Housing shortage

No discounts here either , in the last year we have seen 5 houses started on our old dirt road. We bought our land 20 years ago for 1600. an acre today it is 15000. an acre. We helped our son buy a Townhome downtown
Houston last summer . Had to pay full price. Invested with a friend on a piece of commercial property . We had to carry our guns when we went to look at it because it had been taken over by bums. No problem , they all moved out and after spending money yet it looks pretty nice and we do have a few tenants . I will sell you a real nice Apartment Townhouse in Amsterdam. Right close to the shopping district ? Rented out right now.
I am fed up with real property ,,,,,I don’t have the stomach for it.

I live in kinda of strange place.

The neighborhood is very old. I do a lot of walking for cardiac rehab, and most of the sidewalks are from the 1930s and 1940s, with a smattering of sidewalks from the 1920s, and a few newer.

I am about a 7 minute walk to San Diego Bay, and a 7 minute drive to the Pacific Ocean.

My neighborhood is a mix of 1950s bungalows (800-1000 sq ft.) going for around a million, 1970s-1990s condos going for $500K+, and 1960-1980s apartments renting for around $2,000, which is pretty cheap for San Diego.

There is almost no buildable land within 5 miles of where I sit. The last time there was any significant new construction was when they closed the Naval Training Center (virtually across the street). Filled the space with row houses going for a million a pop.

San Diego County still has a bit of land to build on, but we have some of the same issues as EA. Pacific Ocean to the west, Mexico to the south, Mountains and desert to the east, and Camp Pendleton to the north.

@fun, nope, prices are way up and stuff is selling same day almost. It's nuts here right now with all those pesky northerners moving south (yeah I'm from nj lol)

Our area.. Woodstock, Canton, Holly Springs area in Ga and Fl, Lithia Fishhawk.. single family homes prices going UP.. crazy! People buying as fast as they go up and fleeing BIG Cities like Atl / Tampa.. and moving big time from NY etc !

@Flip , did you find anything this fall ? I knew you were looking .

So put jobs where there is land and people can afford it, you will get some migration.

Of course, Malibu, Santa Barbara, Key Biscayne, Manhattan, will always be expensive, but that is a function of geography.

I know that my city is petitioning our gov because of a statewide mandate for new housing. We literally have no room. We have no unclaimed land that can be converted. We are already dense. The only way for it to happen is to go vertical. Then you run into view issues, but mainly you run into earthquake issues.

The property I had in South Florida, I was going to level and rebuild new. The house was not centered on the lot, in fact it was almost at one end of the rectangle. I did a lot of research. If I prepped the land correctly, I could build a house with metal instead of CBS (concrete/block/stone) I talked to a few builders and they said, yeah, your labor costs will go down a LOT, it's basically building using a huge erector set with everything cut to precision and delivered, whereas now, we cut to fit on the fly. That can lower the costs down. But again, this is all moot if there is no income for people to earn while living there.

Fun - nice coherent post on a subject!

There is an old statement . . . all real estate is local.

When I moved here from South Florida in 2003, I looked at the prices of housing. I got a little bit of sticker shock. I had a nice house, about 3200 sq ft with a detached garage that was another 800 sq ft on a lot that was 150 x 450. The house was a 400k house. I tried to find something similar. I found a 4900 sq ft house on an acre for 1.4mm. I went WTF! When I looked at a map, I saw this vast amount of area and it seemed odd that the cities were where they were. Then I move here. Coming from South Florida, there is this whole thing to the east of us that you can't build in called the ocean. Then, there is something to the west of us that you really can't build in, called the everglades. Well . . . what they did to the everglades was interesting. The developers reclaimed it. Yes, they filled in the everglades with rock and sand and then built on it. This is how Broward county, which, before this reclamation was only about 15 miles east to west, now it is over 30 miles east to west!

This got me into learning more about things here in Real Estate. We have these things called mountains. They tend to get in the way. We have soil that is not as solid as in South Florida. In fact, most homes, as you start to go up the mountains are built on pylons. Then you get into the fact that the city has established a 40' high limitation of buildings. Something about being able to see the ocean means something. This limitation has been broken three times and soon to be a fourth. The first time was a building that is 8 stories tall! That building, which is a theater started the whole, "WTF is this big thing here doing" argument and after its completion in 1924 we had the restrictions. There is a building that is 42' tall and got an exemption because of how they handled parking and earthquakes. The other one was the hospital. It was built around the same time and has had to go through some retrofits for earthquakes and they allowed it to stay that height. The new one is going to be 43' high and it is for mental health.

Why did I bring all of that up? Because you do reach a point where density saturation is met. Fun is correct, we can not make more land here, without . . . blowing up the mountains and terraforming. We would have to basically do what was done in South Florida and 'reclaim' land.

The issue though is there is a solution and it is one I am surprised that you have not figured out AZ. It is complex to implement, but the solution is actually quite simple. Start asking yourself the question . . . "Why do people live here?" The answer a major amount of the time is JOB. Then you get into all the other issues. People move to where they can get a job and make money. 49'rs Gold Rush? This has been going on for a LONG time.

Now how do you solve it? This is the chicken and egg concept and one that I have seen played out and it got ugly. Do you open a place in a location that requires 10000 jobs and the area has 2000 people? If you do that, people will move there and you will have moved to an area where land was simple to get and build on. Most people will try and equate this to Tesla opening up a Nevada factory. They suddenly became, after the local government, one of the largest employers.

I watched IBM have this same issue. IBM invented the PC 20 miles from where I grew up in Boca Raton, FL. IBM saw that getting land in New York was expensive and labor was expensive, so the MBA's figured out that they could get land for 25% of the cost in Boca and labor for 60% of the cost. What happened? They soon learned that on the labor side they could not get the same talent for 60% of the cost. Hell, they could not get the same talent for 125% of the cost. The talent was scarce. This took them a decade(ish) to realize and they basically abandoned Boca.

I believe this will get worse with a lot of people and especially lower income people losing jobs. I haven't seen prices drop yet here and actually seeing prices go up and apparently expecting to go up again next year. I'm hoping by spring that prices drop a lot (wishful thinking), I wanna pick up a few more rental units

"I have no clue how to solve this."

LOL.

At least this time you are being honest...

Or did someone take over your handle?

Simple solutions. Twenty and thirty somethings don’t need a McMansion. Most do t need a school system. They are either not having kids or have not started yet. Learn how to operate a cordless drill. A hammer. A paintbrush. Learn drywall skills. Learn a little something about electric.

There are plenty of houses. They’re all not move I. Ready. Some are on the fringe of bad neighborhoods.

A little elbow grease and sweat equity in things go a long way.

Simply put. Live within your means.

Do you think it is the smaller cheaper home or the price of land . Nobody has found a way to make land . It is true what you say no cheap homes , but also we have never had interest rates so low . So a realtor pushes these people into bigger homes . Everything has a cost and building materials are not going down .

We have fundamentally altered the mechanism that had been providing housing to poor people.

For 50 years (1940s to 1980s) average new house size grew 200 sqft per decade. From 1000 sqft to 2000 sqft. This meant a constant move-up, leaving the 20 yesr old, smaller houses to become "low income".

1980s the 2000 sqft, 4 bedroom became the standard, just as average number of children per family was falling from 3.5 to 1.5. Since then, new houses haven't really grown. The late 70s and later neighborhoods have not become low income in most places, and in fact, many find them preferable to new due to no HOA or "special districts".

Worse, many of what had been low income are being gentrified back into middle class as people look to move closer to the city.

Builders seem to only want to build high end mcmansions on golf course on the fringe of town or luxury condos in what had been low income or industrial areas but have been converted to high density.

For the 10 years before the pandemic, we had been building almost 1 million fewer new house than household formation. We left the 2007 collapse with 2 million too many houses, but now are short at least 5 million.

The reason the demand is not being filled is that what is needed is low-end cheap housing, that can't be built for a profit.

Easy to say "not my problem" until tents pop up all over your city.

This is an issue without a simple solution.

Trump's big achievement was to undo programs intended to help lend to low income people buy houses in lower middle-class neighborhoods, saying he kept criminals out.

Bernie has proposed rent control, but that is counterproductive as it discourages new development. We need more houses.

Warren had a subsidy program to allow builders to sell below cost, but that is likely into a flip-for-profit scheme where the poor buy below market cost with government subsidy, then sell at market price for a quick profit.

I have no clue how to solve this.