 50-75% (which is where they belong).

Where are you talking about? 50-75% downturn is substantial, and if that happens I wouldn't worry about buying a house, I'd be worried about the apocalypse.

Prices in coastal cities will continue to rise as long as we allow foreigners to buy properties. And prices will always rise, simply because politicians want increased taxes on higher prices.

His prior economic predictions have not aged well at all. Just making that statement without regard for location should tell you all you need to know, but I think you knew that already.

[911]

(03-03-2018 01:39 PM)captain_shane Wrote:  

(02-27-2018 10:15 AM)Samseau Wrote:  

The number 1 reason not to buy housing right now is that we're in a bubble. Way cheaper to pay rent now and buy property once prices decline by a solid 50-75% (which is where they belong).

Where are you talking about? 50-75% downturn is substantial, and if that happens I wouldn't worry about buying a house, I'd be worried about the apocalypse.

Prices in coastal cities will continue to rise as long as we allow foreigners to buy properties. And prices will always rise, simply because politicians want increased taxes on higher prices.

Real estate prices are NEVER going to drop below 25%-30%. You have to understand the nature of the bubble, it is driven by excess liquidity due to expanding monetary policy, so you have an inflationary effect that is particularly strong in real estate market where supply is not as dynamic. It is not real estate that is driving the bubble, the rise in RE prices is just a manifestation of monetary policy-driven inflation.

The other important issue here is that while some markets get pummeled in a sharp downturn, others barely budge downwards. This is known as the "fortress effect". San Francisco proper RE prices went down ~10-15% during the Great Recession (and have been up nearly 50% since, even if you've bought at the former peak you're doing well now).

While SF prices have dippes slightly, those in say Stockton or Fresno crashed badly. This is because the former is driven by wealth rather than income. Someone with a net worth of $10M is not going to be forced to sell his $2.5M house in an economic downturn, whereas the truck driver from Vallejo making $60k who got laid off is going to default on his mtgg payments and put his house on the market at the same time as the other two guys in his cul-de-sac who got laid off.

There are about 11,000,000 millionaires in the US, and most of them live in fortress RE enclaves within NYC, Boston, SF, LA, Seattle. Their numbers are growing while those of the middle class are ever shrinking.

Quote:

In 2016, there were 9.4 million individuals with net worth between $1 million and $5 million, 1.3 million individuals with net worth between $5 million and $25 million, and 156,000 households with more than $25 million in net worth, the report says.

At the same time that there is a record number of millionaires in the U.S., the middle class is shrinking. The percent of American adults who are considered middle-income fell from 55 percent in 2000 to 52 percent in 2014, according to a 2016 report from the Pew Research Center.

And increasing numbers of Americans are living paycheck to paycheck. One in three say they couldn't come up with $2,000 if faced with an emergency like an urgent home repair, medical crisis or car accident. Meanwhile, even affluent two-income households report feeling pinched.

https://www.cnbc.com/2017/03/24/a-record...shows.html

This has been an ongoing phenomenon in nearly all western urban economies, you need to understand this in order to navigate the RE market. Invest in middle-class neighborhoods in mid-tier cities and you're going to lose out as the middle class keeps shrinking. The winning formula is instead all about capturing the ongoing growth of the upper class by identifying neighborhoods that are going to gentrify in the next 5-10 years. For example in NYC:

https://ny.curbed.com/2016/5/9/11641588/...m-bushwick



I'm pretty sure you can continue to outperform the stock index by using this strategy, buying property using historically low mortgage rates, deriving income that will put you in the black well before you're halfway through the term, while your equity shoots up as gentrification drives up home values. Unfortunately, nearly all of these cities are liberal bastions. Even in places like Houston, a lot of the gentrifying hoods will be liberal enclaves.

[Repo]

Gentrification will almost always result in liberal communities, since its usually hipsters that move in at first. It's happening in Philly now, people are buying rows of houses and either tearing them down or completely renovating them. Many old abandoned historic buildings are being repurposed as well, it's interesting a city I used to hate is becoming much more tolerable. Know a few guys making serious money in the market.

[911]

Yeah another major feature of gentrifying neighborhoods is nice historic housing stock (see Haarlem, Brooklyn, north Oakland, or many parts of Philly).

[Ice Man]

I just ordered my second bushel of avocados this month alone. Fuck houses.

[Genghis Khan]

A few months late, but:

Avocado prices have soared 125% this year

http://money.cnn.com/2017/09/09/news/eco...index.html

Why buy low-yield houses when you can buy high-yield avocados. I don't recall house prices doubling in 2017. Who's laughing now, boomers?

[Sidney Crosby]

Aren't there a ton of almost ghost towns in the North East that are being turned into Hipster communities? They probably want to make mini Portlands out of them all.

[911]

Avocados are kind of an interesting meme here, they're not particularly expensive, very nutritious and filling, so nothing really profligate. I think it's more about millennials eating out at fast casual places and ordering the works, guac galore. An impulse that chains like Chipotles have done well exploiting.

The other thing about avocado economics not mentioned in that article is that a big chunk of their price goes to the Mexican cartels who extort farmers south of the border.

Quote:

In addition to controlling the production and distribution of marijuana, cocaine and heroin in Michoacán (most of which goes to the US), the Caballeros Templarios, or Knights Templar, also muscled in on local industries–and the rapidly-expanding avocado industry was a prime target. Through its contacts in the state government, the cartel first obtained detailed information about each avocado grower–how much land they owned, how many avocados they harvested and exported, how much money they made–and imposed a “tax” on each, up to ten cents per pound produced and $100 or so for each hectare of land they owned. Growers who expressed reluctance to pay were “persuaded” by violent attacks–one of their farms might be burned, or a family member would be assassinated. (One grower had two of his sons kidnapped and killed; another’s young daughter was raped, tortured, and shot.) Those who responded by moving away were forced to sign over their land deed to the cartel, who then used the plantation to launder drug money.

In recent years, as the cartel became more powerful, it began extorting “taxes” from the local packing and shipping companies–reportedly including those owned by US corporations–and the local employment agencies who hire the farm workers are also assessed a payment of several dollars per employee. In some instances, even local municipal governments are forced to hand over a percentage of the town’s budget as a payment to the cartel. The avocado industry alone is estimated to provide the Templarios with at least $150 million a year.

With as many as 100,000 people working for it, the Templarios cartel is almost a state unto itself. It is larger, richer and more powerful than any local government, and through bribery and violent intimidation it controls the police and courts, and now owns about ten percent of all the avocado orchards in Michoacán. In one town, after the mayor was forced to resign by the cartel, a new mayor fired the entire corrupt municipal police force–and was then himself assassinated. In 2014, frustrated farmers in various parts of Michoacán formed armed vigilante groups called “auto–defensas” to protect themselves from Templarios gunmen; in some cases, these illegal militias returned land that had been taken by the Templarios back to its former owners, and even ambushed and killed known cartel members. The Mexican Federal government responded by deputizing some of the vigilante groups as local policemen and by sending in Federal Army troops to protect the area, but this proved to be largely ineffective.

https://lflank.wordpress.com/2016/07/08/...g-cartels/

We should probably impose a tariff on Mexican avocadoes, it would have for effect of taking away some of the proceeds of their cartels and putting them back into the local economy. Northern Chicanos would benefit most.

[Simeon_Strangelight]

(03-03-2018 01:39 PM)captain_shane Wrote:  

(02-27-2018 10:15 AM)Samseau Wrote:  

The number 1 reason not to buy housing right now is that we're in a bubble. Way cheaper to pay rent now and buy property once prices decline by a solid 50-75% (which is where they belong).

Where are you talking about? 50-75% downturn is substantial, and if that happens I wouldn't worry about buying a house, I'd be worried about the apocalypse.

Prices in coastal cities will continue to rise as long as we allow foreigners to buy properties. And prices will always rise, simply because politicians want increased taxes on higher prices.

For the US there are multiple factors which will shore up real estate prices at least in certain areas:

1) Still rampant liquidity and credit bubble or quantitative easing - it will take more for the US to go bust

2) Mass immigration since population is hardly growing intrinsically - creates pressure for housing - and this actually has a ripple effect across all levels - even when most people moving in are taking up rentals and worse neighborhoods, it creates bigger pressure for middle class folk to either upscale or move away from it or they have to compete with the rest

3) Many more well-off foreigners buying up property for various reasons - this trend continues in many Western countries and certain areas. Though contrary to London, Canada or Australia - it does not generate quite the same bubble due to the sheer size of the US property market

A collapse of the real estate market will only happen when the US goes bust or starts to reign in spending, goes into full austerity (because the US cannot get really bankrupt, just the currency could become worthless which would trigger austerity far beyond the proportions of the great recession)

[Simeon_Strangelight]

(03-03-2018 07:59 PM)911 Wrote:  

Avocados are kind of an interesting meme here, they're not particularly expensive, very nutritious and filling, so nothing really profligate. I think it's more about millennials eating out at fast casual places and ordering the works, guac galore. An impulse that chains like Chipotles have done well exploiting.

The other thing about avocado economics not mentioned in that article is that a big chunk of their price goes to the Mexican cartels who extort farmers south of the border.

Quote:

In addition to controlling the production and distribution of marijuana, cocaine and heroin in Michoacán (most of which goes to the US), the Caballeros Templarios, or Knights Templar, also muscled in on local industries–and the rapidly-expanding avocado industry was a prime target. Through its contacts in the state government, the cartel first obtained detailed information about each avocado grower–how much land they owned, how many avocados they harvested and exported, how much money they made–and imposed a “tax” on each, up to ten cents per pound produced and $100 or so for each hectare of land they owned. Growers who expressed reluctance to pay were “persuaded” by violent attacks–one of their farms might be burned, or a family member would be assassinated. (One grower had two of his sons kidnapped and killed; another’s young daughter was raped, tortured, and shot.) Those who responded by moving away were forced to sign over their land deed to the cartel, who then used the plantation to launder drug money.

In recent years, as the cartel became more powerful, it began extorting “taxes” from the local packing and shipping companies–reportedly including those owned by US corporations–and the local employment agencies who hire the farm workers are also assessed a payment of several dollars per employee. In some instances, even local municipal governments are forced to hand over a percentage of the town’s budget as a payment to the cartel. The avocado industry alone is estimated to provide the Templarios with at least $150 million a year.

With as many as 100,000 people working for it, the Templarios cartel is almost a state unto itself. It is larger, richer and more powerful than any local government, and through bribery and violent intimidation it controls the police and courts, and now owns about ten percent of all the avocado orchards in Michoacán. In one town, after the mayor was forced to resign by the cartel, a new mayor fired the entire corrupt municipal police force–and was then himself assassinated. In 2014, frustrated farmers in various parts of Michoacán formed armed vigilante groups called “auto–defensas” to protect themselves from Templarios gunmen; in some cases, these illegal militias returned land that had been taken by the Templarios back to its former owners, and even ambushed and killed known cartel members. The Mexican Federal government responded by deputizing some of the vigilante groups as local policemen and by sending in Federal Army troops to protect the area, but this proved to be largely ineffective.

https://lflank.wordpress.com/2016/07/08/...g-cartels/

We should probably impose a tariff on Mexican avocadoes, it would have for effect of taking away some of the proceeds of their cartels and putting them back into the local economy. Northern Chicanos would benefit most.

Tariffs won't help Mexico. You would need to send in the army and probably conquer Mexico, kill all cartel members, then start fresh in a Neo-Mexico.

[PharaohRa]

There are only 2 reasons why you should buy a house:

1) Raise a family
2) See an investment opportunity

Furthermore, I can vouch for New York City going through massive gentrification in certain areas (Williamsburg and Long Island City are just of many areas). As long as the usual suspects have access to cheap liquidity, gentrification is going to keep on happening, and there will be no stop to it.

Also, it is not just New York. Even in the South, places like Atlanta, Charlotte and Richmond have been gentrifying many of their areas for years.

[kosko]

Williamsburg and LIC are old news. Williamsburg was gentrifying way back in 2006 and is now is a calcified new money bougouise neighborhood and has become stale as hell (you notice you don't hear about cool shit coming out of there anymore?)These rich assholes never learned that they are all insufferably boring and just make neighborhoods a mirror representation of themselves.

We now see that gentrification is starting to creep into Crown Heights and South Bronx. The Bronx example was so easy to see that eventually the pocket right above Manhattan would gentrify. You would have been smart buying 8-10 years ago or going in right after the 2008 crash if any owners wanted to dump to liquidate.

The key is that you have to buy in before it gets labeled as "gentrifying" once the New York Times (Toronto Life here for Canadians) writes about it it's already too late.

One interesting thing about gentrification and let's, use the example of Starbucks. With Starbucks, it seems it is early, or always seems to show up at the right time in gentrifying places as they have very powerful location selection metrics they use which put emphasis on real estate value and demographic/income patterns and they then localize certain points they want to approach for leases. Part of the reason why Starbucks is viewed as the "kiss of death" for a neighborhood.

There is that good sweet spot where it's still cheap but rough while showing signs of change where you want to get in. I'm not a fan of gentrification as interesting people should make s city cool and fun and a city full of bougie granolas is boring as hell. The sanitized city has made it safe for these folks to move in. You keep the city a little rough around the edges surrounding the interesting parts and the bougie people will stay away.

[PharaohRa]

(03-04-2018 12:00 PM)kosko Wrote:  

Williamsburg and LIC are old news. Williamsburg was gentrifying way back in 2006 and is now is a calcified new money bougouise neighborhood and has become stale as hell (you notice you don't hear about cool shit coming out of there anymore?)These rich assholes never learned that they are all insufferably boring and just make neighborhoods a mirror representation of themselves.

We now see that gentrification is starting to creep into Crown Heights and South Bronx. The Bronx example was so easy to see that eventually the pocket right above Manhattan would gentrify. You would have been smart buying 8-10 years ago or going in right after the 2008 crash if any owners wanted to dump to liquidate.

The key is that you have to buy in before it gets labeled as "gentrifying" once the New York Times (Toronto Life here for Canadians) writes about it it's already too late.

One interesting thing about gentrification and let's, use the example of Starbucks. With Starbucks, it seems it is early, or always seems to show up at the right time in gentrifying places as they have very powerful location selection metrics they use which put emphasis on real estate value and demographic/income patterns and they then localize certain points they want to approach for leases. Part of the reason why Starbucks is viewed as the "kiss of death" for a neighborhood.

There is that good sweet spot where it's still cheap but rough while showing signs of change where you want to get in. I'm not a fan of gentrification as interesting people should make s city cool and fun and a city full of bougie granolas is boring as hell. The sanitized city has made it safe for these folks to move in. You keep the city a little rough around the edges surrounding the interesting parts and the bougie people will stay away.

Gentrification serves its purpose of revitalizing neighborhoods (and I actually prefer that old neighborhoods are reformatted rather than use up open space for building when that open space can stay open space to promote a green environment). However, you have to know when to say when, and it seems that some people/groups never get it!

[RichieP]

The game is different, and the space of advantages / disadvantages / opportunities / threats is different.

Success = do the things needed to win the game you find yourself in, and get lucky.

If you were born in USA, Western Europe or Australia, your opportunities are ridiculous compared to most human males on the planet. Your life is a relative carnival of abundance. Doesn't mean you won't fuck it up though Or get unlucky.

But yeah, would be nice if people could buy a house on an average salary. Four walls and and a roof doesn't seem like it should be so out of reach.

Interestingly - not every developed country has ridiculous house prices, or a housing crisis:
https://www.ft.com/content/023562e2-54a6...c0c26b3c60

"Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged."

Much of it is down to policy and willingness of the govt to... *shock horror* build houses.

[Laner]

(03-04-2018 12:00 PM)kosko Wrote:  

Williamsburg and LIC are old news. Williamsburg was gentrifying way back in 2006 and is now is a calcified new money bougouise neighborhood and has become stale as hell (you notice you don't hear about cool shit coming out of there anymore?)These rich assholes never learned that they are all insufferably boring and just make neighborhoods a mirror representation of themselves.

We now see that gentrification is starting to creep into Crown Heights and South Bronx. The Bronx example was so easy to see that eventually the pocket right above Manhattan would gentrify. You would have been smart buying 8-10 years ago or going in right after the 2008 crash if any owners wanted to dump to liquidate.

The key is that you have to buy in before it gets labeled as "gentrifying" once the New York Times (Toronto Life here for Canadians) writes about it it's already too late.

One interesting thing about gentrification and let's, use the example of Starbucks. With Starbucks, it seems it is early, or always seems to show up at the right time in gentrifying places as they have very powerful location selection metrics they use which put emphasis on real estate value and demographic/income patterns and they then localize certain points they want to approach for leases. Part of the reason why Starbucks is viewed as the "kiss of death" for a neighborhood.

There is that good sweet spot where it's still cheap but rough while showing signs of change where you want to get in. I'm not a fan of gentrification as interesting people should make s city cool and fun and a city full of bougie granolas is boring as hell. The sanitized city has made it safe for these folks to move in. You keep the city a little rough around the edges surrounding the interesting parts and the bougie people will stay away.

For lifestyle and general happiness, I like the neighborhoods to be mixed. I bought into Vancouver's Gastown a number of years ago, probably a few years late, but still well before the boom. The hood has not cleaned up yet, but the really nasty shit is getting more attention which is good. Even the poor hate seeing human shit and needles everywhere. The junkie part of the hood does not have any allies in the residents, but has allies in the Non Profits who get $365 million a year funneled into the area from governments only to be snatched up by the Non Profits. That is a LOT of money, and very much in their best interests to keep the junkies a problem. In fact the Non Profits do not allow the front line workers to make the junkies even clean up after they allow them to inject heroin in the safe injection site. Unreal.

In Vancouver now even the hipsters hate New Westminster, so this is where I would invest if I were confident on the market. I am not, but in the future this could be a good bet. Collingwood is 'gentrifying' but in my opinion is a third world shithole. The streets and alleys are disasters, the schools run down, and houses half consumed by nature. But you might be able to buy a house for $1.5 million which is laughable.

Gentrification in such a hot market like Vancouver is a misnomer. Expensive real estate in shitty hoods without the transition is a disaster. Too much speculation and flipping means people don't give a shit about community.