HARVARD study on The State of the Nation’s Housing

[an]

[quote=HLS]Flu,
You are touching on part of the concern of the report which is that many people cannot qualify to buy (even with almost nothing down) because of lending guidelines…
SO… should it be easier for people to qualify to buy ??[/quote]Since I too also am in flu’s shoe, I would say, resoundingly, YES!!!!!. Lower the standard and let the house bubble start again.

[bearishgurl]

[quote=FlyerInHi][quote=HLS]The housing market is a HUGE part of the economy in this country and correlates with the general mood of the country and a sense of wealth & security for many.

The govt has stepped in to create a market for mortgage backed securities along with govt subsidies, guarantees and insurance.

If there was no financing available for houses and
buyers had to pay cash, is there any doubt that houses would sell for less ?
If 50% down was required, they would sell for a bit more. If 25% down was required, prices would be even higher and when you get to almost nothing down, the prices become inflated.

What’s ironic is that the responsible ALL CASH buyer who has worked hard and saved to buy a house,
has to pay the same price that someone with crappy credit and no down payment has to pay.
[/quote]You’re assuming that all else is being equal.

If there was no financing, the building industry would not be as huge, as you put it. There would be lower economies of scale and costs would be higher overall.

We now have large builders who can technically put up thousands of houses very quickly.

We need financing to generate economies of scale for constructing the commodities that houses are.

I think that zoning, building codes, and lack of supply of new houses, have much more to do with prices.

There’s a “housing establishment” that’s used to doing certain things that acts to protect its way of life. If we had innovative prefab houses and looser zoning restrictions, house prices would drop.

If you could put a prefab container house in your backyard, you could rent it out to a single tenant who would enjoy a nice modern, comfortable space.

Creative thinking can help solve the housing shortage very quickly.[/quote]

The problem here is that, historically, “prefab housing, mobile homes and RVs” have only been allowed in very specific micro areas of the county. And over the years, many of those areas have banned them with rezoning (and the “rent control” which accompanied many of these parks). Yes, “prefab houses” in SD County are built only in specific subdivisions or “parks,” governed by HOAs. The owner of the “prefab” house typically DOES NOT OWN THE LOT! They often still have to pay “space rent” + HOA dues. The NCC USED to have several small mobile home parks right along the coast where today the vast majority have been sold off due to zoning changes. South County used to have several more mobile home parks than it currently has. The parcels of some of those sold-off parks are now zoned commercial.

A person or family who feels they need to “live on the cheap” this way cannot expect to live on the coast, at least not “permanently.” In San Diego County, they can expect to live in Otay Mesa, unincorporated East County or Inland North County. There are only a handful of parks in the City of San Diego, the largest being in Otay Mesa or bordering it.

All of these types of cheaper housing are abundant in many flyover states which consist of mostly plains. If this is the way a family feels they have to live in order to survive, then those places are the best places for them to move to, imho.

I disagree with HLS that the “responsible cash buyer” has to pay the same as the FHA/VA buyer for the same house. In CA coastal counties, the negotiated price between an all-cash buyer and a seller is entirely dependent upon the desirability of the micro-area the property is situated in along with any recent nearby sold comps.

This is assuming a “traditional sale” free of lender approval/involvement.

[Coronita]

[quote=The-Shoveler]I don’t think you can get to a sell worthy bubble/crash without No-down No-Nothing NINJA Loans.

You may want to sell a home for different reasons, but I don’t think I will see another housing crash like the last.

Maybe when they rope off an area for shanty towns (could happen in 25-50 or so years).[/quote]

We’ll, see another crash at some point. We just don’t know when….. 🙂

[Coronita]

[quote=HLS]Flu,
You are touching on part of the concern of the report which is that many people cannot qualify to buy (even with almost nothing down) because of lending guidelines…
SO… should it be easier for people to qualify to buy ??

There will ALWAYS tenants, in all parts of the country.
The macro housing market is not like San Diego/ So Cal though.

I have a friend in FL who was told he could get $340K for his house last year. It’s been listed for sale and is still for sale. I think it is down to $249,000 and hardly anybody looks.
Nothing wrong with condition. He’s even willing to carry with a down payment.

Many parts of the country have properties sitting. It’s not always easy to find tenants in many areas,
even when rent is $300-$500 a month.[/quote]

*Should it be easier for people to qualify to buy who are sketchy on their finances?…..My opinion is, absolutely not.

But my opinion doesn’t matter…And frankly, when a big % of the population can’t qualify for a loan to buy a home…… You know that the government isn’t going to just sit there and not do anything.. You also know that subprime lending is a big business for banks… You know that they are going to be itchy to be loaning @ subprime again to fatten their bottom line. perhaps it won’t be as crazy as before (initially), but you know subprime will be back…The profit motives are just too compelling not to go at it again. Again, look no further than the auto industry… They’re at it again…

Can’t beat them… Join them.. That way, personally I won’t feel so bad the next time….

[bearishgurl]

[quote=HLS]Flu,
You are touching on part of the concern of the report which is that many people cannot qualify to buy (even with almost nothing down) because of lending guidelines…
SO… should it be easier for people to qualify to buy ??

There will ALWAYS tenants, in all parts of the country.
The macro housing market is not like San Diego/ So Cal though.

I have a friend in FL who was told he could get $340K for his house last year. It’s been listed for sale and is still for sale. I think it is down to $249,000 and hardly anybody looks.
Nothing wrong with condition. He’s even willing to carry with a down payment.

Many parts of the country have properties sitting. It’s not always easy to find tenants in many areas, even when rent is $300-$500 a month.[/quote]

LOL, HLS, one of my relatives began sending me SFR listings for (mostly) 73120 (and immed surrounds) about six weeks ago. He was sending me several batches per day and I told him to STOP! Before he bombarded me, he asked me, “What do you want in a house?” and, “What would it take for you to `retire’ here?”

I told him (priced for what I thought was reasonable for that area … up to $275K):

– completely flat lot with flat driveway
– min 9K sf lot
– 2+ car garage (not undersized)
– no busy streets
– no HOA or HOA dues <$500 per year - min 1900 sf - min 3 br/2 FULL ba - one-story only - floor-to-ceiling brick or flagstone FP - prefer sidewalks but not a deal-killer - no age preference - located INSIDE the turnpike Now this (theoretical) property couldn't even be found in SD County and if it could be, it would cost >$650K.

He send me HUNDREDS of listings in the space of 3 days which I went thru really fast. ALL were priced $98K to $235K with an avg price of about $145K. 95% of them met ALL my criteria and most of them had at least 600 more sf than I needed!

73120 is one of the more “desirable” zip codes in that particular metro area and it is bordered on the east by the (historically) very best area of town (73118 walled covenant). I was literally shocked at the sheer numbers of current listings (esp within the same subdivision)!

And only about 2-3 listings were “REOs” (FNMA) and I didn’t see any “short sale” listings at all!

In the end, I had to ask myself the following questions:

Why so many price reductions on so many of these seemingly perfectly decent listings in decent areas?

Why the long market time and multiple off/market and re-market of so many of these listings?

Why are there SO MANY current listings of homes in established areas?

If I decided after a couple of years that I didn’t like living there and wanted to sell, how long would it take me to sell?

And the bottom line was “Could I get my purchase money back after selling with less than five years ownership? How about ten years? 15?”

I determined the answer was probably no, even if I bought the place for only $100K and rehabbed it with a more modern interior.

This area is in a state where the vast majority of residents are native to that state. They’re not moving anywhere else, today, tomorrow or at any time (except maybe to their plot at the local cemetery where they are already “ready to roll”). The families who transfer in and out of there for educational/job purposes take a loss if they buy a home to live in and then sell it a few years down the line when their gig is up (which is cheaper then renting the same home). They don’t care. They take the loss (mostly RE commission) and move on with life. In addition, this particular residential market is ALREADY approx 48 miles long by 68 miles wide AND THEY ARE STILL BUILDING SUBDIVISIONS in the outlying areas, due to an abundance of flat, buildable land!

I have no idea who is buying in the new subdivisions but surmise it must be the “natives” who are currently renters or will attempt to sell or rent out their existing (urban) house in order to get a new lot in the outlying area which are up to 5 AC.

*****

Here in CA coastal counties, we have always had a “captive audience” for residential RE, due mainly to geography and strict zoning and land-use laws to protect this coveted environment. NOT SO for many flyover states. They don’t have the influx of new residents at anywhere the same rate we do. Therefore, their particular populations don’t view residential RE as an “investment.”

Aside from Props 13/58/193, the above para is THE main reason for the high housing prices in coastal CA combined with the dearth of listings from here on out. This situation will only continue to get more pronounced as the years go by, IMO.

[FlyerInHi]

[quote=bearishgurl] The problem here is that, historically, “prefab housing, mobile homes and RVs” have only been allowed in very specific micro areas of the county. And over the years, many of those areas have banned them with rezoning [/quote]

it shows how slow we are at adapting to technology. prefab is not what it used to be. They are actually perfect for San Diego’s mild climate.
https://www.google.com/search?q=container+house&tbm=isch&tbo=u&source=univ&sa=X&ei=6my0U-rvHYaayASxw4KQBg&ved=0CCgQsAQ&biw=2048&bih=934

old properties with big lots could easily accommodate a couple prefab houses in the backyard.

If you’re in Vegas, go visit Container Park, a small shopping center built with old containers.

Reduce
Reuse
Recycle

[bearishgurl]

[quote=FlyerInHi][quote=bearishgurl] The problem here is that, historically, “prefab housing, mobile homes and RVs” have only been allowed in very specific micro areas of the county. And over the years, many of those areas have banned them with rezoning [/quote]

it shows how slow we are at adapting to technology. prefab is not what it used to be. They are actually perfect for San Diego’s mild climate.
https://www.google.com/search?q=container+house&tbm=isch&tbo=u&source=univ&sa=X&ei=6my0U-rvHYaayASxw4KQBg&ved=0CCgQsAQ&biw=2048&bih=934

old properties with big lots could easily accommodate a couple prefab houses in the backyard.

If you’re in Vegas, go visit Container Park, a small shopping center built with old containers.

Reduce
Reuse
Recycle[/quote]

Understand your ideas. BUT … the NIMBYs in the most valuable coastal areas would have a field day if local zoning laws were changed to accommodate “prefab” living quarters on residential lots.

I see really valuable neighborhoods being turned into eyesores on the order of some areas of Tijuana with the proliferation of “prefab housing.”

The CA coast is not the place for this type of housing. As I stated before, it is MUCH more prevalent in (semi-rural and rurals areas of) the plain states. If you want to live in or own that type of housing, you probably need to give some thought into moving there or investing there. It’s not gonna happen around here.

[bearishgurl]

[quote=flu]We’ll, see another crash at some point. We just don’t know when….. :)[/quote]

If you mean in SD County, I don’t see this constellation … at all. I don’t see any conditions in place to suggest that our local housing market is going to “crash,” now or later.

In fact, I think just the opposite is going to happen. SD County SFR values will hold steady in some areas and increase in others.

[an]

[quote=bearishgurl]
Understand your ideas. BUT … the NIMBYs in the most valuable coastal areas would have a field day if local zoning laws were changed to accommodate “prefab” living quarters on residential lots.[/quote] http://irontownhomes.com/portfolio/ It has already been done in Carlsbad ocean front.

[FlyerInHi]

[quote=bearishgurl] I see really valuable neighborhoods being turned into eyesores on the order of some areas of Tijuana with the proliferation of “prefab housing.”
[/quote]

That’s old fashioned traditional thinking that doesn’t take into account technological improvements.

Why would valuable areas be turned into eyesores? They are already valuable so people will keep it that way.

The prefab houses look beautiful compared to some of old stick houses.

If anything, allowing more density will increase house prices, but those higher prices will be shared among more residents thus lowering the cost of housing.

let’s say a house in clairement is worth $550k. But if you can build 2 additional guest houses in the back, someone might pay $650k for the house. He then builds 2 guest houses and share the cost with his extended family. The result it more community, less driving commute, more affordability…

[bearishgurl]

[quote=AN][quote=bearishgurl]
Understand your ideas. BUT … the NIMBYs in the most valuable coastal areas would have a field day if local zoning laws were changed to accommodate “prefab” living quarters on residential lots.[/quote]

http://irontownhomes.com/portfolio/ It has already been done in Carlsbad ocean front.
[/quote]

YIKES, AN! That Carlsbad bldg doesn’t look “prefab” to me.

My vision of “prefab” or “modular” homes is this:

http://www.lakejenningsliving.com/Listings.html

For a larger home, my vision was kind of like the “Los Angeles” photo in your link (but replace expensive concrete stemwall, stairs and porch with wood).

I have absolutely NO IDEA how that “prefab eyesore” actually got built in one of the highest-regulated jurisdictions in the state, Los Altos, let alone three units!. UGH!! The one in Nederland, CO is just a step up from ugly. The rest are okay.

Irontown puts a lot of finishes on their homes so most of them don’t look like a “prefab.”

[bearishgurl]

[quote=FlyerInHi][quote=bearishgurl] I see really valuable neighborhoods being turned into eyesores on the order of some areas of Tijuana with the proliferation of “prefab housing.”
[/quote]

That’s old fashioned traditional thinking that doesn’t take into account technological improvements.

Why would valuable areas be turned into eyesores? They are already valuable so people will keep it that way.

The prefab houses look beautiful compared to some of old stick houses.

If anything, allowing more density will increase house prices, but those higher prices will be shared among more residents thus lowering the cost of housing.

let’s say a house in clairement is worth $550k. But if you can build 2 additional guest houses in the back, someone might pay $650k for the house. He then builds 2 guest houses and share the cost with his extended family. The result it more community, less driving commute, more affordability…[/quote]

Okay, due to AN’s link, I’m convinced prefabs can “look good.” But I don’t think the ones in the photos on that link can be built two for $100K (or less). The ones I see being built (cheaply) in backyards are more on the order of the “Home No. 240” in my “Lake Jennings” link. They look like a temporary construction trailer. In a place like Clairemont, their “tenants” would have to park in the street, causing more congestion for the rest of the neighbors, which wouldn’t fly. I don’t see multiple companion units being approved on one city SFR lot. And they cannot be produced cheaply enough for an area like Clairemont unless they resemble that “construction trailer.”

[img_assist|nid=18181|title=Home No. 240 (LJP)|desc=|link=node|align=left|width=252|height=160]

Otherwise, the homeowner would have too much money tied up in the property (unless they purchased many years ago).

[an]

prefab has come a LOOONG way. There are many luxury prefab housing companies now building some very luxurious looking places. Here are pictures of them: http://www.bing.com/images/search?q=luxury+prefab+homes&qpvt=luxury+prefab+homes&FORM=IGRE#a

[CA renter]

BG, there are a few very nice modular/prefab homes in Encinitas and Carlsbad. These cities also have fairly generous zoning requirements for companion units.

http://www.ci.encinitas.ca.us/modules/showdocument.aspx?documentid=228

Can’t seem to find Carlsbad’s right now, but have looked into it in the past and know that they allow accessory dwelling units similar to what Encinitas allows.

[bearishgurl]

[quote=CA renter]BG, there are a few very nice modular/prefab homes in Encinitas and Carlsbad. These cities also have fairly generous zoning requirements for companion units.

http://www.ci.encinitas.ca.us/modules/showdocument.aspx?documentid=228

Can’t seem to find Carlsbad’s right now, but have looked into it in the past and know that they allow accessory dwelling units similar to what Encinitas allows.[/quote]

Yes, I see Encinitas allows only ONE accessory unit per lot and requires one off-street pkg space for that unit. That unit’s size is also regulated to 750 sf or 30% of the sf of the main dwelling, whichever is less (750 sf is 30% of 2500 sf). Because the accessory dwelling must have the same finishes as the main house, THAT is what will run up the cost.

It is still very expensive in SD County to build a companion unit (stick built). Prefab homes are also likely expensive to build/erect depending on foundation and finishes used. It’s not worth it to over-invest in a property on a residential lot if the cash outlay to build an accessory unit causes the homeowner to have way too much invested for their particular micro-area.

It’s not even worth it if it is being built to house elderly relatives as they could need to be transferred to a skilled nursing facility or pass away long before an owner’s property value rises enough to make the accessory unit pencil out.

In my mind, in CA, it’s not worth it at any time to over invest for the area because homeowner(s) never know what life may throw at them (or what they may ultimately decide to do) and should always be in a position to prepare their home for sale on the open market at any time and be able to recover the vast majority of their cash investments, if not all, upon sale (not including maintenance costs).

I know, I know. I’ve heard, “I’m/we’re going to be here until I/we die” many times. But sh!t happens. These owners DO intend to live in their present home long-term …. until they don’t.

The best thing to do if one needs an accessory unit is to buy a property with one already built on it (not paying over recent sold comps for the property). This is doable because many accessory units or “granny flats” (at least around here) were built in the ’60’s or early ’70’s for a small fraction of what it costs to build them today.

***

The above doesn’t apply to owners who bought 20+ years ago and never removed any equity from their properties.

[Author]

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